Resettlement Policy Framework (RPF)

Azerbaijan Water Users Association Development Support Project (WUAP) Resettlement Policy Framework (RPF) December 29, 2010

I. Project Background

1. Azerbaijan is the largest and most populous (over 9 million people) country in the South Caucasus. Thanks to the oil and gas boom, Azerbaijan’s economy grew significantly in recent years with an average annual GDP growth rate of 24 percent in 2005-2008, with 12 percent growth in the non-oil sectors. As a result of the global economic recession, GDP growth after 2008 decreased to 9 percent - 3 percent in the non-oil sectors. Agriculture maintained a positive growth of 3.5 percent in 2009 in part due to government support during the global food price crisis. 2. The economic growth has significantly reduced poverty in the country but also resulted in greater income disparity. In 2008, some 13.2 percent of the Azerbaijani population was poor, compared to 50 percent in 2001 (based on the 2001 poverty line of AZM 120,000 per capita per month and World Bank methodology). Urban areas experienced a more rapid decline in poverty than rural areas with incidence of poverty declining from 55 percent in 2001 to 11 percent in 2008. Rural poverty declined from 42 percent in 2001 to 16 percent in 2008. About 51 percent of Azerbaijan’s poor live in rural areas, although rural areas accounts for only 45 percent of the total population. With limited oil and gas reserves, the Government’s main challenge and priority is to diversify the economy and reduce the economic dependence on the oil sector. 3. The agricultural sector is a key component of Azerbaijan’s non-oil economy with great potential for competing on the internal and external markets. While the agricultural sector accounts for only 6 percent of GDP, it provides income and employment for about 40 percent of the country’s workforce. In addition, the sector is seen as a priority by the Government of Azerbaijan (GoA) in the context of food security. 4. After experiencing a major decline during the transition period (1991-1995), the agricultural sector recovered and has been growing at an average annual rate of 6 percent. The combination of favourable natural conditions, combined with an established base for exports, creates many opportunities in the sector for growth, private sector investments and trade opportunities. However, a number of bottlenecks need to be resolved in order to materialize these opportunities. One of the most pressing constraints lies in the irrigation sub-sector. This includes an ongoing but incomplete irrigation reform agenda, exacerbated by a deteriorated irrigation and drainage (I&D) infrastructure, in particular on-farm I&D infrastructure. The core irrigation reform under way consists of irrigation management transfer of on-farm I&D systems to water users to enable technical and financial viability of the systems. 5. Since almost all agricultural lands are in (semi-) arid zones with annual precipitation of 200-300 mm, irrigation is the crucial input for reliable crop production for 85 percent of the agricultural output in the country. An irrigation command area of about 1.4 million ha is covered by 52,000 km of irrigation canals and 30,000 km of drainage collectors built during the Soviet times. In 2006 it was estimated that about 50 percent of the I&D infrastructure was not in the

1 condition to provide adequate water supply to the end users, and 630,000 ha was estimated to have poor drainage and subsequent soil salinization. 6. Over the last years, the GoA entity responsible for the I&D sector, the Amelioration and Irrigation Open Joint Stock Company (AIOJSC) has made great strides in improving the irrigation infrastructure, with related recurrent expenditures increasing from about US$ 6 million in year 2000 to about US$ 295 million in 2009. On the other hand, the increases in the recurrent budget have to a large extent been off-set by steep increases in unit costs for repairs and operations and maintenance (O&M), with price increases from year 2003 to 2009 for steel (300 percent); fuel (70 percent); cement (100 percent); and labor (300 percent). Under the State Program for Food Security (2008), expenditures are projected to increase further, to about US$ 850 million in 2013, primarily for upgrading the main system I&D infrastructure. 7. Estimated rehabilitation needs for on-farm irrigation and drainage are about US$ 900 million. AIOJSC current annual budget of US$ 255 million is mainly allocated to staff costs, repairs of main irrigation infrastructure, and operation of pumping stations. Limited funds are allocated to on-farm irrigation rehabilitation, drainage, and related maintenance. However, reliable on-farm irrigation is key to improve the agricultural sector competitiveness. Therefore, to start the process of upgrading on-farm I&D infrastructure the AIOJSC, with the support of the World Bank-financed Irrigation and Distribution System Management Improvement Project (IDSMIP, which closed September 30, 2010) registered and supported Water Users Associations (WUAs) all across the country. The vision is that with long-term AIOJSC support and upgrading of the systems, WUAs gradually will become self-governing organizations, with capacity to take responsibility for the on-farm I&D infrastructure, progressively more capable of levying WUA fees and paying Irrigation Service Fees (ISF) to AIOJSC, thus contributing to enhancing the competitiveness of the agricultural sector. Under IDSMIP, this approach was piloted successfully for 22 WUAs on 52,000 ha, and the GoA has now requested the World Bank to support a new project to expand this approach to a significantly larger area.

II. Project Objective

8. The Project Development Objective (PDO) of the Water Users Association Development Support Project is to improve the effectiveness and financial viability of on-farm irrigation water distribution and management in the project areas. The PDO would be achieved through capacity building and support to WUAs, WUA support units, and the AIOJSC, and through rehabilitation of on-farm I&D infrastructure. The target group would be irrigating farmers and WUAs in selected project areas, and AIOJSC. With a project envelope of about US$ 115 million, the project could support about 40 WUAs on 85,000 ha with rehabilitation, and about 379 WUAs and 760,000 farmers in 27 raions (districts) with targeted capacity building measures like equipment and training.

9. The project has three components targeting an expanded area: (i) Component 1: Institutional and WUA Capacity Strengthening financing a training and capacity support program to WUAs and RSUs in 27 raions, and institutional strengthening of AIOJSC; (ii) Component 2: On-farm Irrigation and Drainage Rehabilitation financing rehabilitation of on- farm I&D systems for about 34 WUAs in 15 raions which have been selected based on irrigated

2 area and agricultural production potential; and (iii) Component 3: Project Management which finances project management and implementation activities, and monitoring and evaluation.

III. Rationale, principles and objectives for preparing the Resettlement Policy Framework

10. All the projects implemented under the World Bank (WB) assistance are subject to careful scrutiny to ensure their environmental and social sustainability. The examination of the WUAP proposal identified that Operational Policy (OP) 4.12 on involuntary resettlement is triggered. The OP 4.12 of the WB is designed to include safeguards to address and mitigate social, environmental and economic risks caused by the involuntary resettlement under the WB financed development projects. OP 4.12 applies to all components and activities of the project that result in involuntary resettlement. In the given project, the following activities can cause a resettlement and/ or land acquisition:

 Potential permanent land acquisition by WUAs for small WUA offices  Potential permanent land acquisition by AIOJSC for offices for (Regional Support Centers)  During rehabilitation potential sporadic instances of removal and subsequent replacement of trees with an economic benefit, located on government and/ or private owned land along on-farm irrigation canals.  Temporary occupation/use of mostly government but at times private lands for machinery used during rehabilitation.

11. To address the impacts of the project activities, the OP 4.12 requires preparing a Resettlement Policy Framework. The RPF is a framing tool to guide principles, the policies, and follow right institutional arrangements in guiding involuntary resettlement and land acquisition. This framework will secure stakeholders from imparting negative social and economic effects on the persons affected by the project (PAP). It is expected that with the application of RPF provisions, and process, the negative impacts associated with the land requirements for the project will be addressed systematically. .

12. Under the unavailability of specific information on the land type, size and the exact location, of the land to be acquired, the Resettlement Policy Framework (RPF) has been prepared as a benchmark for the appraisal. The possible land acquisition is planned to be carried out according to the regulations of the Azerbaijani Republic law and World Bank Operational Policy (OP) 4.12 and Bank Procedures (BP) 4.12 on Involuntary Resettlement, defined by RPF.

Principles of Mitigating Land acquisition related impacts

13. This RPF is prepared keeping in view of the World Bank’s Operational policy- 4.12 principles on involuntary resettlement and these principles will be adhered during mitigation of the impacts. The principles that will apply to this project include: but not limited to:

3  The impacts associated with the land acquisition will be avoided wherever feasible or minimized by exploring all viable alternative designs;  All the affected people will be meaningfully consulted and provided with opportunities to participate in the planning and mitigation of impacts;  The compensation and assistance to the affected people will be provided at replacement costs and prior to taking over of their assets and as appropriate they will be assisted to improve or at least restore their living standard to the pre- project level;  Particular attention will be paid to assist the vulnerable among those affected people  All affected people irrespective of their legal tenure will be provided assistance and support during the transition period as needed and appropriate.

IV. Potential temporary and/or permanent social impact

14. The project envisions to make an investment in 9 raions of IDSMIP operation (Quba, Khachmaz, Sabirabad, Saatli, Imishli, Beylagan, Aghjabedi, Zardab, Goranboy,), 6 new raions (Gusar, Ismaili, Gabala, Balakan, Zagatala, Gakh) and additional 12 raions (Samukh, Shamkir, Hadjigabul, Salyan, Neftchala, Goychay, Aghsu, Kurdamir, Ucar, Bilasuvar Bardaç and Shamakhi) for Component 1 of the project. The project investments will be spent mainly on institutional and WUAs capacity strengthening and support, and rehabilitation of existing irrigation and drainage infrastructure within the command area of the WUAs but on the property balance sheet of the Government. A WUA as a self-governing community organization serves and represents interests of water users, such as farmers, landowners that receive water from a main canal or water resource maintained by the WUA. The WUA elects leaders, collect ISFs, maintains the irrigation and drainage system and handles disputes over the water management.

15. The achievement of the project objectives of irrigation and water distribution improvement (rehabilitation work on irrigation and drainage infrastructure and construction of RSC’s and WUAs offices) might involve minor temporary or permanent land acquisition and/ or removal of economically valuable trees which are currently owned by individuals. While the WUAs are managed by and accountable to their members, they should identify and select the location for their offices and the infrastructure to be rehabilitated, in consultation with all WUAs members. It is still not determined exactly whether the private or state land will be acquired, and if yes, on which locations. The land acquisition is planned for four Regional Support Centers’ (RSC) and around 200 WUA’s offices. At this point, no physical resettlement or infrastructure demolition is planned by the project. The area for one or two room offices (around 40-50 m2) will be selected by the WUAs, on the land plots which is currently not occupied and provided to them by local governments (municipalities). RSCs offices are planned to be located on the premises or the areas of the Raion Amelioration and Irrigation Departments.

16. The extensive rehabilitation and repair works (use of machinery and/ or location of temporary contractors’ camps on private or state land plots) under the project might have a temporary negative impact on farms and their agricultural production. Rehabilitation will only be

4 carried out on government-owned irrigation and drainage infrastructure like canals, structures and drains, within the command area of the WUAs. The Government ownership extends a radius of 15 meters from the infrastructure. In case if private land plots will be affected during the period of construction/ rehabilitation works the farmers/ landowners of these land plots will be compensated the cash value of crops lost and cost of deep-plowing of the impacted area afterwards.

17. During the rehabilitation potential sporadic instances of removal and subsequent replacement of trees with an economic benefit, located on government and/ or private owned land along on-farm irrigation canals might occur. The poplar trees grow at times along the embankment of canals, and mostly in the north-eastern raions of the country.

18. The temporary use of land will be minimized through screening of repair and rehabilitation options and continuous monitoring of the impact during the rehabilitation and construction phases. The infrastructure for rehabilitation and the construction schedule will be identified, approved and subsequently supervised by the WUA. The public consultations, social and environment assessments will clarify the exact features and locations of the RSC’s and WUAs’ offices. The clarification of the location of the land cites affected by the project, the legal status of these land cites and responsibilities and rights of the RSCs and WUAs participants using will be determined after final project design.

V. Land acquisition

19. Whether private or state land will be acquired or not is still not clear at this point of the project. About 110 m2 (0.01 ha) of land will be acquired for the raions where construction of offices are planned for Regional Support Centers. Only around 200 WUAs and 4 Regional Support Center offices need new space to be identified. The WUA office’s size is planned to be about 40-50m2, and for the RSCs it will constitute around 110 m2. 20. The Regional Support Center offices are planned to be built on the territory of the Rayon Amelioration and Irrigation departments in 4 regions (Saatli, Zardab, Guba, Gakh). In case if the Rayon Irrigation and Amelioration departments will not have a spare piece of land , the land plots will be identified and allocated by the local Executive power authorities together with local land and cartography departments. The Municipal land plots in each WUA village are planned to be provided for construction of WUAs offices. The WUAs need to ensure to have a prior agreement with the local Municipality on provision of land. It is also possible that the construction of small WUA offices could necessitate the acquisition of small parcels of private land. Illegal settlements occupying the planned sites will not be removed, but the site of the new office will be changed to the nearby location. VI. Legal framework / Laws in Azerbaijan and WB policy and regulations

21. Land issues, land acquisition, and compensation for property losses in the Azerbaijani legislation are regulated by the following documents:

1. The Land Code, 25 June 1999 2. The Civil Code, 1 December 1998

5 3. Cabinet of Ministers Resolution No. 42, 15 March 2000 4. Cabinet of Ministers Resolution No. 110, June 1999 5. Cabinet of Ministers Resolution No 54 (2009) - On confirmation of “Procedure of calculation of purchase price of property acquired for state needs”

All of these documents provide a firm basis to deal with the issues of land acquisition for public purpose, and for compensating land owners with legal titles.

22. Land Code (1999) is the most important document, regulating the rights and responsibilities of the land owners in the context of public land acquisition and involuntary resettlement. It recognizes the right of land owners with legal titles for compensation at market prices in the event their property is acquired for public intentions and, in the event of a disagreement, their right to appeal to the court for the resolution of this dispute. The acquiring party can also approach the law courts to legitimize the acquisition if the owner opposes the acquisition or to the amount of compensation. The Land Code also allows “land-for land” compensation. Where a pertinent local executive branch solves a land case, the decision shall come into force instantly and this decision cannot be stopped by the filing a complaint with the appropriate court. Article 70.5 of the Land Code stipulates reimbursement payment to the legally recognized possessors of the property in advance, i.e. in advance of the acquiring authority take over the possession of the purchased property. Articles 110 and 111 of the Land Code state that unauthorized occupation of land plots and unlawful construction on land plots constitute a violation of the land legislation. The articles stipulate that such land plots will be given back to the commensurate authorities without compensation of the operating costs incurred during the unlawful usage. Rehabilitation of the lands, where obligatory, should also be implemented by the unlawful occupants with their own resources.

23. Civil Code (1998) is also an important document, regulating land issues, ownership and usage of land. Registration certificate issued by the Real Estate Land Registry Service based on the cadastral information (survey numbers) obtained from the SLCC (State Land and Cartography Committee) where the land is located, establishes the legal ownership of the land and all of the rights that this ownership gives. District/Municipal authorities may issue provisional ownership certificates. However, according to the Civil Code all of the immovable property pieces should be registered in public agencies. The ownership of the immovable property and land can be terminated in cases, in which courts approve the intention to use those lands for public purposes.

24. Cabinet of Ministers Resolution No. 42 (2000). Sections I and II of this Resolution make it mandatory for the purchasing authority to reimburse the legal owners when their land is purchased for public use (whether temporary or permanent), and for the damages to their productive assets and crops. The resolution is important in outlining the formal steps for the obligatory purchase of land for state or municipal uses. To procure private land for state needs, the purchasing agent should obtain the consent of owners and of the local district executive powers. The land acquiring party (client) should be responsible for the provision of detailed maps, for consulting the owners and negotiating compensation prices, including cooperation to address all of the outstanding issues with the district/municipal authorities and the local Land and Cartography department (SLCC). The approval of the land acquisition emanates from the raion

6 branch of the local executive power. In case if the latter does not have proper jurisdiction to solve the situation, the land acquisition is approved by the SLCC at the highest level. The approval requires further endorsement from the Cabinet of Ministers. However, actual ownership transfer comes into force only after the client provides another set of documents confirming the details of the design of the proposed facility, availability of funds for the work and a guarantee of payment of the agreed compensation to the owners, lessees and users. When the agreement with the owner of the land cannot be achieved, only then recourse to compulsory land acquisition is taken. Such action requires approval of the relevant court of law.

25. Cabinet of Ministers Resolution No. 110 (1999). The Resolution No. 110 outlines measures for the purchase and valuation of building/immovable properties for public needs. It also refers to the Cabinet of Ministers Decree No. 158 that is to be used as the framing guide for the assessment of land.

26. Decree No 54 (4 April 2009).

Overall responsibility on land acquisition and economic and physical displacement lies on the State Committee on Property Issues (SCPI), according to the Cabinet of Ministers Resolution No 54, adopted in 2009. The decree regulates necessary procedures and processes that the Cabinet of Ministers refers to in identifying public needs, upon the submission of the required documents by private land acquiring party (i.e. Executive Agency) to the Cabinet of Ministers.

27. Compensation for lost assets and real properties may be granted either in cash or in-kind. Importantly, the Resolution also establishes a stipulation that the compensation for the acquired land should amount to market prices, the latter established by one of the following ways:

 Sale prices of the immovable assets in the corresponding administrative district over the preceding 90 days earlier than the census date or public pronouncement of the decision on immovable property purchase, whichever of them comes earlier;  Replacement value of the assets and land, if there have not been adequate numbers of immovable property deals in the project area to establish a just price for the land, or if land for land compensation is provided; or  In case sales price or replacement costs cannot be identified to establish a fair and real value of land, any price which is no less than the normative price of the corresponding plot.

28. In case the affected people need to be physically relocated and/ or alternative sources of livelihoods need to be established for them, the following should also be included into the compensation package of them:

 In case of acquisition of agricultural land, costs related to the preparation of lands for sowing, as well as any fees and taxes mandatory for the purchase and register new agricultural land.  Expenses connected with restoration of facilities such as utilities and connecting roads if such facilities are not provided by the expropriators.

7  If a person is obliged to be physically relocated or leave current jobs, transport and other expenses that result should be provided.  Income loss from agricultural or commercial activities will be compensated based on the income of the most recent year.  Any fees, taxes and duties required for the registration of new properties.  Building materials and other productive assets left for owners after the demolition of buildings;

29. In order to compensating damages resulting from the purchase of property, as well as lost income and loss connected with the pre-termination of commitments against third parties, the President Decree (2007) establishes that 20% additional compensation will be added to the market price of affected land.

VII. Gaps with World Bank's OP on Involuntary Resettlement and the mechanisms for bridging the gaps

30. Many of the crucial stipulations of the WB’s OP 4.12 are sheltered in full or in part by current Azerbaijani legislation.

These are the following:

• The obligation to provide compensation beforehand where land is compulsorily acquired (Cabinet of Ministers Resolution No 54; Land Code, article 70.5) • The requirement to reimburse based on full market price or through donation of another land plot or building of equal quality, size, and value (Cabinet of Ministers Resolution No 54; Land Code articles 8 and 70.5) • The need to evade, wherever likely, effects on agricultural land and forests (Cabinet of Ministers Decree No. 42, section I, article 2) • The obligation to compensate for losses, whether temporary or permanent, in output or damage to productive assets and crops (Cabinet of Ministers Decree No. 42, Sections I and II)

31. The following World Bank OP 4.12 requirements are not reflected in Azerbaijani law: o Land acquisition (and/or resettlement), preparation, and technical requirements o Public consultation and participation of project-affected communities o Amount of compensation and types of support to be accessible o Categories of citizens qualified for compensation o Income restitution o Support to all affected people irrespective of title to the affected properties; o Support during the transition period

Resettlement Preparation and Requirements

8 32. The Azerbaijani legislation does not require the preparation of formal Resettlement Action Plan (RAP), nor to address other important aspects of the resettlement like a census, socioeconomic survey, and consultation with project-affected people (PAP), monitoring, or reporting. The legislation also does not refer specifically to “involuntary resettlement.” Current legislation of the Azerbaijani Republic does not regulate or have inferences to community participation in the resettlement planning process and the requirement to improve or enhance project-affected people’s living standards and income and production levels.

33. Actions that will be undertaken under the project to guarantee the compliance with OP4.12 provisions such as:  Consultation on with PAPs to avoid the inclusion of infrastructure that might lead to land acquisition under the project-financed civil works.  Consultation with likely project-affected people on realistic actions for land acquisition if applicable  Outlining and executing a full public consultation strategy and disclosure plan prior to land acquisition process  Implementing a social screening for each subproject to discover the need for an RAP if appropriate;  Preparing RAP as appropriate to mitigate the impacts associated with the land acquisition. The RAP will describe the compensation and assistance based on the nature and magnitude of impacts ;  Informing PAP of their rights to help and clarifying this plainly, with supporting information and material, if suitable.

Public Consultation and Participation

34. OP 4.12 notes that PAP should be informed about their alternatives and rights dealing with to land acquisition “…consulted on, offered choices and provided prompt and effective compensation at full replacement.”(Clause 6 (i), (ii)). Currently there is no precise consultation prerequisites in the Azerbaijani law.

35. Steps that will be taken under the project to guarantee fulfillment of OP4.12 will embrace:  A public consultation gathering that will be implemented after social screening to (i) jointly with the WUAs and PAPs review the list of proposed infrastructure for rehabilitation and adapt the list to remove any infrastructure that might lead to land acquisition which might potentially have negative impact on PAPs; (ii) inform the PAPs of the essence of the project, anticipated result, entitlements for compensation, and steps for complaint redress  Disclosure of project environmental and social information as an essential part of the public consultation process, with information disclosed about both advantages and disadvantages of the project  Information plainly presented in suitable local languages and dialects and in ways that are of high importance to local communities  Information shared in places that are available to the public and that are readily reachable by PAP.

9 Compensation Eligibility

36. The categories types of citizens who must be compensated under Azerbaijan laws are narrower than those outlined under OP 4.12. Under the legislation, the only citizens and agents entitled to reimbursement are those with registered property rights, for example, registered landowners, leaseholders, users and those with registered third-party rights, and those who have legally achieved the right to register their title but who have not finished registration. This potentially prevents many types of affected citizens that would be eligible for reimbursement under WB Group policies. These categories of affected people that would be entitled to compensation under the WB polices include:

 Farmers who use land based on an informal agreement often with a relative or extended family member.  Owners who occupy land that was transferred by informal agreement from another owner.  Owners who have not registered a change in ownership following a family death, marriage annulment or similar situation.  Internally Displaced People (IDPs) (who have no rights to land).  People who make use of communal resources to which they have no formal title.  Informal dwellers.

Income Restitution

37. Some types of compensation fully or partly have been covered by the Degree No 54. WB OP 4.12 specifies special compensation is planned for all those people, who might lose income because of loss of land or annual crops or perennial crops/plants loss because of resettlement. In this case, the farmers will be compensated from the government counterpart funds. The special assessment will identify the amount of income loss in case of the loss of perennial crops/plants. In addition to compensation, suitable assistance will be extended to improve or at least restore their incomes to pre-impact levels.

List of ineligible activities

38. Any sub-projects or activities involving physical displacement of people, demolition of structure used for residence or livelihood purposes or acquisition of agricultural lands amounting to more than 10 percent of productive land owning or damages to cultural priorities., will be excluded from financing under this project. The social screening will confirm whether any of the above impacts are occurred or not.

Social Screening

39. The PIU with the help consultant on social issues/ resettlement specialist who is part of the team of the design and construction supervision technical assistance will undertake social screening for each civil works contracts prior to invitation of bids to screen the potential impacts related to land acquisition and resettlement. In addition the social screening will verify if any

10 non-title owners eligible for assistance/compensation. Based on the screening, an appropriate abbreviated Resettlement Action Plan will be prepared if required. The Resettlement Action Plan will describe the proposed compensation and assistance in line with the principals outlined in this RPF. The screening reports and RAP will be shared with World Bank for review and endorsement prior to invitation of bids for respective civil works contracts. Following the World Bank’s endorsements, appropriate approvals within the Government will be obtained for the RAP to secure necessary budget support for its implementation. The screening process includes the following steps: (i) The PIU the specialist on social issues together with the design team and WUAs will do a social screening of the sites prior to construction/ rehabilitation works. For this, they will visit potential sites. Sites without any PAPs will be selected, and if this is not feasible, (ii) the specialist on social issues and the WUA will make an inventory of encumbrances on the proposed site and will discuss these encumbrances with local possibly affected people; (iii) The WUA under supervision of the specialist on social issues and PIU will record all encumbrances in the screening format and will publish list of all affected people in the WUA offices for two weeks; ( iv). During these weeks, each WUA is responsible to conduct a public consultation meeting with affected person; (v) After the WUA will modify the list of infrastructure to be rehabilitated and the construction schedule based on comments during the consultation, and will prepare a protocol, which will be signed by each affected beneficiary ( vi). In case significant resettlement issues are foreseen, the WUA will not be eligible for funding of an office; (vii) In case of minor impacts, an abbreviated RAP will be prepared in line with the RPF provisions tomitiage the impacts and losses. Wherever, land acquisition impacts are triggred based on the social screening, abbreviated RAP will prepared in consultation with the affected people and the draft will be submitted to the World bank for prior review prior to invitation of bid for the respective civil works contract.

VIII. Institutional Framework

40. The WUAP will be implemented by the PIU/ Amelioration and Irrigation Open Joint Stock Company (AIOJSC). AIOJSC will be responsible for the RPF and for any land acquisition issues that might occur in any of their project raions in Azerbaijan. Depending upon the magnitude of impacts, necessary steps will be taken to strength the PIU to implement the land acquisition related impacts. AIOJSC will use counterpart funds to make the payment of compensation, with assistance of the raion local land commission and the local Executive Power authority and Municipality of the specific rayon, as planned in the RAP and approved by the Cabinet of Ministers.

IX. Process for addressing Land Acquisition/ use and/or Resettlement issues.

41. The project will provide funds for selective rehabilitation of irrigation and drainage systems and construction of WUAs offices. About 40 of 416 WUAs in 15 selected raions will benefit from rehabilitation investments. Rehabilitation will not only be at on-farm level, as it will be ensured that water supply to the WUA boundaries is reliable, and the main drainage is functioning.

11 42. The following steps summarize the selection and review (approval) of each WUA for rehabilitation (R-WUA), followed by design, contract procurement, implementation, and completion: a) Preliminary Assessment (rapid appraisal) carried out by a small team headed by the PIU Regional Engineer and WUA Coordinator, design engineer and the specialist on social issues from the design and construction supervision technical assistance team, RSU staff, and WUA representatives. The aim is to explore the WUA’s readiness, willingness, and competence (financial, administrative and technical) to participate in the rehabilitation program. The assessment will include a ‘walk through’ reconnaissance survey of the system, determine preliminary feasibility and costs, and ensure compliance with selection criteria. It may sometimes be necessary to abandon the WUA. B) Technical Review: preparation of a brief preliminary ‘rehabilitation form’ (under ten pages) to provide sufficient justification for AIOJSC and the Bank to approve the WUA for inclusion in the program. The form will include summary rehabilitation proposals, a schematic map, and an economic assessment of the tentative costs and benefits. c) Surveys and Engineering Design. Following AIOJSC and Bank approval, the R-WUA will be included in the program and a Rehabilitation Agreement will be signed. The process of identifying priorities for onfarm rehabilitation requirements, and alternative options to address these will begin. Potential rehabilitation options and costs will be presented and discussed with the WUA, which will repay 10 percent of rehabilitation costs. The required surveys and preparation of detailed engineering designs, including quantities and costs and submission these to PIU for approval will be undertaken. In addition to preparation of designs, project engineering consultants will draw up bidding documents, act as technical advisors in the tendering process, and be responsible for the direct supervision of contractors executing the works. d) Procurement of a contractor to execute the works will be through competitive bidding following procedures acceptable to the GOA and the Bank. Some RWUA contract packages for onfarm rehabilitation works may qualify for international competitive bidding (ICB), but national companies are expected to predominate. e) Contract Implementation: There will be a tripartite relationship between the PIU, consultants and contractors for execution of civil works contracts. Prior to handing over of the land to the contractors, PIU will provide all compensation and assistance to the affected people as proposed in the RAP, if any. There will be a specific reference in the civil works contracts that any unforeseen permanent or temporary impacts related to land and displacement are encountered by the contactors, they will bring to the notice of PIU promptly for necessary action in line with RPF provisions. The project will engage four Regional Construction Engineers as the PIU’s direct engineering representatives in the field, working out of the RSCs. These engineers will carry out joint inspections with consultants, local RSU staff, a WUA representative, and the contractor with regard to approval of contractors claims for completed works. The engineering consultants will

12 have direct control over contractors, while field engineers only have a role in monitoring, inspection and liaison. The flow of project funds will be controlled and authorized by the PIU, with the project manager, consultants’ representative, Regional Construction Engineer, and PIU Design Engineer, as cosignatories for payments to contractors.

f) Contract Completion: The final progress payment will be released after inspection of the completed works. It is anticipated that many onfarm works will be completed over two construction seasons, as the timely coincidence of contract award and season is difficult to achieve in practice.

43. The following actions for the project activities will be carried out in partnership with the WUAs:

1. During the walk-through the design engineer, the WUA Coordinator jointly with the WUAs will determine the preliminary identification of infrastructure to be rehabilitated, the preliminary construction schedule, and the location of the WUA. The selected WUA with guidance of the design team and the specialist on social issues will identify all the potential impacts and prepare a comprehensive list of PAPs. 2. The WUA with assistance of the specialist on social issues will prepare a list of affected beneficiaries with details of impacts. Two weeks time will be provided to hear any grievances of non-inclusion of affected people for compensation and assistance. The WUA will conduct a public consultation meeting with the affected beneficiary, modify the list of infrastructure to be rehabilitated and the construction schedule based on comments during the consultation, and will prepare a protocol, which will be signed by each affected beneficiary. This protocol will state that the affected people :

a. Agree with the selected list of infrastructure and rehabilitation schedule. b. Agree that the scheduled construction/rehabilitation does not temporarily or permanently occupy their land or causes economic damage. c. Are explained the compensation and assistance proposed for mitigating adverse impacts, if any. d. Are informed about the grievance procedure.

3. The protocol signed by all affected beneficiaries will be attached to the Rehabilitation Agreement signed by RID with the WUA. All grievances will be referred to the independent grievance committee who will consult the affected people and implementing agency and resolve in line with the policy provision and principles.

44. RAP and Compensation mechanisms in case of eligible affected beneficiaries will be as follows:  The specialist on social issues/ resettlement specialist and the regional WUA coordinator of the PIU will determine the needs and scale of land acquisition and / or temporary land use based on social screening, and assessment of the affected properties.  Then the results of assessments will be reported to the Cabinet of Ministers, sending also the details of the land under acquisition/use to the Land and Cartography Committee.

13  The Cabinet of Ministers will assess the process and establish the normative prices/compensations for land, property and income loss.  AIOJSC will define the budget for compensation allocated from project money. AIOJSC will pay the compensation out of the government part of the project money if needed.  AIOJSC will inform on the land acquisition/use dynamics in their project report.  Periodical progress reports will be submitted to the World Bank on implementation of land acquisition impacts. The Bank team will also monitor during the supervision mission thorough field visits and interactions with the affected people and those responsible for implementation.  AIOJSC will be accountable for monitoring of the progress and effectiveness of the land acquisition/use process.

Public Consultation and Grievance Redress

45. To address possible grievances of the beneficiaries, affected by the project, a public consultation will be launched for them and their representatives. The specialist on social issues/ resettlement Specialist and the regional WUA Coordinator will provide detailed project-related data and outline project impact dynamics for all those who need information of this kind. They will pay particular attention to individuals, who have no prior experiences in consultation. Information on compensation procedures as per the RPF as well as a grievance system nuances will be explained to people affected by the WUAP. Important aspect of the work with affected people is the explanation to them of the most direct procedures for the handling of grievances. In addition to this, to represent interests of affected people and redress of grievances the respected community leader will be selected in each community. This community leader can be a Zone Representative who is chosen by group of water users/ WUA members and participates in the WUA Representative Assemblies. The respected community leader/ zone representative will be part of the grievances redress committees.

AIOJSC/PIU will follow-up to ensure the grievances have been adequately resolved. The World Bank will be informed about the grievance handling performance on request.

46. Basically the redress a grievance process will :

• Offer affected people with direct and easily reachable ways for suiting a complaint or deciding any disagreement that may arise through the progress of the project • Guarantee that suitable and mutually satisfactory remedial actions are identified and immediately carried out to address grievances. • Permit confirmation that grievances are satisfied with results of remedial actions • Evade the need to turn to judicial or pre-judicial measures.

Costs and budget allocation

47. The costs and specifics of the land acquisition and compensation for crops (lost during the period of construction and rehabilitation) is difficult to determine at this point, because cites of the Regional Support Centers and WUAs’ offices have not been determined yet and the work

14 for the rehabilitation of I&D systems been started. In addition, the price for the land and crops tends to fluctuate seasonally and region-wise. Based on the impacts identified in the social screening, the compensation will be determined based on the principals outlined in this RPF.

X. Monitoring and Evaluation

48. The supervision and monitoring, as crucial components of the resettlement/ land acquisition plan, should be carried out by AIOJSC/PIU during and after the project implementation. The project objective and purpose will guide land acquisition specifics. If the need arises, modifications to the plan can be made.

49. External monitoring and evaluation should be implemented by an independent third party. The monitoring and evaluation should include all the elements of resettlement/ land acquisition.

The indicators identified for monitoring will include timely compensation of screening prior to invitation bids, timely payment of compensation and assistance prior to taking over of the affected assets, handing over of unencumbered land to the contractor’s timely redress of grievances, etc. The impact evaluation should reflect changes in social and economic situation of PAP, the use of land, terms of compensation, timing to resume farming during rehabilitation works, etc.

50. Disclosure. This RPF will be disclosed in local language on the web site of AIOJSC and other public places accessible to the local people in the project area. This RPF will also be disclosed by the World Bank in their Info Shop. Subsequently, if any abbreviated RAPs are prepared, those will also be disclosed in the Web site and other public places accessible to the local people.

15 Annex A: Impacts & Entitlements Matrix

The following matrix addresses impacts anticipated at the time of the preparation of the RPF, and may not include all impacts that may actually occur, which will be addressed under site- specific RAPs.

Project Impacts Project activities Project Affected Entitlements/ Types of compensations Persons

Permanent land RSC and WUAs Land owners / IDPs : acquisition offices - Land for land compensation with plots of equal value and construction productivity to the plots lost (OR) - Cash compensation for land (equivalent to market price ) with 20% additional compensation in line with the provisions of President Decree-2007

- Cash compensation for expenses related to the preparation of land for sowing, any fees and taxes for the purchase and register new agricultural land

- Cash compensation for annual crop production

Farmers who use/ -Cash compensation for annual crop production for one year. lease land but have - Cash compensation for transport and other expenses that no rights to land resulted due to physical relocation and / or loss of current jobs Temporary land Rehabilitation Owners with land If in spite of the procedures outlined in the RFP there are acquisition/use and repair works use rights, farmers eligible affected people they will be paid the following (use of who use/ lease land compensations: machinery and/ but have no rights to - Upon works completion, the land will be restored to its or location of land / IDPs pre-project condition and returned to the owner/user temporary - Cash compensation for loss of crop production for the contractors’ period of construction camps on private - Cash compensation for loss of immovable assets and land or state lands attachments. plots)

Removal / Rehabilitation Households/ Owners - Cash compensation reflecting income replacement. Trees replacement of and repair works with land use rights, will be valued based on age category and market value of economically on private owned farmers who use/ one year income times the number of years to grow a new valuable trees land and along lease land but have tree with similar productivity and in addition expenses for on-farm no rights to land/ seedlings. irrigation canals IDPs

Unforeseen Impacts will be mitigated in accordance with RPF principles impacts an provisions

16 17 Annex B: Outline of a Resettlement Action Plan

Each site-specific RAP will consist but not limited to the following parts:

1. Project Description  Project background  Project objectives  Project activities  Policy Provisions ( summary of RPF and cross references as needed)

2. Social Impacts Assessment  Scope of land acquisition/ resettlement impacts   results of census/ socio–economic surveys  Baseline socio-economic characteristics of the affected people

3. land acquisition and resettlement Process  Public consultation and participation  Entitlements and compensations

4. Implementation Arrangements  Institutional arrangements  Grievance redress Mechanisms (Registration complaints Communication, Judicial or pre-judicial measures if needed)  Compensation and Assistance Distribution Process  Coordination between RAP implementation and Civil works time table  Budget and costs  Monitoring and Evaluation arrangements

Annexes : List of Different categories of affected people and other relevant supporting data