37888 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized offer. Upon successful completion of the project and related certification of the outputs by an independent program audit consultant (PAC), a subsidy reflecting 40% of total capital expenditure will be provided to the CWP to prepay a part of the loan from the K-Rep Bank. All participating CWPs will also be eligible for OBA subsidy for availing external services of a 'Project Manager' to ensure good project management and delivery of the agreed outputs as well as post-implementation support.

"Outputs" are defined as (i) increase in access through individual connections and (ii) improvement of operating efficiency as measured by revenue collection through user charges. The subsidy amount has been determined on the basis of an assessment of overall household affordability using average rural household expenditure in . The assessment suggests that 40% subsidy (for capital expenditure) is required to ensure affordable household bills. The remaining loan will be repaid by each CWP through operational surpluses. This arrangement will ensure injection of discipline in the financing (due diligence by K-Rep bank) and operations of the CWP.

D. Project location and salient physical characteristics relevant to the safeguard analysis (if known):

The OBA Pilot in Kenya will provide partial subsidies to about 20 CWPs from within the AWSB area of jurisdiction which includes the districts of , , , Makueni and . Sections of the project districts - for example and Ngong (Kajiado), and (Machakos), and (Thika) are experiencing rapid growth triggered by spill-over population from the city of . Demand for essential services and infixstructure is growing in tandem with the increase in population. Makueni district is more rural, and populated by communities less dependent upon livelihoods centered upon Nairobi.

Climate in the low lying OBA Pilot Project districts of Makueni, Kajiado and Thika is generally semi- arid but changes to semi-humid within the high elevation areas of Kangundo (Machakos), Ngong (Kajiado), (Kiambu) and the Aberdare slopes of Thika Districts where mixed farming for both subsistence and sale is the economic mainstay. With population growth, the demand for residential, trade and institutional facilities is on the increase which, in addition to intensification of farming has created a huge demand in supply of safe and affordable water. Water supply is generally inadequate within these districts. The project area is also characterized by some sub-areas that have very good groundwater potential (for borehole drilling or where there are high yield springs).

E. Borrower's Institutional Capacity for Safeguard Policies:

The final recipients of the grant are the community-managed water projects. They will receive assistance from independent consultants for preparing their loan applications as well as an application to receive a service provider status through a Service Provision Agreement (SPA) with the AWSB. The consultants will review the technical proposals and prepare the 'Project Reports' to be submitted to National Environmental Management Agency (NEMA) as part of the process of obtaining an EIA License. The consultant team that will support the community water project will include a 'Lead Expert' registered with NEMA.

The consultants will also work with the community projects to ensure that the ESMF provisions in the Environmental and Social Management Framework (ESMF) are followed for each sub-project. No resettlement is anticipated in these sub-projects. However, each sub-project will be screened as per the provisions in the ESMF to ensure that necessary mitigation measures are undertaken to avoid any nep~itiveimpacts associated with land issues linked to the sub-project construction activities.

F. Environmental and Social Safeguards Specialists on the Team:

Serigne Omar Fye and Kristine Schwebach.

11. SAFEGUARD POLICIES THAT MIGHT APPLY

- I Safeguard Po~IcIesTriggered (pleare explain why) Yes No TBD Environmental Assessment (OP/BP 4.01) X Because there will be some construction, there may be adverse impacts. However, these are expected to be minor, localized, and readily managed. An Environnlend and Social management Framework (ESMF) will be prepared to guide the planning, design, review and approval of civil works. Natural Habitats (OPBP 4.04) X

Forests (OPIBP 4.36) X

Pest Management (OP 4.09) X

Physical Cultural Resources (OP/BP 4.11) X

Indigenous Peoples (OP/BP 4.10) X

Involuntary Resettlement (OP/BP 4.12) X I involuntary resettlement is not mtnticipated. However, a Resettlement Policy Framework will be prepared to define compensation rules and procedures. Safety of Dams (OP/BP 4.37) X

Projects on International Waterways (OP/BP 7.50) X

Projects in Disputed Areas (OP/BP 7.60) X

111. SAFEGUARD PREPARATION PLAN

A. Target date for the Quality Enhancement Review (QER), at which time the PAD-stage ISDS would be prepared: N/ A

B. For simple projects that will not require a QER, the target date for preparing the PAD-stage ISDS: August 2006

C. Time frame for launching and completing the safeguard-related studies that may be needed. The specific studies and their timing1 should be specified in the PAD-stage ISDS:

Environmental and Social Management Framework (ESMF) Report: August 2006 Resettlement Policy Framework (RPF) Report: August 2006.

IV. APPROVALS

1 Reminder: The Bank's Disclosure Policy requires that safeguard-related documents be disclosed before appraisal (i) at the InfoShop and (ii) in-country, at publicly accessible locations and in a form and language that are accessible to potentially affected persons.