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World Bank Document Report Number ::: ICRRICRR1428014280 ICR Review IEG Independent Evaluation Group Public Disclosure Authorized 1. Project Data: Date Posted ::: 04/21/2014 Country::: Kazakhstan Project ID ::: P059803 Appraisal Actual Project Name ::: Nura River Clean-up Project Costs (((US$M(US$MUS$M):):):): 67.82 97.80 Project LLL/L///CC Number::: L4693 LoanLoan////CreditCredit (((US$M(US$MUS$M):):):): 40.39 40.39 Sector Board ::: Environment Cofinancing (((US$M(US$MUS$M):):):): 0 0 Cofinanciers ::: Board Approval Date ::: 05/15/2003 Closing Date ::: 09/30/2009 06/30/2011 Public Disclosure Authorized SectorSector((((ssss):):):): Petrochemicals and fertilizers (36%); Irrigation and drainage (30%); General agriculture fishing and forestry sector (17%); Solid waste management (16%); Central government administration (1%) ThemeTheme((((ssss):):):): Pollution management and environmental health (29% - P); Water resource management (29% - P); Other human development (28% - P); Environmental policies and institutions (14% - S) Prepared by ::: Reviewed by ::: ICR Review GroupGroup:::: Coordinator ::: David M. Colbert Stephen Hutton Christopher David IEGPS1 Nelson 2. Project Objectives and Components: a. Objectives: Public Disclosure Authorized The Project Appraisal Document (PAD, p. 2) defines the project development objective (PDO) as “to improve the welfare of the population in the Nura River Basin by cleaning up serious mercury pollution in area adjacent to the Nura River, providing a safe, secure and cost effective alternative source of water supply to meet growing needs of local water users, and restoring flow control in the river for flood management and ecological purposes.” The Loan Agreement (Schedule 2, p.12), on the other hand, states the PDO as to “(a) improve the welfare of the population in the Nura River Basin by cleaning up serious mercury pollution in and adjacent to the Nura River; (b) provide a safe, secure and cost effective alternative source of water supply to meet growing needs of local water users; and (c) restore flow control in the river for flood management and ecological purposes.” This review will assess achievement of the development objective as formulated in the Loan Agreement, which is the formulation adopted by the ICR as it is the legally binding one. b.Were the project objectives/key associated outcome targets revised during implementation? No c. Components: Component 1: Nura Valley Mercury Clean-Up Public Disclosure Authorized (appraisal amount US$44.08 million; actual US$58.77 million). This component would include construction of a secure landfill for contaminated soil and materials; excavation of contaminated hotspots at a polluted factory site; excavation of other highly contaminated areas and transport to the landfill site; initial operation and long-term maintenance and monitoring of the landfill; and inspection and monitoring of the landfill. Component 2: Intumak Reservoir Rehabilitation (appraisal amount US$19.13 million; actual US$33.76 million). Component 2 would include rehabilitation of the Intumak Reservoir, including reinforcement of the dam and completion of the spillway and gates to allow the dam to operate as a flow-control mechanism as originally designed; development and implementation of an integrated water resources management plan for Intumak and the upstream Samarkand and Sherubianur Dams and reservoirs. Component 3: Nura-Sarysu River Basin Authority Strengthening (appraisal amount US$1.68 million; actual US$1.67 million equivalent). This component would include technical assistance, training and equipment necessary to increase the institutional capacity of the Nura-Sarysu River Basin Authority, in order to strengthen its resource planning and management capacity, as well as to strengthen the water quality monitoring network, and water pollution control systems. Component 4: Project Management and Monitoring (appraisal amount US$2.53 million equivalent; actual US$3.20 million). This component would cover a number of activities related to project management and monitoring, including the incremental operating costs of the Project Management Unit (PMU); training in procurement, disbursement, and project accounting; auditing of project accounts; assistance in implementation of the environmental management plan; and assistance in hydrology, social sciences, and environmental management. d. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Cost : The ICR reports that the cost of the project was initially estimated at US$67.83 million but that at completion project costs were US$ 97.80 million (144% of the original project costs). The large variation in cost was due to the extent of polluted territories and level of pollution discovered in Nura River flood plains during the detailed design and pre-construction excavation phase. Costs were further increased due to the delays in state approvals for the design, the requirement to update the feasibility study (and the accompanying state approvals) resulting in the delay in construction works. However, the government of Kazakhstan financed the escalated costs as well as the remaining costs of works pending at loan closing. Financing : The project was financed by a $40.39 million IBRD loan and by a Borrower contribution. There was no co-financing. Borrower Contribution : At appraisal the Borrower planned to contribute US$27.4 million; whereas the actual contribution was US$57.41 million equivalent or 209% of planned. This large increase in the Borrowers’ contribution was due to the reasons explained above, and was fully funded through the Borrower’s own funds after the loan closing in June 2011. The ICR does not clearly distinguish between Borrower expenditure prior to and after project closure. Dates : The project effectiveness date was extended one time to June 17, 2004, because of the delay in ratifying the Loan Agreement by Kazakhstan’s Parliament. The loan became effective on June 14, 2004, almost 15 months after project approval (March 27, 2003). The expected closing date (September 30, 2009) was extended twice as a result of significant delays in project implementation. Initially, the extension was processed as a legal amendment for nine months, establishing June 30, 2010, as the closing date. The second extension was processed as a level-two restructuring and was granted for 12 months, establishing June 30, 2011, as the closing date. 3. Relevance of Objectives & Design: a. Relevance of Objectives: Substantial . At the time of project appraisal Kazakhstan was still responding to the legacy of environmental damage left by the output-focused development policies of the former Soviet Union. The government faced a number of challenges with respect to remediation of environmental degradation, cost-effective supply of potable water to the population, and ongoing protection of environmental resources. In order to assist the government in addressing these challenges, the Bank’s 2001-2004 Country Assistance Strategy (approved January 16, 2001) included lending to support the most vulnerable, through improvement in the delivery of municipal and industrial water supply and sanitation and to protect the environment by addressing environmental degradation. The Bank's strategy concentrated on addressing industrial pollution in the Northeastern industrial area, promoting integrated planning of water resources and addressing the security of water supply and access to clean water for vulnerable populations. The project objectives remain very relevant to the Bank’s current Country Partnership Strategy (FY 2012- FY 2017), which cites the Nura River Clean-Up Project as part of the Bank’s ongoing support for pollution remediation in Kazakhstan and commits the Bank to continue providing assistance for “rehabilitation of selected industrial contaminated sites” and broadening and deepening “implementation of Energy Efficiency and water resource management” (para. 71-72, p.25). While the objectives appear less relevant to the government's Strategic Plan for Development 2020 , which identifies national priorities for achieving a competitive, diversified economy, they are very relevant to the National Environmental Action Plan. b. Relevance of Design: Substantial. The PAD contains a detailed project design summary (Annex 1, pp 28 – 31) connecting the sector-related Bank strategy goal to relevant sector outcomes, the project development objectives to project outcomes/impacts and project activities to relevant outcomes. The project’s environmental remediation activities could reasonably be expected to improve the health and welfare of the affected population in the Nura River Basin by reducing their exposure to toxic substances. Furthermore, the improvements in Nura River water quality resulting from the environmental remediation could reasonably be expected to provide local water users with a safe and secure alternative source of water supply (even though the cost-effectiveness of this alternative is not convincingly demonstrated). Finally, rehabilitation of the Intumak Reservoir could reasonably be expected to improve water resources management (assuming adequate institutional capacity for such management), by allowing the dam to operate as a mechanism for flow control at its original design reservoir level, thus providing control over river flows for flood management and ecological purposes. 4. Achievement of Objectives (Efficacy): (a) Improve the welfare of the population in the Nura River Basin by cleaning up serious mercury pollution
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