Yangon City Water Resilience Project

Report and Recommendation of the President to the Board of Directors

Project Number: 52176-001 September 2020

Proposed Loan Republic of the Union of Myanmar: Yangon City Water Resilience Project

Distribution of this document is restricted until it has been approved by the Board of Directors. Following such approval, ADB will disclose the document to the public in accordance with ADB's Access to Information Policy.

CURRENCY EQUIVALENTS (as of 21 August 2020)

Currency unit – kyat/s (MK) MK1.00 = $0.00073 $1.00 = MK1,360.99

ABBREVIATIONS

ADB – Asian Development Bank COVID-19 – coronavirus disease EDWS – Engineering Department (Water and Sanitation) GDP – gross domestic product IEE – initial environmental examination JICA – Japan International Cooperation Agency MOALI – Ministry of Agriculture, Livestock and Irrigation O&M – operation and maintenance PAM – project administration manual ROW – right-of-way SUDP – Strategic Urban Development Plan WRWSA – Water Resources and Water Supply Authority WTP – water treatment plant YCDC – Yangon City Development Committee YRG – Yangon Region Government

WEIGHTS AND MEASURES

km – kilometer km2 – square kilometers m – meter MLD – million liters per day

NOTES

(i) The fiscal year (FY) of the Government of Myanmar and its agencies ends on 30 September. “FY” before a calendar year denotes the year in which the fiscal year ends, e.g., FY2019 ends on 30 September 2019.

(ii) In this report, “$” refers to United States dollars.

Vice-President Ahmed M. Saeed, Operations 2 Director General Ramesh Subramaniam, Southeast Asia Department (SERD) Directors Vijay Padmanabhan, Urban Development and Water Division (SEUW), SERD Newin Sinsiri, Myanmar Resident Mission (MYRM), SERD

Team leaders Alan Baird, Principal Urban Development Specialist, SEUW, SERD Kyaw Thu, Infrastructure Specialist, MYRM, SERD Team members Meenakshi Ajmera, Principal Safeguards Specialist, Office of the Director General (SEOD), SERD Maricar Barrogo, Associate Project Officer, SEUW, SERD Stephane Bessadi, Senior Procurement Specialist, Procurement Division 2 (PFP2), Procurement, Portfolio, and Financial Management Department (PPFD) Elizabeth Burges-Sims, Senior Social Development Specialist (Gender and Development), Human and Social Development Division, SERD Sorin Chung, Financial Management Specialist, SEUW, SERD Yukiko Ito, Senior Social Development Specialist, Social Development Thematic Group, Sustainable Development and Climate Change Department Chitoshi Izumi, Senior Procurement Specialist, PFP2, PPFD Shinsuke Kawazu, Principal Counsel, Office of the General Counsel Michael John Lacambacal, Senior Operations Assistant, SEUW, SERD Antoine Morel, Principal Environment Specialist, SEOD, SERD Nan Kham Syne, Safeguards Officer, MYRM, SERD Ryutaro Takaku, Principal Water Resources Specialist, Environment, Natural Resources and Agriculture Division, SERD Peer reviewer Jaemin Nam, Urban Development Specialist, Urban Development and Water Division, South Asia Department

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS

Page PROJECT AT A GLANCE MAP I. THE PROPOSAL 1 II. THE PROJECT 1 A. Rationale 1 B. Project Description 6 C. Value Added by ADB 7 D. Summary Cost Estimates and Financing Plan 7 E. Implementation Arrangements 8 III. DUE DILIGENCE 9 A. Technical 9 B. Economic Analysis 10 C. Sustainability 10 D. Governance 10 E. Poverty, Social and Gender 11 F. Safeguards 11 G. Summary of Risk Assessment and Risk Management Plan 13 IV. ASSURANCES 14 V. RECOMMENDATION 14

APPENDIXES 1. Design and Monitoring Framework 15 2. List of Linked Documents 17

Project Classification Information Status: Complete

PROJECT AT A GLANCE

1. Basic Data Project Number: 52176-001 Project Name Yangon City Water Resilience Project Department/Division SERD/SEUW Country Republic of the Union of Myanmar Executing Agency Yangon Region Borrower Republic of the Union of Myanmar Government

Country Economic https://www.adb.org/Documents/LinkedDocs/ Indicators ?id=52176-001-CEI Portfolio at a Glance https://www.adb.org/Documents/LinkedDocs/ ?id=52176-001-PortAtaGlance

2. Sector Subsector(s) ADB Financing ($ million) Water and other urban Urban policy, institutional and capacity development 9.00 infrastructure and services Urban water supply 171.00 Total 180.00 3. Operational Priorities Climate Change Information Addressing remaining poverty and reducing inequalities GHG reductions (tons per annum) 0 Tackling climate change, building climate and disaster resilience, and Climate Change impact on the Low enhancing environmental sustainability Project Making cities more livable Strengthening governance and institutional capacity ADB Financing Adaptation ($ million) 0.50 Mitigation ($ million) 4.00

Cofinancing Adaptation ($ million) 0.00 Mitigation ($ million) 0.00 Sustainable Development Goals Gender Equity and Mainstreaming SDG 1.5, 1.a No gender elements (NGE) SDG 6.1 SDG 10.3 Poverty Targeting SDG 11.7 General Intervention on Poverty SDG 13.a

4. Risk Categorization: Complex . 5. Safeguard Categorization Environment: B Involuntary Resettlement: A Indigenous Peoples: C

. 6. Financing Modality and Sources Amount ($ million) ADB 180.00 Sovereign Project (Concessional Loan): Ordinary capital resources 180.00 Cofinancing 0.00 None 0.00 Counterpart 16.00 Government 16.00 Total 196.00

Currency of ADB Financing: US Dollar

Source: Asian Development Bank This document must only be generated in eOps. 24082020182319074354 Generated Date: 08-Sep-2020 8:25:39 AM 94o 00’E 100 o 00’E

MYANMAR YANGON CITY WATER RESILIENCE PROJECT

o o 24 00’N 24 00’N

NAY PYI TAW

PProjectroject AreaArea

Bago Region o o 14 00’N 14 00’N

Ngamoeyeik Reservoir

94 o 00’E 100 o 00’E Taik Kyi

Yangon Region National Capital Pipeline Route River Nyaungnhapin Water Treatment Plant Region/State Boundary Hlegu International Boundary Boundaries are not necessarily authoritative.

Htantabin Mingaladon

Shwepyithar Dagon Ayeyarwaddy Region Myothit Insein Khayan Hlaingtharya Yangon City Hlaing

Thanlyin

Twantay Dala

Kawhmu

Kungyangon 0 5 10

Kilometers This map was produced by the cartography unit of the Asian Development Bank. The boundaries, colors, denominations, and any other information shown on this map do Gulf of Martaban not imply, on the part of the Asian Development Bank, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries, colors, denominations, or information. - MYA AV

I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on a proposed loan to the Republic of the Union of Myanmar for the Yangon City Water Resilience Project.

2. The project will address critical water infrastructure needs associated with bulk water supply in Yangon City given the significant underinvestment for decades. It will support the government’s strategies to make its cities more livable by providing better and more widespread water services and reinforcing water security. The project will (i) construct new water transmission infrastructure from the existing Ngamoeyeik reservoir to the existing Nyaungnhapin water treatment plant (WTP), including an intake structure, a pumping station, and a bulk water conveyance pipeline of about 34 kilometers (km) in length, to transfer about 818 million liters per day (MLD) of bulk water; and (ii) strengthen institutional capacity of the Yangon City Development Committee (YCDC) to operate and manage water services to reinforce the city’s water supply. The project will directly benefit about 800,000 people. While the project was envisioned well before the coronavirus disease (COVID-19) pandemic, it will make significant contributions to the pandemic response by improving overall health and hygiene of the population of Yangon City.

II. THE PROJECT

A. Rationale

3. Macroeconomic context. Myanmar is the largest country in mainland Southeast Asia with an area of 676,577 square kilometers (km2)1 and a population of 54.05 million.2 It comprises 15 states and regions with a total of 330 townships. About 30% of the population live in urban areas and the rest live in rural areas. In 2019, agriculture accounted for 21.3% of gross domestic product (GDP) value added, industry contributed 38.0%, and services 40.7%.3 Urban areas generate a disproportionate share of the value added, but there is a massive investment gap in the development of water and other urban infrastructure (footnote 1).

4. Yangon Region comprises 45 townships with a population of about 7.36 million and an area of 10,170 km2. Yangon City, the principal economic hub of Myanmar and the capital of Yangon Region is made up of 33 townships and contains a population of about 5.20 million spread over an area of 895 km2. Yangon City’s municipal services are managed by the YCDC.4

5. As the country’s largest city, Yangon represents about 10% of the national population and 35% of the country’s urban population, with contribution to Myanmar’s GDP at about 23%.5 Yangon City’s population grew at 2.20% annually between 2014 and 2019, more than three times faster than the country’s total annual population growth of 0.67% during the same period (footnote 2). There is also a transitory population of about 400,000 living in and around the city’s industrial areas.6

6. Sources of bulk water. The YCDC supplies about 932 MLD of water to its customers, 90% of which is drawn from surface water sources. About 614 MLD of the total supply is from the

1 ADB. 2017. Urban Development and Water Sector Assessment, Strategy and Roadmap, Myanmar. Manila. 2 United Nations. 2019. World Population Prospects. New York. 3 Central Bank of Myanmar. 2019. Quarterly Financial Statistics Bulletin 2019, Volume II. Nay Pyi Taw. 4 The YCDC is a public entity in Yangon City, established in 1985 and operating in accordance with the Yangon City Municipal Law. Yangon Region Parliament. 2018. Yangon City Municipal Law. The YCDC’s mandate includes provision of certain public services, licensing, and collection of property and other taxes. 5 S. Fox and E. Verrucci. 2017. Estimating GDP Growth in Greater Yangon Using Nightlights Data. London. 6 Danish Institute for International Studies. 2017. Migration and Security Challenges in Yangon's Informal Settlements: The Case of Hlaing Thayar Township. Copenhagen.

Ngamoeyeik reservoir, supplied through the Ngamoeyeik canal to the Nyaungnhapin WTP.7 In all, the Ngamoeyeik reservoir supplies 1,304 MLD for irrigation purposes and 614 MLD for drinking water purposes, representing a combined flow of 1,918 MLD after accounting for evaporation and seepage losses in the open and unlined canal.

7. Water supply and scarcity. The YCDC serves all 33 townships of Yangon City, but in practice, each township’s water supply is highly variable. With losses reported to be at least 60% of the total supply—among the highest in Southeast Asia, less than half of the city’s population receive water through the YCDC’s piped system.8 Those who receive service from the YCDC can only expect an average water supply of 8 hours per day and experience frequent water supply interruptions, with water pressure often only adequate late at night. Those without any service rely on private wells and/or water vendors, which cause added cost and inconvenience. However, the heaviest burden is felt by the poor and vulnerable people and by women since inadequate provision of potable water is common in areas where the poor live and they are obliged to spend time to secure water for their basic needs.

8. Water quality. Aggravating the supply constraints, water supplied by the YCDC is not suitable for drinking. About a third of the total YCDC piped water supply receives no treatment at all, among the highest in Southeast Asia. The remaining supply is not properly treated at all times. Treated and untreated supplies are blended in the distribution network, which further reduces water quality to levels that pose a risk to human health.9 A very high percentage of water samples in Yangon City is found to be contaminated with thermotolerant (faecal) coliforms, with a potential to cause E. coli. Myanmar’s poor health outcomes also highlight the urgency of improving urban infrastructure, including for water supply. Between 2015 and 2020, Myanmar’s mortality rate of children under 5 years of age was second highest in Southeast Asia, and the incidence of water borne diseases is quite high.10

9. Water scarcity and impacts on personal hygiene during the COVID-19 pandemic. Yangon City is subject to periods of water scarcity during the dry season. Given the strong water- sanitation-hygiene linkage, any water shortage or deterioration in water quality will adversely impact personal hygiene of Yangon City’s communities, which could hamper efforts to battle the ongoing COVID-19 pandemic. YCDC’s plan to enhance water security and water quality for Yangon City is a practical response aligned with measures to arrest devastating health, social, and economic impacts of diseases including COVID-19.

7 The Nyaungnhapin WTP is Yangon City’s only large-scale conventional WTP, while the other YCDC facilities are small-scale plants and stations. To address capacity and operational constraints of the existing Nyaungnhapin WTP, the YCDC propose to refurbish and augment the WTP. This and other future projects by the YCDC will expand water distribution coverage across Yangon City and will be supported by development partners. 8 Government of Myanmar, Ministry of Immigration and Population. 2015. The 2014 Myanmar Population and Housing Census. Nay Pyi Taw. The 2014 Census showed that the water supply service coverage rate for Yangon City was 35%. The YCDC has indicated that this level has increased to 40%–50% by early 2020, but datasets are not yet available to substantiate this update. 9 According to the Myanmar Living Conditions Survey, 2017 of the United Nations Development Programme, almost 50% of Yangon City’s population relied on bottled water for their drinking water needs. 10 Statista. 2020. Infant mortality rates Southeast Asia 2015-2020 by country. https://www.statista.com/statistics/590013/. Only about 9% of the households in Yangon City have access to wastewater management services. About 43% of households have septic tanks, and the others discharge wastewater into local drains with no treatment, creating significant odor and public health issues. A wastewater treatment plant with capacity of 15 MLD constructed in 2005 currently receives only about 2.3 MLD of wastewater from the existing network (constructed in the 1880s). Septage collection is inadequate, because of an insufficient number of vacuum collection trucks. To address this lack of service by Yangon Region Government (YRG) and the YCDC, the Japan International Cooperation Agency (JICA) will finance the Yangon Sewerage System Development Project. The JICA loan was signed in January 2020.

10. Groundwater overreliance. By 2017, Yangon City had significant industrial activities, which placed further strain on the available water supply from the YCDC. As the YCDC is unable to fully serve industrial water customers, many factories use their own groundwater supply, which depletes groundwater resources, causing subsidence.11 In areas where the YCDC’s water service is inadequate or absent, household consumers also rely on groundwater from aquifers.

11. Impacts of groundwater depletion. Yangon City is situated on a delta, where the exhaustion of groundwater is compounded by sea level rise. Saltwater intrusion in tube wells in areas close to rivers and the sea is widespread, while the city’s geology, primarily meadow alluvium, is susceptible to sinking.12 This increases the risk of subsidence in some densely populated areas and inevitably exposes the urban poor, who live in dilapidated housing on marginal, flood-prone land, to the greatest risk. Yangon City’s dependence on groundwater must be significantly reduced to avoid outright loss of dwindling groundwater supplies.

12. Constraints in delivering bulk water to Yangon City. Bulk water from the Ngamoeyeik reservoir to Yangon City’s Nyaungnhapin WTP is currently conveyed through the 36.3 km Ngamoeyeik canal. The Ministry of Agriculture, Livestock and Irrigation (MOALI) owns the initial 25.4 km of the canal and shares this section with the YCDC, and the YCDC owns the remaining 10.9 km. MOALI provides water for irrigated agriculture for only 3 months of the year and performs maintenance on the canal outside of this 3-month period. MOALI may also perform emergency maintenance and repair works on the canal. Furthermore, as an open structure, the canal requires frequent maintenance which can be accommodated only during extended periods with no water service delivery. However, as the YCDC requires water 24 hours per day, 7 days a week, all year round, MOALI cannot suspend delivery of water to the YCDC. As a result, necessary refurbishments and repairs are deferred, or attempts are made to make repairs while the canal is in operation. The YCDC’s dependency on MOALI for water transmission, while unavoidable in the short-term due to the lack of any alternatives, prevents it from developing a sustainable, long- term solution for ensuring reliable water supply to Yangon City.

13. Need for secure and safe water transfer. The potential for intermittent bulk water supply combined with a lack of direct operational control of the overall length of the Ngamoeyeik canal by the YCDC presents an unacceptable risk to the water security of Yangon City. The substantial water loss due to evaporation and seepage in the open and unlined canal, coupled with ongoing bank deterioration, causes significant reduction in system resilience. Water safety cannot be assured if the open canal is exposed to surface water runoff including from industry, which is expanding to areas adjacent to the canal. Unsafe water transferred to the WTP will stress the treatment system and require higher treatment costs to supply potable water to Yangon City.

14. Climate impacts. Projected climate change and temperature increases will lead to higher evaporation rates. More frequent and stronger cyclones and more intense precipitation will increase surface water runoff, exacerbating efforts to control pollution in the canal.13 As the YCDC estimates the city’s water demand to be about 2,519 MLD by 2040, up from approximately 932 MLD in 2020, the overall resilience and robustness of the bulk water system will become even more critical.

15. Institutional arrangements. The YCDC is responsible for the delivery of water services in Yangon City. Prior to 2018, the YCDC’s Engineering Department (Water and Sanitation) (EDWS) undertook both the water supply and sanitation functions. Under the Yangon City Municipal Law enacted in June 2018, the newly created Water Resources and Water Supply

11 Government of the Netherlands. 2016. Industrial and Urban Water in Myanmar. Yangon. 12 T. van der Horst. 2017. Sinking Yangon. Master’s Thesis. Singapore: TU Delft and National University of Singapore. 13 ADB. 2018. Urban Infrastructure Improvement in Yangon City: Scoping Study. Manila.

Authority (WRWSA) has been designated to be responsible for the YCDC’s water supply and resources.14 The transfer of water supply functions from the EDWS to the WRWSA has been completed. However, YCDC’s capacity needs to be enhanced because the water sector challenges facing Yangon City require the YCDC to manage water resources and services as efficiently and prudently as possible. Building the capacity of the WRWSA and managing new institutional arrangements is an ongoing process and is a precondition for the delivery of improved and expanded water services.

16. Financial sustainability. The YCDC’s revenue comprises tax (31%), tariff (8%), and other income sources (61%) such as permits and licenses, and land and building rental. The YCDC receives no intergovernmental transfers, except a subsidy for capital investment. During FY2015-FY2019, the YCDC maintained an operating ratio of 0.5–0.6. However, forecasts show that the operating ratio will cross 1.0 by 2030 because the growth rate of operating expenses will exceed that of revenue by a considerable margin. Hence, it is critical to reinforce the revenue stream with efforts by both the YRG and the YCDC to undertake institutional reforms accompanied by a well-regulated tariff system and prudent financial management practices.

17. Sector strategy. With support from the Japan International Cooperation Agency (JICA), the Yangon Region Government (YRG) and the YCDC developed the Strategic Urban Development Plan (SUDP) of Greater Yangon, which was approved by the Parliament of Yangon Region in June 2015 and updated in 2018.15 The SUDP is the vision of the future structure of Yangon Region, including for Yangon City, and for other urban sub centers, greenbelts, and new towns. Building on this vision, the YCDC plans to expand reliable and safe water service to 86% of the Yangon City residents by 2040.16

18. As identified in the SUDP, the YCDC proposes to (i) develop water resources and water treatment capacity; (ii) establish effective transmission and distribution systems; (iii) improve water quality; (iv) reduce water losses; (v) improve billing and collection; and (vi) improve institutional and organizational capacity, and enhance human resources. Based on the SUDP, the YCDC has commenced a series of projects, including the Yangon Water Supply Improvement Project in 2015 with a phase I loan of $222 million from JICA. This will be followed by additional support from JICA and other development partners. The phased projects identified by the SUDP will bring additional supply, transfer, treatment, and distribution capacity to help meet Yangon City’s ambitious targets for water service coverage by 2040.

19. The project will enhance Yangon City’s water security, achieving benefits for all residents.17 This was a fundamental requirement before the emergence of COVID-19. The proposed project now has far greater urgency and importance as an essential part of the response to the COVID-19 pandemic and other future health emergencies. Access to safe and reliable drinking water complements access to adequate sanitation and good hygiene practices. Combining water supply, sanitation, and hygiene is a fundamental building block in delivering improved health outcomes, especially for the poor and vulnerable, and leads to wider socioeconomic benefits in addition to its impact on public health. The country requires significant

14 Under the YCDC, the WRWSA is responsible for finding new water resources; installing and maintaining bulk water transmission pipelines, distribution lines, and pumping stations; giving permission for new connections; prohibiting unsanitary supplies from public or private suppliers; managing the water standards periodically specified by the World Health Organization and relevant ministries; and leasing land required for water supply. The YCDC is responsible for imposing and managing tax and tariff collection. 15 YCDC and JICA. 2014. A Strategic Urban Development Plan of Greater Yangon. Yangon; and YCDC and JICA. 2018. The Updated Strategic Urban Development Plan of the Greater Yangon. Yangon. 16 The target of 86% assumes 24/7 water supply at a defined pressure. 17 The Cities Development Initiative for Asia conducted the project preparation from September 2018 to August 2019 through a technical assistance agreement with the YCDC.

investment in water and sanitation infrastructure to meet its targets under the Sustainable Development Goals (2030).

20. Alignment with ADB’s Strategy 2030. Table 1 summarizes the project’s alignment with the Asian Development Bank (ADB) Strategy 2030.18

Table 1: Alignment with Strategy 2030 Strategy 2030 Priority Project Interventions Tackling climate change, Addressing water scarcity exacerbated by effects of climate change by building climate and disaster promoting responsible and sustainable water management and resilience, and enhancing developing and enhancing resilience in systems and robustness in environmental sustainability operations Making cities more livable Developing solutions to help sustain a livable city through improved and resilient water supply services Strengthening governance and Improving governance and operational capacity of the YCDC to enhance institutional capacity delivery of improved water supply services Addressing remaining poverty Enhancing access to reliable and safe water, and reducing burdens on and reducing inequalities the poor and vulnerable, including women, imposed by service interruptions and intermittent supply YCDC = Yangon City Development Committee. Source: Asian Development Bank.

21. Other strategic alignments. The government has placed a high-level focus on the development of sustainable cities to achieve its overarching goal of inclusive and sustainable economic development.19 Equitable access to water and sanitation is a key component of the Myanmar Sustainable Development Plan, which also includes the development of additional water resources, enhanced management of water supply, and improved sanitation.20 The project supports government initiatives to make its infrastructure climate resilient and energy efficient.21 The project is also aligned with ADB’s country partnership strategy for Myanmar, 2017–2021 and country operations business plan, 2020–2022 that identify urban development as a priority area, with support for climate change responses and enhanced institutional capacity.22

22. Development coordination. The Agence Française de Développement (AFD) is preparing the feasibility study for the Hlawga Water Supply Project, which will include a new 205 MLD WTP. The raw water for this AFD project may be supplied via the new bulk water transmission system to be constructed under the project. The 818 MLD of water envisaged to be transferred under the project will supply 409 MLD to the existing Nyaungnhapin WTP. The YCDC is considering options to fully utilize the augmented water supply, including routing 205 MLD of the remaining 409 MLD to the Hlawga WTP under the AFD project and allocating the balance of 204 MLD to a future expansion of the Nyaungnhapin WTP. The project will also continue to build links with ongoing JICA-supported water supply and wastewater management improvement projects and programs which support capacity development in urban management and water

18 ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific. Manila. 19 Government of Myanmar. 2016. Economic Policy of the Union of Myanmar. Nay Pyi Taw. 20 Government of Myanmar, Ministry of Planning and Finance. 2018. Myanmar Sustainable Development Plan. Nay Pyi Taw. 21 The project is aligned with Myanmar’s Intended Nationally Determined Contributions under the United Nations Framework Convention on Climate Change. (Republic of the Union of Myanmar. 2015. Myanmar's Intended Nationally Determined Contribution-INDC. Nay Pyi Taw.) 22 ADB. 2017. Country Partnership Strategy: Myanmar, 2017–2021—Building the Foundations for Inclusive Growth. Manila; and ADB. 2019. Country Operations Business Plan: Myanmar, 2020–2022. Manila.

operations.23 ADB will continue its close coordination with the Urban Development Workstream under the Cooperation Partners Group mechanism.

23. Conflict sensitivity. There is no active conflict in Yangon City or the project area. However, the project is designed with an understanding of the country context. The project will benefit all communities in the townships where the YCDC provides piped water supply, in an inclusive and fair manner through access to secure water services. The project will minimize risks associated with conflict through meaningful stakeholder participation, including civil society engagement and an effective communication strategy.

B. Project Description

24. Impact and outcome. The project is aligned with the following impact: Yangon City’s urban resilience and livability enhanced.24 The project will have the following outcome: security of Yangon City’s water supply reinforced.25

25. Output 1: Bulk water transmission system constructed. The project will finance the construction of new facilities to transfer about 818 MLD of water to Yangon City, including (i) an intake structure at the Ngamoeyeik reservoir, (ii) an online pumping station 900 meters (m) downstream of the intake structure, and (iii) a 34 km pipeline of 2.4 m diameter from Ngamoeyeik reservoir to the Nyaungnhapin WTP.26 These interventions will secure and expand the existing water services and will complement the YCDC’s strategic plan by increasing the supply of raw water from the Ngamoeyeik reservoir to the Nyaungnhapin WTP by one third from 614 MLD to 818 MLD.

26. Output 2: Institutional sustainability strengthened. The project will strengthen the YCDC’s institutional sustainability to increase the reliability of its water services and by supporting its subsidiary water authority, the WRWSA. It will support capacity building of the YCDC in critical areas, such as water systems operational management and climate change responsiveness. The project will prepare a wide-ranging financial sustainability road map for the YCDC, including options for a new water tariff strategy. The project will also provide targeted support to build the YCDC’s self-financing capacity to meet the growing demands on its water service. The project will support the YCDC in optimizing its operating efficiency by expanding its metered water service and improving its collection efficiency and customer service.

27. Key lessons. The project preparation built on lessons from recent project design and implementation experience.27 The key lessons incorporated in the project include (i) upfront

23 In 2015, the YCDC commenced the JICA-financed Yangon Water Supply Improvement Project (phase I). Under the follow-on phase II (commenced in 2017), the first tranche of $232 million will help expand the YCDC’s water treatment capacity and improve its distribution networks. The second tranche of the phase II loan will be disbursed from 2020 and the third tranche from 2023, for a total of $398 million. 24 Government of Myanmar. 2016. Economic Policy of the Union of Myanmar. Nay Pyi Taw; Government of Myanmar, Ministry of Planning and Finance. 2018. Myanmar Sustainable Development Plan (2018–2030). Nay Pyi Taw; and YCDC and JICA. 2014. A Strategic Urban Development Plan of Greater Yangon. Yangon. 25 The design and monitoring framework is in Appendix 1. 26 Small-scale community-focused infrastructure will support communities affected by the construction of the project. 27 ADB. 2015. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Administration of Grant to the Republic of the Union of Myanmar for the Mandalay Urban Services Improvement Project. Manila. https://www.adb.org/projects/47127-002/main; and ADB. 2018. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Administration of Grant to the Republic of the Union of Myanmar for the Third Greater Mekong Subregion Corridor Towns Development Project. Manila. https://www.adb.org/projects/48175-002/main; and ADB. 2014. Grant Assistance Report: Proposed Administration of Grant to the Republic of the Union of Myanmar for the Pro-Poor Community Infrastructure and Basic Services. Manila. https://www.adb.org/projects/47187-001/main. Sufficient baseline information will be collected to avoid data shortfalls for project completion reporting.

capacity development of the YCDC on ADB policies and procedures to accelerate project start- up, (ii) streamlined procurement approaches that minimize the number of procurement packages to facilitate effective project implementation, and (iii) deploying early consultant support to build momentum and accelerate implementation.

C. Value Added by ADB

28. ADB’s ongoing operations (footnote 27) have been supporting the rehabilitation and development of urban infrastructure and services including water supply, wastewater management, solid waste management, tertiary roads, and urban planning and management capacity strengthening in major cities and secondary cities and towns. The project will directly complement the YCDC’s SUDP master plan for the Yangon Region (vision for 2040) by reinforcing bulk water supply to Yangon City (paras. 17–18). The project supports the ADB’s country partnership strategy for Myanmar, 2017–2021, to improve access to basic infrastructure and services, accelerate structural and institutional reforms in key sectors and provide tailor- made, innovative knowledge and technology solutions (para. 21). The project is also aligned with the YCDC’s phased approach in the water sector through various development partner-funded projects including by AFD, JICA and World Bank (para. 22). The project will also help Myanmar meet the relevant Sustainable Development Goals.

29. ADB’s comparative advantage in driving sector reform will be central in the support offered by the project as the YCDC seeks to build capacity in the WRWSA. ADB will provide the YCDC with targeted support in long-term planning and strengthening of the WRWSA. ADB will assist the YCDC by closing the large financing gap, which is a prerequisite for ensuring the city’s long-term water security. Adoption of information and communication technologies and other remote digital systems will deliver benefits in control and systems management. In addition, the project will bring international best practice on efficient operational management of a large-scale bulk water scheme using the emerging principles of smart water and big (cloud) data. Through the project, ADB will support transfer of best practices in water operations to other cities in Myanmar and specifically under ADB’s ongoing operations (footnote 27).

D. Summary Cost Estimates and Financing Plan

30. The project is estimated to cost $196 million (Table 2). Detailed cost estimates by expenditure category and by financier are included in the project administration manual (PAM).28

Table 2: Summary Cost Estimates ($ million) Item Amounta A. Base Costb 1. Bulk water transmission system constructed 153.12 2. Institutional sustainability strengthened 9.25 Subtotal (A) 162.37 B. Contingenciesc 27.92 C. Financing Charges During Implementationd 5.71 Total (A+B+C) 196.00 a Includes taxes and duties of $7.34 million to be financed by the Yangon City Development Committee through cash contribution and $0.22 million to be financed by the Asian Development Bank loan. b In mid-2019 prices. c Physical contingencies are computed at 10.8% for civil works, material, and equipment; and 10.0% for all other categories. Price contingencies are computed at 1.5%–1.6% on foreign exchange costs and 6.5%–8.0% on local currency costs; this includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

28 Project Administration Manual (accessible from the list of linked documents in Appendix 2).

d Interest during construction for the Asian Development Bank loan is 1% per year and will be paid in cash by the Yangon City Development Committee. There are no commitment charges. Source: Asian Development Bank estimates.

31. The government has requested a concessional loan of $180 million from ADB’s ordinary capital resources to help finance the project. The loan will have a 32-year term, including a grace period of 8 years; an interest rate of 1.0% per year during the grace period and 1.5% per year thereafter; and such other terms and conditions set forth in the draft loan agreement. The borrower will be the Republic of the Union of Myanmar, which will relend the loan proceeds to the YCDC. Relending will carry the same terms and conditions as the ADB loan. The YCDC will bear the foreign exchange and interest rate variation risks.

32. The summary financing plan is in Table 3. ADB will finance the expenditures in relation to works, goods, and consulting services. The YCDC will provide for the cost of resettlement, interest during construction, taxes and duties, and contingency.

Table 3: Summary Financing Plan Amount Share of Total Source ($ million) (%) Asian Development Bank Ordinary capital resources (concessional loan) 180.00 91.84 Yangon City Development Committee 16.00 8.16 Total 196.00 100.00 Source: Asian Development Bank estimates.

33. Climate mitigation is estimated to cost $4 million and climate adaptation is estimated to cost $500,000. ADB will finance 100% of mitigation and adaptation costs.29

E. Implementation Arrangements

34. The implementation arrangements are summarized in Table 4 and described in detail in the PAM. Table 4: Implementation Arrangements Aspects Arrangements Implementation period December 2020–December 2025 Estimated completion date 31 December 2025 Estimated loan closing date 30 June 2026 Management (i) Oversight body Project coordination committee Chair: Mayor of Yangon Citya Members: Representatives from Ministry of Agriculture, Livestock and Irrigation; Ministry of Construction; Ministry of Electricity and Energy; Ministry of Natural Resources and Environmental Conservation; Ministry of Office of the Union Government; and Yangon Electricity Supply Corporation (ii) Executing agency Yangon Region Government (iii) Key implementing agency YCDC (iv) Implementation unit Project management unit is established by YCDC Procurement Open competitive 1 contract $144.03 million bidding (internationally Bulk water supply advertised)

29 Climate Change Assessment (accessible from the list of linked documents in Appendix 2).

Aspects Arrangements Open competitive 1 contract $0.50 million bidding (nationally Firefighting equipment and advertised) materials Consulting services Quality- and cost- 1 contract $9.25 million based selection 200 person-months (international) 825 person-months (national) Advance contracting Expressions of interest for project management consultant recruitment will be invited after the approval of the project by the Union Parliament of Myanmar. Disbursement The loan proceeds will be disbursed following ADB's Loan Disbursement Handbook (2017, as amended from time to time) and detailed arrangements agreed upon between the government and ADB. ADB = Asian Development Bank, YCDC = Yangon City Development Committee. a The mayor of Yangon City is also the chair of the YCDC and the development affairs minister of the Yangon Region Government’s cabinet, facilitating a robust cross-agency linkage for decision-making and effective implementation. Source: Asian Development Bank.

III. DUE DILIGENCE

A. Technical

35. Transmission pipeline alignment. Several routes for the pipeline from the reservoir to the WTP were investigated, including a canal route, a road route, a mixed road–canal route, and a cross-country route. Based on a comparative assessment, the road route was preferred because of its reliance on an established right-of-way (ROW); ease of construction, access, and operation and maintenance (O&M); lower safeguard impacts; and cost efficiency. The initial part of the ROW is in favor of the YCDC, and the remaining section is vested in the Ministry of Construction.30

36. Construction considerations. To minimize the width and depth of the trench, moderate the social and environmental impacts, and reduce the initial investment costs, an intermediate pumping station is proposed. The adoption of the pumping station will reduce the pipeline’s internal diameter by 0.5 m, from about 2.9 m to 2.4 m, and decrease the necessary excavation depth by about 1.5 m.

37. Safe working under COVID-19 conditions. The impact of the COVID-19 disease is evolving. The implementation of the project will be responsive and flexible in meeting emerging needs and new best practice in construction and water utility management. The YCDC, the project management consultant, and the contractor will incorporate emerging international construction best practice on implementation methodologies for managing COVID-19 risk, vital for work in deep trench and other confined spaces where the risk of transmission is high. Such practices will also consider the government’s guidance on safe working in COVID-19 conditions.

38. Operation and maintenance. The project’s bulk water transmission system will be operated using a combination of gravity and pumping mains. Treatment of the water will be undertaken downstream of the system by the YCDC. On completion of the project, the YCDC will be responsible for O&M. Support will be provided to the YCDC during implementation of the project to develop operational guidelines to manage the system including the need for planned

30 The YCDC has obtained permission from the Ministry of Construction to construct, operate, and maintain the project’s facilities within the Ministry of Construction’s ROW.

physical inspections and/or related work. In accordance with water industry good practice, the design of the project will limit the need for physical inspections by the YCDC during O&M. The lessons learned from the project under COVID-19 conditions will be collated in an O&M manual to document best practices and synthesize approaches for O&M for future health emergencies.

39. Climate change considerations. The water balance study conducted with support from the Urban Climate Change Resilience Trust Fund confirmed that, under climate change conditions and continued urban growth, no water shortage is anticipated at the Ngamoeyeik reservoir because of the project. The project’s water demand from the reservoir will have no adverse impact on MOALI operations.31 The pumping station has been designed with high-efficiency pumps, which will minimize power consumption. The project design will protect project-related key equipment and structures which may be vulnerable to potential damage from erosion and/or flooding.

B. Economic Analysis

40. Economic analysis was conducted to evaluate the economic viability of the project. The results of the economic cost–benefit analysis show that the project is economically viable. The economic net present value is MK19.2 billion ($12.7 million) based on a discount rate of 9%, and the economic internal rate of return is 10%, which exceeds the economic opportunity cost of 9%. The project’s economic viability would increase if unquantifiable economic benefits from better health of the population and improved environmental conditions are considered.

C. Sustainability

41. The project is nonrevenue-generating and the financial analysis indicated that the project is unlikely to be financially viable in the medium- to long-term under the current revenue stream. To ensure financial sustainability, the project will support an operation efficiency optimization program that includes expanding the metered water service, enhancing collection efficiency, and improving customer service. The YRG has obliged the YCDC to explore all practical means to put itself on a path to financial sustainability using its powers to raise tariffs under the Yangon City Municipal Law. Hence, the YCDC will engage in a phased, economically and socially acceptable tariff reform program, coupled with a long-term plan for service coverage expansion. A financial sustainability road map to be developed under the project will contain a new water tariff structure informed by socioeconomic survey outcomes and JICA’s support to the YCDC on financial management. The YRG will guarantee budget transfers to the YCDC to cover any project related O&M shortfall.32

D. Governance

42. Financial management assessment. The pre-mitigation financial management risk is considered substantial because of the weak capacity of the YCDC’s staff to manage ADB funds, deficiencies in the coverage and timeliness of external project audit, structural weakness of internal audit system, suboptimal record-keeping, and inconsistencies because of a lack of a robust financial management information system. The project includes the following risk mitigation measures: (i) provision of focused and demand-driven training on ADB financial management requirements and loan disbursement procedures, (ii) ADB’s endorsement of the terms of

31 Financed by the Urban Climate Change Resilience Trust Fund under the Urban Financing Partnership Facility and administered by ADB. 32 Yangon Region Parliament. 2018. Yangon City Municipal Law. The Yangon City Municipal Law establishes the institutional relationship between the YCDC and the YRG and stipulates that the YCDC operates under the Yangon Region’s Budget Law, which is administered by the YRG.

reference for the external auditor to ensure the quality of external audit of project financial statements, (iii) provision of a capacity-building program to strengthen the internal audit capacity, and (iv) adoption of a robust financial management information system.

43. The YCDC operates under Yangon Region’s Budget Law, but raises its own revenues by collecting fees, tariffs, and taxes in accordance with the Yangon City Municipal Law. At the end of each fiscal year, the YCDC is required to prepare annual financial statements in accordance with the Myanmar Accounting Standards, which are audited by the Yangon Region auditor general in accordance with the Yangon City Municipal Law and submitted to the YRG for confirmation of its funds and operations by the YRG. The project will ensure that the YCDC and/or the YRG make sufficient funds available for long-term O&M of the facilities constructed under the project.

44. Procurement capacity assessments. The procurement risk is rated high. The strategic procurement planning assessed procurement risks and identified optimal procurement packages to mitigate such risks given the capacity constraints within the YCDC. Procurement is streamlined under two main packages—a consulting contract for preparation of detailed design and construction supervision and a large civil works contract that includes capacity building of the YCDC in O&M of the facility after completion. The single-responsibility civil works contract will help deliver value for money as it minimizes interfaces and organizational complexity, allowing for more efficient delivery. The appointment of one contractor responsible for procurement of the pipeline will further drive value for money by bringing economies of scale in the manufacturing of the pipes.

45. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the government, the YRG, and the YCDC. The specific policy requirements and supplementary measures are described in the PAM.

E. Poverty, Social and Gender

46. Poverty targeting. The project is classified as a general intervention for poverty targeting because it will construct a bulk water transmission system to improve urban resilience. Improved services will contribute to making the city more productive and increasing economic opportunities for people, leading to poverty reduction. The project will directly benefit 800,000 people in the YCDC service area. The project’s civil works contract will give people in the project area an opportunity to work as part of the labor force, particularly in the numerous unskilled jobs.

47. Gender features. The project is categorized no gender elements. Due to the nature of the project, which focuses on bulk water supply infrastructure, it is unlikely to directly improve women’s access to services and opportunities. However, through the project, the YCDC will ensure that its consultations, communications, and customer satisfaction surveys are gender- sensitive. The YCDC will also enhance the skills of female staff by ensuring high levels of representation in project management, procurement, and financial management activities, and in capacity building on improving water management, climate change responsiveness, and operation of the project facilities. The project will not disadvantage women in any way and the outcome of the project is fully inclusive and everyone in society will benefit equally.

F. Safeguards

48. In compliance with ADB’s Safeguard Policy Statement (2009), the project’s safeguard categories are as follows.

49. Environment (category B). The project has been classified as category B, requiring an initial environmental examination (IEE).33 The IEE report has been prepared in accordance with requirements of ADB’s Safeguard Policy Statement and the Myanmar Environmental Impact Assessment Procedure (2015). The IEE concluded that the project will have positive benefits through improvements in water security and in water quality at the Nyaungnhapin WTP. Anticipated adverse impacts during construction are temporary and localized and will be mitigated and monitored through measures defined in the environmental management plan (EMP).34 The YCDC, through its project management unit, will be responsible for implementing and monitoring the EMP, and has committed to provide adequate environmental management capacity. Assuming that measures in the EMP are effectively implemented, the project is not expected to have a significant adverse environmental impact.

50. Involuntary resettlement (category A). The project will not involve acquisition of any privately owned lands, as the pipeline will be constructed using the existing ROW held by the Ministry of Construction and the YCDC. During project preparation, various encroachments were identified along the ROW. Some of these structures will be affected entirely and some will be impacted partially. The total number of project-affected households is 226 with 918 affected persons. Of these affected households, 142 are considered vulnerable, and 99 of these 142 are considered severely affected. All 142 affected households are eligible for additional financial assistance, will be supported under a livelihood and income restoration program, and will be given preference for project-related employment during construction.

51. Resettlement plan. The draft resettlement plan has been developed in accordance with national regulations and ADB’s Safeguard Policy Statement. It includes provision for compensation for all assets at replacement value, additional assistance, and resettlement and rehabilitation measures for affected persons, including vulnerable households and those without legal title to the land.35 The project will assist in relocating the permanently affected households along the same ROW, where feasible, after due compensation.

52. The draft resettlement plan was disclosed on ADB’s website on 19 March 2020. The draft resettlement plan will be finalized, and the cost estimates will be updated, during detailed design. The YCDC has limited experience and capacity to manage involuntary resettlement, and they will receive training and other support.36 The YCDC will engage an external monitor to oversee the implementation of the resettlement plan. A corrective action plan will be prepared to rectify any noncompliance.

53. Indigenous peoples (category C). Ethnic groups represent only 2% of the surveyed population. The project will have no direct or indirect impacts on these ethnic households. These ethnic households have migrated to Yangon City from other regions of Myanmar. Nonetheless, the resettlement plan provides for additional assistance, so that any unforeseen impacts on ethnic households can be mitigated during detailed design.

54. Consultation, communication, and grievance redress mechanism. Meaningful consultations with affected persons have been undertaken by the YCDC during project preparation, and this will continue during project implementation with the participation of affected

33 Initial Environmental Examination (accessible from the list of linked documents in Appendix 2). 34 During construction, there will be localized temporary adverse impacts caused by excavation, tunneling, and pipe- laying works, including ground surface disturbance, increased dust and noise levels, occupational and community health and safety risks, temporary traffic disturbance, and spoil disposal. 35 An indicative budget provision of $1.25 million has been made for implementation of the resettlement plan. 36 Training on ADB's Safeguard Policy Statement to build stakeholder capacity will be provided by the project management consultant.

13 persons. A stakeholder analysis, participation plan, and communication strategy have been prepared by the YCDC, and a gender-inclusive grievance redress mechanism has been developed to address concerns, complaints, and grievances during project implementation.

G. Summary of Risk Assessment and Risk Management Plan

55. Significant risks and mitigating measures are summarized in Table 5 and described in detail in the risk assessment and risk management plan.37

Table 5: Summary of Risks and Mitigating Measures Risks Mitigation Measures The YCDC and/or the YRG fail to secure The assurances from the relevant authorities will be timely and legally enforceable formalized as loan covenants, and ADB will assist the commitments from the relevant YCDC to the extent practicable in negotiations with the authorities for on-demand water relevant authorities. allocation, provision of power supplies, and access to right-of-way. The YCDC has no experience with ADB The number of procurement packages will be minimized, procurement procedures. and an open competitive bidding process will be adopted. The project management consultant will include procurement specialists experienced in ADB’s procurement procedures. Procurement training will be provided while developing the strategy road map for the YCDC on planning and operational management. The YCDC’s approach to compensation ADB has discussed its Safeguard Policy Statement (2009) payment, support, and resettlement of requirements with the YCDC, and the draft resettlement affected persons leads to noncompliance plan prepared complies with ADB’s Safeguard Policy with ADB policies and procedures; and Statement requirement. ADB has sensitized the YCDC on delays in allocation of funds for the requirements of resettlement costs as part of its implementation of the resettlement plan responsibilities. lead to construction delay. The YCDC’s revenue is insufficient to The loan agreement includes the YRG’s guarantee of cover the O&M of new infrastructure and budget allocation, subsidy, fiscal transfer, or any other repay the loan through the YRG. Also, financial support to the YCDC to cover any shortfall. A the YRG’s capacity for the YCDC budget socioeconomic survey will inform the financial sustainability support is not confirmed and, hence, road map for the YCDC, which will include financial arrangements may be recommendations on the water tariff. unsustainable. The YCDC staff has weak capacity to Develop a project-specific financial management manual manage project funds and comply with for the project management unit and provide financial ADB’s financial reporting requirements. management training to YCDC staff. Placement of the Internal Audit Division Provide a capacity-building program to strengthen the under the Budget and Accounts internal audit function. Department creates structural weaknesses in the YCDC’s internal audit system. The coverage and timeliness of the ADB-endorsed audit terms of reference, scope, and Yangon Region auditor general’s project requirement will be shared with the Yangon Region auditor audit are deficient. general in advance for the project financial statement audit. The MS Excel-based accounting system The project will support the installation of financial in use in the YCDC leads to improper management information system software and training in record-keeping and mistakes. its use. COVID-19 impacts adversely on the The contractor will maintain vigilance in the management of contractor’s workforce, subcontractors, COVID-19 health risks in all siteworks to allow for a safe

37 Risk Assessment and Risk Management Plan (accessible from the list of linked documents in Appendix 2).

Risks Mitigation Measures suppliers, consultants, government and working environment, including in adjacent areas used by ADB staff, and general public the general public. Health and safety protocols will be (particularly vulnerable people). enforced for working in trenches and other confined spaces. The technical capability of the YCDC is The YCDC staff will be trained in O&M through formal insufficient to operate and maintain the programs and on-the-job training. The YCDC will ensure new water supply facilities. that adequate numbers of suitable staff are assigned to O&M. ADB = Asian Development Bank, COVID-19 = coronavirus disease, O&M = operation and maintenance, YCDC = Yangon City Development Committee, YRG = Yangon Region Government. Source: Asian Development Bank.

IV. ASSURANCES

56. The government and the YRG have assured ADB that implementation of the project shall conform to all applicable ADB requirements, including those concerning anticorruption measures, safeguards, gender, procurement, consulting services, financial management, and disbursement as described in detail in the PAM and loan documents.

57. The government and the YRG have agreed with ADB on certain covenants for the project, which are set forth in the draft loan agreement and project agreement.

V. RECOMMENDATION

58. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Asian Development Bank (ADB) and recommend that the Board approve the loan of $180,000,000 to the Republic of the Union of Myanmar for the Yangon City Water Resilience Project, from ADB’s ordinary capital resources, in concessional terms, with an interest charge at the rate of 1.0% per year during the grace period and 1.5% per year thereafter; for a term of 32 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft loan and project agreements presented to the Board.

Masatsugu Asakawa President 7 September 2020

Appendix 1 15

DESIGN AND MONITORING FRAMEWORK

Impacts the Project is Aligned with Yangon City’s urban resilience and livability enhanced (Economic Policy of the Union of Myanmar, Myanmar Sustainable Development Plan, and Strategic Urban Development Plan of Greater Yangon)a

Performance Indicators with Data Sources and Results Chain Targets and Baselines Reporting Mechanisms Risks Outcome By 2026:

Security of Yangon a. Bulk water available 24 a. YCDC and MOALI YCDC has insufficient City’s water supply hours per day, 7 days a week annual reports, YCDC and technical capability to reinforced at Nyaungnhapin water MOALI operational data, operate and maintain treatment plant from project completion report new water supply Ngamoeyeik reservoir via facilities. dedicated conveyance system, free from pollution and subject to insignificant losses (2019 baseline: NA)

b. Integrated urban water b. Training records, PMC management capacity of YCDC reports, YCDC annual enhanced (2019 baseline: NA) reports, project progress reports from YCDC, plans and other reports; project completion report Outputs By 2025:

1. Bulk water 1a. Intake structure with about 1a–c. YCDC and MOALI YCDC and/or Yangon transmission system 818 MLD capacity constructed annual reports, operational Region Government constructed (2019 baseline: NA) (OP 4.1.2) data, project progress fails to secure timely report from PMC, project and legally 1b. Bulk conveyance pipeline completion report enforceable with about 818 MLD capacity commitments from the from Ngamoeyeik reservoir to relevant authorities for Nyaungnhapin water treatment on-demand no- plant constructed (2019 restriction water baseline: NA) (OP 4.1.2) allocation, provision of power supplies, and 1c. Pumping station with about access to right-of-way. 818 MLD capacity constructed (2019 baseline: NA) (OP 4.1.2)

2. Institutional 2a. Strategy road map for 2a–b. YCDC operational YCDC staff has weak sustainability YCDC developed to define data, YCDC annual capacity to manage strengthened planning and operational reports, project progress ADB funds and management processes for report from YCDC, comply with ADB’s WRWSA (2019 baseline: NA) benchmarking reports by financial reporting (OP 4.2.1) WRWSA, project requirements. completion report 2b. Financial sustainability road map for YCDC developed to enhance financial sustainability of water services (2019 baseline: NA) (OP 4.2.2)

2c. At least 150 government 2c. Training records, staff (including at least 50 YCDC annual reports, women) report increased project progress reports knowledge on water system from YCDC, annual operational management,

16 Appendix 1

Performance Indicators with Data Sources and Results Chain Targets and Baselines Reporting Mechanisms Risks business continuity responses reports by WRWSA, to shocks and stresses arising project completion report from unforeseen events (e.g., public health emergencies, including COVID-19), community-based hygiene and WASH promotion, and climate change responsiveness to strengthen reliability of YCDC water services (2019 baseline: NA) (OP 4.2.2)

Key Activities with Milestones 1. Bulk water transmission system constructed 1.1 Commence detailed engineering design and preparation of bidding documents by Q1 2021. 1.2 Complete civil works by Q4 2025. 2. Institutional sustainability strengthened 2.1 Develop strategy road map for YCDC (and training) by Q4 2024. 2.2 Develop financial sustainability road map for YCDC (and training) by Q4 2024. 2.3 Develop guidelines on climate change responsiveness for YCDC (and training) by Q4 2024. 2.4 Develop guidelines on water system operational management (and training) by Q4 2024. 2.5 Develop gender-sensitive training programs and materials for items 2.1–2.4 by Q2 2022. Project Management Activities Establish project management unit by Q3 2020. Commence recruitment of PMC by Q3 2020. Appoint PMC by Q1 2021. Commence procurement of civil works by Q3 2021. Award civil works contract by Q2 2022. Procure and award goods contract by Q1 2023. Manage capacity-building activities until Q4 2024. Manage construction contracts until Q4 2025. Provide timely progress reports until Q2 2026. Inputs Asian Development Bank: $180 million (loan) Government of Myanmar: $16 million Assumptions for Partner Financing Not applicable ADB = Asian Development Bank; COVID-19 = coronavirus disease; MLD = million liters per day; MOALI = Ministry of Agriculture, Livestock and Irrigation; NA = not applicable; OP = operational priority; PMC = project management consultant; Q = quarter; WASH = water supply, sanitation and hygiene; WRWSA = Water Resources and Water Supply Authority; YCDC = Yangon City Development Committee. a Government of Myanmar. 2016. Economic Policy of the Union of Myanmar. Nay Pyi Taw; Government of Myanmar, Ministry of Planning and Finance. 2018. Myanmar Sustainable Development Plan (2018–2030). Nay Pyi Taw; and Yangon City Development Committee and Japan International Cooperation Agency. 2014. A Strategic Urban Development Plan of Greater Yangon. Yangon. Contribution to the Asian Development Bank Results Framework: OP 4.1.2: Urban infrastructure assets established or improved. Expected: 3 assets. OP 4.2.1: Measures to improve regulatory, legal, and institutional environment for better planning supported in implementation: Expected: Capacity development programs on project implementation, institutional development and awareness building, to be implemented through PMCs’ contract. OP 4.2.2: Measures to improve financial sustainability supported in implementation: Expected: Capacity development programs on financial management, to be implemented through PMCs’ contract. Source: Asian Development Bank.

Appendix 2 17

LIST OF LINKED DOCUMENTS http://www.adb.org/Documents/RRPs/?id=52176-001-3

1. Loan Agreement 2. Project Agreement 3. Sector Assessment (Summary): Water and Other Urban Infrastructure and Services 4. Project Administration Manual 5. Financial Analysis 6. Economic Analysis 7. Summary Poverty Reduction and Social Strategy 8. Risk Assessment and Risk Management Plan 9. Climate Change Assessment 10. Initial Environmental Examination 11. Resettlement Plan

Supplementary Document 12. Financial Management Assessment