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World Bank Document Document of The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: 31282-IN PROJECT APPRAISAL DOCUMENT ON A Public Disclosure Authorized Public Disclosure Authorized PROPOSED LOAN IN THE AMOUNT OF US$216 MILLION TO THE REPUBLIC OF INDIA FOR THE KARNATAKA MUNICIPAL REFORM PROJECT Public Disclosure Authorized Public Disclosure Authorized FEBRUARY 14,2006 Infrastructure and Energy Sector Unit India Country Management Unit South Asia Region This document as a restricted distribution and may be used by recipients only the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Public Disclosure Authorized Public Disclosure Authorized authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective February 1,2006) Currency Unit = Indian Rupee (INR) Rs.44.0 = US$l US$1.510 = SDRl FISCAL YEAR April 1 - March 31 Comptroller and Auditor General C&AG of India CAO Chief Accounts Officer CAS Country Assistance Strategy CBO Community Based Organization Capacity Enhancement Needs cc City Corporation CENA Assessment CIP Catital Investment Plans CMC Citv MuniciDal Councils GIS Geographical Information System GO Government Order Go1 Government of India GoK Government of Karnataka ~ International Bank for IBRD Reconstruction and Development ICB International Competitive Bidding International Development IDA Association IEC Information Education Communication IFA Initial Financial Assessment IRR Internal Rate of Return Integrated Development of Small IDSMT and Medium Towns IT Information Technology Japanese Bank for International JBIC Cooperation KHB Karnataka Housing Board KMA Karnataka Municipalities Act KMCA Karnataka Municipal Corporation Act Karnataka Municipal Reform KMRP Project KSAD Karnataka State Accounts Department Karnataka Town & Country Planning KSCB Karnataka Slum Clearance Board KTCP Act Karnataka State Remote Sensing Karnataka Urban Infrastructure KSRSAC Applications Centre KUIDFC Development Finance Corp. Karnataka Urban Water Sector Karnataka Urban Water Supply and KUWASIP Improvement Project KUWSDB Drainage Board MCP Mega City Proiect MDG Millennium Development Goals MIS I Management Information Svstem I MOA I Memorandum ofAssociation Ministrv- -Mnn --- I - _____ -,of Defense I MoU 1 Memorandum of UnderstandingY MSW Municipal Solid Waste MTFF Medium Term Fiscal Framework MTFP Medium Term Fiscal Plan MTR Mid-Term Review inis is try of Urban Development I I MUDPA and Poverty Alleviation NCB National Competitive Bidding NGO Non Governmental Organization NIC National Informatics Centre I National Institute of Financial I I Non-Loan Gross Own Revenue Development Advisory I So1 I Survev of India 1 STP I Sewerage Treatment Plant I I-SWM I Solid Waste Manaeement I TA I Technical Assistance I TMC Town Municipal Council TNUDF Tamil Nadu Urban Development Fund Tamil Nadu Urban Development TNUDP Project TOR Terms of Reference TP Town Panchayats UDD Urban Development Department UGD Under Ground Drainage ULB Urban Local Body United States Agency for International URIF Urban Reform Incentive Fund USAID Development voc Vehicle Operating Cost WB World Bank Vice President: Praful Pate1 Country ManagedDirector: Michael F. Carter Sector Manager: Sonia Hammam Task Team Leader: Oscar E. Alvarado INDIA Karnataka Municipal Reform Project PROJECT APPRAISAL DOCUMENT South Asia Energy & Infrastructure Date: February 10,2006 Team Leader: Oscar E. Alvarado Country Director: Michael F. Carter Sectors: Sub-national government Sector ManagedDirector: Sonia Hammad administration (40%), solid waste Yusupha Crookes management (30%), general Project ID: PO79675 water/sanitation/flood protection (30%) Lending Instrument: Specific Investment Loan Themes: Access to urban services for the poor (P); Municipal Finance (P); Municipal governance and institution building (P); other urban development (P); Decentralization (P) Environmental Screening Category: A Safeguard Screening Category: Source Local Foreign Total Government of Karnataka 85.0 0.0 85.0 IBRD 203 .O 13.0 216.0 Urban Local Bodies 9.0 0.0 9.0 Total 297.0 13.0 3 10.0 FY Year 1 Year 2 Year 3 Year 4 Year 5 Annual 25 36 56 56 43 Cumulative 25 61 117 173 216 Does the project depart from the CAS in content or other significant Yes xNo respects? Does the project require any exceptions from Bank policies? Yes x No I YesX7,." I 2; Does the project include any critical risks rated “substantial” or “high”? x Yes No Does the project meet the Regional criteria for readiness for implementation? x Yes No The objective ofthe project is to help improve the delivery ofurban services in Karnataka, through enhancing urban infrastructure, and improving the institutional and financial frameworks at the ULB and State level. Project description: The proposed project would comprise the following components: (A) Institutional Development (Total cost US$28.4 million, Bankfinancing US$22.7 million), which supports institutional capacity building activities aimed towards better transparency and accountability at the ULB and state levels in key areas including computerization, urban land management and planning, financial management reforms, training to ULB staff and TA and training to UDD, KUIDFC and other GoK agencies’ staff; (B) Municipal Investment Support (Total cost US$90.0 million, Bankfinancing US$ 72.0 million), which provides performance-based loans and grants to ULBs outside ofBangalore for investments in urban services, covering water supply, urban roads, street lighting, slum up- gradation and other obligatory municipal functions such as solid waste disposal, sewerage, and storm water drains; (C) Bangalore Development (Total cost US$179.8 million, Bankfinancing US$lll.7 million), which provides financing support for the rehabilitation ofBangalore city road network (Bangalore Road Rehabilitation, Total cost US$35.4 million, Bank financing US$28.3 million), the construction ofa sanitary sewerage system in the eight ULBs around Bangalore city and institutional capacity building of BWSSB (Greater Bangalore Under Ground Drainage Program, Total cost US$13 7.6 million, Bankfinancing US$ 78.0 million), and the construction of sanitation facilities at the community and individual levels in the eights ULBs (Pro-Poor Sanitation Program, Total cost US$6.8 million, Bank financing US$5.4 million); (D) Project Management (Total cost US$11.3 million, Bankfinancing US$9.0 million), which supports project implementation, including incremental operating costs ofrelevant implementing units and a Project Development Advisory Facility to support preparation and implementation of sub-projects by ULBs Which Safeguard policies are triggered, if any? The following two safeguard policies are triggered under the project: Environmental Assessment (OP/BP/GP 4.01) and Involuntary Resettlement (OP/BP 4.12) Significant, non-standard conditions, if any, for: Board presentation (see Ref. C.7.) - For the Municipal Investment Component: the pipeline of sub-projects appraised by KUIDFC should be no less than 20% worth of the component cost. - For the Bangalore Development Component: the contracting of the Project Management Consultant for the management ofthe Under Ground Drainage (UGD) component. - For the Bangalore Development Component: successful re-appraisal of the UGD component, as per the variations cited by GoK during the negotiations. Covenants applicable to pro-iect implementation - The DMA shall commence implementation ofthe Institutional Development Component for the ULBs by April 30,2007. - Operating Ratio ofthe BWSSB to be below 90% during each ofthe next five years. - Preparation ofthe State Long Term Urban Development Strategy by March 3 1,2007. - Preparation of the State Urban Finance Framework by March 3 1,2007 and an action plan for implementation of the same by June 30,2007. - Preparation of KUIDFC Business Model by March 3 1,2007 and an action plan for implementation of the recommendations ofthe study by September 30,2007. - BWSSB shall carry out appropriate measures for the purpose of operating and maintaining the water and sewerage systems in the Greater Bangalore area by June 30,2007. - BWSSB shall complete construction of all sewage treatment plants under Part C.2(a) of the Project, satisfactory to the Bank, by March 3 1,2010. Effectiveness: None INDIA: Karnataka Municipal Reform Project CONTENTS Page A . STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 1. Country and sector issues.................................................................................................... 1 2 . Rationale for Bank involvement ......................................................................................... 2 3 . Higher level objectives to which the project contributes .................................................... 2 €3 . PROJECT DESCRIPTION ................................................................................................. 3 1. Lending instrument ............................................................................................................. 3 2 . Project development objective and key indicators .............................................................. 3 3. Project components ............................................................................................................. 4 4 . Lessons learned and reflected in the project design ............................................................ 6 5. Alternatives considered and reasons for rejection .............................................................
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