Document of The World Bank Public Disclosure Authorized Report No: ICR0000874

IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-46090 TF-56801)

ON A

Public Disclosure Authorized LOAN

IN THE AMOUNT OF US$ 64.50 MILLION

TO THE

REPUBLIC OF KAZAKHSTAN

FOR A

SYR DARYA CONTROL AND NORTHERN ARAL SEA PHASE-1 PROJECT

Public Disclosure Authorized

June 21, 2011

Sustainable Development Department Central Asia Country Unit Europe Central Asia Region

Public Disclosure Authorized CURRENCY EQUIVALENTS

(Exchange Rate Effective June 21, 2011) Currency Unit = Kazakhstan Tenge (KZT) KZT 1.00 = US$0.0070 US$1.00 = KZT 145.57

FISCAL YEAR

ABBREVIATIONS AND ACRONYMS

ASBP Aral Sea Basin Program M&E Monitoring and Evaluation BCG Basin Consultative Group MOA Ministry of Agriculture BVO Basin Water Authority MNREP Ministry of Natural Resources and Environmental Protection CAS Country Assistance Strategy MTR Mid Term Review CPAR Country Procurement Assessment Report NAS Northern Aral Sea CWR Committee for Water Resources of MOA NGO Non Governmental Organization EA Environmental Assessment O&M Operations and Maintenance EC-IFAS Executive Committee of the Interstate PAD Project Appraisal Report Fund on the Aral Sea EMP Environmental Management Plan PDO Project Development Objective FM Financial Management PHRD Japan Policy and Human Resources Development GIS Geographic Information Systems PIU Project Implementation Unit GOK Government of Kazakhstan PMU Project Management Unit ICC Inter-ministerial Coordinating Committee PPF Project Preparation Facility ICR Implementation Completion Report PSC Project Steering Committee ICWC Interstate Commission for Water SA Social Assessment Coordination IP Implementation Progress SCO Shanghai Cooperation Organization IPOE Independent Panel of Experts SEA Social and Economic Assessment ISR Implementation Status and Results Report SYNAS Darya Control and Northern Aral Syr Sea JSDF Japan Social Development Fund UNDP United Nations Development Program LAS Larger Southern Aral Sea UNEP United Nations Environment Program

Vice President: Philippe LeHouerou Country Director: Motoo Konishi Sector Manager: Dina Umali-Deininger Project Team Leader: Ahmed Shawky ICR Team Leader: Ahmed Shawky REPUBLIC OF KAZAKHSTAN

SYR DARYA CONTROL AND NORTHERN ARAL SEA PHASE-1 PROJECT

CONTENTS

Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design...... 1 2. Key Factors Affecting Implementation and Outcomes……………………………...6 3. Assessment of Outcomes ...... 13 4. Assessment of Risk to Development Outcome...... 16 5. Assessment of Bank and Borrower Performance ...... 18 6. Lessons Learned...... 21 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners...... 22 Annex 1. Project Costs and Financing...... 23 Annex 2. Outputs by Component...... 24 Annex 3. Economic and Financial Analysis ...... 32 Annex 4. Bank Lending and Implementation Support/Supervision Processes...... 36 Annex 5. Beneficiary Survey Results ...... 38 Annex 6. Stakeholder Workshop Report and Results...... 41 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ...... 42 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders...... 51 Annex 9. List of Supporting Documents ...... 52 MAP No. IBRD 312428 A. Basic Information Syr Darya Control & Country: Kazakhstan Project Name: Northern Aral Sea Phase I Project Project ID: P046045 L/C/TF Number(s): IBRD-46090,TF-56801 ICR Date: 06/29/2011 ICR Type: Core ICR REPUBLIC OF Lending Instrument: SIL Borrower: KAZAKHSTAN Original Total USD 64.5M Disbursed Amount: USD 62.4M Commitment: Revised Amount: USD 62.4M Environmental Category: A Implementing Agencies: Ministry of Agriculture Cofinanciers and Other External Partners:

B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 11/27/1996 Effectiveness: 04/08/2002 Appraisal: 01/29/2001 Restructuring(s): Approval: 06/05/2001 Mid-term Review: 10/15/2005 07/31/2004 Closing: 02/28/2007 12/31/2010

C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Satisfactory Government: Moderately Satisfactory Implementing Quality of Supervision: Moderately Satisfactory Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance:

i C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of No None time (Yes/No): Supervision (QSA): DO rating before Satisfactory Closing/Inactive status:

D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Animal production 1 32 Central government administration 4 4 Flood protection 29 29 Irrigation and drainage 66 35

Theme Code (as % of total Bank financing) Biodiversity 17 17 Infrastructure services for private sector development 17 17 Rural services and infrastructure 33 33 Water resource management 33 33

E. Bank Staff Positions At ICR At Approval Vice President: Philippe H. Le Houerou Johannes F. Linn Country Director: Motoo Konishi Dennis N. de Tray Sector Manager: Dina Umali-Deininger Joseph R. Goldberg Project Team Leader: Ahmed Shawky M. Abdel Ghany Masood Ahmad ICR Team Leader: Ahmed Shawky M. Abdel Ghany ICR Primary Author: Michael J. Sandoz

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) 1. Sustaining and increasing agriculture (and livestock) and increasing fisheries production in the Syr Darya basin; and

ii 2. Securing the existence of Northern Aral Sea and improving the ecological/environmental conditions in the delta area and around the sea leading to improved human and animal health and biodiversity.

Revised Project Development Objectives (as approved by original approving authority)

(a) PDO Indicator(s)

Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Sustaining and increasing agriculture (and livestock) and increasing fisheries Indicator 1 : production in Syr Darya basin. 2650 tons of fish caught in the NAS Insignificant amount of in 2009 (excluding freshwater fish Production of informal catch); production and no fresh water fish Value water supply to sturgeon and caviar about 700 tons per quantitative or irrigated and production. Depressed year, 100 tons of Qualitative) livestock areas crop production in sturgeon and 10 reestablished; irrigated lands and low tons of caviar. livestock crop yields. production increased by 40% Date achieved 03/05/2001 08/31/2017 11/19/2010 Rice area went from 58,500 ha 2001 to 73,300 ha in 2009, but this cannot be Comments attributed only to SYNAS. Crop production depends not only on water (incl. % availability but also on irrigation, agronomic and marketing systems (hence achievement) requiring projects like IDIP2). Securing the existence of Northern Aral Sea and improving the Indicator 2 : ecological/environmental conditions in the delta area and around the sea leading to improved human and animal health and biodiversity. Target met and often exceeded. Water salinity in NAS Salinity levels was about 25 g/l. Air and throughout the soil salinity was high, Water salinity NAS have dropped Value negatively impacting reduced to 15 g/l, to 10g/l in 2010 quantitative or population and animal improvements in (about half of 2001 Qualitative) health and negatively air and soil value) thanks to 4 impacting the natural salinity. billion m3 of water. environment and Reported improved biodiversity. fauna and flora by local residents Date achieved 03/05/2001 08/31/2011 11/19/2010 Comments There are many media reports that describe the dramatic impact on people, flora

iii (incl. % and fauna. achievement)

(b) Intermediate Outcome Indicator(s)

Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Major bottlenecks in Syr Darya's carrying capacity removed (e.g. at Chardara Indicator 1 : dam, Aitek, Kyzylorda, and Aklak); Target met. Aitek weir and rehab of other structures increased winter Syr Darya capacity carrying capacity of A number of bottlenecks increased during Syr Darya to Value severely decreasing the winter to 700 cms, 700m3/sec, (quantitative carrying capacity of Syr and spells to reducing losses or Qualitative) Darya within the Arnasai reduced into desert sinks to Kazakhstan territory. from 3 Bcm to 1 1 BCM/year, Bcm/yr. compared to 5 BCM/year in 2003. Aklak diverts 0.075BMC/year to delta Date achieved 03/05/2001 08/31/2007 11/19/2010 Comments (incl. % Although not all works are completed at Aklak, the structure is now operational achievement) Indicator 2 : Completion of dike enabling filling of the NAS. Target met ahead of schedule. By april 2009, water level reached full supply level of 42m for the fourth year in a Water level Value row. NAS area Reduced area of the stabilized between (quantitative increased from Northern Aral Sea. 39 - 42 m in Yr 10 or Qualitative) 2400km2 in 2001 to of the project. 3300km2 in 2009. In August 2010 NAS was 35Km from Aralsk harbor compared to 75km in 2001 Date achieved 03/05/2001 08/31/2007 11/19/2010 Comments

(incl. %

iv achievement)

G. Ratings of Project Performance in ISRs

Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 06/28/2001 Satisfactory Satisfactory 0.00 2 12/11/2001 Satisfactory Satisfactory 0.00 3 04/30/2002 Satisfactory Satisfactory 0.65 4 11/07/2002 Satisfactory Satisfactory 2.24 5 06/16/2003 Satisfactory Satisfactory 5.44 6 12/31/2003 Satisfactory Satisfactory 10.78 7 01/29/2004 Satisfactory Satisfactory 13.07 8 06/15/2004 Satisfactory Satisfactory 17.37 9 11/01/2004 Satisfactory Satisfactory 29.56 10 04/03/2005 Satisfactory Satisfactory 34.41 11 11/11/2005 Satisfactory Satisfactory 46.86 12 03/23/2006 Satisfactory Satisfactory 52.04 13 11/21/2006 Satisfactory Satisfactory 56.63 14 11/15/2007 Satisfactory Satisfactory 57.70 15 05/02/2008 Satisfactory Moderately Satisfactory 59.46 16 08/07/2008 Satisfactory Satisfactory 59.46 17 04/23/2009 Satisfactory Moderately Satisfactory 59.58 18 01/28/2010 Satisfactory Moderately Satisfactory 60.71 19 12/20/2010 Satisfactory Moderately Satisfactory 60.71

H. Restructuring (if any) Not Applicable

v I. Disbursement Profile

vi 1. Project Context, Development Objectives and Design (this section is descriptive, taken from other documents, e.g., PAD/ISR, not evaluative) The project is the first phase of the rehabilitation of the Syr Darya basin identified under the Aral Sea Basin Program (ASBP) approved by heads of the five Central Asian States in 1994. The project was considered of strategic importance in addressing the environmental issues of the Aral Sea basin.

1.1 Context at Appraisal (brief summary of country and sector background, rationale for Bank assistance) The desiccation of the Aral Sea over a period of forty years, caused by major diversions from the Amu Darya and Syr Darya rivers to serve extensive developments for irrigated agriculture in Kazakhstan and Uzbekistan, had resulted in serious economic, social, and environmental damage in and around the Aral Sea. This has often been described as “the worst environmental disaster in recent history”.

More recently, over the last two decades, major increases in hydroelectric power generation along upper river reaches in Kyrgyzstan, notably at the Toktogul dam on the Syr Darya River, have taken place during winter, releasing water from reservoir storage that would previously have been retained for release during summer for irrigation purposes. Water released into the river during winter has had little productive impact downstream, since most irrigation demands occur in summer. It had also not represented much environmental benefit to the Aral Sea and adjacent river delta areas. This was because of flow capacity constraints along key reaches of the Syr Darya River in Kazakhstan, caused by bottlenecks including under-designed weirs, pontoon bridges, low flood protection dikes, and other channel and infrastructure maintenance and safety deficiencies, all made worse in winter due to ice formation. Much of the water arriving into Kazakhstan has had to be spilled from the Chardara reservoir on the border with Uzbekistan and diverted into desert sinks including the Arnasai-Aydarkul depression in Uzbekistan, and into irrigation and drainage canals and channels, where it has caused flooding problems and has been eventually lost to evaporation1.

Basin-Wide International Context

In order to address the Aral Sea crisis, the five Aral Sea Basin states requested assistance from the international community. After diagnostic investigations in 1992, an Aral Sea Basin Program (ASBP) was prepared in 1993 by the World Bank in coordination with UNEP and UNDP, and was approved by the five Heads of State in January 1994. The ASBP has four major objectives: (i) to stabilize the environment of the Aral Sea; (ii) to rehabilitate the ecological disaster zone around the Aral Sea; (iii) to improve and integrate the management of the international waters of the Aral Sea Basin; and (iv) to

1 Even more recently, following filling and development of the Arnasai depression and the construction in Uzbekistan of two new earth dams on the Arnasai flow channel, the Chardara reservoir spilling capacity has been severely reduced. As a result, the safety of Chardara dam has been compromised.

1 build the capacity of the regional institutions to plan and implement the corresponding projects. Seven priority programs, comprising a total of 19 projects, were identified for implementation during the first phase of the ASBP. The Syr Darya Control and Northern Aral Sea phase I (SYNAS-I) project formed part of the ASBP Programme 4, which deals with environmental issues in and around the Aral Sea.

Starting in 1992, the Interstate Commission for Water Coordination (ICWC) of the five Central Asian States developed a common strategy for trans-boundary water management in the Aral Sea Basin, determining water allocations and reservoir operations in the Amu Darya and Syr Darya river basins. Declarations on water sharing were signed in 1995 (Nukus) and in 1997 (Almaty). In March 1998 a long-term water and energy agreement, covering the sharing of hydro-power benefits from Kyrgyzstan, was signed between the three Syr Darya River riparian countries (Kazakhstan, Uzbekistan and Kyrgyzstan). In August 2007, at the Shanghai Cooperation Organization (SCO) summit, the heads of several of the SCO member states proposed a new policy of utilization of hydroelectric energy resources, and a new agreement on utilization of transboundary water resources within this framework is being considered. Meanwhile an International Fund for the Aral Sea (IFAS) was established in 1993, and an Interstate Council was created to coordinate and manage financial resources and programs in the field of ecological and socio- economic development in the Aral Sea region. In the Ashgabat declaration of April 1999, the five Heads of State expressed once more their concern about the quality of life in the Aral Sea region and acknowledged the need for an integrated and joint regional strategy based on an ecosystem approach and integrated water resources management. However, in spite of all of these initiatives, key issues such as the mode of operation of the Toktogul reservoir remained unresolved.

National River Basin and Project Context

Of the newly-formed states Kazakhstan is the Syr Darya River tail-ender. As such it suffers the most from the effects of inadequate integrated international river basin management, including those outlined above. The environmental degradation of the Aral Sea region and the inefficient use of water resources are among the serious threats affecting the social, environmental and economic development and wellbeing in the country.

The Government of Kazakhstan (GOK) recognized early that non-sustainable developments upstream of the Northern Aral Sea (NAS) would continue to limit the country’s growth potential. In addition to its participation in regional multi-country agreements concerning the water management and environmental rehabilitation in the Aral Sea basin, the GOK decided to work with the international donor community to initiate direct resolution of the situation through the SYNAS-I project, targeting environmental restoration, infrastructure rehabilitation, intersectoral water use conflict reduction and institutional capacity strengthening.

For the GOK, the SYNAS project is a priority project in the water resources sector. It is managed by the Committee for Water Resources (CWR), which coordinates with the Syr Darya Basin Water Authority (BVO) and with the ICWC. At regional (oblast) level the

2 project is strongly supported by the regional authorities in Kyzylorda oblast and the local district (raion) administrations of Kazalinsk and Aralsk raions, which have been the areas most affected by the environmental catastrophe. Preparation of the World Bank supported SYNAS-I project was completed in 2001, and implementation was completed in 2010; key dates were (i) approval, 05 June 2001, (ii) effectiveness, 08 April 2002, and (iii) closing, 31 December 2010. The project value was US$86 million, of which US$61 million was provided from a World Bank loan. Parallel development grant financing of US$1.9 million was provided from the Japan Social Development Fund (JSDF) for the Kazakhstan Community-Based Aral Sea Fisheries Management and Sustainable Livelihoods Project (closing in March 2012).

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 1 As presented in the Project Appraisal Document (PAD), the PDOs were (i) sustaining and increasing agriculture (including livestock) and fish production in the Syr Darya basin; and (ii) securing the existence of the NAS and improving the ecological/environmental conditions in the delta and around the NAS leading to improved human and animal health and biodiversity. Corresponding key indicators to be used in assessing achievement of these objectives were as summarized below:

Key Indicators Target Outcomes/Impacts Indicator for both PDO(i) and PDO(ii): • Increased water levels and reduction • [Target outputs only] in salinity levels in the NAS Indicators for PDO(i): • Increase in yields of freshwater fish, • Yields increased to about 2,000 t/yr for sturgeon and caviar. freshwater fish and to 500 t/yr and 30/t/yr for sturgeon and caviar by Project Year 16 • Increase in water supply to irrigated • Sustained crop production on about 150,000 lands at Kazalinsk, Aitek and ha of irrigated lands and yields increased by Kyzylorda and increase in crop 20% production from irrigated lands Indicators for PDO(ii): • Improvement in air, soil and water • Decline of the natural environment near the qualities, biodiversity and state of NAS and in the delta reversed by Project flora/fauna Year 6; air, soil and water qualities and state of flora and fauna improved to acceptable • Improvement in general health of levels by Project Year 15 population in Kazalinsk/Araslk • Health of population in Kazalinsk/Aralsk improved (incidence of diseases reduced) to • Improved water supply to lakes and national average by Project Year 10. hayfields around Aklak and Kazalinsk • [Target output only]

3 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification There were no formal revision to the PDO, and project activities remained substantially the same as designed albeit with some additions and some omission of contracts justified as part of implementation.

1.4 Main Beneficiaries The total number of direct and indirect beneficiaries is about 1 million people, mainly in Kyzylorda oblast, the poorest region of the country. The project directly improves the well being of 150,000 to 200,000 people in Aralsk and Kazalinsk raions of this oblast (an internationally recognized area affected by the Aral Sea environmental catastrophe).

1.5 Original Components (as approved)

The project was the first one of a series of investments that would reduce the risks posed by the Chardara dam and improve water delivery, distribution, and basin wide water use efficiency. The project’s components were:

(a) Rehabilitation of Northern Aral Sea (Component A), comprising construction of a dike across the Berg strait, including spillways, to allow for recovery and stabilization of NAS levels and salinity separate from those of the southern Larger Aral Sea (LAS); (b) Improving the Hydraulic Control of the Syr Darya (Component B), comprising rehabilitation and construction of various hydraulic structures to allow for improved regulation and management of river flows and controlling of water allocations to various users including increased inflows to the NAS, the hydraulic structure interventions being (i) reconstruction of the Aklak weir and related works, (ii) reconstruction of the Aitek and Karaozek water control structures, (iii) rehabilitation and construction of low height dikes at key locations along the river for improved flood protection and increased channel flow capacity, and (iv) repairs to the Kazalinsk headworks and Kyzylorda barrage; (c) Rehabilitation of Chardara Dam (Component C), covering various first phase priority safety and water control improvement works; (d) Aquatic Resources Restoration and Fisheries Development (Component D), covering development interventions to maximize benefits from additional fisheries resulting from stabilization of the NAS level and salinity and improved flows to the delta lakes; (e) Monitoring and Evaluation (Component E), covering monitoring and evaluation (M&E) activities aimed at evaluating the success in meeting the project's goals and assessing the project's physical, environmental/ecological, social, agricultural and economic impacts; and (f) Project Management and Institutional Development (Component F), supporting operation of the CWR's Project Management Unit (PMU) and financing overall project management and technical assistance during

4 implementation, as well as providing for institutional capacity building in river basin management.

The estimated project costs were as summarized in the table below. Breakdowns of project and component costs by works categories and financing entities are provided in Annex 1, while further details of the interventions realized, outputs achieved and next follow-up activities required are provided in Annex 2.

Estimated Project Cost by Component (including contingency allowances) Component/Sub-Component Costs (USD millions)

Sub-Total Total A Restoration of Northern Aral Sea 23.19 B Improving Hydraulic Control of the Syr Darya 40.95 B1 - Aklak Complex 17.58 B2 - Aitek Complex 15.25 B3 - Flood Protection Dikes 3.72 B4 - Kyzylorda and Kazalinsk Barrages 4.40 C Rehabilitation of Chardara Dam 14.10 Sub-Total Major Works 78.24 D Aquatic Resources Restoration and Fisheries Development 2.00 E Monitoring and Evaluation 1.50 F Project Management and Institutional Development 1.60 F1 - Project Management 1.00 F2 - Institutional Development 0.60 Refinancing of PPF 1.80 Front end Fee 0.645 Total 85.79

1.6 Revised Components Overall there were no major changes made to the project components affecting the target PDOs. However, Component D had to be significantly revised, as summarized in Section 1.7 (and explained in details in Annex 2).

1.7 Other significant changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations) While no major changes were made to the project components, a number of reallocations between activities for additional auxiliary works such as access roads and other necessary but not initially scheduled works were added while other activities such as works on weir the Karaozek branch and structures along the Aitek complex were dropped from financing. Some of these works were later funded through the Ministry of Emergency Situation of the Republic of Kazakhstan, thus only minimally affecting the impact of the project. A number of flood protection dikes (Component B) were dropped from project financing due to cost overruns and budgetary constraints. In addition, under Component D, cost savings/reductions were agreed as some activities where financed by other financiers whereas other activities were deferred to SYNAS-2 (see Annex 2 for further

5 details). These cost savings were used to meet the additional cost of project-wide supervision and management due to extending the project implementation period.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry (including whether lessons of earlier operations were taken into account, risks and their mitigations identified, and adequacy of participatory processes, as applicable)

Conformity with country and sector policies and strategies. The project formulation conformed well to the Bank’s Country Assistance Strategy (CAS), primarily through its strong provisions for (i) reversing environmental degradation caused by the decline of the Aral Sea and (ii) improving Syr Darya river basin water management for increased agricultural (including livestock) and fisheries production, all to the benefit of the population of the poorest and most adversely affected region of the country. It similarly addressed well the key GOK policies and priorities relating to environmental restoration, rehabilitation of deteriorated hydraulic infrastructure, reducing intersectoral water use conflicts and strengthening institutional capacity for river basin water management.

Relevance and appropriateness of project objectives, components and design. The project’s two PDOs presented at Section 1.2 reflect well the development policies and priorities indicated above. The six project components likewise corresponded to the six essential and minimum interventions needed to secure a substantial integrated and sustainable improvement in the region's economic and environmental situation. The overall project design seemingly achieved a well considered and appropriate balance between cost and benefit effectiveness, given the very much larger potentially suitable alternative investments for NAS restoration, river flow capacity increases, and dam and water control structures rehabilitation, some of which at the end of the project have become high priority items for subsequent intervention. Nevertheless, there was a minor design shortcoming (probably avoidable at preparation) that led to partial bank erosion downstream of the Aklak weir, which is discussed below under Section 2.4.

Soundness of institutional and implementation arrangements. The formulated primary institutional arrangements for project implementation under the CWR, through the PMU headed by a National Project Coordinator (NPC), were put in place and would appear to have been both simple and effective. Overall management and interagency coordination was assigned to and undertaken by the CWR, and although an inter-ministry transfer of this entity took place during the course of the project (from the Ministry of Natural Resources and Environmental Protection (MNREP) to the Ministry of Agriculture (MOA) this seemingly had minimal impact on project implementation. The PMU, based initially in Almaty but then in Astana, had responsibility for the day-to-day project management and administration, assisted by a Consultants Group (CG) based in Kyzylorda for technical design, contracts preparation, construction supervision, M&E and project management tasks. Strong and often but not always entirely effective support was provided by international and national consultant firms and individuals in these areas. Other envisaged institutional arrangements included establishment and operation of (i) an Inter-ministerial Coordinating Committee (ICC), (ii) a Project Steering

6 Committee (PSC), (iii) a Basin Consultative Group (BCG), and (iv) an Independent Panel of Experts (IPOE) for dam safety works at Chardara Dam. The first and fourth of these entities contributed timely and meaningful inputs into the project.

Application of previous lessons learned. Previous lessons learned as identified at the time of project formulation related to (i) applying economic and environmental criteria, (ii) accounting for difficulties in interagency coordination, (iii) providing for competent and efficient national management staff, (iv) ensuring timely provision of adequate counterpart funding, (v) providing appropriate technical assistance, (vi) emphasizing procurement, financial management and construction quality control aspects, and (vii) involving local institutions in project design and preparation. All of these were to greater or lesser extent addressed by the project preparation analyses and assessments, the formulated institutional arrangements, the management structure and staff specifications, the technical assistance arrangements and the institutional strengthening provisions.

Identification and mitigation of risks. Risks relating to marketing constraints, institutional and funding shortfalls, water balance deficiencies, consultant staff insufficiencies, and procurement and construction delays, were identified and addressed as part of project formulation. Concerning the underlying government commitment to the project, this was indicated to be strong at the time of project preparation, and it seemingly remained so throughout the course of project implementation.

2.2 Implementation (including any project changes/restructuring, mid-term review, Project at Risk status, and actions taken, as applicable) In many respects, although not in all, the project was implemented much as envisaged at appraisal. There were a total of 7 major infrastructure works contracts (compared to the originally envisaged total of 11), as summarized below:

Major Infrastructure Works Contracts Contract Number and Name Relevant Project Components 001 Northern Aral Sea Dike and Aklak Control Structure A and B1 002 Aitek Weir B2 003 Rehabilitation of Chardara Dam C 005 Syr Darya Protection Dikes B3 (part) 006 Straightening of Syr Darya River Bed B3 (part) 009 Rehabilitation of Kazalinsk Headworks B4 (part) 011 Rehabilitation of Kyzylorda Headworks B4 (part)

Works implementation was hampered by a number of constraints, the ultimate effects of which included (i) non-execution of some of the needed project works due to increased costs and budget limitations, (ii) conversely, execution of previously unidentified but needed and beneficial works, and (iii) an eventual total extension of the project implementation period from 5 years to just under 9 years. With regard to non-execution of needed project works, some of these were transferred out of the project and were executed under non-project contracts funded by GOK (e.g. Karaozek weir, part of the Aitek structures complex), while others remain to be executed under the project’s prospective second phase or other projects (e.g. further river flood protection works). Concerning the project period extensions, it is noted that these were needed only for a

7 relatively small portion of the overall project infrastructure items; substantial completion of most items, and corresponding disbursements, were seemingly achieved in a generally timely manner.

Some of the specific key factors impacting implementation included (i) differences between Kazakh and international practices and requirements for detail design studies, cost estimating, pre-tender approvals, bid evaluations and contract award approvals, leading to early disputes and delays; (ii) long periods of abnormally high river flows and water levels over several years, leading to delays and additional needs for site protection works and water control, with corresponding increased costs; (iii) an underestimated need for major supporting infrastructure (roads, power lines, camps, etc) that had to be provided for isolated and remote construction site and community locations; (iv) a general construction boom over several years, leading to high cost escalation and key material shortages and delivery delays; (v) some substantial design underestimation of works volumes, some post-award identification of high priority requirements not originally considered, and some contractor inadequacy in implementing needed activities, leading to delays, budget reallocations, and non-execution of important works items due to financing limitations; and (vi), primarily for one contract, some poor contractor performance, organization, staffing, financing and legal aspects. It needs to be noted however, that some of these changes that resulted in increased costs were also in part the result of the opportunity presented from having large contractors on site to help local authorities repairing roads and rehabilitate electric lines that followed the path of the canal, but also to reconnected remote towns and settlements. While the benefits to water and irrigation management directly may have been minimal from these ancillary works, they were of crucial importance to local administrators and residents. Some further detail on these issues and items is provided in the Borrower’s draft ICR report.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Given that some key project target outcomes were not expected to be realized within the life of the project and its M&E program, the focus in establishing the M&E system was on enabling the assessment of interim outcomes and the development of likely future projections of these. In designing it, appropriate indicators were defined, and data bases and Geographic Information Systems (GIS) were set up to record and present historical, initial (baseline) and developing conditions in the project area. During early implementation, the systems were populated to some extent with data from hydrological (quantity and quality), environmental (land and water), ecology/biodiversity and socioeconomic field surveys and studies, and this led also to analyses, forecasts and recommendations relating to restoration of ecosystems, notably for biodiversity, bird habitats and fisheries. For further use of the systems it was reported that efforts to collect data from and through government agencies, and to transfer M&E systems and train government agency staff in their continued use and application, were not successful. Completion of the formal M&E program occurred about half way through the extended project period, and there was seemingly little if any subsequent routine M&E activity. However, some notable positive impacts had already become evident by that time, as evidenced by the findings from the household surveys and structured interviews of the social and economic assessment (SEA). A more recent end-of-project 2009-2010 M&E information has been obtained through self efforts from the PMU staff (including the Borrower version of the ICR Report). It is also worth noting that the M&E should have

8 comprised a full-fledged incremental impact evaluation approach (including baselines and tools), that enables separating the non project/water related “compounding” variables/externalities which can influence the target indicators (listed below under Section 3.2) 2. Due to these shortcomings the M&E activity is deemed only partially satisfactory, and due deligence has to be taken while preparing SYNAS-II to avoid such shortcomings. However, an overall incremental improvement of the key SYNAS-I impact indicators has been recorded as summarized in this table; and the M&E shortcomings do not detract from evidenting that the project has successfully met its key target objectives.

Changes in Key Indicators at the North Aral Sea (NAS)

Key parameters Unit Before Changes project After SYNAS-I Increase (+) or decrease (-) Water level M BS 38,0 42,0 +4 Water surface area km2 2 414 3 288 +874 Water volume km3 15,6 27,1 +11,5 Water salinity g / l 23 9.5 -13.5 Industrial fish catch ‘000 tons 0,4 2,0 +1,6 Distance to Aralsk city Km 75.0 18.0 - 57.0 (harbor)

Also Annex 7 discusses the employment created (salary increases) and other social benefits which are indirectly attributed to the SYNAS-I (from the Borrower’s ICR).

2.4 Safeguard and Fiduciary Compliance (focusing on issues and their resolution, as applicable) Safeguard Policies. The safeguard policies determined at appraisal to be applicable were those for (i) environmental assessment (OP 4.01, BP 4.01, GP 4.01), (ii) safety of dams (OP 4.37, BP 4.37), and (iii) projects in international waters (OP 7.50, BP 7.50, GP 7.50). Comments for each of these are as follows:

(a) Since the project involved construction of some major new hydraulic infrastructure and expected substantial land and water management changes, it was classified as an Environmental Category "A" project. A full Environmental Assessment (EA) complemented by a Social Assessment (SA), including formulation of an Environmental Management Plan (EMP), was undertaken

2 As regards the sea-water salinity, crop and cattle production, and since the years 2000 and 2001 were extremely dry years, the Bank ICR team notes that a better approach for the incremental impact evaluation would warrant comparing the post-project results on these indicators with their pre-construction average annual results from 1995 to 2005 (rather than comparing with the early 2000s baselines). Similarly, as regards the fish catch and crop/cattle production, a full-fledged incremental impact evaluation would warrant separating the non-water-related “compounding” variables/externalities that may have influenced these indicators (for instance, increasing the number of fishing boats in 2007 may have contributed to the catch peak in that year). Such a full-fledged impact evaluation needs to be followed under the forthcoming phase 2 (SYNAS-2).

9 before project appraisal. Comments on implementation of the EMP are provided in the next sub-section below. (b) Interventions under the project for dam safety were formulated for the Chardara dam, which is the key water storage and flow regulation structure for the Syr Darya river in Kazakhstan. Some parts of the needed works were undertaken under the project, while others remain to be implemented under one or more future projects. As mentioned at Section 2.1 above, an IPOE for dam safety works at Chardara dam, comprising international and national experts, was constituted and provided expert advice, reviewed the designs and oversaw the works. (c) The project dealt with developments involving international waters (the Syr Darya River and the Aral Sea) and was therefore subject to requirements relating to notification, disclosure and dissemination of information to riparian states, procedures for which were duly followed. The status of the project as a component of the ASBP as indicated at Section 1.1 above meant that all riparian states were in accordance with its implementation.

EMP Implementation Results. Implementation of the EMP was effected through environmental audits comprising systematic independent reviews of works construction sites and camps. The reviews included inspection of sites, consultations and interviews with clients, consultants and contractors, and examination of relevant supporting documentation. The audits ensured that the appropriate environmental impact prevention and mitigation measures were applied and that the works and outcomes were in accordance with the environmental and socioeconomic enhancement and improvement plans and expectations. Some further detail on this topic is included in the Borrower’s draft ICR report.

Procurement. A procurement Capacity Assessment had been undertaken and was reflected in the PAD. Reflecting the pre-project (pre-2000) era, this assessment highlighted a relatively weak legal and regulatory framework and project cycle management and provided a high risk rating, thus recommending by-yearly procurement supervision and regular post–review audits. The 2000 Country Procurement Assessment Report (CPAR) classified the public procurement system as a medium risk system, in spite of high prevalence of transparency/competitiveness issues that would justify a medium-high risk rating. Due to a relatively good experience with project implementation in the water/agricultural sector, the project was classified as a medium risk from a procurement perspective. The procurement planning was adequate for the project. The bidding processes for all contracts have been successfully completed on time. The procurement processes including the prequalification have been implemented with an assistance of international consultancy company. However, the project faced significant contractual issues during implementing contract SYNAS #001 (construction of the NAS and nearby Aklak Control Structure). Significant delays occurred in construction due to technical and financial constraints by the Contractor. As a result of the delays in completing this contract, services for construction supervision by the Engineer (client) Companies were extended several times with an increased contract value. Overall, the procurement performance is rated as Moderately Satisfactory.

10 Financial Management and Disbursement. The PMU had already acquired financial management experience during the implementation of the preparation PHRD grant that received clean unqualified audit reports. PMU financial management capability and practices were reviewed by the Bank at the time of appraisal and regularly throughout implementation and found acceptable. Overall, it has maintained acceptable financial management arrangements meeting the Bank requirements in respect to the quality of accounting, reporting, internal controls, staffing as well as in respect to the audit arrangements. During project implementation, there were no major issues or problems in conducting financial management by the PMU. The only issue that resulted in downgrading of the FM rating to moderately satisfactory in the last year of implementation is deterioration of the automated accounting software. The problem could not be fixed due to the fact that funds had not been allocated for the software maintenance during the last year.

Audit reports for FY 2009 and final quarterly reports for the fourth quarter of 2010 were received by the Bank and found to be satisfactory. The final audit report for the Project is expected to be received by the Bank before June 30, 2011.

The latest ISR ratings were still valid by the ICR time and can be summarized as follows: • Implementation progress (IP) was provisionally rated as "Moderately Satisfactory" for the end of December 2010, due to the need to complete a few remaining contract works at the Aklak structure site. The client and Bank teams followed up to ensure that there would be minimal works to be completed and financed solely by GOK beyond the closing date, and hence to leave no significant risks after project closure on December 31, 2010. Financial management (FM) was rated as "Moderately Satisfactory". Project management (PMU and PIU) was rated as "Moderately Satisfactory", given the "Moderately Satisfactory" ratings for both IP and FM. • Ratings given for compliance with applicable safeguards (EA (OP 4.01), safety of dams (OP 4.37) and projects in international waters (OP 7.50)) are discussed below: - The EA safeguard compliance rating is "Satisfactory" due to the successful preparation and adoption of the EA and EMP. - In the case of compliance with the dam safety safeguard, until November 2010 this had been rated as "Satisfactory" in all Implementation Status and Results (ISR) reports. This reflected that a dam safety review had been prepared for the Chardara dam, and that a properly constituted IPOE had reviewed the design and overseen the implementation of dam safety measures (further Chardara dam safety work is to be carried out under the prospective SYNAS-2 project, for which an IPOE is also expected to be in place). However, in the last ISR report of November 2010 (and provisionally in this ICR report), the rating was reduced to "Moderately Satisfactory". This was due to the status of pending contract works at the Aklak control structure. The Bank team urged CWR to ensure that the recently occurred erosion of river banks on both sides of the river bed downstream of the Aklak structure (and to a lesser extent downstream of the Aitek weir) is of a localized nature and will be adequately addressed by the contractors. In accordance with the Bank’s

11 dam safety policy (OP/BP 4.37), the Bank ISR mission of November 2010 suggested that the erosion problem may result from either a stilling basin under-design or an implementation shortcoming. The Bank as part of its due diligence and assisted by FAO undertook to review the design to determine whether the problem arose from a design issue or an implementation issue. The preliminary results, obtained by February 2011, suggested that there might be a minor design issue3, which can be tackled. - The international waters safeguard compliance rating is "Satisfactory" due to the successful notification of project details to the upstream riparian countries (Kyrgyz Republic, Uzbekistan and Tajikistan). - The overall combined safeguards compliance provisional rating is "Moderately Satisfactory" (equivalent to the lowest individual rating, that for safety of dams).

2.5 Post-completion Operation/Next Phase (including transition arrangement to post-completion operation of investments financed by present operation, Operation & Maintenance arrangements, sustaining reforms and institutional capacity, and next phase/follow-up operation, if applicable) The SYNAS-I project has been successfully implemented and, as discussed further in Section 3 below, has been instrumental in the achievement of target outcomes and generation of expected benefits. There are indications that both operation and maintenance services for system infrastructure are being provided by CWR, although few shortfalls in this area are identified as a moderate risk to sustainability (see risk matrix on page 18). Also, during site visits to substantially completed and operating project infrastructure works, effected a month before project closure, few hydraulic performance issues were observed that seemed to warrant early attention and subsequent follow up, as discussed further in Annex 2 below. Furthermore, as indicated previously above, execution of a few works remain pending, and in particular Chardara dam longer-term safety, although now partially addressed, remains a concern. These issues can be well addressed by the follow-on SYNAS-II project, which will build on 10-year lessons from SYNAS-I to ensure the sustainability of works introduced along the River and at NAS. Finally, beyond consolidation of achieved benefits, there are identified substantial additional potential environmental and socioeconomic benefits to be realized through further cost-effective investments in and around the Syr Darya river and NAS. The SYNAS-II project has been formulated to carry the regional development forward accordingly.

3 The fast-track analysis suggested that the design of the stilling basin was acceptable but that the whole Aklak structure was probably situated too high in the landscape, giving a steep downstream riverbed slope and a low tailwater depth, leading to occurrence of the hydraulic jump outside of rather than inside of the stilling basin. To obtain a revised riverbed slope of say 0.001, a possible remedy would be for CWR to construct a sill of 2 to 3 m height about 200 m downstream of the weir (for example by dumping boulders into the river at that location). There would most likely be bank erosion again downstream of this new sill, but this might not be as worrisome as regards safety of the structure. Nevertheless, awaiting additional data/drawings, the Bank/FAO team could not provide full evidence that the low tailwater level is causing the turbulence and consequently the erosion. The Bank/FAO team hence advised CWR that: (1) if erosion is still ongoing/progressing, then all required data/drawings should be made available immediately for further detailed analysis; (2) if observed erosion has subsided, then no immediate action is required, but regular monitoring once a week recommended. In May 2011 CWR implied that the latter applies.

12 3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy) Both of the PDOs (PDO(i), the production improvement objective, and PDO(ii), the environmental improvement objective) continued to have a high relevance throughout the duration of the project. Design and implementation priorities remained unchanged, although some changes in actual works implemented and/or transferred or postponed to other or subsequent projects did occur as noted above. It must be said that the abnormally high flows experienced over an extended portion of the project period led to some modification of development need perspectives away from low flow mitigation and towards flood protection and control (including dam safety), and they also had the effect of shortening the expected time frame for achievement of the target outcomes discussed in the following section.

3.2 Achievement of Project Development Objectives (including brief discussion of causal linkages between outputs and outcomes, with details on outputs in Annex 2) In general, the target outcomes are considered to have been achieved, as conveyed by several media reports noted in the past few years. The following is a summary of incremental outcomes achieved, based on comparisons between the pre-project 2001- 2004 baseline data and the post-project 2009-2010 M&E data. Further details are provided in Annex 2 (outputs) and Annex 7 (employment and other social benefits).

(a) For PDOs (i) and (ii). NAS water levels above Baltic Sea Level (BSL) increased from a pre-project low of 38 m to the desired design level of 42 m. In 2006 and 2007 the NAS reached full capacity. Annual inflows into the NAS were 7 and 4 billion m3 in 2007 and 2009 respectively. The water surface area increased by 37% from 2,400 km2 in 2001 to 3,300 km2 in 2009 (50% greater than at the historical lowest water level). The distance from Aralsk harbor to the NAS decreased from 75 km in 2001 to 40 km in 2009 and 35 km in August 2010. Following the closure of the Aklak control structure on 21 November 2009, the upstream water level reached 53 m above BSL as per design, allowing 75 million m3 of water to be diverted into the delta lakes. (b) For PDOs (i) and (ii). Construction of the new Aitek structure and rehabilitation of other Syr Darya river infrastructure works provided an overall carrying capacity of the river of 700 m3/sec and increased the carrying capacity in winter from 300 m3/s in 2001 to 425 m3/sec in 2007. As a result of these interventions and those at Chardara dam and reservoir, annual losses into desert sinks (the Arnasai depression) reduced from 5 billion m3 in 2003 to 0.4, 0.8, 1.0 and 0.2 billion m3 in 2006, 2007, 2008 and 2009 respectively (the target outcome value was 1 billion m3). (c) For PDOs (i) and (ii). The increased freshwater inflow to the NAS more than halved the salinity levels in the sea, from more than 20 g/l in 2001 to less than 10 g/l in 2010. (d) For PDO(i). Areas planted to rice increased from 58,500 ha in 2001 to 73,300 ha in 2009. More generally, water supply for sustained cropping on all irrigated lands (in the order of 150,000 ha) has been secured. However, there was as yet

13 no solid trend helping to directly attribute4 the increased crop production/yield to the SYNAS. Agricultural development is dependent on not only water availability but also workable and effective irrigation systems, agricultural extension, marketing, etc.; further support will be needed to realize the agricultural benefits of secure irrigation water supplies (e.g. through the prospective Irrigation and Drainage Improvement Project - Phase 2 (IDIP-2)). (e) For PDO(i). Cattle numbers increased from 185,000 heads in 2001 to 260,000 heads in 2009, and there were similar levels of increase in other livestock numbers. Livestock raising expanded due to increased availability of potable water for livestock watering and (possibly) of irrigation water for livestock fodder production. (f) For PDO(i). Fish catches in the region increased from 52 t in 2004 to 2,834 t in 2007, 2,320 t in 2008, and 2,650 t in 2009 (of which 2,000 t in 2007 and 1,885 t in 2009 were from the NAS itself). The production from fish processing plants in the region reached 770 t in 2009 (of which 466 t were exported). Fishermen informed the visiting ICR mission that the informal volumes of fish catches far exceed the formally-declared catch volumes. (g) For PDO(ii). Flora and fauna, and in particular birdlife, around the NAS have much improved. Also, local people have reported better health and wellbeing (due to the improved micro-climate and other conditions such as air, soil and water quality and biodiversity), and have indicated a return of hope for the future. The previous trend of mass migration from the area has been reversed, with people returning, building or improving their houses, and reengaging in income generating activities, primarily fishing and livestock raising.

The ICR mission of November 2010, during field visits to SYNAS project sites to see the works and appreciate their actual and potential social and environmental impacts, qualitatively validated the above noted outcomes. As a form of end-of-project beneficiary survey (see Section 3.6 below), the mission met with local project officials, fishermen from the NAS area, and representatives from the local NGO Aral Tenizi based in Aralsk, to obtain information and perspectives on relevant social and environmental indicators (e.g. changes in health of the local population, fish catches and production, and birdlife and biodiversity in the region). The NAS fishermen acknowledged the benefits that they have received from the SYNAS project in terms of greater fish catches, much more variety of fresh-water fish species, improved environmental and health conditions, etc. The mission also met with the PMU’s ecologist to discuss these impacts and review the types of indicators to be used for the GOK’s own ICR report (see Annex 7).

3.3 Efficiency (Net Present Value/Economic Rate of Return, cost effectiveness, e.g., unit rate norms, least cost, and comparisons; and Financial Rate of Return) The project demonstrated good economic viability, as it resulted in several multi-sectoral types of benefits. The viability of the capital investments has been demonstrated by a

4 The economic analysis in Annex 3 attributed only a portion of the value of increased crop and livestock production, to the improved water quantity and quality resulting from SYNAS.

14 simplified, indicative and likely conservative estimation of the annualized monetary gains attributable to the project’s water sector investments and achieved to date in the five key areas of (i) fisheries, (ii) crop production, (iii) livestock, (iv) flood protection and reduced water losses, and (v) ecology, public health and the environment. Details are provided in Annex 3. The ratio of the capital costs to the annualized benefits is used as an indicator of economic viability. A ratio value of less than 10 is deemed to demonstrate economic viability, and the actual value obtained of 6.4 is therefore considered to be a good result.

As previously reflected cost overruns were significant primarily due to auxiliary works that had not be properly identified at design, but also due to inevitable delays and difficulties in applying international standards for management of procurement and management of contracts for works and installations and the related learning curve as well as a relatively weak US$ relative to local currency. In spite of these elements overall unit costs remained within acceptable ranges for such works in the region.

3.4 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs, and efficiency) Rating: Satisfactory

The project outcome is considered to be clearly satisfactory from the perspectives of relevance of objectives, achievement of objectives, and economic efficiency, with only minor shortcomings noted.

3.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above) (a) Poverty Impacts, Gender Aspects, and Social Development From the indications at Section 3.2 above it must be concluded that the remarkable advances achieved in the securing and enhancing of the land and water resources of the Syr Darya river basin and the NAS for production from fisheries, livestock and agriculture should lead to equally significant income improvements for the local population. This assumes that proper attention is given to the removal as necessary of other constraints to production, processing and marketing, for example as is intended for fisheries with the ongoing parallel JSDF initiative and for agriculture with the prospective IDIP-2. Beyond this, the improvements in biodiversity, environmental and human health, and transportation and power infrastructure and services, should prove highly conducive to further social and economic development and quality-of-life enhancement in the region.

(b) Institutional Change/Strengthening (particularly with reference to impacts on longer-term capacity and institutional development) Strong technical and project management assistance was provided under the project to the PMU and implementing agencies, through a mix of international and national consultant firms and individuals. The institutional strengthening benefit that accrued as a result has been acknowledged in the Borrower’s draft ICR report.

(c) Other Unintended Outcomes and Impacts (positive or negative) Construction of the NAS dike and Aklak control structure, the sites of which were at very isolated locations, required a substantive investment to be made for the provision of

15 supporting infrastructure (e.g. roads). During implementation this was increased to an even higher level, at the request of local authorities and communities, to provide extra road and power line connections to isolated communities in the area. It is understood that these have had a substantial positive impact on the development of these communities. Somewhat similarly, at the Chardara dam and reservoir, where revised safety concerns led to unplanned interventions to secure the Arnasai side dam and spillway (and contributed to postponement of some main dam site works), an unintended outcome was the securing of local district power supply through stabilization of a high voltage transmission line.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops (optional for Core ICR, required for ILI, details in annexes) As mentioned at Section 3.2 above, ICR mission meetings with local project officials, fishermen from the NAS area and representatives of a local NGO were held as a form of end-of-project beneficiary survey. Details of the findings from these meetings, together with a relevant media report extract, are provided in Annex 5. There was also a public- hearing stakeholders workshop carried out in Kyzylorda with the participation of local government authorities and community water-user group members. Findings from this workshop are presented in Annex 6. In summary it can be said that there has been widespread public satisfaction with the project results and impacts. Particular emphasis was given to the remarkable improvements in NAS fisheries, birdlife and other wildlife in the adjacent areas, the health of the population, and the potential for social and economic advancement and standards of living. Also expressed was strong positive support for proposed SYNAS-II project interventions.

4. Assessment of Risk to Development Outcome Rating: Moderate

To assist with the assessment of risk to development outcomes, a risk matrix as shown on the following page was developed. This summarizes the perceived risks in the envisaged progression from achieved outputs through intermediate results to final results, together with risk mitigation requirements. It is judged that the risks arose more from externalities than from project design or implementation shortcomings. While the perceived levels of the output to intermediate result risks are low to medium, the importance of some of them leads to an overall rating of the risk to moderate.

16 Risk Matrix Key outputs Risks from outputs Risks Intermediate results Risks from Risks Development results to intermediate Mitigation intermediate results Mitigation results to development results

1) NAS dike Too low/high water SYNAS-2 Fish and fingerlings Install fish and spillway inflow to NAS: Low pass through NAS net, electric developed risk. 1) (From outputs 1, 2 spillway to big Aral shock, or fish & 4): More water Sea where they can’t ladder at 1) Fish, livestock and retained in NAS, survive. NAS crop production 2) River Lack of O&M and Follow up increasing its volume spillway. increased. hydraulic increased erosion by CWR and surface area and structures downstream of Aklak reducing its salinity. Crop production (as rehabilitated and others: Medium opposed to fish Improve and developed risk. catching and irrigation and 2) Biodiversity in and 2) (From outputs 2, 3 livestock raising) drainage (e.g. around NAS & 4): Less water lost depends on other IDIP-2), improved. 3) Chardara Lack of O&M: Low Follow up to sinks or causing non-SYNAS inputs. extension and dam and its risk. by CWR hazardous floods. marketing. auxiliary works rehabilitated Too high flood: 3) Human health and Medium risk. SYNAS-2 3) (From outputs 3 & safety improved. 4): Dam safety 4) CWR improved. strengthened PMU and M&E through the discontinued after SYNAS-2 PMU and M&E SYNAS closing: components Medium risk

17 5. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues)

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry (i.e., performance through lending phase) Rating: Satisfactory There has been no indication from either the Borrower’s draft ICR report or from the ICR mission reviews that Bank performance and support during project preparation was anything less than satisfactory. High quality inputs from both the Bank and project preparation consultants seemingly ensured that project concepts and formulations, emerging as they did from the broader regional context of the ASBP, were sound, relevant, effective and practical. Also noteworthy were the early (pre-effectiveness) arrangements and inputs for timely preparation of detail designs and tender documents for the project’s main infrastructure works. It is deduced that perhaps one area of possible shortcoming was in the prioritization and definition of first phase Chardara dam and reservoir safety interventions, given the changes to these that had to be made during project implementation, and given the perception also that some important items were postponed for later attention more for cost than for technical reasons. However, it needs to be noted that this project covers structures over a stretch of thousands of kilometers in fairly difficult terrain. Working to a large part on blue prints that were several decades old, oversight of some, and reprioritization of other works that only became noticeable during implementation would have to be expected. This is particularly the case since this project is part of an overall program of sequenced investments.

(b) Quality of Supervision (including of fiduciary and safeguards policies) Rating: Moderately Satisfactory

From the Borrower’s perspective, the Borrower's ICR report has indicated nothing but satisfaction with the Bank's efforts, inputs and support in the supervision of project implementation. Also of note however is the indication and acknowledgement of persistent differences between GOK and Bank perspectives, rules and requirements in the formulating, securing and administering contracts and in other project (including financial) management aspects. These differences seem to have been important (though certainly not exclusive) factors in the long delay in project completion and possibly indirectly in the non-execution of some project works due to cost increases and budget limitations. GOK policies, priorities and practices in these procurement, financial and contract management areas are not perceived to be on par with international standards, guidelines and proscriptions relating to competitiveness, transparency and a focus on outputs, development goals and sustainable benefits. In this situation it is felt that greater Bank advocacy and a more proactive approach to influence change, not only at CWR/PMU level but also and probably more importantly at higher government/ministerial levels, could have been applied.

In support of its supervision, the Bank team was in constant contact with the client/PMU and its design/supervision consultants to expedite the design/implementation progress

18 and to address emerging design/technical issues. The Bank team responded proactively with timely approval of justified contract variation orders and with guidance to the PMU on the needed M&E and supervision activities to reach the PDO objectives. Finally, the Bank follow-up undertook an in-depth Mid-Term Review in 2005 that was used to reorient some of the priorities to improve performance. In addition, the Bank’s procurement team kept a close watch to ensure that the client maintains transparent and efficient tendering and contract-management procedures, built capacity by organizing seminars on procurement and FM including sending PMU staff for training in Italy.

(c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory The above overall rating results from the combining of the two previous separate ratings in accordance with the ICR report guidelines.

5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory As mentioned above, GOK policies, priorities and practices in procurement and project, financial and contracts management areas are not perceived to be on a par with international standards, guidelines and proscriptions relating to competitiveness, transparency and a focus on outputs, development goals and sustainable benefits. This is a common situation in Central Asian and other ex-Soviet countries that often constrains and impedes international assistance efforts to help provide meaningful and effective developments with equitable and maximal long-term benefits and positive impacts for a target disadvantaged population. In the present case, also as mentioned above, it seems that it could have contributed to the long delay in project completion and the non- execution of some project works due to cost increases and budget limitations. One example would be contracting system disincentives for contractors to bid on project works contracts, as evidenced by often very poor responses to tender calls; further examples would be the major constraints on contract management options for resolving issues relating to needed work variations and to poor contractor performance. Government performance is therefore deemed to have had moderate shortcomings.

(b) Implementing Agency or Agencies Performance Rating: Satisfactory Judging by outputs/outcomes that are within the mandate/control of CWR, the acceptable quality of construction/operation of SYNAS subprojects suggests that CWR’s performance is satisfactory. The works introduced/rehabilitated are functional and improved the operation and safety of the structures, thus benefiting many water users along the Syr Darya river and around the NAS, and mitigating the flooding risks.

Judging by activities/procedures and implementation progress, there were many delays and problems, such as the small design issues causing tail-water erosion at Aklak and Aitek weirs, few pending works under the Aklak-Structure contract that slipped beyond the closing date,5 and dropping few flood protection works. But much of these issues can be attributed to externalities or to deeply rooted nation-wide procedures.

5 The causes of the contract management problems and delays in Contract#001 (NAS Dike and Aklak Control Structure) are twofold:

19

(c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory

The above overall rating for Borrower performance results from combining the two previous separate ratings in accordance with the ICR report guidelines.

From the above considerations, overall Borrower performance could be reasonably assessed as having had moderate shortcomings, as indeed is indicated by the rating presented above. However, as may be deduced from earlier comments above, it is thought that most of these shortcomings arose substantially from policy, priority and practice restrictions and demands imposed on the implementing agencies from higher levels of government. The CWR/PMU/PIU is thought to have normally demonstrated willingness and desire to subsume and apply sound procurement, supervision and management standards and practices during project implementation (with the support of generally strong consultancy services), but to have been restrained in this by external GOK constraints. From this perspective the implementing agencies could be considered as having performed with only minor shortcomings.

6. Lessons Learned (both project-specific and of wide general application)

• Force Majeure causes (that were difficult to foresee during SYNAS preparation): (1) Severe weather conditions (e.g. floods to NAS in 2003-2005 were double of their annual norms); and (2) the country’s construction boom in 2004-2006 which led to a sharp escalation in project costs and shortage of construction materials (contractor encountered difficulty in providing timely supply of materials/equipment). These events often affected work at its mobilization and during its progress, and caused an accumulated delay of at least 2 years.

• Man-caused issues (partially avoidable during preparation/implementation): (1) The supporting infrastructure in project area was lacking at project onset. Upon the suggestion from the regional governors, the contract was amended to build village roads to improve transportation between remote settlements and to supply the site with materials/equipment from relatively remote railway stations; (2) Delayed production of the hydromechanical equipment by the local manufacturer; and (3) Poor contactor/subcontractor staffing and headquarter-to-site financing policy throughout the construction period particularly its initial stage, and again during 2007-2010. This included the selling of the main contractor’s construction machines, vehicles and dump trucks following the law suit filed by its local subcontractor during working on sealing the river bed, which deterred completing the work on the main structure and the dam in 2008. Until the closing date, the CWR and Bank teams undertook arrangements to resolve the issues between the main contractor and its national subcontractor, in order to leave only minimal works to be completed and financed solely by GOK beyond the closing date. These arrangements aimed to hedge any significant risks after the project closes. •

20 The project provided a number of lessons that should prove relevant in the preparation and implementation of subsequent similar development projects in Kazakhstan and the Central Asia region. These are summarized below.

Lesson 1. While dam safety was not a PDO of SYNAS-I, in water management developments where dam and reservoir safety is identified as an item in need of attention, due prioritization should be given to execution and completion of the needed amelioration measures. It is recognized that this is most likely to require substantial financial resources and that, if these are directed towards comprehensively resolving dam safety issues in the first instance, the overall project objectives and desired outcomes may not be fully attained in a limited budget situation. Under SYNAS-I , Chardara dam and reservoir safety was addressed through urgent but relatively low cost interventions, while important but relatively high cost interventions (e.g. to enable passage of an appropriate design flood) were left for a subsequent project. The successful process of improvements to the NAS and river delta lake water levels and quality, to the Syr Darya river flood control and conveyance capacity, and to overall basin water management, as well as to Chardara dam and reservoir safety, would be continued under the proposed SYNAS-II project. It is suggested that consideration be given in SYNAS-II to affording priority to dam safety in terms of both funding and scheduling, and if this purpose detracts from the main PDOs of SYNAS-II, a separate project may be formulated with the aim of addressing dam safety/operation issues.

Lesson 2. For development effectiveness reasons, both technical and economic/financial, there is a strong need for international river basin water management developments to be formulated and implemented in a joint and integrated manner within and between all of the riparian countries. In the case of the Central Asian and Aral Sea countries it is known that great efforts were made previously to seek agreements and cooperation for much needed joint regional/international water management improvement projects, to no avail. As a consequence, basin water resources development to date has proceeded on an individual country basis, and there is now a history of relatively successful completed and ongoing individual country projects (e.g. the Ferghana valley and other projects). Within this history there are various instances where unilateral development decisions and actions have led to counter investments that were (from a basin-wide perspective) costly, avoidable, or at best sub-optimal. Examples in the case of the Syr Darya river basin in Kazakhstan would include the SYNAS-I repair works on the Chardara reservoir Arnasai side dam and the GOK’s separate Koksarai flood diversion and retention complex. These efforts could be further optimized if a win-win transboundary approach is jointly taken with Uzbekistan. There is every prospect for further such ”useful-but-only-sub-optimal” water developments to take place in the Central Asian countries until such time as international joint water resources planning and management can be agreed to and implemented. A renewal of efforts to achieve this as part of individual country follow-on projects is suggested. Some potential initiatives that have been proposed for consideration include (i) holding trust-building regional workshops involving the five Central Asia countries, (ii) development of national development databases and management information systems (MISs) with standardized designs and tools, covering all water balance variables, from which countries could selectively extract and share key data with other countries with a view to identifying and sharing/trading development

21 benefits, and (iii) formulating and undertaking coordinated and/or joint development projects with similar and/or mutually beneficial outcomes in two or more countries.6

Lesson 3. Based on comments at Section 5 above relating to procurement and other project management aspects, further efforts and attention are needed to bring about some modernization of the development approach in the Bank-supported operations, aiming at establishing international standards and practices relating to competitiveness, transparency and management flexibility with a focus on outputs, goals and sustainability.

Lesson 4. Specific attention is needed to improve the management/administration of the procurement contracts. For any similar follow-on projects the borrower should acquire adequate knowledge and improve capacity in contract management/administration.

Lesson 5. For the follow-on operations such as SYNAS-2, it is recommended that the Bank and client teams fully utilize Bank instruments such as the “Additional Financing” and “Restructuring”, in order to revisit project design, scale up the project, or make major changes to its key/sizable procurement contracts. Use of such instruments is envisaged to avoid the delays and cost overruns and tackle the procedural/contractual problems encountered during SYNAS-I.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies

The comments received from the borrower/implementing agency on this ICR have been positive overall, reiterating the important project impacts despite encountering minor deficiencies. The implementing agency has however expressed some reservation against the ICR sections which judged the project-preparation and contract-management approaches, while the comments have also recognized that in the past years there were discrepancies between government and international practices in project preparation (i.e. feasibility studies). The comments also implied that SYNAS-II can work on addressing these discrepancies in order to continue developing the region, through an integrated river basin management approach.

(b) Cofinanciers

(c) Other partners and stakeholders (e.g. NGOs/private sector/civil society)

6Examples could include modernization of irrigation and drainage systems, and rationalization of conjunctive water use, in the Ferghana valley for overall basin water savings and Aral Sea replenishment, and downstream to upstream energy transfers/substitutions (fossil fuel for hydroelectric) to allow winter flows to be retained for summer use.

22

Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) REHABILITATION OF 23.19 23.19 NORTHERN ARAL SEA IMPROVING THE HYDRAULIC CONTROL OF 40.95 40.95 THE SYR DARYA REHABILITATION OF 14.10 14.10 CHARDARA DAM RESTORATION OF AQUATIC 2.00 2.00 RESOURCES MONITORING AND 1.50 1.50 EVALUATION PROJECT MANAGEMENT 1.60 1.60

Total Baseline Cost 0.00 83.34 Refinancing of PPF 1.80 0.00 0.00 Front end fee 0.65 0.00 0.00 Total Project Costs 0.00 83.34 0.00 0.00 .00 0.00 0.00 .00 Total Financing Required 85.79 83.34

(b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower 21.29 International Bank for Reconstruction 64.50 and Development Local Govts. (Prov., District, City) of 0.00 0.00 .00 Borrowing Country

23

Annex 2. Outputs by Component

Components A, B and C Report on Assessment of Completed Hydraulic Structures (Field Visit of November 2010)7

Summary

Six major hydraulic structures were visited during the Bank’s first ICR mission (field visit in November 2010), over a distance of some 2,000 km by road. Most structures were found to be of good quality ensuring in principle their designed function. However, as with any such large hydraulic structures, the Bank team emphasized that CWR should ensure the typical post-project follow up actions, particularly for the structures rehabilitated “as designed”. An additional assessment through comparing the design drawings with the “as-built-drawings” including a verification of the handover documents is typically required. The most notable follow-up actions are the function of the stilling basins of Aklak and Aitek regulation weirs, both of which encounter a minor energy dissipation shortcoming (attributed to a minor design issue) which eventually causes erosion of the banks of the tailwater channel. This needs to be addressed by the CWR (per the recommendations from the WB/FAO team) to avoid any further erosion damages and additional costs. The Bank suggested that the CWR recruits a specialist who would assist the CWR to identify, and then carry out, the recommended actions, particularly if the bank erosion continues or even escalates (see details below).

The action matrix below presents a summary of the recommended CWR follow-up actions post SYNAS, following visit assessments of each of the five structures completed under the SYNAS-I project.

Follow-up Recommended CWR Follow-up Structure Timeline requirement Actions Drainage monitoring and Analyze monthly drainage data, and 2011/2012 Chardara Dam discharge verify the hydraulic modeling results onwards capacity of of GRG operations GRG* Analyze and interpret NAS outflow 2011/2012 Kok-Aral Dam None data (2005-2010) onwards Verify “as built” drawings, the Verification and Aklak Bank erosion in hydraulic calculations and the design Regulation implementation: tailwater channel of the stilling basin, and implement Weir During erosion protection measures 2011/2012

7Including a visit to Koksarai reservoir and diversion structures which are, however, not part of SYNAS-I implementation, but are integrated with project design.

24 Instable vortex Investigate cause of vortex and hence Kazalinsk in headwater of (if needed) implement mitigation 2011/2012 Headworks left gate measures Verify “as built” drawings, the Verification and Aitek Bank erosion in hydraulic calculations and the design Regulation implementation: tailwater channel of the stilling basin, and implement Weir During erosion protection measures 2011/2012 * GRG = Ground Release Gates

Individual Structure Details

8 1. CHARDARA Dam

Situation before SYNAS-I implementation. Based on information provided by dam operation staff, the four turbines may discharge a maximum of 200 m³/s each, the two ground releases (bottom outlets) a maximum of 300 m³/s each, and the Kyzylkum canal outlet 200 m³/s, altogether 1,600 m³/s. Major problems included the vibration of the ground release gates which could not discharge more than about 40% of their design capacity, the occurrence of sink holes in the dam body at the Kyzylkum Canal outlet, and increased seepage along the toe of the dam. Because of these reasons, the Chardara Dam was considered to be unsafe.

Objective of rehabilitation works. To improve safety conditions of the dam, ensure design discharge capacity of the ground releases, restore the drainage system including renewal of piezometers, and operate and maintain the dam in a satisfactory manner.

Outcome of rehabilitation works. Following hydraulic modeling, the ground releases have been amended; however, maximum safe discharge capacity of each bottom outlet is about 250 m3/s instead of 300 m3/s. The Kyzylkum Canal outlet structure was renewed,

8 Chardara Dam (Contract SYNAS #003). The contract was signed with China Geo-Engineering (CGE) on September 1, 2004 with an originally scheduled completion date of September 21, 2007, but substantial completion was expected by the end of November, 2007. The main rehabilitation works are: (i) Construction of toe drainage system, including 183 pressure relief wells and 3.73 km drainage channel, lined with concrete slabs; (ii) Concrete protection of the downstream face of Arnasai Dam; (iii) Installation of 30 new piezometers and cleaning of 23 existing ones; (iv) Rehabilitation of Chardara Dam’s upstream face concrete protection, including repair of joints; (v) Rehabilitation of Kyzylkum Outlet (200 m3/sec capacity), mainly focusing on cavity grouting and compaction grouting; (vi) Reconstruction of Chardara’s spillway’s two bottom outlets to avoid excess vibration of the gates and allow the design flood to pass. Main works comprise reshaping of spillway floors, with the right outlet tunnel completed in 2006 and the works on the left outlet tunnel ongoing; (vii) Renewal of all hydro-mechanical works (gates, hoisting mechanisms, and stoplogs) at Chardara Spillway and Kyzylkum Outlet; (viii) Electrical works for Chardara and Kyzylkum gates and gantries; and (ix) Investigations for Chardara Dam, including CCTV survey of buried drainage pipes, liquefaction investigations (trial pits, boreholes and CPT), bathymetric survey of the reservoir, and underwater surveys by divers. (x)

25 all piezometers replaced, and the drainage system improved. Total drainage along the dam toe was reported to be 5 m3/s which is a significant and unusually great discharge.

Present operation & maintenance. Though the safety of the dam has been significantly improved, the full discharge capacity of the ground releases cannot be achieved without considerable vibrations. This reduces usage of the Syr Darya flow capacity below Chardara Dam by 100 m3/s or about 8%. Though drainage was said to be recorded, no information was available about drainage fluctuations and/or method of recording.

Recommended follow-up actions by CWR. Drainage data should be analyzed and interpreted monthly, the hydraulic modeling results should be verified, and the cause for continuous vibration of the bottom outlet gates identified and possibly mitigated.

2. KOK-ARAL Dam

Situation before SYNAS-I implementation. In 2001, further desiccation of the Large Aral Sea (LAS, the Southern part of the Aral Sea) led to a separation of the LAS and the NAS, increasing the mineralization level of the latter to up to 100 g/l and thus making it impossible for fish to survive.

Objective of rehabilitation works. To prevent further desiccation of the NAS and enhance its partial restoration including decreasing the high mineralization level.

Outcome of rehabilitation works. Contrary to an expected NAS filling time of some 10 years, the NAS was brought to the designed maximum water level at 42 m above Baltic Sea Level (a BSL) already two years after the completion of the Kok-Aral Dam. Since then, NAS operation level remained steady at around 42 m a BSL (or slightly higher) which was due to favorable climatic conditions as well as the increased discharge capacity of the lower Syr Darya following interventions under SYNAS-I, such as the construction of new regulation weirs, river training works, increase of Chardara dam discharge capacity, etc. Additionally, mineralization decreased in a large part of NAS from some 70 g/l to as little as 10 g/l.

Present operation & maintenance. The spillway is fully functioning but the crane for lifting the stoplogs is not yet installed. The dam body is maintained well; minor seepage of different intensity is visible along the dam. The “new” Syr Darya delta is developing only a few kilometers upstream of the dam.

Recommended follow-up actions by CWR. NAS outflow data (2005-2010) should be analyzed to better understand the reason for the rapid filling of the NAS during 2005 to 2007. A recent study about the variability of mineralization in the NAS should be evaluated, and means to ensure a better mixing of fresh Syr Darya water with impounded NAS water should be identified. Additionally, it might be worthwhile to anticipate the future development of the “new” Syr Darya delta since this may cause increased siltation upstream of the dam’s spillway and a possible reduction of the spillway capacity in the long-term.

26 3. AKLAK Regulation Weir Including Fish Ladder

Situation before SYNAS-I implementation. Following the recession of the Aral Sea, erosion of the Syr Darya riverbed brought the existing regulation weir close to collapse and interrupted adequate water supply to the Syr Darya delta lakes.

Objective of rehabilitation works. To prevent further erosion of the Syr Darya riverbed, regulate NAS inflow, and ensure fish migration and water supply for the Syr Darya delta lakes.

Outcome of rehabilitation works. The Aklak Regulation Weir including a fish ladder is completed and fulfills its purposes. Some minor works are left to be implemented by a new sub-contractor.

Present operation & maintenance. The weir has been tested at the maximum discharge capacity of 500 m3/s and found to be functional as designed. At the time of the visit, some 400 m3/s were discharging and turbulence in the stilling basin was significant, causing supercritical tailwater flow (estimated Froude number greater than 9) and some erosion damages in the weir’s tailwater channel. The latter is such that common maintenance works might not mitigate the problem; a comprehensive solution is needed. As the erosion was significant, the Bank team questioned if this might sooner or later endanger the stability of the structure including the outlet of the fish ladder. Additionally, there is a need to eliminate any future erosion that could jeopardize the stability of the hydropower plant planned to be build on the right abutment (possibly in SYNAS-II).

Recommended follow-up actions by CWR. Following the actions agreed per the Bank supervision Aide Memoires of April and August 2010, the General Contractor finalized a deal with a Subcontractor to complete the remaining works under the Aklak contract, and as much as possible/realistic, before the SYNAS-1 closing date (December 2010). These remaining works were mainly for (i) backfilling of the old river bed; (ii) installing a 35/10 kW transformer to secure permanent electricity supply for the structure, and (iii), most importantly, to fix the bank scouring (erosion) downstream of the structure on both sides of the river bed (particularly at the end of the fish ladder), which occurred after the successful testing/receipt of the structure by the CWR engineers. Other than these 3 subcontracted works (which are not major, compared to the main works achieved), the Bank and CWR teams urged the General Contractor to complete (as fast as possible) any other pending/site-clearing works as per the contact.

During the November 2010 mission, the Bank team advised CWR to ensure that the Aklak recent bank erosion on both sides of the river bed (and to a lesser extent, downstream of the Aitek weir), are of a localized nature hence do not affect the structures stability. The Bank mission suggested that this erosion may correspond either to an under-design of the stilling basin or to an implementation shortcoming. The Bank team advised CWR to, for example, advertise for a “turnkey” (design and build) contract in order to secure a permanent solution. The CWR's local designer formulated a temporary technical solution, and a corresponding Variation Order (VO) has been submitted by the CWR to the Bank for no-objection. This would allow the Subcontractor to (at least

27 temporarily) fix this scouring as well as complete the key remaining works under the Aklak contract. The Bank mission helped in reaching this subcontracting deal (including explaining to all three parties how the VO can be consistent with the Bank’s Procurement Guidelines). The VO includes authorizing the Subcontractor to receive its related (IBRD & GOK) payments directly in its bank account (while the separate subcontract between the General Contractor and its Subcontractor will fairly share the liability periods relating to the works undertaken by each). The CWR team implied that the erosion would be adequately/temporarily tackled by the contractor.

Meanwhile (from December 2010 to March 2011, although SYNAS closed in December 2010), as part of the Bank’s due diligence in observing the Dam Safety OP/BP4.37, the Bank team (assisted by FAO) undertook to review the design to figure out whether the scouring problem is a design issue or an implementation issue. Part of the “as-built- drawings” related to the ogee crest of the weir, the stilling basin and the tailwater channel protection were verified, and preliminary hydraulic calculations and the design of the stilling basin were checked, to help CWR propose corrective measures. The preliminary analysis suggested that the structure is generally safe but there may have been a minor design issue with the stilling basin due to selecting the weir location at a relatively high altitude, hence the Bank/FAO team advised the CWR to monitor the erosion status. If erosion escalates/continues, CWR should immediately engage a Hydraulic Structures specialist to review the detailed design drawings/calculations, hence help CWR analyze further the erosion cause/status and propose a feasible mitigation/protection, and also to advise CWR on any follow-up activities at other SYNAS-I structures, including Aitek Weir where milder erosion occurred. In late May 2011, CWR/PMU has implied that the Aklak erosion has stabilized.

4. KAZALINSK Headworks

Situation before SYNAS-I implementation. The old mechanical and electrical equipment installed in 1970 was worn out and did not fulfill any longer its required functions.

Objective of rehabilitation works. To replace/modernize all mechanical and electrical equipment and to repair the stilling basins and downstream aprons of the diversion structures.

Outcome of rehabilitation works. According to information provided by headworks operation staff, all replaced mechanical and electrical parts are functioning well. However, no structural rehabilitation works were executed.

Present operation & maintenance. Headworks operation is said to be smooth, and there are no maintenance issues. However, an unstable vortex, whose cause is not well understood, was observed in the headwater of the left gate. It may be occurring in the context of (possibly damaged) submerged guiding walls for keeping the left bank intake free from bedload material.

28 Recommended follow-up actions by CWR. As in the case of all rehabilitation activities of big hydraulic structures , due diligence would require preparation of a list of executed rehabilitation works, their detailed specifications, and test results including final handover comments, and to compare these with those specified in the respective rehabilitation/construction contracts. In this particular case, the cause of the vortex activity should be investigated and mitigation measures should be implemented if found necessary. However, the vortex size/location does not seem to pose any worrisome safety risks.

5. AITEK Regulation Weir

Situation before SYNAS-I implementation. The Aitek weir, characterized by a limited flow capacity of 400 m3/s in summer and a reduced flow capacity of 200 m3/s due to ice formation in winter, was in danger of collapse. The destruction of the regulation weir would have led to crop failure on an irrigated area of 16,700 ha.

Objective of rehabilitation works. To construct a new weir with a maximum design flow capacity of 700 m3/s in summer and 425 m3/s in winter.

Outcome of rehabilitation works. The new Aitek regulation weir fulfills its purpose. The Syr Darya discharge capacity below the weir is significantly increased and water availability for irrigation purposes is ensured.

Present operation & maintenance. There are specific operation rules for the weir gates due to the particular flow conditions in winter which lead to higher tailwater levels than for the same discharges in summer. When the weir was visited some 430 m3/s were being discharged. Turbulence in the stilling basin as well as in the tailwater channel was stronger than expected, and was causing some erosion along the left and right tailwater channel banks. The latter is such that common maintenance works may most probably not mitigate the problem, leading to a need for a comprehensive solution (similar to the Aklak weir situation, albeit with a lesser extent ).

Recommended follow-up actions by CWR. As is the case of the Aklak weir, the “as- built-drawings” related to the ogee crest, the stilling basin and the tailwater protection should be verified, the hydraulic calculations and designs for the stilling basin should be checked, and erosion protection/mitigation measures should be designed and implemented as soon as feasible. For these purposes, the same Hydraulic Structure Specialist who would be recruited to address the erosion at the Aklak weir, and help CWR to follow up the other structures built under the SYNAS-I(e.g. appraise the completed works and design any required follow up or O&M measures).

Component D: Aquatic Resources and Fisheries Development

The project aimed to improve conditions of lakes in the Syr Darya delta and the NAS by reducing salinity through more supply of freshwater. This was to help in increasing production of fish in these water bodies, and in improving ecology and biodiversity. The project initially included US$2.0 million for improving aquatic life in the rehabilitated water bodies, including US$1.5 million for technical assistance and consulting services

29 and US$0.5 for works. However, since the start of the project, the GOK has been emphasizing the need to use grant funds as much as possible for implementation of this component.

Among the many ideas/activities for inclusion into this component, rehabilitation of two existing hatcheries in the delta area next to the NAS, at Koszher/Kamyshlybash (for Cyprinid and other forms of freshwater aquaculture) and Tastak (for sturgeon), were considered to be the most essential. At the start of the project, USAID assisted with rehabilitation of these hatcheries, providing equipment such as incubators, technical assistance and training.

With this work done by USAID, by the time of the SYNAS-I project mid-term review (MTR) in 2005, the PMU presumed that the project funds for rehabilitation of hatcheries would not be required and decided to reallocate the civil works funds (US$0.5 million) for rehabilitation of hydraulic structures and canals supplying water to Kamyshlybash lake. However, despite repeated efforts/reminders during World Bank missions, no progress was made in preparing designs for these works. During preparation of the SYNAS-II project, a superior solution for restoring fresh water flows to the system of lakes in the delta, including Kamyshlybash lake, was identified and adopted. The PMU thus felt (and the Bank’s MTR mission agreed) that the utility of the works for restoring flows to the lake as conceptualized, using limited SYNAS-I project funds, was very low, and that the works should therefore not be undertaken in this way. It was deemed that a better resolution of the issue would be obtained under the SYNAS-II project (and by 2010 the CWR had decided to undertake the Kamyshlybash lake works, together with other proposed works on the Akshatau and Aksai-Kuandarya lake systems, under the SYNAS-II project).

Meanwhile, more resources to complete rehabilitation of ponds for fish stock, pumps and power lines were needed at the two above mentioned hatcheries. It was therefore agreed that the funds for civil works would be used to carry out some rehabilitation of the ponds and associated works at the two hatcheries. In parallel, the Bank mobilized the JSDF grant (see below) to provide technical assistance to develop fisheries in the project area through a community-based development approach. There have been savings out of the remaining US$1.5 million allocated to this component (and provided from the GOK budget) for technical assistance/consulting services; only a small part of these funds was required for designing and supervising rehabilitation works for ponds at the two hatcheries. The savings have been used to meet the additional cost of project supervision and management due to extension of the project implementation period.

Community-Based Aral Sea Fisheries Management and Sustainable Livelihoods Project (JSDF Grant of US$1.9 million, approved on March 27, 2008)

The JSDF-supported Kazakhstan Community-Based Aral Sea Fisheries Management and Sustainable Livelihoods Project, which supports the fishing communities around the NAS as a supplement to the SYNAS-1 project, is ongoing. The objectives of this capacity-building project are to improve living conditions for vulnerable, marginalized fishing communities in the NAS region by developing local capacity for improved and sustainable management of the resource base, enhancing income generating opportunities, and

30 supporting access to basic social infrastructure and services. The SYNAS PMU is managing the implementation of the grant, for which certain funds are available under the grant.

Aral Tenizi is the implementing NGO that was identified during grant preparation since it had been working with fishing communities around the NAS for over ten years and was well-qualified for the work under the grant. It was foreseen that the PMU would have procurement expertise but would need to hire technical expertise to assist with the development of detailed technical proposals ready for procurement. The NGO was hired to carry out many of the implementation tasks. The above arrangement has already been tested through completion of two procurements, namely (i) procurement of furniture and toys for kindergartens/baby nurseries in Aralsk and (ii) procurement of vehicle and ambulance for the remote fishing villages. Also, by the end of December 2010, a water truck was to be procured for the communities.

The SYNAS PIU in Kyzylorda facilitates the implementation of the grant, and the Bank team therefore recommended extension of the contracts of the PIU core staff until the start of the SYNAS-II project. It needed to be strengthened with a few short-term technical consultants, to be hired for the NGO Aral Tenizi. Grant implementation has been slow (disbursements were only at US$407,000 or 22% of the target by June 2011). The Bank mission met with PMU staff in Astana and the representative of the NGO “Aral Tenizi” in Karateren who administrates the JSDF grant, to discuss the status of implementation and pending issues. According to the procurement plan activities are significantly behind schedule. The NGO representatives reported that a Grant Coordinator had been hired in November 2010 and that she would start in December 2010 to conduct training on project design (proposal writing) for fishermen in 15 villages. The mission informed the PMU staff that most construction works should be started no later than March 2011, failing which the Grant funds would be returned. The mission also emphasized the need for a Building Engineer/Architect to be in place this year, so that key civil works could be prepared and implemented from the spring of 2011 onwards. At least one year will be needed for implementing the works and supplying the goods (before the grant closes on 27 March 2012), and therefore, if by mid of 2011 the contract documents for these works/goods are not prepared, the Bank and the CWR will consider canceling the related portion/categories of the JSDF grant.

The Bank mission encouraged the CWR to mobilize the eligible consultants category of the JSDF grant for extending the contracts of the core staff of the PIU of SYNAS (who have accumulated good experience over the 8.5 years of the SYNAS-I project) at least until the start of the SYNAS-II project. The extension of the contracts has been important for several reasons, namely (i) to keep the PIU operational to properly complete the SYNAS-I project, including completion of the Aklak structure works by GOK beyond the project closing date, (ii) to manage the 4-month grace period of the project as well as the defect liability period for its key works contracts, (iii) to support the ICR missions to be undertaken by the Bank; (iv) to continue managing the JSDF grant project, and (v) to help CWR finalize the preparation and processing of the proposed SYNAS-II project.

31 Annex 3. Economic and Financial Analysis (including assumptions in the analysis)

At project evaluation (2010) the realized benefits, particularly those related to incremental agricultural production, are at best only at partial or interim levels, and are not readily definable. However, viability of the capital investments has been demonstrated by a simplified, indicative and likely conservative estimation of the annualized monetary gains attributable to the project’s water sector investments and achieved to date in the five key areas of (i) fisheries, (ii) crop production, (iii) livestock, (iv) flood protection and reduced water losses, and (v) ecology and the environment. The ratio of the capital costs to the annualized benefits is used as an indicator of economic viability. A ratio value of less than 10 is deemed to demonstrate economic viability, and the actual value obtained of 6.4 is therefore considered to be a good result.

Type of benefits Incremental Monetized unit benefit (modest Total annual population served estimates used) (annualized) (or incremental benefits units gained) Fisheries 3,000 ton/year US$1,000/ton. Most of it US$3 (formal catches plus attributed to the increased NAS million/year a modest estimate of volume informal catches) Crop production At least 15,000 ha Gross US$500/ton or US$3 (mainly rice) US$700/ha/year (yield is 1.4 million/year ton/ha/year). Net income is US$400/ha/year. Attribute only half of this value to the increased water; hence US$200/ha. Livestock 70,000 cattle and Attribute US$20/head/year to the US$1.5 6,000 camels increased water supply million/year Flood control, increased 60,0009 capita avail US$50/capita/year (a much higher US$3 river winter capacity, from flood value will be obtained if the inter- million/year reduced water losses to protection and sectoral shadow value of the saved sinks reduced losses (by 4 water is taken US$0.01/m3). to 5 Billion m3/year) Flora and fauna10, human 100,000 capita; avail US$20/capita/year (a much higher US$2 health (respiratory), from the increase in value will be obtained if the inter- million/year recreation and aesthetic NAS surface area by sectoral shadow value of the saved plight, intrinsic values 40%. water is taken US$0.01/m3). (vicarious consumption, existence value) Total US$13.5 million/year

9 This is a modest estimate of the number of direct beneficiaries. The total direct and indirect beneficiaries are about 1 million people, mainly in Kyzylorda oblast, the poorest region of the country. The project has directly improved the wellbeing of 150,000 to 200,000 people in Aralsk and Kazalinsk raions of this oblast (an internationally recognized area affected by the Aral Sea environmental catastrophe).

10 These types of benefits are mainly attributed to the increase in NAS surface area, leading to less eutrophication, less dusty wind storms, and better recreation.

32

C/O Ratio (economically viable if lower than 10):

Ratio between capital cost ($86m) and annualized benefits ($13.5m) = 6.4

Total Economic Value: Water Resources

Current-User Values Personal Use Value Intrinsic Values

Direct Use Indirect Use Option Values Non-use Values (Near-term & Long-term Potential use) Ecological Near Function stream value Stewardship Bequest Instream Withdrawal Future Direct and Vicarious value Indirect use values Consumption And pure e.g.Recreational, Existence value e.g. Navigation, Relaxation & Aesthetic Recreational, Commercial & e.g. Flood Control, Nutrients hydropower Cycles, Waste Assimilation

e.g. Municipal, Agriculture, Industrial & Commercial

Figure A – Total Economic Value: Water (adapter from Munasinghe 1992 and Bateman 1995)

Regional outlook: Kyzylorda oblast is a desert region with highly unfavorable climate, but with vast mineral resources. The region is also characterized by deteriorated and rudimentary infrastructure. Rural settlements are predominant, and economy is heavily dependent on agriculture production. Another salient feature of the local economy is its reliance on the national budget; over 90% of the regional expenditures are subsidized by Astana.

Positive outcome for the social environment: Interviews and statistical data show social environment has benefited significantly from improvement in performance of various agricultural sectors. Increase in amount and quality of water, crop and livestock has not only produced a direct poverty-reduction effect, but also created a long-term investment into health and nutrition of the Aral Sea community. For instance, introduction of fish into the ration of the population resulted in a rapid decline in maternal mortality rates, as well as iron and iodine deficiency disorders. Prevalence of water- and airborne diseases was also reduced due to the drop in salinity and occurrence of dust winds. Moreover, economic growth has facilitated population return flow, especially into the seashore areas and the Syr Darya basin. Considerable increase in fishery production, as well as urban wages, has positively influenced migration balance in the region.

33 Threats to sustainability: Several challenges to the economic and social well-being of the region’s population remain and need to be addressed: malnutrition, drug and alcohol consumption and inadequate public health infrastructure. It is also advisable to promote better engagement of business and community in the fish production.

The diagrams below were created based on data from the Agency of Statistics of the Republic of Kazakhstan ( http://www.eng.stat.kz/regions/kzlrd/Pages/default.aspx )

Real income rate

140 120 100 Republic of Kazakhstan 80 Kyzylordinskaya 60 Astana city Almaty city 40 i

n 20 % 0 t o

p 2003 2004 2005 2006 2007 2008 2009** r e v i o u s y e a r

Agriculture production and fishery in Kyzylorda oblast

millions KZT

2003 2004 2005 2006 2007 2008 2009 fishery 2687 131 975 86 200 116 940 149 724 153 844 225868 Stock raising 4912,6 5612,6 6540,2 7520,7 8659,8 11021,2 11 033,9 Plant raising 8383,9 10494,9 10308,5 10855,4 15486,3 18697,2 23 177,7

34 Kzylorda cereal planting

165,0

160,0 160,9 D 156,1 ÃK 155,0 Ã 153,3 153,7 G 151,6 Q 150,0 VD 149,4 X R 145,9 146,1 WK 145,0 140,0

135,0 2003 2004 2005 2006 2007 2008 2009 2010*

 Livestock in Kzylorda

900,0 800,0 780,5 783,4 743,5 700,0 679,3 702,0 637,5 600,0 585,8 Cattle 500,0 Horses 400,0 Small cattle

t 300,0 h

o 216,2 230,8 240,1 245,4 245,6 u 200,0 178,6 199,5 s

a 100,0 n 48,9 50,4 51,1 54,2 57,5 60,9 61,7 d

s 0,0 2003 2004 2005 2006 2007 2008 2009

35

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members Responsibility/ Names Title Unit Specialty Lending Masood Ahmad Mahwash Wasiq Bulat Utkelov

Supervision/ICR Lynette Alemar Senior Program Assistant ECSSD Bakyt Arystanov E T Consultant ECSS3 Ohn Myint Consultant SASDT Ahmed Shawky TTL ECSS1 Bulat Utkelov Operations Officer ECSS1 Mahwash Wasiq Senior Operations Officer SASDA Rural Development Specialist (ICR Daniel Gerber ECSS1 reviewer) Janna Ryssakova Social Development Specialist ECSSD David Colbert Environmental Specialist FAO Walter Klemm Hydraulic Structures Specialist FAO Michael Sandoz Irrigation and Drainage Specialist FAO Coral Bird Program Assistant ECSSD

36

(b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY97 46.00 FY98 13.69 FY99 199.66 FY00 33 160.22 FY01 33 142.94 FY02 0.27 FY03 0.24 FY04 0.00 FY05 0.00 FY06 0.00 FY07 0.00 FY08 0.00

Total: 66 563.02 Supervision/ICR FY97 0.00 FY98 0.00 FY99 0.00 FY00 0.01 FY01 1.25 FY02 20 74.22 FY03 20 85.26 FY04 24 103.67 FY05 25 90.12 FY06 27 164.50 FY07 6 76.07 FY08 6 63.75 FY09 1 0.00

Total: 129 658.85

37

Annex 5. Beneficiary Survey Results (if any) Meetings with Beneficiaries in Karateren during ICR mission November 2010

During its field trip to the Aral Sea region, the ICR mission met in Karateren village with a number of fishermen and representatives from the NGO Aral Tenizi. Findings are presented below

Fisheries. In responding to the questions posed by the mission team, the fishermen ran through the history of the Aral Sea’s decline, from its near death in the 1980s to its more recent return with construction of the Aralsk dam in 1996 and the Kokaral dike in 2002. They said that fishing in the NAS had been reduced to basically one species (flounder) at its lowest point, but they said they now catch a variety of species (including roach, bream, perch, carp, catfish, and pike) in greater numbers than ever before. The fishermen indicated that the fish catch had increased from around 500 tons in the mid-1990s to about 3,000 tons in 2009 (this figure more or less confirmed by the PMU data, but may not reflect unreported catches). The fishermen believe that the informal/unreported catches definitely far exceed the formally-declared catches. They indicated that the quality of fish has improved and their size has increased. The NAS fishermen also explained that they work in two seasons, spring and autumn, and work one of the ten designated fishing sites on the NAS that are owned by local fishermen who pay for a license to fish the site. A small percentage of the catch (roughly 30 percent) goes to the local market, with the bulk of the catch (roughly 70 percent) going either to the big cities in Kazakhstan or to export markets in Russia or Europe. They said the pike perch is the best fish to catch because it is best suited for export. In order to improve their situation, the fishermen indicated that they need improved infrastructure in order to reach the fishing camps (this is what limits them to only two seasons) and coolers and refrigeration for summer fishing. They also said that they want to organize into a cooperative in order to improve their economic situation. Nevertheless, as the catch has peaked in 2007, the Bank task team would advise the local authorities to analyze the tradeoffs of extending the fishing season, as this may compromise the renewal of stocks.

Biodiversity and Environment. When asked about the wildlife (biodiversity) in the NAS region, the fishermen said that the numbers of birds and other animals in the area are definitely increasing. They specifically mentioned migratory species (ducks, swans) that pass through the NAS during their annual migration south. They also mentioned increasing numbers of wild pigs, jackals, antelopes, etc, many of which they hunt. When asked about the health of the local population, the fishermen indicated that there were no major problems with health in the community now. They said that the number of sand and dust storms originating from the Aral Sea bed had decreased in recent years, so the traditional health problems associated with those events (respiratory problems) were declining. The fishermen also indicated that there were no water-related health problems in the community to speak of. The fishermen were not in a position to answer questions about crop or livestock production.

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Future Projects. Unprompted, the fishermen did not hesitate to say that they were in favor of the GOK’s proposed 50-meter NAS dike SYNAS-II project option. They also would like to stop the loss of fish and fingerlings that now pass through the NAS spillway to the LAS. They say that these fish have no chance of survival there and hence should be kept in the NAS. They proposed a fish ladder to allow the fish to return to the NAS, but they admitted that a fish net or electric shock mechanism might be more effective.

Media report from Karateren Village (adjacent to NAS): 06 April 2006

Previously Mr. Zhaisanbayev, a compact, athletic man, worked at a fish-processing plant. But that plant closed in 2001, and to support his three young children he took a job working at a social club in a larger town.

"When the sea came back I knew I must fish," he said.

On a good day now, fishing for carp and flounder, he can earn US$85, an astronomical sum in a region where many people survive on a few dollars a day. Mr. Zhaisanbayev unfurled long hand-woven carpets across his large living room to make his visitors welcome while his wife prepared piles of dried apricots, horse sausages and brick-red pistachios in a kitchen sparkling with new appliances imported from Korea. With the disappearance of the sea, fish and the ecologically interconnected freshwater lakes that supported livestock, many people in the region migrated to larger cities.

Mr. Zhaisanbayev said many are now returning. His village’s population has more than doubled, to more than 1,700, in the past two years.

For many in the Aral region, the new water is confirmation that the Aral's past is prologue. Kudaibergen Sarzhanov, a spry former Soviet minister of fisheries for Kazakhstan in the Gorbachev years, plans a 2009 release of 30,000 fish native to the Aral, that he has been incubating at home, financing his project from a small United Nations grant and money from his local government.

At the Komushbosh Fishing Hatchery, a modern fish incubator paid for with a US$143,000 grant from Israel, the plan is to release as many as 30 million young sturgeon, carp, and flounder into the Aral and its many nearby lakes when water levels are at full level. This translates into a potential catch of 10,000 to 12,000 tons a year, compared with 20,000 in the Aral’s heyday and the current 1,000.

Some in the Kazakhstan government warn of a long road ahead.

"It's going to take decades to solve this problem," said Murat Abenov, the akim, or deputy mayor, of the large Kizbilordinsk region abutting much of the Aral. He said the fishing should be encouraged "even if it's really only going to be in five years that they see results, even if it no longer matters to the government's budget." Kazakhstan has huge oil reserves, and oil revenues now provide 90 percent of local government budgets, he said.

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Many still predict that the big Aral will disappear. "We tried but failed to work with the Uzbeks," said Ikram Adirbekov, the akim for the Kyzylorda region. "The rescue of the Aral Sea is now our problem alone."

News of the Aral’s return has ignited the hope of many, even in villages not yet affected. "The fishermen are getting rich," said Guljanat Karashalan, a 19-year-old English- speaker who studies at a university by correspondence from her village. She says half her friends have left the region but will come back. "They say the jobs will return."

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Annex 6. Stakeholder Workshop Report and Results (if any)

A public hearing workshop was conducted in Kyzylorda City with participation from the local government entities as well as community water-user groups. The public hearing praised the results of the SYNAS-I project and recommended going for the second phase (SYNAS-II) project, with the preferred option of raising the water level in "Saryshiganak" bay to 46m (by building a new 10-km long cutoff dike in addition to a 45-km long adduction canal with sufficient gradient to take flows from the Syr Darya river), as opposed to the less-feasible option of trying to restore further the entire NAS by raising the existing “Kokaral” dike built under the SYNAS-I project. The GOK is currently comparing these two options with support from the World Bank team.

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Annex 7. Summary of Borrower’s ICR and/or Comments on Draft ICR

The Borrower’s draft ICR report of 30 November 2010 is a 50-page document. It is therefore not attached in this Annex. A brief outline is provided below together with a copy of the conclusion section of the report.

Outline of Borrower’s Draft ICR Report

Section Sub-Sections Content Summary / Comments Table of Contents See note at end of table Background Introductory remarks 1. Project History 1.1. Historical Prerequisites Description of pre-project 1.2. Condition of Water Management history and conditions Infrastructure 1.3. Interregional Water Use Problems 1.4. Actions by Kazakhstan 1.5. Assistance of the Global Community 1.6. Joint Efforts of the Central Asian Countries 2. Project Rationale Rationale for selection of interventions 3. Project Project preparation history Preparation Stages and consultant contributions 4. Project Nature and source of project Implementation implementation financing Financing 5. Project Presentation of objectives Implementation and corresponding key Objectives and Key indicators Indicators 6. Project Component . Restoration of the North Description of project Components Aral Sea Area components and of scope Component . Improving the Hydraulic reductions relating to Control of the Syr Darya Karaozek weir and Syr Component . Rehabilitation of Chardara Darya flood protection dikes Dam Component D. Aquatic Resources Restoration and Fisheries Development Component . Monitoring and Evaluation Component F. Project Management and Institutional Development Revised Components

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Section Sub-Sections Content Summary / Comments 7. Project 7.1. Implementing Agency and Description of project Overview Implementation Arrangements implementation institutional, 7.2. Construction Supervision managerial, supervision and 7.3. Project Monitoring and Evaluation overview arrangements with 7.4. Project Management Unit Consultants particular focus on 7.5. Inter-ministerial Coordination consultant contributions Committee 7.6. Independent Panel of Expert for Chardara Dam Safety Works 8. SYNAS Project 8.1. Preparation of Projects Description of project Preparation and 8.2. Bidding implementation activities Implementation 8.3. Implementation of Civil Works and issues relating to Contracts preparation of detail designs - 8.3.1. Contract 001 North Aral Sea and tender documents, Dike and Aklak Control Structure procurement of contracts - 8.3.2. Contract 002 Aitek Weir and execution of works, - 8.3.3. Contract 003 Rehabilitation of including details for each Chardara Dam works contract covering - 8.3.4. Contract 005 Protection Dikes on technical and contractual the Syr Darya River aspects, difficulties and - 8.3.5. Contract 006 Straightening of the exceptionalities Syr Darya River Bed - 8.3.6. Contract 009 Rehabilitation of Kazalinsk Headworks - 8.3.7. Contract 011 Rehabilitation of Kyzylorda Headworks 9. Tentative 9.1. Key Activities and Results Description of M&E Results of Project 9.2. Results of Social and Economic consultant activities, Monitoring and Assessment achievements and findings Evaluation. 9.3. Environmental Audits of Construction Sites and Camps 10. Financing of 10.1. Financing of Construction Works Description of financing, Construction of 10.3. Audit accounting and auditing Works and aspects Consulting Service and Audit 11. Key Results of 11.1. Improvement of Condition of Extensive description of SYNAS Project Chardara Dam project results and impacts Implementation 11.2. Carrying Capacity of the River Bed contrasted to pre-project 11.3. Preservation of the North Aral Sea status and conditions 11.4. Workforce Supply 11.5. Improvement of Infrastructure in Sub- Aral Area 11.6. Key Social and Economic Project Indicators - 11.6.1. Project Impact on Social Aspects in the Region - 11.6.2. Irrigated Farming - 11.6.3. Livestock Breeding - 11.6.4. Fisheries

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Section Sub-Sections Content Summary / Comments 12. Evaluation of 12.1. The World Bank Comments on project Participation of the 12.2. Borrower implementation World Bank, 12.3. Consultants contributions from the Borrower and - 12.3.1. PMU World Bank, the Borrower Construction - 12.3.2. Supervision Consultants and the consultants Supervision - 12.3.3. Monitoring and Evaluation Consultants Consultants Conclusion See report extract below Annexes Annex 1. Interaction Arrangements No content presented between Ministries and Departments during Project Implementation

Annex 2. Key Project Indicators Outcomes by key indicators (as included at Annex 2 above) Annex 3. SYNAS-1 Sites Map Site map with photographs of key project structures Note. Section and sub-section titles in this table differ from those of the presented Table of Contents and reflect actual report content.

Extract from Borrower’s Draft ICR Report - Conclusion

As a result of SYNAS project implementation, the following key interim project objectives were achieved: 1. Carrying capacity of the Syr Darya river bed increased from 350 to 700 m3 / sec at Kyzylorda-Kazalinsk control structure, which removed threat of flooding Kyzylorda city, Zhalagash, Karmakshi and Kazalinsk raions of Kyzylorda oblast with population over 400,000 people, as well as prevented significant damage to irrigation systems and existing infrastructure. 2. Preservation of the NAS as a geographical and climate-forming site reduced salt and dust pollution from the dry sea bed, which led to improvement of health, restoration of biodiversity of the sea and flora and fauna of Sub-Aral area, and mitigation of impact of the Aral Sea drying on environment. 3. Improvement of water supply of irrigation systems on area of over 70,000 hectares and coastal lake system, nature complexes and hayfields on area of over 65,000 hectares in the Syr Darya river delta, which is expected to result in sustainable improvement of crop yields and development of livestock breeding and fisheries. 4. Safe operation of Chardara dam and stabilization of operation mode of Chardara hydropower plant will lead to higher generation of power in winter time. 5. Improvement of environmental, social and economic situation in the region and Sub- Aral area: • Development of local fish species and creation of favorable conditions for breeding of sturgeon; • Fish catch increased from 400 to 2,000 tons in is expected to increase in future to 11,000 tons. 6. Reliability of existing hydraulic structures on the river, increase of their operating life, and improvement of operational features of Kazalinsk and Kyzylorda headworks.

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Project Social Impacts in the Region

During execution of works in the first phase, around 2,000 local people were directly engaged in construction works for 3-4 years. Dozens of companies in Kyzylorda and South-Kazakhstan oblasts had business with the construction companies; quarries of various construction materials supplied rock mass, quarry stone, aggregate and sand. Local plants in difficult economic times of their operation were engaged in manufacturing of hydraulic and other equipment for hydraulic structures. Local power companies designed and built power transmission lines for Aitek weir and Aklak control structure.

Over 70 km of roads built during implementation of the NAS Dam and Aklak Control Structure contract allowed organizing regular passenger and cargo transportation to formerly hard-to-access villages at both sides of the Smaller Aral Sea. Life is reviving in formerly abandoned fishing auls Karateren, Karashalan, and Bugun. Dozens of new houses are being built, those who left come back to their home land. During the reporting period, significant increase of salaries of employed population was observed; this situation in Aral and Kazalinsk rayons is indirectly associated with project implementation. Project implementation resulted in creation of new jobs, new fish processing plants and workshops were built, and new service and other enterprises were opened.

Average monthly salary per employee

70 000 60 000 50 000 e

g 40 000 n

e 30 000 T 20 000 10 000 0 2005 2006 2007 2008 2009

Kyzylorda oblast Aral rayon Kazalinsk rayon

Completion of Aklak control structure will enable the local population to develop fishing, and to significantly increase livestock, because the new control structure will allow increasing areas of hayfields and pastures. Population in the region believed in project results – many fishermen, who had left earlier, started coming back and engage in their traditional occupations, fishing at the NAS and delta lakes. Well-being of population is improving, and as a result new houses are built every year, people buy vehicles and every family has domestic appliances.

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Commissioning of Individual Residential Houses

14000 12000 10000 .

m 8000 . q

s 6000 4000 2000 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Aral rayon Kazalinsk rayon

BORROWER’S COMMENTS ON THE DRAFT ICR RECEIVED ON 6/ 9/ 2011

MINISTRY OF AGRICULTURE REPUBLIC OF KAZAKHSTAN

World Bank Country Office in Kazakhstan June 9, 2011

Re: Your letter from May 25, 2011 The Ministry of Agriculture of the Republic of Kazakhstan (the Ministry) would like to share its comments to the World Bank SYNAS-1 Project Completion Report.

Report No ICR0000874 on implementation completion and results of the Loan in the amount of US$64.5 mln for the SYNAS-Phase I Project dated May 12, 2011 is a detailed analysis of the implemented activities, as well as evaluation of the environmental and social-economic impacts on the living conditions of the Aral Sea population from the project implementation.

The Ministry assumes that number of shortcomings indicated in the SYNAS-1 Implementation Progress Report will be taken into account by the Project Administrator in preparing to the SYNAS-2. Please see our comments to the SYNAS-1 Project Completion Report attached. Attachment of 3 pages.

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Vice Minister M. Orazayev

Conclusion to the Report 1ICR0000874 for completion and implementation and results for the loan in amount US$64.5 mln in Republic of Kazakhstan of the project “Syrdarya river bed control and preservation of north part of Aral sea” phase-1 from May 12, 2011

Implementation completion report for the project “Syrdarya river bed regulation and preservation of north part of Aral sea”-phase-1 (further SYNAS-1) performed by Department of Sustainable Development, Europe and Central Asia region includes following main sections and issues:

(i) Project context, development aims and design; (ii) Key factors, affecting on implementation and results; (iii) Assesment of results, risks affecting on results and also works of Borrower and Bank; (iv) Lessons learned.

SYNAS-1 project is first phase of rehabilitation of Syrdarya river basin in terms of program of Aral sea basin (PASB), confirmed by heads of Central Asia goverments in 1994.

The report provides a summary of the assumptions leading to the shrinkage of the Aral Sea as a consequence of the extensive development of agriculture in Central Asia during the four-decade period. This has led to serious economic, social and environmental damage in the Aral Sea and around the so-called "the most serious environmental disaster in modern history." The report rightly pointed out that the project SYNAS-1 is a priority in the water sector in Kazakhstan.

Preparation of the SYNAS-1 was completed in 2001 with support of World Bank, and its implementation was completed in 2010. The project cost was US$86 million, of which 61 million U.S. dollars of World Bank loans.

In the report the main objectives of the project identified on the basis of the Project Appraisal Document: (i) support and increase in agricultural (including livestock) and fishery production in the Syr Darya River basin; (ii) improving public and animal health, as well as restoration of biological diversity by ensuring that preserve the Northern Aral Sea (NAS) and improve environmental conditions and environment in the delta and around the NAS. Also, for the appropriate key performance indicators that were used to measure the achievement of these goals.

The total number of direct and indirect beneficiaries is about 1 million people, mainly in the Kyzyl-Orda region. The project directly improves the welfare of 150 000 to 200 000 people in the Aral and Kazaly areas of this region (recognized by the international community, the region of ecological disaster of the Aral Sea).

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The Project was the first in a series of investment operations that will reduce the risks caused in Shardara dam, and will improve the efficiency of water supply, water distribution and use around the basin. The report shows the description of all components of the project according to their main goals and objectives, as well as a breakdown of project costs and components, work categories and funding sources.

There were no significant changes in the components of the project affecting the results of the project, in general. Although there was a reallocation of funds between activities to finance additional works such as roads and other necessary activities, which were not planned initially.

Management and interagency coordination of the project was carried out by the Committee of water resources, and although during project implementation there was a transfer of the Committee from one agency to another (from the Ministry of Natural Resources and Environment to the Ministry of Agriculture), it had a minimal impact on the project. Project Management Unit, initially based at Almaty, and then in Astana, was responsible for the daily management and administration of the project, and a group of consultants, located in Kyzylorda assisted in the technical design, preparation of contracts, supervision of construction work, monitoring and evaluation and tasks in project management. Also, there was not always a completely effective support provided by international and local consulting firms and individual consultants in these areas.

Other institutional measures envisaged include the creation and operation of (i) inter-agency Coordinating Committee (ICC), (ii) the Supervisory Committee of the project (NPC), (iii) Basin Advisory Group (BCG), and (iv) an independent panel of experts (IPPs) to work on dam safety for Shardara dam.

The first and fourth of these institutions have carried out the work and made a timely and significant contribution to the successful implementation of the project.

In general, the project SYNAS-1 has been implemented as it was envisaged during appraisal. In the framework of the project it was implemented seven major contracts for construction of new or reconstruction of existing water facilities on the SyrDarya river and the Aral Sea: (1) construction of a dam on the northern part of the Aral Sea (through the Strait of Berg) with the spillway structure in order to restore and stabilize the water level and salinity of the NAS; (2) construction of Aklak weir hydraulic structures; (3) the construction of Aitek weir and reconstruction of head structures in the channel Karaozek, (4) rehabilitation of existing and construction of new protection dams at key points along the river for flood protection and improve the channel capacity Syr Darya; (5) and (6) repair and Kazaly Kyzylorda headworks; (7) Shardara rehabilitation of the dam in order to improve dam safety and increase carrying capacity.

The report stated that to perform the work in whole scope prevented a number of problems, which include (i) the failure to perform the necessary design work because of increasing costs and limited budget, (ii) and vice versa, the implementation has not previously provided, but necessary and beneficial work, and (iii) the general extension of the project from 5 to 9 years.

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According to the Bank’s opinion the following factors influenced to the implementation: (i) the differences between Kazakhstan and international standards and requirements for detailed design, cost estimating, pre-bid approval, evaluation of tenders and approve the award of contracts; (ii) coming n of high-water period for a few years, which led to delays and additional needs for protective works and control of water with a corresponding increase in costs; (iii) the need to build infrastructure facilities (roads, power lines, camps, etc.), etc.

Implementation of the project SYNAS-1 as a whole, comply with the applicable measures of security policy of the Bank, which were identified during the assessment phase of the project: (i) Environmental Assessment (OP 4.01, BP 4.01, GP 4.01), (ii) Dam Safety (OP 4.37, BP 4.37) and (iii) Projects on International Waters (OP 7.50, BP 7.50, GP 7.50). The report noted the estimated risks in procurement and financial management of the project of PMU consultants, and in general, the course of project implementation and financial management of the project to assess the Bank corresponds to "moderately satisfactory".

SYNAS-I project has been successfully implemented as a tool for achieving targeted results and the expected benefits. During a visit to virtually completed and exploited sites were marked by minor deficiencies associated with the erosion of the downstream slopes and facilities Aklak and Aitek (in a less degree), which must be eliminated.

Finally, in addition to the benefits achieved, revealed significant additional potential environmental and socio-economic benefits to be realized through further cost- effective investments. SYNAS-2 project is formulated in such a way as to further promote regional development.

The report provides a brief assessment of the achievement of project objectives, the economic viability of the key areas of economic development in the Syrdarya basin, and, according to the Bank’s opinion in terms of the relevance of the objectives, goals and economic efficiency, the project results are satisfactory, with only one minor deficiencies noted.

In general, the Committee on Water Resources, Ministry of Agriculture of Kazakhstan agrees submitted Report on the completion and implementation and results of the loan in the amount of 64.5 million dollars the Republic of Kazakhstan as of 1st phase of the project on Regulation of the Syrdarya river bed and the preservation of the northern Aral Sea from May 12, 2011 with the following comments:

1. Procurement of consulting services, works and goods were carried out in accordance with the "Guidelines for Procurement under IBRD Loans and IDA Credits" as stated in Annex 4 to the Loan Agreement between Kazakhstan and IBRD (loan number 4609 KZ), therefore, must be excluded from the evaluation report for state procurements in Kazakhstan. 2. Committee cannot agree with the conclusion of the Bank that the regulatory requirements in Kazakhstan to the depth development of a Feasibility study and

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detailed design have led to delays and disputes, although they are much different from international. 3. This comment includes only the main part of the Report, due to the absence in submitted document applications 1-9 in accordance with the contents of the Report.

Deputy Chairman . Zhienkulov

Made by Smailov S. tel. 8 727 2792305

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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders None

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Annex 9. List of Supporting Documents

Monitoring and Evaluation Interim Report (by Scott Wilson, GOK project consultants, 2007)

Project Completion and Results Report by the GOK (CWR, December, 2010)

World Bank Implementation Status and Results Reports (May and December 2010).

Supervision Mission Aide Memoires (April, August, November 2010).

Munasinghe, M., Water Supply and Environmental Management: Developing World Applications. Boulder, Westview Press (1992).

Bateman, Ian, “Environmental and Economic Appraisal.” In Environmental Science for Environmental Management, edited by Timothy O’Riordan. Longman Scientific and Technical, Harlow, UK (1995).

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53 IBRD 31242R 60° 65° KAZAKHSTAN CHELKAR Koposor Kompolo Zhylon SYR DARYA CONTROL AND Shendy Togyz NORTHERN ARAL SEA PROJECT Baykodam Koroshokot Sozdy Zhiger 050100150 Shokysy Imeni Kuybysheva Imeni Vasmogo Marto KILOMETERS Akmorka SAKSAULSKIY Taymak This map was produced by the Map Design Unit of The World Bank. Akespe Kontu Shizhago The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any ARALSULFAT Shomyshkol Sarybosat ARALSK judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. Sopok KAZAKHSTANK A Z A K H S T A N Koktem Kokorol Shomish Zaliv Akbosty Komyshlybosh Tushchybas Bugun Kulandy Mys Karasholon Korotobe Imeni Orozhonikidze Northern Aral Sea Dike (new) Tastak NOVOKAZALINSK Zaliv Izendy Oktyabr Moylibash Chernysheva Completion 04/06 KAZALINSK Dyurmentyube Zhonotal Avongord Karaozek Ostrov Barsakelmes Baikazho LENINSK Imeni Zhdonova Branch Lokoly Kentogay DZHUSALY Aitek Headworks Aklak Outfall Structure (to be replaced) Flood Protection Dikes Zhorogash Completion 10/06 Kazalinsk Headworks Completion 05/05 (to be replaced) Completion 11/04 Ostrov Imeni (to be rehabilitated) Tretiy Internotsional Vozrovdenye Voroshilovo Completion 05/06 Dzhalagash TERENOZEK River Straightening 1 Koraozek 45° 45° Completion 09/06 Aksay Internotsional Zhanorolop Chogon KZYL ORDA Large Aral Sea Ostrov Zhamandarya Tasbuget Uyaly Flood Protection Dikes Sulutobe Branch Completion 05/05 Imeni Pervago Moya 2003 level of Mys Aydorly Aral Sea Aktumsyk Tortogoy Boygakum Kyzlorda Headworks Zhulek Zhidelioryk (to be rehabilitated) Kyzyldikon SHIELY Karokur Suzak 1990 level of Completion 09/05 Tumen- Zhonoturmys Aral Sea Avangorck Aryk Imeni Lenina Karotou 1960 level of Aral Sea Tostop DZHANAKOGAN

Mys Akkalo Koroson

Ataboy KENTAU Novvy Shornok Ikon Teke TURKESTAN Koktube Storyy Ikan

WATER CONTROL STRUCTURES Timur Tortkol DEVELOPED/REHABILITATED BY Mayokum Shaulder Bugun UZBEKISTAN THE PROJECT: Koksoroy STRUCTURES TO BE REHABILITATED ARYS STRUCTURES TO BE REPLACED PROPOSED STRUCTURES (NEW) Montoytas RUSSIAN FEDERATION SYR DARYA RIVER Syutwent RIVER BASIN BOUNDARIES Shardara Dam LAKES Astana (to be rehabilitated) IRRIGATED AREAS KAZAKHSTAN Aboy Area of map Lake Balkhash DESERT CHARDARA Aral MAIN ROADS C Sea Ar a nas s ai p De i REGIONAL AND LOCAL ROADS pr a es n sio n

S RAILROADS e UZBEKISTAN KYRGYZ a ILICH CHINAZ REP. ( A y d a r AZERBAIJAN TURKMENISTAN REGION BOUNDARIES k u l DZHETYSAY SYRDARYA L a k TURKMENISTAN e ) TAJIKISTAN CHINA INTERNATIONAL BOUNDARIES Gogorin Verkmene- Zulumsary Uzunkuduk Gulistan ISLAMIC REPUBLIC OF IRAN AFGHANISTAN 60° 65° volynskoye MARCH 2011