Completion Report
Project Number: 23213 Loan Numbers: 2060(SF)/2061 March 2012
Pakistan: Southern Punjab Basic Urban Services Project
CURRENCY EQUIVALENTS
Currency Unit – Pakistan rupee/s (PRe/PRs)
At Appraisal At Project Completion 14 October 2001 15 November 2011 PRs1.00 = $0.01210 $0.01166 $1.00 = PRs62.6255 PRs85.8001
ABBREVIATIONS
ADB – Asian Development Bank EIRR – economic internal rate of return FIRR – financial internal rate of return ICB – international competitive bidding LGRDD – Local Government and Rural Development Department NGO – nongovernment organization PCO – project coordination office SDR – special drawing rights TMA – tehsil municipal administration UIPT – urban immovable property tax
NOTES
(i) The fiscal year (FY) of the government and its agencies ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2010 ends on 30 June 2010.
(ii) In this report, “$” refers to US dollars.
Vice-President X. Zhao, Operations 1 Director General J. Miranda, Central and West Asia Department (CWRD) Director W. Liepach, Pakistan Resident Mission, CWRD
Team leader M. Shafi, Senior Project Officer, Pakistan Resident Mission, CWRD Team member N. Islam, Project Analyst, Pakistan Resident Mission, CWRD
In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
CONTENTS
Page
BASIC DATA ii I. PROJECT DESCRIPTION 1 II. EVALUATION OF DESIGN AND IMPLEMENTATION 1 A. Relevance of Design and Formulation 1 B. Project Outputs 3 C. Project Costs 7 D. Disbursements 7 E. Project Schedule 7 F. Implementation Arrangements 8 G. Conditions and Covenants 8 H. Consultant Recruitment and Procurement 9 I. Performance of Consultants, Contractors, and Suppliers 9 J. Performance of the Borrower and the Executing Agency 10 K. Performance of the Asian Development Bank 10 III. EVALUATION OF PERFORMANCE 11 A. Relevance 11 B. Effectiveness in Achieving Outcome 11 C. Efficiency in Achieving Outcome and Outputs 12 D. Preliminary Assessment of Sustainability 12 E. Impact 13 IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14 A. Overall Assessment 14 B. Lessons 14 C. Recommendations 15 APPENDIXES 1. Project Framework 16 2. Infrastructure Subprojects 23 3. Status of Compliance with Loan Covenants 29 4. Detailed Breakdown of Consultant Input 47 5. Project Cost 48 6. Yearly Contract Award and Disbursement Performance 49 7. Project Implementation Schedule 50 8. Project Secondary Data 51 9. Financial Performance of Tehsil Municipal Administrations 57 10. Economic Analysis 62 11. Financial Analysis 67 12. Status of Provincial Policy Actions 70
BASIC DATA
A. Loan Identification
1. Country Pakistan 2. Loan Numbers 2060-PAK(SF), 2061-PAK 3. Project Title Southern Punjab Basic Urban Services Project 4. Borrower Islamic Republic of Pakistan 5. Executing Agency Local Government and Rural Development Department, Government of Punjab 6. Amount of Loan (2060[SF]) SDR31,429,000 ($45 million equivalent) Amount of Loan (2061) ¥4,896,225,000 ($45 million equivalent) 7. Project Completion Report Number PCR: PAK 1319
B. Loan Data
1. Appraisal – Date Started Not applicable. The appraisal was waived at – Date Completed management review meeting on 21 October 2003. 2. Loan Negotiations – Date Started 13 November 2003 – Date Completed 15 November 2003
3. Date of Board Approval 18 December 2003
4. Date of Loan Agreement 23 January 2004
5. Date of Loan Effectiveness – In Loan Agreement 22 April 2004 – Actual 25 August 2004 – Number of Extensions 2
6. Closing Date – In Loan Agreement 31 July 2009 – Actual 31 December 2009 – Number of Extensions 0
7. Terms of Loan (2060[SF]) – Interest Rate 1% per annum during grace period, 1.5% thereafter – Maturity (number of years) 32 – Grace Period (number of years) 8
Terms of Loan (2061) – Interest Rate London interbank offered rate-based – Commitment Charge 0.75% per annum – Front-End Fee 0.5% – Maturity (number of years) 25 – Grace Period (number of years) 5
8. Terms of Relending (2060[SF]) – Interest Rate 1% per annum during grace period, 1.5% thereafter – Maturity (number of years) 32 – Grace Period (number of years) 8
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– Second-Step Borrower Punjab government
Terms of Relending (2061) Ordinary Capital Resources – Interest Rate London interbank offered rate-based – Commitment Charge 0.75% per annum – Front-End Fee 0.5% – Maturity (number of years) 25 – Grace Period (number of years) 5 – Second-Step Borrower Punjab government
9. Disbursements a. Dates (2060[SF]) Initial Disbursement Final Time Interval Disbursement 21 October 2004 62 months 31 December 2009 Effective Date Original Closing Time Interval Date 25 August 2004 60 months 31 July 2009 Dates (2061) Initial Disbursement Final Time Interval Disbursement 25 August 2004 64 months 31 December 2009
Effective Date Original Closing Time Interval Date 25 August 2004 60 months 31 July 2009
b. Amount (SDR‘000) for 2060(SF) Amou nt Net Undis- Category or Original Last Revised Cance Amount Amount bursed Subloan Allocation Allocation led Available Disbursed Balance Civil Works 19,414 9,862 9,552 9,862 9,862 0 Equipment and 8,172 4,512 3,660 4,512 4,512 0 Material Social and 203 5 198 5 5 0 Community Mobilization Consultants 1,677 796 881 796 796 0 Incremental and 1,028 429 599 429 429 0 Administrative Costs Interest during 935 267 668 267 267 0 Construction Total 31,429 15,871 15,55815,871 15,871 0
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Amount (¥ ‘000) for 2061 Last Net Undis- Category or Original Revised Amount Amount Amount bursed Subloan Allocation Allocation Canceled Available Disbursed Balance Civil Works 3,024,453 1,629,896 1,394,556 1,629,896 1,629,896 0 Equipment and 1,273,127 757,664 515,462 757,664 757,664 0 Material Social and 31,662 783 30,878 783 783 0 Community Mobilization Consultants 261,241 138,346 122,894 138,346 138,346 0 Incremental and 160,161 71,246 88,914 71,246 71,246 0 Administrative Costs Front-End Fee 121,100 24,481 96,618 24,481 24,481 0 Interest and 24,481 121,100 (96,619) 121,100 121,100 0 Commitment Charges Total 4,896,225 2,743,518 2,152,706 2,743,518 2,743,518 0 () = negative.
10. Local Costs (Financed) - Amount ($ million) 34.9 - Percent of Local Costs 36.0 - Percent of Total Cost 30.9
C. Project Data
1. Project Cost ($ million)
Cost Appraisal Estimate Actual
Foreign Exchange Cost 18.2 15.0 Local Currency Cost 110.4 98.1 Total 128.6 113.1
2. Financing Plan ($ million) Cost Appraisal Estimate Actual Implementation Costs Borrower Financed 28.3 54.8 ADB Financed 87.3 48.1 Other External Financing 10.3 8.5 Total 125.9 111.4 IDC Costs Borrower Financed ADB Financed 2.7 1.7 Other External Financing Total 128.6 113.1 ADB = Asian Development Bank, IDC = interest during construction.
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3. Cost Breakdown by Project Component ($ million) Appraisal Component Estimate Actual A. Development of Infrastructure for Basic Urban Services 1. Civil Works, Equipment, and Materials a. Water supply 18.4 20.6 b. Sewerage system and wastewater treatment 61.2 61.3 c. Low-income area road links 1.8 2.0 d. Solid waste management 3.9 7.7 e. Slaughterhouses 0.5 0.9 f. Incremental land development for the poor 0.2 0.5 2. Community Mobilization 0.6 0.2 Subtotal (A) 86.6 93.2 B. Institutional Development 1. Municipal Management System Development for 1.3 0.7 Tehsil Municipal Administrations 2. Project Implementation Assistance 3.5 3.8 3. Equipment and Vehicles 0.7 0.5 4. Incremental Administration Support 2.3 2.2 Subtotal (B) 7.7 7.2 C. Land Acquisition and Compensation 16.0 10.7 Contingencies 1. Physical Contingencies 5.4 0.3 2. Price Contingencies 10.2 0.0 Subtotal (Contingencies) 15.6 0.3 Interest during Construction a 2.7 1.7 Total Project Cost 128.6 113.1 a Includes front-end fee and commitment charges on Loan No. 2061.
4. Project Schedule Appraisal Item Estimate Actual Date of Contract with Consultants Package 1, Project Implementation Support 12 Feb 2005 Package 2, Municipal Management System Development 7 Mar 2005 Individual Consultants 13 Sep 2006b Completion of Engineering Designs June 2004 Civil Works Contract Date of Award Jan 2006–Oct Feb 2006–May 2007 2009 Completion of Work Dec 2008 31 Dec 2011 Equipment and Supplies Dates First Procurement 1 Oct 2004 Last Procurement 24 Apr 2009 Completion of Equipment Installation 30 Sep 2009 Start of Operations Completion of Tests and Commissioning Beginning of Start-Up Other Milestones b Individual consultants were hired on various dates, the first on 15 October 2004 and the last on 13 September 2006.
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5. Project Performance Report Ratings Ratings Implementation Period Development Objectives Implementation Progress From 30 December 2003 to 30 June 2004 Satisfactory Satisfactory From 1 July 2004 to 31 August 2004 Satisfactory Unsatisfactory From 1 September 2004 to 31 March 2005 Satisfactory Satisfactory From 1 April 2005 to 31 July 2005 Partly satisfactory Satisfactory From 1 August 2005 to 31 October 2007 Satisfactory Satisfactory From 1 November 2007 to 31 January 2009 Highly satisfactory Satisfactory From 1 February 2009 to 28 February 2009 Partly satisfactory Partly satisfactory From 1 March 2009 to 30 November 2009 Unsatisfactory Unsatisfactory From 1 December 2009 to 31 December Partly satisfactory Satisfactory 2009
D. Data on Asian Development Bank Missions No. of No. of Specialization of Name of Mission Date Persons Person-Days Members Fact-finding 8–24 July 2003 4 36 a, b, c Inception 7–12 February 2004 2 12 a, c Review 1 8–14 April 2005 2 11 a, e Special Project 17–20 September 2005 2 6 a, e Administration 1 Special Project 8 January 2006 1 1 a Administration 2 Review 2 20–28 February 2007 1 9 f Midterm Review 13–28 November 2007 4 40 c, e, f, g, Review 3 15–24 September 2008 3 27 a, e, f Review 4 2–20 February 2009 7 133 a, c, h, i, j, k, l Project completion review 28 October–15 3 24 c, d, h November 2011 a = urban development specialist, b = senior environment specialist, c = project administration staff member, d = economist (staff consultant), e = project implementation officer, f = senior urban development specialist, g = senior safeguards specialist, h = senior project officer, i = senior social development specialist, j = social safeguard officer, k = social safeguard consultant, l = assistant disbursement specialist.
I. PROJECT DESCRIPTION
1. Urban areas in Pakistan are experiencing rapid growth, and demand for improved urban services are thus increasing. Slow urban sector development, a lack of resources, and inadequate institutional capacity of newly established local government agencies have resulted in uncontrolled urban sprawl; deteriorating urban environments; and deficiencies in urban services, including water supply, sewerage systems, drainage, solid waste management, roads, and community facilities. These deficiencies in basic infrastructure are inhibiting economic growth in urban areas, affecting particularly the urban poor and leading to a considerably reduced quality of life, including poor health and increased poverty. The incidence of poverty increased from 26.6% in FY1993 to 32.2% in FY1999, and the number of poor increased by 12 million persons over the same period.
2. On 18 December 2003, the Asian Development Bank (ADB) approved two loans of SDR31,429,000 ($45 million equivalent) from the Asian Development Fund and ¥4,896,225,000 ($45 million equivalent) from ordinary capital resources for the Southern Punjab Basic Urban Services Project.1 The project’s objective was to (i) reduce urban poverty, improve community health, and slow environmental degradation in 21 towns by improving water supply, sanitation, solid waste management, and roads for low-income communities; and (ii) ensure sustainability of urban investments by strengthening institutional capacities of newly devolved local government municipal agencies. The project’s outcome was the expected improvement in the living conditions and quality of life of about 3.6 million urban people, mostly living in low-income communities. 3. The project comprised two main components. Under the first component, the project was to provide infrastructure improvements in the subsectors of (i) water supply, (ii) sewerage systems and wastewater treatment, (iii) solid waste management, (iv) low-income area road links, (v) slaughterhouses, and (vi) incremental land development for the poor. This component also emphasized community development and participation, and developing organizational and human capacity within local government agencies for participatory processes targeted at poverty reduction and basic needs. Under the second component, relevant municipal staff members of the tehsil (town) municipal administrations (TMAs) were to be trained for institutional capacity building and revenue improvement.
II. EVALUATION OF DESIGN AND IMPLEMENTATION
A. Relevance of Design and Formulation
4. The project was consistent with the ADB country strategy at appraisal, particularly its focus on low-income communities, investments in devolved service delivery, and support for better municipal management.2 The strategy emphasized poverty reduction in Pakistan through assistance in the strategic areas of good governance, sustainable pro-poor economic growth, and inclusive social development. Key themes included sustainable environmental management, particularly through nongovernment organization (NGO) engagement in the delivery of services, and strengthening governance by devolving services in line with the Punjab Local Government Ordinance, 2001 (PLGO 2001). The project prioritized assistance for decentralized financing, planning, and delivery of social services, was in line with the strategy.
1 ADB. 2003. Report and Recommendation of the President to the Board of Directors: Proposed Loans to the Islamic Republic of Pakistan for the Southern Punjab Basic Urban Services Project. Manila. 2 ADB. 2003. Country Strategy and Program Update: Pakistan, 2004–2006. Manila.
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5. The project was also consistent with the country’s development objectives at appraisal. The Government of Pakistan’s poverty reduction strategy outlined in its Ten Year Perspective Development Plan, envisaged implementation of comprehensive governance reforms, enhancing the effectiveness of basic social services through its devolution plan.3 In the urban sector, the plan envisages (i) strengthening the role of local bodies in planning, determining actual needs, preparing action plans, and augmenting water supply and sanitation service capacities; (ii) developing satellite, intermediate, secondary, and industrial towns as employment centers; (iii) preparing and updating master plans; and (iv) upgrading slums through integrated area improvement packages. Specifically for water supply and sanitation, the plan aims to increase water supply service coverage from 63% to 84% and sanitation service coverage from 39% to 63% across the country. Private sector participation in water supply for major cities is encouraged, and the institutional capacity of TMAs is to be upgraded. The project supported these plans by promoting policy reform in line with the PLGO 2001; financial management and resource generation at the local level with cost recovery and elimination of subsidies; according priority to the basic needs and increases in water and sanitation coverage; and supporting local community participation and ownership of services.
6. The project preparatory technical assistance (PPTA) was relevant both in terms of sectoral and geographic scope with focused on low income communities and basic urban needs. The design was undertaken in close collaboration with beneficiaries, NGOs, and TMAs. Besides extensive meetings with these groups, three consultative workshops were organized at the inception, interim, and final stages of the project preparation.
7. The major risks were well identified at the PPTA stage including delays in land acquisition; consistency in implementing the PLGO 2001; TMAs’ inability to raise revenues and enhance their municipal management capacity; and delay in TMAs meeting project eligibility criteria. These risks were mitigated in the project design through policy action and loan covenants. The project design also supported selective private sector and community participation, but the lack of TMA capacity, institutional environment, and additional resources for developing private and community models for service delivery was not fully captured in the project design.
8. The project’s objectives were relevant at completion. The ADB country partnership strategy4 focuses on developing clearer roles and stronger lines of accountability for urban services providers that are reoriented toward cost recovery and sustainability, corporatization, and professionalization of services, with incentives to perform. Basic aspects of sustainability, role clarity, and cost recovery are well covered in the project design. Professionalization of services, the role of private sector, incentives to perform, and autonomy in operations, although included, would need to be strengthened in the future project designs for stronger alignment with current ADB strategy.
9. The project’s design with focus on improving efficiency of basic urban services and their operation by improving public sector capacity and involving private sector and communities is relevant to the Pakistan’s framework for economic growth at completion.5 The framework aims to make cities and towns more efficient and competitive by strengthening the policy and regulatory role of the government and enhancing the role of the private sector in developing infrastructure and services. The design already includes public sector capacity building, which
3 Government of Pakistan. June 2001. Ten Year Perspective Development Plan, 2001–2011. Islamabad. 4 ADB. 2009. Country Partnership Strategy: Pakistan, 2009–2013. Manila. 5 Planning Commission of Pakistan, May 2008, Mid Term Review of MTDF, Islamabad
3 can be further aligned by focusing on public sector capacities to engage private sector in urban services provision.
B. Project Outputs
1. Development of Infrastructure for Basic Urban Services
10. This component comprised infrastructure improvements and community development and participation, and included town-specific investments for infrastructure improvements with mapping and asset management, water audits, and formation of community-based organizations. The investment plan for each project town was prepared at the design stage.6 Project outputs as achieved are in Appendices 1 and 2.
a. Infrastructure Improvements
11. Water supply. This subcomponent aimed to improve the service quality of existing water supply systems and to increase revenues by updating consumer databases and reducing illegal connections, leak detection, and water quality-monitoring. Distribution systems were to be extended and rehabilitated for poorly served low-income communities in seven towns through construction of tube wells, new transmission mains, storage reservoirs, and supply networks. In addition, public pay toilets were to be constructed on a pilot scale, and all schools in the project areas were to be provided with latrines, safe drinking water, and hygiene awareness.
12. The outputs of this subcomponent were partly satisfactory. Bulk of activities were focused on improving infrastructure service quality with limited activities undertaken to increase revenues. Out of 18 water supply subprojects initiated in seven towns to improve water supply infrastructure, 15 were completed, and 3, all in Bahawalpur, are to be completed by 30 June 2012. Public pay toilets were constructed in three towns, but no schools were provided with latrines or safe drinking water in any town. The increase in revenues was marginal, as consumer surveys could not be undertaken, and databases were only updated in two towns with hardly any effort to reduce illegal connections, leak detection and rectification, and water quality monitoring, except in Multan. Further, health and hygiene awareness campaigns were not implemented widely, covering only a few schools in each town, and the impact was not monitored.
13. Economic and health benefits for completed scheme are high, even though all water schemes were delayed. Cost recovery was not achieved in the water supply operations of any town, and their operations remain heavily subsidized and unsustainable due to the lack of effort toward the revenue and efficiency improvement measures proposed under this subcomponent.
14. Sewerage systems and wastewater treatment. The scope of activities for this subcomponent included rehabilitation of existing and lying of new secondary and main trunk sewers, rehabilitation and construction of disposal stations, and construction of sullage carriers and wastewater treatment plants in 19 of 21 towns. Lane-level sewers and house connections were to be provided by the communities through technical assistance by the project.
15. The outputs of this subcomponent were satisfactory. In total, 80 subprojects were undertaken in 20 towns, for the laying of new secondary and trunk sewers, rehabilitation and
6 ADB. 2005. Report and Recommendation (RRP) of the President to the Board of Directors: Proposed Loan to the Islamic Republic of Pakistan for the Rawalpindi Environmental Improvement Project (Appendix 7). Manila
4 construction of disposal stations, wastewater treatment plants and sullage carriers, and provision of sewer cleaning equipment and machinery. Sixty-four subprojects were completed, with 15 ongoing and 1 wastewater treatment plant dropped due to land issues. The ongoing subprojects including 3 wastewater treatment plants are to be completed by 30 June 2012.
16. There is delay in lane-level connections as most schemes started operating recently and also because communities could not be organized before loan closure, and this effort has since been discontinued. However, the communities are expected to start connecting to these sewers once they see them functioning, although there is no increase in sewer charges and operations will continue to be subsidized.
17. Solid waste management. This subcomponent included (i) community support for solid waste collection, (ii) procurement of equipment and vehicles for collection and disposal of solid waste, and (iii) development of landfills. Emphasis was on the involvement of communities, NGOs, and the private sector in solid waste collection, recycling, and composting.
18. The outputs of this subcomponent were satisfactory. Majority of activities focused on equipments and civil works, with little focus on community support. In total, 48 subprojects were identified in 21 towns for solid waste collection and disposal equipment and machinery supply, development of community waste collection points, and development of landfills. Out of these, 41 subprojects were completed, with 2 for landfills ongoing and 5 for landfills dropped. Solid waste collection has shown marked improvement, and disposal practices have improved in all towns where landfills are operational. However operations are subsidized, as no charges are being gathered for solid waste collection except for nominal sanitation charges, which were being collected even before the project. Efforts were made through campaigns to involve communities in the collection of waste and to improve street cleanliness; however, no TMAs were able to continue this effort beyond the project. Although efforts are being made in Multan, no TMA has privatized operations. Recycling and composting were not initiated due to lack of interest by TMAs and the capacity of the consultants to lead this effort.
19. Low-income area road links. The output of this subcomponent is highly satisfactory. This subcomponent aimed to improve access of low-income communities to their town centers and neighborhoods to advance economic activities. All of the 16 road links were completed in 14 towns. All roads were generally well identified and serve the towns and low-income communities well and follow their existing right-of-way.
20. Slaughterhouses. The output of this subcomponent is satisfactory. This subcomponent included the construction or relocation of slaughterhouses in 12 towns, and improvement in hygiene and handling of wastewater and solid waste from these slaughterhouses. In total, 8 out of 12 slaughterhouses were relocated or improved in 8 towns, based on demand. Seven slaughterhouses were completed, handed over to the TMAs, and are operational. The slaughterhouse in Multan is 85% completed and is expected to be handed over to the TMA by 3o June 2012. The completed facilities were outsourced for operation and have become sources of revenue for the TMAs. Related solid waste, in most cases, is being disposed of in sanitary landfills, where available. The liquid waste after primary treatment and recovery of solids are being disposed of in the sewerage system.
21. Incremental land development for poor. This subcomponent was to be implemented in Mian Channu City as a pilot activity. The Local Government and Rural Development Department (LGRDD) and TMAs were to select state land for housing schemes for the poor, delineate small plots, and provide external access and water supply and sanitation infrastructure
5 to them. The communities, as their contribution, were to construct internal infrastructure using their own resources and technical support from the project.
22. The output of this subcomponent was partly satisfactory. The land was provided by the Punjab government, location was well identified, and external development was completed in time. However, technical assistance for targeting the poor and establishing tertiary services was not provided as envisaged. The plots were instead distributed to government employees, and most of the developed land is uninhabited because of poor targeting of recipients.
b. Community Development and Participation
23. This subcomponent included (i) social mobilization for a cost-sharing approach for provision of tertiary infrastructure, public health education, hygiene-awareness campaigns, and training for microcontractors to install house water connections; (ii) action research aimed at system improvements of community-based organization-managed collection of solid waste and composting; and (iii) simple skills training for income generation, particularly to women. All of these subprojects were to be implemented through the social mobilization teams or NGOs.
24. The performance of this subcomponent is unsatisfactory. A male and a female social organizer were hired (i.e., package D) for each TMA to undertake these activities, guided by the project coordination office (PCO) and participatory planning specialist provided under package B. However, the specialist was not mobilized, so no guidance was provided to undertake these activities. Communities were only organized in some towns marginally covering the area identified for waste collection. The community response varied depending upon the TMA’s leadership, which, at best, was marginal. No action research or skills training was undertaken, and no community is collecting or composting waste. Further, the gender specialist under package B did not develop any gender action plans, so most activities under the project’s gender strategy (except those outlined in Appendix 3) were not implemented. The community development effort was discontinued after project closure due to limited interest of both the PCO and TMAs in these activities. This has disconnected the project and its outputs with the communities, which is the main reason that communities have no role in service provision nor are they willing to pay for the improved urban services to the extent envisaged at appraisal.
2. Institutional Development
a. Municipal Management System Development
25. This subcomponent featured (i) training in technical and financial management for all TMA staff members, including mapping and asset management; (ii) encouraging public awareness of urban issues and sustainability of facilities and options for improving urban services through participation; and (iii) improving municipal financial management by implementing a management information system; introducing policies and procedures for accounting, budgeting, resource mobilization, and enhanced operations and maintenance of existing assets; improving the billing and collection system; and establishing laws, standards, rules, and regulations under the PLGO 2011.
26. The performance of this subcomponent was partly satisfactory. The outputs produced by package B consultants were delivered in the form of reports, manuals, and training. According to mission reports, outputs delivered included designing, and training TMA staff members in the use of; (i) an asset management system (ii) a management information system and computerized billing system; (iii) municipal regulations and by-laws; (iv) a customer relations
6 and management system; (v) spatial planning techniques; (vii) participatory planning and public disclosure protocols; and (viii) procedures for outsourcing TMA functions to communities and the private sector. In addition the consultants prepared and implemented the resettlement plans of subprojects requiring resettlement according to government and ADB policies.
27. The design of this subcomponent assumed that systems and manuals to improve municipal functions would be developed by consultants, who would then train TMA staff members to implement them. In most cases, however, there were no dedicated TMA staff members to carry out this objective. The limited number of staff members available were also either not interested or lacked the basic skills and incentives required to utilize such training. At project completion, none of the manuals, designs, and training provided to TMAs were in use. Less than 10% of the TMAs implemented computerized billing, and very few staff members were doing the jobs for which they were trained due to high staff turnover. Further, hardly any improvement was noted in asset management, collection efficiencies, spatial planning, customer relations, disclosures, and management information systems in the TMAs. Most TMAs could not even produce the manuals and designs of these activities from their records. In addition, the resettlement plans developed by the consultant were deficient, and their implementation was weak (para. 49). The lack of implementation of this subcomponent undermined the sustainability of the project investments.
b. Project Implementation Assistance
28. To support project implementation, and to build the long-term capacity of the TMAs, 1,830 person-months of consulting services (32 international and 1,798 domestic person-months) were identified at the design stage, covering (i) package A, project management and implementation support to the PCO and project units including subproject detailed design, construction supervision, and monitoring and evaluation (532 person-months); (ii) package B, development of a municipal management system (146 person-months); (iii) package C, project unit professionals (1,152 person-months); and (iv) package D, support for community development and participation (978 person-months) using local NGOs, exiting government institutions (for training), and social mobilization teams. The utilization of the inputs is provided in Appendix 4.
29. The performance of this subcomponent is partly satisfactory. The consultancy firms were hired for packages A and B, and individual consultants were hired for packages C and D. The output performance of all packages is provided in paragraph 44.
c. Incremental Administration Support
30. Incremental administrative support was to be provided to the PCO and project units. At the PCO level, it was meant to support provincial and inter-TMA coordination, planning, and management of activities. At the TMA level, it was to provide technical support for subproject planning, design, and implementation, and to maintain links with other stakeholders such as NGOs and community-based organizations.
31. The performance of this subcomponent was partly satisfactory. At closure, 42% of inputs were utilized. All incremental staff members were hired efficiently. Although decision making remained weak during the first 2 years of the project as the project managers appointed by the Punjab government did not have the necessary skills, the outputs remained satisfactory in terms of planning, management, quality control, approval, and implementation. The main weaknesses of the PCO and project unit incremental staff members were in managing the outputs of
7 consultants, implementing the TMA selection criteria and resettlement policy, as well as their lack of interest in the community participation and municipal management subcomponents. As a result, community level ownership of the project could not be achieved.
C. Project Costs
32. The two ADB loans were expected to finance $90.0 million or 70.0% of the total project cost of $128.6 million at appraisal. At closure, only $51.5 million or 45.5% was disbursed against the revised project cost of $113.1 million. The project costs were generally well estimated at appraisal. The overall cost underrun (Appendix 5) is due to the increase (from $28.3 million [22%] at appraisal to $54.8 million [49%] at completion) in the government’s share and the reduction in the expected scope of activities, occurred mainly due to a funding shortfall after ADB closed the two loans in December 2009. The reason for the delay in completion and ADB’s decision not to extend the loans was prompted by a series of safeguard noncompliance measures that were noted in 46 out of 172 subprojects (para. 49).
33. As a result of cost constraints, most of the technical assistance being extended to TMAs for improving municipal management and capacity building was terminated immediately at loan closure. Similarly, some wastewater treatment plants and landfills that were in early stages of implementation or still not procured were dropped. This reduction in scope impacted operational sustainability of services, and the cancellation of solid waste disposal and wastewater treatment subprojects will result in downstream surface and groundwater contamination and reduce health benefits and the economic return of the project (para. 54).
D. Disbursements
34. The appraised disbursement schedule was realistic. The status of the actual against the appraised schedule is provided in Appendix 6. The deviations were mainly due a start-up delay in meeting conditions of effectiveness and then poorly performing package A consultants (para. 44). However, through the efforts of the borrower and ADB, contracts were awarded efficiently, contract awards grew from 2006, and disbursement improvements followed in 2007.
35. To expedite disbursement, LGRDD established a first-generation imprest account for eligible project expenditures up to $50,000. Anything above this amount was paid directly by ADB. The imprest account was liquidated or replenished using statement-of-expenditure dispensation. Each project unit at each TMA was to open a second-generation imprest account to meet their eligible expenditures. However, in absence of qualified accounting staff members in the project units, payments were made for all subprojects through the first-generation imprest account. No changes occurred in disbursement procedures during implementation. This disbursement system worked effectively and did not cause any delays. However, incorrect booking of expenditures by ADB required a major effort to correct and reconcile payments. The PCO internal controls and reporting remained satisfactory throughout project implementation.
E. Project Schedule
36. The project schedule was overoptimistic about the time needed for initial selection of TMAs and the screening of subprojects, considering the diversity of parameters that had to be met by each TMA. Initial lags also related to delays in establishing the PCO and providing qualified management and accounting staff members. More delays were due to weak project management in the initial project years and poor consultant performance under package A (para. 44). This was followed by weak overall performance of package B consultants (paras. 27–28).
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Many subprojects were awarded without fully implementing the resettlement plans, causing further delays. The project was initially suspended because of these weaknesses, and then both of the ADB loans were closed prematurely due to noncompliance related to resettlement plans and TMA performance benchmarks. There were no major delays attributed to procurement and performance of the contactors (Appendix 7).
F. Implementation Arrangements
37. The Punjab Government took 7 months to establish the PCO in the office of the Directorate General of Katchi Abadi and Urban Improvement, headed by its director general, which delayed project effectiveness. The PCO was also supported by a team of consultants to assist TMAs on policy reforms, institutional strengthening, monitoring and evaluation, capacity improvements, and implementation of project activities. Each TMA established a project unit, with a municipal engineer and accountant provided by the PCO and support staff members provided by the TMA to execute subprojects. Four technical support teams of consultants were established to assist the project units in the preparation of detailed design and procurement of subprojects. This arrangement generally worked well, except that PCO management was taken over from LGRDD by staff deputed from Housing, Urban Development and Public Health Engineering Department (HUD&PHED), including the project directorship. This impacted the overall focus of the PCO, skewing it toward infrastructure development rather than sustained operation of the investments and capacity of the TMAs. Control over financing remained centralized, against the decentralized model envisaged at appraisal. No changes were made in the implementation arrangements during project execution to resolve these issues.
38. Project implementation review committees were established at each tehsil to monitor the project on a monthly basis. The committees comprised representatives from the TMAs, union councils, consultants, citizen community boards, and LGRDD. They were headed by a tehsil head, known as a nazim. Most committees were either inactive or only used for approval or selection of subprojects in each TMA.
39. A project steering committee, headed by the chairperson of the Planning and Development Board, and composed of senior officers from LGRDD, Provincial Finance Department, and the PCO, as well as tehsil nazims, was set up within a month of loan effectiveness. The committee met regularly and was able to steer management and planning issues; however, it was unable to improve compliance with loan covenants (para. 40) and resolve high staff member turnover in TMAs and weaknesses in meeting TMA selection criteria.
G. Conditions and Covenants
40. Out of the total 74 covenants in the loan and the project agreement, 49 were complied with, 10 not complied with, 10 partly complied with, and 5 complied with, with delays. The status of the borrower’s compliance with loan and project covenants is in Appendix 3. The covenants that were not or partly complied with related to devolution of implementation supervision and financial disbursement under subprojects to TMAs, establishment of a project performance management system, revenue assessment and collection for the completed subproject facilities, TMA staff induction into regular public services, monitoring of eligibility of TMAs for annual provincial financial commission grants, providing insurance to subproject facilities, and compliance with ADB social safeguard policies. Failure to comply with these covenants resulted in (i) minimal ownership of the subprojects by the beneficiaries and TMAs; (ii) lack of operational sustainability of completed facilities, as charges could not be revised for improved services; and
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(iii) lack of data for monitoring the project benefits. Partial and delayed compliance of covenants on land acquisition and resettlement resulted in delays and ultimate suspension of the project.
H. Consultant Recruitment and Procurement
41. The consulting support (para. 28) identified at the design stage was grouped into four (A, B, C and D) packages. The services of firms were hired for the first two packages (A and B) using quality- and cost-based selection. Both contracts were awarded within 8 months of loan effectiveness in accordance with the original procedures set out in schedule 5 of the loan agreement. The package A contract was terminated in July 2006. The remaining scope of activities under package A were delivered through a local consultant firm hired directly by the Punjab government from its own resources. The remaining two packages (C and D) were delivered through individual consultants. Hiring under package C was substantially completed in 2006, with hiring under package D done in 2007. Individual hiring was delayed for both of these packages due to lengthy internal (i.e., Punjab government) procedures and approvals.
42. After the detailed design stage, 42 contracts for goods and 183 for civil works were awarded. Out of these, only one for civil works was above the ICB threshold of $1.0 million, and none for goods was above the $0.5 million ICB threshold. The main reason for not using larger (ICB) packages was the spread of small works that was not attractive for international contractors as a single package, but worked well for attracting qualified local contractors.
43. There were no major delays experienced in awarding contracts except in 2005 and 2006. These delays were due to poor performance of the package A consultants who delayed the preparation of the design and bidding documents, lengthy approval procedures of subprojects, and the lack of response immediately after the 2005 earthquake. However, the situation improved when the package A consultants were replaced, procedures were streamlined, and initial uptake of contractors in the earthquake areas was complete.
I. Performance of Consultants, Contractors, and Suppliers
44. Details of actual utilization against estimated inputs for all consultancy packages (A, B, C, and D) are provided in Appendix 4. The inputs were underutilized for all packages except for package B, and outputs were partially delivered. The performance of design and construction supervision (package A) consultants was satisfactory. The performance of the first consultants was not satisfactory and their contract was terminated after 1 year. Project activities were delayed by about 1.5 years because of this. These consultants were replaced by consultants hired by the Punjab government who then satisfactorily designed and supervised subproject implementation. The municipal management consultants (package B) over utilized their inputs (116%) without capturing the ground realities, and, as a result, the performance remained partly satisfactory (paras. 27 and 28). Cost was one criterion for selection, and it overshadowed consideration of quality. Considering the complexity of the assignment in urban projects, quality- based selection may have yielded better results for consultant selection. The performance of individual consultants supporting the project unit (package C) varied, but overall, the outputs in terms of coordination and supporting the TMAs in planning and implementing the hardware components of the project remained satisfactory. However, due to capacity constraints of package C consultants to coordinate social activities, the performance of the community development subcomponent remained unsatisfactory. The performance of the package D consultants (para. 24) was partly satisfactory.
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45. All of the contractors and suppliers were local. There were no major delays experienced in implementation and the performance of the local contractors or suppliers was satisfactory.
J. Performance of the Borrower and the Executing Agency
46. The performance of the borrower and the executing agency was partly satisfactory. The counterpart funds were made available on time, and policy actions were completed with minor delays. The Punjab government showed commitment toward the infrastructure investments by efficiently providing design and supervision consultants from their own resources and then by making additional resources available to complete the ongoing subprojects that were left incomplete when ADB closed the two loans prematurely. However, the Punjab government showed much less commitment toward implementing the PLGO 2001 reform, and the community development and participation and municipal management subcomponents, which were discontinued immediately at loan closure. Many conditions of the loan agreement were also not complied with (para. 40). The overall reforms proposed under the PLGO 2001 were undone by the Punjab government by not devolving municipal management capacities to the TMAs, not continuing with the local government elections, and continuing to manage the tehsils through government-appointed municipal administrators.
47. Similarly, the Punjab government was also unable to address the safeguard noncompliance identified toward the end of 2008. In addition, most of the participating towns did not fully meet the TMA criteria for selection and continuous participation in the project as agreed at appraisal, yet the executing agency continued to fund investments in these towns. The Punjab government was also unable to curtail the frequent changes of the project directors and TMA staff during implementation, nullifying the training provided by the consultants to the TMAs.
K. Performance of the Asian Development Bank
48. The performance of ADB was partly satisfactory. There were regular project reviews, and project staff members were trained on disbursement and safeguards. ADB and the borrower acted promptly to address the poor performance of package A consultants and to engage a new firm. Packaging and contract awards were done efficiently after initial delays, and most contracts were awarded by 2007. Further, the selection criteria of TMAs were well designed but were not monitored after the initial review either by the borrower or ADB, which resulted in continuous investments without considering sustainability of operations.
49. Resettlement and environmental management plans were developed for most subprojects. However, apart from gaps in the quality of these plans, some contracts were awarded before the complete implementation of social safeguard plans, and ADB identified this gap very late in the implementation stage. Those affected by land acquired for wastewater treatment plants in Multan formally complained to the operations department and the Office of the Special Project Facilitator at the end of 2008. ADB immediately fielded a mission to assess resettlement and environment noncompliance and also conducted an independent, third-party environmental audit. The mission recommended compliance improvement measures and partial suspension of noncompliant subprojects and also provided additional advisory support to guide the executing agency. However, due to a lack of capacity, and to some extent, of interest of the TMAs to meet these safeguard benchmarks, ADB first suspended and then closed the loans, leaving parts of ongoing subprojects incomplete. The decision to prematurely close the loan further delayed compliance and completion of critical downstream subprojects for which upstream works were complete, creating health and water pollution impacts in the short to medium term.
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III. EVALUATION OF PERFORMANCE
A. Relevance
50. The project design was relevant. The relevance was high for the infrastructure subcomponent, sustainability, and cost recovery. The community participation, private sector and municipal management components although included in the design, require further clarity for effective implementation and stronger alignment with current ADB strategy (para 8) focusing on well defined role of private sector, incentives to perform, and autonomy in TMA operations. The design had strong focus on TMA capacity, but capacity gaps in the TMAs were underestimated and so where the resources and activities required to address the gaps (para. 27). The policy action were well designed, with minor gaps as elements like the role of TMA in revising UIPTs and urban service charges were not fully captured. No major changes were made in project design during project implementation.
B. Effectiveness in Achieving Outcome
51. The project was effective in achieving its intended outcomes. The project improved water quality and quantity, solid waste and sewerage collection and disposal, the quality of roads and slaughterhouses, and the quality of life for 3.6 million residents in 21 towns of South Punjab. In the absence of project-specific benefit monitoring data, trends from secondary urban data of the seven districts where project interventions took place are attributed to the project (Appendix 8). Children under 5 years suffering from diarrhea decreased from 20.3% to 14.3% between 2004 and 2010. Data from district hospitals7 show a 15% decrease in patients suffering from water- and hygiene-related diseases between 2006 and 2009. Secondary data shows reduced coverage of population with piped water (from 34.2% to 25.9%). The population using motor pumps increased (from 40.3% to 55.9%) between 2004 and 2010, showing exceeding dependency upon own-water sources due to sustained poor quality water in the past. This trend may change once the water schemes completed under the project are fully operational.
52. Further, in the project towns, 96.0% of the population are using flush latrines in 2011 compared to 84.6% in 2005, although 50% of these houses are still not connected to external sewers. With improved health and water supply and better waste collection, the net enrollment rate at the primary level (i.e., ages 5–9 years) has increased from 45% to 51% between 2004 and 2011, with the bulk among females. There is no separate secondary data available on slum inhabitants and the poor, in the 21 project towns.
53. Although these outcomes cannot be fully attributed to the project as major investments were made by the government in urban services during this period and many project schemes are still not operational, it can still be assumed that the project contributed to these positive trends. However the project was unable to enhance communities role in urban service management and create conditions conducive to sustained urban development, as local government capacities, including their management and planning capacities, could not be improved. In addition, local resource generation remains minimal (Appendix 9), and most of the TMAs remain under resourced both in terms of financial and human recourses. The service charges have remained stagnant, with no improvement in billing and asset management.
7 Executive District Officers, Health, FY2008-2009, FY2009-2010, 2010-2011, District Health Information System
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C. Efficiency in Achieving Outcome and Outputs
54. The project was highly efficient in achieving its outputs and outcomes considering the high economic returns, even though the returns were lower than appraisal estimates. Out of 166 subprojects started, 86 were completed at loan closure, 58 after loan closure, and 22 are ongoing. The ongoing subprojects, will be completed by June 2012 with government resources. An economic and financial reevaluation was done at completion following the appraisal methodology, taking into account the delayed completion, irrespective of funding source. A representative sample from the seven TMAs was selected for this purpose. The analysis is provided in Appendix 10.
55. For the sewage system and wastewater treatment subprojects, an economic rate of return (EIRR) of 18.0% was estimated at completion, compared to 37.6% at appraisal. The lower-than-projected EIRR is due to the delay in street-level connections that were to be undertaken by the communities through the mobilization and awareness effort. The other reason is the delay in completion of wastewater treatment plants in more than 50% of the towns. No financial rate of return (FIRR) was estimated for these subprojects at appraisal or completion.
56. The overall EIRR of water supply subprojects at completion was 23%, compared to 30% at appraisal. The reduced EIRR estimate is due to the delay in accrual of benefits derived from savings in health expenditures, and time and cost savings in water collection. The estimated FIRRs for the water supply improvement subprojects in Bahawalpur, Dera Ghazi Khan, and Multan were lower (2-6.4%) than those at appraisal (6-16%) due to poor collection efficiency across all TMAs, which ranges from 40% to 60%, and the lower-than-anticipated increase in net water tariffs. new connections and possible inability of TMAs to maintain the service quality.
57. For the road link subprojects, an EIRR of 23.4% was estimated at completion, compared to 23.0% at appraisal. The high EIRR is due to increased land value because of economic activities generated along the newly constructed roads. In addition, the EIRR for the solid waste management subcomponent was estimated at 21.0%, compared to the appraisal estimate of 22.7%. The reason for the high EIRR estimate at completion is due to increased property values, reduced flooding, and increased solid waste collection efficiency. The FIRR for the solid waste management subprojects was not analyzed, as no tariffs are being collected for this service.
58. The estimated EIRR for the slaughterhouses was 15.0% at completion, which is almost the same as at appraisal (15.7%). The benefit comprises savings in health expenditure. The FIRR estimate ranged between 10% and 26% at completion compared to 15%–26% at appraisal. The minor reduction is due to location disadvantages of new slaughterhouses.
59. The above analysis shows that all project investments were economically viable and highly efficient despite the delays in completion. The investment in slaughterhouses is the only investment that is financially viable, and all other investments are financially unviable considering the less-than-anticipated increases in service charges, collection efficiencies, and customer base. In the absence credible source the appraisal assumptions for capital investment and maintenance cost were used for calculating EIRR, however due to low financial return there is some risk of reduced economic benefits over time.
D. Preliminary Assessment of Sustainability
60. The sustainability of the project investment is less likely. The project was to support an increase in the TMA revenue base in a sustainable manner and to facilitate establishment of
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TMA institutional capacities and organizational setups in line with the PLGO 2001. The Punjab government and TMAs agreed to implement these reforms as a prerequisite for TMA entry into the project. To be eligible, each TMA was to update consumer databases, undertake service charge revisions and other revenue enhancement measures, establish compliant cells in TMAs, provide qualified staff members, introduce improved budgeting accounting and procurement procedures, increase community participation, and prepare an action plan of financial and municipal management reforms to generate resources. However, in most cases, these plans were not implemented. The performance of the participating TMAs (Appendix 9) shows that most TMAs have weak financial performance and are highly dependent on government transfers to sustain their operations with the current services that they provide. Further, most TMAs are unable to carry out and sustain the reforms regardless of the quality of the reforms.
61. The TMAs and Punjab government have neither the capacity nor the political will and resources to sustain the improvements in service delivery resulting from project investments unless the cost of services continue to be subsidized through other sources and grants from the provincial government. The grants are expected to continue, considering the high demand for these services; however, they will continue to be inadequate to subsidize the service costs for optimal operations and be affected by political biases for specific TMAs. This is expected to reduce health benefits, increased property values, and other benefits of the project over time.
E. Impact
62. The overall impact of the project is positive. In the short term, the project has contributed toward an improved urban environment and the health of the 3.6 million people living in 21 towns (paras. 51–53).Although, there is risks associated with resources and capacity limitation to maintain the services, there is major improvement in urban services with the project.
63. Field and secondary data (Appendix 8) were used to assess impacts in the absence of a benefit monitoring and evaluation system for the project. However, even this data may not capture the impacts, as most subprojects recently started operations. In addition, where some upstream works are complete but wastewater treatment plants and landfills are still incomplete, the impact can still be less than anticipated.
64. According to the secondary data, maternal mortality rates have fallen from 300 to 227, and infant mortality rate has remained constant at 77, between 2004 and 2009 in Punjab. The industrial units in participating towns have increased to 1,359, employing 94,249 people compared to 890 units employing 75,323 people between 2004 and 2009. There has been a 10% increase in secondary and a 25% increase in tertiary roads in the project area over the same period. The direct benefits of project related to health and education that are also positive are provided in paragraph 51.
65. About 40% of the subprojects involved land acquisition. In some cases, land was owned by the TMAs or the government. During implementation, resettlement noncompliance was noted on 46 subprojects, out of which 26 were suspended as contracts for these subprojects were awarded without fully implementing the resettlement plans, and some plans had gaps in documenting the scope of resettlement. The executing agency was unable to implement the measures identified to improve resettlement compliance due to weak capacity and delays in identifying noncompliance by ADB, and the project was closed prematurely.
66. Yet most of the subprojects had an environmentally positive impact, as they improved sanitation and the quality and quantity of water and reduced solid waste, travel time, and traffic
14 congestion. The wastewater treatment plants, slaughterhouses, disposal stations, and landfills contribute toward environmental improvement but may still have minor health and other impacts for the adjoining population. These impacts were mitigated in project design, developing operation proposals and selecting simple treatment options and a comprehensive waste reuse and recovery study to reduce downstream impacts. However, the guidelines for operation and reuse must be implemented and monitored to check adverse downstream impacts, especially on houses located along the boundary of these facilities. The risk of poor management due to capacity and resource constraints of TMAs will remain unless these are addressed by the Punjab government through grant funding for operation, continuous support for capacity and revenue improvements in TMAs, and close monitoring of operational guidelines.
IV. OVERALL ASSESSMENT AND RECOMMENDATIONS
A. Overall Assessment
67. The project was successful. Its interventions and design were relevant. The project was effective in achieving its intended outcomes in the short term. The outputs and outcomes were achieved with delays and slightly reduced benefits and low financial returns, however economically it was still highly efficient. Policy and institutional reforms were introduced but not fully implemented, making the physical interventions and provision of quality services less likely to be sustainable in the long-term. Most of the targets in the design and monitoring framework were met, but achievements were below the set quantitative targets (Appendix 1). No changes were made in the design and implementation arrangement of the project at the midterm or any other stage of the project.
B. Lessons
68. Ownership and commitment of the Punjab government toward the PLGO 2001 decreased over the project implementation period. The PLGO 2001 reforms were embedded in the TMA selection criteria and were supported through municipal management capacity-building initiatives to ensure sustainability of investments. Due to the lack of political will and weak capacities of the implementing agencies, however, the implementation of the reforms and municipal management activities was marginal. With more focus on infrastructure, and limited attention to TMA selection criteria and related benchmarks, this gap could not be fully addressed during implementation. Urban projects need an integrated approach, and infrastructure alone cannot result in improved services, unless different services complement each other, and capacities, resources, and systems are in place to sustainably deliver these services.
69. Based on the analysis at completion, one of the major flaws in the devolution process was that TMAs were given additional responsibilities without providing them the additional staff members, resources, power, and regulatory environment to deliver these responsibilities. In the absence of these four key elements, any further investments in urban services managed by TMAs are not expected to deliver sustainable results and service improvements.
70. LGRDD, through the PCO, was the executing agency of the project. However, with limited capacity demonstrated in implementing the project for the first 2 years, PCO management was taken over by staff members deputed from HUD&PHED, and focus shifted toward infrastructure investments. Sustainability can be better achieved if the organizations that operate services remain fully involved in its design, planning, and implementation stages.
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71. It was envisaged that TMAs would be assisted in offering opportunities to the private sector in the transport, recycling, and composting of solid waste, municipal slaughterhouses, and wastewater treatment plant operations. However, except for outsourcing slaughterhouse operations, no private sector participation was achieved. Private sector participation was included in the scope of project activities without fully understanding the dynamic of such a partnership, conducive regulatory environment, economies of scale, and capacities of TMA to enter into and manage such partnerships. The overall support required for new approaches for delivering services must be better understood before these are included in project designs to ensure success.
72. The community participation in design and planning subprojects was minimal. The engagement with communities was mainly through social organizers and some council members, who were not directly related to mainstream implementation of the subproject, which was one of the key reasons for weak participation. Community participation requires their intensive involvement from the design to the implementation stages, through direct interaction with key players responsible for implementation, to build ownership and sustained partnerships.
73. Delay in acquisition of the required land and award of contracts without implementation of resettlement plans impeded implementation and caused premature loan closure. Efforts are needed to built safeguard capacities within countries to implement and within ADB to supervise, guide, and monitor safeguard compliance. To check against safeguard-related delays, safeguard plans and their implementation should be part of a project readiness filter.
C. Recommendations
74. The Punjab government is currently revising the PLGO 2001, and local government elections are expected in 2013. Some of the key weaknesses in the implementation and design of the ordinance that impact the sustainability of the operations in urban areas are the incentive structure for professional management of urban services, weak capacities of devolved staff members, autonomy of the structures responsible for city management, regulatory environment for services management, conducive environment for private sector in provision of services, and clarity on urban boundaries and establishing proper planning and controls for guiding investments. ADB needs to monitor the revisions with respect to these weaknesses to secure its future urban investments.
75. Covenants. The covenants in the loan and project agreements were relevant. Covenants related to resettlement and revenue enhancement to sustain improvement in urban services should be maintained in their existing form and monitored for the next 2 years (up to June 2014), through the urban sector dialogues and country portfolio review.
76. Timing of the project performance evaluation report. About 12% of the critical project components, especially wastewater treatment plants and landfills, are expected to be completed by June 2012. The sustainability and complete impact of the project can only be assessed once these subprojects are functional. Based on better services, revenue improvement measures may also show some results by the end of 2012. The most appropriate timing for preparing the project performance evaluation report is 2013 to capture the complete impact of the project interventions and their sustainability.
PROJECT FRAMEWORK 16
Performance Indicators and/or Assumptions Design Summary Targets Monitoring Mechanisms and Risks Status at Completion 1 Appendix Impact
Urban poverty reduced Percentage of urban population in Government economic The PPMS for the project Urban poverty in Punjab has increased absolute poverty reduced from statistics was not implemented. No from 13.1% to 16.8% between 2005 Community health improved 35% to 22% sampling of impacts was and 2009 (Appendix 8). Government health undertaken during Environmental degradation Waterborne diseases and infant statistics implementation. Most of Children under age 5 years suffering reduced mortality and morbidity reduced the reported data are from diarrhea decreased from 20.3% significantly Hospital and medical clinic secondary data. to 14.3% between 2004 and 2010 in records the project towns (Appendix 8). Data Ambient water quality data Most project facilities from district hospitalsa in the project improved significantly Periodic spot sampling started operation between areas showed a 15% decrease in 2010 and 2011, and patients suffering from water- and Flooding reduced significantly Sample surveys many are still incomplete. hygiene-related diseases during 2006– As a result, this data may 2009. The infant mortality rate in Quarterly progress reports, not represent the real Punjab has remained constant at 77, review missions, and impact of the project. and maternal mortality rates have project completion report fallen from 300 to 227 between 2004 and 2009. ADB PPMS reports No data on ambient water quality for ADB PPER the project areas were available.
Flooding frequency has increased substantially, with major floods in south Punjab during 2010 and 2011. Outcome
Living conditions and quality Safe and reliable drinking water Government economic Future legislation Safe, reliable drinking water supplies of life improved for 3.6 million available to at least 135 low- statistics continues to support were provided to 126, 914 households people in low-income income communities in 7 towns consistency of PLGO through 18 (new as well as communities of 21 towns Financial records of TMAs 2001 and TMA augmentation of current) water supply Sewage disposal from 21 towns sustainability schemes. The water supply Sustainability of urban and 400 low-income communities Sample surveys improvement schemes were investments achieved improved significantly Risks implemented only in seven towns. The ADB PCR length of the installed/upgraded water
a Executive District Officers, Health, FY2008-2009, FY2009-2010, 2010-2011District Health Information System- DHIS
Performance Indicators and/or Assumptions Design Summary Targets Monitoring Mechanisms and Risks Status at Completion Urban poverty alleviated Water quality in 21 towns Late TMA actions in supply pipes is 518 km. improved significantly Tripartite review of ADB, eligibility criteria delay the government, and TMAs start up. Sewage disposal was improved Final disposal of untreated through construction of new and sewage improved significantly PPMS reports Inadequate allocation of augmentation of 80 schemes in all 21 counterpart funds and project town. Only 10,467 households Frequency of solid waste their delayed release were provided with new connections at collection and disposal to landfills affect implementation. completion because wastewater improved significantly treatment plants have just started Land acquisition for operation recently and 20% are still Institutional policy reforms per wastewater treatment incomplete with untreated disposal is PLGO 2001 implemented, and plants and landfill sites still going into natural water bodies, TMA mobilization of financial delay execution of these canals, and drains. Wastewater resources increased components. treatment capacity has increased by 300,000 cubic meter per day at Poverty incidence reduced from completion. An additional 270,000 35% in 2002 to 22% in 2009 cubic meters per day capacity will be added on completion of ongoing schemes. The number of sewer connection will increase exponentially in the next 6 months.
Frequency of solid waste collection and disposal were improved to 70-80% coverage in all project towns through provision of solid waste handling and transport equipment in all project towns as well as construction of landfills. 2 landfills are still under construction, so the final disposal in 2 towns may still not be according to local environmental standards.
Institutional policy reforms under
PLGO 2001 were partly implemented, 1 Appendix and most of the TMAs showed marginal improvement in revenues or in mobilizing additional financial resources.
Urban poverty in Punjab increased
from 13.1% to 16.8% between 2005 17 and 2009 (Appendix 8).
Performance Indicators and/or Assumptions 18 Design Summary Targets Monitoring Mechanisms and Risks Status at Completion Outputs
1 Appendix Development of the At least 7 subprojects for water TMA records and reports Land acquisition for One site for a wastewater treatment infrastructure for basic urban supply system improvement in 7 wastewater treatment plant and five sites for solid waste services completed for TMAs completed, along with PCO progress reports plants and landfills delay management landfills were abandoned (i) water supply, completion of 57 new tube wells, execution of key project due to delays related to safeguard
(ii) sewerage systems new transmission mains, ground ADB PPER components. issues. and wastewater storage reservoirs, and treatment, construction and rehabilitation of Semiannual ADB review Water supply and In seven towns, 15 water supply (iii) solid waste distribution systems missions sewerage customers are schemes were completed and another management, willing to pay more for 3 are expected to be completed by 30 (iv) low-income area At least 19 subprojects completed ADB PCR better services. June 2012 with new connection to road links, and operational for extension and 126,914 households. (v) slaughterhouses, rehabilitation of sewerage Local communities are and systems, 32 wastewater treatment interested and respond In 21 towns, 64 sewerage and (vi) incremental land plants, 49 new sewage disposal positively to the project. wastewater treatment plant schemes development for the stations, and construction of about were completed and another 15 are poor 49 km of sullage carriers The government expected to be completed by 30 June continually supports a 2012. This includes 3 wastewater Solid waste management comprehensive and treatment plants. About 10,467 houses improved in 21 TMAs by providing consistent devolution are now connected, with wastewater waste collection and disposal policy. treatment capacity of 300,000 cubic equipment, developing suitable meter per day. Additional 270,000 landfills, and training in solid Provincial governments cubic meters per day capacity will be waste management and TMAs remain added on completion in June 2012. committed to actions on House connection will improve once Access of low-income institutional policy operations start communities improved to town reforms. centers and local neighborhoods In 21 TMAs and towns, 41 solid waste in 20 towns, with about 54 km of Efforts to enhance the management schemes were link roads TMAs’ revenue base are completed, and another 2 are not be successful, thus expected to be completed by 30 June Construction or relocation of affecting the sustainability 2021. This includes provision of solid slaughterhouses in 10 towns of improvements in waste equipment and landfills and completed, with operational and financial management transfer station development. maintained facilities and resource generation. 15 roads were completed in 14 towns. Incremental land fully developed TMA staff members as a pilot project in Mian Channu respond positively to In 8 towns, 7 slaughterhouse schemes City, and all plots allotted to and training, and successfully were completed, and one is expected developed by low-income use new skills and to be completed by 30 June 2012. The communities facilities. operation of completed slaughterhouses has been outsourced.
Performance Indicators and/or Assumptions Design Summary Targets Monitoring Mechanisms and Risks Status at Completion One scheme for incremental land development was completed. Institutional capacity of TMAs Institutional capacity of TMAs Training was reported to have been strengthened strengthened provided, but limited evidence was seen of improved institutional capacity Institutional action plans of the in all TMAs. No action plans were Punjab government and the TMAs available with any TMA for capacity created strengthening.
Training in urban infrastructure It was reported that municipal management and revenue management training-related asset, generation completed by 2005 billing, and revenue improvement measures were provided to the TMAs. However, there was no record of such Training in execution and training available with most TMAs, and operation of supplementary urban no impact in terms of improvement in facilities completed by 2005 these areas was noted, mainly due to high turnover of staff in the TMAs. Financial programs and tariff requirements for recovery of full No training in accounting and operation and maintenance costs budgeting was provided. of water supply systems developed in 2004. While the TMAs do have estimates of water supply arrears, there is limited Improved accounting, political will for improving collection, management, and budgeting rationalizing service charges, or systems implemented by 2005 reducing nonrevenue water. There was also no improvement in collection Action taken by TMAs on efficiency (Appendix 9). rationalization of water use charges and regularization of illegal water connections
Significant improvement of
collection efficiency by 2005 1 Appendix
Activities
PCO and project unit Started: December 2003 TMA records and reports Local communities are The PCO was established between established and fully staffed Completed: March 2004 willing to contribute time, June and December 2004. Responsible: Planning and PCO and project unit money, and other
Development Board, LGRDD, and project progress resources. 19
Performance Indicators and/or Assumptions 20 Design Summary Targets Monitoring Mechanisms and Risks Status at Completion TMAs
ADB PPER LGRD and TMA staff 1 Appendix members are committed Semiannual ADB review to institutional missions strengthening and expeditious project
ADB PCR implementation.
PPMS Competent key personnel and counterpart staff are available.
Counterpart funds are available in a timely manner. Procurement of technical Consultant recruitment was completed services in March 2005.
Consulting firms and Started: December 2003 individual consultants Completed: June 2004 recruited Responsible: Planning and Development Board, LGRDD, and TMAs
Design of subprojects The PCO was established and fully staffed between June and December Technical team established Started: June 2004 2004. and provided with all required Completed: July 2005 resources; cooperation Responsible: LGRDD and TMAs mechanism established with project units and PCO
Implementation of Although with initial delays, tendering subprojects and design started in 2005 and was almost complete in 2008. There were Detailed designs and tender Started: July 2004 major gaps in land acquisition that documents prepared, Completed: December 2008 could not be completed at project community participation Responsible: LGRDD, PCO, closure in December 2009. The ascertained, land acquired for project unit, TMAs, and technical community participation remained subprojects, tenders support team weak and was not ensured during conducted, contracts implementation or sustained after loan implemented, and closure.
Performance Indicators and/or Assumptions Design Summary Targets Monitoring Mechanisms and Risks Status at Completion construction supervision conducted
Institutional capacity Most of these activities were either building of TMAs delayed or did not take place. The reporting on these activities is very Actions taken by Punjab Started: March 2004 weak, no records are available on their government and TMAs per Completed: December 2004 status and delivery schedule, and very agreed institutional action Responsible: Planning and limited impact of their delivery was plan Development Department, noted at the TMA level. However, LGRDD, TMAs training in municipal management activities was undertaken by package Training in urban B consultants according to mission infrastructure management, Started: July 2004 reports. This schedule was not revenue generation, and Completed: December 2005 reported. execution and operation of Responsible: PCO, project unit, supplementary urban facilities TMAs, and technical support team
Financial programs and tariff Started: March 2004 requirements for recovery of Completed: December 2004 full operation and Responsible: Planning and maintenance costs of water Development Department, supply systems developed LGRDD, TMAs
Environmental monitoring and Started: July 2004 No environmental monitoring plan was management plan developed Completed: December 2005 prepared or reported according to the and operationalized Responsible: PCO, project unit, information available. TMAs, and technical support team Loan covenants were monitored Loan covenants monitored, Started: July 2004 regularly, but no PPMS was PPMS applied, and regular Completed: July 2009 developed, implemented, or quarterly reports prepared Responsible: PCO, project unit, monitored. Quarterly reports were TMAs, and technical support team prepared regularly on project progress and issues.
1 Appendix Inputs
ADB loan total: $128.60 million ADB project disbursement Consultants are recruited $49.87 million (i) Urban Infrastructure, civil $66.00 million documents in a timely manner. $30.45 million works, equipment, and
materials Contracts are negotiated 21
Performance Indicators and/or Assumptions 22 Design Summary Targets Monitoring Mechanisms and Risks Status at Completion and awarded in a timely
(ii) Community development $19.90 million manner. $13.94 million 1 Appendix (iii) Institutional development Equipment is procured in (a) Municipal $0.60 million a timely manner. $0.01 million management system
development Sufficient numbers of (b) Project $1.20 million qualified personnel are implementation available for training assistance when required. (c) Incremental $3.50 million $2.45 million operational costs
Consulting services Adequate counterpart funding is available when $2.90 million required. $1.29 million 32 person-months, international 1,798 person-months, domestic TMAs and community funding contributions are fulfilled as agreed. ADB = Asian Development Bank, km = kilometer, LGRDD = Local Government and Rural Development Department, PCO = project coordination office, PCR = project completion report, PLGO = Punjab Local Government Ordinance, PPER = project performance evaluation report, PPMS = project performance management system, TMA = tehsil municipal administration.
Appendix 2 23
INFRASTRUCTURE SUBPROJECTS
Table A2.1: Summary Status of Subprojects
Completed by Total Sub- Completed before 31 29 February 30 June Sector projects July 2009 2012 2012 Dropped Water supply 18 11 4 3 0 Sewerage and wastewater 80 34 30 15 1 treatment plants Road links 16 10 5 1 0 Solid waste management 48 26 15 2 5 Slaughterhouses 8 5 2 1 0 Incremental land development 2 0 2 0 Total 172 86 58 22 6
24 Appendix 2
Table A2.2: Schemes Completed before 31 July 2009
Completion Cost Subproject (PRs million) A. Water Supply 1. Phase 1, part 1, Multan 34.589 2. Qaddafi Chowk, Multan 35.180 3. Installation of water meters and house connections, Smeejabad, Multan 29.783 4. Zone C, Dera Ghazi Khan 83.603 5. Zone A, part 1, Dera Ghazi Khan 62.948 6. Zone A, part 2, Dera Ghazi Khan 55.565 7. 200-kilo-volt amperes (KVA) diesel generator for zone A, Dera Ghazi Khan 2.860 8. Zone B, Dera Ghazi Khan 79.754 9. Jalalpur Pirwala 81.579 10. Taunsa 15.588 11. Bindra Basti, Bahawalpur 101.404 Subtotal for Water Supply 582.853 B. Sewerage Systems and Wastewater Treatment 1. Sewer cleaning and safety equipment, Bahawalpur 1.576 2. Sewer cleaning and safety equipment, Rajanpur 1.576 3. Sewer cleaning and safety equipment, Khanewal 1.576 4. Sewer cleaning and safety equipment, Dera Ghazi Khan 1.576 5. Sewer cleaning and safety equipment, Qadirpur Raan 1.576 6. Sewer cleaning and safety equipment, Jalalpur Pirwala 1.576 7. Sewer cleaning and safety equipment, Taunsa 1.576 8. Sewer cleaning and safety equipment, Shujabad 1.576 9. Sewer cleaning and safety equipment, Kot Addu 1.576 10. Sewer cleaning and safety equipment, Jampur 1.576 11. Sewer cleaning and safety equipment, Alipur 1.576 12. Sewer cleaning and safety equipment, Khairpur Tamewali 1.576 13. Sewer cleaning and safety equipment, Yazman 1.576 14. Sewer cleaning and safety equipment, Rojhan 1.576 15. Sewer cleaning and safety equipment, Mian Channu 1.576 16. Rehabilitation of wastewater disposal station Suraj Miani, part 1, Multan 63.000 17. Truck-mounted sucker and jetting machines and safety equipment, Multan 24.000 18. Construction of sewer links, Qadirpur Raan 19.275 19. Augmentation and improvement of sewerage system, Jalalpur Pirwala 16.070 20. Rehabilitation of sewerage disposal station, Kot Addu 3.059 21. Construction of sewer links, zone 1, Alipur 14.364 22. Truck-mounted sucker and jetting machines, Dera Ghazi Khan 6.650 23. Truck-mounted sucker and jetting machines, Yazman 6.650 24. Sewer cleaning and safety equipment, Jatoi 1.576 Rehabilitation and augmentation of disposal station, Khayaban-e-Sarwar, Dera 25. 22.278 Ghazi Khan 26. Sewerage system, Yazman 21.599 27. Construction of wastewater treatment plant, Yazman 19.253 28. Rehabilitation of sewerage system, Rojhan 11.230 29. Sewerage system, Khairpur Tamewali 23.643 30. Rehabilitation and augmentation of main disposal (eastern zone) Dera Ghazi Khan 56.782 31. Rehabilitation and augmentation of main disposal (western zone) Dera Ghazi Khan 75.468 Procurement of truck-mounted jetting machines for 15 tehsil municipal 32. 54.750 administrations Procurement of truck-mounted sucker machines for 15 tehsil municipal 33. 45.000 administrations Construction of sullage carrier from wastewater treatment plant to agricultural land, 34. 1.838 Yazman Subtotal for Sewerage Systems, Wastewater Treatment Plants 489.637 C. Road Links 1. Construction of road links, Yazman 3.552 2. Construction of road from Taliwala to wastewater treatment plant, Yazman 9.100 3. Construction of road links, Ahmadpur East 5.326
Appendix 2 25
Completion Cost Subproject (PRs million) 4. Construction of road links, Khanewal 1.900 5. Construction of road links, Jahanian 4.665 6. Construction of road links, Taunsa 18.259 7. Construction of road links, Jampur 5.201 8. Construction of road links, Qadirpur Raan 10.545 9. Construction of road links, Mian Channu 6.643 10. Construction of road links, Kabirwala 10.216 Subtotal for Road Links 75.407 D. Solid Waste Management 1. Improvement of solid waste manager part 1, Multan 28.898 2. Improvement of solid waste manager part 1, Mian Channu 3.937 3. Improvement of solid waste manager part 1, Bahawalpur 12.282 4. Improvement of solid waste manager part 1, Shujabad 5.015 5. Improvement of solid waste manager part 1, Taunsa 4.732 6. Improvement of solid waste manager part 1, Rojhan 3.660 7. Improvement of solid waste manager part 1, Yazman 3.562 8. Improvement of solid waste manager part 1, Jalalpur Pirwala 4.915 9. Improvement of solid waste manager part 1, Khanewal 5.654 10. Improvement of solid waste manager part 1, Jahanian 2.249 11. Improvement of solid waste manager part 1, Dera Ghazi Khan 8.050 12. Improvement of solid waste manager part 1, Ahmadpur East 4.223 13. Improvement of solid waste manager part 1, Kot Addu 4.013 14. Improvement of solid waste manager part 1, Jampur 1.873 15. Improvement of solid waste manager part 1, Khairpur Tamewali 2.912 16. Improvement of solid waste manager part 1, Qadirpur Raan 3.090 17. Improvement of solid waste manager part 1, Hasilpur 4.445 18. Improvement of solid waste manager part 1, Kabirwala 1.929 19. Improvement of solid waste manager part 1, Jatoi 2.800 20. Improvement of solid waste manager part 1, Alipur 2.899 21. Procurement of tractor-towed mechanical sweepers and water bowsers, Multan 11.013 22. Construction of public toilets, Multan 10.470 23. Construction of public toilets, Taunsa and Dera Ghazi Khan 4.938 Procurement of handcarts for 21 model union councils of 21 tehsil municipal 24. 1.953 administrations Procurement of handcarts for 21 model union councils of 21 tehsil municipal 25. 8.473 administrations 26. Procurement of solid waste management hoist trucks, Multan 22.600 Subtotal for Solid Waste Management 67.075 E. Slaughterhouses 1. Construction of slaughterhouse, Yazman 2.763 2. Construction of slaughterhouse, Ahmadpur East 2.316 3. Construction of slaughterhouse, Qadirpur Raan 2.028 4. Rehabilitation of slaughterhouse, Kabirwala 0.524 5. Construction of slaughterhouse, Mian Channu 2.489 Subtotal for Slaughterhouse 10.120 Total 1,349.090
26 Appendix 2
Table A2.3: Schemes Completed before 29 February 2012
Completion Cost Subproject (PRs million) A. Water Supply 1. Improvement of water supply scheme, Rojhan 16.206 2. Water supply scheme, Hasilpur 297.434 3. Water supply scheme, Tibba Bander Sher, Bahawalpur 93.923 4. Water supply scheme, Bahawal Colony, Bahawalpur 47.459 Subtotal for Water Supply 455.022 B. Sewerage Systems and Wastewater Treatment 1. Sewer links, Khanewal 36.600 2. Sewer links, Kabirwala 77.668 3. Rehabilitation of sewerage and disposal station, Shujabad 17.690 4. Sewer links, Khairpur Tamewali 33.071 5. Sewer links, Jahanian 51.619 6. Wastewater treatment plant, Kabirwala 45.722 7. Sewer links, zone C, Kot Addu 27.525 8. Sewerage scheme, zone 2, Alipur 42.335 9. Sewerage system, Taunsa 71.621 10. Sewerage system, Qaddafi Chowk and Sameejabad, Multan 343.106 11. Sewerage system, Jampur 48.161 12. Wastewater treatment plant, Khairpur Tamewali 48.390 13. Sewerage system, Bosan road part 2, Multan 164.491 Sullage carrier, wastewater treatment plant, Tibba Bander Sher to Sutlej River, 14. 26.444 Bahawalpur 15. Sewerage system, zone A, Rajanpur 36.695 16. Main and submain sewers, Shujabad 35.000 17. Force main from disposal station to wastewater treatment plant, Jalalpur Pirwala 20.658 18. Sewer links, Mian Channu 86.352 19. Sewerage scheme, Jatoi 63.889 20. Wastewater treatment plant, zone C, Khanewal 123.191 21. Wastewater treatment plant, zone A, Khanewal 34.409 22. Wastewater treatment plant, Jalalpur Pirwala 48.222 23. Wastewater treatment plant, Alipur 39.390 24. Lateral sewers, Jatoi 15.550 25. Wastewater treatment plant, Tibba Bandar Sher, Bahawalpur 146.540 26. Wastewater treatment plant, Jahanian 29.187 27. Wastewater treatment plant, Jatoi 19.975 28. Wastewater treatment plant, Taunsa 25.200 29. Wastewater treatment plant, Rajanpur 35.390 Laying of remaining force main from disposal station to wastewater treatment plant, 30. 9.613 Qadirpur Raan Subtotal for Sewerage Systems, Wastewater Treatment Plants 1,803.704 C. Road Links 1. Construction of road links, Rojhan 2.274 2. Construction of road links, Rajanpur 8.529 3. Construction of road links, Jampur 5.848 Construction and rehabilitation of metaled road and earth filling at disposal stations, 4. 4.028 Dera Ghazi Khan 5. Rehabilitation and construction of Aqilpur road, Rajanpur 6.778 Subtotal for Road Links 27.455 D. Solid Waste Management 1. Landfill, Habiba Sial, Multan 60.006 2. Landfill, Rajanpur 4.000 3. Landfill, Alipur 26.342 4. Landfill, Mian Channu 30.560 5. Landfill, Jalalpur Pirwala 35.253 6. Landfill, Hasilpur 51.782 7. Landfill, Ahmadpur East 45.892 8. Solid waste enclosure at Multan tehsil municipal administrations 4.595
Appendix 2 27
Completion Cost Subproject (PRs million) 9. Solid waste enclosure at Bahawalpur tehsil municipal administrations 4.813 10. Solid waste enclosure at Dera Ghazi Khan tehsil municipal administrations 1.462 11. Procurement of 4 hoist trucks for Dera Ghazi Khan tehsil municipal administrations 12.178 12. Landfill, Kabirwala 34.456 13. Solid waste enclosure at Khanewal tehsil municipal administrations 2.198 14. Solid waste enclosure at Muzaffargarh tehsil municipal administrations 1.683 15. Solid waste enclosure at Rajanpur tehsil municipal administrations 2.700 Subtotal for Solid Waste Management 317.920
E. Slaughterhouse 1. Construction of slaughterhouse, Khanewal 3.116 2. Construction of slaughterhouse, Jahanian 1.381 Subtotal for Slaughterhouse 4.497 F. Incremental Land Development 1. Incremental land development (external electrification), Mian Channu 12.409 2. Incremental land development, Mian Channu 21.424 Subtotal for Incremental Land Development 33.833 Total 2,642.431
28 Appendix 2
Table A2.4: Schemes Scheduled to be Completed by 30 June 2012
Estimated Completion Cost Subproject (PRs million) A. Water Supply 1. Water supply scheme, Satellite Town, Bahawalpur 103.110 2. Water supply scheme, Bhatta Jat, Bahawalpur 103.851 3. Water supply scheme, Quaid-e-Azam Colony, Bahawalpur 94.592 Subtotal for Water Supply 301.553 B. Sewerage Systems and Wastewater Treatment 1. Rehabilitation of wastewater disposal station, Suraj Mian Part 2, Multan 61.472 2. Sewerage scheme zones C and D, part 1, Bahawalpur 146.412 3. Sewerage scheme zones A and F, Bahawalpur 126.891 4. Wastewater treatment plant, Mian Channu 52.034 5. Sewer links, zone B, Rajanpur 87.330 6. Sewer links, zone A, Khanewal 70.330 7. Sewerage scheme, zone A, Kot Addu 62.810 8. Sewerage scheme, zone C and D, part 2, Bahawalpur 173.004 9. Wastewater treatment plant, Binda Dakhli, Bahawalpur 158.715 10. Sewerage system, Bosan Road, Multan 215.100 11. Sewerage system, Qaddafi Chowk and Sameejabad, part 2, Multan 45.613 12. Sullage carrier, Khan village to wastewater treatment plant, Suraj Miani 209.830 13. Wastewater treatment plant, Qadirpur Raan 22.344 14. Wastewater treatment plant, Suraj Miani, Multan 612.500 15. Augmentation of sewerage system and lateral sewers, Bahawalpur 70.561 Subtotal for Sewerage Systems, Wastewater Treatment Plants 2,114.946 C. Road Links Construction of metaled road from Yazman road, One Unit Chowk, Raffi 1. 22.734 Qamar road, Bahawalpur Subtotal for Road Links 22.734 D. Solid Waste Management 1. Landfill, Jahanian 29.020 2. Landfill, Taunsa 29.188 Subtotal for Solid Waste Management 58.208 E. Slaughterhouse 1. Construction of slaughterhouse, Multan 35.000 Approach road to slaughterhouse and boundary wall of slaughterhouse 3.923 Subtotal for Slaughterhouse 38.923 Total 2,536.164
Appendix 3 29
STATUS OF COMPLIANCE WITH LOAN COVENANTS
Reference in Loan Covenant Agreement Status of Compliance (a) The Borrower shall cause Punjab to carry out the LA, article IV, Complied with. Project with due diligence and efficiency and in section 4.01 conformity with sound administrative, financial, engineering, environmental and urban services practices.
(b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 6 to this Loan Agreement. The Borrower shall make available to Punjab LA, article IV, Complied with. promptly as needed, the funds, facilities, services, section 4.02 and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project. The Borrower shall ensure that the activities of its LA, article IV, Complied with. departments and agencies with respect to the section 4.03 carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures. The Borrower shall furnish, or cause to be furnished, LA, article IV, Complied with. to the Bank all such reports and information as the section 4.04 Bank shall reasonably request concerning; (i) the Loan, and the expenditure of the proceeds and maintenance of the service thereof; (ii) the goods and services and other items of expenditure financed out of the proceeds of the Loan; (iii) the Project; (iv) the administration, operations and financial condition of Punjab and any other agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof; (v) financial and economic conditions in the territory of the Borrower and the international balance-of- payments position of the Borrower; and (vi) any other matters relating to the purposes of the Loan. The Borrower shall enable the Bank's representatives LA, article IV, Complied with. to inspect the Project, the goods financed out of the section 4.05 proceeds of the Loan, and any relevant records and documents. The Borrower shall take all action which shall be LA, article IV, Complied with. necessary on its part to enable Punjab to perform section 4.06 its obligations under the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations. (a) It is the mutual intention of the Borrower and the LA, article IV, Complied with. Bank that no other external debt owed a creditor section 4.07 other than the Bank shall have any priority over the Loan by way of a lien on the assets of the Borrower. To that end, the Borrower undertakes
30 Appendix 3
Reference in Loan Covenant Agreement Status of Compliance (i) that, except as the Bank may otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest charge and any other charge on, the Loan; and (ii) that the Borrower, in creating or permitting the creation of any such lien, will make express provision to that effect; provided, however, that if for any constitutional or other legal reason, such provision cannot be made with respect to any lien on assets of its political subdivision, the Borrower shall, at no cost to the Bank, promptly secure the principal of, and interest and other charges on the, the Loan by an equivalent lien on assets of the Borrower satisfactory to the Bank.
(b) The provisions of paragraph (a) of this Section shall not apply to (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such Complied with. property, or (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date.
(c) The term ‘assets of Borrower’ used in paragraph (a) of this Section includes assets of any political subdivision, or any agency of the Borrower and assets of any agency of any such political Complied with. subdivision, including the State Bank of Pakistan and any other institution performing the functions of a central bank for the Borrower. LGRD shall be the Project Executing Agency and LA, schedule 6, Complied with. shall coordinate the implementation of the Project. para. 1 PCO shall be headed by the Director General of DG KAUI and supported by a team of counterpart staff and consultants. PCO shall: (i) assist TMAs in providing policy guidance and inter-TMA coordination; (ii) assist in the implementation of the Municipal Management System Development component; (iii) support the monitoring and evaluation of works executed by PUs; and act as a support unit for TMAs by providing TMAs with guidance in implementing Project activities. Each TMA shall act as a Project Implementing Partly complied with. project Agency within its respective jurisdiction. Each TMA units were established but shall have established a PU to execute Part A of the not fully staffed. Project, as more fully described in Schedule 1 to this Loan Agreement. Each PU shall be headed by the
Appendix 3 31
Reference in Loan Covenant Agreement Status of Compliance Chief Officer of the TMA and shall comprise of: (i) a municipal engineer; (ii) two (2) sub-engineers; (iii) an accounts officer; and (iv) five (5) support staff.
In Multan, PU shall also include staff from the Multan Development Authority Each PU shall work in close collaboration with the TO LA, schedule 6, Complied with. l&S. Four (4) technical support teams of consultants, para. 3 one each placed in Multan, Bahawalpur, Dera Ghazi Khan and Khanewal, shall assist PUs in the preparation of detailed designs, and procurement for Part A of the Project. The Borrower shall ensure that Punjab causes TMAs LA, schedule 6, Complied with. The PCR to retain their PUs after completion of the Project as para. 4 mission verified the their core development units to look after TMAs' presence of project unit staff development works under annual development in the TMAs visited. programs and ensure sustainability of all development works including the works carried out under the Project. A PIRC shall be set up by each TMA within one (1) LA, schedule 6, Partly complied with. PIRCs month of the Effective Date at each Tehsil level to para. 5 were established. However, review the implementation of the Project. PIRC shall PIRC did not review be headed by the Tehsil Nazim and shall comprise implementation of of: subprojects and their role (i) Male and female representatives of the TMA, was limited to the planning Union Councils, and CB0s; and approval stage of (ii) TMO; subprojects. (iii) Tehsil Officer, Planning and Coordination; (iv) TO l&S; (v) Chief Officer of the TMA; (vi) Package A and B Consultants referred to in Supplementary Appendix C of the RRP; (vii) Assistant Director, LGRD of the concerned district; and (viii)Conveners of the CCBs.
PIRG shall meet every month to discuss the progress of the Project. A PSC shall be set up by Punjab at P&D within one LA, schedule 6, Complied with. Meetings (1) month of the Effective Date to: (i) ensure smooth para. 6 were held on an as needed and timely implementation of the Project; (ii) provide basis. At times, the policy guidance on on-going and new policy frequency of these meetings initiatives; (iii) resolve inter-agency problems; and (iv) was more than quarterly. follow up with LGRD on the progress made regarding the policy actions referred to in paragraphs 13 to 15 herein below. The Chairman, Planning and Development Board, Punjab, shall head the PSC. Senior officers of the R&D, LGRD, Department of Finance, and Tehsil Nazims of the participating TMAs shall be members of the PSC. The PSC shall hold meetings at least once every three (3) months. LGRD
32 Appendix 3
Reference in Loan Covenant Agreement Status of Compliance shall continue to hold follow-up meetings with PCO and TMAs, as and when required. Without limiting the provisions of Section 4.10 of this LA, schedule 6, Not complied with. Accounts Loan Agreement, the Borrower shall ensure that para. 7 at the project unit level were LGRD shall maintain records and accounts adequate not opened, and all to identify the works, goods and services financed out payments were handled of the proceeds of the Loan and the ordinary capital from the PCO. Audit reports resources loan. In particular, LGRD shall: (i) maintain have been submitted with separate Project accounts of PCO and PUs; (ii) delays. ensure that Project accounts and financial statements are audited annually in accordance with sound accounting principles by independent auditors acceptable to the Bank; and (iii) furnish to the Bank, not later than nine (9) months after the close of each fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loans proceeds and compliance with the covenants of this Loan Agreement and the Ordinary Operations Loan Agreement as well as on the use of the procedures for the imprest accounts and statement of expenditures), all in the English language. The Borrower shall ensure that Punjab shall furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. The Borrower shall ensure that Punjab shall cause LA, schedule 6, Complied with. PCO to submit reports to the Bank concerning the para. 8 use of loan proceeds, project administration, and financial management. PCO shall prepare quarterly progress reports in a form and substance acceptable to the Bank, which shall include information on: (i) progress made against the set targets, including pre- determined performance monitoring indicators; (ii) any delays and/or problems encountered and the actions taken to resolve them; (iii) due compliance with loan covenants; and (iv) proposed program of activities to be undertaken and the expected progress during the next quarter. Within three (3) months of the physical completion of the Project, LGRD shall prepare and submit to the Bank a Project Completion Report on the execution of the Project including the costs and compliance with Loan covenants The Bank and the Borrower shall semi-annually LA, schedule 6, Complied with. The project review the implementation of the Project. A para. 9 was regularly reviewed, and comprehensive mid-term review at the end of year the midterm review was three (3) shall be undertaken to evaluate the actual conducted in November physical and financial progress. The review shall 2007. include:(i) a comprehensive evaluation of the Project implementation arrangements with progress made against set targets; (ii) consultations with community
Appendix 3 33
Reference in Loan Covenant Agreement Status of Compliance groups; and (iii) an appraisal of the institutional and policy dev. aspects of the Project, and shall recommend adjustments to the Project design and/or implementation arrangements, if necessary. The Borrower, LGRD and PCO shall establish, LA, schedule 6, Not complied with. PPMS maintain and implement the PPMS in accordance para. 10 was not established. Only with the Bank's Project Performance Management baseline data were collected System Handbook to monitor and evaluate the by the consultant. technical performance and social and economic benefits of the Project, particularly with reference to the poor and women. The performance monitoring indicators and procedures established in accordance with the Bank's Project Performance Management System Handbook, as more fully described in Supplementary Appendix D of the RRP, shall be tested with respect to data availability and other constraints, revised, if necessary, and institutionalized as part of the Project management information system. PUs, with the assistance of PCO, shall undertake monitoring and assessment of the performance monitoring activities for sub-projects on a semi-annual basis. To measure the Project impacts on the beneficiaries, in particular low-income groups within Project Towns, accurate baseline information shall be established by PCO and PUs at the commencement of sub-project implementation, with this information being the basis for determining the resulting impacts. The Borrower shall ensure that Punjab allows and LA, schedule 6, Complied with. facilitates the Bank's representatives to carry out spot para. 11 and random checks on (i) flow of funds and their use for the Project in accordance with this Loan Agreement and the Ordinary Operations Loan Agreement; (ii) work-in-progress; and (iii) Project implementation The Borrower shall ensure that Punjab allocates and LA, schedule 6, Complied with. makes available to LGRD and eligible TMAs, in a para. 12 timely manner, sufficient funds from its budget for each fiscal year for the implementation of the Project and operation and maintenance of the Project facilities and shall ensure that such facilities are operated and maintained in accordance with sound urban utility practices. The Borrower shall ensure that Punjab shall undertake the time-bound policy actions: (i) Within one (1) month of the date of execution of LA, schedule 6, Complied with, with a delay this Loan Agreement, Punjab shall create a para. 13(i)–(xi) of 21 months. special grant (the PFC Grant) under the PFC for participating TMAs fulfilling the eligibility criteria set forth in the PFC Grant and notify it as part of PFC award;
34 Appendix 3
Reference in Loan Covenant Agreement Status of Compliance (ii) within one (1) month of the date of execution of Complied with, with a delay this Loan Agreement, Punjab shall provide copy of 12 months. of the PFC award to all TMAs and place it on Punjab website; (iii) within one (1) months of the date of execution of Complied with, with a delay this Loan Agreement, LGRD shall hold of 20 months. workshops with TMA Nazims and TMOs to explain the PFC Grant, its operation and performance evaluation procedures. (iv) within three (3) months of the date of execution of Complied with, with a delay this Loan Agreement, Punjab shall make of 18 months. arrangement for the smooth transfer of PFC Grant funds to the imprest accounts of the eligible TMAs; (v) within three (3) months of the date of execution of Complied with. TMA Rules this Loan Agreement, Punjab shall provide the of Business 2002 provide CO Units of the TMAs the financial power to meet that the sanctioning and urgent operation and maintenance expenditures; incurring of contingent expenditure out of local funds for items provided in the sanctioned budget.
(vi) Punjab shall, on a quarterly basis, from the date Partly complied with. This of execution of this Loan Agreement, provide to was done only on annual TMAs, statements showing total collection, basis. The Finance TMAs’ share, deductions and balance transferred Department transferred the to the TMA which should be reconciled by the TMA share out of UIPTs on E&T Department and TMAs; a regular basis, but the details were not provided to TMAs as reflected in (vi) above.
Partly complied with. This (vii) Punjab shall, on a quarterly basis, from the date occurred only on an annual of execution of this Loan Agreement, transfer to basis. TMAs their share in UIPT;
(viii) Within six (6) months of the date of execution of Complied with. The this Loan Agreement, Punjab shall consider and functions and powers of the specify the sources and application of TMA funds TMAs have been clearly derived from urban areas. Punjab shall spend identified under section 54 UIPT, TOTP, octroi compensatory grant, property of the Punjab Local rentals, and user charges in the CO Units to Government Ordinance, ensure equity in resource allocation and 2001, and the details of adequate provision of municipal services source of receipt are given under part IV of the second schedule of the ordinance.
(ix) within six (6) months of the date of execution of Complied with, with a delay this Loan Agreement, Punjab shall facilitate the of 18 months. TMAs in reconciling the arrears due to the Pakistan Water and Power Development Authority.
Appendix 3 35
Reference in Loan Covenant Agreement Status of Compliance (x) within six (6) months of the date of execution of Complied with. this Loan Agreement, Punjab shall devise transition arrangements for the transfer of the operational expenditures of public health engineering schemes. Complied with, with a delay (xi) within twelve (12) months of the date of execution of 12 months. LGRDD of this Loan Agreement, Punjab shall, through confirmed that the PFC promulgation of PFC Rules of Business, grievance mechanism was operationalize the PFC redress of grievance put in place in mid-August mechanism relating to transfers. 2006. The Borrower shall ensure that Punjab shall issue LA, schedule 6, Complied with. TMAs are timely directives on the following policy actions; para. 14(i)–(vi) paying their electricity bills. (i) within one (1) month of the date of execution of this Loan Agreement, the TMAs shall be made responsible for payment of their electricity bills; (ii) within two (2) months of the date of execution of Complied with. Zila this Loan Agreement, meetings of the Zila mushavarat committees Mushavarat Committee shall be held on regular were constituted in all six intervals in accordance with the provisions of the project districts comprising a PLGO; zila nazim (chairperson), naib zila nazim (assistant district administrator), and tehsil nazim (town administrator), with a district coordination officer as secretary.
(iii) within two (2) months of the date of execution of Complied with. CCB this Loan Agreement, CCBs shall be registered registration rules were with the prescribed authority; notified vide letter no. SOX(LG)5-5/ 2000 (P) dated 17 March 2004 and circulated to the local level. The registration of already- constituted CCBs has also been undertaken. (iv) within three (3) months of the date of execution of Complied with. The this Loan Agreement, the district governments valuation of the property is shall review and revise the land values notified carried out by the district for levy of stamp duty and registration charges, government on regular which exercise shall be repeated after every interval basis. three (3) years; (v) within six (6) months of the date of execution of Complied with. LGRDD had this Loan Agreement, Punjab shall issue already issued necessary directives on the pension contribution and instructions on the subject. provident fund deduction of staff of decentralized departments working in the TMAs; and (vi) within twelve (12) months of the date of execution Complied with. LGRDD of this Loan Agreement, Punjab shall issue notified the rules vide letter directives on the setting-up of an internal audit no. SOR(LG)38-1/2004 office required under Section 57(h) of the PLGO dated 22 October 2004. and shall also specify the existing
36 Appendix 3
Reference in Loan Covenant Agreement Status of Compliance service/department from where the audit staff may be utilized.
The Borrower shall ensure that, within six (6) months LA, schedule 6, Complied with. of the execution of this Loan Agreement, Punjab shall para. 15 notify rules for monitoring and house committees and for the conduct of business of the tehsil councils. The Borrower shall cause Punjab to make the Loan LA, schedule 6, proceeds available to TMAs through LGRD under para. 16 PFC as the PFC Grant. Funds to TMAs shall be allocated on the basis of a TMA-specific investment plan based on the actual needs of the TMA for basic urban services, particularly for low-income communities, within the agreed scope of the Project. The PFC Grant shall be available to TMAs meeting: (i) Eligibility Criteria: All TMAs shall meet the Eligibility Criteria before approval of any sub- Complied with. project. PCO shall assist TMAs in undertaking the required actions under the Eligibility Criteria and prepare a compliance report, which shall be reviewed and endorsed by LGRD and submitted to the Bank for review and approval. Future quarterly progress reports to be prepared by P00 shall include the status of sustainability of the required actions under the Eligibility Criteria. Bank review missions shall review and validate the situation in the light of these reports. (ii) Project Specific Criteria: Upon fulfillment of Complied with. the Eligibility Criteria, TMAs shall prepare annual work plans and budgets for their respective PUs. In order to fulfill the Project Specific Criteria, TMAs shall be required to meet: (a) generic; and (b) sector-specific requirements: (a) Generic requirements: TMAs shall: (i) Complied with. ensure transparency in all bidding procedures, the compliance whereof shall be certified by the Package A Consultants specified in the Supplementary Appendix C of the RRP; (ii) be required, upon release of overall annual development funds by Punjab, to demonstrate availability of requisite counterpart funds- for the sub-projects and adequate budget for meeting the operation and maintenance expenditure of the existing facilities of the TMAs. LGRD shall provide the status of such funds to the Bank for the Bank's consideration. (b) Sector-specific requirements:
Appendix 3 37
Reference in Loan Covenant Agreement Status of Compliance Water Supply and Sewerage Not complied with. Only the Improvement Works; TMAs shall have city district government in finalized plans for the detection of leaks Multan is collecting water and the rectification thereof, and for supply and sewerage water quality monitoring. In view of the charges, while water supply consumer survey and tariff plan charges are being collected furnished under the Eligibility Criteria, by TMAs in Bahawalpur and which shall be approved by the Bank, Dera Ghazi Khan only. first bills shall have been issued for water supply and sewerage charges and all illegal connections shall have been detected and regularized, as certified by the Package A Consultants specified in the Supplementary Appendix C of the RRP.
Wastewater treatment plant, solid waste Partly complied with. Six management, and slaughterhouse: Upon sites were dropped due to completion of the requisite actions to be land acquisition and undertaken by the district governments, resettlement issues. TMAs shall have acquired all land required, in accordance with land acquisition plan referred to in paragraph 21 to this Schedule, and involuntary resettlement, if any, shall have taken place in accordance with the Resettlement Framework.
Low income area link roads: TMAs shall Complied with. have finalized the arrangements with communities and CCBs for the implementation schedule of the roads.
Incremental land development: Following Complied with. clearance from Punjab, the required government land shall have been arranged and demarcated, and plots accordingly delineated with the assistance of LGRD. The Borrower shall cause Punjab to determine the LA, schedule 6, Partly complied with. share of the PLC Grant to be provided to each TMA, para. 17 Eligibility criteria were in the first year of the Project, on the basis of the applied only at the TMA investment plan specified in the Supplementary eligibility approval stage, Appendix I of the RRP. In subsequent years, the PFC and subsequent monitoring Grant shall be allocated according to the formula was not done. Secondly, agreed with the Bank. Performing TMAs shall be funds were transferred to entitled to withdraw their agreed allocation and the the PCO from where all TMAs that fail to meet minimum performance targets payments were made. shall forfeit their share of the PFC Grant. Any unused shares shall be credited to the investment pool (Investment Pool) and shall be available, annually, for reallocation to other TMAs based on a performance evaluation of the TMAs, as provided under the
38 Appendix 3
Reference in Loan Covenant Agreement Status of Compliance following performance measures (Performance Measures) and the Investment Pool:
(a) Investment Project-specific Performance Measures (IPPM):
The IPPM shall include measures to be observed by Complied with. TMAs to ensure the effective use of resources allocated to individual investment projects. The performance of the TMAs shall be measured and evaluated on a sliding scale as follows: (i) operations of Pus (fully staffed, equipped and functional 10 points; inadequate in above areas 0 – 5 points depending upon the deficiency) (ii) community participation in sub-projects (satisfactory 10 points; partly satisfactory 5 points, unsatisfactory 0 points) (iii) compliance of TMAs with agreed targets for physical progress (variance of actual versus stipulated progress within 10% (10 points); between 10-20% (5- 10 points); more than 20% (0 point); (iv) quality of construction in general (satisfactory 10 points, partly satisfactory 5 points, and unsatisfactory 0 point); (v) observance of the PLGO in respect of maintenance of accounts, closing of accounts (satisfactory 10; unsatisfactory 0); (vi) tendering and procurement (transparent 10 point; problematic 0 point); (vii) TMA staff involved in construction supervision (fully involved 10 points; partially involved 0 point); (viii) PIRC meetings, (held regularly 10 points; irregular 5 points; not held 0 point); (ix) progress reports, submitted by PUs to PCO (regularly 10 points, irregular submission 5 points, not submitted 0 points); and (x) monitoring and evaluation (M & E) (TMA staff deputed and fully involved in M&E 10 points; partly involved 5-9 points; not deputed/involved 0 point).
A TMA must secure 70 points to qualify for a PFC Grant. Full compliance under (v) to (vii) and a minimum of 5 points each under (i) to (iv) and (ix) to (x) shall be mandatory to qualify for a PFC Grant.
(b) Reform Implementation Performance Measures (RIPM):
Appendix 3 39
Reference in Loan Covenant Agreement Status of Compliance
The RIPM shall further strengthen the reforms undertaken by TMAs by fulfilling the Eligibility Criteria. The performance of the TMAs shall be evaluated and measured as follows: Not complied with. Subsequent annual (i) Effective functioning of complaints cells monitoring was not (number of staff recruited and facilities undertaken. provided, number of complaints registered and addressed, efficiency of complaints addressed, public feedback on the performance); Not complied with. (ii) Implementation of actions specified in the Subsequent annual PLGO for transfer of functions to UCs; monitoring was not (iii) TMA accounts showing utilization of the undertaken. twenty-five percent (25%) of development budget by CCBs; (iv) Improved public access to information, demonstrated by: (a) posting of approved TMA annual budget at designated public places (TMA offices, TMA hospital/health unit, etc); (b) posting of listing of approved schemes and implementation schedules at TMA offices, and (c) posting within one month of the close of any quarter, a statement of accounts/expenditures for each sub- project at TMA offices; (v) completion and publication of the results of the user survey; implementation of the action plan on financial reforms; and implementation of the tariff plan; (vi) Completion of the revenue enhancement base-line survey etc; and (vii) Implementation of budget rules in accordance with PLGO on detailing arrears.
TMAs shall be evaluated on a sliding scale of one (1) Not complied with. to five (5), with 5 representing 100% performance by Subsequent annual a TMA within a specific category. A total of 25 points, monitoring was not with minimum 3 points in each category, shall be undertaken. considered satisfactory to qualify for a PFC Grant. The Borrower shall cause Punjab to suspend LA, schedule 6, Not complied with. disbursements to an ongoing subproject and para. 18 Subsequent annual reallocate funds of the PFC Grant to the Investment monitoring was not Pool should a TMA fail to score 70 points in IPPM undertaken. and 25 points in RIPM. To meet the criteria specified in the Performance Measures, PCO shall assist the TMA in resolving the issues affecting the implementation progress of the subproject and shall facilitate continuing compliance with the required actions under the Eligibility Criteria. Should the TMA
40 Appendix 3
Reference in Loan Covenant Agreement Status of Compliance performance improve, PCO shall report such improvement to LGRD. A joint review mission of PCO, TMA, LGRD, and consultants shall verify the situation and depending on the satisfactory results, LGRD shall permit such TMA to have access to the funds available in the Investment Pool (c) Investment Pool LA, schedule 6, Not complied with. para. 19 Subsequent annual The Borrower shall cause Punjab to, annually, monitoring was not reallocate funds, originally allocated in the works undertaken. schedules for any TMA under the PFC Grant, to the Investment Pool established at PCO and operated with the assistance of a special committee of LGRD constituted for this purpose, under the supervision of Secretary, LGRD and Secretary, Finance, Punjab, in case any of the following eventualities shall have occurred: (a) a TMA shall not have met the Eligibility Criteria within six (6) months of the date of execution of this Loan Agreement; (b) after having attained the Eligibility Criteria, a TMA shall not have met the Project Specific Criteria, within three ( 3) months of approval of the annual program of works (three (3) months from the start of each year); and (c) after compliance with the Eligibility Criteria and the Project Specific Criteria, a TMA's performance in a given year is unsatisfactory with below minimum score, as specified in the Performance Measures. The Borrower shall cause Punjab to: (a) apply the LA, schedule 6, Not complied with. Performance Measures to determine eligibility to para. 20 Subsequent annual access the Investment Pool; and (b) ensure that the monitoring was not annual review process to ascertain eligibility for the undertaken. PFC Grant shall be completed within three (3) months after the commencement of the next year which should include: (a) technical review by PCO of compliance with the Project Specific Criteria and the Performance Measures by TMAs; and (b) review to ascertain compliance of the RIPM, conducted by a subcommittee of the PSC including LGRD, TMAs, PCO, Package B consultants specified in Appendix C of the RRP, and 1-2 other members of the PSC. The Borrower shall cause Punjab to ensure that all LA, schedule 6, Partly complied with. Forty- land, rights-of-way and other rights required for any para. 21 six subprojects did not sub-project shall be acquired or otherwise made comply with the loan available to the TMA concerned in a timely manner. agreement and ADB social The Borrower shall further ensure that all land safeguard policies. acquired for the Project shall be acquired in accordance with the land acquisition plan agreed between the Borrower/Punjab and the Bank and shall
Appendix 3 41
Reference in Loan Covenant Agreement Status of Compliance cause Punjab to ensure that the social and economic base of the affected persons shall be restored and/or enhanced through mitigating measures.
The Borrower shall cause Punjab to ensure that no LA, schedule 6, Partly complied with. Forty- persons shall be adversely affected in terms of the para. 22 six subprojects did not Bank's Policy on Involuntary Resettlement and the comply with the loan Bank's Policy on Indigenous People. The Borrower agreement and ADB social shall cause Punjab to further ensure that involuntary safeguard policies. resettlement under the Project, if any, shall be undertaken in accordance with the Bank's Handbook on Resettlement, to the satisfaction of the Bank, and in accordance with the Resettlement Framework, as agreed between the Borrower/Punjab and the Bank, and if applicable, the individual resettlement plans shall be prepared for each TMA in accordance with the Resettlement Framework. The Borrower shall ensure that Punjab and TMAs LA, schedule 6, Partly complied with. Forty- implement land acquisition and resettlement activities para. 23 six subprojects did not in accordance with the Bank's Policy on Involuntary comply with the loan Resettlement and all applicable laws and regulations agreement and ADB social of the Borrower including: (i) Land Acquisition Act of safeguard policies. 1984; (ii) Project Implementation and Resettlement of Affected Persons Ordinance of 2002;(iii) Punjab Development of Cities Act of 1977; and (iv) Pakistan Environmental Protection Act of 1997, as amended from time to time. The Borrower shall cause each of Punjab and TMAs LA, schedule 6, Partly complied with. to ensure that all environmental mitigation measures para. 24 Subprojects not complying identified in the initial environmental examination are with the loan agreement incorporated into the Project design and were dropped. implemented during Project construction and operation and maintenance, in accordance with the Borrower's environmental laws and regulations, the Bank's Environment Policy, the Bank's environmental guidelines as set forth in Environmental Assessment Guidelines (2003) and the environmental management plan agreed with the Bank. The Borrower shall cause Punjab to ensure that men LA, schedule 6, Complied with. Female and women are given equal employment para. 25 workers were employed on opportunities to benefits from the Project. The construction subprojects. mechanisms for maximizing local employment benefits shall be included in the Project design. The Borrower shall case Punjab to ensure that the LA, schedule 6, Complied with. This was civil works contracts include legally mandated para. 26 verified by the PCR mission. provisions on health, sanitation and appropriate working conditions, including accommodation, where appropriate, for construction workers at campsites during the construction period of the Project. The Borrower shall ensure that the Project shall be LA, schedule 6, Complied with. Female carried out in accordance with the Bank’s Policy on para. 27 councilors of TMAs and Gender and Development. The Borrower shall cause female activists were
42 Appendix 3
Reference in Loan Covenant Agreement Status of Compliance Punjab to ensure women’s participation in the Project provided training at TMA implementation in accordance with the gender headquarters in planning strategy as agreed between the Borrower and the and monitoring activities Bank. The Borrower shall ensure that Punjab causes under the project. LGRD to ensure that (i) women councilors of TMAs and UCs shall be trained for effective gender –based planning and monitoring of Project activities; (ii) women councilors are included in PIRC of each TMA; and (iii) at each PU, one female community development and social mobilization staff will be hired to facilitate women’s participation in the planning of subprojects’ activities. Except as the Bank my otherwise agree, the LA, schedule 3, Partly complied with. Borrower shall ensure that LGRD shall establish para. 8 Second-generation immediately after Effective Date, a first generation accounts by project units imprest account at the National Bank of Pakistan, were not opened. Rather, all Lahore. Second generation imprest accounts shall be funds were transferred to, established by PUs immediately after the Effective and payments made from, Date at the local branches of the National Bank of the PCO. Pakistan to meet eligible expenditures incurred by PUs under the Project. The establishment of the first and second generation imprest accounts shall be subject to the appointment of qualified account staff and the establishment of internal controls by PCO and PUs, acceptable to the Bank. PCO shall disburse funds from the first generation imprest account for (i) PCO activities including capital and operating costs of PCO; (ii) payments to consultants; (iii) technical support team offices; (iv) capacity building and training activities; and (v) related expenditures on monitoring, review and evaluations. Funds for Part A of the Project shall be transferred to the second generation imprest accounts managed by PUs on the basis of work plans for eligible items in accordance with the Eligibility Criteria. The first and second generation imprest accounts shall be managed, replenished and liquidated in accordance with the Bank's "Loan Disbursement Handbook" dated January 2001, as amended from time to time, and detailed arrangements agreed upon between the Borrower and the Bank. The initial amount to be deposited into the (i) first generation imprest account shall not exceed $1,200,000; (ii) second generation imprest accounts for each PU shall not exceed $100,000, except for Ahmadpur East, the second generation imprest account for which it shall not exceed $10,000 Punjab shall carry out the Project with due diligence PA, article II, Complied with. and efficiency, and in conformity with sound section 2.01 administrative, financial engineering, environmental and urban services practices. Punjab shall make available, promptly as needed, the PA, article II, Complied with. funds, facilities, services, equipment land and other section 2.02
Appendix 3 43
Reference in Loan Covenant Agreement Status of Compliance resources which are required, in addition to the proceeds of the Loans, for the carrying out of the Project. In carrying out of the Project, Punjab shall employ PA, article II, Complied with. competent and qualified consultants and contractors, section 2.03(a) acceptable to ADB, to an extent and upon terms and conditions satisfactory to ADB. Except as ADB may otherwise agree, all goods and PA, article II, Complied with. services to be financed out of the proceeds of the section 2.03(b) Loans shall be procured in accordance with the provisions of Schedule 4 and Schedule 5 to the Special Operations Loan Agreement. ADB may refuse to finance a contract where goods or services have not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB. Punjab shall carry out the Project in accordance with PA, article II, Complied with. plans, design standards, specifications, work section 2.04 schedules and construction methods acceptable to ADB. Punjab shall furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request. Punjab shall take out and maintain with responsible PA, article II, Not complied with. No insurers, or make other arrangements satisfactory to section 2.05(a) insurance was provided. ADB, for insurance of the Project facilities to such extent and against such risks and in such amounts as shall be consistent with sound practice. Without limiting the generality of the foregoing, PA, article II, Not complied with. No Punjab undertakes to insure, or cause to be insured, section 2.05(b) insurance was provided. the goods to be imported for the Project and to be financed out of the proceeds of the Loans against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods. Punjab shall maintain, or cause to be maintained, PA, article II, Complied with. records and accounts adequate to identify the goods section 2.06 and services and other items of Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, it operations and financial conditions. (a) ADB and Punjab shall cooperate fully to PA, article II, Complied with. ensure that the purposes of the Loans will be section 2.07 accomplished. (b) Punjab shall promptly inform ADB of any
44 Appendix 3
Reference in Loan Covenant Agreement Status of Compliance condition which interferes with, or threatens to interfere with, the progress of the Project, the performance of its obligations under this Project Agreement or the Subsidiary Loan Agreement(s), or the accomplishment of the purposes of the Loans. (c) ADB and Punjab shall from time to time, at the request of either party, exchange views through their representatives with regard to any matters relating to the Project, Punjab and the Loans. (a) Punjab shall furnish to ADB all such reports PA, article II, Complied with. and information as ADB shall reasonably section 2.08 request concerning (i) the Loans and the expenditure of the proceeds thereof; (ii) the goods and services and other items of expenditure financed out of such proceeds; (iii) the Project; (iv) the administration, operations and financial condition of Punjab; and (v) any other matters relating to the purposes of the Loans. (b) Without limiting the generality of the foregoing, Punjab shall furnish to ADB quarterly reports on the execution of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form n and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following quarter. (c) Promptly after physical completion of the Project, but in any event not later than three (3) months thereafter or such later date as ADB may agree for this purpose, Punjab shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by Punjab of its obligations under this Project Agreement and the accomplishment of the purposes of the Loans. (a) Punjab shall (i) maintain separate accounts PA, article II, Complied with. for the Project; (ii) have such accounts and section 2.09 related financial statements (balance sheet, statement of income and expenses, and related statements) audited annually, in accordance with appropriate auditing
Appendix 3 45
Reference in Loan Covenant Agreement Status of Compliance standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iii) furnish to ADB, promptly after their preparation but in any event not later than nine (9) months after the close of the fiscal year to which they relate, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loans proceeds and compliance with the covenants of the Loan Agreements as well as on the use of the procedures for the imprest accounts and statement of expenditures), all in the English language. Punjab shall furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. (b) Punjab, shall enable ADB, Upon ADB’s request) to discuss Punjab’s financial statements and its financial affairs (to the extent that the financial statements and financial affairs relate to the Project) from time to time with Punjab's auditors, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of Punjab unless Punjab shall otherwise agree. Punjab shall enable ADB's representatives to inspect PA, article II, Complied with. the Project, the goods financed out of the proceeds of section 2.10 the Loans and any relevant records and documents. (a) Punjab shall, promptly as required, take all PA, article II, Complied with. action within its powers to carry on its section 2.11 operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are necessary in the carrying out of the Project or in the conduct of its business. (b) Punjab shall at all times conduct its business in accordance with sound administrative, financial, environmental and urban services practices, and under the supervision of competent and experienced management and personnel. (c) Punjab shall at all times operate and maintain its plants, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with
46 Appendix 3
Reference in Loan Covenant Agreement Status of Compliance sound administrative, financial, engineering, environmental, urban services, and maintenance and operational practices (insofar as the plants, equipment and other property relates to or impacts on the carrying out of the Project). Except as ADB may otherwise agree, Punjab shall PA, article II, Complied with. not sell, lease or otherwise dispose of any of its section 2.12 assets which shall be required for the efficient carrying on of its operations or the disposal of which may prejudice its ability to perform satisfactorily any of its obligations under this Project Agreement. Except as ADB may otherwise agree, Punjab shall PA, article II, Complied with. apply the proceeds of the Loans to the financing of section 2.13 expenditures on the Project in accordance with the provisions of the Loan Agreements and this Project Agreement, and shall ensure that all goods and services financed out of such proceeds are used exclusively in the carrying out of the Project. Except as ADB may otherwise agree, Punjab shall PA, article II, Complied with. duly perform all its obligations under the Subsidiary section 2.14 Loan Agreement(s), and shall not take, or concur in, any action which would have the effect of assigning, amending, abrogating or waiving any rights or obligations of the parties under the Subsidiary Loan Agreement(s).
Appendix 4 47
DETAILED BREAKDOWN OF CONSULTANT INPUT (person-months)
At Appraisal At Completion Consultancy Packages and/or Experts Int’l Domestic NGOs Int’l Domestic NGOs Package A: Implementation Support to PCO and
Project Units 1. PCO Professionals Team leader and civil engineer 48.0 17.4 Monitoring and evaluation specialists (4) 192.0 61.4 Construction supervision specialists (4) 192.0 16.0 2. Technical Support Team for PUs Water supply and sanitation engineer 12.0 36.0 Wastewater treatment specialist 2.0 Wastewater treatment specialists (2) 12.0 15.9 Infrastructure engineer 12.0 4.0 Procurement and outsourcing specialist 6.0 1.0 Wastewater reuse specialist 2.0 Groundwater quality survey specialists (2) 24.0 9.4 Municipal O&M system engineer 6.0 Municipal O&M system engineers (4) 24.0 Solid waste management specialist 1.0 Financial specialist 9.0 Environment specialist 2.0 Subtotal A) 14.0 518.0 1.0 172.1 Package B: Municipal Management System
Development Policy and management specialist and 20.0 37.0 team leader Institutional and financial specialist 22.0 8.0 Spatial planning training specialist 18.0 8.7 10.4 Gender specialist 18.0 17.5 MIS specialist 24.0 Participatory planning specialist 6.0 Disclosure and transparency specialist 6.0 13.9 Municipal regulation specialist 12.0 6.7 Customer relations specialist 8.0 Billing system specialist 12.0 11.2 Asset management specialist 13.2 Quality management specialist 10.2 Resettlement specialist 21.4 Subtotal (B) 18.0 128.0 8.7 149.5 Package C: Individual Consultants (21 at tehsil 1,152.0 675.0 municipal administrations) Package D: Community Development and
Participation Provincial coordinator 54.0 49.0 Social mobilization specialists 924.0 966.0 Subtotal (D) 978.0 1,015.0 Total 32.0 1,798.0 978.0 9.7 2,011.6 Int’l = international, MIS = management information system, NGO = nongovernment organization, O&M = operation and maintenance, PCO = project coordination office. Source: ADB Project completion review mission estimates
48 Appendix 5
PROJECT COST ($ millions)
At Appraisal At Completion Item FC LC Total FC LC Total A. Base Cost 1. Urban infrastructure (including land 12.8 89.2 102.0 8.8 95.2 104.0
acquisition) a. Land 16.0 16.0 10.7 10.7 b. Infrastructure 12.8 73.2 86.0 8.8 84.5 93.3 2. Community development 0.6 0.6 0.2 0.2 3. Institutional development 0.5 7.2 7.7 4.5 2.7 7.2 a. Municipal management system 0.3 0.9 1.2 0.7 0.0 0.7
development for TMAs b. Project implementation assistance 0.2 3.3 3.5 1.9 1.9 3.8 c. Equipment and vehicles 0.7 0.7 0.4 0.1 0.5 d. Incremental operational cost 2.3 2.3 1.5 0.8 2.3 Subtotal (A) 13.3 97.0 110.3 13.3 98.1 111.4 B. Contingencies 1. Physical 0.7 4.7 5.4 – – – 2. Price 1.5 8.7 10.2 – – – Subtotal (B) 2.2 13.4 15.6 – – – C. Interest during Construction 2.7 2.7 1.7 1.7 Total 18.2 110.4 128.6 15.0 98.1 113.1 Percent 14.0 86.0 100.0 13.0 87.0 100.0 – = data not available, FC = foreign currency, LC = local currency TMA = tehsil municipal administration. Source: Project completion review mission data.
Appendix 6 49
PROJECT COST
Table A6: Yearly Contract Award and Disbursement Performance ($ millions)
Contract Awards Disbursements Cumulative Cumulative Year Projected Actual Actual Projected Actual Actual 2004 4.00 0.47 0.47 1.00 1.55 1.55 2005 10.00 4.51 4.98 8.60 0.99 2.54 2006 8.50 13.03 18.01 7.00 4.42 6.95 2007 19.36 41.01 59.02 12.28 16.47 23.42 2008 25.90 14.86 73.88 29.00 16.86 40.29 2009 1.00 0.83 74.71 28.28 9.54 49.83 Total 68.76 74.71 86.16 49.83 Sources: ADB historical project performance reports
Figure A6: Cumulative Contract Award and Disbursement Performance
86.16 90.0 74.71 80.0 68.76
70.0
60.0 49.83
50.0 Projected Actual 40.0 $millioni 30.0
20.0
10.0
0.0 Contract Award Disbursement
50 Appendix 7
PROJECT IMPLEMENTATION SCHEDULE (appraised versus actual)
Prior to 2005 2006 2007 2008 2009 2010 2011 2012 LE 12341234123412341234123412341234 Formation of PSC
Formation of PCO
Formation of Project Units
Land acquisition
Provincial policy action
Procurement of consultants
Decision of TMA project entry criteria
Institutional strengthening at TMAs
Community mobilization and development
Detailed design for physical projects
Tendering of physical projects
Implementation of physical projects
Project review missions
Midterm review Legends As appraised Actual Activities after Loan Closing Date LE = loan effectiveness, PCO = project coordination office, PSC = project steering committee, TMA = tehsil municipal administration. Source: ADB Project completion review mission data.
Appendix 8 51
PROJECT SECONDARY DATA
Table A8.1: Distribution of Household by Source of Drinking Water by District (%)
Water Delivery System Tap Water Hand Pump Motor Pump Dug Well Others Rank 2004- 2010- 2004- 2010- 2004- 2010- 2004- 2010- 2004- 2010- 2004- 2010- District 2005 2011 2005 2011 2005 2011 2005 2011 2005 2011 2005 2011 Multan Urban 24 20 13 4 62 74 0 0 1 2 24 28 Khanewal Urban 12 13 31 14 57 74 0 0 0 0 33 34 Lodhran Urban 23 14 24 11 52 73 0 0 1 2 29 14 D.G.Khan Urban 83 54 8 10 3 27 0 0 6 9 7 17 Rajanpur Urban 59 57 25 19 16 24 1 0 0 0 10 15 Muzaffar Garh Urban 14 2 44 37 42 61 0 0 0 0 32 36 Bahawalpur Urban 24 21 20 7 50 58 1 0 6 14 26 20 Total 34 26 24 15 40 56 0 0 2 4 23 23 Source: Pakistan Social And Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
Table A8.2: Distribution of Household by Type of Toilet (%)
Flush Urban Non Flush Urban No Toilet Urban District 2004-2005 2010-2011 2004-2005 2010-2011 2004-2005 2010-2011 Multan 89 97 3 1 8 2 Khanewal 80 96 9 1 11 4 Lodhran 76 94 4 1 21 5 D.G.Khan 92 99 4 0 4 1 Rajanpur 88 98 3 1 8 1 Muzaffar Garh 83 93 5 4 12 3 Bahawalpur 84 95 4 2 12 4 Total 85 96 5 1 11 3 Source: Pakistan Social and Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
Table A8.3: Distribution of Households by Type of the Perception of the Economic Situation of the Household Compared to the Year before Survey, by District ($)
Economic Situation of the Household Much Worse Worse Same Better Much Better 2004- 2010- 2004- 2010- 2004- 2010- 2004- 2010- 2004- 2010- District 2005 2011 2005 2011 2005 2011 2005 2011 2005 2011 Multan Urban 2 6 21 34 52 39 22 18 3 3 Khanewal Urban 4 10 22 27 47 44 26 18 1 1
52 Appendix 8
Economic Situation of the Household Much Worse Worse Same Better Much Better 2004- 2010- 2004- 2010- 2004- 2010- 2004- 2010- 2004- 2010- District 2005 2011 2005 2011 2005 2011 2005 2011 2005 2011 Lodhran Urban 0 1 15 34 65 34 20 30 1 1 D.G.Khan Urban 10 10 17 19 42 45 29 23 3 3 Rajanpur Urban 4 5 18 36 43 44 34 15 1 0 Muzaffar Garh Urban 3 10 23 34 48 33 25 19 1 3 Bahawalpur Urban 7 18 23 36 47 35 21 10 2 0 Total 29 61 139 219 345 275 176 134 10 10 Source: Pakistan Social and Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
Table A8.4: Net Enrollment Rate at the Primary Level by District (%)
District 2004-2005 2010-2011 Multan 49 59 Khanewal 52 64 Lodhran 38 50 D.G.Khan 50 51 Rajanpur 50 46 Muzaffar Garh 39 48 Bahawalpur 38 40 Total 45 51 Source: Pakistan Social And Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
Table A8.5: Children Under Age 5 Years Suffering from Diarrhoea in Past 30 Days, by District (%)
Year District 2004-2005 2010-2011 Multan 17 14 Khanewal 17 17 Lodhran 20 12 D.G.Khan 23 17 Rajanpur 18 12 Muzaffar Garh 19 13 Bahawalpur 28 15 Total 20 14 Source: Pakistan Social And Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
Appendix 8 53
Table A8.6: Flush Toilets Used by the Households by District (%)
Year District 2004-2005 2010-2011 Multan 67 74 Khanewal 51 55 Lodhran 48 60 D.G.Khan 52 38 Rajanpur 51 29 Muzaffar Garh 36 45 Bahawalpur 57 56 Total 52 51 Source: Pakistan Social and Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
Table A8.7: Sources of Drinking Water as Piped-Water, Punjab (%)
Year District 2004-2005 2010-2011 Multan 18 11 Khanewal 8 5 Lodhran 13 21 D.G.Khan 56 20 Rajanpur 39 21 Muzaffar Garh 8 1 Bahawalpur 15 16 Total 22 14 Source: Pakistan Social and Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
Table A8.8: Net Enrollment Rate at the Primary Level by District (%)
Urban Male Female District 2004-2005 2010-2011 2004-2005 2010-2011 Multan 61 67 61 70 Khanewal 77 86 61 78 Lodhran 56 74 54 61 D.G.Khan 73 81 71 74 Rajanpur 67 68 69 76 Muzaffar Garh 60 77 54 85 Bahawalpur 52 54 46 54 Total 64 72 50 71 Source: Pakistan Social and Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
54 Appendix 8
Table A8.9: District-wise Population Sick or Injured during Last 2 Weeks, Reported by Interview or Health Consultation (%)
Sick or injured Health consultation Male Female Male Female 2004- 2010- 2004- 2010- 2004- 2010- 2004- 2010- District 2005 2011 2005 2011 2005 2011 2005 2011 Multan 8 7 9 8 94 96 96 96 Khanewal 8 7 8 9 96 97 92 100 Lodhran 10 6 10 6 98 97 96 100 D.G.Khan 7 7 7 10 91 94 95 99 Rajanpur 7 7 8 5 94 100 98 100 Muzaffar Garh 6 5 8 7 100 97 100 97 Bahawalpur 12 8 14 10 90 86 92 90 Total 8 7 9 8 95 95 96 97 Source: Pakistan Social and Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
Table A8.10: District-wise Percentage Under Age 5 Years Sick or Injured during Last 2 Weeks Reported by Interview or Health Consultation (%)
Sick or Injured Health Consultation Male Female Male Female 2004- 2010- 2004- 2010- 2004- 2010- 2004- 2010- District 2005 2011 2005 2011 2005 2011 2005 2011 Multan 14 14 12 9 89 98 97 100 Khanewal 12 12 11 14 100 100 100 100 Lodhran 22 13 13 7 100 88 91 100 D.G.Khan 13 15 11 26 100 100 100 100 Rajanpur 15 13 12 5 100 100 100 100 Muzaffar Garh 16 13 17 3 100 100 100 100 Bahawalpur 21 16 21 12 93 91 95 89 Total 16 14 14 11 97 97 98 98 Source: Pakistan Social and Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
Table A8.11: Children Aged 5 Years Suffering from Diarrhea in Past 30 days by District (%)
Urban Male Female District 2004-2005 2010-2011 2004-2005 2010-2011 Multan 15 12 15 11 Khanewal 13 17 11 16 Lodhran 17 19 24 11
Appendix 8 55
Urban Male Female District 2004-2005 2010-2011 2004-2005 2010-2011 D.G.Khan 27 16 17 27 Rajanpur 30 13 14 7 Muzaffar Garh 18 13 17 9 Bahawalpur 27 18 21 10 Total 21 15 17 13 Source: Pakistan Social And Living Standards Measurement Survey (PSLM) 2004-05 & 2010-11
Table A8.12: Infant & Maternal Mortality Rate, Punjab (No. per 1,000)
Indicators Status 2004 Status 2009 Infant Mortality Rate 77 77 Maternal Mortality Rate 300 227 Source: Directorate General Health Services Department of Health, Government of the Punjab, Pakistan.
Table A8.13: Poverty Rate, Punjab (%)
Area 2004-2005 2005-2006 Urban Punjab 17 12 Source: Mehtab Haider. 2008. Poverty Up in Balochistan and Rural Sindh, Down in Punjab, NWFP: World Bank. Pakistan Real Estate Times, 18 July 2008
Table A8.14: Number of Registered Factories, and their Employment Level by District
No. of Factories Estimated Employment District 2004 2009 2004 2009 Multan 275 427 19,172 27,282 Khanewal 122 163 6,756 14,913 Lodhran 68 116 1,883 2,661 D.G.Khan 55 107 8,777 8,142 Rajanpur 27 72 1,065 2,223 Muzaffar Garh 106 130 25,268 24,884 Bahawalpur 237 344 12,402 14,164 Total 890 1,359 75,323 94,269 Source: Pakistan Development Statistics 2010 & 2011
56 Appendix 9 Table A8.15: Metal Roads Length by Type, Zone, and District, under National Highway Authority and Highway Department (kilometers)
District Roads Farm to Sugar National Provincial R & B Market Cess District Council Total Highways Motorway Highway Sector Roads Roads Roads District 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 2008 2011 Multan 1,972 1,973 140 140 0 0 134 135 123 123 873 873 0 0 703 703 Khanewal 2,202 2,203 77 77 0 0 180 181 133 133 1,395 1,395 41 41 376 376 Lodhran 1,472 1,471 0 0 0 0 102 101 86 86 963 963 0 0 321 321 D.G.Khan 1,700 1,700 315 315 0 0 12 12 192 192 994 994 0 0 187 187 Rajanpur 1,335 1,729 177 177 0 0 0 0 147 245 1,003 1,290 8 17 0 0 Muzaffar Garh 2,638 2,638 42 42 0 0 397 397 105 105 1,297 1,297 60 60 – 737 Bahawalpur 2,601 2,580 96 96 0 0 366 345 335 335 1,210 1,210 90 90 504 504 Total 13,920 14,294 846 846 0 0 1,191 1,171 1,122 1,220 7,733 8,020 199 209 2,091 2,828 Source: Pakistan Development Statistics 2009 & 2011
Table A8.16: Number of Registered Factories By District
No of Factories Total Having less than 100 employees Having 100 or more employees District 2004 2009 2004 2009 2004 2009 Multan 275 427 241 394 34 33 Khanewal 122 163 109 144 13 19 Lodhran 68 116 67 115 1 1 D.G.Khan 55 107 42 96 13 11 Rajanpur 27 72 26 71 1 1 Muzaffar Garh 106 130 81 103 25 27 Bahawalpur 237 344 224 332 13 12 Total 890 1,359 790 1,255 100 104 Source: Pakistan Development Statistics 2010 & 2011
Appendix 9 57
FINANCIAL PERFORMANCE OF TEHSIL MUNICIPAL ADMINISTRATIONS
1. To evaluate the sustainability of service delivery, the financial performance of selected TMAs and the Water and Sanitation Authority (WASA) of Multan was evaluated at project completion. For this purpose, actual income and expenditure were weighed against the budgeted target for the last 3 years (i.e., 2008–2011). The budgeted income and expenditure estimates were taken from the budget books, and actual data were obtained from monthly accounts. The analysis excluded government fiscal transfers and only took into account revenue from TMAs’ own resources as a measure of financial sustainability. Revenue streams from different sources were identified, and budgets against actual variances were calculated to gauge the past performance of TMAs to generate required revenue. In addition, the revenue–operational expenditure ratio was also estimated to ascertain the ability of TMAs to finance their operations. The annual deficit and surplus were also determined to analyze the degree of dependency on external sources. These results were then correlated with the financial and economic analyses to detail the reasons for a high or low operating risk of faced by the each TMA.
A. Urban Immovable Property Tax
2. The urban immovable property tax (UIPT) is collected by the excise and taxation departments, which charge 15% of the collected tax as the collection fee. The rest is transferred to TMAs after adjustment of any provincial dues payable by TMAs, such as the charges imposed by water and power development authorities or any debt that has to be serviced. UIPT receipt varies significantly across financial years. It was as high as 317% for FY2011 of the budget estimate in Jampur and as low as –22% for FY2009 regarding Multan. This indicates the inability of TMAs to collect and forecast receipts in lieu of UIPTs. The proportion of UIPT to total revenue was also not consistent across TMAs. For Dera Ghazi Khan, it was 33% of total town-source income, while in Jampur, it was 4%. Therefore, Dera Ghazi Khan is at risk in terms of its dependency on UIPTs as compared to other TMAs.
Table A9.1: Dera Ghazi Khan, Urban Immovable Table A9.2: Jampur, Urban Immovable Property Tax Property Tax (PRs) (PRs)
Variance Variance Fiscal Year Budgeted Actual (%) Fiscal Year Budgeted Actual (%) 2009 44,710,000 35,889,623 (19.73) 2009 1,500,000 1,800,000 20.00 2010 50,370,000 44,183,230 (12.28) 2010 2,000,000 544,236 (72.79) 2011 57,800,000 57,966,443 0.29 2011 600,000 2,500,000 316.67 () = negative.
Table A9.3: Khanewal, Urban Immovable Table A9.4: Multan, Urban Immovable Property Tax Property Tax (PRs) (PRs)
Variance Variance Fiscal Year Budgeted Actual (%) Fiscal Year Budgeted Actual (%) 2007 7,000,000 12,648,232 81 2009 49,500,000 38,378,000 (22.47) 2008 7,000,000 8,216,605 17 2010 54,450,000 74,901,000 38% 2009 7,000,000 6,806,773 (2.76) 2011 75,000,000 100,086,000 33% () = negative.
58 Appendix 9
B. Water Supply
3. Revenue from water supply contributed less than 1% toward own-source revenue in the TMAs, indicating low collection efficiency and lack of willingness to pay by the public for the services provided by the TMAs due to historically poor quality of these services. Water rates are usually politically motivated and have not been revised for many years. Water charges are not metered in any TMA, and billing systems are not fully computerized as envisaged at the time of project appraisal, except in a few TMAs (e.g., Khanewal and Multan). The operation and maintenance costs for water supply, including electricity, labor, and fuel, form the bulk of overall costs for TMAs.
4. The inability to generate revenues from water supply burdens other sources of revenue, is a major risk factor for sustainability of the new water supply infrastructure developed under the project, and questions the ability of TMAs to maintain an improved level of service in the long run. Multan, which has 69% of total revenue generated from its water supply, has had a negative variance in the last 3 years (i.e., –32% in FY2011), implying that it is facing difficulties in achieving revenue targets. This has also been reflected in the lower-than-appraised financial internal rate of return. Unless some fundamental changes are made, such as outsourcing of revenue collection, it is highly unlikely that Multan will be able to sustain provision of quality water supply services in the long run.
Table A9.5: Dera Ghazi Khan, Water Supply Table A9.6: Jampur, Water Supply (PRs) (PRs)
Variance Variance Fiscal Year Budgeted Actual % Fiscal Year Budgeted Actual % 2009 7,500,000 1,524,050 (79.68) 2009 650,000 353,978 (45.54) 2010 8,000,000 1,214,908 (84.81) 2010 600,000 144,816 (75.86) 2011 11,093,000 823,040 (92.58) 2011 – – – – = data not available, () = negative
Table A9.7: Khanewal, Water Supply Table A9.8: Multan, Water Supply (PRs) (PRs)
Variance Variance Fiscal Year Budgeted Actual % Fiscal Year Budgeted Actual % 2007 1,300,000 436,435 (66.43) 2009 172,250,000 137,916,000 (19.93)
2008 1,300,000 469,579 (63.88) 2010 190,000,000 155,008,000 (18.42)
2009 1,300,000 440,548 (66.11) 2011 250,000,000 168,918,000 (32.43) () = negative
C. Slaughterhouses
5. Slaughterhouse operations are generally sustainable across TMAs and have shown satisfactory performance. Collection efficiency is good, although targets are usually not achieved and variances are high, which may be due to overenthusiastic targets rather than the inability of TMAs to collect revenue. However, slaughterhouse revenue contributes less than 1% to total TMA revenue.
Appendix 9 59
Table A9.9: Dera Ghazi Khan, Slaughter House Table A9.10: Jampur, Slaughter House (PRs) (PRs)
Variance Variance Fiscal Year Budgeted Actual % Fiscal Year Budgeted Actual % 2009 650,000 654,171 0.64 2009 70,000 84,795 21.14 2010 700,000 654,555 (6.49) 2010 53,000 55,000 3.77 2011 800,000 639,110 (20.11) 2011 85,000 84,498 (0.59) () = negative
Table A9.11: Khanewal, Slaughter House (PRs)
Variance Fiscal Year Budgeted Actual (%) 2007 300,000 293,462 (2.18) 2008 300,000 312,040 4.01 2009 500,000 227,810 (54.44) () = negative
D. Other Income
6. Other key income sources comprise taxes on the transfer of immovable property, cattle, property rental, and license fees. Other income is more than 50% of the own-source revenue of TMAs except for Multan. In general, collection efficiency is good; however, variances were negative but have started showing improvement. Negative variances may be due to the weak budgeting process. Taxes on the transfer of immovable property and cattle have shown positive variance over the years.
Table A9.12: Dera Ghazi Khan, Other Income Table A9.13: Jampur, Other Income (PRs) (PRs)
Fiscal Year Budgeted Actual Variance Fiscal Year Budgeted Actual Variance % % 2009 80,815,000 95,666,875 18.38 2007 48,860,000 66,466,000 36.03 2010 86,878,213 68,596,314 (21.04) 2008 63,211,000 65,837,425 4.16 2011 104,197,000 79,131,886 (24.06) 2009 – – – () = negative
Table A9.14: Khanewal, Other Income Table A9.15: Multan, Other Income (PRs) (PRs)
Fiscal Year Budgeted Actual Variance Fiscal Year Budgeted Actual Variance % % 2007 34,135,000 30,349,011 (11.09) 2009 43,270,000 23,517,000 (45.65) 2008 27,224,000 31,487,647 15.66 2010 38,775,000 22,630,000 (41.64) 2009 50,170,000 26,405,639 (47.37) 2011 31,300,000 26,060,000 (16.74) () = negative
60 Appendix 9
E. Conclusion
7. The overall financial performance of the TMAs is poor. The expectations at appraisal—that by supporting institutional capacity building of these TMAs, their financial performance would be enhanced and they would move toward cost recovery for services and eliminate subsidies—have not been met. On the contrary, the analysis indicates that TMAs are still largely dependent on intergovernmental fiscal transfers just to meet their operational expenses and to sustain their operations at the pre-project level.
8. The infrastructure added to the TMAs’ asset inventory by the project is expected to reduce operational costs in some cases where the focus has been on system efficiency improvements. However, it will increase operational costs because of the improvement in quality and extent of coverage. Further, most subprojects have come into operation only recently, and most TMAs still do not have reliable estimates on the additional operational expenses required for the new infrastructure. In the absence of any increase in collection efficiency, addition of new clients, or increase in service charges, the additional infrastructure provided by the project will further increase TMA dependence on outside sources. This increase was not factored into the analysis, as it was based on data for the last 3 years, which does not include the revenues and operational cost impact of the subprojects.
9. The overall variances for annual budget and revenues collected from all sources are negative except for Jampur, which means that most of the time, TMAs are unable to achieve the targets. In most cases, the revenue–expenditure ratio was very poor (i.e., indicating a high deficit) and has remained around 0.5 against the benchmark of 1.0. This reflects that 50% of the TMAs’ operational cost must be financed through a Provincial Finance Commission (PFC) award, for which the actual transfers to TMAs have also been inconsistent due to budget constraints at the national and provincial levels. This dependency makes TMAs vulnerable to overall provincial government fiscal positions, and their operations are directly affected by the government priorities.
10. The main reasons for the TMAs’ poor performance and resulting weak revenue base and collection efficiency are the TMAs’ inability to create customer databases, improve the quality of human resources, plan (i.e., master plans either do not exist or are never updated), detect illegal connections and nonrevenue water, restructure the decade-old service charges, impose sewerage and solid waste charges, and improve budgeting and monitoring of operation and maintenance expenditure. These issues were taken into account for future projections and have therefore resulted in lower-than-appraised financial internal rates of return. The overall analysis is given in the tables below.
Table A9.16: Dera Ghazi Khan, Total Income Analysis (PRs)
Variance Operating Revenue/ Fiscal Year Budgeted Actual % Expenditure Surplus/deficit Expenditure 2009 133,675,000 133,734,719 0.04 173,156,651 (39,421,932) 0.77 2010 145,948,213 114,649,007 (21.45) 221,616,786 (106,967,779) 0.52 2011 173,890,000 138,560,479 (20.32) 313,047,856 (174,487,377) 0.44 () = negative
Appendix 9 61
Table A9.17: Jampur, Total Income Analysis (PRs)
Variance Operating Revenue/ Fiscal Year Budgeted Actual % Expenditure Surplus/deficit Expenditure 2009 51,080,000 68,704,773 34.50 173,156,651 (104,451,878) 0.40 2010 65,864,000 66,581,477 1.09 221,616,786 (155,035,309) 0.30 2011 – – – – – – () = negative.
Table A9.18: Khanewal, Total Income Analysis (PRs)
Variance Operating Revenue/ Fiscal Year Budgeted Actual % Expenditure Surplus/deficit Expenditure 2009 42,735,000 43,727,140 2.32 52,823,726 (9,096,586) 0.83 2010 35,824,000 40,485,871 13.01 54,935,443 (14,449,572) 0.74 2011 58,970,000 33,880,770 (42.55) 64,612,767 (30,731,997) 0.52 () = negative.
Table A9.19: Multan, Total Income Analysis (PRs)
Variance Operating Revenue/ Fiscal Year Budgeted Actual % Expenditure Surplus/deficit Expenditure 2009 265,020,000 199,811,000 (24.61) 312,065,000 (112,254,000) 0.64 2010 283,225,000 252,539,000 (10.83) 301,474,000 (48,935,000) 0.84 2011 356,300,000 295,064,000 (17.19) 312,434,000 (17,370,000) 0.94 () = negative.
62 Appendix 10
ECONOMIC ANALYSIS
1. For this economic analysis, a sample of seven tehsil (town) municipal administrations (TMA) were selected that accounted for 60% of project investment. The benefits from the project constituted the extent to which it contributed to increasing the value of consumption available to the population. Economic cost reflected the degree to which consumption was sacrificed by diverting the resources required by the project from other uses. The total net change in consumption available represented the project impact. Shadow prices were used to take into account project impact; thus, market prices were adjusted to account for the effect of government intervention and market structure.
2. The economic analysis used the domestic price numeric, as benefits are nontradable. Economic costs were derived from the financial estimates of capital and operation and maintenance costs after eliminating all duties and taxes and multiplying the net result by the appropriate price conversion factors. Traded and nontraded components were estimated from the cost estimates of each subproject. The shadow exchange rate factor for traded goods was 0.909, and the conversion factor for nontraded components was 1.0. The analysis was undertaken for a 20-year period, although the economic lives of most investments extend beyond this time. All costs and benefits were quantified in constant 2010 prices and on an incremental basis. The economic viability of the subprojects was determined by computing its economic internal rate of return (EIRR).
3. The project was suspended before its completion, but due to the resolve shown by the provincial government to complete it, the continued funding after the suspension has produced reasonable outcomes. Most of the subprojects are completed or near completion, except for some wastewater treatment plants, sewerage systems, and solid waste landfills. Out of 172 subprojects, 86 were completed at loan closure and 58 after closure. Twenty-two projects are still in progress, and six subprojects were dropped.
4. Benefits from the project are better health and quality of life due to improved water supply and sanitation, improved property values, and cost savings in waste disposal. These benefits were estimated based upon cost savings in health expenditure, time saved for water collection, and customer willingness to pay for quality of water and better sanitation facilities. Economic benefits were based on surveys conducted in the project service area by visiting hospitals and private clinics, interviewing medical professionals, accessing registered property ventures, speaking with residents, and a desk review. The health impact of the investments was in terms of avoided medical costs due to reduced morbidity rates and improved quality of life. The capital cost was the actual investment made, and operation and maintenance costs were based on the normal activity level of the facilities built. Replacement cost equivalent to 10% of capital was assumed every 10 years.
A. Water Supply
5. Water supply subprojects were carried out in 7 of 21 TMAs where water was either very deep or brackish. This subcomponent included construction of new tube wells, transmission mains, storage reservoirs, and distribution systems. It was directed toward providing quality, sustainable supply of water to lower-income communities. The major benefits comprise savings in health expenditure and time and cost savings in water collection. Overall, this subcomponent was well implemented, and most schemes have been completed in time. However, the EIRR at completion was 23%, lower than the value at appraisal of 30%.
6. The EIRRs were highly sensitive to revenues; a 10% reduction in revenue reduces the EIRR by 40%. Due to a poor revenue collection history, there is a risk that TMAs will not be able to cover the operation and maintenance costs and will face problems in maintaining the required level of
Appendix 10 63 service in the long term. In Multan, where water and sanitation authority (WASA) is responsible for water and sanitation, water service charge collection is less than 50% of the assessed revenue. Reasons include a low willingness to pay for municipal services, no political will to support increased water charges, and weak awareness and community mobilization campaigns on water issues as envisaged at appraisal.
7. During the survey of communities at Dera Ghazi Khan, people seemed generally satisfied with the water supply services and acknowledged the consistent availability and better quality of water. The health data for last 3 years show a declining trajectory for waterborne diseases. In Bahawalpur, three of six schemes have been completed, with three schemes in testing phase.. Therefore, for Bahawalpur, the complete health benefits will not be accrued immediately but delayed depending upon commissioning of rest of schemes.
Table A10.1: Economic Analysis, Water Supply Subcomponent
EIRR Sensitivity Analysis 10% Increase Delay in Project in 10% Cost and 50% Benefit Increase 10% 10% Decrease Decreas by 1 Tehsil At the in Decrease Decrease in Capital e in Year Municipal Time of At Project Project in in Cost and Health Administration Appraisal Completion Cost Revenue Revenue O&M Cost Benefits Bahawalpur 26.2 20.1 17.3 10.7 8.5 15.4 16.5 18.5 Dera Ghazi Khan 24.3 25.7 25.5 23.2 21.1 21.5 21.5 24.7 Multan 45.2 30.7 26.0 23.3 17.1 18.3 19.1 19.0 Overall 30.2 23.0 21.0 16.0 14.0 18.0 18.0 20.0 EIRR = economic internal rate of return, O&M = operation and maintenance. Source: Project completion review estimates
B. Sewerage Systems and Wastewater Treatment
8. At the project completion review, the overall EIRR for the sewerage improvement component was 18.0%, which is lower than the value at appraisal (37.6%). The project design envisaged active participation of communities, which required taking up responsibility for laying street-line sewers and connections to households for which funds would be provided by the communities or in partnership with union councils who have budgets for street pavement and lights. At the project completion review, such community participation was not evident, which resulted in lack of ownership and low willingness to pay, and resulted in delayed benefits from sewerage improvements.
9. Another reason for the lower EIRR is that the wastewater treatment plants, which required large land areas and timely acquisition, were critical, but land acquisition issues could not be resolved in time. As 20% of the wastewater treatment plants have not been completed, economic benefits accruing due to sewerage and disposal stations may be neutralized. Therefore, EIRRs of sewerage subprojects declined. For example, in Multan, due to downstream impacts of untreated wastewater, the EIRR at appraisal was 31.7% and at completion was 21.9%.
64 Appendix 10
Table A10.2: Economic Analysis, Sewerage Systems and Wastewater Treatment Subcomponent
EIRR Sensitivity Analysis 10% Increase in 10% 10% Project Cost 20% At the Increase Decrease and 10% Delay in Decrease in Tehsil Municipal Time of At Project in Project in Decrease in Benefit by Households Administration Appraisal Completion Cost Revenue Revenue 1 Year Served Bahawalpur 19.6 16.8 16.1 11.8 13.0 13.3 13.5 Dera Ghazi Khan 16.5 16.8 16.1 11.8 13.0 13.3 13.5 Jahania 13.0 13.6 13.1 10.2 10.8 11.3 11.5 Jampur 28.2 26.4 25.6 20.3 22.1 20.4 21.6 Kabirwala 22.6 12.5 11.9 9.1 9.5 10.3 11.0 Khanewal 13.8 5.4 4.1 1.4 0.4 4.2 4.5 Multan 31.7 21.9 20.6 15.4 16.2 16.0 19.0 Overall 37.6 17.0 17.0 12.0 13.0 13.0 15.0 EIRR = economic internal rate of return, O&M = operation and maintenance. Source: Project completion review estimates
C. Solid Waste Management
10. Investment in this subcomponent included development of landfills, transfer stations, and procurement of equipment and vehicles. All equipment and machinery was procured and delivered to the TMAs. Six schemes were dropped after the suspension of the loan.
11. The EIRR for this subcomponent was 21.00%, which is slightly lower than the value at appraisal (22.74%). Landfills were often delayed, which involved land acquisitions. The other issue was the lack of involvement of communities to separation and disposal of their waste, and their willingness to pay for clean, efficient collection of waste. The EIRR for solid waste management is highly sensitive to willingness to pay, which is currently very low; therefore, future benefits have been adjusted to account for this risk.
12. Multan has shown lot of improvement, with complete coverage of 45 union councils and partial coverage in an additional 16 unions. It has established transfer stations and devised mechanisms for primary and secondary collection, with around 300 containers installed across the city. During FY2011, there was PRs20 million savings in annual operation and maintenance expenditure.
Table A10.3: Economic Analysis, Solid Waste Management Subcomponent
EIRR Sensitivity Analysis 10% Increase in 10% Project Increase 10% Cost and 15% 20% Tehsil At the in Decrease 10% Decrease in Decrease in Municipal Time of At Project Project in Decrease in Willingness Households Administration Appraisal Completion Cost Revenue Revenue to Pay Served Bahawalpur 30.6 26.2 23.2 20.4 16.8 13.2 13.3 Dera Ghazi Khan 48.2 38.6 37.1 36.3 33.3 31.4 30.9
Appendix 10 65
EIRR Sensitivity Analysis 10% Increase in 10% Project Increase 10% Cost and 15% 20% Tehsil At the in Decrease 10% Decrease in Decrease in Municipal Time of At Project Project in Decrease in Willingness Households Administration Appraisal Completion Cost Revenue Revenue to Pay Served Jahania 17.5 15.6 11.1 15.2 3.9 1.1 2.7 Jampur 36.9 27.1 24.1 26.6 19.3 16.8 17.2 Kabirwala 19.7 13.5 13.2 13.8 11.4 10.3 10.4 Khanewal 57.9 30.96 29.4 26.6 24.1 21.4 21.1 Multan 21.5 15.95 3.0 15.8 − − − Overall 22.7 21.00 15.5 22.5 3.3 5.2 EIRR = economic internal rate of return, O&M = operation and maintenance. Source: Project completion review estimates
D. Low-Income Area Road Links
13. This subcomponent involved developing roads that provide access from town centers to low- income road areas. All road links followed already existed right-of-way, and no new roads were constructed. The increase in land value was used to estimates the benefits for the improved roads.
14. Under this subcomponent, all schemes were completed. The road links had an overall EIRR of 23%, the same as at the time of appraisal. Increase in the value of land varies across TMAs, with the maximum observed in Jahania and lowest at Bahawalpur, depending upon the economic activity attracted by the road due to its location.
E. Slaughterhouses
15. This subcomponent involved construction and relocation of slaughterhouses to improve hygienic conditions of residential areas. All subprojects have been completed except for Multan. The overall EIRR was 15.0% at completion, which is almost the same as at appraisal (15.7%). The benefit comprises savings in health expenditure due to decrease in diseases relating to consumption of spoiled meat. Although the EIRR for this subcomponent is marginally over the economic opportunity cost of capital (currently 13%), there are many environmental benefits that cannot be quantified, including hygienic disposal of waste and a cleaner city environment.
F. Conclusion
16. All investments were highly efficient and economically viable irrespective of delay and reduced benefits. In most of the subcomponents, the EIRR at completion is lower than the value at appraisal due to delayed completion of most of the schemes, reduced benefits over time due to weak operation and maintenance capacities, and reduced scope of activities. The sustainability of the project benefits demands enhancing capacity at TMAs, adequate budget allocations, , strengthening sector institutions, accelerating financial management reforms, and improving service delivery and benefits directed toward the poor. At the time of completion, no TMA has a master plan, and they are unsure about their future role in the wake of current political uncertainty. There is lack of willingness to levy charges for municipal services, and most of the TMAs are unable to collect any charges. Thus, whether TMAs can provide a constant level of services is questionable, making them completely depended upon budgets received through provincial finance commission awards, which in turn comes with certain political biases.
66 Appendix 10
Table A10.4: Economic Analysis, Road Links
EIRR Sensitivity Analysis 10% Increase 10% 10% in Project 15% Tehsil Municipal At the Increase Decrease Cost and 10% Decrease 20% Administration Time of At Project in Project in Decrease in in Land Decrease Unit Appraisal Completion Cost Revenue Revenue Value in Area Bahawalpur 21.9 16.8 16.4 12.5 14.0 13.1 11.8 Jahania 51.1 60.0 59.7 39.6 24.3 23.0 21.3 Jampur 24.7 24.9 24.6 18.5 21.6 20.4 18.8 Kabirwala 23.0 18.3 18.0 13.7 15.4 14.5 13.2 Khanewal 22.1 27.8 27.5 20.6 24.3 23.0 21.3 Overall 23.0 23.4 22.5 17.5 20.2 19.1 17.6 EIRR = economic internal rate of return, O&M = operation and maintenance. Source: Project completion review estimates
`
Appendix 10 67
FINANCIAL ANALYSIS
1. The financial analysis of the revenue-generating subprojects in the Southern Punjab Basic Urban Services Project was undertaken in accordance with Asian Development Bank’s Guidelines for the Financial Governance and Management of Investment Projects Financed by ADB (2002)9.
A. Financial Internal Rates of Return
2. Financial internal rates of return (FIRRs) were calculated for the water supply and slaughterhouse subcomponents. No FIRR was calculated for the solid waste management subcomponent, as at the time of the project completion review, no charges were being generated for solid waste management and no tehsil (town) municipal administration (TMA) had plans to levy any in the near future. The TMAs cited lack of political will and the prevailing culture for this inaction.
3. Projected income and expenditure statements and cash flows were prepared, and the FIRRs were calculated over 20 years. The financial viability of the subcomponents were assessed from the perspective of operating entities (i.e., water and sanitation authority Multan and TMAs), rather than from the economy as a whole. The revenue and costs are in constant 2010 prices, the year in which the project became functional, and are on an incremental basis. Investment cost was derived from actual project accounts. Revenue estimates were based on latest consumer charges and their willingness to pay for improved service delivery because of the better availability of water supply and generally enhanced sanitation facilities. It was also assumed that better facilities will help the entity bring illegal connections into the revenue net. The water charges, (that show minor increase in a few cases), are fixed and are slab-based depending upon the plot size.
4. Finally, FIRRs were calculated on the basis of actual collection efficiency for 2007–2011, which is, on average, 60%. Sensitivity tests were undertaken to assess the robustness of the FIRR calculations.
B. Water Supply
5. The water supply subcomponent comprised water source development and construction of transmission mains, storage reservoirs, and distribution systems. To recover costs for water supply facilities and services, monthly water charges are applied based on a flat tariff rate. Operation and maintenance costs were assumed to increase by 5% annually and included expenditure relating to salaries, power, chemical, and miscellaneous repairs.
6. All subprojects related to water supply were completed and are operational except in Bahawalpur. These water supply schemes are in the testing phase. Currently, no water charges have been collected on the connections in the new schemes, but TMA officials stated that charges based on a flat rate will be levied as soon as the schemes are functional. In Dera Ghazi Khan, new tube wells were installed along with a distribution network. All work has been completed, and during the survey, it was observed that most people are satisfied and are willing to pay the water charges.
7. In Multan, WASA is responsible for water and sanitation facilities and is better equipped to levy and collect water charges. The collection efficiency is 60%, but water rates need revision, as they were last revised in 1992. There is no water strategy or master plan, and computerization of billing needs to be upgraded.
9 ADB, 2002, Guidelines for the Financial Governance and Management of Investment Projects Financed by ADB, Manila
68 Appendix 11
8. For Multan and Dera Ghazi Khan, the FIRRs for water supply are highly sensitive to the increase in operation and maintenance costs and the combined effect of a 10% increase in such costs and a 10% reduction in revenue. The water charges were assumed to increase by 10% to cover the operation and maintenance costs. Replacement cost is 10% of initial capital every 10 years. Only incremental revenue and operational costs were considered for the FIRR calculation.
9. The FIRRs are substantially lower than appraised because at the time of this review, no new water charges had been imposed, and, historically, collection efficiency was poor. Further, there seems to be lack of political will to implement water charges. TMA officials are confident that with visible improvement in water supply services, people will begin paying charges.
Table A11.1: Financial Analysis, Water Supply Subcomponent (%)
FIRR's Sensitivity Analysis 10% Increase in 10% Project Increase in 10% Cost and 10% O&M Cost Delay Tehsil Increase 10% 10% Increas and 10% in Municipal At the Time in Decrease Decrease e in Decrease Benefit Administration of At Project Project in in O&M in by 1 Unit Appraisal Completion Cost Revenue Revenue Cost Revenue Year Bahawalpur 6.0 3.5 3.2 2.3 2.0 2.7 1.4 2.0 Dera Ghazi Khan 16.0 2.0 1.6 0.9 0.6 negative negative 0.9 Multan 8.0 6.4 6.3 4.8 4.6 negative negative 4.1 EIRR = economic internal rate of return, O&M = operation and maintenance. Source: Project completion review estimates
C. Slaughterhouse
10. All subprojects under this component were completed except for Multan, for which 85% of work has been completed. There are different rates for different animals (i.e., cows and goats), but all subprojects have same or slight lower FIRRs than estimated at appraisal. The reduced FIRR values are due to delays in completion and, in some cases, less-than-anticipated increases in revenues. Capital costs were taken from the actual investment made and operation and maintenance, and replacement costs were based on 2010 prices. Other assumptions include:
(i) for revenue projection, the number of cows and goats slaughtered were taken from TMA official records; (i) operation and maintenance costs included salaries for part-time staff members; (ii) slaughter fees range from PRs25 (for small animals) to PRs45 (for large animals); (iii) slaughter fees increase by 10% annually in line with inflation; and (iv) the collection efficiency was 100%.
11. The FIRR for the slaughterhouse in Multan is sensitive to a delay in benefits by 1 year, and, in case of Jahania, it is more sensitive to the combined effect of decreased revenue and increased operation and maintenance costs.
Appendix 10 69
Table A11.2: Financial Analysis, Slaughterhouse Subcomponent (%)
FIRR's Sensitivity Analysis 10% 10% Increase Increase Tehsil in Project in O&M Munici- 10% Cost and Cost and pal Increase 10% 10% 10% 10% Delay in Admini- At the in Decrease Decrease Increase Decreas Benefit stration Time of At Project Project in in in O&M e in by 1 Unit Appraisal Completion Cost Revenue Revenue Cost Revenue Year Multan 15.00 10.00 9.30 8.90 8.30 9.70 8.60 negative Jahanian 27.00 21.00 20.36 19.37 18.78 20.13 18.50 17.28 Kabirwala 26.00 26.05 25.47 23.99 23.47 24.70 22.67 20.47 Khanewal 19.00 14.53 13.88 13.30 12.68 14.05 12.80 12.15 EIRR = economic internal rate of return, O&M = operation and maintenance. Source: Project completion review estimates
70 Appendix 12
STATUS OF PROVINCIAL POLICY ACTIONS
Time Frame after Loan Signing Policy Action (no. of months) Status at Completion 1. The Punjab government will notify rules for 6 Complied with. monitoring, house committees, and for the conduct of business of the tehsil councils. Rules notified vide letter no. SOR(LG)38-1/2004 dated 22 October 2004. 2. The Punjab government will issue directions on (i) setting up an internal audit office, required 12 Partly complied with. Rules notified under section 57(h) of the Punjab Local vide letter no. SOR(LG)38-1/2004 Government Ordinance, 2001, also dated 22 October 2004. However, the specifying the existing service or department project completion report mission from which audit staff members can be could not find any evidence of internal utilized; audits being undertaken in the seven TMAs visited. (ii) making pension contributions and provident 6 Complied with. The Punjab Local fund deductions for staff members of Government and Rural Development decentralized departments working in the Department issued necessary TMAs; instructions on the subject. (iii) convening meetings of zila mushavarat 2 Complied with. Zila mushavarat (district advisory) committees regularly in committees were constituted in all six accordance with the provisions of the project districts, comprising a nazim Punjab Local Government Ordinance, 2001; (district administrator) as chairperson, naib zila nazim (assistant district administrator), and tehsil nazim (town/tehsil administrator), with a district coordination officer as secretary. (iv) registering citizen community boards with 2 Complied with. Board registration the prescribed authority; rules were notified vide letter no. SOX(LG)5-5/2000 (P) dated 17 March 2004 and circulated to the local level. The registration of already-constituted citizen community boards has also been undertaken. (v) district governments reviewing and revising 1 Complied with. Valuation of the land values notified for levy of stamp duty property is carried out by the district and registration charges, which will be governments on a regular basis. repeated every 3 years; and (vi) TMAs made responsible for payment of their 1 Complied with. TMAs are paying their electricity bills. electricity bills. In case of any discrepancy, the reconciliation is made by the chief engineer (power), Irrigation and Power (I&P) Department. 3. The Punjab government will (i) create a special grant under the PFC for 1 Complied with, with a delay of 21 participating TMAs, fulfilling the eligibility months. criteria set forth in the PFC grant, and notify it as part of the PFC award; (ii) make arrangements for the smooth transfer 3 Complied with. The Punjab of PFC grant funds to TMA imprest accounts government counterpart funds for the upon fulfillment of eligibility criteria specified project were made available to TMAs in the PFC grant; through the project coordination office, as part of the PFC grant.
Appendix 12 71
Time Frame after Loan Signing Policy Action (no. of months) Status at Completion (iii) provide a copy of the PFC award to all 1 Complied with, with a delay of 12 TMAs, and place it on the Punjab months. government website; (iv) through the Punjab Local Government and 2 Complied with, with a delay of 20 Rural Development Department, hold months. workshops with the TMA nazim and tehsil municipal officers, explaining the PFC grant created under the project, and its operational and performance evaluation procedures; (v) provide chief officer units of the TMAs the 3 Complied with. The TMA Rules of financial power to meet urgent operation and Business 2002 provide the maintenance expenditures; sanctioning and incurring contingent expenditure out of local funds for items duly provided in the sanctioned budget. (vi) consider and specify sources and 6 Complied with. The functions and application of TMA funds derived from urban powers of the TMAs have been areas, as the Punjab government will spend clearly identified under section 54 of UIPTs, octroi (abandoned municipality tax Punjab Local Government Ordinance, on entry of goods in the city ) compensatory 2001, and the details of source of grants, rents of municipal property, and user receipt are given under part IV of the charges in the chief officer units to ensure second schedule of the ordinance. equity in resource allocation and adequate During the project, TMAs kept on provision of municipal services; spending their resources received from the Punjab government in accordance with the functions entrusted to them. (vii) transfer regularly to TMAs their share in Quarterly Complied with. The Finance UIPTs; Department transfers the TMA share out of UIPTs on a regular basis, but the details were not provided to TMAs as reflected in (vi) above. (viii) regularly provide to TMAs statements Quarterly Not complied with. Details of the showing total collection, TMA shares, UIPTs were not provided to TMAs. deductions, and balances transferred to the TMAs, which should be reconciled by the Excise and Taxation Department and TMAs; (ix) operationalize the PFC redress of grievance 12 Complied with, with a delay of about mechanism relating to transfers through 12 months. The PFC grievance promulgation of PFC rules of business under mechanism was put in place in mid- section 120 L of the Punjab Local August 2006. Government Ordinance, 2001; (x) facilitate TMAs to reconcile Pakistan Water 6 Complied with. and Power Development Authority arrears; and (xi) devise transition arrangements for the 6 Complied with. All operation and transfer of operational expenditures of public maintenance expenditure of health engineering schemes. completed water supply and sewerage schemes is the responsibility of TMAs. PFC = provincial finance commission, TMA = tehsil municipal administration, UIPT = urban improvement property tax.