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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Report No: 59291-NP Public Disclosure Authorized PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 8.80 MILLION (US$13.75 MILLION EQUIVALENT) AND A Public Disclosure Authorized PROSPOSED GRANT IN THE AMOUNT OF SDR 7.20 MILLION (US$11.25 MILLION EQUIVALENT) TO NEPAL FOR THE URBAN GOVERNANCE AND DEVELOPMENT PROGRAM: Public Disclosure Authorized EMERGING TOWNS PROJECT APRIL 6, 2011 Sustainable Development Department Urban and Water Unit South Asia Region This document has a restricted distribution and may be used by recipients only in the Public Disclosure Authorized performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective February 28, 2011) Currency Unit = NEPALESE RUPEES NPR1 = US$0.014 US$1 = NPR72.43 FISCAL YEAR July 16 – July 15 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank BOT Build Operate and Transfer CBO Community Based Organization CBS Central Bureau of Statistics CDO Chief District Officer DDC District Development Committee DTCO District Treasury Controller Office DUDBC Department of Urban Development and Building Construction ED Executive Director EO Executive Officer FNCCI Federation of Nepalese Chambers of Commerce and Industry GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH GTZ Deutsche Gesellschaft für Technische Zusammenarbeit GmbH GON Government of Nepal ID Institutional Development IDA International Development Association IEG Independent Evaluation Group IGFT Intergovernmental fiscal transfer IPR Implementation Progress Report IUFR Interim Unaudited Financial Report KfW Kreditanstalt für Wiederaufbau LBFC Local Bodies Fiscal Commission LBFAR Local Body Financial Administration Regulation LDF Local Development Fund LGAF Local Governance and Accountability Facility LGCDP Local Governance and Community Development Programme LSGA Local Self Government Act LSGR Local Self Government Regulations MCPM Minimum Conditions and Performance Measures MLD Ministry of Local Development MOF Ministry of Finance MPPW Ministry of Physical Planning and Works MuAN Municipal Association of Nepal PRAN Program for Accountability in Nepal PFM Public financial management ii PFS Project Financial Statement TDF Town Development Fund TLO Tole Lane Organizations UC Users Committee UDLE Urban Development through Local Efforts UDTC Urban Development Training Centre UEIP Urban Environmental Improvement Project UNCDF United Nations Capital Development Fund UNDP United Nations Development Programme VDC Village Development Committee WB World Bank WUC Water Users Committee Regional Vice President: Isabel M. Guerrero Country Director: Susan G. Goldmark Sector Director: John Henry Stein Sector Manager: Ming Zhang Task Team Leader: Balakrishna Menon Parameswaran Co-Task Team Leader Tashi Tenzing iii Table of Contents I. Strategic Context........................................................................................................................... 1 A. Country Context ................................................................................................................. 1 B. Sectoral and Institutional Context ...................................................................................... 1 C. Higher Level Objectives to Which the Project Contributes ............................................... 6 II. Project Development Objectives .................................................................................................. 6 A. PDO .................................................................................................................................... 6 B. Project Beneficiaries .......................................................................................................... 6 C. PDO Level Results Indicators ............................................................................................ 7 III. Project Description .................................................................................................................... 7 A. Project Components ........................................................................................................... 7 B. Project Financing ............................................................................................................. 11 C. Lessons Learned and Reflected in the Project Design ..................................................... 11 IV. Key Risks and Mitigation Measures ....................................................................................... 13 V. Implementation ........................................................................................................................... 14 A. Institutional and Implementation Arrangements ............................................................. 14 B. Results Monitoring and Evaluation ................................................................................. 17 C. Sustainability .................................................................................................................... 18 VI. Appraisal Summary ................................................................................................................. 18 A. Economic and Financial Analysis .................................................................................... 18 B. Technical .......................................................................................................................... 20 C. Financial Management ..................................................................................................... 21 D. Procurement ..................................................................................................................... 22 E. Social (including Safeguards) .......................................................................................... 22 F. Environment (including safeguards) ................................................................................ 23 Annex 1: Results Framework and Monitoring ................................................................................... 26 Annex 2: Detailed Project Description ............................................................................................... 30 Annex 3: Implementation Arrangements ........................................................................................... 40 Annex 4: Operational Risk Assessment Framework (ORAF) ........................................................... 60 Annex 5: Implementation Support Plan ............................................................................................. 63 Annex 6: Team Composition.............................................................................................................. 65 Annex 7: Economic and Financial Analysis of Sub-projects – Rules of Engagement ...................... 66 Annex 8: Town Development Fund – Current Status and Roadmap for Development ..................... 70 Annex 9: Town Selection Methodology and Profile of Participating Towns .................................... 74 iv DATA SHEET NEPAL URBAN GOVERNANCE AND DEVELOPMENT PROGRAM: EMERGING TOWNS PROJECT PROJECT APPRAISAL DOCUMENT SOUTH ASIA REGION Sustainable Development Department Date: April 6, 2011 Sector(s): Sub-National Government Administration Country Director: Susan G. Goldmark (100%) Sector Director: John Henry Stein Theme(s): Municipal Finance (30%); Municipal Sector Manager: Ming Zhang Governance and Institution Building (40%); Access to Team Leader(s): Balakrishna Menon urban services and housing (30%) Parameswaran, Tashi Tenzing EA Category: B Project ID: P120265 Lending Instrument: Specific Investment Loan (SIL) Project Financing Data: Proposed terms: [ ] Loan [ x ] Credit [ x ] Grant [ ] Guarantee [ ] Other: Source Total Amount (US$M) Total Project Cost: 35.13 Parallel financing: 3.00 Borrower: 5.00 Community/ Municipality 2.13 Total Bank Financing: IBRD 0.00 IDA 25.00 New 0.00 Recommitted Borrower: Government of Nepal (GON) Responsible Agency: Ministry of Physical Planning and Works (MPPW) Contact Person: Dr. Mahendra Subba, Deputy Director General, Department of Urban Development and Building Construction Telephone No.: +977-1-4257312 Fax No.: +977-1-4262729 Email: [email protected] Estimated Disbursements (Bank FY/US$ m) FY 2011 2012 2013 2014 2015 2016 2017 Annual 0.10 2.4 5.5 6.5 5.5 4.0 1.0 Cumulative 0.10 2.5 8.0 14.5 20.0 24.0 25.0 v Project Implementation Period: Start: July 2011 End: July 2016 Expected effectiveness date: July 15, 2011 Expected closing date: July 31, 2016 Does the project depart from the CAS in content or other ○ Yes ● No significant respects? If yes, please explain: Does the project require any exceptions from Bank policies? ● Yes ○ No Have these been approved/endorsed (as appropriate by Bank ● Yes ○ No management? Is approval for any policy exception sought from the Board? ○ Yes ● No If yes, please explain: The audit reports for the ongoing Nepal Social Safety Nets Project (IDA Credit 4750-NP and IDA Grant H 579-NP) and the Rural Access Improvement and Decentralization Project (IDA Credit 4664-NP and IDA Grant H 525-NP), which are implemented by the Ministry of Local Development (MLD), were not received by the due date. In accordance with the provisions of BP 10.02 Annex A, an exception by the Vice President of Operational Policy and Country Services and by the Vice President and Controller was approved for the presentation of this operation
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