Document of The World Bank
FOR OFFICIAL USE ONLY Public Disclosure Authorized
Report No.: 18437
IMPLEMENTATION COMPLETION REPORT Public Disclosure Authorized INDIA
HYDERABAD WATER SUPPLY AND SANITATION PROJECT (Loan 3181/Credit 2115-IN) Public Disclosure Authorized
SEPTEMBER 21, 1998
Infrastructure Sector Unit South Asia Region Public Disclosure Authorized
This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS
US$1.00= Rs 16.00 at appraisal(October 1, 1989) Rs. 1.00= US50.0625at appraisal(October 1, 1989) US$1.00 Rs. 39.50 at closure(March 31, 1998) Rs. 1.00= US$0.025at closure (March31, 1998)
GOIIGOAPFISCAL YEAR
April 1 - March31
WEIGHTS AND MEASURES m - meter (39.37 inchesor 3.28 ft) m2 - square meter (10.7639square feet) km - kilometer(0.62 miles) ha - hectare (10,000 squaremeters or 2.47 acres) sq. km - square kilometer(0.386 square. miles) I - liter (0.22 Imperialgallons or 0.264 US gallons) lcd - liters per capita per day Rs. I akh - Rs. 100,000 Rs. I crore - Rs. 10,000,000
ABBREVIATIONS AND ACRONYMS
DRP - Dam ReviewPanel ERR . EconomicRate of Return FRR - FinancialRate of Retum FY - Fiscal Year GOAP - Governmentof AndhraPradesh GOI - Governmentof India HMWSSB HyderabadMetropolitan Water Supply and SewerageBoard HWSSP . HyderabadWater Supplyand SanitationProject ICADD - Irrigation and ConmmandArea DevelopmentDepartnent of GOAP ICR - ImplementationCompletion Report IS - InformationSystems LCS - Low-Cost Sanitation M&E - Monitoringand Evaluation MTR - Mid-TermReview OAP OperationalAction Plan O&M - Operationand Maintenance PSP - Private SectorParticipation R&R - Resettlementand Rehabilitation RRP Resettlementand RehabilitationProgram SAR - Staff AppraisalReport SCF - StandardConversion Factor SOE - Statementof Expenditure s/w - Staff-weeks UFW - Unaccounted-forWater WSS - WaterSupply and Sanitation
Vice President Mieko Nishimizu Director Edwin R. Lim Sector Manager Frannie Humplick Task Leader Shyamal Sarkar FOR OFFICIALUSE ONLY IMPLEMENTATIONCOMPLETION REPORT
INDIA
HYDERABADWATER SUPPLY AND SANITATIONPROJECT (LOAN 3181/CREDIT2115-IN)
TABLE OF CONTENTS Page No. PREFACE i
EVALUATION SUMMARY ii
PART I: PROJECTIMPLEMENTATION ASSESSMENT 1 A. Project Objectives 1 B. Achievement of Project Objectives 1 C. Major Factors Affecting the Project 7 D. Project Sustainability 8 E. Bank Performance 9 F. Borrower Performance 10 G. Assessment of Outcome 11 H. Future Operations 12 I. Key Lessons Learned 12
PART II: STATISTICALANNEXES Table 1: Summary of Assessments 14 Table 2: Related Bank Loan/Credits 15 Table 3: Project Timetable 17 Table 4: Credit Disbursements:Cumulated Estimated and Actual 17 Table 5: Key Indicators for Project Implementation 18 Table 6: Key Indicators of Project Operation 19 Table 7: Studies Included in Project 20 Table 8A: Project Costs 22 Table 8B: Project Financing 22 Table 9: Economic Costs and Benefits 23 Table 10: Status of Legal Covenants 24 Table 11: Compliance with OperationalManual Statements 26 Table 12: Bank Resources: Staff Inputs 26 Table 13: Bank Resources: Missions 27
APPENDICES A. Completion Mission's Aide-Memoire 29 B. Borrower's Evaluation 56 C. The Implementationof the Relocation and RehabilitationProgram 64 Maps: IBRD No. 20971R Water Supplyand Transmission System IBRD No. 29845 HMWSSB- Water Supply System IBRD No. 29846 HMWSSB - Sewerage System
4 This document has a restricted distribution and may be used by recipients only in the performance,oftheir official duties. Its contents may not otherwisebe disclosed without World Bank authorization. i
IMPLEMENTATIONCOMPLETION REPORT
INDIA
HYDERABADWATER SUPPLY AND SANITATION PROJECT (LOAN 3181/CREDIT2115-IN)
Preface
Thisis the ImplementationCompletion Report (ICR) for the HyderabadWater Supply and SanitationProject in India,for which the Loan3181 -IN in the amountof US$10.0 million equivalentand Credit2115-IN in the amountof SDR63.9 million (together, US$89.9 million equivalent)were approved on March27, 1990and made effectiye o,n September 28, 1990.
The Loan amountwas canceledin fullon December5, 1991.
The Creditwas closedon March31, 1998,which was the originalclosing date, and final disbursementtook place on August24, 1998 at whichtime there was a US$6.7million equivalent Creditbalance, which was cancelled.
The ICRwas preparedby Mr.Michael Whitbread (Consultant) under the guidanceand supervision of Mr. ShyamalSarkar (Task Leader). The ICR wasreviewed by Messrs./Mmes.Robert Panfil (on behalfof FrannieHumplick, Sector Manager, South Asia Region),Agustin Litvak (Procurement),Salman M.A. Salman (Legal), Williamn B. Marke(Loan), Panneer Selvam (Envirom-nental),Asger Christensen (Social Development), Hartwin Nickel and CarloRietveld (peerreviewers).
Thepreparation of this ICRbegan during the Bank's final supervisionand completionmission in March 1998. The ICRis basedon the mission'sfindings which are includedas AppendixA to the ICR, materialfrom project files and discussionswith officials of the Bank,Borrower and others involvedwith different stages of the projectcycle. The Borrowercontributed to the ICR by providingdata and viewson the projectoutcome. The Borrower's evaluation is includedas AppendixB. ii
IMPLEMENTATION COMPLETION LREPORT
INDIA
HYDERABADWATER SUPPLY ANDSANITATION PROJECT (LOAN 3181/CREDIT2115-IN)
EvaluationSummary
Introduction
1. The HyderabadWater Supply and SanitationProject was the first Bank-supportedurban water supply and sanitation(WSS) project in Hyderabad,the capitalcity of the State of Andhra Pradesh,and one of India's five largest cities. Hyderabadis one of the few cities in India with a dedicatedpublic utility which provides WSS services. Althoughthere were important physical investmentsaimed at improvingthe supply of water and waste water disposal and other benefits, much of the project consistedof strengtheningpolicies and institutionalarrangements. Given its prominence,Hyderabad was likely to provide demonstrationeffects for other Indian cities.
ProjectObjectives
2. The majorproject objectiveswere to: (a) help AndhraPradesh in improving,for Hyderabad,the adequacyand reliabilityof the water supply,the collection,treatment and disposalof waste water and the provisionof excretadisposal facilities; (b) strengthenthe managementand technical capacityof the concernedinstitutions; and (c) prepare future urban and water supply and sanitationprojects in Andhra Pradesh.
3. Therewere six componentsand several agreedactions to achievethe objectives. Component1, the ManjiraPhase III Stage II Scheme,was intendedto treat, store and pump 135 Mld of water from the Singur Dam reservoir,an irrigationfacility located 67 kms from the city which at the time of appraisalwas under construction,and also improvethe reliabilityof supply thereby addressingthe water quantityand qualityimprovement objectives. Component 2 was intendedto rehabilitateand strengthenthe existingwater systemand Component 3, to rehabilitateand strengthenthe existing seweragesystem including the provision of additional sewagetreatment works. Component 4 provideda householdlatrine (low cost sanitation) program. Component 5 involvedresettlement and rehabilitationof the people involuntarily displacedby the Singur Dam and reservoir. Component 6, involvedinstitutional strengthening through technicalassistance to, and personneltraining in the HyderabadMetropolitan Water Supply and SewerageBoard (HMWSSB). Other actionsfor institutionalstrengthening were either covenantedor includedin an OperationalAction Plan.
Implementation Experience and Results
4. Physicalachievements of the first five componentswere mixed, although they have,been rated as satisfactoryoverall. Component1 was implementedpromptly and efficientlyby the HMWSSB. However,the benefitsof the Component1 expenditurewere not fully realized iii
during the projectdue to slow action by the Irrigationand CommandArea Development Department(ICADD) of GOAP, the owners of SingurDam, in undertakingnecessary remedial works to the dam gates. This failure by ICADDresulted in restrictionsin the height to which the reservoir could be filled and reducedflows of water to Hyderabadcompared with appraisal. The dam gates are under repair at the time of writingand clearancehas been given for full reservoir filling which should occur in 1998. Components2 and 3 were greatlydelayed due to non- availabilityof maps which were necessaryfor the engineeringdesign work and, as a result, Components2 and 3 were modified,but within the overallproject objectives, at the time of the Mid-termReview. Component4 was fully implemented.Component 5 was substantially completeddespite a slow start and difficultiesencountered during implementationin resolving many unforeseenissues.
5. Institutionalstrengthening (Component 6) was successfuland fullyjustified the risks taken by the Bank in supportingHMWSSB, which was a new institution. Achievements included:successful completion of many importantstudies, including studies assisting the preparationof a secondproject; successfulexecution of a well-preparedtraining program; introductionof advancedprocurement procedures; extensive computerization; introduction of modem financialmanagement systems; and successfulcommencement of a program of private sector p-aticnation in the form of O&Mcontracts. Morethan these achievemunts,there nas been an institutionaltransformation at HMWSSBfiom thcetraditional bureau_ratic to a professional,consumer-orientated, approach to the provisionof WSS services.
Assessment
6. Achievementof developmentobjectives at closingwas satisfactory. Implementationwas also rated as satisfactory. The project supportedmajor improvements, but there is a considerable way to go beforeHMWSSB could be consideredto be a modem WSS public utility.
Key Lessons Learned
7. Institutional arrangements. Based on the experiencesof this project, adoption of the public utilitymodel for the urban WSS sector would be appropriatefor other major cities in India during their transitionto a modemand efficientdelivery system.
8. Ownership of assets. For effectiveoperations, the urban WSS utility should have ownershipof the assets which it uses to supply services.
9.. Improved Financial Management. Major advancesin financialmanagement at HMWSSBwere achievedas a result of the appointmentof a highlyqualified Director of Finance and other senior Financeand Accountsstaff having equal status in the organization as their Technicaland Engineeringcolleagues. However,although the financialperformance of HMWSSBimproved it was adverselyaffected by infrequencyof tariff revisions; a mechanism needs to be foundto overcomethe reluctanceof the HMWSSB'sBoard to take unpopular tariff decisions. iv
10. The importance of training. A well worked out Training Plan, produced and implemented with the assistance of an external training organization, led to increased staff awareness and upgrading of skills. This exposure has greatly benefited HMWSSB and, through the experience gained from this program, also the external trainers.
11. Drafting of the Financial Covenant. Differences arose between the Bank and Borrower over the definition of technical terms used in the Financial Covenant. The Financial Covenant should be simple in concept and expressed in unambiguous terminology.
12. Continuity of key Bank staff. Task Manager continuity from identification through to the late stages of implementation was warmly welcomed by the Borrower and contributed to the project's success. In contrast, the Borrower objected to the numerous R&R experts that visited the project in the early years. The Bank should seek to achieve continuity as far as possible of Task Managers and membership of preparation and supervision mission teams.
13. Readiness at Effectiveness. Delays which occurred during implementation with Components 2 and 3 confirm the des;.ability of curr_n: Bank practice which requires that up to 25 percent of total project cost should be completed to detailed design stage before effectiveness.
14. Links in the RRP to other Government programs. It was important for the administration and success of the Resettlement and Rehabilitation Program (RRP) that links were made to other development programs implemented in the district so as to provide attractive options for beneficiaries.
15. Monitoring and Evaluation of the RRP. An independent long-term monitoring and evaluation (M&E) team was appointed for the duration of implementation of the R&R component which provided highly beneficial continuity.
16. Downstream impacts of the Dam. It was discovered after the Singur Dam was filled that water table changes impacted on at least one village downstream. This village was not identified during the preparation of the RRP. The coverage of dam-related RRP will need to consider the possibility of downstream community impacts in addition to those usually associated with dam filling.
17. Private Sector Participation (PSP). PSP was limited in this project to contracting out of the operations and management of certain key facilities. However, the contracting out was successful and the experience supports the case for extending PSP in future projects.
18. Summary "Actions" table in Mission Aide-Memoires. The inclusion in Bank Aide- Memoires of clear summaries of actions agreed with or recommended by each Bank supervision mission, which were rolled forward from mission to mission as necessary, greatly assisted dialogue and understanding between Bank and Borrower and project management. In accordance with current good practice guidance, a summary "Actions" table should be a standard feature of Aide-Memoires. IMPLEMENTATION COMPLETION REPPORT
INDIA
HYDERABAD WATER SUPPLY AND SANITATION PROJECT (LOAN 3181/CREDIT 2115-IN)
PART I: PROJECT IMPLEMENTATION ASSESSMENT
A. PROJECT OBJECTIVES
1. The major project objectives were to:
(a) help Andhra Pradesh in improving, for Hyderabad, the adequacy and reliability of the water supply, the collection, treatment and disposal of waste water and the provision of excreta disposal facilities; (b) strengthen the management and technical capacity of the concerned institutions; and (c) prepare future urban and water supply and sanitation projects in Andhra Pradesh.
2. The project was consistent with the Bank strategy for urban water supply and sanitation (WSS). The objectives of the strategy were to: seek efficient utilization of resources through appropriate technology and sound engineering design and construction; improve institutional capacity including introduction of efficient management of operation and maintenance; commercial accounting; adopt pricing policies which encourage water conservation while rendering services affordable to the poor; and ensure adequate financing of current expenditure and funds for further investment.
3. Pre-project physical, institutional and financial conditions in the WSS sector in Hyderabad were poor by any standards (these conditions are described in full in the SAR). However, Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB) was established under State legislation in 1989, shortly before the project commenced, to provide dedicated WSS services in the city which previously had been the responsibility of the Municipal Corporation of Hyderabad and the Government of Andhra Pradesh (GOAP). It was the policy of GOAP, supported by the Bank, to achieve improvements in the sector through this dedicated utility approach. Responsibility for the achievement of the project objectives was placed largely in the hands of an untested institution. The objectives were realistic. But there were risks for the Bank in supporting a new institution and, in the Indian context at that time, an approach based on an innovative public utility model l/.
B. ACHIEVEMENT OF PROJECT OBJECTIVES
4. The project had six components.
'/ Urban WSS is mostlya municipalresponsibility in India. 2
Component 1: The Manjira Phase III Stage II Scheme (base costs at appraisal, US$34.0 million or 34%). This scheme would transmit, treat, store, and pump 135 Mld of water from the Singur Dam reservoir, an irrigation facility located 67 kms north-west from Hyderabad. At the time of appraisal Singur Dam was under construction by the Irrigation and Command Area Development Department (ICADD) of GOAP. ICADD would retain ownership of the asset. An agreement governed the quantity of off-take by HMWSSB of bulk supplies, which were available free of cost to HMWSSB. This Component would increase the normal supply from 72% to 87% of the 1991 demands of the city and also improve reliability of supply thereby addressing the water quantity and quality improvement objectives.
Component 2: The rehabilitation and strengthening of the existing water system (US$27.2 million, 27%). At appraisal this Component included: distribution reservoirs; trunk distribution mains; replacement of leaking transmission lines; rehabilitation measures at four existing treatment plants and several pumping stations; provision of new pumping stations, repair of reservoirs and other rehabilitation works; provision of bulk flow meters; and provision of leak detection, laboratory and other equipment to aid O&M.
Component 3: The rehabilitation and strengthening of the existing sewerage system (US$24.8 million, 25%). At appraisal this Component consisted of: connections to the sewerage system of drains discharging into the open storm drainage channels; 26 kms of branch sewers; 43 kms of trunk sewers; 4 pumping stations and 4 pumping mains; a sewage treatment plant of 180 Mld capacity; and equipment for the maintenance of the sewerage system.
Component 4: Low cost sanitation (US$2.8 million, 3%). This Component consisted of construction of about 20,000 pour-flush water-seal household latrines, which would address the objective of providing safe excreta disposal facilities, mainly to poor households.
Component 5: Resettlement of households which at appraisal were estimated to be 4,120 in number, whose dwellings would be submerged by the Singur Dam reservoir, and rehabilitation where required of these households and an estimated firther 2,000 households, parts of whose lands would be flooded (US$7.4 million, 7%).
Component 6: Institutional strengthening through technical assistance and training (US$3.9 million, 4%).
5. A number of measures to strengthen institutions and improve project performance were, covenanted and others were included in an initial operational action plan (OAP) which was agreed at negot-ations and covered the first two years of the project. The initial OAP was updated with the agreement of the Bank from time to time for subsequent periods.
Physical Achievements
6. Component 1 was promptly implemented and completed ahead of schedule by HMWSSB. However, a Dam Review Panel (DRP) faulted the designs of the dam gates, finding the gates in need of strengthening in order to safely accommodate the planned full reservoir level. During project preparation, possible remedial works to the dam gates were considered for 3 inclusion in the project. However, at negotiations it was agreed that the GOAP would finance these works from its own resources. Despite being outside of the project, the dam gates obviously affected it since, for safety reasons, filling of the reservoir was restricted to less than the maximum level while the remedial works remained to be completed. The ICADD of GOAP failed to respond in a timely manner to the DRP recommendations concerning the dam gates. The remedial works at the time of writing the ICR are advanced, clearance for full filling of the reservoir has been obtained and the facility will be fully operational in 1998. Nevertheless, as a result of this inaction during the project period by ICADD, the supply of water from the reservoir to the city during the critical summer months was about one-half of that planned; Component 1 project facilities were underutilized and the expected improvements in service were not achieved. The supply of water to the city remains woefully inadequate, and at closing supplies to consumers averaged about 1.5 hours availability per day.
7. Components 2 and 3 were identified for inclusion in the project but the conceptual design details were left to be prepared during the first few years of project implementation. Attention during preparation was focused mainly on providing for the urgently required additional water for the city in Component 1. However, design work for Components 2 and 3 was further and significantly delayed by the non-availability of maps. As a result of the delays, these two components were redefined at the Mid-Term Review (MTR) by HMWSSB, with the Bank's agreement, in accordance with the changed relative priority or works, as follows: a) the emphasis of Component 2 was changed to highlight Unaccounted-for Water Management (UFW), extensive meter installations for consumers, bulk flow meters, and other actions to reduce water loss; and b) the focus of Component 3 was changed to environmental improvement of one of the most important cultural heritage features of Hyderabad, the historic Hussainsagar Lake located prominently in the heart of the city.
8. In US$ expenditure terms, Component 2 was increased at the MTR compared with appraisal, but Component 3 was scaled down to about one-third the appraisal amount (see Table 8A). All the works for these two Components agreed at the MTR were substantially completed by closing. Nevertheless, the improvements in water supply services which were expected at appraisal were not fully achieved at closing.
9. Component 4 was executed in an efficient and effective manner by HMWSSB and over 22,000 latrines were installed, exceeding the target. Implementation utilized the services of eight NGOs who performed the valuable tasks of educating beneficiaries on the value of the facilities, organizing the collection of beneficiary contributions, undertaking implementation and generally overseeing the program. Surveys confirm that the latrines are well used and properly maintained by the beneficiaries.
10. Component 5 implementation by GOAP was substantially completed by closing, although it was complicated by many unforeseen difficulties that arose. Data used to prepare the RRP for appraisal were based on samples of the affected population which were later found to have been unreliable. The geographical boundary for the RRP was too narrowly defined because it did not allow for the effects of wave action. Many of the tasks in the RRP in 4
the area of economic rehabilitation were new to the Borrower and difficult to perform. As a result of these and other problems, the Component got off to a slow start and there were three substantial revisions to the original RRP. The Bank endeavored to assist the Borrower by sending several specialist R&R missions to Hyderabad but during 1993 the Borrower complained to the Bank of inconsistent advice from different Bank specialists on how to proceed with implementation. The Bank subsequently addressed the issues raised by the Borrower 2/ and the implementation process improved considerably after 1993 although it remained a difficult component. Notwithstanding the erratic experience of implementation, this project is likely to become a practitioners' case study for R&R implementation lessons to be learned since ultimately the objectives relating to both physical relocation works and the rehabilitation aspects have been largely achieved, often in innovative ways. The Component was particularly effective in linking R&R actions to other Government programs to provide attractive options for beneficiaries. Matters outstanding at closiihgincluded the resettlement of five remaining villages, and investigation of the downstream water table effects of the dam which appears to be causing water logging in one village. These matters are being addressed in the Second Project. Appendix C of this ICR provides a full account of the implementation of Component 5.
11. This project was appraised before the appearance of the Bank's Operational Directive governing its policy on the environment (OD 4.01) and there was, therefore, no environmental categorization. Nevertheless, the project had significant environmental inputs in relation to excreta disposal (Components 3 and 4) and the clean-up operations of the Hussainsagar Lake. Overall, the environmental gains were significant.
12. The project made important physical advances. Nevertheless, considerably more needs to be done in the areas of water availability on a continuous basis, unaccounted for water, effective utilization of staff, sewerage collection, and sewage treatment etc. before HMWSSB would even begin to have the appearance of a modern and effective WSS public utility.
Institutional Strengthening Achievements
13. Component 6, consisting of studies and training, was successful. The studies agreed with the Bank at appraisal and during implementation were all completed, albeit with delay, with the exception of a few of those concerned with the preparation of the proposed Second Project which were still underway at closing, although substantially finished (see Table 7). An extensive Training Plan was produced which was executed in an efficient and effective manner. Based on the evidence of ex-post evaluation survey results, HMWSSB management and staff regard the training process as highly beneficial. The external training agency that assisted HMWSSB, the Regional Center for Urban and Environmental Studies from Osmania University, also benefited greatly from the experience and is applying its knowledge within utilities elsewhere in India.
14. These actions started the institutional transformation of the new utility from a traditional public sector mode of operation to an effective and dedicated organization serving the
2{ The Bank's letter of May 28, 1993 informed the Borrower of the decision to establish the Social Development Unit at the New Delhi Office, which was expected to improve the advice offered. 5
needs of its consumers. An account of this institutionaltransformation is providedin Annex 1 of the Completionmission Aide-Memoire,which appearsas AppendixA to this ICR.
15. Included in the OAP were actions to improve procurement procedures for which there were major advanceswhich anticipatedsubsequent Bank guidelines. Computerizationis now extensivewithin HMWSSB,although there wasno comprehensiveInformation Systems (IS) master plan and the applicationshave developedpiecemeal within the Engineeringand Finance Departments. Nevertheless,computerization appears to be workingwell, having been introduced by knowledgeablesenior professionalstaff with the support of the successive Managing Directors.
16. Financialmanagement for the sector greatlyimproved following the establishmentof HMWSSBdue to the appointmentof a professionallyqualified Finance Director and other senior staff, and the introductionof modermcomputerized procedures. Accountshave been preparedon an accrual basis since the establishmentof HMWSSBand, with one non-materialexception, have been without audit comment ever since. In 1996 the Bank selected HMWSSBbecause of its advancedsystems to be one of about twenty organizationsworld-wide for a pilot exerciseto assess the imnplementationpotential and difficultiesassociated with the Loan Administration ChangeInitiative (LACI). Further, HMWSSBwon the award for the best presented accountsfor FY96 in its class from the Institute of CharteredAccountants of India.
17. HMWSSB's financial performance depended to a large extent on the implementation of timely and appropriaterevisions to chargesfor services. The covenantwhich required HMWSSBto implementa seweragesurcharge of 20% on the water tariff was implemented. Watertariffs were reviewedannually in accordancewith the agreements. The annual tariff reviewreports providedto the HMWSSB's Board were thorough and well researched. However, the Board implementedtariff revisions infrequently,as follows:August 1991; April 1993 (gap of 1.7 years); February 1997 (gap of 3.8 years). Largelyas a result of the infrequencyof revisions, the target of full cost recovery in the FinancialCovenant was not achievedin five of the eight years of the project. The shortfallswere marginaland, following the substantialFebruary 1997 increase, at closingthe Financial Covenantwas in full compliance.3/ However, there was a decline in revenuecollection over the last two years and an increasein the months receivables (Table 5). Covenantingfull cost recoverywas appropriateto the circumstancesof HMWSSBat the appraisal of the project since traditionallyWSS serviceshad been providedwell below cost. Backedby the strength of its financialmanagement, HMWSSB would be able to move to a more exactingfinancial covenant in the proposed SecondProject.
18. Staffingproblems revolved mainlyaround reducing staff numbers,and the issue of deputationof staff. HMWSSBadopted an informaltarget reductionof 700 staff during the
3/ There was a difference of opinion between Bank and HMWSSB over the definition of terms in the Financial Covenant which indicates that the legal drafting was unclear. Using HMWSSB's definitions, the percentage cost recovery achievements of the financial covenant were as follows: 1990/91 (minus 0.50%); 1991/92 (minus 1.65%); 1992/93 (minus 0.90%); 1993/94 (plus 5.25%); 1994/95 (minus 0.39%); 1995/96 (minus 5.16%); 1996/97 (plus 0.38%); 1997/98 (plus 0.59%). 6
project period which would result from natural attrition (retirements, turnover etc.) coupled with minimal recruitment. The actual reduction was about 450 from the peak. Given the considerable increase in connections over the period, the staff numbers per connection and per 100,000 people served declined significantly (Table 5). Staffing levels remain extremely high by international standards at about 20 staff per 1,000 connections compared with 3-5 in some developing countries, and less than unity in the best European utilities. Deputation is the system whereby staff remain with their parent departments as their principal employer but work at HMWSSB. Deputation causes problems of ambiguous allegiances and reduced work incentives. Some staff were transferred to HMWSSB but the Engineers continued on deputation until closing. Accordingly, this difficult issue remained partially unresolved at closing. However, the Board introduced many incentive schemes and new working procedures which improved effectiveness. Important in identifying and introducing changes to personnel policy were the decisions by GOAP to appoint competent officers to the Managing Director's post at HMWSSB and not to transfer them frequenttly,as is usually the case with civil service appointments in India. Throughout the project there was considerable widening of the Board's autonomy in matters of personnel administration.
19. Private Sector Participation innovations were liinied duiing the project to contracting out of key O&M. functions, of which the most significant were the iew water treatment plant, pumping station and other facilities at Peddapur under Component 1 4/ and maintenance of water meters by the supplier. The private contractors were performing their tasks at Peddapur to a high standard at the time of the visit of the Bank's completion mission.
Rates of Return
20. The Economic Rate of Return was calculated in the SAR (Annex 17) to be 11% using the domestic price numeraire without the application of a Standard Conversion Factor, and 10% with a SCF of 0.8 5/. The ERRs were re-estimated using similar methodology but with actual cost and benefit data for the project period, and the results were 4% and 3% respectively (see Table 9). The principal explanation for the poor result was that measured benefits were far lower than expected at appraisal. Benefits were lower for two main reasons: (a) the substantially reduced flow and hence consumption of water from the Singur Dam source; and (b) the tariffs on which the benefit measure depends were at lower levels throughout the project period.
21. The Financial Rate of Return was not calculated at appraisal. However, financial projections were made for HMWSSB and were included in the SAR (Annex 16). The main differences to be found in the Income Statements between the appraisal projections and outtums as recorded in supervision mission Aide-Memoires were that actual gross revenues were significantly lower than forecast. This result reflected the reduced sales of water due to the
4/ GOAP attempteda BOOT scheme for bringingadditional water to the city from the Krishna River and receivedthree proposals. This was innovativeas an approach,but none of the proposalswere found acceptable.
5/ The methodologyrelies on tariffs as the measureof benefits. Consumers'surpluses and public health benefits are not includedon the groundsthat they are difficultto measure;hence the ERRs are underestimated. 7 failure to fill the Singur Dam, and lower than expected tariff levels 6/. Operating expenses were broadly similar to the forecasts.
C. MAJORFACTORS AFFECTING THE PROJECT
22. Delays to the preparation of utility maps which were necessary for design work for Components 2 and 3 were outside of the Borrower's control although the risks should have been recognized.(see para 28).- Delays with the maps meant that implementation and strengthening of water distribution and sewerage could not proceed as planned. However, the revised works agreed at the MTR to be implemented under these two Components were substantially completed before closing.
23. Drought conditions prevailed in the region for several years. However, the drought was not the reason for the failure to fill the Singur reservoir to the design level. It is certain that the reservoir would have filled, despite the drought, if remedial works had been undertaken to the gates. Obviously, timely action by the ICADD on remedial works to the dam gates was a matter under Government's control. Their lack of response deprived Hyderabad of a significant supply of water over several years.
24. Implementation of the RRP was protracted and much delayed. However, this delay cannot be attributed wholly to GOAP which was responsible for implementation. Data on which the initial RRP was based were found to be inadequate and the RRP had to be revised. There was an initial and understandable period of hesitation, given the innovative nature of the economic rehabilitation program. Further delays arose from many unforeseen difficulties which appeared during the project, as described in Appendix C. GOAP with Bank support devoted adequate resources to ensure substantial completion by closing.
25. Despite major advances being made, the Board of HMWSSB failed to fully achieve all of its staffing reforms due to resistance by some sections of the staff and reluctance by the GOAP to approve all the proposed changes. The Board failed to approve timely tariff increases which were necessary to achieve its financial covenants.
26. Thus, factors which adversely influenced the rating for the achievement of the project development objectives, causing the rating to be 'satisfactory' rather than 'highly satisfactory'. were mostly under the Governnent's control.
6/ Tariffs are well below broadly comparableinternational levels (for example,as given in the Bank's Waterand Wastewater Utilities - Indicators). For domestic consumers, tariffs are well below the incremental costs of supplyingwater. There is extensivecross-subsidization from non-domesticto domesticconsumers. Block charging and difficultieswith estimatingconsumption levels makesaccurate estimating impossible, but at appraisalthe averagedomestic tariff was roughly Rs 1.5 to 2.2/m3,or US$0.10to 0. 14/m3at prevailingexchange rates, while at closingthe correspondingfigures were Rs 4.62 to 6.60/m3,or US$0.12to US$0.1 7/m3. 8
Assessmentof Project Risks
27. Three risks were identifiedat appraisal: a) unprovenplanning and executioncapacity of HMWSSBin the areas of water supply, system rehabilitationand of sanitarysewerage - in the event,these fearswere unfounded as HMWSSB,with the assistanceof consultants,executed the Project with efficiency and major advances were made with procurementprocedures and quality of construction(Annex 1 to the CompletionMission's Aide-Memoireconfirms the high standardsreached); b) a possible lack of political will to sustaintariffs at adequatelevels - despite annual reviews which were expertlyundertaken, the risk wasjustified as there was reluctanceto implement tariff revisions in a timely fashion(see para 17); c) the possibilitythat farmersaffected by land loss at the SingurDam would not regain their former standard6f living - this risk provedunfounded.
28. Appraisalfailed to identifythe followingas risks: a) dependenceof Components2 and 3 on the early completionof the utility mapping exercise - in the event delayswith the mapping led to delaysin the design and implementationof the physicalworks under these Componentsand eventuallyto changesat the MTR (see para 7); b) protracted implementationof the RRP, given the innovativenature of the economic rehabilitationprogram and many unforeseenissues which could arise during implementation - there were extensivedelays, and requirementsfor additionalBank staff resources(see para 34); and c) the lengthytime requiredfor resolvingstaffing issuesat HMWSSBin the face of staff resistanceto changes in deputationarrangements, which resultedin agreed changes remainingunfinished at closing (see para 16).
D. PROJECTSUSTAINABILITY 29. It is highly likely that the Borrowerwill maintainand build upon the Project's achievementsand that the Project is sustainable. ContinuingBank support in the proposed Second and possible Third Projects7/ will maintainthe momentumof improvementand reform at HMWSSBas the Board's activities expand. However,quite apart from continuingBank involvementin the Board's activities,there are good groundsfor believingthat the Project will be sustainableon its own account, as follows. Thereis proven commitmentto reform by the GOAP and managementat HMWSSB. The HMWSSBhas mademajor advancesin institutional transformationwhich it will be difficultto reverse. There is greatertechnical competenceand much improvedfinancial viability which provide the bases for further developmentof the organization. There is a high level of professionalism.The Board is alert to the need for incentivesfor improvedperformance amongst staff, linkedto training. Private sector participationhas been acceptedas being beneficial,and new applicationsare being identified.
7/ The proposedSecond Project was appraisedin March-April1998. A possibleThird Projectis under preparation. 9
Experiencehas been gainedwith social provisionthrough the successfulexecution of the LCS program and the implementationof the RRP. Overall,the project has supportedmajor improvementsat HMWSSBwhich are likely to be sustainablebut there is still a long way to go before the organizationcould be consideredto be a modem and an effectiveWSS public utility.
E. BANK PERFORMANCE
30. A singleBank Task Managerwas responsiblefor this Project from identificationthrough preparation,appraisal and supervisionuntil a little overtwo years beforeclosing when he was replaced by another staff-member,also with long-terminvolvement with the Project. Continuity of key Bank staff played a major part in ensuringsuccess.
31. Identification was highly satisfactory. GOAP was keen to establish HMWSSBas a dedicated WSS public uitilityfor Hyderabad. HMWSSBwould have a large measureof financial and technical autonomyin its day-to-dayoperations, and this approachwas consistent with the Bank's policy at the time. Hyderabadis one of India's five mega-citiesand of considerable economicimportance, so the demonstrationeffect of the Project was likely to be high. Urban WSS was an infrastructuresector identifiedfor support in the Bank's CountryAssistance Strategy.
32. Preparationwas satisfactory. There was a relativelyshort intervalof eight months betweenidentification and appraisal(see Table 13). However,much of the Project preparation for the urgent Component1, to bring additionalwater to the city, had been completedwith the technical assistanceof the Bank-executedAsia SectorDevelopment Project of the United Nations DevelopmentProgram. However,Components 2 and 3 involvingsubstantial expenditurehad not been designedby the time of appraisaland subsequentdelays led to MTR changes.
33. Appraisal was satisfactory. Borrowercommitment to the Projectobjectives and implementationarrangements were clearly identified. The appraisalmission containedall relevant specialistskills. Three criticalissues arose:R&R at SingurDam; the Dam Review Panel to ensure dam safety; and procurement- specificallythe need to developmodel bid documents. A substantialperiod of two years elapsed betweenappraisal and Board presentation during which time these importantissues were resolvedto the Bank's satisfaction. However, appraisal failed to identifysome of the projectrisks (see para 27). The Bank prepared a comprehensive SAR containing, inter alia, very detailed and extremely clear cost tables.
34. Supervision was highly satisfactory. The Bank fieldedfull supervisionmissions at an averageinterval of 5.7 months until the MTR, and thereafterat an averageinterval of 7.6 months, which indicatesa high level of commitment. Additionally,there were-fivemissions which mostly focused on problemsbeing encounteredwith the implementationof the RRP at Singur Dam and which were undertakenin order to help move the difficultand innovative Component5 forward. The MTR was held about 10 monthsafter the literal mid-termand was acknowledgedat the time as being late, delayed due to electionsand the late arrival of a critical consultants' reports on Components2 and 3. The MTR involveda comprehensivereview of projectperformance, and resultedin importantand necessarychanges in direction for 10
Components 2 and 3. The SAR estimate of supervision inputs was 104 staff-weeks compared with 163 actual staff-weeks. The increase reflected the attention given to the RRP in Component 5 and the need for the new directions for Components 2 and 3.
35. One aspect that should have been more firmly dealt with by the Bank during supervision was the inaction by ICADD of the GOAP on the remedial works to the Singur Dam gates. Dragging of feet by ICADD on this issue deprived the city of much needed additional water and substantially reduced proj ect benefits and the Bank should have been more resolute in pursuaing GOAP to take action.
36. All supervision missions were appropriately staffed with the requisite range of .professional skills (see Table 13). Key inputs for R&R, Procurement and Engineering were provided from the Bank's New Delhi Office during the latter half of project implementation. There was a high degree of continuity of staffing of the missions, particularly after 1993.
37. The missions Aide Memoirs were exceptionally fully documented. They each contained innovative sections listing actions agreed/recommended by the mission which were rolled forward from mission to mission. The Aide-Memoires also contained comprehensive lists of documents received and reviewed, and provided helpful technical advice. The Borrower welcomed the Bank missions as positive contributions to the Project and there was close Bank/Borrower collaboration throughout. Form 590 (Project Status Report) ratings were appropriate (see Table 13).
F. BORROWER PERFORMANCE
38. Preparation. The Borrower's performance was highly satisfactory. HMWSSB was constituted as a public utility during preparation with appropriate powers, staffing at senior levels and the benefit of an early tariff revision to move the new entity towards financial viability. Detailed engineering designs for Component 1 were prepared by appraisal and plans were in place for all other components, although designs for Components 2 and 3 depended on the availability of maps which, later, were delayed. The Borrower was committed to LCS provision for low income households and to the preparation and implementation of an RRP for Singur Dam. The Borrower was keen to identify, with Bank support, policy and institutional strengthening changes.
39. Implementation. The achievement of development objectives was satisfactory as the institutional capacity of HMWSSB expanded and developed over the Project period.
40. Physical implementation performance was satisfactory. Component 1 was executed promptly and ahead of schedule with exemplary planning, procurement and execution. Fault may be found, however, with the failure by ICADD of GOAP to execute remedial works on the Singur Dam gates which resulted in the considerably reduced flow of water to the city compared with appraisal. Components 2 and 3 were delayed, but changes introduced at the MTR were substantially completed at closing. Component 4 was executed in a professional and resolute manner, which contrasts with Bank experience elsewhere in urban India as there is often 11 reluctance to implement LCS programs. HMWSSB performance was excellent in the LCS program in mobilizing support from NGOs. HMWSSB executed the Project with diligence.
41. The MTR had considerable importance for this project given the need to revise the priorities in Components 2 and 3. HMWSSB showed initiative in preparing its own MTR report ahead of the Bank mission. This was an example of the Borrower generally showing considerable responsiveness in the preparation of reports and providing data. The Quarterly Progress'Reports were clear, informative and timely.'
42. GOAP was responsible for Component 5, R&R, which got off to a slow start. Eventually, GOAP devoted appropriate resources to the task and the Component has become a success, even though it was not fully completed at closing.
43. Covenant compliance was generally satisfactory although there were delays of which, perhaps, the most significant were the tariff revisions which impacted on the financial covenants. By closing most covenants were in full compliance although a few remained only in partial compliance including: posts unfilled in the Finance Department; and, aspects of implementation of the RRP.
44. The Borrower's performance on institutional development aspects of the project was good. This institutional development was evidenced by advances in procurement procedures, financial management, staffing and training. Apart from these individual improvements there was a cultural shift at HMWSSB away from the earlier traditional bureaucratic approach to one which was orientated to providing for consumer wants in an efficient and effective manner. Good as these actions were, they constitute only the first step down the road to sector modernization and improvements in efficiency.
G. ASSESSMENT OF OUTCOME
45. Overall the Project outcome has been rated as satisfactory (Table 1). Implementation status and the achievement of development objectives at closing were both rated as satisfactory.
46. The implementation of the Project was rated satisfactory due to the mixed performance of the Components. Some of the physical objectives were achieved to a high standard, such as the construction quality and operation of the works of Component 1 and, following the MTR, the works of Components 2 and 3. But failure to implement the recommendations of DRP resulted in inability to deliver the expected quantity of additional water under Component 1 which was a serious limiting factor in Project implementation. It is expected that the supply of water will substantially increase as remedial works to the Dam gates and other measures at Singur are completed during 1998. Also, there was far less strengthening of the sewerage~system than was proposed at appraisal under Component 3 although important environmental upgrading of the cultural heritage feature of Hussainsagar Lake was substantially completed. The LCS program of Component 4 was a success. There were many difficulties with the implementation of the RRP in Component 5 although some arose from the innovative nature of the economic rehabilitation program and at closing Component objectives were substantially achieved, though delayed. 12
47. Partly as a result of the failure to deliver all the expected water, the calculated ERR fell below the critical ten percent target (see Table 9).
48. Development objectives were achieved to a satisfactory level as evidenced by the institutional improvements in the sector brought about by HMWSSB, the new water utility. There were important investment planning, procurement, staffing, organizational and financial gains, although these were only a stirt and there continues to be much' further work to be done, some of which will be addressed by the follow-on Second Project. On the basis of the institutional strengtheninigachievements of this Project, adoption of the public utility model for the water supply and sanitation sector would be appropriate for other cities in India during the transition to a modem and efficient delivery system
H. FUTURE OPERATIONS
49. The follow-on proposed Second Project will determine the operation plan for the next five years and thereafter, and will ensure agreement with the Bank on operation of the created assets. Estimates of indicators of project operation are provided in Table 6 which will be monitored by HMWSSB. There are no specific plans for operations other than through the future project agreements which are continuing to be discussed with the Bank. The dialogue is continuing with: the Dam remedial measures; completion of the RRP; the determination of tariff levels and structures; financial covenant performance targets; manning levels, which remain too high; continuing decentralization; private sector participation; performance indicators and other aspects of HMWSSB's operations.
I. KEY LESSONS LEARNED
50. Institutional arrangements. HMWSSB was established as a dedicated public utility with day-to-day operational independence. On the evidence of this project, adoption of the public utility model for the water supply and sanitation sector would be appropriate for other cities in India during the transition to a modem and efficient delivery system.
51. Ownership of key assets. Had the Singur Dam been under HMWSSB's ownership, the DRP recommendations for dam gate rectification would have been addressed promptly and the design quantity of water would have been available to the city. When assets are shared between agencies project preparation needs to give careful attention to the ownership arrangements that will ensure realization of project benefits.
52. Improved Financial Management. Major advances in financial management at HMWSSB were achieved as a result of the appointment of a highly qualified Director of Finance and other senior Finance and Accounts staff having equal status in the organization as their Technical and Engineering colleagues. However, although the financial performance of HMWSSB improved it was adversely affected by infrequency of tariff revisions; a mechanism needs to be found to overcome the reluctance of the Board to take unpopular tariff decisions.
53. The importance of training. A well worked out Training Plan, produced and implemented with assistance of an external training organization, led to increased staff 13
awarenessand upgradingof skills. This exposurehas greatlybenefited HMWSSB and, through the experiencegained from this program,also the externaltrainers.
54. Draftingof the FinancialCovenant. The cost recoveryFinancial Covenantwas appropriateto the circumstancesof the sectorat the time of appraisal,but there was disagreement betweenBank and Borrower during implementationover the exact definitionof the performance target. The legal draftingwas therefore unclear. The FinancialCovenant should be simple in conceptand expressedusing unambiguousterminology. 55. Continuityof key Bank staff. The Task Managerremained unchanged from identificationuntil few months after the MTR. This continuitywas warmly welcomedby the Borrower. In contrast,the Borrowercomplained about conflictingadvise from numerousR&R specialistsused b- the Bank for supervision in the early years. The Bank should seek to achieve cont;nuityas far as possible of Task Managersand membershipof preparationand supervision mission teams.
56. Detaileddesign of Components. The experienceof delays which occurred with Components2 and 3 confirmsthe desirabilityof adoptingcurrent Bank practice requiring up to 25 percent of total project cost to be completedto detaileddesign stage before effectiveness. This requirementis all the more desirable now that Bank policy is for project implementation periodsof about five years rather than eight years in this case, since the reduced period offers less scope for change/revision. 57. Links in the RRP to other Governmentprograms. It was important for the administrationand success of the RRP that links were madeto other developmentprograms implementedin the districtso as to provide attractiveoptions for beneficiaries.
58. Monitoringand Evaluationof the RRP. An independentlong-term M&E team was appointedfor the duration of implementationof the R&R componentproviding highly beneficial continuity. The team developedthe initial base-linesurvey, provided management with timely indicationsof problemsand progress and facilitatedprogressive revisions of the RRP which were required.
59. Downstreamimpacts of the Dam. The RRP for the reservoirwas prepared for the upstreamcommunities affected by flooding, as is the normal case. Subsequently,it was discoveredthat the water table variationswere inpacting on at least one village downstreamof the dam. Future dam-relatedRRPs may need to considerthe possibilityof downstream communityimpacts in addition to those usually associatedwith dam filling.
60. PrivateSector Participation. The extent of PSP was limited in this project to contractingout of the operationsand managementof certainkey facilities. However, it was successfuland this experiencesupports the case for extendingPSP in futureprojects.
61. Summary"Actions" table in MissionAide-Memoires. The inclusion in Bank mission Aide-Memoiresof clear summariesof actions agreed withor recommendedby each supervision mission, and rolled forwardfrom missionto missionas necessary,greatly assisted dialogue, understandingand management. 14
PART II: STATISTICAL ANNEXES
Table 1: Summary of Assessments
Macro policies- Sector policies ^ Financial objectives V Institutional development Physical objectives Poverty reduction I Gender Issues I Other social objectives V Environmental objectives / Public sector management - Private sector development /
Identification ^ Preparation assistance Appraisal Supervision
Preparation( Implementation Covenant compliance Operation (if applicable) E_'i
-h~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 15
Table 2: Related Bank Loans/Credits
Loan/credit title Purpose Year of approval Status -
Preceding operations _ 1. Second Madras UTD Single city IUD project including: development 198i Closed Project (Cr.1082-IN) of plots; slum improvements; provision of buses; municipal services; and, TA. . _ i 2. Kanpur UD Project Project focused mainly on sites and services and 1982 Closed (Cr. 1185-IN) slum upgrading; also included infrastructure and municipal services improvements and TA. 3. Gujarat Water Supply Water supply to rural communities; 1983 Closed and Sanitation Prqj. cct improvement and extension of water supply and (Cr 1280-IN) sewerage services in selected urban centers; extension and upgradation of sewage collection and disposal systems in major municipalities; low-cost sanitation in medium-size towns; improvement of financial management, accounting, billing and collection practices, and introduction of cost recovery targets andl establishment of training facilities. 4. Third Calcutta UD Single city IUD project, involving the spreading 1983 Closed Project (Cr. 1369-N) of infrastructure and service improvements outside of metrocore. 5. Madhya Pradesh UD Project mainly focused on shelter and sanitation 1983 CIosed |_Project(Ln.2329-lN)_ improvements,in 10 cities. 6. Tamil Nadu WSS Water Supply to larger urban areas and certain 1984 Closed Project (Cr. 1454-IN and smaller towns and to rural areas; low cost SF-12-IN) sanitation to urban communities and strengthening of institutional, managerial, and financial practices. 7.Bombay UD Project Single city IUD project including: land 1985 Closed (Cr. 15444N) infrastructure servicing; slum upgrading; local government finance and administration, and services; and TA. 8. Kerala W'S Project Strengthen institutions including financial 1986 Closed (Cr. 1622-IN) management and provision of water supply to rural areas and water distribution in one urban area; and low-cost sanitation in urban and rural areas. 9. Gujarat UD Project Appraised as a state-wide multi-city IUTDproject 1986 Closed (Cr. 1643-IN) with emphasis on: shelter; infrastructure; slum l upgrading; solid waste; and, institutional strengthening. Restructured with large rural WS component. 16
Loan/credittitle Purpose Yearof approval Status 10.Third Bombay WSS Projectinvolved expansion of WSSfacilities in 1987 Closed Project the city;sanitation for urbanpoor; and, (Cr. I 7501Ln2769-N) improvementsto implementation capacity. 11. Uttar Pradesh UD State-widemulti-city IUD projectwith all main 1987 Closed Project sectorsincluded: institutional improvements; (Cr.1780/Ln.2797-IN) municipalservices; shelter; traffic and transport; watersupply and sanitation.Also supportto GangaAction Program. Emergency earthquake reconstructioncomponent added. 12.Madras WSS Project Groundwater supply,distribution and waste 1987 Closed (Cr.I 822/Ln.2846-IN) waterimprovements in city with small LCS componentand institutionalimprovements. 13.Tamil Nadu UD Project State-widecapacity for efficientmanagement of 1988 Closed (Cr. 1923-iN) urbanand economicdevelopment; supply of legal,environmentally acceptable and affordable privateand publicserviced lands; and cost- effectiveurban road and traffic management schemes.
Following operations l 1. SecondMadras WS Projectincludes: major schemeto bring 1995 SPN-Active Project(Ln.3907-0/6 IN) additionalwater to city; distributionand conservationimprovements within city; and,TA. 2. BombaySewage Projectincluded: construction of 2 outfall 1996 SPN-Active DisposalProject sewers;pumping facilities; sewage treatment; (Cr.2763/Ln.3923-IN) seweragesystem improvements and rehabilitation;and, slum sanitation.
Table 2 lists all urban developmentand urban water supply and sanitation projects in India for the 10 years preceding,and the years following HWSSP approval. RIUDindicates an IntegratedUrban Development Project, which may have WSS components.
Year of approvalis Bank fiscal year.
UnderStatus: SPN-Activeindicates that the project is being implementedand is underactive supervision. 17
Table 3: Project Timetable
Stepsin ProjectCycle |_Date Planned [ Date Actual l Identification May 1987 Pre-Appraisal September 1987 Appraisal (departure) March 7, 1988 Negotiations September29, 1989 Board Presentation March27, 1990 Signing May 23, 1990 Effectiveness March 15, 1990 September 28, 1990 Mid-Term Review March 1994 Janruary 1995 Credit Closing March 31, 1998 March 31, 1998 l
Table 4: Credit Disbursement: Cumulative Estimated and Actual (US$ million)
FY 1990 1 1991 1992 1993 1 1994 19951 1996 ] 1997 1 1998 1999
Estimate at 4.0 5.7 13.5 24.6 41.0 57.2 75.3 86.5 89.9 89.9 Appraisal/a
Actual 0.0 6.0 20.5 32.3 38.9 40.5 50.7 65.2 75.1 81.9
Actual as percent of 0.0 105.3 151.9 131.3 94.9 70.8 67.3 75.4 83.5 91.1 Estimate
/a Credit and Loan combined. The Loan amount of US$10.0 million was cancelled in December 1991. 18
Table 5: Key Indicators for Project Implementation
Key Implementation Indicators in SAR/ Actual Actual Actual Actual Actual Actual President's Report/a~Unit 31-Mar-93 31-Mar-94 31-Mar-95 31-Mar-96 31-Mar-97 31-Mar-98 Total staffHMWSSB No. 5,246 5,318 5,259 5,191 5,135 5,057 Staff/100,000people served No. 115.45 115.91 110.95 108.44 103.55 98.85 Staff/1,000connections No. 24.99 23.87 22.94 21.55 20.82 19.99
No.staff participating in Training No. . 7 172 258- 1,252 1,550 1,6-10 Total staff costs (salary plus benefits) Rs Million 167.6 205.6 241.6 261.1 291.9 336.2 Pensions sanctioned (< 3 months of retirement) No. 128 204 283 361 427 509 Revenue billinpg Rs Million 401.4 505.3 544.5 562.9 704.6 915.0 Revenue collection Rs Million 382.5 456.2 526.3 535.9 600.1 722.0 Collection/Billing Percent 95.3 90.3 96. 7 95.2 85.2 78.9
*Consumerrec&ivables .Rs Milli6n 208.5 257.6 275.7 302.8 407.3 600.3 Months receivables Months 6.23 6.12 6.08 6.45 6.94 7.87 Working ratio 0.98 0.9 0.96 1 0.95 0.84 Operating ratio 1.01 0.95 1.00 1.05 1.00 0.88 Covenant Percent -3.9 26.2 -2.3 -33.2 3.1 6.2 Covenantas % of Gross Revenues Percent -0.9 5.3 -0.4 - 5.2 0.4 0.6 Current ratio 2.39 2.28 1.73 1.16 0.88 0.89 Cost of water produced Rs/m3 3.21 4.81 5.15 5.71 4.01 4.90 Cost of water sold Rs/m3 4.15 5.57 6.63 6.90 6.57 8.04 Average tariff - Domestic Rs/m3 1 2.04 3.17 3.59 3.28 3.49 5.00 -Non-domestic Rs/m3 ... 18.08 16.66 13.74 15.73 22.54 Total Investments - HMWSSB Rs Million 519.1 458.8 200.31 501.7 853.5 985.0 Investment in Bank-supported project Rs Million 384.0 284.3 2.2 264.0 654.0 839.0 No. latrines completed No. 354 1,694 4,840 12,572 19,264 22,077 Population served by HMWSSB water supply Thousand 4,544 4,588 4,740 4,787 4,959 5,1116 Water produced Millionm3 155.5 126.0 136.4 146.9 231.8 210.1 Water sold - Domestic Million m3 120.2 97.4 92.6 104.8 123.0 111.5 - Non-domestic Million m3 11.5 13.4 16.8 18.4 16.6 No. days supply not given No. 0 0 0 0 0 0 Av. ao. of supply hours per day Hr/day 2 1.5 1.5 1.5 1.5 1.5 No. of public standposts No. 4,278 4,797 4,811 4,812 4,816 4,819 Total no. of connections - Domestic No. 199,535 212,134 218,483 231,317 236,503 243,133 Total no.of connections - Non-domestic No. 110,,425 8,668 8,7171 9,614 9,733 9,868 No. of bulk supplies No. - 2,023 2,030 2,064 2,070 2,121
Domestic connections with working meters Percent - 50.6 50.0 50.0 50.0 55.0 Non-domnesticconnections with working meters Percent - 60.0 60.0 60.0 70.0
Bulk supplies with working meters Percent - 67.4 72.0 75.0 80.0 82.0 Power costs Rs Million 158.5 190.0 209.7 235.4 328.9 388.0 No. of pollution cases No. 62 230 1,018 122 133 310 No.of water samples taken No. - 46.525 40,440 2~1,909 16,484 35,437
No. of pollution cases attended No. -- - - 125 310 ManJ1irasupply interTlptions> 12hours No. I 00 0
/a No key indicators were provided in the SAR. Values shown are of the monitoring indicators reported during implementation. 19
Table 6: Key Indicators of Project Operation
Key Implementation Indicators in ACtual Estimate Estimate Estimate Estiniated SAR/President's Report/a 31-M-98 31-Mar-99 31-Mar-00 31-Mar-0l 31-Mar-02
Percent of bulk connections with working 72 90 92 93 95 meters . _l Percent of small connections with working 55. 75 80 85 90 meters I Non-Revenue Water (Percent of water 44 42 35 30 25 produced) Water Billed (Million cubic meter) 119 155 166 180 189 Average Water and Sewerage Revenue (1998 7.6 9.0 11.0 13.0 15.0 Rs/m3billed) . ._l Cost CoverageRatio (Percent) 118 144 175 200 230 AccountsReceivables (Days of billings) 216 140 100 80 70 Self-FinancingRatio (Percent) 14 16 17 17 17
Indicatorsof ProjectOperation Definition Bulk connections = Connectionswith consumptionmore thanor equal to 100 m3/day Smallconnections = Connectionswith consumptionless than 100 m3/day Non-RevenueWater (Percent water produced) = (Water produced- Waterbilled) / Waterproduced WaterBilled (Millioncubic meter) = Volumeof waterbilled basedon meter reading or estimated AverageWater and SewerageRevenues = Waterand seweragerevenues Rs/m3 billed x deflatorindex (1998Rs/m3 billed) betweencurTent year and 1998 Cost CoverageRatio (1998Rs/m3 billed) = OperatingRevenues / OperatingExpenses without depreciation AccountsReceivables (Days of Billings) = (Accountsreceivables / billings)x No of days in the period Self-FinancingRatio = Net InternalCash Generation/ CapitalExpenditures
NOTE: No indicators of project operation was given in the SAR/President's Reports. The above is based on the Key Performance Indicators tentatively agreed with HMWSSB during appraisal of the proposed Second Hyderabad Water Supply and Sanitation Project. 20
Table 7: Studies Included in Project
Purpose as Defined Study at Appraisal/Redefined Status Impact of Study Survey of infrastructure Preparation of Component 2 Completed Essential preliminary for mapping, detailed water implementation distribution analysis, final concept design Water conservation, Preparation of UFW part of Completed Essential preliminary for leakage control and use Component 2 implementation. Enabletl management studies HMWSSB to prepare Action Plan for unaccounted for water reduction and control
System operation and Prepare Operations Manuals and Completed In day-to-day use maintenance Maintenance Guidelines LCS studies Preparation of Component 4 Undertaken in- Essential preliminary for house. Completed implementation
Dam Review Panel for Undertake inspections and 16 meetings and GOAP slow to act on Singur propose measures to ensure safety reports produced recommendations R&R program evaluation Provide information feedback Continuous Greatly benefited planning of future implementation Accounting management Computerized accounting at HQ Completed Better management of information system F&A operations Project planning and Training and software for PERT- Completed Slow to be taken up by control system based project system linked to HMWSSB Engineers Accounts Billing and Collection Software designed and installed Completed System installed in about- system for computerized counters 28 (of 32) counters. Improved customer service Materials management and Software developed and installed Completed Up and running in stores inventory HMWSSB's 3 stores Ex post evaluation of LCS Not identified at appraisal. Assess Draft final report Essential for planning program program and draw out lessons prepared future programs Post project impact study of Not identified at appraisal. To Under progress at Limited so far due to R&R program assess impacts on living closing early stages, but will be conditions of PAFs essential for assessment purposes Environmental monitoring Not identified at appraisal. Continuous Essential for investment of Hussainsagar Lake Continuous assessment of water impact assessment and sediment quality of Lake 21
Purposeas Defined Study at Appraisal/Redefined Status Impactof Study Detailedengineering and Not identifiedat appraisalexcept Almostcompleted Essentialinput to project environmentalassessment in generalterms. For bringing410 at closing preparation of KrishnaWater Supply Midfrom KrishnaRiver to city Scheme Water qualitystudies Not identifiedat appraisal.To Completed ditto ensureKrishna water is fit for consumption AP sector strategystudy Not identifiedat appraisal. Completed For GOAP policy planningpurposes Consultancyto assist Not identifiedat appraisal. Completed BOOT proposaldid not evaluationand negotiations proceed for BOOTproposal for Krishnawater scheme Preparationof PPP and PIP Not identifiedat appraisal. Almostcompleted Bankrequirements for for SecondProject at closing SecondProject processing Socio-econsurvey and Not identifiedat appraisal. Almostcompleted Bankrequirements for RAP preparationfor at closing SecondProject Second Project processing H/holdsurvey for assessing Not identifiedat appraisal. Almostcompleted Bank requirementsfor demandfor LCSunits in at closing SecondProject surrounding9 processing municipalitiesfor Second Project 22
Table 8A: Project Costs K Componerlt Rs million US$ million Appraisal Actual Appraisal Actual
I Manjira Phase III Stage 1 774.8 921.0 44.0 35.9
2 S rengthen Water Systems 689.7 1313.5 35.9 40.7
3 Strengten Sewerage Systems 624.4 331.4 33.6 10.0
t4 Low-cost Sanitation 57.8 61.2 3.2 2.0
5 Resettlemen- and Rehabilitation 146.3 262.8 8.7 9.9
I6nstitutionai Strengthening 86.0 180.4 4.8 5.9
Enginleeringand Supervision 182.4 105.1 10.0 3.6
Land 9.3 17.3 0.6 0.7
2570.6 3192.7 140.6 108.6
Table 8B: Project Financing
So-aces Appraisal Actual US$ million US$ million
IDA Credit 79.9 56.8 81.9 75.4 IBRD Loar 10.0 7.1 0.0 0.0 SUB TOTAL 89.9 63.9 81.9 75.4
|GOAP Loans to HMWSSB 41.0 29.2 0.0 0.0 GOAPP Other Contribution 9.0 6.4 26.3 24.2 Householder Contributions (LCS) 0.7 0.5 0.4 0.4
TOTAL FINANCING 140.6 100.0 108.6 100.0
The increaso in the Bank's share of financing of total projectcosts from56.8% (appraisal)to 75.4% (actual) is a'tribu.able largely to dhe decision by the Bank to increase its project disbursement percentages in 1991 as a result of the Gulf War. The changes were: Civil Works - from 61% to 90%; Equipment and Materials local expenditures for items pro rured locally -- from 65% to 80%. All IDA funds were passed on by GOAP to HMWSSB as loans. The balance of GOAP funds were assumed, therefore, to have been provided as grants although the precise breakdown between lbans and grants is uncertain. 23
Table 9: Economic Costs and Benefits
Capitaland Incremental Capital Incremental Net operating Net Revenues Water Sold Expenditures OperatingCosts Expenditures (Revenuesless costs) Rs, Million) (Rs. ilion) (Rs. Million) (Rs. ion Adj. Net Including Adj. Incremental Adj. SCF= of Depreciation SCF= Revenues SCF= S.No. Year Mld m3 mill Market 0.8 Depreciation /a Nominal 0.8 (Rs. Million) Nominal 0.8
1. 1990-91 0.0 0.0 19.9 21.2 0.0 0.0 19.9 21.2 0.0 -19.9 -21.2 2. 1991-92 0.0 0.0 351.3 375.0 0.0 0.0 351.3 375.0 0.0 -351.3 -375.0 3. 1992-93 0.0 0.0 437.5 467.0 0.0 0.0 437.5 467.0 0.0 437.5 -467.0 4. 1993-94 0.0 0.0 271.5 289.8 0.0 0.0 271.5 289.8 0.0 -271.5 -289.8 5. 1994-95 44.6 16.3 156.2 166.7 38.4 83.8 194.6 207.7 32.9 -161.7 -174.8 6. 1995-96 44.6 16.3 0.0 0.0 43.1 57.1 43.1 46.0 34.1 -9.1 -11.9 7. 1996-97 44.6 16.3 0.0 0.0 60.3 74.3 60.3 64.4 - 42.6 -17.7 -21.8 8. 1997-98 .44.6- 163 0.0 0.0 67.4 81.4 67.4 .71.9 55.3 -12.0 -16.6 9. 1998-99 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 10. 1999-00 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 11. 2000-01 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 12. 2001-02 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 13. 2002-03 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 14. 2003-04 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 15. 2004-05 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 16. 2005-06 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 17. 2006-07 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 18. 2007-08 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 19. 2008-09 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 20. 2009-10 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 21. 2010-11 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 22. 2011-12 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 23. 2012-13 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 24. 2013-14 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 25. 2014-15 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 26. 2015-16 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 27. 2016-17 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 28. 2017-18 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 29. 2018-19 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 30. 2019-20 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 31. 2020-21 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 32. 2021-22 135.0 49.3 0.0 0.0 67.4 81.4 67.4 71.9 167.6 100.3 95.7 33. 2022-23 135.0 49.3 0.0 0.0 67.4 S1.4 67.4 71.9 167.6 100.3 95.7 /a Not used in calculations 1988/89prices PresentValue for DiscountRates of 8% 349.7 1030.7 1100.1 554.5 701.6 1585.4 1692.2 1150.4 -435.0 -541.7 10% 268.3 991.6 1058.4 435.6 555.5 1427.2 1523.3 876.7 -550.4 -646.5 12% 210.0 955.0 1019.3 348.9 448.8 1304.0 1391.8 681.6 -622.5 -710.3 14% 167.3 920.5 982.5 284.6 369.2 1205.2 1286.4 539.2 -666.2 -747.3
Results (SAR value in parentheses): The calculated actual EIRRs are as follows: Nominal -- 4% (11%); SCF = 0.8 -- 3% (10%); SCF = 0.9 -- 3% (n/a). The calculatedaverage incrementalcosts of water in NominalRs/m3 are as follows:at discountrate = 8% - 4.5 (4.3);at discountrate = 10%-- 5.3 (4.9); at discountrate = 12%-- 6.2 (5.5); and, at discountrate = 14%- 7.2 (6.1).
NOTE: (I) A standardconversion factor of 0.8 was appliedto the foreign exchangecomponent of investmentcosts (2) Costs and Revenueare in constant 1988-89Prices Table 10: Status of Legal Covenants
Agreement Section Covenant Present Original Revised Descriptionof Comments type status fulfillment fulfillment covenant date date DCA 2.02(b) 01 C India to open and maintain a SpecialAccount in the RBI 3.01(a) 03,04,05 C India to cause AP and HMWSSBto take all actions l______necessary to implementthe project 4.01 01 C India to ensure records maintained of all SOE's and provide audit report to IDA within 9 months after the end of each
fiscal year r_:_ 4.02 01 C India to provide SpecialAccount report to IDA within 6 months of the end of each fiscal year AP 2.01(a) 03 CP AP to provide funds, facilities, services and other resources tmplementationof DRP recommendationswas requiredfor Part B of the Project (RRP and DRP) slow and remained incomplete at closing. 2.01(b) 10 C AP and HMWSSB to carry out Project substantiallyin accordance with an OAP updated from time to time with Bank agreement 2.02(a) 04 C AP to provide funds to HMWSSBto carry out Parts A (i), (ii), (iii) of Project in accordancewith SLA approved by the Association 2.02(b) 03,04 C AP to provide HMWSSB, as a grant, the funds required to carry out Parts A(iv) and (v) - LCS, TA, Training l 2.05 05 C AP to perforn all its obligationsunder SLA 2.07(a) 07 CP AP to carry out RRP in accordancewith 3-yr timetable ERSs have not been completed in the newly added 5 villages and for the returnees 2.07(b) 07,10 C AP to monitor all activities in carrying out RRP through DistrictCollector Medak 2.07(c) 07,10 C 31-Mar-90 AP to employ consultantsto undertake supplementary monitoringand evaluationof RRP 2.07(d) 07.09 C AP to promptlyrevise, as necessary,the RRP on basis of monitoringand evaluation reports,in consultationwith Bank 2.08(a) 10 C AP to ensure safety of Singur Dam by maintainingDRP Implementationof DRP recommendationswas until Dam and remedial work is completed slow and remained incomplete at closing. 2.08(b) 10 C AP to ensure regular inspectionsand evaluationof Singur Dam fAgreement Section Covenant Present Original Revised Description of Commcnts type status fulfillment fulfillment covenant date date 2.09 05 C AP to operate the Singur Dam in accordancewith Operating Rules approved. Reservoir fillingdelayed by Rules approved by Bank spillwaygate problems and safety concems 2 10 03,05 CD AP to remit to HMWSSB arrears in payment of standpost Paymentswere initially insufficient and late. charges due from MCH in 5 equal annual installments,the Final payment to discharge debt made by 31- first before 30-Jun-90 Mar-95 3.01(a) 01,07 C AP to maintain records and accounts for Part B (RRP) : 3.01(b) 01 C AP to provide RRP accounts and audit reports within 9 months of fiscal year end PA 2.01(b) 05,10 C HMWSSB and AP to carry out project in accordance with OAP updated from time to time in agreementwith Bank 2.04 05 C HMWSSBto perform all obligationsunder SLA 3.03 05 C _ HMWSSBto maintain appropriate insurance 3.04 05,10 C HMWSSB to maintain Project Cell staffedand organized in manner satisfactory to the Bank 3.05 05,10 CP HMWSSB by 31 -May-90 and thereafter to staff an Two CA posts and one Intemal Auditor post not un organization under its Dir. Finance in a manner satisfactory filled at closing to the Bank 4.01 01 C HMWSSBto forward the accounts and audit report to the Bank within 9 months of the end of each fiscal year 4.02(a) 02 C HMWSSBto ensure its gross revenues are not less than Expected to be in compliance for 1997/98, i.e. at operating expenses plus debt service requirements in excess closure, following tariff revision of 0 1-Feb-97. of provisionfor depreciation Shortfalls occurred in 1990/91(1.25%), 1991/92 (1.65%), 1992/93 (0.900/0),1994/95 (0.39%), and 19.95/96(5.15/6). 4.03 02 C HMWSSBto establish sewerage charges not less that 200/% Sewerage cess levied at 20% on 01-Oct-90; of water charges payable to all consumerswith private increased to 30% on 29-Mar-93; increased to connection and access to sewerage services 35% on 01-Feb-97. Covenanttypes: PresentStatus: 1. = Accounts/audits 8. = Indigenouspeople C = covenantcomplied with 2. = Financialperfornance/revenue generation from beneficiaries 9. = Monitoring,review, and reporting CD = compliedwith after delay 3. = Flowand utilizationof projectfunds 10. = Projectimplementation not coveredby categories1-9 CP = compliedwith partially 4. = Counterpartfunding 11. = Sectoralor cross-sectoralbudgetary or otherresource NC = not compliedwith 5. = Managementaspects of the projector executingagency allocation 6. = Environmentalcovenants 12. = Sectoralor cross-sectoralpolicy/ regulatory/institutional DCA:Development Credit Agreement 7.= Involuntaryresettlement action AP: AndhraPradesh Agreement 13. = Other PA:Project Agreement 26
Table 11: Compliance with Operational Manual Statements
No significant lack of compliance.
Table 12: Bank Resources: Staff Inputs
Stage of Planned Revised Actual Project Cycle Weeks US$ Weeks US$ Weeks US$ Through Appraisal n/a n/a n/a n/a 50.7 135,000 Appraisal-Board n/a n/a n/a n/a 36.8 107,000 Supervision n/a n/a n/a n/a 162.6 456,000 Completion 12.0 38,000 12.0 38,000 12.0 38,000 TOTAL L 262.1 736,900
1. The table indicatesn/a where informationis not availablefrom the Bank's MIS 2. CompletionActuals are final estimates 3. Staff costs includesLabor, Travel and Other costs 4. Small amountsof Supervisioncosts includecharges to the budgetsof a TrustFund and the UNDP/Bank RegionalWater SupplyGroup 27
Table 13: Bank Resources: Missions
Performance Rating
Number Days in Specialized Impleme Develop- Stage of Month/ of Field Staff Skills ntation ment Types of Problems Project Cycle Year Persons (max) Represented Status Objectives
Through Appraisal May-87 _ _ Identification
Sep-97 . _ Pre-appraisal
Mar-88 7 19 SE(3), FA, R&R, _ _ Appraisal Proc., DC
Appraisal through Dec-88 _ _ Review Mission Board Approval
Jan-90 I 5 R&R Partial Review Mission - R&R
Supervision Apr-90 6 11 SE(2),FA,Proc, I I Review Mission Disb,DS
Oct-90 3 14 SE(2), FA, 1 1 #1 (Full): Org. and staffing; preparation of up-dated OAP; tariff reviews
Mar-91 4 10 SE, R&R, LCS, I 1 #2 (Full): CPT5 - RRP behind HRD schedule. Otherwise, no major problems
Aug-91 4 11 SE, FA,Disb, I 1 #3 (Full): CPT5 - RRP catching up. LCS No major problems
9 Sep- 1 2 5 R&R(2) I I #3a (Partial - R&R)
Jan-92 3 12 SE, FA, R&R I 1 #4 (Full): Implementation of RRP again behind schedule esp. econ. rehabilitation
May-92 5 5 SE(2), FA, I I #5 (Full): Implementation of econ. HRD,LCS rehabilitation of RRP still slow
Sep-92 5 13 SE(2), FA, R&R, I 1 #6 (Full): CPTS - RRP now well LCS behind schedule. Basic data in RRP found invalid. Tariff increase overdue. Finance and Accounts Dept needs strengthening
Jan-93 2 7 SE, R&R I I #7 (Partial - R&R)
Mar-93 3 4 SE(2), R&R 1 1 #8 (Partial - R&R): Project proceeding well but CPT5 (RRP) continues to slip.
Apr-93 4 6 SE,ME,FA,R&R #9 (Partial - R&R)
Jul-93 2 2 SE(2) #10 (Partial - R&R)
Nov-93 4 11 SE(2), FA,R&R _ I #11 (Full): CPT2 and CPT3 pre- investment design studies behind schedule. Progress with CPT5 (RRP) econ rehab still poor and RRP further revised. CTP6 consultant studies behind schedule. 28
Performance Rating
Number Days in Specialized Implemen Develop- Stage of Month/ of Field Staff Skills tation ment Types of Problems Project Cycle Year Persons (max) Represented Status Objectives
May-94 6 12 SE(2), FA, HS S #12 (Full): Cm and CPT3 studies R&R, HRD, delayed.. CPT5 progress much LCS improved. and revised timeframe agreed. CPT6 still behind schedule. Action on Finance and Accounts staffing delayed.
Jan-95 6 15 SE(2), FA, HS S # 13 (Mid TermnReview): Good LCS, Proc, progress on all components after earlier R&R delays. 5 "new" R&R villages identified. One covenant not in compliance - payment of arrears to HMWSSB for standpost charges.
Oct-95 5 13 SE(2), FA, HS S #14 (Full): Action on Finance and R&R,LCS Ac-countsstaffing continues to be delayed.. Delays to completion of R&R. GOAP tardy in responding to safetyissues and recommnendations raised by Dam Review Panel.
May-96 4 11 SE(2), R&R, HS S \ #15 (Full): Action on Finance and LCS Accounts staffing continues to be delayed. at HMWSSB. Concern over supervision staff strength for CPT2 and CPT3 now that implementation is proceeding. Need for tariff revision to meet financial covenant. Further delays to completion of RRP over 5 new villages.Darn ReviewPanel recommendations remain outstanding.
Nov-96 7 7 SE(2), FA(2), S S #16 (Full): Supervision staff strength R&R, Proc(2), for CPT2 and CPT3 inadequate. LCS Vacant positions persist in Finance and, Accounts. Tariff revision needed for financial covenant. Slow response to Dam Review Panel by GOAP. Further delays to completion of RRP - need for revision to accommodate returnees.
Jun-97 4 8 SE(2), R&R, S S #17 (Full): Continuing slow response LCS to Dam Review Panel by GOAP. Slow progress to construct reservoir outlets (financed outside Project but affecting storage and capacity utilization)
Completion Mar-98 4 22 SE, FA, R&R, S S Final Supervision #18 and Completion Proc Mission: Vacant positions persist in Finance and Accounts at HMWSSB. Dam Review Panel recommendations not addressed by GOAP. Key to Specializedstaff skills: SA - SanitaryEngineer; FA - FinancialAnalyst (and sometimnesincluding Economist); ME - Municipal Engineer; R&R - Relocation and Rehabilitation Specialist; Proc - Procurement Specialist;Disb - DisbursementsSpecialist; DS - Dam SafetySpecialist; DC - DivisionChief and Chief of Mission; LCS - Low Cost Sanitation Specialist; HRD - Training Specialist.
Numberof Personson missions includedattendance of technicalstaff of the UNDP/WorldBank RegionalWater Supplyand SanitationGroup based in New Delhiwho were not financedfrom the SupervisionBudget of the Bank. CPT - Component APPENDIX A
Completion Mission's Aide-Memoire APPENDIX A 29
INDIA: HYDERABAD WATER SUPPLY & SANITATION PROJECT (Loan 3181/Credit 2115-IN) March 05-27, 1998: Final Supervision (No. 18) and Completion Mission
AIDE MEMOIRE
TABLE OF CONTENTS
I INTRODUCTION ...... 2
II THE PROJECT - PROJECT STATUS OVERVIEW ...... 3
III PROJECT IMPLEMENTATION AT CLOSING ...... -.-. 6 Component 1: Manjira Phase IV ...... 6- Singur Reservoir Filling and Dam Review Panel (DRP) ...... 6 Component 2: Strengthen-Rehabilitate Existing Water System ...... 7 Component 3 : Strengthen-Rehabilitate Existing Sewerage System ...... 8 Component 4: Low-Cost Sanitation ...... 9 Component 5 : Resettlement and Rehabilitation Program (RRP) ...... 9 Component 6: Technical Assistance and Training ...... 1 3
IV VIEWS ON PROJECT IMPLEMENTATION ...... ]15 Mission's Views...... 15 HMWSSB's Views ...... 16 GoAP's Views ...... 18
V VIEWS ON FUTURE OPERATION - OPERATIONAL PLAN - SUSTAINABILITY ...... 18
VI FOLLOW UP AND AGREED ACTIONS ...... 19
ANNEXES
1 Institutional Transformation at HMWSSB ...... 4 2 Monitoring Indicators ...... 1 3 Guidance on the Borrower's Contribution to the ICR ...... 1 4 Summary of Significant Actions Recommended by/Agreed with this Mission ...... 1 5 List of Key Persons Met ...... 1 INDIA: HYDERABAD WATER SUPPLY & SANITATION PROJECT (Loan 3181/Credit 2115-IN) March 05-27, 1998: Final (No. 18) Supervision and Completion Mission
AIDE MEMOIRE
I. INTRODUCTION
1.01 The Mission. A World Bank mission visited Hyderabad at various times over the period March 5 and March 27, 1998 for the Final Supervision and Completion of the Project. The Mission Members were: Messrs. Shyamal Sarkar (Sanitary Engineer & Mission Leader, Bank's New Delhi Office), from March 5 to 10, and March 25 to 27, 1998; David Marsden (Senior Social Development Officer, SASSD, Bank's Washington HQ), from March 9 to 20, 1998; S. Krishnan (Procurement Engineer, Bank's New Delhi Office), March 5 to 7, 1998; and Michael Whitbread (Financial Analyst, Consultant), from March 9 to 27, 1998.
1.02 Mission objectives. The objectives of the Mission were to: (a) conduct the final supervision of the Project: (b) assess the views of the Mission, Borrower and implementing agencies on Project implementation, operations, and future operational plan; (c) start to document lessons of experience; (d) provide advise and support for the Borrower's contribution for the Implementation Completion Report (ICR).
1.03 Mission Tasks. The Mission held discussions with officials of the Government of Andhra Pradesh (GoAP); senior management and concerned staff of Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB); Consultants working on the Project; Regional Centre for Urban and Environmental Studies (RCUES) of Osmania University who assisted with the Training Plan, and others concerned with implementation including two former Managing Directors, and two former Chief Engineers of HMWSSB (Annex 5 lists key persons met). For Component 5, Resettlement and Rehabilitation Program (RRP), discussions were held with the Village Level Workers, the deputy Tahsildars, the village headmen and a variety of project affected persons, and members of the independent monitoring and evaluation team of the Centre for Economic and Social Studies (CESS), Hyderabad. The mission also held discussions with the District Collector and Joint Collector of Medak District.
1.04 Field visits were made as follows: Water Treatment Plant at Peddapur and associated facilities, and the clear water pumping main from Peddapur to the Khanapur Reservoir (Component 1); the clear water reservoirs in the city at Prashasan Nagar, Bojagutta, Narayanguda and Chilkalguda and associated facilities, and several bulk flow, bulk and domestic meters at different locations installed (Component 2); the Sewage Treatment Plant at Hussainsagar and associated facilities, the duplicate "A" main, and the stormwater drain interception arrangements at Banjara Nalah and Divya Shakti (Component 3); the two communities of Pahadi and Hyderguda to inspect low cost sanitation (LCS) units (Component 4); and, the new resettlement village sites of Peddareddipet, Lonikhurd, Itkepally, Pulkurthy, and the resettlement villages of 31
Mallikarjunpally, Atmyal and Takkadpally (3 of the 24 resettlement villages), with members of the Rehabilitation team (Component 5). Overall the Mission was impressed with the quality of the work which had been undertaken at these places. Facilities, where commissioned, were functioning as intended.
1.05 Reports Received by the Mission. This Mission was pleased that the HMWSSB had prepared various data and reports in advance of the Mission's arrival in Hyderabad. These were: a list of studies under the project; a list and an account of training activities; data on project costs and financing; HMWSSB accounting statements over the project life; an economic analysis of Component 1 of the project; a statement of tariffs over the project life; a status report on superstructures of LCS toilets; and a brief implementation report for each of the project components with detailed information on procurement. These data and reports greatly facilitated the task of the Mission in summarizing the status of the project as it approached closing.
1.06 Ex-post evaluation studies have been undertaken for LCS and Training and the Mission benefited from receiving reports of the consultants/evaluators, as follows: Low Cost Sanitation, draft final report dated March 1998 (Consulting Engineering Services, Calcutta - CES); Training Action Plan, Performance and Impact Analysis dated November 1997 (RCUES, Osmania University). The mission also received: The 14th Semi-annual Report on the RRP, for the period March to September 1997 (CESS); and, the Report of the 16th Meeting of the Dam Review Panel of Singur Dam (23 to 27 February, 1998).
1.07 Wrap-up Meeting. A State level wrap-up meeting was held in Hyderabad on March 27, 1998, chaired by the Principal Secretary, Municipal Administration and Urban Development Department of GoAP at which the principal findings and recommendations of the Mission were reviewed and the future actions were agreed with. The Mission received assurance that the few works which would remain uncompleted at closing would be completed and the GoAP/HMWSSB would finance these balance works from their own sources. However, the GoAP would like to include the remaining works of RRP for implementation under the upcoming Second Project.
1.08 All Mission Members wish to record their appreciation for the courtesies extended to them and for the assistance and cooperation of all agencies and individuals concerned. This Aide Memoire contains the Mission's findings, recommendations and agreement reached. These are subject to review and confirmation by the management of the World Bank.
II. THE PROJECT - PROJECT STATUS OVERVIEW
2.01 Disbursements. At March 22, 1998, US$73.2 million equivalent which is 91.6% of the original principal of the Credit, and 81.8% of the current value of the Credit, had been disbursed. The Borrower anticipates that about 93% of the current value of the Credit will have been disbursed by the final reimbursement claim. The estimated Credit unused is therefore US$5.6 million. 32
2.02 Total Project Costs. The Borrower estimates that the estimated expenditure on the Project at closing will be Rs 3,145 million, which compares with appraisal estimates of Rs 2,570 million (US$140.6 million equivalent).
2.03 Implementation progress. Implementation of Component 1 (Manjira Phase IV) has been completed and commissioned. It is anticipated that except for (a) Pipeline between Patancheru and Jyoti cinema; (b)'erection of pumping plants at Shaikpet and Prashasan Nagar; and (c) and remote sensing surveys for municipalities adjoining Hyderabad, implementation of Component 2 (Strengthening and Rehabilitation of the Existing Water System) will have been completed by closing. Completion of these works will need about three/six months more. However, there will be a small shortfall on the completion of Component 3 (Rehabilitation and Strengthening of the Existing Sewerage System) as the works for railway crossing and some road crossings of duplicate "A" main would not be completed fully. Targets for Component 4, Low Cost Sanitation, have been exceeded. Some works such as (a) housing construction in 5 new villages; (b) economic rehabilitation schemes in the 5 new villages; and (c) some economic rehabilitation schemes in the other villages under Component 5 (the RRP at Singur) remain to be completed. Under Component 6 (Technical Assistance and Training), all the studies which were appraised have been completed; studies which, with the Bank's agreement, were added during implementation have been initiated and mostly completed (some of the preparation studies for the proposed Second Project are nearing completion); and the agreed Training Plan has been completed and evaluated. Accordingly, the Project at closing will have implemented in large measure the six components which were appraised, or amended with the agreement of the Bank at the Mid-Term Review and otherwise from time to time.
2.04 The Mission rates the implementation performance as Satisfactory.
2.05 Institutional and policy changes. Most of the institutional and policy changes discussed and agreed with the Bank and covenanted or included in the Operational Action Plan, which was updated from time to time, have been implemented. The residual unfinished items are: three senior postings in the Finance and Accounts Wing of HMWSSB remain unfilled (see Covenant Compliance below); and, the autonomy of HMWSSB on staffing matters remains to be resolved given that Engineering staff continue to be on deputation.
2.06 Critical actions which remain outstanding are:
* There continues to be an inadequate response from the Irrigation and Command Area Development Department (ICADD) of GoAP to implement the recommendations of the Dam Panel Review (DRP).
* Delays in the completion of the reservoir gates, also a matter for the ICADD, have led to reduced availability of water, and lower reliability of supplies to the city. Furthermore, as a consequence of this inaction, assets which have been provided 33
under the project are under-utilized because of the reduced availability of water.
The GoAP proposed to include implementation of the DRP recommnendationsin as mush as they are related to Singur Dam in the proposed Second Project. But these works will be financed entirely from the GoAP sources as the procurement of these works have been progressed following the ICADD procurement practices which are not consistent with the Bank procurement guidelines.
2.07 Covenant compliance. Earlier inaction by GoAP to implement tariff increases requested by HMWSSB in a timely manner led to failure by HMWSSB in some years to achieve its covenanted financial cost recovery target (PA Sec 4.02(a)). In 1995-96 the shortfall on the target was 5.15%. This was the only covenant not in compliance at the time of the previous mission. Following the tariff increase in February 1997, it is anticipated that the cost recovery covenant will be exceeded in the current fiscal year ending March 31, 1998 by about 10.7 1% and that accordingly, this covenant is now regarded as being in compliance.
2.08 Two covenants are in partial compliance: (a) a portion of the RRP has not been completed as the PAFs did not move to the resettlement villages constructed for them whereas the Andhra Pradesh Agreement Sec 2.07(a) required that Andhra Pradesh shall carry out the RRP in accordance a three year timetable; and (b) posts of two Chartered Accountants and one Internal Auditor which were to be filled as agreed with the Bank have not been filled in the organization under the Director Finance whereas Project Agreement Sec 3.05 required that HMWSSB shall staff an organization under its Director of Finance, in a manner satisfactory to the Bank.
2.09 Quarterly Progress Reports. QPRs have been prepared promptly by HMWSSB since effectiveness in a format agreed with the Bank. These reports have continued to be supplied on time, providing systematic record of progress and keeping the Bank and HMWSSB adequately informed. The last report was for the period to December 31, 1997. The final progress report i.e. covering the period up to March 31, 1998 will be furnished to the Bank by May 31, 1998.
2.10 Having regard to the foregoing, and to the findings of the Mission recorded elsewhere in this Aide-Memoire, the Mission rates the achievement of Development Objectives8 / as Satisfactory.
S/ The developmentobjectives are: (a) an improvementin quantityand reliability of water supply in Hyderabad;(b) an improvementin the capacityand utilizationof existingwastewater collection and treatmentfacilities; (c) a reductionin the householdsnot having satisfactoryexcreta disposalfacilities; (d) the satisfactoryresettlement and rehabilitationof those affectedby the Singurdam reservoir;(e) the preparationof futureurban and water supplyand sanitationprojects; and (f) the strengtheningof the management,technical and financialperformance of sectorinstitutions. 34
III. PROJECTIMPLEMENTATION STATUS AT CLOSING
3.01 The following section provides the details of the Project implementation status at the time of the Mission, by Component.
Component 1: Manjira Phase IV
3.02 The main objective of the Manjira Phase IV was to improve the water supply by providing additional 135 Mld of treated water to the Hyderabad water supply system from Singur dam through the construction and commissioning of works including a raw water transmission main, a water treatment plant, clear water storage, pumping, a clear water transmission main, distribution reservoirs and installation of bulk flow meters. The works were completed before December 1993 and treated water was delivered to Hyderabad water distribution system in January 1994. The pre-commissioning trial was conducted smoothly, made possible by the good construction quality.
3.03 The newly built water treatment plant process operation is based partly on instrumentation control and partly manual control, and has had an operation and maintenance contract from the beginning. It is working satisfactorily. The operation and maintenance of the clear water pumps and motors have also been contracted out since commissioning and these are working satisfactorily.
Singur Reservoir Filling and Dam Review Panel (DRP)
3.04 The Singur Dam was constructed and financed apart from the project by GoAP's ICADD and its construction was approaching completion at the time of inception of this project in 1990. Almost a decade has passed since the dam was completed, but the reservoir could not be filled to the FRL +523.6m (storage at FRL is 29.9 TMC) as all the remedial works recommended by the Dam Review Panel have not been implemented. The crucial work which remains and which has affected the filling to FRL is the repairs and strengthening of the gates. The ICADD has been very slow in procuring a gantry crane to facilitate the repairs. It is now expected that the crane will be procured in June 1998 and the repairs will be completed in time to fill the reservoir to FRL in monsoon year 1998. The mission flagged the necessity of DRP's clearance before the reservoir is filled to FRL.
3.05 Andhra Pradesh and the Bank agreed [AP Agreement Sec 2.08(a)] that the DRP will be maintained until the dam, including remedial works, is completed. This covenant is in compliance, but the issue is that the DRP recommendations have not been implemented. The Bank's concerns on the tardy implementation of the DRP recommendations are that, having regard to the disastrous consequences of any dam failure, the issues are not receiving adequate attention. The Sixteenth meeting of the DRP on February 23-27, 1998, further deliberated on the dam safety measures required. The Mission suggest that a thorough review of the compliance of the DRP recommendations should be made and compliance ensured by the GoAP in collaboration with HMWSSB. The DRP should be continued in the spirit of the project covenant, 35
mentioned above, until such times that all actions related to dam safety are completed. The GoAP and HMWSSB agreed to the Mission's suggestions.
Component 2: Strengthen-Rehabilitate Existing Water System
3.06 The objective of this component was to improve the reliability of the water supply by including the means whereby water can be transferred, within the trunk distribution system, from areas normally supplied by a less drought-vulnerable source to areas served by a more drought-vulnerable source; and provide equipment to aid effective and efficient management of operation and maintenance.
3.07 This component included the rehabilitation and strengthening of the existing water systems including the construction of distribution reservoirs and the rehabilitation of existing reservoirs; various trunk distribution mains; the replacement of leaking transmission main; the rehabilitation of existing water treatment plants and existing pumping stations and the construction of new pumping stations; the rehabilitation and strengthening of the existing distribution system and service connections and meters; the provision of bulk flow meters and related equipment to improve system operation and management; the construction of office space, and the provision of equipment for leak detection.
3.08 Following the Conceptual Design Report prepared by the Consultant, HMWSSB attached higher priority to the unaccounted-for water management and control aspects. The SAR estimates for this component were revised from Rs 689.7 million (US$35.9 million) to Rs 1266.3 million (net of engineering and land). The investment comprised of: (i) construction of 8 clear water reservoirs (aggregate capacity 101.5 million liters); (ii) construction of two pump houses and installation of pumps (6 pumps, 670.5 KW); (iii) inlet and outlet mains for the proposed reservoirs (inlets 400 mm dia to 1200 mm dia, 23.8 km; outlets 900 mm dia to 1200 dia, 7.67 km); (iv) some strengthening works (1200 mm dia, 22.3 km); (v) chlorinators (39 nos.); (vi) unaccounted-for water (UFW) management and control; (vii) construction of office buildings; and (viii) preparation of base maps (aerial photography and photogrammetry) for development of water supply and sewerage system for areas surrounding Hyderabad. The UFW program covered installation of bulk flow meters, leak detection surveys on old CI distribution mains, replacement of RCC/AC distribution mains with CI pipes; replacement of GI pipe service connections with MDPE pipes, replacement of domestic and bulk consumer meters.
3.09 The delays (about 17 months) in completing the Conceptual Design Report by the consultant affected the implementation schedule. At Mid-Term Review. (January 1995) no expenditure on civil works was reported. However, HMWSSB was able to complete most of the works due to its overall sound management ability. A few uncompleted works are progressing at speed which HMWSSB expects will be substantially completed by closing. However, the mission observed that (a) Pipeline between Patancheru and Jyoti cinema; (b) erection of pumping plants at Shaikpet and Prashasan Nagar; and (c) and remote sensing surveys for municipalities adjoining Hyderabad, may take 3-6 months longer. 36
3.10 Three of the eight reservoirshave been commissionedand the water tightness testing for the remainingis ongoing. The schedulefor completionof this test was affected by the drought conditionsas it requiredtransportation of water by tankers to fill the reservoirs. The depletionof productionof water due to droughtconditions may prevent immediatecommissioning of all the facilitiesconstructed. All these are expected to be commissionedas soon as the productionimproves with raw water availability during the monsoonexpected in July.
3.11 The UFW managementand control programevolved in the project was implementedin only 3 (BanjaraHills, Red Hills, and Asmangadh)of the 18 water supply zones, and a high priority Action Plan has been preparedby HMWSSBto implementthe UFW managementand control program in its entire servicearea in the next 3-4 years under the proposed SecondHyderabad Urban Water Supply and SanitationProject.
Component3: Strengthen-RehabilitateExisting Sewerage System
3.12 At appraisal this Component was expected to cost Rs 624.4 million (US$33.6 million) and included: connections to the sewerage system of about 20,000 sanitary building drains; about 26 km of branch sewers to twin or replace existing sewers; about 43 km of trunk sewers, also to twin or replace existing sewers; up to two large and two small pumping stations; four pumping mains of 925 m length; a sewage treatment plant (STP) of 180 Mld capacity comprising an anaerobic followed by aerated lagoon system; and various items of equipmentto be used to maintainthe seweragesystem.
3.13 The Conceptual Design Report brought fresh perspectives to the appropriate priorities and to relatLedaspects of the configuration of the sewerage system. In particular, the concentration on pollution abatement in Hussainsagar, which was not only severely polluted by both domestic and industrial wastes with consequences for health risks and the environment generally, but this is an important heritage feature which is badly in need of conservationmeasures. These investmentthus comprised:(i) measures to abate pollutionin Hussainsagar;(ii) some pilot scale UpflowAnaerobic Sludge Blanket (UASB)sewage treatment works in Amberpet;(iii) sewerhouse connections; (iv) sewer maintenance equipment. The SAR estimates for this component was thus revised from Rs 624.4 million (US$33.5 million) to Rs 433.0 million (net of engineering and land).
3.14 Although the procurement plans, procurement schedules and cost estimates were prepared quite promptly, the procurement of the works progressed slower than the works under Component 2. Successive Bank supervision missions raised with HMWSSB that the delays in bidding K-5 1 sewers, and the UASB sewage treatment plant might leave these two works uncompleted at closing. In fact, the K-5 1 sewers were not completed at the time of mission's visit. However, HMWSSB expects them to be completed by the Credit closing. The UASB works have not been taken-up as contract award decisions could not be made by HMWSSB leaving sufficient time in hand for completion. HMWSSB, therefore, decided in consultation with the Bank to take-up this work under 37 the proposed Second Hyderabad Urban Water Supply and Sewerage Project. These apart, the construction of duplicate "A" main sewer will remain partly uncompleted because of the delayed decision regarding the laying of pipes below the railway tracks.
Component4: Low-CostSanitation
3.15 It was proposed at appraisal to construct 20,000 twin pit pour flush water sealed latrines in Hyderabad and surrounding area. Areas selected are not usually covered by sewerage facilities and are located where there is no program to lay sewers. The LCS program has been assisted by NGOs conducting surveys, motivating beneficiaries, providing health education and the construction of toilets. In all, 8 NGOs assisted. Beneficiaries' contribution of 20% of cost (in practice between Rs 400 and 500) were required which were usually given in kind (materials) and sometimes with labor. A total of about 22,01 1 LCS toilets will have been constructed in 104 settlements by closing.
3.16 Field visits by earlier Missions and by this Mission have given the clear impression that this program has been successful in achieving its objectives as the units are fully utilized and are functioning correctly. Data collected by the 8 NGOs confirms that 88% of toilets are in use of which 67% have permanent super-structures and 33% temporary super-structures. A more systematic evaluation survey of 2,013 sample toilets spread over 40 settlements has been undertaken by Consultants whose draft final report was given to the Mission. The result of this evaluation confirms that only about 6% of the toilets do not have superstructures, but the beneficiaries have plans to construct them as soon as they can afford it.
3.17 In conclusion, Component 4 is regarded as having been successful in achieving its objectives.
Component5: RevisedResettlement and RehabilitationProgram (RRP)
3.18 A revised (fifth) Resettlement and Rehabilitation Plan was reviewed by the Bank and approved by the Government of Andhra Pradesh vide Government Order No.93 MA on March 29, 1997. This was largely an iteration of the fourth revision approved by the Bank in early 1994 with attempts to quantify outstanding requirements to complete the RRP for the 5 new resettlement villages. It did not include provision for dealing with Singur village which is located at the foot of the dam and which suffers from seasonal waterlogging. An estimate of costs has been prepared although a request from the villagers to the ICADD for relocation has so far remained unaddressed.
3.19 Economic Rehabilitation. All of the planned Economic Rehabilitation Schemes (ERSs) in the 24 fully submerged villages have been "grounded"9 / and the only outstanding schemes are those to be delivered to returnees (those people who, having earlier left the project area, returned to take up their entitlements as PAFs). All of the
9/ By "grounded"project authoritiesmean that assetsfor the EconomicRehabilitation Schemes (ERSs)have been purchasedand transferredto the recipients. It doesnot implythe success of the scheme. 38
ERSs planned in RRP4 for the 37 partially submerged villages have been grounded. Current estimates by the project office indicate that 297 schemes (another estimate had shown it to be 495) remain to be grounded in these two sets of villages, the result of the establishment of claims by returnees, and those who have taken their cases to court.
3.20 Rehabilitation Action Plans for 2 of the 5 new resettlement sites have been prepared by the NGOs and the Rehabilitation Office, and have been discussed with the villagers at Gram Sabhas (village meetings). The plans identify 'awardees' together with relevant data as to age and caste affiliation. They also contain indications of the choices that 'awardees' have made for economic rehabilitation packages. The plans remain to be finalized. A total of 1466 ERSs are planned for these 5 sites once relocation has been completed. There is an undue focus on risky animal husbandry schemes in the plans subrmittedto date. Project authorities have given an assurance that, wherever possible, land-based schemes will be preferred.
3.21 Infrastructure Provision. Project reports indicate that all physical works apart from the residual provision of electricity connections have now been completed. Public buildings have been finished to a high standard, drinking water supplies have been improved and drainage facilities have been completed. There remains the ongoing problem of maintenance in the older resettlement colonies. As pointed out in previous mission Aide-Memoires, unless provision is made for maintenance the assets created by the project are likely to deteriorate rapidly. While assurances have been given to previous missions by the Collector, Medak district there is little evidence that extra resources have been made available for this essential work. As long as the panchayats perceive that the project is available to maintain assets it is unlikely that progress in this matter can be made. Until systematic efforts are made to generate local revenues this will remain an important risk to sustainability. Project authorities recognize that communal buildings, especially those for health centers and veterinary clinics were created without the participation of the concerned departments, and they consequently remain understaffed. The provision of water in this drought-prone area remains a seasonal problem, and is exacerbated by an uncertain electricity supply to the pumps.
3.22 Physical infrastructure facilities in all five 'new' villages have been completed. Utilities await the relocation of PAFs before they will be made operational. The project continues to focus on the completion of planned works in the 5 new resettlement sites. These cannot be completed until the PAFs relocate, when they trigger the disbursement of the ERSs. The status of housing in these five villages is given below as of February 28, 1998.
Name of No. of No. of No. of No. of No. of houses No. of No. of Village Awardees plots plots houses under fiouses ERSs made allotted sanctioned construction completed planned Lonikhurd 273 343 164 24 6 (20) 15 150 Peddareddipet 538 214 204 100 59 85) 37 350 Itkepally 330 295 155 79 61 (24) 6 197 Pulkurthy 438 292 269 130 100 (6) 4 324 Bellapur 543 505 447 232 0 (118) 0 445 Total 1 2122 l 1649 l 1239 l 565 226 (253) l 62 l 1466 (* figuresin bracketsindicate reported position at June 1997) 39
3.23 It is now apparentthat the completionof housingand thus the 'grounding' of economicrehabilitation schemes in the five new villageswill not be completedbefore Credit closing. Reasonsfor variable progressappear to be largelythe result of rising expectationsin the minds of the PAFs. Project authoritiesindicate that, as a result of the sub-divisionof householdsinto separatePAF units and recognitionof major deperndents as separateunits for the calculationof benefits, 1162households have been able to claim entitlementto 1466 ERSs.
3.24 Health issues. A visit was made by the Missionto the Heath Center at Atmakhur to discuss with the medicalprofessionals based there the possiblehealth implicationsof the impoundmentof such a large body of water, particularlythe incidenceof malaria. There were no apparentchanges in the diseasepattern and the incidenceof malaria appearedto be low. Such casual observationswould need to be substantiated,but deteriorationin health was not mentionedduring missiondiscussions.
3.25 Dealingwith Returnees. The namesof those who have registeredentitlements to benefitsare availablewith the Collector. As and when appropriate,and subject to residencein the village, they are providedwith their housingentitlements and their economicrehabilitation benefits. No major effortto search out these people is now being made, on the assumptionthat having taken their compensationand moved away, they have re-establishedtheir livelihoodselsewhere. It will be importantto ensure that the post-evaluationstudy incorporatesa sub-set of cases from these emigre awardees.
3.26 Sustainabilityof RehabilitationPackages. CESSreports the status of rehabilitationschemes by tracking their viabilityover time. These reports indicatethat animalhusbandry schemes and small businessschemes are among the most risky. An analysisof the status of these schemesrevealed that about 75% of all schemeswhich have been groundedto date have been retained. The circumstancessurrounding non- retentionhave been analyzedby CESS. They vary from outrightsale, to re-establishment outsidethe villageand non-viability.
3.27 Post-projectsustainability. Assuranceshave been receivedfrom GoAP that the 36 VillageLevel Workersand project staff will continue. There is a need to ensure that the work in the 5 villages continuesand all ERSs are not only grounded,but also monitoredto ensure sustainability. Eventual disbursementof the ERSs, together with supportfor their proper establishment,will still be necessary.
3.28 Threepolicy issuesare outstandingfor Component5.
(a) The issue of sustainabilityof both physicaland economicassets. This has been addresseddirectly only in the context of insuranceschemes for animal assets. For other assets, responsibilityremains with the borrowerto ensure sustainabilityover time but the Mission believesit is not sufficientto entrustthese investmentsto the day to day administrationof the District,which is knownto devote inadequateresources to maintenanceoperations. The followingMission concemsneed to be addressed: how 40 long project affected families will be treated separately; the timing of handing back the responsibility of the Rehabilitation Office to the normal administration of the District. The objectives of self-reliant development will not be achieved as long as a dependency syndrome is perpetuated.
(b) The temporal boundary which separates earlier from later claimants. PAFs who took compensation and moved out prior to the ratification of the restructured RRP in 1994 perceive the enhanced benefits being offered to those who remain to be resettled and rehabilitated as inequitable and quite legitimately question the differential that has been established between them. Similarly, because of the delay between notification and eventual relocation minor sons (and daughters) have grown up and query their exclusion from receipt of benefits, especially in the light of the apparently generous provision being offered to the inhabitants of the 5 'new' resettlement villages. A cut-off date is required for receipt of entitlements.
(c) The geographical boundary which separates those who have assets above and below the precise contour which determines FRL and, therefore, entitlement. This boundary sometimes cuts villages and thus communities in half with all the attendant social complexities that arise. While in some instances this may be deemed to have a pro-poverty impact, as in Bellapur where the lower caste groups occupy the lower ground, in other circumstances, the result of the inclusion of some and the exclusion of others is more divisive. The assumption of a village-wide community of interests is not tenable for most of the villages in this area which are ridden with caste divisions. A restoration of the status quo ante is merely a replication of traditional inequities. A pro- poor stance is likely to exacerbate divisions, as the taken for granted privileges of the richer members of the village are undermined. The determination of entitlement in terms of the drawing of an arbitrary line that does not take account of these social networks will always create such distinctions. This points to the importance of early involvement of viilagers in the decisions about boundary definitions in order to obtain consensus wherever possible.
3.29 In order to address these three issues, the Mission recommends:
(a) The early establishment of regular institutions at village level to take explicit charge of operation and maintenance. This could emerge from the formnationof the "habitation committees" under the current Janmabhoomi program. (b) In any subsequent programs an accurate , authoritative and agreed base-line survey is carried out and that the time elapsing between identification of beneficiaries and the receipt of benefits is minimized. (c) In dealing with marginal cases the project management should attempt to be inclusive, and accede to the demands of those wishing to resettle with their neighbors wherever possible.
Component 6: Technical Assistance and Training
3.30 Studies. Sixteen studies were identified at appraisal (later grouped into twelve), 41
and eleven more were added during implementation.
3.31 HMWSSB appointed domestic consultants with foreign inputs for two assignments under Component 2: (a) surveys and infrastructure mapping, and final design; and (b) water conservation, leakage control and use management. These assignments have been completed, with delay.
3.32 Under Component 3, HMWSSB commissioned domestic consultants with foreign inputs to carry out assessment studies of the sewerage system and for producing final engineering designs. This assignment has been completed, but with delay.
3.33 National Environmental Engineering Research Institute (NEERI) were commissioned to carry out in environmental monitoring of the cultural heritage site of Hussainsagar Lake which is expected to improve slowly, probably over a 5-year period, as effluents are diverted to the new STP provided under Component 3. The study is underway and the mission received the first quarterly progress report.
3.34 HMWSSB appointed domestic consultants with foreign inputs to undertake studies of operations and maintenance. This assigrnent has been completed, without delay.
3.35 The study for LCS was undertaken in-house by HMWSSB. However, LCS evaluation studies have been commissioned and a draft final report was presented to the Mission.
3.36 The concurrent evaluation of the implementation of the RRP for Component 5 was undertaken by Consultants and six monthly reports were produced during the Project. A post-project impact study is under progress.
3.37 Four major studies were commissioned for Finance and Accounts at HMWSSB and all have been brought to closure after delays. HMWSSB has implemented the systems as follows:
* Financial Accounting System, Payroll and MIS: the HQ work is complete. HMWSSB will turn its attention to extending to the decentralized parts of the organization during the proposed Second Project.
* Revenue Billing and Collection: the system has been installed at around 28 counters out of 32, each one covering on average about 8,000 consumers, to issue bills and receive payments. Implementation is now proceeding towards full cornpletion.
* Stores Management and Inventory Control: the system is up and running at all three stores.
* Project Management System: although connected to the accounting system, this system is designed primarily for improving monitoring and management for capital 42
works for HMWSSB engineers. It is operational but has yet to be fully integrated into the Engineering functions, thereby missing out on both the technical and accounting benefits.
3.38 Training. An extensive training program was undertaken with the assistance of RCUES of Osmania University. This program initiated training with an orientation module designed to increase staff awareness of the HMWSSB's overall operations. Over 385 employees have been covered. The orientation module has been followed by an Integrated Module to enhance skills. 382 Engineers are expected to be covered by closing. 31 Finance & Accounts personnel and 40 staff members from Personnel & Administration have been trained. In addition to the Integrated Module, an Induction Module was developed to meet the needs of the new promotees, and 85 persons have been trained under this Module. A select group of Managerial personnel with responsibilities for training have completed a course in training for trainers.
3.39 Training for support staff for enhancing specific skills in local languages is 60% completed. This includes 214 employees trained under the literacy improvement program.
3.40 Construction of a Staff Training Centre has been completed.
3.41 Thus, the training plan agreed under the project was fully implemented. In their Performance and Impact Analysis, RCUES has completed an extensive analysis and evaluation of the courses offered. Benefits from the training as far as HMWSSB staff are concerned are regarded as substantial.
3.42 Follow-on Project Studies. Studies relating to the possible Second Hyderabad Water Supply and Sanitation Project and other future initiatives and funded under this Project are in progress and are likely to be completed shortly after March 31, 1998. These studies include:
* A conceptual design report, designs, and bid documents for an additional 410 Mld to be brought from the Krishna River to the city. Environmental assessment studies have been completed. Detailed engineering studies have been extended to reflect revised phasing of the scheme. * A water quality study has been completed. * A.P. Urban Water Supply structure strategy is underway and the strategy paper is expected before March 31, 1998. * Surveys to determine feasibility of construction of LCS units in the nine adjoining Municipalities have been given to seven NGOs who were associated with the implementation of the LCS program under this Project. These studies are in order to identify households yet to be covered with sanitary latrines, hydrogeological conditions and other aspects of implementation; this survey is expected to be completed soon. * A study to comment on the financial and commercial bids for the BOOT proposal for bringing water from Krishna river was completed although, in the event, the BOOT 43
process was aborted. * Consultants have been appointed to prepare the Project Preparation Plan and Project Implementation Plan for the proposed Second Project. This study is also underway and is expected to be completed soon. * A survey of the Socio-Economic conditions and Preparation of a RAP for Project affected persons is underway and is expected to be completed soon.
IV. VIEWS ON PROJECT IMPLEMENTATION
Mission Views
4.01 From October 1990 to May 1994 Bank supervision missions had classified implementation performance as Highly Satisfactory. From May 1994 the rating slipped to Satisfactory. At the closing of the Project, the overall performance has been judged to be Satisfactory by the Mission. The project failed to achieve the Highly Satisfactory rating largely because of the delay and difficulties which occurred with certain components: Component 2 & 3 were delayed largely as a result of difficulties experienced by consultants undertaking the surveys for mapping purposes. With the delay in mapping, it was not possible to proceed with design work in accordance with the original time-table, or with execution of works. Only the comparatively long project period of 8 years has permitted HMWSSB to (virtually) complete the works in time, or within reasonable time (3-6 months) beyond closing.
4.02 Component 4 also started slowly but overall the progress was impressive and implementation, utilizing the services of competent NGOs, has proved to be highly successful.
4.03 Component 5, the RRP, also had considerable delays. These stemmed from a variety of circumstances - the changing perception towards rehabilitation issues generally, the importance attached to the project by the various District authorities, and the changing perceptions of PAFs during the course of the project.
4.04 Elements of Component 6 were also slow to complete, such as the four studies in the Finance & Accounts wing. Nevertheless, overall the follow-on actions from the studies, and the training program, have been implemented to a high standard.
4.05 The quality of project implementation has been good. Physical works in all components have been planned and constructed to high standards and appear to be working well. In Component 5, doubt remains over their maintenance.
4.06 In Component 5, once a clear policy and direction was given to the economic rehabilitation program, it developed some of the more imaginative schemes to be found in any R&R program in the country. The combination of project and District resources was of considerable importance in achieving the success in housing and in economic rehabilitation. It is obvious that some of the rehabilitation schemes were risky, and the Bank's continuing insistence that land-based schemes are likely to be the most 44 sustainable has been borne out by the results. But the overall success rate of about 75% is a significant achievement. It is too early to measure the eventual sustainability of these schemes. While the participation of NGOs was positive, in particular with respect to the adoption of more consultative and participatory practices, their association was short- lived and somewhat problematic. Of the 5 NGOs employed, only CESS remained until the end of the project period. The appointment of an independent monitoring and evaluation team which was associated with the project for its whole life has been an important element in ensuring effective monitoring as well as in pointing out problems and initiating revisions of direction. In contrast to the attention given to many R&R projects in other parts of the country, the Singur project has not received any sustained criticism. The project has several important lessons to offer for future similar projects.
HMWSSB's Views
4.07 HMWSSB will provide an assessment in its Borrower Evaluation. The general feeling amongst senior management during the Mission appeared to be that the project was Successful.
4.08 Component 1 was implemented successfully and within time and the HMWSSB experienced no problems with the operation of the facilities.
4.09 Component 2 underwent significant changes compared with SAR at the time of the Mid-Term Review. This meant delays occurred but the Component has been completed and is providing substantial benefits, particularly, in the area of Unaccounted- for Water Management, and the provision of meters to improve management and increase conservation amongst consumers.
4.10 Component 3 was also delayed due to the late completion of consulting studies. There were problems arising from delayed road cutting permission from Municipal Corporation of Hyderabad (MCH) and the traffic police, and sometimes there was physical resistance from the local population affected by the construction work. Utility services along the alignment of sewers and drains also caused problems as did: the need for the controlled blasting; water infiltration; permission from the railway authorities for laying a major sewer below rail track; and resistance by MCH on the restoration of full road width when only part of the road had been cut. HMWSSB learned many lessons from this experience and although utilization of the newly constructed facilities would not be fully achieved before the Credit closing, substantial work was completed. Accordingly, benefits will nevertheless be derived particularly in protecting the important heritage feature of Hussainsagar Lake from pollution.
4.11 Component 4 provided HMWSSB the opportunity to acquire understanding and competence to undertake the Low Cost Sanitation program. Implementation, with the encouragement of the Bank, has been effective. In the initial years competence was created, familiarization of technology was achieved, communities were motivated and the use of alternative materials to increase quality without increasing cost, was explored. Another important benefit has been effective quality control. Many lessons have been 45
drawn by HMWSSB Management from the implementation of this Component.
4.12 Component 6 has left a deep impression on the Management of HMWSSB of the importance of continuing training at all levels. The Training program was widely regarded as successful.
4.13 Implementation of studies has been of mixed success, though the program was completed in all major respects. HMWSSB has received exposure to national and international consultants which has enriched its staff.
4.14 Institutional Transformation. In addition to the implementation of the individual components, the management at HMWSSB believe that there has been a "cultural" change in the organization in certain important aspects leading to improved efficiency and greater responsiveness. HMWSSB management is in broad agreement with the Mission on this issue (see Annex 1). This cultural change has not yet extended to the lower grades of the organization. The future training program may lead to its extension to these groups. However, senior management, and their counterparts in the GoAP, now believe they have a clearer vision of the direction that the organization should take. The proposed Second Project provides the opportunity to continue to implement these substantial, and in the Indian context, often unique innovations.
GoAP Views
4.15 Overall the borrower perceives that the objectives of the project have been substantially met, despite delays. The lack of an accurate baseline survey resulted in inadequate planning, cost estimates and several revisions of the RRP. The physical infrastructure investments in the 24 resettlement villages were completed with minimal delays by 1993. This led to an imbalance between that component and the Economic Rehabilitation component. The latter, while initially not clearly defined, gained considerable momentum under the leadership of a dynamic Joint Collector. Subsequent progress fluctuated with the attention devoted to it by the District authorities, and the different interests of the successive Joint Collectors. Greater and earlier attention should be given in future projects to.the integrated planning of income generation schemes. The time delay between displacement and rehabilitation resulted in the migration of large numbers of PAFs. The selection and association of NGOs needs to be given careful consideration in future projects.
4.16 For various reasons all the recommendations of the DRP could not be implemented. As a result, the reservoir could not be filled to full supply level. Implementation of the DRP recommendations will be given high priority by GoAP to ensure reservoir filling to full level in the forthcoming monsoon year. 46
V. VIEWS ON FUTURE OPERATIONS - OPERATIONAL PLAN - SUSTAINABILITY
5.01 The additional water made available in 199J through this Project has been integrated into Hyderabad's water supply system and is being operated satisfactorily by HMWSSB. However, commissioning of all the facilities constructed under the project is affected by the reduction in water supply imposed in October 1997 due to insufficient storage in the impounding reservoirs. HMWSSB has prepared an operational plan and accordingly will integrate and operate all the water supply facilities as soon as the raw water availability improves with the arrival of monsoon (1998). The sewage treatment facility constructed under the project will be put to use with the completion and commissioning of the influent pipeline.
5.02 The proposed Second Project, for which appraisal is shortly to commence, provides the opportunity to sustain the investment program and the program of institutional, policy and operational innovations which the First Project has commenced. The Bank's continuing involvement in WSS in the city goes a long way to ensure the sustainability of the First Project over the coming several years.
5.03 Notwithstanding the proposed Second Project, GoAP and the HMWSSB are of the opinion that the HMWSSB will be successful in obtaining: increased autonomy in its day to day operations; freedom to conduct its personnel policy in a manner which will result in efficient and responsive staff at all levels; sufficient resources generated from within the organization by timely tariff revisions; agreement of the consumers to the HMWSSB's objective of providing a 24-hours supply of potable water at the earliest opportunity.
5.04 With continued Bank support, clear objectives of the GoAP and HMWSSB and sufficient resources to achieve them, there are no reasons for doubting that the assets and institutional changes provided by this Project are not sustainable.
VI. FOLLOW UP AND AGREED ACTIONS
6.01 Unfinished works in Component 2, 3 will be completed with GoAP/HMWSSB finance. Unfinished works of Component 5 will be implemented under the proposed Second Project.
6.02 The Mission reminded the Borrower of the obligations which remain, including those entering into under the Agreements, during the post-closure period. These are:
(1) all withdrawal applications to the Bank for eligible expenditures incurred up to March 31 st, 1998 should be submitted to the Bank by July 31, 1998; (2) audits for SOE for the fiscal year 1997/98 should be submitted in accordance with the Audit Covenant by December 31, 1998; (3) HMWSSB's audit entity accounts should be submitted by December 31, 1998; (4) GoAP and HMWSSB will continue to assist with the preparation of the ICR in 47
accordancewith the timetableagreed with the Mission (see below); (5) GoAP& HMWSSBshould prepare their own Evaluationof the Project for inclusionas an Annex to the ICR, and submitit to the Bank as soon as possible but not later than the May 31, 1998; (6) HMWSSBto submitfinal QuarterlyProgress Reportby May 31, 1998; and, (7) in accordancewith Agreementsthe Borroweris obligedto comply with covenants,as appropriate,during period of the Credit.
6.03 The followingprogram for ICR preparationwas agreed.
6.04 The draft of the ICR (Bank portion) includingtables, will be forwarded by the Bank to the Borrowerfor commentby May 31, 1998,and Borrowercomments will be providedto the Bank by June 30, 1998.
6.05 The Borrower's Evaluationwill be sent to the Bankby May 31, 1998.
6.06 Final draft of ICR preparedby the Bank, reflectingthe Borrower's and other reviewerscomments, will be sent to the Managementof the Bank for approval, by August 15, 1998. The final versionof ICR will be sent to Bank's print shop and transmittedto the Bank Board by August 31, 1998.
6.07 A list of the agreed actions and recommendationsis providedat Annex 4. ANNEX 1 Page 1 of 4
Institutional Transformation at HMWSSB
Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB) was established shortly before the commencement of the Project under the Hyderabad Metropolitan Water Supply and Sewerage Act, 1989. Previously the functions of the new institution were performed by Municipal Corporation of Hyderabad and the Public Health Engineering of the Government of Andhra Pradesh (GoAP). The origins were traditional, public sector styles of operation which were, and continue to be, common throughout India. These operational styles may be characterized by Engineering professional domination, heavy emphasis on new construction, extremely weak finances and financial reporting, total dependence on Government for all decisions of significance, and with little attention to the needs of consumers.
The advent of the Project seemed to galvanize the organization. Early Aide Memoires following effectiveness convey the clear impression that this was a new organization keen to transform itself into an efficient and effective deliverer of services to the population of the city. HMWSSB was responsive to the needs, requirements and recommendations of the Bank. It seemed keen to impress by delivering promptly, efficiently and in a professional manner, data, information, new initiatives and properly procured contracts.
Illustrative examples of the lack of care and attention to non-engineering matters prior to formation in 1989, and since changed, are:
(a) The books of accounts had not been audited since 1983. A Director of Finance was soon appointed after 1990 and audits from 1990 on were submitted on time and without comment. (b) There were no formalized procedures for establishing relationships with members of the public. (c) There was no involvement of NGOs embracing community participation. (d) There was a lack of appreciation of the need for promptness. (e) There were no regular reviews of tariffs. (f) Commitment to transparency and accountability was absent.
There were two long serving Managing Directors for much of the project period who were committed and reformist, and much of the credit to the early transformation of the organization is due to them. They were willing to accept the challenges standing in the way of progress. Staff on deputation from the parent departments had either to return, or stay as HMWSSB staff-membersl'/. These Managing Directors, and their senior lo/ Engineeringstaff are still on deputation. This an issue outstandingfrom the Project, to be carried over to the Second. 49
ANNEX 1 Page 2 of 4 management colleagues seemed genuinely to believe that the wider public good was a more important objective than narrow considerations of staffing and procedure which dominate the affairs of public institutions in India. Credit is also due to Government which has increasingly assumed a "hands-off' approach in day-to-day operational matters.
The transformation of the institution involved a change of attitudes and a cultural shift. Below are some illustrative examples of the impact of this institutional transformation.
Institute of Chartered Accountants Annual Award 1995-96
A panel of Judges of The Institute of Chartered Accountants of India judged HMWSSB to have prepared the best Annual Report for 1995-96 in India for institutions in its category. This award reflects the progressive improvement in the presentation of information about HMWSSB in the Annual Report over the years since formation. The Board's philosophy is that the Annual Report should provide far more information for general public consumption than simply a Statement of Accounts. The Annual Report is seen by HMWSSB as a document which presents the organization in its totality to the general public. It provides well illustrated and easy-to-read information both in English and Telugu of HMWSSB's structure, activities in all fields, performance and visions for the future.
Resettlement and Rehabilitation Program (RRP)
Although the responsibility of GoAP, HMWSSB has played a significant part in the RRP of relocating and rehabilitating villages displaced by the rising waters of the Singur Dam. The Project will supply a case study of good practice in R&R planning and implementation in Bank projects. Pressure brought to bear by HMWSSB on Government, and its participation in the program to ensure progress, has greatly aided the successful implementation of this challenging work.
Procurement
This Project is one where procurement was carried out in a planned, effective, timely and organized manner consistent with Bank guidelines. The Bank and HMWSSB, after early deliberations, adopted agreed bid documents for use in the Project. Recognizing the substantial benefits of the Bank documentation, the HMWSSB easily graduated to the adoption of standard bidding documents as they appeared during the course of Project implementation. These documents have been accepted for use by HMWSSB in non-Bank funded projects. The following were noted as providing particular benefits to the Board: 50
ANNEX 1 Page 3 of 4
* The provision of detailed qualification criteria to ensure that only the bidder with the necessary qualification to execute the Contract is selected. * Enhanced levels of requirements for quality control in the technical specifications, resulting in superior quality work. * Adoption of the concept of "single responsibility" approach, which has reduced possible areas of contractual dispute. * Provision of a mobilization advance, as well as the stipulation of penal clauses, which have helped in achieving the result that most works have been completed on time or even ahead of schedule.
The Importance of Training
At the outset of the Project, training was regarded as of little value by Management, and for staff as something to be avoided. A well worked out Training Plan is now an integral part of the organization and is used as a measure to enhance productivity and effectiveness. Insistence on the participation of staff has paid off handsomely and there has been widespread upgrading of awareness which has benefited HMWSSB. Following the induction modules, the next stage of training is to move to skills enhancement.
Project Planning
An effective Project Planning Cell was established at the outset of the Project providing a focused approach to the preparation and implementation monitoring of the contracts as they were executed. Clear demarcation of responsibility appears to have brought out in the Chief Engineers of HMWSSB and their colleagues, a genuine professionalism of approach which is not yet widely encountered in the sector in India.
Loan Administration Change Initiative (LACI)
Recognizing the advances made by HMWSSB in the areas of Project design and financial management and accountability, the Bank selected the organization as one of about twenty world-wide to be pilot projects for the Loan Administration Change Initiative which commenced in 1996. LACI is addressing several fundamental vulnerabilities in the Bank's current loan administration process and is moving towards a system whereby loans are disbursed based on information derived from the project's financial management system based on performance rather than, as now, on Statements of Expenditure. For LACI to work, the Borrower's Financial Management and Accounting system has to be advanced, operate on an accruals basis and be able to link performance to expenditure. It is to the credit of HMWSSB that the LACI tearn regarded the financial 51
ANNEX 1 Page 4 of 4 managementto be fully supportiveof LACI and that the new systemcould be introduced into the organizationwithout much amendmentto the HMWSSB'sexisting system.
Environmental and Social Cell
The developmentof this Cell signifiesHMWSSB's commitmentto wider societal goals.
Decentralization.An importantinnovation has been the decentralizationof engineeringfunctions. This has resulted in a desireby the engineers,not earlier encountered,to take up responsibilitiesfor operationsand maintenanceactivities in the divisions. O&M now provides responsibilitiesand a commandover the use of resources and is attractive.
The institutionaltransformation still has a long way to go. There are important areas where reforms continueto be required and new approachesadopted. These are the challengesfor the futureprojects. However,the organizationthat exists to-day has moved a long way from the one existingin 1990. 52
ANNEX 2 Page 1 of 1 MONITORING INDICATORS
Key Indicators Units Values Totalstaff HM WSSB No. 5460 Staffl100,000people served No. 107.3 Staff/1,000connections No. 21.7 Totalstaff costs(salary plusbenefits) Rs million 73.7 Amountpaid in overtime Rs million 5.3 Pensionssanctioned (< 3 monthsof retirement) No. 0 Revenuebilling Rs million 214.0 Revenuecollection Rs million 178.3 Collection/Billing' Percent 83.3 Consumerreceivables Rs million 249.8 Receivables Months 5.12 Workingratio 1.36 Operatingratio lAl Costof waterproduced Rs/m3 5.53 Cost of watersold Rs/m3 9.06 Averagetariff- Domestic Rs/rn3 4.52 - Non-domestic Rs/m3 16.11 No. latrinesconstructed No. 21136 Populationserved Million 5.09 Waterproduced Millionm3 45.35 Watersold -Domestic Millionm3 23.08 - Non-domestic Million m3 4.59 No. dayssupply not given Days 17 Av. no. of supplyhours per day Hours/day 1.5 No. of publicstandposts No. 4816 Total no. of connections No. 251,988 - Domestic No. 241,699 - Non-domestic No. 9,832 No. of bulksupplies No. 2,083 Domesticconnections with workingmeters Percent 50 Non-domesticconnections with workingmeters Percent 60 Bulk supplyconnections with workingmeters Percent 72 Powercosts Rs million 97.7 No. of watersamples taken No. 29,687 No. of pollutioncases No. 259 Manjirasupply interruptions > 12 hours No. 0
Source: December 1997 Quarterly Progress Report prepared by HMWSSB representing performance during the quarter ending December 1997. 53
ANNEX 3 Page 1 of 1
GUIDANCE ON BORROWER'S CONTRIBUTION TO THE ICR
1. The Borrower's evaluation of the project implementation is an important part of an ICR. It is attached, unedited, to the ICR. It can be selective in its coverage and should address issues and lessons learned in project implementation,from the borrower's perspective. Topics covered can be the same as in the ICR, namely, project design and appraisal, implementation, and project results and sustainability. At each stage of the project the contribution should comment on the performance of both the Bank\IDA and the implementing agencies, with the observations, where possible, supported by evidence or reasoned argument.
2. For project design and appraisal the contribution could address such questions as the appropriateness of the project's objectives, the size of the project and scope of the investments proposed, aspects of design leading to easy (or difficult) implementation and the effect on government institutions and implementing agencies.
3. Project irnplementation experience should be divided into an assessment of the performance of the Bank/IDA in supporting and supervising the project and the performances of the implementing agencies.
4. Project results and sustainabilityshould include an assessment of the benefits arising from the project. Since financial and economic re-analysis of the project will be undertaken by the World Bank mission as part of the ICR, it is suggested that the contribution could most usefully comment on the effects of the project from the borrower's perspective. Such an analysis would be a most useful contribution to the ICR.
5. Based on the foregoing sections, the contribution should list the main lessons learned from the implementation experience.
6. If the contribution is more than ten pages, it should include a summary. The latter is recommended for all but the shortest contributions. 54
ANNEX 4 Page 1 of 1
SUMMARY OF SIGNIFICANT ACTIONS AGREED WITH/RECOMMENDED BY THIS MISSION OR LEFT OVER FROM PREVIOUS MISSIONS
Followingis a table providinga list of actions agreed with/recommendedby the mission.
NO. ACTION BY WHO BYWHEN
I. Resolve the issues concerning the Staff on deputation GoAP-HMWSSB
2. Take decision on ownership of Singur Dam GoAP Immediate
3. Continue with the Dam Review Panel until there is compliance GoAP with its recommendations.
4. Take appropriate action to Implement DRP recommendations GoAP-ID-HMWSSB Immediate
5. Complete implementation of housing program in 5 "new" GoAP-Collector villages and the other affected villages Medak
6. Develop a viable schedule for the repair and maintenance of GoAP-Collector assets in the post-project period Medak
7. Complete 'grounding' of Economic Rehabilitation Schemes in 5 GoAP-Collector "new" villages and additional ERSs proposed in RRP5 for Medak returnees in 64 villages
8. Retain CESS to monitor R&R progress of work uncompleted at GoAP-Collector closing Medak
9. Make appointments to senior posts outstanding in the Finance GoAP-HMWSSB and Accounts Wing of HMWSSB
10. Fumish all withdrawal applications to the Bank for eligible HMWSSB ASAP but no later than expenditures incurred up to 31 -Mar-98 31-Jul-1998
II. Audits for SOEs for the fiscal years 1997/98 and 1998/99 should HMWSSB 31-Dec-98 be submitted in accordance with the Audit Covenant by 31-Dec- 98 and 31-Dec-99 respectively
12. HMWSSB's audit entity accounts should be submitted by 31- HMWSSB 31 -Dec-98 Dec-98 and 31 -Dec-99
13. GoAP and HMWSSB will continue to assist with the preparation GoAP and HMWSSB of the ICR in accordance with the timetable agreed with the Mission
14. GoAP & HMWSSB should prepare their own Evaluation of the GoAP and HMWSSB 31-May-98 at latest Project for inclusion as an Annex to the ICR, and submit it to the Bank as soon as possible
15. Provide the draft ICR including the tables to GoAP & HMWSSB Bank 31 -May-98
16. Provide finalized ICR to GoAP & HMWSSB Bank 30-Sep-98 55
ANNEX 5 Page 1 of 1
LIST OF KEY PERSONS MET
Govt-AndhraPradesh Mr. N.S. Hariharan,Principal Secretary, Municipal Administration and Urban Dev.
HyderabadMetrowater Mr. L.V. Subrahamanyam,Managing Director Supplyand Sewerage - Mr. P.V.R. Ravindra,Director (Projects) and Engineer-in-Chief Board(HMWSSB) - - Mr. PrabhatKumar, Chief GeneralManager (P&M) - --- Mr. Imtiaz Ahmed, General Manager (UFW) - - - - Mr. Bapu Reddy, General Manager ----- Mr. K. Waghre,Deputy General Manager ----- Mr. S. Anand Swaroop,Deputy General Manager - Mr. G. NageswarRao, Director,Finance - - Mr. L. Shivasankar, Chief general Manager (Accounts) - - - Mr. V. Bhanu Murthy Rao, General Manager (Finance) - Mr. G.K. Rao, Director,Personnel
Dr. J.C. Mohanty,Former Managing Director Mr. V. Bhaskar,Former Managing Director Mr. Venkattapaiah,Former Chief Engineer Mr. G. Subrahmaniam,Former Director (Projects)
Govt-AndhraPradesh Mr. S. Misra, Collector,Medak District (Re RRP - CPT 5) - Mr. Yellapa, Joint Collector - - Mr. Azmat Khan, Rehabilitation Officer *- Mr. S.P. Venugopal Rao, General Manager, R&R Division's *- Dr. V.S. Charyulu, Asstt. Director, Animal Husbandry *- Dr. B. Yadagiri, Asstt. Director, Agriculture - - Dr. Srinivas Chari, Asstt. Director, Management
CONSULTANTS RegionalCenter for Urban Prof. V. Lakshmipathi and Env. Studies(RCUES) OsmaniaUniv. (reTraining)
AdminStaff College,H'bad Prof. K. Ramesh (re RRP - CPT 5) NGOs (re LCS - CPT 4) Urban Poor ServiceSyndicate Mr. ChandraMohan
NGOs (re RRP - CPT 5) CESS Dr. S. Galab,Fellow CESS Dr. G. GopinathReddy, Associate Fellow Actionaid Mr. P. Varma APPENDIX B
Borrower's Evaluation APPENDIX B
56
HYDERABAD METROPOLITANWATER SUPPLY AND SEWERAGEBOARD HYDIERABAD WATER SUPPLY AND SANITATION PROJECT (Cr-2 1 15-IN) BORROWERS EVALUATION
1.0 INTRODUCTION
The Hyderabad Water Supply and Sanitation Project (HWSSP) was the first Bank supported urban water supply and sanitation (WSS) project in Hyderabad, the capital city of the State of Andhra Pradesh, India. The Project Cost as per the Staff Appraisal Report (SAR), January, 1990, was INR 2570.60 Millions (US$ 140.64 Million) and revised to INR 3502.61 Millions in July 1997.
2.0 PROJECT OBJECTIVES:
The major project objectives were: a) to provide health, economic efficiency and environmental benefits through (i) an increase in the quantity and an improvement in the reliability of the water supply, (ii) an improvement in both the capacity and the utilization of facilities for the collection, treatment and disposal of waste water, and (iii) achieving a major reduction on the number of households not having safe excreta disposal facilities;
b) to strengthen the management, technical and financial perfornance of sector institutions;
c) ensuring that those people involuntarily displaced by the Singur Dam have a reasonable opportunity to improve, or at least maintain, their productive base and income-earning capacity, as members of a socially integrated community having social, religious and physical infrastructure; and
d) the preparation of future urban water supply-sanitation projects.
3.0 THE PROJECT:
3.1 The project components were:
Component. 1 The Manjira Phase.IV to provide additional 135 MId water. Component.2 The Rehabilitation and Strengthening of the existing water supply system. Component.3 The Rehabilitation and Strengthening of the existing sewerage system. Component.4 Low-Cost Sanitation (LCS) Programme. Component.5 The Resettlement and Rehabilitation of those persons displaced by the Singur Dam. Component.6 Institutional Strengthening, Technical Assistance and Training. 57
4.0 ACHIEVEMENTS OF PROJECT OBJECTIVES:
The HMWSSB implemented both water supply and sewerage works in phased manner and achieved the objectives of each Component of the Project as below:
4.1 Water Supply Sector:
4.1.1 The Component-1 of the project designed to bring an additional 135 Mld of water from Singur dam was completed three months ahead of schedule and treated water was continuously delivered to Hyderabad water supply distribution system since January 1994. The additional water has been integrated into the HMWSSB's water supply system and is being operated, This has helped HMWSSB to meet the water supply requirements during drought years and improve water supply to surrounding nine municipalities and to the urban poor.
4.1.2 The objective of the Component.2 was to improve the reliability of the water supply by including the means whereby water could be transferred, within the trunk distribution system, from areas normally supplied by a less drought-vulnerable source to areas served by a more drought-vulnerable source; and provide equipment to aid effective and efficient management of operation and maintenance. Under this Component, 8 clear water distribution reservoirs (105 Ml aggregate storage capacity) with inlet and outlet mains (25.28 Kms inlets and 9.6 Kms outlets), and a 1200 mm dia PSC/MS transmission main from Saidabad to Sainikpuri of 23.14 Km long, two pump houses were taken up. The rehabilitation and strengthening of the existing distribution system was taken up by replacing 138 Km leaking AC/RCC pipelines with CI pipes in three water supply zones including replacement of service connections and consumer meters (98,100 nos). Bulk flow meters (73 nos) and bulk consumer meters (1730 nos) were also installed under Unaccounted for Water (UFW) Management in the entire system.
4.2 Sanitation Sector:
4.2.1 The investment under Component-3 mainly aimed at abatement of pollution of Hussainsagar. With this aim, diversion units were constructed across the five incoming nalas into Hussainsagar to divert the dry weather flow away from the lake into sewers. Trunk sewers such as Duplicate 'A' Main (1800mm/1600 nm dia to a length of 5.15 Kin), K-51 Sewer (450mm to 1600 mm dia to a length of 5.20 KKm),and laying sewers in the downstream of Banjara nala (300 mm to 600 mm dia to a length of 4.60 Kin) were taken up. A 20 Mld sewage treatment plant with extended aeration process was constructed in the reclaimed land of Hussainsagar for treating domestic sewage and to let out the effluent into Hussainsagar to maintain the hydrology of the lake.
4.2.2 Under Component-4 of the project it was proposed to construct 20,000 twin pit pour flush water sealed latrines in settlements not covered with sewerage facilities and in areas where there is no programme to lay sewers. The LCS programme was implemented in 104 settlements and 22011 toilets were constructed. The HMWSSB had set up a separate 58
Field Management Unit consisting of one Dy.General Manager and four Managers and two Work Inspectors who were responsible for monitoring the construction of toilets and ensuring the quality aspects besides rendering necessary technical guidance to the NGOs. The objective of this programme was to achieve a major reduction in the number of households not having safe excreta disposal facilities and where the sanitary conditions are very poor. Unlike the engineering components, the implementation of low cost sanitation programme required a sociological and community based approach. The skills required to undertake such a programme were not available with the HMWSSB's project staff and hence services of LCS Advisor and NGOs were obtained to implement the programme. The LCS programme has been successfully implemented by the NGOs by conducting surveys, motivating beneficiaries, providing health education, and constructing toilets. The programme was initially implemented in settlements under Municipal Corporation of Hyderabad (MCH) area and subsequently extended to the fringe areas of MCH. The areas were selected based on socio-economic conditions of the families, lack of sewerage facilities, and willingness of households to contribute 20% cost of toilet in shape of material.
4.3 The Resettlement and Rehabilitation Programme (RRP) for those Persons displaced by Singur Dam:
4.3.1 A RRP was prepared for the resettlement and rehabilitation of the persons affected in the 32 villages fully submerged and 37 partly submerged villages and implemented by GoAP through the District Collector, Medak.
Scheme i) House Constructions - 2260 nos ii) Roads - 60.64 Km approach roads 53.95 Km internal roads iii) Schools & other community structures - 53 nos iv) Rehabilitation schemes implemented - 4626 nos
4.3.2 The first RRP was prepared and approved in April 1989 and has been revised five times based on an independent monitoring and evaluation reports and due to inclusion of five new villages. A revised (fifth) RRP was reviewed by the Bank and approved by the GOAP in March 1997. As per original estimation (SAR) 6,120 families were expected to be affected and as per RRP.5 - 11,633 families are affected out of which 6516 families required R&R assistance.
4.4 Institutional Strengthening through Technical Assistance:
4.4.1 At appraisal stage sixteen studies were identified which were finally grouped into twelve (12) studies. Subsequently eleven (I 1) more studies were added during project implementation period. All these studies have been completed. An extensive training programme was undertaken with the assistance of Regional Center for Urban Environment Studies (RCUES), Osmania University. 59
5.0 EVALUATION OF THE PROJECT PREPARATION, APPRAISAL, AND IMPLEMENTATION:
5.1 Project Preparation and Appraisal:
The HMWSSB completed the preparation work in a short period of 8 months between Identification and Appraisal Missions. But the conceptual designs for Components-2 & 3 had not been done by the time of appraisal, as though major items of these Components were identified based on an earlier feasibility report available with HMWSSB. Much of the details for Components-2 & 3 had to be worked out after the Conceptual Design Reports for strengthening and rehabilitation of water supply and sewerage systems were made available by the respective consultants in the month of January, 1995 & December, 1994 respectively. Due to the time lag in the identification of works to be implemented, some of the works mainly in the Component-3 could not be fully completed within the Credit closing date. HMWSSB is of the opinion that the preparation work needs to be completed in a substantial manner by the time the project is appraised. Even though the complete preparation of work was not ready, the SAR prepared by the Bank staff in January'90 identified the Components clearly.
Based on the report and recommendations of the water conservation, leakage control and use management studies, the scope of work related to the Un-accounted For Water Management (UFW) was increased substantially at Mid-Term Review January, 1995. The Bank as well as the HMWSSB felt the need to increase the scope of the work under UFW so that the objective of Component-2 could be achieved to a satisfactory level.
5.2 Project Implementation:
Water Sector:
I Though the works under the Component-2 were identified with a combined effort of Borrower as well as Bank in the Mid-Term Review Jan'95, many of the outlets from the storage reservoirs were not included and those were proposed for financing from some other projects taken up by HMWSSB. Later, these outlets were included in the World Bank financed Project for better correlation and completion in time. Hence, the borrower is of the view that the identification of works should be carried out in such a way that the results are fully achievable from the assets generated without any time gap.
Sanitation Sector:
A 25 Mld UASB Sewage Treatment Plant (STP) was proposed for construction under the Component-3 at Amberpet. The hydraulic and structural designs for the plant were done through the consultants. But, on a suggestion made by the World Bank during one of the Mission's visit in May 1994, the hydraulic designs were referred to the Netherlands consultants. The same caused delay as the Netherlands consultants took a lot of time in offering their views & suggestions on the improvement of hydraulic designs of STP. Though the bids were invited twice, the first time under the NCB procedure and the 60
second time it was restricted to the firms who have applied for bidding documents in response to 1st call, the award could not be decided by the borrower due to the deficiencies in the bids and the work could not be taken up. In this connection the borrower feels that the Bank should have taken a more positive initiative in guiding the borrower in taking decisions in such a critical bid evaluation with their world wide experience. The passive role of the Bank requires a shift.
6.0 PERFORMANCEOF BANK & BORROWER:
The visits by Supervision Missions of the Bank during the entire period of implementation of the Project were very useful. The missions had high level of commitment and provided guidance to the borrower (HMWSSB and GoAP) in implementing,the Project. All the Aide Memoirs of the Bank Mission's were fully documented-with necessary details and contained a list of agreed/recommended actions. The borrower also equally responded to the reviews of the various Mission's by taking follow up actions and by furnishing the Quarterly Progress Reports etc., clearly and timely.
6.1 A noteworthy change made by the Bank in shifting the supervision responsibility from the Bank's headquarters in Washington to its field office in New Delhi in 1995 enabled HMWSSB to remain in contact with the Bank and seek advice on the project implementation as and when required. HMWSSB highly appreciates the quick, positive and comprehensive response to its enquiries, received from the Bank since the project supervision responsibility was moved to the New Delhi office.
6.2 The borrower could satisfy the various Bank Supervision Mission's during their site visits with the quality control measures adopted in implementing the various works.
7.0 PROJECT RESULTS & SUSTAINABILITY:
Results:
7.1 The successful implementation of Component- I resulted in additional 135 Mld of treated water into the system from the Singur Reservoir which is a more dependable source when compared to the two old impounding sources namely; Osmansagar & Himayatsagar. In the recent years, though the Osmansagar & Himayatsagar reservoirs did not receive sufficient inflows, the borrower was able to maintain a reasonable water supply in the system due to this added 135 Mld water from the more reliable source i.e. Singur. Since the various components under Component- I were implemented under, strict quality control, the transmission system of Manjira Water Supply Scheme, Phase-IV, stood as a dependable system transmitting the designed flow of treated water to the city without any disruptions, leakages or losses.
7.2 The implementation of Component-2 achieved the project objective in improving the reliability of water supply system by establishing the means whereby water could be transferred from areas normally supplied by a less drought vulnerable source to areas 61
served by a more drought vulnerable source and in providing equipment to aid effective and efficient management of operation & maintenance. The UFW management programme undertaken under this Component by way of installation of bulk flow meters, leak detection surveys, and replacement of RCC/AC distribution mains with CI pipes, replacement of GI service connections with MDPE pipes, replacement of domestic and bulk consumer meters with dependable ISO meters etc., resulted in the reduction of estimated UFW losses from 35% to 33%.
7.3 The implementation of Component-3 resulted in making a beginning for abatement of pollution of Hussainsagar by intercepting the entry of pollutants into the lake. The implementation of the major duplicate sewers like Duplicate 'A' main, K-5 1, and sewers in Banjara downstream relieved the existing sewers i.e. existing 'A' main, existing K-51 and existing sewerage system in the downstream of Banjara nala areas, from surcharged flow conditions, chokages and overflows and thus improving the sanitation condition in the catchment areas of the respective sewers.
7.4 The implementation of Component-4 i.e. Low Cost Sanitation Programme, achieved a major reduction in the number of households not having the safe excreta disposal facilities in the MCH limits as well as fringe areas to MCH, and thus achieving better sanitary conditions. The local leaders and the beneficiaries have expressed that there has been significant improvement in health in the household members. Another view is that the rent of houses with LCS toilet is higher than houses without them. Particularly the women are very happy with the latrines constructed as it has improved sanitation surrounding their houses and provided privacy and other benefits.
7.5 The implementation of Component-5 i.e. R&R Programme to the extent implemented, although certain scheme remained incomplete by project closing date and which will be continued in the forthcoming Second Project, has substantially met the objective of ensuring that those people involuntarily displaced by the Singur Dam have a reasonable opportunity to improve, or at least maintain, their productive base and income-earning capacity, as members of a socially integrated community having social, religious and physical infrastructure.
7.6 The Technical Assistance under Component-6 obtained from various national and international consultants has enriched the knowledge of the borrower with the latest technical know-how particularly the borrower is benefited with the development of digitized maps of water supply & sewerage system and modernization of financial accounting and revenue billing systems. The extensive training programme undertaken with the assistance of RCUES, OU, has increased the awareness of the HMWSSB's overall operations among the staff and the training for the support staff enhanced their specific skills. The benefits derived from the training for the borrower's staff are considered to be substantial. 62
7.7 Sustainability:
The sustainability of the measured benefits from the Project on financial & economic aspects may prove to be little lower than that expected by the Bank at the time of appraisal due to two main reasons (a) substantially reduced flows in the impounding sources and non filling of Singur Reservoir to the FRL, (b) tariffs being at lower levels throughout the project period.
The facilities constructed have been/are being integrated with the systems in operation. The borrower is confident that all assets created with the finance from the Bank will be operated in a sustainable manner and will provide the benefits as intended.
8.0 LESSONS LEARNT BY THE BORROWER:
8.1 Preparation of Components:
The detailed designs and bidding documents shall be ready for at least 25% of total project cost before appraisal so that the Project could be completed in a shorter time span.
8.2 Adoption of Bank procedures in bid evaluation:
The pre-qualification & post-qualification criteria adopted in entrustment of the various works in the implementation of the Project were helpful in timely completion of works as contractors with relevant and required experience and financial resources only were appointed. The borrower has adopted these procedures in implementation of other Projects such as Megacity Project being implemented with other than World Bank fumding. Other sister departments like Public Health Engineering Department, GoAP also have adopted the World Bank procurement guidelines in calling for bids, evaluation of bids and entrustment of works.
8.3 Preparation and completion of technical jobs through Consultants provided advantage of having latest technical expertise adopted in HMWSSB. The close and collaborative working arrangements with the consultants provided good exposure to the borrower's engineers on the national & international practices.
8.4 Ownership of Singur Dam:
Due to several reasons the Irrigation and Command Area Development Department (ICADD) of GoAP could not implement the DRP reconimendations for repair to the gates of Singur Dam which resulted in not filling up water to FRL and hence the designecd quantity of water was not available. The HMWSSB has taken up the matter with ICADD and GoAP for necessary prompt action and to transfer the ownership of Singur Dam to HMWSSB to give careful attention to the conditions that will ensure realization of project benefits. 63
8.5 Continuity of Borrower's Kea Staff:
Continuity of borrower's key staff is essential for successful implementation of the Project.
8.6 It is essential for all the utility departments in a city to have a proper co-ordination arrangements for implementation of various pipelines works to ensure receipt of timely permissions from appropriate authorities for road excavation etc., to avoid interruption to the programme of execution of works.
8.7 Sufficient geo-technical survey is needed to minimize the variation in quantities in execution of works, particularly in items like hard rock excavations, foundations of structures etc.
9.0 CONCLUSIONS:
9.1 The HMWSSB acknowledges the guidance and support it received from the Bank Officials and particularly the Task Managers in implementing the Project. The visits by Bank Officials as a part of 18 missions were very useful to HMWSSB for discussing and sorting out a number of issues across the table. The HMWSSB appreciates the Bank's gesture in including the outlet mains of reservoirs (originally included under HUDCO assisted Mega city project) for financing under the Project. The relations between the Bank and the borrower were cordial throughout the implementation of the Project.
9.2 The HMWSSB has taken steps to overcome the bottlenecks and to complete the works with dedicated and sincere efforts. The implementation tearn has worked with full devotion and monitored the progress constantly and maintained liaison cordially with the contracting agencies to achieve the targets both physical and financial. Sectoral efficiencies have improved in both water supply and sanitation sectors. The HMWSSB has taken measures to further improve its performance.
9.3 The project has been substantially completed with satisfactory implementation progress and has achieved its development objectives. The HMWSSB thanks the World Bank for its financial assistance as well as the constant encouragement, technical advice and support given during implementation of the project and looks forward to continuing the association for future projects for enhancement of water supply and sanitation service to the people of twin cities of Hyderabad and Secunderabad. The experience and the success in implementing this Project has enabled the HMWSSB to plan a much larger future Project for implementation in a shorter period (Implementation of the Project enabled this Board to occupy the primary position among fellow water utilities). The Bank has also enabled the HMWSSB to emerge as a modem utility with accrual accounting. It will not be an exaggeration to state that the Bank's agenda for reforms in urban water supply and sanitation in India took a definite shape after its experience with HMWSSB. The Bank kept the HMWSSB as a flagship in all related matters. The responsibility that this cast on the HMWSSB to perform explains the many milestones that have been left behind by the HMWSSB. APPENDIX C
The Implementation of the Relocation and Rehabilitation Program APPENDIX C
64
IMPLEMENTATION COMPLETION REPORT
INDIA
HYDERABAD WATER SUPPLY AND SANITATION PROJECT (LOAN 3181/CREDIT 2115-IN)
The Implementation of the Resettlement and Rehabilitation Program
I. Historical Overview
1. The Singur Dam is an impoundment on the river Manjira some 67 kms. from Hyderabad. It was. completed by the Irrigation and Command Area Development Department (ICADD) of the Government of Andhra Pradesh (GoAP) in 1989 and water was impounded behind the dam from that date. It was intended to provide irrigation water, electric power generation and drinking water supply for the Manjira Phase III Stages 1 and 2 schemes to supplement the supply for metropolitan Hyderabad. Once reached, the FRL of the reservoir behind Singur will be 523.6 meters above sea level. This level was supposed to have been reached during the 1990 monsoon, but has not yet been attained. A dam review panel raised concerns about the dam gates which have not been addressed by ICADD. In view of the serious safety implications that would result from failure, there has been only partial filling of the dam. In addition, there has been assurance that physical relocation of those to be resettled would precede the submergence of their settlements. So far, partial filling of the reservoir has resulted in the full submergence of 27 villages, involving lands and structures, and the partial submergence of 37 villages involving only lands.
2. In 1992, 5 'new' villages were classified as subject to submergence, as flood-water, and back-water effects were taken into account in fresh calculations of effects of water impoundment up to full reservoir level. But the particular situation of one village, Singur itself, which lies just downstream of the dam, was not included in these calculations l '/. The inhabitants of the 27 fully submerged villages have been relocated in 24 new resettlement villages. The inhabitants of the 5 'new' villages remain to be fully relocated in 5 new adjacent resettlement sites currently under construction. Compensation for land and structures has been completed in all affected villages, except where court cases are outstanding. Given the slow filling of the dam and the slow progress with the execution of RRP, PAFs were given time to adjust to changing circumstances.
3. The initial Resettlement and Rehabilitation Plan (RRP) for Project-Affected Families (PAFs) was completed in March 1989 ahead of loan/Credit effectiveness, with the assistance of the Centre for Economic and Social Studies (CESS) of Hyderabad. This RRP was approved by the Bank, and is appended to the SAR of January 1990 as Annex 7. This RRP is subsequently
"/ Singurvillage is subjectto intensivewaterlogging as a directresult of the impoundmentof waterjust upstream. It was not included in the RRP. While it was identified as an issue by the Bank's mission of May 1996, and a request that the villagers be relocated was made to the ICADD, but no resolution has so far been forthcoming. 65 referred to as RRPI. It envisaged the relocation of 3630 households, out of a total of 6120 affected households. The large majority of PAFs from the 37 partially submerged villages (PSVs) were not relocated because they only lost land.
4. The RRP1 identified 4628 PAFs who would require assistance in re-establishing economic productivity because they had lost their principal means of livelihood. This was 75% of the total of 6120 PAFs identified. The remaining 25% consisted of absentee and large landowners, or those whose farms were only marginally affected and were thus not included in the numbers considered eligible for receipt of Economic Rehabilitation Schemes (ERSs). They did, of course, receive compensation for the land lost and a house plot. The 4628 PAFs identified were classified as:
Medium Farmers (holding between 2 and 4 hectares of 1684 (28%) land) Small/Marginal Farmers (holding less than 2 hectares) 1794 (29%) Agricultural Laborers/Landless (SCs/STs) 1150 (18%)
5. Specific strategies for these 3 categories of PAFs were elaborated in RRP 1. It was agreed with the Bank that subsequent revisions to the plan would be incorporated on the basis of periodic monitoring reports received from the independent social research institute appointed for monitoring and evaluation (see para. 9 of the SAR) 12/. This was of some importance given the tentative nature of the figures underpinning the plan (CESS had based its projections on a sample survey, not a fall census). Government undertook to implement RRPl over a 3 year period and thus completed by April 1992, and this was covenanted. This timetable was not achieved. Subsequent revisions of the RRP, (RRP2 was produced in April 1992 and RRP3 in July 1993) were considered inadequate by the Bank and intensive monitoring and support by Bank staff during 1993 together with the collection of more accurate base-line information by project authorities resulted in the production of RRP4 which was approved by the Bank in January 1994 - nearly two years after the resettlement and rehabilitation component of the project was due to have been completed. The Bank subsequently agreed completion dates for the RRP4, of September 30, 1995 for the physical works, June 30, 1997 for the completion of ERSs in the Fully Submerged Villages (FSVs) and the Partially Submerged Villages (PSVs), and February 28, 1998 for the completion of the work at the 5 new resettlement sites.
6. The new data collected in late 1993 resulted in considerable upward revisions of estimates of PAFs identified, (from 6,120 to 10,910) and the identification/ reclassification of the 5 'new' resettlement villages, as the effects of periodic floods and the back-water effect were taken into account. The numbers of villages classified as FSVs thus increased to 32, and the numbers of resettlement villages from 24 to 29. The numbers of villages classified as PSVs remained at 37. The numbers of planned ERSs increased from 4628 to 5611. This was further revised upwards to 6516 to take account of 'returnees' claiming entitlements. 4,201 plots were laid out in the 24 resettlement villages with a 20% surplus to deal with future expansion. All plots in the 24 resettlement sites have now been allotted. 2328 houses have been sanctioned under the Weaker Section Housing Program in these villages and all but a very small number
12/ CESSwas appointedto carry out this M&E work and has to date produced 14 half yearly reports 66 have been built. Only a handful await completion. Housing construction was the responsibility of the PAFs with some support from the Rehabilitation Division, Medak.
7. A solid base for planning and implementation was finally available with RRP4, and a clearer categorization of PAFs was possible. Mission aide memoires from 1993 indicate that resettlement and rehabilitation was the only part of the project that was performing poorly. Intensive attention was given to this component during 1993 and 1994 and special Bank supervision missions were devoted exclusively to this issue. Notable and speedy improvements in implementation were forthcoming. Improvements were largely due to sustained and systematic attention by project management, the strengthened Rehabilitation team at District headquarters, and the efforts of the Joint Collector of Medak District.
8. Physical infrastructural work in all the 24 resettlement villages was substantially completed by the beginning of 1996 13/. Supervision missions by the Bank in May 1996, November 1996, and May 1997, as well as the twice yearly monitoring reports from CESS, attested to the adequacy of both the majority of the physical works and to the receipt and retention of the majority of Economic Rehabilitation Schemes (ERSs) in the villages visited. CESS reports indicate up to 74.8% of schemes had so far been retained by the recipients (i.e. they have remained 'intact'). This 'retention rate' was perceived as a crucial measure of the sustainability of the schemes. The land-based schemes have been notably successful, but non- land-based schemes have been less so. A significant issue in the calculation of the success of these schemes is the time required to support their sustainable development. The time elapsed between the receipt of the schemes may be too short to predict sustainability, and an evaluation of their viability and their place in the viability of overall family livelihood strategies remains to be completed. Their sustainability is also linked to the promotion of self-reliance rather than the perpetuation of dependency.
9. From January 1994 a much more concerted attempt was made to tackle the difficult problems of rehabilitation. During the early period of the project the Government's and the Bank's approach to Resettlement and Rehabilitation was rapidly evolving, given the increased public scrutiny of these issues both in India and by the international community. Previously the focus of resettlement had been primarily on compensation for assets lost, and the liberal use of the powers of eminent domain applied through the Land Acquisition Act. By this time, however, greater prominence was being given to the interests of those subject to involuntary relocation and particularly to questions of income restoration.
Situation at Closing (March 1998)
10. Four distinct groups of villages/villagers with their individual problems for project implementation and monitoring can be identified for documenting progress and highlighting obstacles:
1. The 'original' 27 Fully Submerged Villages (FSVs - whose occupants were moved into the 24 Resettlement sites specifically created to receive them.)
13/ No physicalinfrastructural works were planned for the 37 PSVs 67
2. The 37 Partially Submerged Villages (PSVs - whose occupants were not relocated, but who lost land through the filling of the reservoir.) 3. The 5 newly identified FSVs whose occupants are to be relocated in S new resettlement sites under construction adjacent to the old FSVs. 4. Those aspiring to PAF status through attempts to change the status of their village classification from PSV to FSV and thus gain the benefits that are deemed to emerge from any new resettlement sites that might be developed, and others who may have legitimate claims to entitlement (e.g. non-residents, missing awardees, those who have taken their cases to court, or the sons of 'awardees' who have reached the age of 18 between identification of PAFs and actual implementation of the RRP).
11. While a more detailed evaluation of the project remains to be completed by the CESS within the next six months, preliminary results indicate that infrastructural provision is much higher than that found elsewhere in the District and that inhabitants are very satisfied with it. The large majority of PAFs have managed to maintain, and some significantly improve, their incomes, as a result of the program of economic rehabilitation. 3058 (73%) of all PAFs (4191) from the 27 FSVs were given houseplots in the 24 resettlement villages. 2225 (53%) have been able to take advantage of the Weaker Section housing scheme. Benefits under this program have proportionally accrued to the lower castes. 66% of the Scheduled Caste population, 54% of the Backward Castes population and 37% of other castes were able to take up this program. The project has resulted in a significant change in employment characteristics among the PAFs. Amongst those who did not migrate there has, not surprisingly, been a significant increase in the number who have no land. The proportion of landless has risen from 37% before the project to 60% after submergence.
12. To March 1998 substantial progress has been made in 4 of the 5 new resettlement sites, where completion of all house construction is confidently expected by project authorities within 6 months. The completion of such construction work and the voluntary relocation of all villagers is a trigger for the 'grounding' of ERSs and until such time as people move, rehabilitation work will not conmnence. This benchmark was considered to be an important incentive to ensure relocation. On the 5th site (Bellapur) no construction activity is currently being undertaken because of a dispute over entitlements with the dominant caste in that village.
13. The fact that FRL of the reservoir has yet to be reached has provided a 'breathing space' for project officers to progress with rehabilitation activities, and an opportunity for PAFs to continue to use submergence lands in their efforts to re-establish livelihoods. But it has also led to rising expectations among PAFs who remain to be both resettled and rehabilitated, and amongst PAFs and others who consider that either they were unfairly treated in the past or who think they may be able to establish future claims to entitlements. These enhanced demands, fueled by the lack of any apparent threat from rising reservoir levels, as well as-from perceptions that their entitlements are unlikely to be curtailed, have exacerbated delays and are the major current obstacles to full completion of the RRP. PAFs in the 27 FSVs agreed to resettlement with less resistance than those in the 5 new sites. The numbers of 'retumees' claiming entitlement have increased, and children who were minors at the time of the award of benefits have now gained adulthood. This is estimated by CESS to be as many as 34% of all PAFs from the 27 FSVs. The opportunity to maintain residence in acquired structures (because the threat of 68 flooding/submergence is perceived as minimal) and simultaneously gain access to new structures and facilities, is, naturally, quite attractive to some PAFs. The sub-divisions of households to increase the numbers of household members who can register as PAFs, has complicated progress and inflated numbers. 1,162 (approx.) families in the 5 new resettlement sites have secured entitlements to 1,466 ERSs.
14. As of March 1998, 1763 (27%) ERSs out of a total of 6516 schemes planned remain to be 'grounded' 14/. But, of this number, 1466 (83%) are to be found in the 5 new resettlement sites. The remaining 297 schemes still outstanding in the other villages are planned for 'returnees' of one sort or another and are confidently expected to be completed in the coming 2 months. CESS reports indicate that in the 24 resettlement villages, all but 6 of the planned 3,514 ERSs have been grounded. Housing construction remains to be completed in the 5 'new' resettlement sites (PAF perception that the award of their ERS might be jeopardized if they had not built and relocated prior to the closing date of the project at the end of March 1998 seems to have spurred recent activity).
Remaining Concerns at Closing
15. There is concern about: the viability of some of the ERS schemes; the maintenance of the assets created under the Resettlement and Rehabilitation component; and the ability to relocate the villagers from the five re-classified villages to the new resettlement sites. There is also concern about establishing a cut-off date for those claiming entitlement. Additionally five partially submerged villages, where not all structures have been acquired, are asking that the whole of their village be included and that they be re-classified as FSVs. The position of Singur village itself, just below the dam, which is subject to extensive waterlogging, remains to be resolved. This village was not included in the RRP.
16. While all infrastructural provisions (roads, public buildings, electricity and water) in all 29 resettlement sites have been provided, water and electricity connections remain to be activated in the 5 new resettlement sites, and small deficiencies remain in some resettlement villages. These have been identified in the regular CESS monitoring reports, and where possible appear to have been addressed. Other deficiencies are associated with the need for regular maintenance of assets, now the responsibility of the local Panchayats, inappropriate location of some public buildings, seasonal fluctuations in the availability of water in this drought-prone area, and frequent fluctuations in the availability of electricity. These together put the sustainability of some investments in question. Assurances by the District Administration that sufficient local resources will be available for regular maintenance have been obtained, but the lack of a revenue base for these recently created Panchayats means that there are unlikely to be adequate resources in the future.
14/ By 'grounded' projectauthorities mean that assets for the EconomicRehabilitation Schemes (ERSs) have been purchasedand transferredto the recipients.It does not imply the successof the scheme. 69
Table 1 Planned and completed activities under the Resettlement & Rehabilitation Plan
Revised Cost Item Planned (MTR) Currently Estimate Cost Actual (SAR) RRP4 functioning Rs Millions Rs. Millions INFRASTRUCTURE Approach roads -formation (kn¢) i3/ 69 65.50 65.50 17.95 38.085 - metalling (hns) 88 66.60 66.60 . Intemal roads - formation & 59 69.35 69.35 17.52 45.290 metalling (ksns)
DRINKING WATER 10.94 9.088 borewells (Nos.) 89 97 72 l piped systems (Nos.) l°l 20 28 21 _ _ l
ELECTRICITY "1/. 2.84 6.709 Electricitypowerlines (kms) 34 57 Electricity transforners (Nos.) 14 29 _
BUILDINGS 31.31 22.052 School rooms / 179 95 Community Halls 23 27 . l General purpose buildings 19, 29 23 . ll Primary health centers 7 8 Veterinary clinics 16 8
REHABILITATION SelfEmployment Schemes 28/ 1524 6516 4735 15:76 56.430 Employment training (Families) 270 350 1.55 0-694 Irrigation Borewells 2, 315 104 73 23.76 12.420 Housing for SClSTs 1150 2888 2273 25.03 37.000 1Tousingplots . . Land for Housing Plots 4.24 9.043 Resettlement Grants 9.05
151 Approach roads to 19 resettlement villages have been completed. They were not required for the remaining I0 of the 29 new settlements 16~ While piped systems have been provided in the 5 'new' resettlement villages they are not yet functional because PAFs have not relocated. '7/ Electricity supply is currently operational in 21 of the 24 original resettlement villages. It has not yet been connected in the 5 new resettlement villages. Is/ 26 school buildings have been constructed in the 29 new settlements 19/ These consist of 19 Gram Panchayat buildings and 4 libraries 20 This includes 4555 ERSs grounded from the year 1994. A balance of 297 schemes remain to be grounded in the 64 originally identified villages (for non-residents and missing awardees). In the 24 original resettlement villages 3508 schemes out of a total of 3514 schemes have been grounded. Analysis of schemes in these 24 villages by CESS indicates that 2628 schemes (75%) remain intact. 1466 schemes are planned, but remain to be grounded in the 5 new resettlement villages once villagers relocate. 21/ This constructed number is based on an overall retention rate for schemes of 75%, as computed by CESS. 22/ While 151 borewells were eventually drilled for purposes of agricultural intensification only 104 have been put to use 70
II. Aspects of the RRP Process in Greater Detail
The Baseline (1989) Survey
17. The initial Resettlement and Rehabilitation Plan (RRP1) was produced by the CESS in March 1989. This quantified the requirements for land acquisition and infrastructural development and set parameters for the proposed economic rehabilitation program, with cosigns. These became the base for the RRP appended to the SAR of January 1990. Structures up to level 523.60 meters, which was the full reservoir level for the darn, were to be acquired. The report noted that this did not include an additional 0.3 meter to take account of wave height, or another 1 meter for backwater effect. The report remained an incomplete draft and the stratified random sampling was too small - 1 1% of PAFs from FSVs and only 4% from PSVs were interviewed.
18. Relocation began as early as 1986. The submergence area had been neglected for three decades by development agencies in anticipation of the project. The region is prone to periodic droughts and there remains a serious shortage of water. While some attempts were made in RRP1 to quantify existing circumstances in the 27 FSVs these were not well developed. Illiteracy rates among the sampled population were estimated at 76.5%. Income levels averaged Rs 10,415 per household, and only 13% of the population had received primary education. At the time of the survey some 10-15% of villagers in the 27 submergence villages had evacuated the area. As many as one third saw themselves as eventually leaving agricultural occupations. Villagers felt that compensation for housing was roughly adequate, but that compensation for land was grossly inadequate. Compensation for land averaged Rs 8,000 per hectare for dryland, and Rs 12,000 per hectare for wetland, whereas prices of land in the area had apparently risen to Rs 37,000 and Rs 49,400 per hectare for dryland and wetland respectively at that time.
19. While full compensation remained to be received at the time of the 1989 study, the investigation indicated that, while 60% of compensation received had gone to purchasing productive assets including land, the amount of replacement land bought was only about 30% of land acquired by the project. Richer farmers were eager to dispose of their land and move out of this relatively unproductive area. The draft RRP did not propose to provide help in the restoration of incomes to large farmers. The worst hit were agricultural laborers, many of whom had been cultivating government land for which they received no compensation. Village specialists with no land holdings, but who were essential parts of the village economy, were not entitled to compensation, other than for the structures in which they lived, as well as an ex-gratia payment of Rs 1,000.
20. The 1989 study estimated that there were 1,150 households (10,694 vulnerable agricultural laborers) in the 27 FSVs, and a further 2,000 households (15,17$ vulnerable agricultural laborers) in the (then estimated) 42 PSVs who would require economic rehabilitation. The suggested solution to the problem of income restoration was the intensification of agricultural production through the development of borewells (315 were originally proposed) of which 30% would be reserved for SCs/STs. The survey also recommended the distribution of government land to the landless, and the temporary employment of villagers on physical infrastructural works associated with the development of the new resettlement sites, and a Weaker Section housing program. The study also 71 recommended that self-employment schemes for a further 2367 persons using the model provided by the Integrated Rural Development Program (IRDP) be developed, paralleled by training for 268 literate beneficiaries. The RRP proposed financing self-employment schemes through bank loans, part subsidies, and margin money, with the subsidy elemrrentvarying according to the economic status of the beneficiary. This was a point of dispute with the Bank supervision missions who maintained that an objective of the rehabilitation scheme was to ensure that PAFs were not to become further indebted. The study suggested that a third of the ERSs be reserved for SCs/STs and that priority be devoted to those below the poverty line (Rs 6,400 in 1990). There was little thought given to the institutional arrangements for the implementation of the plan, apart from the fact that it would be administered by the Collector's office in Medak District, in which all the resettlement was taking place.
The First Phase of Implementation (1990 - 1993)
21. To speed up land acquisition which was still underway, three land acquisition units were added to the original one. All'that GoAP committed itself to, in addition to compensation payments under the land acquisition act, was an ex-gratia cash grant in lieu of rehabilitation. This was 50% of compensation, or Rs 1,000 (whichever was less) for those losing either house or land, and 50% of compensation, or Rs 5,000 (whichever was less) for those losing both. Provisions for basic amenities at new resettlement sites were made in accordance with Government norms prevalent at the time and the Basic Minimum Needs Program. Neither ex gratia payments nor basic amenities were at that time forthcoming. Some employment opportunities on dam related work were to be given to PAFs on a preferential basis.
22. The GoAP, through the District Administration in Medak, was responsible for implementation of the RRP. The implementation capacity of Medak district to execute the agreed RRP was strengthened by the addition of a Rehabilitation Officer with the rank of Deputy Collector to head a division of 23 persons together with an engineering division responsible for physical infrastructural works consisting of 51 persons recruited from the Panchayati Raj Engineering Department. While physical infrastructural provision proceeded relatively smoothly, (HMWSSB deputed an experienced Engineer of General Manager rank to lead the infrastructure team at the Resettlement Unit in the District in 1992), little progress was made with the economic rehabilitation work.
23. As a result of concerns about slow progress, four Bank missions which focused virtually exclusively on this component were mounted between January and July 1993. These aimed at finalizing RRP3 and improving performance. Considerable emphasis in RRPl was given to the intensification of agricultural production for small farmers through the construction of irrigation borewells. The assumption was that land-based rehabilitation programs were likely to meet with greater success. In the event this was only feasible on a much smaller scale than anticipated, because of the failure to locate adequate groundwater. The missions pointed out the weak administration of the R&R component of the project. Hardship to the PAFs was avoided during this period because of delays in filling the reservoir, and because of the availability of work on infrastructural works, particularly roads.
24. The supervision mission of March 1993 identified R&R as the 'one really substantive issue' in the project which did not seem to be receiving the attention that the Bank would have 72 liked. Part of the reason for this was attributed to the separate responsibility given for the implementation of this component to the Medak District authorities through the State Municipal Administration & Urban Development Department. Thus, responsibility was not under the control of the HMWSSB, and the same sense of urgency that infused the progress in other components of the was not evident. While relocation to the 24 resettlement sites had been accomplished by April 1992 (the original deadline set in RRP1) development of these sites remained far from complete. The economic rehabilitation program was being carried out in an ad-hoc manner, with little purposive direction. The officer-in-charge of the RRP in Medak District remained at Deputy Collector rank, despite the fact that an officer of the rank of Joint Collector had been proposed at appraisal and agreed with Government. The Deputy Collector did not have sufficient authority to mobilize government resources to carry out the IRDP work envisaged. The Resettlement Division remained understaffed.
RRP4 - Rapid Progress with Implementation from 1994
25. By January 1994 Medak District Collector's Rehabilitation Division (RD) had, with informal assistance from HMWSSB, and in consultation with the Bank, made its fourth revision of the RRP. RRP4 was developed on the basis of much wider consultations and with the help of a much more solid data base. It was finalized in close collaboration with the Bank.
26. A new head of the Rehabilitation Office in Sangareddy, Medak District headquarters, with the rank of Joint Collector, was appointed in June 1993. Her primary responsibility was to ensure progress of the RRP. She remained in the post until April 1995, and oversaw the transformation of this component from one which was failing, to one which was in many respects a remarkable success. The revised baseline data was collected in October/November 1993. Implementation of ERSs proceeded apace during 1994 (1000 schemes were grounded between June and October of that year alone). Officers with skills in agriculture and animal husbandry were seconded to the Rehabilitation Office during the latter part of 1993 and a person with skills in small industrial development was seconded to the program in June 1994 as Rehabilitation Officer. He remains in charge of the day to day progress of the RRP.
27. During her tenure the Joint Collector oversaw the completion of infrastructural works in most of the 24 resettlement villages, and the grounding of the bulk of the ERSs, except those in the 5 new resettlement sites. From the beginning of 1995 she was gradually drawn into other duties. There was something of a hiatus during the middle of 1995. She was replaced for a short time by a Joint Collector who had to divide his time between the project and other District duties. While he restricted ERSs to land schemes only, running counter to earlier efforts and Bank recommendations, he did manage to oversee the purchase of 600 acres of land for distribution to PAFs. He was succeeded in August 1995 by another Joint Collector, who rem.ained in the post until August 1997. During this time there was much more continuity of Bank R&R specialists. Since early 1994 there has only been one change in Bank personnel dealing with these issues.
28. Under RRP4 eligibility criteria were different and there were a number of innovative elements for economic rehabilitation. These resulted in a six month turn-around in economic rehabilitation from a project component that could be deemed a failure, to one in which there was a high likelihood that all beneficiaries would receive high quality productive assets, which 73 they want, and which can be authoritatively demonstrated to have improved their living standards.
29. By 1994 the number of PAFs had undergone considerable upward revision. RRP4 covered PAFs in all 69 villages using a maximum 1994 poverty line criteria of Rs 8,500 per annum. The RRP4's rationale for the Rs 8,500 income criteria was that it would be more inclusive than that of the original RRP 1. The original RRP envisaged exclusion of landless PAFs for self-employment schemes. They were to be provided only with housing grants on the assumption that adequate agricultural employment for them would be generated in the fields of medium and large farmers due to borewell development. As indicated earlier borewell development fell short of expectation. Only 79 (of 105 operationalized) are currently functional.
30. Medium farmers were also excluded from self-employment schemes, regardless of income. CESS had conducted a sample survey of four villages (Osrikapally, Paladugu, Manthur and J. Osrikapally) finding 75% with incomes above Rs 10,000 and most with multiple productive assets in addition to agricultural land. The new criteria would still exclude most medium farmers from receipt of ERSs but would include any whose income was at or below the poverty line.
31. It had earlier been planned to cover PAFs only in those villages where more than 20% of lands were submerged. The RRP4 proposed covering all fully and partially submerged villages, because in villages where less than 20% of lands had been submerged, there were PAFs who lost their entire land.
32. It was possible for the first time (CESS Report, para. 30 above) to quantify the income of PAFs. Estimating pre-displacement income was fraught with subjectivity and inaccuracies. Current income was a-good indication of need for economic rehabilitation. Income criteria would include all landless PAFs, in addition to SC/STs, for the RRP Weaker Section housing program.
33. The number of families eligible for the ERSs in RRP1 was 4,628. Using the comprehensive survey data and a new income eligibility criteria, the number in 1994 rose to 5,611 PAFs. This included the five 'new' FSVs. Total PAFs estimated in 1990 were 6,120; in 1993 this figure had risen to 10,910. Of these, some 3,890 (36%) were not traceable either through death or migration. Of the remaining 7,020 PAFs still in the area, 3,575 were living in the 24 resettlement sites, and another 1,399 (later increased to 1466) are to be resettled in the five new sites, for a total of 4974 resettled PAFs. In response to the new data, the RRP budget was revised from Rs 161.98 million at the time of appraisal to Rs 264.7 million. This revision was agreed with the Bank during the supervision mission in early 1994. 74
Table 2 Number of Project Affected Families
Status 27 FullySubmerged 37 Partially Five New' Total Villages:No. of SubmergedVillages: Villages:No. of PAFs No of PAFs PAFs. Total PAFs 7,396 2,115 1,,399 10,910 Not residingin the villages(migrated) 3,135 755 Nil 3,890 PAFshaving annual incomeabove Rs 8,500 1,028 182 199 1,409 Total not requiringassistance: 4,163 937 199 5,200 11 Total requiringassistance (income below Rs 8,500) 3,233 1,178 1,200 5,611
34. There were a number of innovative elements to RRP4, some of which were additional to those agreed with the Bank. These were:
* NGOs were used in designing and carrying out the program; * Participatory Rural Appraisal (PRA) techniques for consulting with PAFs in designing the ERSs. * NGOs were to adopt villages for long term involvement beyond completion of the RRP. * Village Rehabilitation Reports were to be prepared as part of the ERS design process. * Each household-level ERS was supported by a standard grant of Rs 8,000, and households were given subsidized Bank loans, as per the Integrated Rural Development Program (IRDP), for schemes over this amount. 231 SC/ST households received additional subsidies. Unemployed, educated village youth were to be employed as Village-level Workers (VLWs) to help implement and monitor the ERSs. These were also ERS beneficiaries, and were expected to use learned liaison skills to work with the district government after RRP4 was completed. * In recognition that lift irrigation from the newly created drinking water reservoir cannot be used to offset the loss of submerged land, GoAP attempted to strengthen Village-level resources. This included plans to set up cooperatives and encouraging entrepreneurs to create village-level enterprises for providing alternative means of employment and also strengthening household-level income generating schemes by strengthening backward (resource) and forward (marketing) linkages. * Innovative deployment of other District resources to support rehabilitation measures,
23/ This was controversial. The World Bank had a number of reservations about the incorporation of loans into the RRP, since the original RRP was quite explicit that, ...."the total cost of establishing a family in one of the available occupations will be met by GoAP, and the affected family will not have to becomejindebted in order to re- establish their livelihood." RRP4 nevertheless instituted this loan program from commercial banks for those PAFs choosing schemes valued at more than the standard grant of Rs 8,000. The RRP4 document justified these loans on the grounds that: a) people choosing high cost schemes would otherwise be unfairly subsidized; b) that people would feel a greater sense of ownership of their assets if they had a personal stake in them; and c) that without a grant limit, each PAF would choose only the most expensive schemes whether or not these were appropriate for them. From what subsequent Bank missions can determine in the field, this appears to have been a workable policy decision. So far it has produced a flexible array of attractive and relatively sustainable options. 75
such as the seeding of the lake with fingerlings, the development of fodder and of forest cover on the draw-down lands surrounding the reservoir, and the provision of low cost pit latrines.
35. GoAP made an effort to fully document the Economic Rehabilitation process. It created a Management Information System to manage a comprehensive data base and produced individual reports on each of the village-level schemes. It was also to produce Completion/Impact Studies of each village where ERSs had been grounded with the help of the engaged NGOs. These various measures were to provide the documentation base for a final evaluation report by the M&E agency six months after the RRP4 completion date, then scheduled for September 1995. The M&E agency, (CESS) took on implementation of the ERSs in two villages, which lent an added level of authenticity to its evaluation.
Progress with Economic Rehabilitation Schemes.
36. By January 1995, 2,180 of 5,611 PAFs (39%) in the FSVs and PSVs had received ERSs (up from 16% reported in the September 1994 Quarterly Report). Nearly 80% of the 4,433 PAFs from the 32 FSVs (which includes the 5 new resettlement sites) had been relocated in 24 resettlement sites. Of those resettled in those 24 sites 43% had received ERSs. The majority of the infrastructure for the 24 resettlement villages was in place, and work on the 5 new resettlement sites was to commence in 1995. This latter was scheduled to be completed within one year.
37. ERSs had been grounded in 11 of the 29 resettlement villages (38% coverage). About 60% of ERSs in a further 10 villages had been grounded and this was expected to be completed by the end of February 1995. The 3 remaining villages had been taken up by one NGO, Youth for Action, which withdrew unexpectedly without starting the work of grounding the planned ERSs. Work in these 3 villages was taken up by the Rehabilitation Division, and was expected to be completed by the end of March 1995. At that time it was confidently expected that ERSs in the 5 new sites would be completed by the middle of the following year (June 1996) at the latest.
38. The schemes were chosen through a combination of participatory rural appraisal (PRA) techniques, assessment of local resources, and economic feasibility studies for each scheme with the help of NGOs and the Village Level Workers. The procurement process was public and transparent. Weekly income was being carefully monitored by the 36 Village Level Workers (VLWs) and their reports indicated a substantial rise in family income for affected households 24/
39. By September 1995, 51% of beneficiaries eligible for ERSs had been covered, or 2,831 of 5,61 1 eligible PAFs in the 37 PSVs, the 24 resettlement villages, and the 5 new resettlement sites. The village-wise level of completion in the 24 resettlement villages is given in Table 3. ERSs had been grounded in 18 of the 24 original resettlements. Substantial numbers of ERSs
24/ VillageLevel Workers(VLWs) were appointedby the project authoritiesfrom amongthe beneficiariesin all the 24 resettlementsites and for clustersof the partiallysubmerged villages, to assist the NGOs and to monitorimplementation of the physicalinfrastructural provisions, house construction,and the ERSs. 76
remained to be grounded in those villages from which the NGO Youth for Action withdrew. No ERSs had been grounded in the 5 new resettlement sites. All the PAFs in the 24 resettlement villages had been surveyed for their ERS preference. Given the numbers of returnees, together with disputed claims to entitlement, it is difficult to obtain a precise figure for additional ERSs required. Project Officials indicate that, in addition to the 1,466 ERSs whiclh will be required for the 5 new resettlement sites there were, as of March 1997, 297 outstanding ]_RSs remaining to be grounded.
III. Commentary on the RRP Implementation
The work of NGOs
40. Five NGOs were selected by the RD in 1993 to prepare and implement economic rehabilitation schemes for 22 villages. If this procedure was found successfilW,the Rehabilitation Office was prepared to induct more NGOs if necessary. The NGOs would conduct a detailed survey of the PAFs and village resources and prepare a draft plan for ERSs 'within the framework of a Village Rehabilitation Report. It was expected that 3 of the NGOs woudd cover 6 villages each, and the two others would cover 2 villages each, regardless of the numbers of PAFs in each village. The Resettlement Office itself would cover the remaining villages. CESS, the monitoring institution undertook to work in two villages, to strengthen its own capacities and understanding..
41. Of the NGOs, the Deccan Development Society (DDS) had particularly strong qualifications because it had worked in Medak District villages for over a decade, including one of those for whom it took RRP responsibility. Its particular strength had been with the management of women's sanghams (committees), balwadis (nurseries); non-formal education, purchasing land, permaculture schemes for rejuvenating marginal land, and managing communal resources for drought relief among the sangham members. PRERANA was a relatively new group, made up of primarily young professionals, whose experience in rural development to date had been in R&R, but not in Medak District. Advanced Rural Technology Hyderabad Inputs Centre (ARTHIC) was an established NGO, whose membership included retired professionals and government officials. Youth for Action (YFA) withdrew unexpectedly during implementation, but later, in the event, all but CESS withdrew. DDS indicated that they had other work to do and that the constraints of working for government were too great. PRERANA withdrew after completing its Village Rehabilitation Reports, as did ARTHIC.
42. DDS had considerable success in organizing villagers to purchase plots of land through pooling their ERS grants. There was however a tendency to accept whatever ERSs the PAFs chose without determining feasibility or viability, which led to the establishmuentof too many schemes of the same type in particular locations. This exceeded demand or absorptive capacity - particularly for animal husbandry options, and small business options. The NGOs also had difficulty in meeting the rather rigorous monitoring requirements imposed by the project authorities, and necessitated by Bank procurement and disbursement rules. They felt that they should have been given block grants to be used as appropriate. Also, the competition among Rehabilitation Office staff and NGOs was an inducement for project staff to perform well. The presence of the NGOs along with Village Level Workers greatly strengthened the monitoring of 77
the procurement as well as the establishment of the various ERSs.
The Role of the Independent Monitoring & Evaluation Team
43. The CESS has been associated with the project since it carried out the original socio- economic survey in 1989. They were subsequently employed to provide half yearly supervision, monitoring and evaluation reports. Their continued association is unique in projects of this type and their inputs have been important, not only in documenting progress, but also in alerting the project authorities and the Bank missions to problems of implementation. Their 14 half yearly reports are an important record of the various dimensions of project implementation and their role is one that should be emulated in the development of similar projects. They have been employed to carry out the post-project impact evaluation study which is expected to be completed by September 1998. The experience with NGO participation was mixed. While initial enthusiasm for their participation was high, and they achieved early gains, their longer term association with the project was more problematic as they took on different agendas, or withdrew their support.
The Role of Government
44. The Resettlement and Rehabilitation Plan was implemented through the Medak Collector's office. A major advantage was that, once the authority of the Joint Collector could be established, the integrated resources of the District could be applied to the project to provide opportunities and resources that might not otherwise have been available. Deployment of resources from other departments, such as forestry, fisheries, small industries, agriculture, health, education, and the District Rural Development Authority, was thus possible. The main disadvantage of the involvement of the Medak Collector's office was that execution of the project was somewhat divorced from other components of the project which were implemented through the HMWSSB. The shortage of skilled administrative capacity within the State is acknowledged and the temptation to focus on other issues inescapable, but the progress with this component seems to have been directly proportional to the attention given to it by the Joint Collector.
45. Factoring in inflation. The Rs 8,000, available to those entitled for receipt of a rehabilitation package no longer purchases the same as it could one or two years ago (for example, Rs 8,000 now buys seven small ruminants, rather than the eleven that it could earlier). The R&R Action Plan did not factor into account inflation when it determined the level of benefit to which people were entitled. It is becoming apparent that inflation currently places at risk the ability to re-establish livelihoods. This is a lesson to be leamed as future projects are planned. Entitlements should be calculated in terms of assets to be provided rather than in terms of a fixed amount. While it would be desirable to provide enhanced benefits to those who received reduced packages, the complexities of retro-fitting at this stage may well outnumber the advantages. 300 animal husbandry packages may need to be 'topped up' because of inflation, in the grounding of remaining schemes.
46. Delivering the outstanding Economic Rehabilitation Packages. The issue of viable livelihood regeneration is called into question by the continued erosion of the local purchasing 78
power of the Rupee for those remaining to be resettled and rehabilitated. It is understood that, rather than forcing resettlement as a way of triggering access to economic rehabilitation schemes, savings accounts are being opened for those who are entitled to benefits but who have not yet claimed them. The Rs 8,000 deposited will be disbursed at a time convenient to the 'awardee' after demonstrating willingness to resettle. The joint signatories to the bank account would be the Collector or his/her representative and the 'awardee'. This has the benefit of allowing interest to be earned over time and thus is a hedge against further inflation, as well as offering an incentive to resettle in order to withdraw the entitlement. The assumption behind this practice is that 'awardees' are currently able to sustain their livelihoods without recourse to external assistance, and that the 'grounding' of the scheme is not essential for this.
Sustainability of Economic Rehabilitation Schemes (ERSs).
47. The various schemes aimed at the economic rehabilitation of PAFs are divided between land-, and non-land-based activities. They are classified as:
* Agricultural Schemes - purchasing of land for the landless, plough bullocks, carts and bullocks, pump irrigation. * Animal Husbandry Schemes - crossbred buffaloes, jersey cows, sheep and goat units. * Industry, Service, Business Schemes - e.g. small tea shops ('hotels'), businesses, vending. * Social Security schemes for the aged and the disabled.
48. Evidence from the 13th CESS half-yearly report (October 1996 - March 1997) indicated that 2,501 schemes out of a total of 3,51 1 of these ERSs have 'remained intact' (i.e. they continue to be operational) in the 24 totally submerged villages. The 14th, and final report covering the period from April to September 1997, indicates that 2,273 schemes out of a total of 3,494 remain 'intact'. This figure rises further if account is taken of schemes which have transferred location (some small businesses and shops for example have moved to more appropriate locations such as cross-roads) or have been replaced through insurance claims. There are, however, significant variations in sustainability, even after a relatively short period of three years since the earliest of them were 'grounded', both in terms of schemes and in terms of villages. Land-based schemes, as expected, have been the most sustainable, whereas the more risky animal husbandry and small business schemes have been much less successful with less than a 50% retention rate. Little attention was given to the particular needs of women, and only 725 (or 20%) of the 3,494 schemes were given to women. However, project monitoring does not systematically desegregate statistics on gender lines. Further details can be found in Table 3 below. 79
Table 3 Status of various Economic Rehabilitation Schemes in 24 resettlement villages (March 1998)
Type of Scheme No. of schemes NoJage of schemes Grounded Sustained Agriculture: 1306 (37.5%) 984 (74.5%) Land 583 581 (99.5%) Plough Bullocks 560 263 (46.9%) Bullock and Cart 34 16 (47.0%) Minor Irrigation/Agrl. implements 129 124 (87.3%)
Animal Husbandry 1116 (32.0%) 492 (43.7%) Milch animal 531 200 (37.5%) Jersey Cow 31 5 (16.1%) Sheep 323 189 (57.3%) Goats 180 64 (35.5%) Fishing Equipment 49 32 (65.5%) Poultry 2 2 (100.0%)
Small Industry/Business (ISB) 500 (14.0%) 221 (45.6%) Kirana (groceriesl provisions 121 63 (49.6%) Cloth 85 22 (26.2%) Tailoring 24 15 (60.0%) Others 270 121 (48.6%)
Social Security Schemes 572 (16.5%) 576 (100%) |_TOTAL 3494 (100.0%/6) 2273 (65.05%)
49. The preliminary analysis by CESS of the reasons for the failure of schemes is instructive. The most common failures are reported from the animal husbandry sector where the death of animals, their migration in search of fodder, and their sale in order to provide resources to purchase different assets appear to be the major reasons. If some of these apparent failures are discounted (because insurance from death though illness provides for replacement, lack of ability to enumerate does not necessarily mean non-viability, and sales do not appear to be distress sales), then the proportion of retained schemes rises to about 75%. According to CESS figures, of 205 schemes which were not retained 146 (71%) were sold. Predictably the most successful of the ERSs have been the land-based schemes, and project management has indicated that wherever possible these will be vigorously pursued for the remaining project beneficiaries in the five 'new' villages. Through tie ups with existing govermmentprograms for support to the Scheduled Castes, rehabilitation benefits can be combined to produce a package which will allow for the purchase of land at market prices.
50. CESS also investigated the retention of schemes according to sub-sections of the village populations, and reported that there was a correlation between the position of PAFs in the caste hierarchy of villages and the retention of schemes; the lower the caste position, the higher the rate of retention. One interpretation of this might be that the other castes attach less importance to the schemes because they are less dependent on them for sustaining their economic livelihoods. It is important to note that these ERSs do not appear to be, in the majority of cases presented, the only sources of livelihood. Villagers are supplementing their income with other sources - agricultural wage labor, leasing of land for agricultural production, etc. The economic rehabilitation schemes offer additional insurance against impoverishment and important opportunities to diversify household economic portfolios. The post-project evaluation of the 80 economic rehabilitation program should be able to further investigate this and analyze the processes of economic diversification.
51. Maintenance of Project assets. While the project reports completion of all physical works, (apart from the provision of electricity in the new settlement colonies 25/) there remains the ongoing problem of maintenance in the older resettlement colonies. The maintenance of physical assets is the responsibility of the local panchayats. These remain weak institutions with little ability (or incentive, as long as the project will provide) to raise adequate revenues. While the current "Janmaboomi" program in the state is important in motivating people for self-reliant development, many activities are one-off events. There is a need to more firmly link them to the development of systematic revenue generation capacities to ensure that the assets created for the PAFs and the surrounding populations are not allowed to deteriorate, and adequate resources for maintenance are locally generated: There is still some concern that health and veterinary facilities are inadequately staffed for the demand created by the addition of animal husbandry schemes, and the expansion of the animal population in the project area.
52. Problems with completion in the 5 'new' villages. The project has now focused considerable attention on the remaining problems of the completion in the five 'new' villages. Because of the link being made by the project between resettlement and the availability of the rehabilitation package, progress in the 'grounding' of schemes has been particularly slow in these villages. PAFs are reluctant to move because, in a majority of cases, there is no immediate physical threat of flooding, and also because they perceive that the housing benefits on offer in the project are inadequate. This is particularly evident when comparisons are made between the substantial stone-built houses of some awardees with what is affordable currently. This is likely to remain a stumbling block as inflation erodes the value of the Rs 15,000 available to the SCs among them who are eligible for the housing grant.
Table 4 Five new resettlement villages: The status of house construction in June 1997 and March 1998 (March 1998 figures are given in brackets)
Name of No. of No. of plots No. of plots No. of No. of houses No. of No. of ERSs Village Awardees made allotted houses under houses planned in sanctioned construction completed RRP5
Lonikhurd 273 343 164 24 20 (6) 0 (15) 150 Peddareddipet 538 214 204 100 85 (59) 0 (39) 350 Itkepally 330 295 155 79 24 (61) O (6) 197 Pulkurthy 438 292 269 130 (129) O (6) O (4) 324 Bellapur 543 505 447 232 0 (118) X 445
Total 2122 1649 1239 565(564) 135 (250) 0 (64). 1466
53. It is now apparent that the completion of housing and thus the 'grounding' of economic rehabilitation schemes in the five new villages will not be completed as originally envisaged.
25/ The project office is reluctantto completeelectricity connections until there is substantialevidence that peoplewill move, and to avoid possibletheft. Concretepoles and cableshave been delivered to the sites where electrification remains incomplete. While some minor physical works were reported in the latest CESS report in a small number of villages, the project authorities maintain that these have been dealt with. 81
Progress is varied and house construction work has been abandoned at Bellapur. Substantial activity is underway in three villages (Peddareddypet, Lonikhurd and Itkepally) and some initial progress has recently been made in Pulkurthy. 55 houses were completed between June 1997 and March 1998. In Bellapur a small number of Scheduled Caste members began digging foundations after much persuasion from the project officers, but this has recently been abandoned, in the face of upper caste opposition. Project management remained confident that despite resistance to resettlement their completion is possible, but not before the closure of the project. The slow progress is not the result of lack of action by the project team, but rather by the resistance of villagers to move through fear, and as a result of the perception that greater benefits may be forthcoming.
54. Housing benefits. The inflation in the cost of housing means that those entitled to housing benefits are having to invest considerably more than the Rs 15,000 obtained through the Weaker Section housing program in order to build an acceptable house. There is a fear that the financing of this extra expenditure is driving people into debt and putting their ability to retain their assets at risk. Nevertheless PAFs seem reluctant to accept cheaper alternatives, preferring to invest in traditional constructions in the development of an asset which will be of greater value in the future, to their families and their children. While demonstration models of low cost houses have been erected they have not been copied, despite the fact that they are available at Rs 20,000 (nearly half the cost of the average price of a traditional house). The post impact study should reveal whether the extra expenditure on housing has resulted in an unsustainable debt burden.
55. Dealing with returnees. The names of those who have registered entitlements to benefits are available with the Collector, and advertisements indicating the availability of benefits for those who can establish claims have been placed in local newspapers. As and when appropriate, and subject to residence in the village they will be provided with their housing entitlements, and their economic rehabilitation benefits. No major effort is now being made to search these people out, on the assumption that having taken their compensation and moved away, they have re-established their livelihoods elsewhere. The post impact study will incorporate a sub-set of cases from these emigre awardees. All additional ERSs planned are for 'returnees'.
56. Post Project Arrangements. It is important at this stage in the project that continuity of personnel is maintained to consolidate the considerable advances that have been made over the past four years, to ensure the sustainability of the schemes, and to focus on the completion of work in the five remaining villages. This means that arrangements need to be made in the District to ensure that some staff attached to the office of the Joint Collector should remain in post. The importance of retaining the services of the Village Development Workers until at least six months after the close of the project, to assist in the impact study as well as in other remaining aspects of implementation should be emphasized. If there is a possibility of incorporating their acquired skills into the on-going development programs of the District, this should be pursued. They are a valuable asset that appears to have contributed effectively to enhanced sustainability of investments. 82
Maintenance of Communities
57. Two of the original objectives of the RRP were to ensure that PAFs are relocated 'in the village limits, village sections or families in accordance with their preference', and that they be 'fully integrated into the community to which they are resettled'. PAFs have been involved in extensive discussions about their preferences within the planned resettlement sites. While there were some internal disagreements about the most appropriate locations there has been no serious dispute, except perhaps in Bellapur. Where evident these appear to have been internally resolved in favor of the upper caste groups. Sections and families have been accommodated according to their choices, and the spatial differentials which separated caste groups, appear to have been partially reproduced at the new sites. If this traditional arrangement is seen as an integrated community then the majority of villagers have been reintegrated.
58. Given the nature of these new sites, and the changing nature of differentiation within the village and regional economy the new layouts are likely to have enhanced equity. Scheduled and Backward classes have been given greater opportunities through access to ERSs, and have in some instances, gained independence from feudal landlords. However the viability of some of the schemes may well have been threatened by continuing caste divisions and the restrictions on access imposed by such divisions. For example, schemes run by scheduled caste members will be restricted to such castes. The spatial differentiation on caste lines within a traditional village mean that the higher castes were located in the higher physical locations. The latters' perceptions of threats from submergence might thus be lower than their lower caste neighbors. The demands for reclassification of PSVs into FSVs may well be fueled by this geographical and cultural differentiation. The impasse in the village of Bellapur is motivated by the higher castes on the higher grounds who see no threat of submergence and who are able to exercise control over the movement of the lower caste groups in the village. The project is presiding over the dilution of caste divisions and, as such, is likely to invite higher caste opposition. The third of the original objectives, of fully integrating PAFs into their new communities, may neither be achievable nor desirable. The structure of rural society is being reconfigured by the project and the forces at work in the wider society of which the project is a part. ______~~~~~~~~~~~~BRO2 97
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