Sustainable Coastal Protection And

Completion Report

Project Number: 40156-023 Loan Number: 2679 January 2021

India: Sustainable Coastal Protection and

Management Investment Program – Tranche 1

This document is being disclosed to the public in accordance with ADB's Access to Information Policy.

CURRENCY EQUIVALENTS

Currency unit – Indian rupee ( ₹)

At Appraisal At Project Completion 27 August 2010 30 June 2018 ₹1.00 = $0.02134 $0.0146 $1.00 = ₹46.85 ₹68.44

ABBREVIATIONS

ADB – Asian Development Bank CIMU – coastal infrastructure management unit CMIS – coastal management information system CPS – country partnership strategy CWC – Central Water Commission CWPRS – Central Water and Power Research Station DMF – design and monitoring framework EIRR – economic internal rate of return FAM – facility administration manual km – kilometer KMB – Karnataka Maritime Board MFF – multitranche finance facility MMB – Maharashtra Maritime Board MOEF&CC – Ministry of Environment, Forests and Climate Change MOJS – Ministry of Jal Shakti NPV – net present value O&M – operation and maintenance PCR – project completion report PMDC – project management and design consultant PMU – project management unit PPMS – project performance monitoring system PPP – public–private partnership SEA – state executing agency SMO – shoreline management organization SMP – shoreline management plan TA – technical assistance

NOTES

(i) In this report, “$” refers to United States dollars.

Vice -President Shixin Chen, Operations 1 Director General Kenichi Yokoyama, South Asia Department (SARD) Director Takeo Konishi, India Resident Mission (INRM) , SARD

Team leader Rajesh Yadav, Senior Project Officer (Natural Resources and Agriculture), INRM, SARD

Team members Raghavendra Naduvinamani, Project Analyst, INRM, SARD Krishan Singh Rautela, Associate Project Officer (Infrastructure), INRM, SARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS Page BASIC DATA I I. PROJECT DESCRIPTION 1 II. DESIGN AND IMPLEMENTATION 1 A. Project Design and Formulation 1 B. Project Outputs 3 C. Project Costs and Financing 5 D. Disbursements 5 E. Project Schedule 6 F. Implementation Arrangements 6 G. Technical Assistance 7 H. Consultant Recruitment and Procurement 7 I. Safeguards 8 J. Monitoring and Reporting 9 III. EVALUATION OF PERFORMANCE 10 A. Relevance 10 B. Effectiveness 10 C. Efficiency 11 D. Sustainability 11 E. Development Impact 12 F. Performance of the Borrower and the Executing Agency 13 G. Performance of the Asian Development Bank 13 H. Overall Assessment 14 IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14 A. Issues and Lessons 14 B. Recommendations 15 APPENDIXES 1. Design and Monitoring Framework 16 2. Project Cost at Appraisal and Actual 24 3. Project Cost at Appraisal and actual by Financier 25 4. Project Implementation Schedule 29 5. Disbursement of ADB Loan and Grant Proceeds 30 6. Contract Awards of ADB Loan and Grant Proceeds 31 7. Status of Compliance with Loan Covenants 32 8. Project Economic and Financial Reevaluation 44 9. Performance of Coastal Protection Structures 58 10. Safeguards 70

BASIC DATA

A. Loan Identification 1. Country India 2. Loan number and financing source 2679 , ordinary capital resources 3. Project title Sustainable Coastal Protection and Management Investment Program – Tranche 1 4. Borrower India 5. Executing agencies Public Works, Ports and Inland Water Transport Department, Government of Karnataka; and Maharashtra Maritime Board, Government of Maharashtra 6. Amount of loan $51.555 million 7. Financing modality multitranche financing facility

B. Loan Data 1. Appraisal – Date started March 2007 – Date completed September 2010

2. Loan negotiations 30 August to 1 September 2010

3. Date of Board approval 6 October 2010

4. Date of loan agreement 17 August 2011

5. Date of loan effectiveness – In loan agreement 14 November 2011 – Actual 28 November 2011 – Number of extensions 1

6. Project completion date – Appraisal 30 June 2014 – Actual 30 June 2018

7. Loan closing date – In loan agreement 31 December 2014 – Actual 20 December 2018 – Number of extensions 2

8. Financial closing date – Actual 20 December 2018

9. Terms of loan – Interest rate London interbank offered rate plus 0.60% – Maturity (number of years) 25 years – Grace period (number of years) 5 years

10. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval 16 December 2011 20 December 2018 84 months

Effective Date Actual Closing Date Time Interval 17 August 2011 20 December 2018 88 months

b. Amount ($)

Increased Canceled Last Original during during Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balance Category (1) (2) (3) (4=1+2 –3) (5) (6 = 4 –5) Works 36,838,000 1,820,000 35,018,000 31,274,942 3,743,058 Karnataka 31,514,000 31,514,000 28,652,223 2,861,777 Maharashtra 5,324,000 1,820,000 3,504,000 2,622,719 881,281 Equipment 550,000 80,000 470,000 7,879 462,121 Karnataka 273,000 273,000 7,879 265,121 Maharashtra 277,000 80,000 197,000 0 197,000 Training 648,000 120,000 528,000 0 528,000 Karnataka 324,000 0 324,000 0 324,000 Maharashtra 324,000 120,000 204,000 0 204,000 Studies and 538,000 40,000 498,000 0 498,000 Surveys Karnataka 303,000 0 303,000 0 303,000 Maharashtra 235,000 40,000 195,000 0 195,000 Community 766,000 60,000 706,000 114,531 591,469 Initiatives Karnataka 502,000 0 502,000 58,285 443,715 Maharashtra 264,000 60,000 204,000 56,246 147,754 Consulting 7,255,000 1,260,000 5,995,000 5,086,150 908,850 Services Karnataka 3,954,000 0 3,954,000 3,942,829 11,171 Maharashtra 3,301,000 1,260,000 2,041,000 1,143,321 897,679 Unallocated 4,960,000 810,000 4,150,000 0 4,150,000 Karnataka 4,150,000 0 4,150,000 0 4,150,000 Maharashtra 810,000 810,000 0 0 0 Total 51,555,000 4,190,000 47,365,000 36,483,502 10,881,498

iii

C. Project Data

1A. Karnataka project cost ($ million) Cost Appraisal Estimate Actual Asian Development Bank share 41.02 32.661 State Government share 7.529 9.025 Total 48.549 41.686

1B. Maharashtra project cost ($ million)

Cost Appraisal Estimate Actual Asian Development Bank Share 10.53 3.82 State Government Share 3.59 4.74 Total 14. 12 8.56

2A. Karnataka financing plan ($ million) Cost Appraisal Estimate Actual Implementation cost Borrower financed (Government of India and 4.953 7.667 Government of Karnataka) Asian Development Bank financed 41.020 32.661 Other external financing Subtotal implementation cost 45.973 40.3 28 Interest during construction costs Borrower financed ADB financed 2.576 0 Other external financing Subtotal interest during construction cost 2.576 1.304 Total 48.549 41.632

2B. Maharashtra financing Plan ($ million) Cost Appraisal Estimate Actual Implementation cost Borrower financed (Government of India and 2.83 4.51 Government of Maharashtra) Asian Development Bank financed 10.53 3.82 Other external financing Subt otal implementation cost 13.36 8. 33 Interest during construction costs Borrower financed 0.76 0.23 Asian Development Bank financed Other external financing Subtotal interest during construction cost 0.76 0.23 Total 14.12 8.56

3A. Karnataka cost breakdown by project component ($ million) Component Appraisal Estimate Actual A. Planning and Design 1. Equipment and supplies 0.176 0.000 2. Studies and surveys 0.215 0.000 3. Consulting surveys 2.820 4.443 4. Taxes and duties 0.265 0.000 Subtotal A 3.475 4.443

B. Coastal Protection and Management 1. Civil works 31.514 33.523 2. Community initiatives 0.502 0.058 3. Studies and surveys 0.048 0.000 4. Taxes and duties 3.123 0.000 Subtotal B 35.187 33.581

C. Effective Institutions and Project Management 1. Equipment and supplies 0.098 0.008 2. Training 0.324 0.054 3. Studies and surveys 0.040 0.000 4. Consulting surveys 1.134 0.000 5. Project management unit staff costs (including 1.402 2.296 accommodation) 0.143 0.000 6. Taxes and duties 3.141 2.358 Sub total C Total Base Cost (A+B+C) 41.803 40.382 D. Physical Contingencies 3.500 0.000 E. Price Contingencies 0.670 0.000 F. Financing Charges during Implementation 2.576 1.304

Total Project Cost (A+B+C+D+E+F) 48.549 41.686

3B. Maharashtra cost breakdown by project component ($ million) Component Appraisal Estimate Actual A. Planning and Design 1. Equipment and supplies 0.183 0.00 2. Studies and surveys 0.147 0.00 3. Consulting surveys 2.261 0.85 4. Taxes and duties 0.226 0.00 Subtotal A 2.818 0.85

B. Coastal Protection and Management 1. Civil works 5.324 2.94 2. Community initiatives 0.264 0.11 3. Studies and surveys 0.049 0.00 4. Taxes and duties 0.959 0.00 Subtotal B 6.596 3.05

C. Effective Institutions and Project Management 1. Equipment and supplies 0.094 0.00 2. Training 0.324 0.00 3. Studies and surveys 0.039 0.00 4. Consulting surveys 1.040 1.19 5. Project management unit staff costs and administration 1.474 3.24 6. Taxes and duties 0.146 0.00 Sub total C 3.118 4.43 Total Base Cost (A+B+C) 12.531 8.33

D. Physical Contingencies 0.661 0.00 E. Price Contingencies 0.170 0.00 F. Financing Charges during Implementation 0.762 0.23

Total Project Cost (A+B+C+D+E+F) 14.124 8.56

4. Project schedule Item Appraisal Estimate Actual Date of contract with consultants a Maharashtra 20 Dec 11 23 Jan 12 Karnataka 1 Jan 11 20 Dec 11 Completion of engineering designs Maharashtra 31 Dec 12 30 Jun 17 Karnataka 31 Dec 12 30 Jun 17 Civil works contract: Maharashtra Mirya Bay reef: award 1 Mar 11 5 Nov 11 Completion of construction 1 May 13 27-Feb 16 Mirya Bay beach nourishment: award 1 Oct 11 19-Aug 16 Completion of construction 1 May 12 20-Mar 17 Civil works contract: Karnataka Ullal reef: award 1 Mar 11 07-Nov 14 Completion of construction 1 Jan 13 30-Jun 17 Ullal inshore berms: award 1 Mar 11 14-Feb 13 Completion of construction 1 Jan 13 01-Jun 18 Ullal breakwater: award 1 Mar 12 31-Jul 14

Item Appraisal Estimate Actual Completion of construction 1 Jan 14 01-May 17 Ullal beach nourishment: award 1 Oct 11 Not procured

5. Project performance report ratings Implementation Period Project Rating From 28 November 2011 to 30 December 2011 Potential Problem From 1 January 2012 to 31 December 2012 Potential Problem From 1 January 2013 to 31 December 2013 Potential Problem From 1 January 2014 to 31 December 2014 Potential Problem From 1 January 2015 to 31 December 2015 Potential Problem From 1 January 2016 to 31 December 2016 On Track From 1 January 2017 to 31 December 2017 On Track From 1 January 2018 to 31 December 2018 Potential Problem From 1 January 2019 to 31 March 2019 On Track

D. Data on Asian Development Bank Missions No. of No. of Specialization Name of Missio n Date Persons Person -Days of Members a Fact-finding 27 Sep–14 Oct 2009 3 57 a,k,n Consultation 7–10 Dec 2010 2 8 a,b Consultation 6–8 Jun 2011 2 6 a,c Loan inception 30 Jan–16 Feb 2012 7 18 a,c,d,e,f,g,h Loan review 17–31 Aug 2012 1 15 a Midterm loan review 13–27 Jun 2013 6 15 a,c,d,d,I,j Loan review 18–24 Jan 2014 2 7 c,d Consultation 26 May–6 Jun 2014 2 12 a,c Safeguards review 28–30 Jan 2015 2 3 i,l Loan review 10–13 Mar 2015 3 4 c,d,k Loan review 14–17 Mar 2016 4 2 c,d,m Loan review (Maharashtra) 3–5 Oct 2016 3 9 b,c,d Loan review 5–7 Dec 2016 3 3 c,d,m Loan review 29 Jul–5 Aug 2017 3 8 c,i Loan review 2– 4 May 2018 3 3 c,d,i Project completion review Project completion review Note: a a = senior water resources specialist and team leader, b = water resources management specialist, c = senior project officer (natural resources and agriculture), d = project analyst, e = geosystem specialist, f = consultant team leader, g = procurement specialist, h = project management specialist, i = environmental specialist, j = coastal engineer, k = climate change specialist, l = safeguards specialist (portfolio management), m=head, portfolio management unit, n=natural resources economist Source: Asian Development Bank.

I. PROJECT DESCRIPTION

1. India has a coastline of 7,525 kilometers (km). About 20%–25% of its population lives within 50 km of the coast, with 70% of the coastal population residing in rural areas. All of India’s coastal states are affected by coastal erosion, which has intensified on the west coast, including in the states of Karnataka and Maharashtra on which the investment program has focused. In these states, about 50% of the 1,000 km of coastline is facing erosion. At the time of assessment, about 520 km were prone to erosion and 320 km required protection.1 Sea level rise is projected to be from 15 centimeters to 38 centimeters in the Indian subcontinent by 2050,2 and with increased stormy weather expected with climate change, improved coastal protection is needed.

2. India’s Ministry of Jal Shakti (MOJS) initiated the National Coastal Protection Project to coordinate coastal protection activities at the national and state levels. The Sustainable Coastal Protection and Management Investment Program was designed as a multitranche financing facility (MFF) supporting the government’s sustainable coastal management strategy. Separate arrangements were made for the two participating states of Karnataka and Maharashtra.

3. The investment program had the following envisaged impact: improved income and reduced poverty of the coastal communities in the subproject areas of the coastal states of Goa, Karnataka, and Maharashtra.3 The investment program had the following envisaged outcome: protected and managed shorelines in the three states, meeting the needs of stakeholders and protecting the environment. The outcome was to be achieved through the following outputs: (i) sustainable plans and management for shorelines developed, (ii) coastal erosion and instability managed and reduced, and (iii) capacity for shoreline planning and development enhanced. The MFF was appraised covering the states of Goa, Karnataka, and Maharashtra. Tranche 1 included Karnataka and Maharashtra.

II. DESIGN AND IMPLEMENTATION

A. Project Design and Formulation

4. At the time of project formulation, a key theme of the Government of India’s Eleventh Five Year Plan, 2007–2012 4 was the integration of environmental concerns into policy, planning, and development activities, underscoring the need to address the impacts of sea level rise, particularly for coastal agriculture, as well as the management of seawater ingress into coastal areas. Considering the government’s development priorities, the country partnership strategy (CPS) for India, 2009–2012 of the Asian Development Bank (ADB) emphasized sustainable measures for coastal protection, with a focus on the enhanced capacity of state authorities to design, implement, monitor, and finance coastal protection and management measures.5 The CPS supported the use of advanced technologies, innovative business, and financing options. The report and recommendation of the President for the MFF program (footnote 1) provides a road map and policy framework, of national and state governments on integrated and sustainable

1 Asian Development Bank (ADB). 2010. Report and Recommendation of the President to the Board of Directors: Proposed Multitranche Financing Facility to India for the Sustainable Coastal Protection and Management Investment Program . Manila. 2 ADB. 2019. Reference Manual on Climate Change Adaptation Guidelines for Coastal Protection and Management in India . Consultant’s report. Manila (TA 8652-IND). 3 While MFF included three states, Goa did not eventually participate in the investment program. 4 Government of India, Planning Commission. Eleventh Five Year Plan, 2007–2012 . New Delhi. 5 ADB. 2009. Country Partnership Strategy: India, 2009–2012 . Manila.

coastal protection and management, preparation of state shoreline management plans (SMPs), and improved public–private partnerships (PPPs) in coastal management. 6

5. Coastal management responsibilities in India lie with both the environmental agencies and the public works authorities. While identifying appropriate government partners at project formulation, the program team concluded that for implementation of the physical works, the more appropriate partner would be the state organizations for public works, rather than the line departments of the Ministry of Environment, Forests and Climate Change (MOEF&CC). While the planning controls for activity in the coastal zones lie with the coastal zone management organizations under the MOEF&CC, technical review and approval processes are the responsibility of the MOJS and its organizations namely the Central Water Commission (CWC) and the Central Water and Power Research Station (CWPRS), which work closely with organizations such as the selected state executing agencies the Public Works, Ports and Inland Water Transport Department of Karnataka and the Maharashtra Maritime Board (MMB). A World Bank project on coastal zone management works with the MOEF&CC at that time, but ADB decided to partner with MoJS for this MFF. The selection made remains appropriate in hindsight, but a lack of collaboration between the two systems of management for the coastal zone resulted in some issues in project implementation (para. 39). 7

6. The project remained relevant at completion. Pillar 3 of ADB’s CPS for India, 2018–2022 addresses environmental degradation through mitigating the negative impacts of climate change and promoting sustainable natural resource use in project design, and the Sustainable Coastal Protection and Management Investment Program is strongly allied to this objective. 8 ADB’s Strategy 2030 focuses on seven operational priorities, including tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability. 9 The project remained relevant to State planning at completion, for example the Maharashtra Government policy has environmental sustainability at the base of its strategy. 10

7. The MFF modality was appropriate, addressing the perceived need for long-term support required for coastal management planning and implementation, including continued engagement and capacity building of state executing agencies and other stakeholders. This approach allowed the detailed design of interventions to be developed under the program, and it fostered stronger support for the capacity building of the state executing agencies (SEAs). The project design had three tranches for development. This was later revised to two tranches because of slow progress made under tranche 1; tranche 3 is being subsumed into tranche 2 to better enable the achievement of project completion within the lifetime of the agreed loan program.

8. Preparation of the project design was supported by an ADB technical assistance (TA).11 The design focused on the development of a new approach to coastal management through a planned transition from hard coastal protection structures (e.g., sea walls) to an approach of participative planning and integrated development of environmentally appropriate, sustainable, and socially accepted solutions (Appendix 9). Priority projects were developed to address urgent

6 These policies include the 1986 Environmental Protection Act and the 1991 Coastal Regulation Zone Notification. 7 World Bank. 2010. India: Integrated Coastal Zone Management Project . Washington, DC. 8 ADB. 2017. Country Partnership Strategy: India 2018–2022—Accelerating Inclusive Economic Transformation . Manila. 9 ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific . Manila. 10 Planning Department, Government of Maharashtra. 2017. Vision 2030 . Mumbai. 11 ADB. 2007. Technical Assistance to India for Preparing the Sustainable Coastal Protection and Management Project . Manila (TA 4965-IND).

coastal management issues identified by the state governments, including the following: (i) protecting land and beaches from erosion, (ii) addressing the causes of erosion, and (iii) providing natural protection using dunes or mangroves. 12 The project was supported by both state governments, with strong institutional involvement. Communities benefiting from the project needed detailed briefings about the project before they supported it. While a separate design and monitoring framework (DMF) was developed for tranche 1, there were some weaknesses in its formulation (para. 44).13 For the outcome, in addition to the of two major targets (length of coastline protected, and community involvement in coastal protection), other targets (number of businesses at intervention beaches and increase in coastal fishing and fish landings) were hard to document and lacked baseline. Change in scope and revision of DMF were not done during implementation.

B. Project Outputs

9. The project had 3 outputs with 22 performance targets. Overall, 18 targets were achieved, 3 were partially achieved and 1 not achieved. 14 The tranche 1 DMF is in Appendix 1.

10. Output 1: Sustainable plans and management for shorelines developed. In Karnataka, all 8 targets were achieved. SMPs were developed for the three coastal districts and for the state as a whole. These were prepared and endorsed by the state government, with some delays in preparation and approval. The target completion date was December 2013; approval was achieved in 2014 for two districts but was delayed to 30 November 2017 for the third district and the state SMP for incorporating climate resilience and upgrading based on stakeholder consultation. A coastal management information system (CMIS) to support planning and management was established in 2018. The CMIS will be further strengthened during tranche 2 implementation. A project performance management system (PPMS) was established in 2012 and is still operational. A financial management reporting manual was prepared but was not used by the project management unit (PMU) because a robust internal financial reporting system already existed within the Karnataka government. The design of Tranche 2 schemes was achieved, with detailed project reports for nine subprojects prepared in 2015 and approvals received from the MOJS.

11. In Maharashtra, 7 targets were achieved and 1 was partially achieved. SMPs were developed for the five coastal districts and for the state as a whole. These were prepared and endorsed by the state government, with some delays because of slow administrative procedures. The state SMP was approved on 19 July 2017. The CMIS was established in 2013 and is still in use. The PPMS was established in 2014, although it is basic. The state executing agency (the MMB) preferred to submit quarterly CMIS reports (without the aid of the PPMS) covering project implementation and execution along with progress. A financial management reporting manual was also developed early in the investment but was not used, and submission of audited project financial statements by MMB was sometimes significantly delayed. Design work for tranche 2 had not been completed at the time of the contract termination of the project management and design consultant (PMDC) but designs for the 16 subprojects were complete as of 2016. Agreement was reached in 2016 between the borrower and MMB that tranche 2 in Maharashtra would not go ahead because of insufficient remaining time under MFF, with the investment to be reorganized under a stand-alone program.

12 Appendix 9, Annex 1 provides the long-listed projects considered by the project preparatory TA consultants. 13 See Appendix 1 14 In Karnataka, 19 targets were achieved, 2 partially achieved, and 1 not achieved. In Maharashtra, 18 targets were achieved, 3 partially achieved, and 1 not achieved.

12. Output 2: Coastal erosion and instability reduced. Of the four performance targets, two were achieved, one was partially achieved, and one was not achieved. In Karnataka, the target related to coastline erosion was achieved, with the 2016 survey by the Government of India indicating that the length of eroding coastline has been reduced to 70 km from a baseline of 250 km at appraisal. The target related to community and local government resolution for the maintenance of projects was achieved with the creation of active shoreline management organizations (SMOs). The target related to community engagement in coastal erosion and instability reduction was addressed through the formation and support of SMOs, established as registered cooperative organizations with established office bearers, bank accounts, and management committees. SMOs have been established in Bengre and Ullal, using start-up project funding. However, women’s representation in the SMOs is only 15%. Women’s membership is being gradually increased to meet the target of 30%. For tranche 1, policies and guidelines for encouraging private sector investment into coastal protection and management were planned and actual investments by the private sector were not envisaged. Though there were no specific enabling policies and guidelines developed under the project, related policies for tourism and public private partnership (PPP) which promoted PPP modality in tourism and transport sectors (minor ports and harbors, and inland water transport subsectors) were developed by the state.15 These peripheral policy measures would be helpful in future for encouraging adoption of integrated coastal protection and management by private sector into such the investments.

13. In Maharashtra, two targets were achieved, one was partially achieved, and one was not achieved. The target related to coastline erosion was achieved, with the length of eroding coastline having been reduced from 263 km at appraisal to the 2016 estimate of 178 km. The target related to community engagement for supporting project maintenance was achieved with the creation of the SMO role. Seven SMOs in different locations were formed and became fully operational in 2018–2019. The project provided seed funding to help establish the SMOs, which continue to be active beyond project closure. However, women’s participation has not met the targeted 30%. The project completion report (PCR) mission undertook community consultation with the Mirya SMO at Ratnagiri, Maharashtra, confirming their continued activities using an office in government premises. As in Karnataka, policies and guidelines for private sector engagement were planned under the tranche but actual investments were not envisaged. There were policies prepared by the state outside of the project which complement the objective of developing enabling policies and guidelines for encouraging private sector investment into coastal protection and management. In particular, the maritime development policy promotes private sector participation in development of coastal infrastructure such as ports with provision of handholding and viability enhancement support etc.; and the tourism policy includes adoption of PPP model for promoting coastal tourism. 16

14. Output 3: Enhanced capacity for integrated shoreline planning and development. Of the 10 performance targets, 9 were achieved and 1 was partially achieved in Karnataka and in Maharashtra. In Karnataka, a coastal infrastructure management unit (CIMU) was established with named officers through a state government order in 2015, but all officers identified continued in their earlier roles and did not spend significant time in their new roles. Orientation training was

15 Department of Tourism, Government of Karnataka. 2015. Karnataka Tourism Policy 2015-2020 . Karnataka.; and Infrastructure Development Department, Government of Karnataka. 2015. Karnataka Infrastructure Policy 2015. Karnataka 16 Maharashtra Maritime Board, Government of Maharashtra. 2016. Maharashtra Maritime Development Policy 2016 . Maharashtra; and Department of Tourism and Culture Affairs, Government of Maharashtra. 2016. Tourism Policy of Maharashtra 2016 . Maharashtra.

conducted for all district administration and local bodies (GPs and municipalities) in three districts, covering about 600 participants. SMO activities were fully achieved and financially supported during the project, including many community-based activities such as a beach festival at Ullal. The target related to the approval of formal mandates of the SEAs was achieved, and the newly created Karnataka state maritime board incorporates offices of the ports departments, including the CIMU. The shoreline planning target was achieved. In Maharashtra, enhanced shoreline management capacity has been addressed, achieving the target of training provision and achieving the target of the CIMU being operational. Enhanced capacity targets have been fully met for training state and central government personnel. The target related to community involvement in beach management was partly successful in meeting the target for involvement of local bodies, as the SMOs with this responsibility did not achieve the gender balance required. The SMO activity target was achieved. SMOs continue to be active in supporting local management of beaches. Training was provided to all seven SMO committees and members. Responsibility for operation and maintenance of project assets was given to the MMB engineering wing, and the approved formal mandate target was achieved, as the target of approved shoreline planning and management policy was met.

C. Project Costs and Financing

15. The appraised and actual project costs are presented in Appendix 2 for each state for the tranche 1 project, and the cost breakdown by financier is provided in Appendix 3.

16. Karnataka. At appraisal, the total cost of the tranche 1 project was estimated to be $48.6 million, of which $7.5 million (15.5%) was to be provided by the Government of Karnataka, with $41.0 million to be provided by the ADB loan. Actual expenditure costs totaled $41.686 million, with the state government contributing $9.025 million (21.65%) and ADB $32.661 million. Civil works expenditures were lower than estimated at appraisal, with about $4.85 million of loan funding for civil works not spent (para. 32), including the unutilized amount from not undertaking beach nourishment works. A physical contingency provision of $2.576 million was also not used.

17. Maharashtra. At appraisal, the total cost of the tranche 1 project was estimated to be $14.124 million, with the Government of Maharashtra contributing $3.589 million (25.4%) and the ADB loan being $10.535 million. The actual expenditure (Appendix 2) shows total costs to be $8.56 million, with the state government contributing $4.74 million, and only $3.82 million of the ADB loan being used. The state government’s contribution included enhanced contributions for staff and associated costs, and funding for consultancy services to replace the loan consultants following their withdrawal from the project. Unutilized loan resulted from the reduced size of the offshore reef, reduced volumes of sand used for beach nourishment, and the reduced scale of consultancy services (para. 33). The partial loan cancellation was approved in March 2016, reflecting a reduction of $2.72 million on civil works, $2.19 million on consultancy costs, and $0.81 in unallocated costs that were not used.

D. Disbursements

18. Total disbursement for tranche 1 amounted to $36.484 million, or 71% of the original loan of $51.555 million. The loan disbursement projections at appraisal and the actual disbursements are summarized in Appendix 5. Delays in project implementation, which occurred largely because of technical issues delaying progress in the major construction contracts (paras. 23–25), contributed to the large gap in projected and actual cumulative disbursements.

19. For Karnataka, loan disbursements totaled $28.7 million for civil works, $3.9 million for consulting services, and minor sums for community initiatives and equipment. Total disbursements of $32.7 million were about 78.9% of the amount anticipated in the FAM. For Maharashtra, loan disbursements included $2.6 million for civil works and $1.11 million for consulting services. The total disbursement of $3.82 million was about 36.2% of the $10.54 million disbursement anticipated during preparation of the FAM. For Maharashtra, disbursements for civil works were 49.3% of the budgeted amount, and 34.6% for consulting services (para. 17).

20. The timeline of contract awards is in Appendix 6, comparing the actual contract award profile with the appraisal plan. Slow contract awards resulted from poor contractor response to invitations to bid, and the need to redesign some of the major civil works (Appendix 9).

21. Disbursements were made in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time), and no imprest advance was used. Both statement of expenditure and reimbursement procedures were used for withdrawal of funds. The statement of expenditures procedure was used to reimburse or liquidate eligible expenditures.

E. Project Schedule

22. Tranche 1 was declared effective on 28 November 2011, with an expected completion date of 30 June 2014. The loan closing date was extended twice and was finally closed on 30 June 2018, 48 months behind schedule. A 30-month extension was granted in July 2014 because of delays in awarding the principal works contracts. A second extension of 12 months was approved in July 2017. A timeline of the implementation schedule is provided in Appendix 4.

23. In both states, major modifications in reef design delayed construction. Other issues included PMU understaffing; the need for extensive coordination with all state, district, and community departments; the need to obtain prior approval from the advisory committee of the MOJS; a temporary ban on the extraction of sand in Maharashtra; withdrawal of the PMDC; and local protests against construction. Payment and reimbursement of a local tax on the use of sand was an additional administrative issue that took time to resolve for the construction of the reef (Appendix 9).

F. Implementation Arrangements

24. At appraisal, it was planned that each state would have a different SEA with responsibility for overall project management and implementation. The government of each state was required to establish a program steering committee, to be chaired by the SEA departmental secretary. A PMU, headed by a full-time project director, was to be established in each state.

25. Karnataka. These implementation arrangements were largely followed in Karnataka, but the project director for the PMU was only a part-time position. This led to some delays in decision- making but did not directly impact the delivery of project outputs. A state-empowered committee was created in 2011 to coordinate the project. The PMU lacked the personnel planned at appraisal, and staffing issues continued and were documented in the findings of ADB missions. The CIMU was to be formed by 2012 to take over constructed facilities, manage the CMIS, and participate in project implementation to harness the benefits (to be delivered through the project) of technology transfer and capacity building. While the official CIMU was established by the state government in Karnataka through an order dated 17 April 2015, with seconded officers from the PMU, the CIMU has not yet become fully active. This did not directly impact the project’s outcome

and outputs. Shoreline management is a formal mandate of the Karnataka Maritime Board (KMB),17 which incorporates offices of the ports departments, including the CIMU.

26. Maharashtra. The MMB established a PMU for project implementation. During the midterm review mission in June 2013, it was noted that only 8 posts out of 28 identified during inception had been filled, and that the PMU had difficulty recruiting and retaining staff. The key post of project director was not filled on a full-time basis. These PMU staffing issues persisted and were compounded by issues within the PMDC team (para. 29). A concept framework for the CIMU was prepared in September 2012 and was discussed during ADB missions in 2013 and 2014, with an initial setup date of 31 March 2014 established during the January 2014 mission. PSC approval for the CIMU establishment was obtained in September 2014 and during the April 2016 mission it was promised staff would be in place by 15 May 2016. During the May 2018 mission, the EA informed ADB that the CIMU would not be created and assets would be managed by the executive engineer of the MMB Ratnagiri office. This may have an impact on sustainability of the outcomes, as institutional development associated with project implementation was not optimally transferred to the office of the executive engineer of the MMB Ratnagiri office.

G. Technical Assistance

27. In September 2007, ADB approved a TA in the amount of $1,000,000, with financing from the Japan Special Fund to prepare the project (footnote 11). In April 2009, supplementary TA was approved amounting to $200,000 from the Technical Assistance Special Fund to support additional project preparatory activities. The TA closed in March 2011. Summary of the TA’s findings and proposed design is found in Appendix 9.

H. Consultant Recruitment and Procurement

28. Consulting services. The project design provided for consultancy services in the form of the PMDC to be procured by the PMUs in Karnataka and Maharashtra.

29. In Karnataka, appointment of the PMDC was made on 20 December 2011, 1 year behind schedule. Initial PMDC activities were affected by issues related to slow mobilization of key experts. The delay in the start of the PMDC also impacted the timely resolution of design issues related to key structures for the main construction works for the Ullal offshore reef (para. 32). Nonetheless, the PMDC has been effective in support of the PMU.

30. In Maharashtra, the PMDC contract was signed on 30 January 2012. Differences developed between the PMDC and the PMU concerning the quality of the deliverables, availability of the experts fielded by the PMDC, and over slow payments made by the PMU to the consultants. The PMU questioned the PMDC’s performance and issued a letter in September 2013, seeking replacement of 11 of its 17 national experts. The PMDC served a notice of termination of their contract on 30 October 2013 over payment issues, with termination becoming effective on 28 November 2013. Subsequent efforts to amicably resolve the dispute did not yield agreement. Later, it was agreed that the PMU would use its state funds to engage a design and supervision consultant to complete work required under the original PMDC terms of reference, including preparation of tranche 2 detailed project reports. The lack of a PMDC after November 2013 delayed preparation of SMPs and tranche 2 designs.

17 Created under the Karnataka Maritime Bill, 2015.

31. Works packages. The works and works packages were largely unchanged from the arrangements agreed at appraisal.

32. Karnataka. The key civil works packages for Karnataka were for (i) construction of two multipurpose geotextile reefs and four inshore berms at Ullal; (ii) shortening and rehabilitation of the southern breakwater, extension and rehabilitation of the northern breakwater, and crest protection at Ullal; and (iii) dredging and beach nourishment. The new technologies impacted the contractor procurement process, with low contractor interest in bidding for the works and technical issues delaying tendering and bid evaluation, requiring rebidding for the main reef contract (Appendix 9). For the beach nourishment element, the works were canceled, as a good beach developed behind the offshore reef without the need for additional sand. Works related to the shortening and rehabilitation of the breakwaters at the old port of Mangalore were redesigned, but this did not affect construction progress. Output quality was satisfactory overall.

33. Maharashtra. The main civil works in Maharashtra comprised (i) construction of one multipurpose geotextile reef at Mirya, and (ii) dredging and beach nourishment using bulk sand stockpiled on the beach and from dredging of the fishing harbor. The contract for the construction of the geotextile reef was awarded in October 2011, with the contractor undertaking surveys and a design review. Subsequent changes to the proposed surveys and to the design to improve constructability and sustainability (Appendix 9) and community resistance to the construction of the reef delayed progress, leading to the suspension of work. Following the departure of the PMDC, an individual consultant was engaged by the PMU to supervise the civil works, which were completed in February 2016. Following a monsoon in 2017, one geotube of the reef was lost and another was deflated because of sand leakage. The contractor rectified the damage during the defect liability period under the contract. Works related to beach nourishment were done following completion of the reef as planned, with the contract award in August 2016, and completion in March 2017. The volume of sand used was less than planned because of reduced availability of suitable sand, but the outcome remained satisfactory. Output quality was also satisfactory.

34. Goods procurement. Goods procured under the loan were minimal. Some multifunctional printers were procured in Karnataka for about $8,000.

I. Safeguards

35. The project has been classified environmental category A, the interventions expected to improve the natural environment of the shoreline by stabilizing and even restoring the natural beaches. ADB’s Environment Policy (EP), 2002 is applicable for this loan. The SEIA was amended in December 2012 to reflect the change pertaining to the type of materials proposed for the construction of the Ullal reefs and dropping of Goa state component from the scope (that took place after SEIA issuance). Potential adverse effects of proposed structures were considered during the design stage and measures were included to minimize them. The environmental management plan addressed possible effects during the construction and operation phases. Public consultation and disclosure were completed in each subproject area and placed on ADB website, in a timely manner. More details are provided in Appendix 10.

36. The subproject interventions were carried out offshore or on the shoreline. There were no settlements in these areas and, as a result, none of the subprojects required any land acquisition or resettlement of people. In the subproject areas, there were no indigenous peoples or ethnic minority groups. The project was therefore classified category C for involuntary resettlement and indigenous peoples, and no related complaints were received. All safeguard requirements were

9 added in the bidding documents, including an environmental assessment and environmental management plan.

37. ADB review missions flagged some concerns on statutory environmental compliance by the project. Appropriate environmental clearance for construction under the coastal regulation zone notifications was obtained following the normal process. The key issue was the non-receipt of clearance earlier following project redesign. The PCR mission was informed that for Maharashtra, clearances had been granted at all levels except final confirmation from the MOEF&CC, and MMB were following this up.

38. Implementation of the contractor’s environmental management plans was assessed during the review mission carried out in 2018 to be less than adequate. Both PMUs had failed to maintain qualified staff to work as environmental consultants consistently during the project period and only had intermittent support from the PMDC team for environmental monitoring. Nonetheless, this did not result in any adverse environmental impacts.

J. Monitoring and Reporting

39. Compliance with loan covenants was regularly monitored during the ADB review missions. Of the 66 covenants (and subdivisions of covenants), 57 were fully complied with, 2 were partially complied with (related to women’s representation within the SMOs and receipt of final environmental clearance from coastal regulation zone authorities for revised designs), 2 were not complied with (related to the involvement of PPPs in coastal management), and 5 were no longer relevant (mostly because no resettlement was needed). The need for environmental clearance from coastal regulation zone authorities was flagged late (in July 2017), but the application for this clearance immediately followed. However, application by other government departments encountered administrative delays and the clearance is yet to be received. These shortcomings in relation to compliance with loan covenants had little direct impact on overall project performance. Participation and investment by the private sector were envisaged, up to 7% of the project cost, for MFF and there were no investments envisaged or cost allocated to private sector in project 1. Both states have included measures for promotion of private sector participation and PPP into coastal economic activities through peripheral policies for tourism and maritime development which may help in encouraging future private sector participation in the integrated coastal protection and management. The project’s general and special covenants and the compliance with these covenants are described in Appendix 7.

40. Quarterly progress reports were routinely submitted by both PMUs, although there were occasional delays. Semiannual environmental reports were submitted by both SEAs, although the initial reports for both states were delayed, with the Karnataka report for August 2011–June 2014 submitted in March 2015, and the Maharashtra first report was submitted in May 2016. Thereafter, reporting was regular, and on time. Reports were uploaded to the ADB website. No external monitor for safeguards was engaged.

41. Monitoring and reporting systems implemented in each state were not as originally envisaged, and there were delays in establishing these reporting systems. In Karnataka, the PPMS was to be established within 3 months of project effectiveness, but implementation was delayed, as the system was to be developed by the PMDC, which was appointed about 12 months late. The PMDC then developed a simplified reporting system using an Excel spreadsheet, which was later updated to a database system in 2018 (para. 10). In Maharashtra, a simplified PPMS spreadsheet system was developed in 2013–2014 and was used thereafter (para. 11).

42. Financial management of the SEAs was impacted by their failure to employ appropriate full-time staff at the deputy director level. There were no reported issues with financial mismanagement identified by audit, but problems with obtaining audited project financial statements in a timely manner were flagged by review missions, especially for Maharashtra. A finance and administration unit was established in each of the state PMUs to ensure the rules and regulations and reporting formalities of ADB were followed. The annual audit reports were prepared for each SEA and included the audit of the SGIA and the SOE procedure, and a separate audit opinion on the use of loan proceeds, the operation of the SGIA, and compliance with SOE procedures and loan covenants. Detailed consolidated annual project accounts (as maintained by the SEAs through their PMUs) were audited by independent auditors and were submitted to ADB. Of the 16 audited project financial statements received during fiscal year (FY) 2012 to FY2019 from Karnataka and Maharashtra separately, 3 reports were received on time. The others were delayed by 0.2 to 4.1 months, with an average delay of 1.15 months. All qualifications to reports were later resolved. Specific opinions on the use of funds were also issued.

III. EVALUATION OF PERFORMANCE

A. Relevance

43. The project is relevant . It was relevant at appraisal (para. 4) and at completion. It is in line with pillar 3 of the CPS, 2018–2022, which addresses environmental degradation through mitigating the negative impacts of climate change and promoting sustainable natural resource use in project design (footnote Error! Bookmark not defined. ). It is also in line with ADB’s Strategy 2030, particularly operational priority 3 on tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability (footnote Error! Bookmark not defined. ). The project introduced an innovative way of managing erosion of the coast through construction of offshore reefs and recommended novel designs and schemes such as the use of offshore reefs to conserve beaches (Appendix 9). But since the approach was new, unanticipated problems at appraisal were experienced during implementation which caused delays in the delivery of the schemes. Nonetheless, the new approach proved to be successful, and resulted in rapid beach recovery. The coasts at Ullal and Mirya bay are now better protected and the adopted approach has the potential for replication in other states and to influence national strategies to include coastal protection.

44. The project design had some weaknesses as reflected in the DMF targets (para 8). The private sector participation indicator of the outcome remained peripheral to project implementation and was difficult to achieve as there is little experience in such participation in coastal management in India. The output and outcome targets for private sector investment were more appropriate to the DMF of the facility. The DMF also lacked baselines and quantifiable targets, had too many output indicators, and indicators that would have been better served as activities (such as consultant engagement). Despite these, prevention of coastal erosion remains a priority for the governments of Maharashtra and Karnataka, which continue to seek support from international financial institutions to develop projects in this area. This project has developed environmentally-friendly approaches to coastal protection that have proven to work well, and are in accordance with the recommendations for coastal protection and management endorsed by the MoJS. 18 Overall, the project is assessed as relevant.

B. Effectiveness

18 https://www.adb.org/news/videos/restoring-beaches-through-sustainable-coastal-protection-and-management

45. The project is rated effective . There has been substantial progress in addressing the problem of shoreline erosion and increasing community involvement in coastal protection and management, with 3 of the 4 outcome targets achieved and 1 substantially achieved. The outcome of protecting targeted vulnerable coastline based on the DMF was achieved.19 A total of 8.3 km of coastline is protected and better managed in Ullal and Mirya bay. Enhancing community involvement has been achieved in both states with representatives of well over the target 50 communities participating in project activities. Exact figures to measure actual increases in businesses, local fish catches, and coastal shipping are sparse, but significant additional activities in these areas developed under tranche 1 are evident in the project sites. Business activities at intervention beaches have greatly increased, with Ullal rising from no activity and Mirya Bay reporting significant improvements following increase in footfall for tourism. In Karnataka, 20 to 30 families are now gainfully employed in beach tourism and 10-15 new vendors and micro retailers use peripatetic stalls to earn livelihood. Coastal shipping and fish landings have also expanded. In Maharashtra, purses seiners operating along the Ratnagiri coast increased by 18% and combined average landing of Indian mackerel and oil sardine grew from 9% to 23%. Even at appraisal for tranche 1, project focus on private sector involvement in coastal management was secondary and it remained peripheral throughout implementation. Nonetheless, this did not affect the achievement of the overall outcome of protecting and managing shorelines to meet the needs of the stakeholders and the environment. Overall, 82% of the output indicators were achieved for tranche 1 (paras. 10-14).20 The continued implementation of SMPs for the entire coastline in Karnataka and Maharashtra will strengthen coastline protection. Coastal erosion and instability have been reduced in both areas, and capacity of states in shoreline planning and development has been improved. Safeguard compliance reporting, monitoring, and management were also generally satisfactory: environmental reporting was done, no environment-related grievances were raised, except the delay in revised environmental clearances (para 37). No other safeguard issues were flagged.

C. Efficiency

46. The project is rated efficient . During appraisal, the calculated economic internal rate of return (EIRR) for the base case for the Mirya Bay works was 16.8%, and the net present value (NPV) at a discount rate of 12% was calculated to be ₹89.2 million. For the present analysis of the Mirya Bay scheme, and to estimate the benefits delivered by the scheme, the EIRR is calculated to be 35.9%, with an NPV of ₹1,199 million. At appraisal, the Ullal sub-project had an EIRR of 14.5% with a NPV of ₹180 million. In the reappraisal, the base case for Ullal is calculated to be an EIRR of 15.2% with an NPV of ₹348 million. For the combined scheme, the EIRR is 21.9% with an NPV of ₹1,547 million. The economic reevaluation is described in Appendix 8. With respect to process efficiency, there were significant initial implementation delays because of challenges in procurement and staff capacity, slow mobilization of key experts, and termination of a consulting contract. The use of new technologies reduced bidder interest; technical issues delayed tendering and bid evaluation; and unforeseen geotechnical conditions endangered the stability of the offshore structure, which led to a 3.5-year extension (a 50% overrun). The EIRR re-estimation accounted for the time overrun, although the project is still found to be efficient.

D. Sustainability

19 Remeasurement of the actual length of the coastline to be protected shows that it is only 8.3 km compared to the 10 km target given in the DMF. In essence, it is considered that the full length was achieved. However, the DMF target was not updated. 20 Of the 22 output targets for tranche 1, 18 were achieved, 3 were partially achieved.

47. The project is rated likely sustainable . The technical solutions adopted by the project are likely to be sustained given their effectiveness and the acceptance within CWPRS and CWC which provide key advice on engineering of coastal protection measures. Project implementation has provided opportunities for interaction and collaboration among key specialists in the CWC and CWPRS, which enhanced the ownership and capability of both these institutions to continuously promote and lead the communities toward sustainable protection and management of India’s coastline.

48. The sustainability of the project outputs was assessed separately for the participating states as their institutional arrangements are different. For both states, the project is rated likely sustainable . While the new technologies introduced pose a challenge in terms of appropriate and sufficient operation and maintenance (O&M) of the structures, the project supported the development of an O&M manual to sustainably maintain these assets. The budgetary requirements are relatively small, and the responsible agencies have extensive experience in general management of coastal structures. Technical and institutional challenges to project sustainability are discussed in Appendix 9.

49. Karnataka. An O&M manual for the maintenance of the project assets has been provided to the SEA, and it is important this is used together with appropriate staff and financial resources for the proper maintenance of the structures created. During the PCR mission, the SEA confirmed that project assets will remain with the Public Works Department for the initial years of operation until the KMB is further developed. The agency has sufficient O&M budget to meet project O&M requirements.21 The handover will take place once KMB has the capacity to effectively manage these assets. The sustainability of the community initiatives in shoreline management through the SMOs developed remains uncertain, as the internal revenue streams have yet to be demonstrated. More details are provided in Appendix 9.

50. Through its participation in tranche 2, Karnataka will have more opportunities to further demonstrate the benefits of effective shoreline management, community involvement in decision- making, and investments along the coastline; and contribute to institutional capacity building.

51. Maharashtra. The MMB has limited engineering and project implementation capacity and does not have ongoing tranche 2 support to assist capacity building to enhance its ability to manage the project outcome following project completion. MMB has a functioning department of civil engineering to undertake construction and maintenance of the assets created, and the new project under development is expected to significantly enhance the sustainability of tranche 1.22 The MMB has confirmed adequate budget 23 for undertaking O&M of the created assets.

E. Development Impact

52. The development impact of the project is rated satisfactory . The impact indicators in the DMF were targeted after 5 years of project completion, or in 2019, but because of delays, this assessment was made about 2 years after completion, and so the impact might not be as developed as originally envisaged. While there are no specific targets in the DMF at the impact level, the contributions of the project to higher per capita income and increase in GDP were made through improvements in fishing and tourism activities in addition to reduction in damages caused by coastal flooding and erosion arising from coastal protection interventions. There have been

21 The O&M budget requirement represented 0.02% of the Public Works Department’s annual budget in 2019. 22 A new project – the Maharashtra Sustainable Coastal Protection and Management Project is under development. 23 The O&M requirement was about 1% of the MMB’s O&M expenditure in 2019.

13 no reports of flood damage in the protected areas since project completion, and fish landings have increased between 9% and 23%. The development of beaches at Mirya Bay and Ullal has led to restart of tourist visits and generation of economic activities. The works at Ullal have strengthened the management of the old port in Mangalore, encouraging the growth of traffic through this port. The enhanced coastal resilience at Ullal was demonstrated during Cyclone Ockhi as the shoreline infrastructure minimized damage in the region when the cyclone hit southern India in December 2017. Other states have shown interest in these soft hybrid protection measures for new investments.

53. The environmental impact of the project was positive, as it addressed environmental degradation through coastal erosion. Tourism in Ullal witnessed noticeable growth. In addition, the clam mussel population on Ullal reef increased, allowing profitable fishing for fisherfolk, and dolphins are being sighted near the reef. These indicate environmental sustainability and potential economic sustainability over the long term. Contribution of the project to ADB Strategy 2030 can be found in Appendix 8.

F. Performance of the Borrower and the Executing Agency

54. The performance of the borrower is rated satisfactory . No adverse issues arose through the borrower’s actions. The MOJS and its agencies (the CWC and CWPRS) provided considerable support to project implementation and made a significant contribution to overall project success. Overall, the performance of the SEAs is considered satisfactory .

55. Karnataka. The performance of the SEA is rated satisfactory . The PMU provided strong support and guidance to overcome many challenges encountered during implementation such as in managing the need for design changes and additional site investigations (within the constraints of its own procedures for clearing design changes and managing procurement processes). Loan covenant noncompliance was a minor issue, and the SEA made strong efforts to achieve compliance.

56. Maharashtra. The performance of the SEA is rated less than satisfactory because of the accumulation of issues relating to the management of the PMDC and reef construction contracts. Implementation of the project suffered from significant negative impacts from contract-related disputes, which could have been better managed. Persistent problems with lack of staff within the PMU to effectively manage contracts were also flagged during review missions. For example, during project implementation, the SEA constructed a new Mirkarwada fisheries jetty within Mirya Bay without any assessment of how it would impact project performance. Loan covenant noncompliance was a minor issue, and the SEA to made strong efforts to achieve compliance.

G. Performance of the Asian Development Bank

57. During project implementation, ADB fielded one inception mission, one midterm review mission, one consultation mission, five loan review missions, and one safeguards review mission. On average, missions occurred about once every 8 months. These missions provided strong support and clear direction for project implementation as ADB staff had in-depth technical knowledge and strong country experience, and their suggestions enabled the PMUs to fast-track project implementation. The mission members helped flag potentially troublesome issues and resolve internal and external bottlenecks. The collaboration between the SEAs and ADB resulted in the improved performance of the PMUs. The overall performance of ADB was satisfactory .

H. Overall Assessment

58. This pioneering project effectively implemented environmentally appropriate hybrid solutions combining engineered (hard) and non-engineered (soft) measures appropriate for Indian coastal protection and management to enhance climate change resilience. The involvement of coastal communities in shoreline management was an important part of the project’s approach. The project helped to stabilize the shoreline and recover the beaches, helping local communities with enhanced opportunities for fishing and tourism.

59. Overall, the tranche 1 project is rated successful . It was relevant and provided impetus for the development of sustainable coastal management practices in India relevant to both government and ADB policies. It was effective in achieving the target outcomes, and significant outputs were achieved towards delivering environmentally sustainable and effective protection to key beaches. The project was economically efficient and is likely to be sustainable with existing institutional capacity for coastal management and O&M of project outputs. Overall Ratings Criteria Rating Relevance Relevant Effectiveness Effective Efficiency Efficient Sustainability Likely sustainable Overall Assessment Successful Development impact Satisfactory Borrower and executing agency Satisfactory Performance of ADB Satisfactory ADB = Asian Development Bank. Source: ADB.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS

A. Issues and Lessons

60. Delays in consultant engagement. The SEAs suffered delays during the procurement of their PMDC technical support consultancy teams, and both contracts for consultancy services were awarded about 12 months behind schedule, leading to slow implementation of the project. Consultancy contracts administration proved problematic, with delayed payments, output quality issues, and a lack of trust on the services rendered. This could be addressed either by factoring such possible delays in project timelines or providing additional support to executing agencies to manage procurement of consultancy services.

61. Effective supervision during implementation . Decision-making in procurement of works and management of contracts for the construction took a long time, which slowed progress. Also, deployment of both SEA and PMDC staff for contract management was not well-planned, and supervision of contractors was inadequate. More attention should be given to addressing oversight and supervision matters during regular mission visits.

62. DMF quality . The DMF contained a number of weaknesses, and opportunities to improve the DMF were missed during project implementation. This has made project evaluation less precise. In the future, more care is needed in considering how project should be most appropriately monitored and evaluated, both in design and at midterm review.

63. Utilization of SMPs. The preparation of SMPs was successfully achieved, but there is no mandatory requirement for government agencies to use SMPs for planning coastal intervention activities. The need to widen interdepartmental coordination, for increasing usefulness of the planning document, needs to be addressed.

B. Recommendations

64. To address issues of delays caused by design changes, the design and build contract approach could be used. This type of contract is used successfully in India, but with much larger contracts than those under the project. Additional time should also be allowed to implement such changes.

65. In designing projects, enough time should be allotted to account for the learning curve within SEAs to complete procurement, especially if they have little experience in engaging consulting services effectively. Proceeding with initial procurement without having support for the SEAs available through consulting services has risks and can lead to significant delays. This should be recognized in establishing implementation schedules within the project design. With structures to be built that are beyond the experience of the PMU team, it is important that good advice is available to the PMU until the arrival of the long-term TA team.

66. When institutional arrangements for post-project asset management involve creation of new organizations or significant reorganization of existing institutions, these actions should occur early (i.e., before the midterm review), and institutional development and training provided under the project should be directed to reach those holding post-project responsibilities.

67. For better follow-up on compliance with the submission of audited project financial statements, a financial management specialist should be part of project missions to monitor and support the mission leaders and executing agency/implementing agency. Audit issues should be more closely followed up on while the project is still being implemented.

68. Future monitoring. Continued monitoring of project performance will be needed for Karnataka during implementation of tranche 2. Collection of information to assess delivery of the project impact may require the commissioning of social surveys to collect specific data to quantify the level of achievement of performance targets on completion of tranche 2. Monitoring is also needed to promote compliance with all remaining regulatory issues.

69. With construction of offshore reefs, the navigational hazards that these structures present should be minimized. The reefs should be identified with marker buoys and located on nautical charts. Checks should be made to confirm these tasks have been done.

70. The design of the Mirya Bay project in Maharashtra was reduced to one layer from original two-layer geotube reef, and significant reduction was made in the sand volume for beach nourishment. When suggesting the design changes, the CWPRS stressed the need to monitor the impact of the reduced structure and make further changes if needed. Such monitoring is required in the future. Nevertheless, the investment remained successful in achieving its main objective of bay stabilization, despite the construction of a fisheries jetty that was not part of the investment plan, reducing sediment circulation within the bay (Appendix 9). The MMB should continue to monitor the beach in case future maintenance measures are needed.

71. Timing of the project performance evaluation report. The project performance evaluation report should be prepared after completion of tranche 2 of the program.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK Performance Indicators and Project Achievements Design Summary Targets Overall Tranche 1 Karnat aka Maharashtra Impact After 5 years of the program Improved income and completion (2019): Improvements on  At Ullal the protected fish factories  In Maharashtra fishing activities reduced poverty of the income, tourism and ensured continued employment of about improved by wide beach for landing coastal communities in  Higher per capita income for poverty reduction have 120 women from the fishing boats, with some 1,904 active the sub-project areas of coastal communities in the sub- been observed. Full communities (Source: SMO) fishermen. Data on incomes not three coastal states project areas impact evaluation to be available conducted after  Anecdotal evidence indicates positive  Contribution from tourism to completion of tranche 2. impact on coastal communities in the  Tourist arrivals in Ratnagiri district state GDP increased sub-project areas, and so impact increased by 250% in period 2009 to expected to be achieved by completion 2013 a  Poverty incidence in coastal of tranche 2. communities reduced  Anecdotal evidence indicates positive impact on coastal communities in the sub-project areas, and so impact expected to be achieved by completion of proposed follow-up project Outcome At the end of the program (2014) Protected and managed  Achieved. A total of  A total of 5.3 km of coastline has been  A total of 3.0 km of coastline has shorelines in the three  about 10 km of coastlines in the 8.3 km (83% of target) protected and managed by the been protected and managed by the States meeting the States protected and managed of coastline protected schemes at Ullal, (in comparison with schemes in Mirya Bay (in comparison b needs of the using soft technologies as and managed. the 6 km estimated length of Ullal with the 4km estimated beach length stakeholders and the required beach made the PPTA report). (Source: in the PPTA report). (Source: Mission Mission Google Earth measurement). Google Earth measurement) environment  Communities are active in coastal  Community and private sector  Communities are active in coastal  Substantially protection and management through participate in coastal protection protection and management through the Achieved. the SMOs created – 7 in and management SMOs created – 2 in Karnataka. Communities are more Maharashtra. Local Gram Panchayat Communities using SMO route are actively participating in offices have adopted SMO roles and involved in articulating their concerns coastal protection, undertaken development activities, and suggesting appropriate solutions. though the private receiving funds under the project for SMO meetings are dynamic in nature sector involvement activities such as providing cold c and they are involved in beach remained peripheral. storage, beach entertainment and maintenance tasks. Two SMOs were other facilities, and improved supported with project funds to the tune interaction with authorities managing of INR 13,600,000 ($ 209,230) to take the coastline. up shoreline management activities.

The funds were utilized to install (Source: PMU reports) community toilets, high mast lights, beach fixtures and furniture leading to enhanced beach amenity value. This

Appendix 1 17

Performance Indicators and Project Achievements Design Summary Targets Overall Tranche 1 Karnat aka Maharashtra has increased beach tourist foot falls and increased micro business potential

substantially. The SMOs also converged well with the on-going government schemes

(Source: PMU reports)

 Private sector involvement in coastal  Private sector involvement in coastal management is peripheral at this stage management is peripheral at this with inclusion of measures for stage with inclusion of measures for promotion of private sector participation promotion of private sector and PPP into coastal economic participation and PPP into coastal activities through peripheral policies for economic activities through tourism and maritime development peripheral policies for tourism and

which would be helpful for encouraging maritime development which would private sector participation in the be helpful for encouraging private integrated coastal protection and sector participation in the integrated management in the future coastal protection and management in the future

 Number of business at intervention beaches increased  Achieved. Number of  Businesses at intervention beaches  The businesses have increased by 15% businesses have have increased by at least 100%. There significantly due to increased footfall increased were no facilities or visitors at the start for tourism and related economic d of the project as beach was eroded, but activities for a net positive impact. now 20 to 30 families are gainfully (Source: EA PCR; PMU Reports) employed in beach tourism during weekends, with enhanced income of ₹ 6,000 to 10,000 per month and 10 to 15

new vendors and micro retailers use

peripatetic stalls to earn their livelihood

with earning of ₹ 2,000/ to 3,000/ per day during weekends. (Source: SMO)  10% increase in coastal shipping and fish landings at intervention districts  Achieved. Number of coastal shipping and  In Karnataka, enriched population of  The purses seiners operating along fish landings have “clam mussels” in the Ullal reef allows the Ratnagiri coast (Marine Fisheries increased gainful employment to 15 families Census, 2010) increased by 18%

18 Appendix 1

Performance Indicators and Project Achievements Design Summary Targets Overall Tranche 1 Karnat aka Maharashtra operating in five groups, between from 142 in 2010 to 167 in 2016. October and April. Catch potential up to The combined average landing of 150 to 200 kg per group per trip, Indian mackerel and oil sardine in fetching around ₹ 100 to 120 per kg. Maharashtra grew from 9% to 23% after introduction of purse seine.

(Source: Discussion with group members and SMO) (Source: Government publication- Marine Fisheries Census 2010, Maharashtra http://www.cmfri.org.in/ and other published article in J.Exp. Zool.India Vol 20, No.1, pp.431-434, 2017 ISSN 0972-0030 (www.connectjournals.com/jez ) Catch composition of purse-seine fishing along Ratnagiri coast of Maharashtra state, India)

Outputs

Output 1: Sustainable Plans and Management for shoreline developed  All plans are completed and  Achieved with delay.  All SMPs prepared and discussed  All SMPs prepared and discussed endorsed by local bodies as All SMPs completed with stakeholders, endorsed and with stakeholders, endorsed and 1.1 Participatory stakeholders and relevant and endorsed by local cleared by authorities. By 2017, cleared by authorities. By 2017, shoreline planning authorities by 2013 bodies by 2017. three district SMP and one State five district and one State SMPs management plans SMP prepared. (Source: PMU completed. See MMB website

to meet the long reports) (Source: PMU reports) term needs for shoreline management for 3 State coastlines prepared and endorsed

1.2 Coastal  Coastal management  Achieved. Coastal  Coastal Management Information  Coastal Management Information management information system is functional Management Systems have been developed by the Systems have been developed by information system in each state with linkages to information system is end of the project and continue to be end of the project and continue to to support planning central agencies functional in the 2 actively used. These have evolved be actively used. These have and management states. from rudimentary systems initially evolved from rudimentary systems established used, to more sophisticated systems initially used, to more sophisticated

Appendix 1 19

Performance Indicators and Project Achievements Design Summary Targets Overall Tranche 1 Karnat aka Maharashtra available. The system is accessible systems (including development of by ADB officers, and relevant points a mobile phone app for the CMIS) within central Government agencies. available. See MMB website CMIS holds data for reporting

progress, and is used to compile quarterly progress reports, and to support ADB Review Missions.

 18 Staff have been trained to 1.3 Project  Staff are trained to maintain  Achieved. Staff in the maintain and manage both project  10 Staff have been trained to management and manage the system 2 states have been management and financial maintain and manage both project system established trained to maintain management systems. All PMU management and financial

and operational, and manage the technical staff are familiar with the management systems.

and sub-projects system. system, and regularly use it. System for future tranches is maintained and operational after

planned and departure of PMDC 1 consultants’ designed team.

 PMU established, staffed  PMU established and staffed in 2010.  PMU established and staffed in  Achieved. PMU (2010) 2010. established and

staffed in 2010.

 PMU staff trained (2011)  7 training events attended by 36 PMU  Training on project management,  Achieved. A total of staff with over 136, training days on possible options and design 56 training was considerations for coastal conducted for 66 staff. shoreline management contract protection measures provided to management and project MMB staff Training events were 49, administration. with total of 229 training days, with

30 officers trained.

 Project manuals prepared and  Project manuals prepared for inshore  Project manuals prepared for the fully operational (2011)  Achieved. Project berms, offshore reef and being used Mirya Bay offshore reef. These are manuals prepared. being effectively used by MMB. by Ports Department.

 Consultants engaged and  Consultants engaged in early 2012 and provided support until project provide support (2011)  Consultants engaged in late 2011.  Achieved. completion. Consultants were

20 Appendix 1

Performance Indicators and Project Achievements Design Summary Targets Overall Tranche 1 Karnat aka Maharashtra engaged in 2011/2012.  Designs for future tranches  Designs for future tranches prepared. approved by qualified Progress was made to Tranche 2, professional and technical with some 9 projects prepared and  Designs for future tranches  Partially Achieved. prepared. The withdrawal of the review panel and endorsed by Designs for future endorsed by communities and communities and stakeholders stakeholders. Project Design and Management tranches were Consultant (PMDC) team meant prepared by the 2 (Source: PMU reports, ADB reports) that things were delayed, and not states, although able to be completed to allow issues were Tranche 2 to be implemented and encountered in now planned for implementation Maharashtra. under a stand-alone project. Some 16 sub-projects designed. (Source: PMU reports, ADB reports)

Output 2: Coastal erosion and instability reduced

2.1 Coastal erosion and  Coastline subject to erosion is  Achieved. Coastline  Separate target for Karnataka not  Separate target for Maharashtra instability reduced reduced to 380 km from the subject to erosion was provided, but length of eroding coast not provided, but length of eroding e present level of 530 km reduced to 248 km. at appraisal for Karnataka estimated coast at appraisal for Maharashtra to be 250 km. A recent Government estimated to be 263 km. Latest

report gives length of eroding coast estimate for length of eroding f for Karnataka of 70 km coastline in Maharashtra is 178 km. l

 Responsibility for management and  Responsibility for management and 2.2 Community and  Community/local government  Achieved. maintenance of completed projects maintenance of completed projects private sector engaged resolution for purposes of Management and lies with the MMB in Maharashtra. lies with the Coastal Infrastructure in coastal erosion and maintenance of completed maintenance are SMO responsibilities established Management Unit (CIMU), which was instability reduction projects being handled by with local Gram Panchayat offices local government operational in 2015. Shoreline to provide link with local agencies. Management Organisations (SMOs) government and local communities. established to support work of CIMU.  Coastal communities active in  Coastal communities active in coastline management activities  50 communities with up to 30%  Partially Achieved. coastline management activities and and have been supported through women beneficiaries at each While communities have been supported. 5 SMOs. Representatives of 53 intervention district supported are supported, Representatives of 600 communities communities represented within the participation of attended training events. SMO committees. These SMO women in some of the Participation of women in some of organizations are the local Gram

Appendix 1 21

Performance Indicators and Project Achievements Design Summary Targets Overall Tranche 1 Karnat aka Maharashtra organizations is less these community organizations is Panchayats, having sufficient than 30%. currently less than 30%, but the means to assure sustainability and continued investment supported have excellent community links. increased participation of women. Participation of women in some of The number of organizations involved these community organizations is (only 2 in Ullal). SMO Bengre has 2 currently less than 30%, In Mirya women out of 13 members, and Ullal SMO 30% of members are women. SMO has no women participation out of 7 members.

(Source: Reporting by PMU and ADB)  Private sector investment in  Not Achieved. coastal protection and (Source: Reporting by PMU and ADB) This is a target for the management up to 7% of total entire MFF and in cost appraisal stage, there was no cost allocation for private sector investment in both states. Only preparatory and promotional activities to increase private sector participation were planned in tranche 1. Output 3: Enhanced capacity for integrated shoreline  Training was provided to all 7 SMO  Orientation training conducted for all planning and  Achieved. Training committees and members. development  Training provided to programs have been district administration and local bodies 3.1 Enhanced capacity state/district agencies, local provided from 2012. (GPs and municipalities) in three for districts and states bodies and stakeholders (2012) districts, covering about 600 participants in 2012 and 2013. Repeat to plan, design and implement shoreline training also conducted in 2014 and 2015. In addition to local bodies protection and management projects training, 8 further training events attended by PMU staff in a variety of

subjects.

 Coastal Infrastructure  Achieved with delay.  CIMU was established and staffed  CIMU was established in Karnataka Management Unit (CIMU) CIMU has been within MMB in June 2015. operational by 2012 vide Government Order GO on 17 April 2015 with roles and

22 Appendix 1

Performance Indicators and Project Achievements Design Summary Targets Overall Tranche 1 Karnat aka Maharashtra established in the 2 responsibilities of the identified CIMU states in 2015. officers. Post-project O&M is a

mandate of CIMU.  Shoreline Management Plans  Shoreline management plans were (SMPs) updated every five  Achieved. SMPs  [Likely to be Achieved] The need to completed in 2017 and have been years updated in Karnataka update SMPs is accepted by the and will be updated in updated with assistance of Tranche 2 SEA but since the original SMPs Maharashtra. consultants in 2019. The updated received late approval (published SMPs are currently waiting for June 2017) five years have not yet approval. elapsed.

(Source: PMU reports) (Source: PMU reports)

 Training of SEA staff has been  Adequate numbers of  Training of SEA staff has been provided by the PMDC teams. provided by the PMDC teams. State/ Districts agencies,  Achieved. A total of 3.2 Enhanced capacity Fourteen training events held SMO and local expert/agencies local experts/ agencies, 18 staff trained from for State/district providing training for PMU, SMO and were provided training in coastal local bodies and the 2 states on agencies local other stakeholder staff, including management issues, including visit stakeholders trained in climate resilient experts/agencies, local attendance in an international study to operating Kovalum Beach in application of new coastal protection bodies and using softer tour. In addition, 13 PMU staff Kerala. Technical training for PMU technologies. stakeholders to provide technologies such as attended training on new Guidelines and SEA staff was provided by specialist support for use of offshore reefs for Coastal Management over 3 days consultants. In addition, 5 PMU planning, modeling, and coastal dunes in Mangalore. staff attended training on new design, checking and guidelines for Coastal Management review for coastal over 3 days in Pune. protection and  50 staff at CWC, CWPRS and  Training provided as described for management other central agencies trained  Core CWPRS and CWC staff were Karnataka.  Achieved . A total of given orientation training. Core staff 116 staff trained were completely involved in the project design and approval process with involvement of CWC, CWPRS and other central agency staff. Three major training events held, with total of 116 participants from central agencies, university departments.

 SMOs have been established and functional in 2 locations in the State,  Shoreline Management involving local bodies. Representation  SMOs have been established and 3.3 Beaches are involving local bodies as  Partially Achieved. of women is below 30%, but efforts are functional in 7 locations in the State, managed and stakeholders with at least 30% SMOs have been involving local bodies. maintained by the representatives from women established but Representation of women is below

Appendix 1 23

Performance Indicators and Project Achievements Design Summary Targets Overall Tranche 1 Karnat aka Maharashtra communities and functional women representation being made under Tranche 2 project 30%, but efforts are being made to stakeholders is below 30%. to improve this. improve this.

 Shoreline management active  SMO members at all sub-project sites  SMOs at all sub-project sites remain at each sub-project site  Achieved. Shoreline remain active, providing information active and in regular contact with management is a on performance of coastal protection the CIMU. PCR Mission formal mandate of the works and identifying local interviewed one SMO chairman, maritime board in the management issues or developing confirming on-going role for the 2 states. problems. SMO.

 Approved formal mandate as  Achieved . Shoreline  Shoreline management is a formal  Shoreline management is in the 3.4 SEAs formally part of proposed shoreline management is a mandate of the newly created mandate of Maharashtra Maritime planning and management mandated to formal mandate of the Karnataka Maritime Board, which Board, of which the CIMU is a part. policy coordinate all maritime board in the incorporates offices of the Ports coastal protection 2 states. departments, including the CIMU. and management programs  Approved Shoreline Planning  Achieved. Shoreline  The Shore line Management Plan and Management Policy  The Shoreline Management Plan for Management Plans for the State was approved by the the State was approved by the approved in 2017. Government on 19 July 2017. Government on 30 November 2017

 Appropriate notification by the  Achieved. Shoreline  Maharashtra Maritime Board has  Karnataka Maritime Board has been States as required management is a the territorial jurisdiction for the constituted with clear mandate to formal mandate of the entire coastline of the State. maritime board in the carryout coastal protection works and 2 states. to prevent sea erosion in Karnataka Karnataka Maritime Act coast. See: link (Source: PMU and ADB reports) Note: While MFF included three states, Goa did not eventually participate in the investment program. a National Council of Applied Economic Research January, 2019. District-Driven Growth A Pilot Study for Making India A $5 Trillion Economy. Report for Ratnagiri District b Such as artificial reefs, beach nourishment, dune management etc. Remeasurement of the actual length of the coastline to be protected shows that it is only 8.3 km compared to the 10 km target given in the DMF. Therefore, it is considered that the full length was achieved. However, the DMF target was not updated. c Within the indicator, the focus on community participation is greater based on the magnitude of outputs/activities planned to be conducted as evident in the DMF. Related output on private sector investment is not envisaged under tranche 1, but a facility target. Thus, the indicator is assessed as substantially achieved. d No baseline data on businesses at intervention beaches to quantify actual increase in activity. e The target of a reduction in eroding coastline is carried forward from the PPTA Final Report – established for three States and all tranches of the project. f See https://www.nccr.gov.in/sites/default/files/schangenew.pdf Source: ADB.

24 Appendix 2

PROJECT COST AT APPRAISAL AND ACTUAL ($ million)

Component Appraisal Actual Foreign Local Total Cost Foreign Local Total Exchange Currency Exchange Currency Cost

A. Investment Costs 1. Turnkey contract 2. Civil works 36.838 36.838 36.463 36.463 3. Mechanical and equipment 0.55 0.55 0.008 0.008 4. Environment and social mitigation 1.129 1.129 0.058 0.058 5. Consultants a. Project management 7.255 7.255 3.2531 2.3787 5.6318 b. Capacity development 0.324 0.324 0.054 0.054 6. Training 0.324 0.324 7. Community initiatives 0.264 0.264 0.11 0.11 8. Studies and surveys 0.235 0.235 0.85 0.85 Subtotal (A) 46.684 46.684 3.2531 39.9217 43.1748 B. Recurrent Costs 1 Salaries 1.474 1.474 2.95 2.95 2 Accommodation 2.59 2.59 3 Equipment operation and maintenance Subtotal (B) 1.474 1.474 5.54 5.54 Total Base Cost (A+B) 48.158 48.158 3.2631 45.4577 48.7108 C. Contingencies 4.98 4.98 D. Financial Charges During Implementation 1.534 0.23 Total Project Cost (A+B+C+D) 53.138 53.138 4.797 45.4577 50.255 Source: ADB and EA PCR documents

Appendix 3 25

PROJECT COST AT APPRAISAL AND ACTUAL BY FINANCIER

Table A3.1: Appraisal, Karnataka ( $ ‘000)

Component ADB Government of Total Cost a Karnataka % of Cost % of Cost Taxes and Amount Category Amount Category Amount Duties A. Investment Costs 1. Turnkey contract 2. Civil works 31,514 91.0% 3,121 9.0% 34,625 3,121 3. Mechanical and equipment 273 77.6% 79 22.4% 352 79 4. Environment and social mitigation 805 93.0% 61 7.0% 866 61 5. Consultants a. Project management 3,954 94.4% 234 5.6% 4,188 234 b. Capacity development 324 89.8% 37 10.2% 361 37 Subtotal (A) 36,870 88.2% 4,933 11.8% 41,803 3,532 B. Recurrent Costs 1 Salaries 2 Accommodation 3 Equipment operation and maintenance

Subtotal (B) Total Base Cost (A+B) 36,870 88.2% 4,933 11.8% 41,803 3,532 C. Contingencies 4,150 99.5% 20 0.50% 4,170 D. Financial Charges During Implementation 2,576 100.0% 2,576

Total Project Cost (A+B+C+D) 41,020 84.5% 7,529 15.5% 48,549 3,532 Note: Numbers may not sum precisely because of rounding. Source: ADB

26 Appendix 3

Table A3.2: Project Cost at Completion by Financier: Karnataka ( $ million)

Component ADB Government of Karnataka Total Cost

Amount % of Cost Amount % of Cost Amount % of Cost Category Category Category A. Investment Costs

1. Turnkey contract 2. Civil works 28.652 85.47% 4.871 14.53% 33.523 100.00%

3. Mechanical and equipment 0.008 100.00% 0.008 100.00%

4. Environment and social mitigation 0.058 100.00% 0.058 100.00%

5. Consultants 0

a. Project management 3.943 88.75% 0.5 11.25% 4.443 100.00%

b. Capacity development 0.054 100.00% 0.054 100.00%

Subtotal (A) 32.661 85.76% 5.425 14.24% 38.086 100.00%

B. Recurrent Costs

1 Salaries 2 2.296 100.00% 2.296 100.00%

2 Accommodation

3 Equipment operation and maintenance

Subtotal (B) 2.296 100.00% 2.296 100.00%

Total Base Cost (A+B) 32.661 80.88% 7.721 19.12% 40.382 100.00%

C. Contingencies D. Financial Charges During Implementation 1.304 100.00% 1.304 100.00% Total Project Cost (A+B+C+D) 32.661 78.35% 9.025 21.65% 41.686 100.00%

Notes: 1. Numbers may not sum precisely because of rounding. 2.Local Government expenditure on salaries and accommodation Source{s}: ADB and Government of Karnataka

Appendix 3 27

Table A3.3: Project Cost at Appraisal by Financier: Maharashtra ( $ ‘000)

Component ADB Government of Total Cost Maharashtra Amount % of Cost % of Cost Taxes and Category Amount Category Amount Duties A. Investment Costs 1. Civil Works 5,324 87.4% 962 15.3% 6,286 962 2. Equipment and supplies 277 77.6% 80 22.4% 357 80 3. Training 324 89.8% 37 10.2% 361 37 4. Community initiatives 264 95.0% 14 5.0% 278 14 5. Studies and surveys 235 89.7% 27 10.3% 262 27 6. Consulting services 3,301 94.0% 212 6.0% 3,513 212 7. PMU staff costs 1,474 100.0% 1,474 8. Sub-project maintenance

Total Base Cost 9,725 77.6% 2,806 22.4% 12,531 1,332 C. Contingencies 810 97.4% 21 2.6% 831 D. Financial Charges During Implementation 762 100.0% 762

Total Project Cost (A+B+C+D) 10,535 74.6% 3,589 25.4% 14,124 1,332

Notes: 1. Numbers may not sum precisely because of rounding. Source: ADB and Government of Maharashtra

28 Appendix 3

Table A3.4: Project Cost at Completion by Financier: Maharashtra

($ ‘000)

Component ADB Government of Total Cost Maharashtra % of Cost % of Cost % of Cost Amount Category Amount Category Amount Category A. Investment Costs 1. Civil Works 2,600 88.4% 340 11.6% 2,940 100.0% 2. Equipment and supplies 3. Training 4. Community initiatives 110 100.0% 110 100.0% 5. Studies and surveys 850 100.0% 850 100.0% 6. Consulting services 1,110 93.3% 80 6.7% 1,190 100.0% 7. PMU staff costs 1 3,240 100.0% 3,240 100.0% 8. Sub -project maintenance Total Base Cost 3,820 45.9% 4,510 54.1% 8,330 100.0% C. Contingencies D. Financial Charges During Implementation 230 100% 230 100.0%

Total Project Cost (A+B+C+D) 3,820 44.6% 4,740 55.4% 8,560 100.0%

Note: 1. Numbers may not sum precisely because of rounding. Source: ADB and Government of Maharashtra

1 Staff costs includes accommodation and other administrative costs

Appendix 4 29

Task / Activity PROJECT2011 IMPLEMENTATION 2012 2013 SCHEDULE 20142015 2016 2017 2018 2019

I II III IV I II III IV I II III IV I II III IV I II III IV IIII II IV III I IV II IIII II IV I II III IV i. Mirya Bay Reef, Maharashtra

ii Mirya Bay Beach Nourishment

iii Ullal Offshore reef

iv Ullal Beach Nourishment

v Ullal Inshore Berms

vi Ullal Rock Breakwater

vii Project Management Design Consultancytra - Maharash

viii Project Management Design Consultancyka - Karnata

= original schedule = actual schedule

Source: ADB

30 Appendix 5

DISBURSEMENT OF ADB LOAN AND GRANT PROCEEDS

Table 5.1: Annual and Cumulative Disbursement of ADB Loan Proceeds a ($ million) Annual Disbursement Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total

2011 0.557 1.5% 0.557 1.5% 2012 1.315 3.6% 1.872 5.1% 2013 2.217 6.1% 4.089 11.2% 2014 6.106 16.7% 10.195 27.9% 2015 6.263 17.2% 16.457 45.1% 2016 8.509 23.3% 24.967 68.4% 2017 7.664 21.0% 32.631 89.4% 2018 3.853 10.6% 36.484 100.0%

Total 36.484 100.0% ADB = Asian Development Bank. a Includes disbursements to advance accounts Source: Asian Development Bank.

Figure 5.1: Projection and Cumulative Disbursement of ADB Loan Proceeds ($ million)

Disbursement Curve 70

Cumulative Cumulative disbursement($ million) 10

0 2010 2011 2012 2013 2014 2015 2016 2017 2018

Planned Actual - both States

Appendix 6 31

CONTRACT AWARDS OF ADB LOAN AND GRANT PROCEEDS

Table 6.1: Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million) Annual Contract Awards Cumulative Contract Awards Amount Amount Year a ($ million) % of Total ($ million) % of Total

2011 5.809 15.9% 5.809 15.9% 2012 1.109 3.0% 6.920 19.0% 2013 5.484 15.0% 12.402 34.0% 2014 23.203 63.6% 35.604 97.6% 2015 0 0% 35.604 97.6% 2016 0.757 2.1% 36.361 99.7% 2017 0.072 0.2% 36.433 99.9% 2018 0.051 0.1% 36.484 100.0%

Total 36.484 100.0% 36.484 ADB = Asian Development Bank. Source: Asian Development Bank.

Figure 6.1: Projection and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

Cumulative contract awards by value ($, million) 60

10 Cumulative value of contracts awarded contracts of value Cumulative

0 2010 2011 2012 2013 2014 2015 2016 2017 2018

Actual Planned

32 Appendix 7

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Loan covenant Reference Status

Loan Agreement

4.01. (a) The Borrower shall cause the States to LA Article IV Complied with. carry out the Project with due diligence and efficiency and in conformity with sound applicable technical, financial, business, and development practices. (b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 5 to this Loan Agreement. 4.02. The Borrower shall make available to the LA Article IV Complied with. Project funds were included States, promptly as needed, the funds, facilities, in the departmental budget by the state. services, and other resources, as required, in addition to the proceeds of the Loan, for the carrying out of the Project. 4.03. The Borrower shall ensure that the activities LA Article IV Complied with. of its departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures. 4.04. The Borrower shall take all actions which LA Article IV Complied with. shall be necessary on its part to enable the States to perform their respective obligations under the Project Agreements, and shall not take or permit any action which would interfere with the performance of such obligations. 4.05. (a) In relation to the Project, the Borrower LA Article IV Complied with. Regular fund flow was shall exercise its rights under the financing assured by the SEA. No instances of fund arrangements in such a manner as to protect the shorted faced by PMU interests of the Borrower and ADB and to accomplish the purposes of the Loan. (b) In relation to the Project, no rights or obligations under the financing arrangements shall be assigned, amended, abrogated or waived without the prior notice to ADB. Establishment of Imprest Account; use of LA Sch 3 Complied with. Statement of Expenditure. 5. (a) Except as ADB may otherwise agree, the Provision for imprest account, direct Borrower may establish, and cause to be payment and reimbursement procedure was established, immediately after the Effective Date, put in place. Compliance was based on (i) a first generation imprest account at the preferred disbursement procedure of the Reserve bank of India, and (ii) a second State Government. generation imprest account for each SEA in a commercial bank acceptable to ADB (collectively, The state had opted for reimbursement “imprest accounts”). The imprest accounts shall procedure and direct payment. be established, managed, replenished, and liquidated in accordance with ADB's Loan Disbursement Handbook, and detailed arrangements agreed upon between the Borrower and ADB. The currency of the first generation imprest account shall be the Dollar, and the currency of the second generation imprest accounts shall be Indian Rupees. The aggregate amount to be deposited into the imprest accounts shall not exceed the lower of (i)

Appendix 7 33

Loan covenant Reference Status the estimated expenditure to be financed from the imprest accounts for the first 6 months of Project implementation, or (ii) the equivalent of 10% of the Loan amount. 5. (b) The statement of expenditures procedure LA Sch 3 Compliance is based on preferred may be used for reimbursement of eligible disbursement procedure of the State expenditures and to liquidate advances provided Government. into the imprest account, in accordance with the Loan Disbursement Handbook and detailed The state has opted for reimbursement arrangements agreed upon between the procedure and direct payment. Borrower and ADB. Any individual payment to be reimbursed or liquidated under the statement of expenditures procedure shall not exceed the equivalent of $100,000. Implementation Arrangements LA Sch 5 Complied with. 1. The Borrower, States, and SEAs shall ensure that the Project is implemented in accordance with the detailed arrangements set forth in the FFA, and the FAM. Any subsequent change to the FFA or FAM shall become effective only after approval of such change by the Borrower, the States, and ADB. In the event of any discrepancy between the FFA or the FAM and this Loan Agreement, the provisions of this Loan Agreement shall prevail. Subproject Approval and Implementation LA Sch 5 Complied with. 2. Each State shall cause its SEA to ensure that all Subprojects are selected, processed for approval, and implemented in accordance with the criteria and procedures included under Schedule 4 to the FFA and safeguard requirements included under Schedule 5 to the FFA. Environment LA Sch 5 Partial complied with. 3. Each State shall cause its SEA to (a) ensure that the Subprojects under the Project In both States while original designs were are undertaken and that all Project facilities are fully approved, there was a requirement of designed, implemented, operated and maintained obtaining environmental clearances for in accordance with all applicable laws, and modified designs. The EAs from both states regulations of the Borrower, the State, and ADB’s have informed that the process for obtaining Environment Policy (2002) , and the EARF, and modified environmental clearances for the (b) prepare and implement the necessary IEE/EIA revised design is underway. as applicable, and EMP (with budget) in accordance with the EARF. For Subprojects, the Environmental monitoring reports submitted. environmental categorization and assessment procedures defined in the EARF shall be followed. For any environment category A or B sensitive Subproject, a SEIA/SIEE as applicable shall be prepared and made available to the public 120 days before the Subproject is submitted to ADB for approval. Each State through its SEA shall monitor, audit, and report to ADB twice a year on the implementation of the EMPs for each Subproject. Resettlement LA Sch 5 No longer relevant. The project was category C for Involuntary Resettlement. 4. Each State shall cause its SEA to undertake the Project and the Subprojects in accordance with ADB’s policy on Involuntary Resettlement (1995), the RF, the relevant RP and applicable

34 Appendix 7

Loan covenant Reference Status

laws and regulations of the Borrower and the State. 5. In the event any Subproject involves LA Sch 5 No longer relevant. The project was category involuntary resettlement, necessary RP shall be C for Involuntary Resettlement. prepared according to the RF, particularly (a) subject to compliance with all applicable laws and regulations of the Borrower and the relevant State, its SEA shall acquire or make available the land and rights to land free from any encumbrances, and clear the utilities, trees, and any other obstruction from such land, required for commencement of construction activities in accordance with the schedule agreed under the related civil works contract; (b) each State shall cause its SEA to ensure that all land and rights-of-way required by the Subprojects will be made available in a timely manner and that the provisions of the RPs, including compensation and entitlements for affected households and persons, will be implemented in conformity with all applicable laws and regulations of the Borrower, the State, and ADB’s policy on Involuntary Resettlement (1995), and the agreed RP; and (c) each State shall cause its SEA to ensure that prior to land acquisition and any resettlement under each Subproject, the related RP including its update based on consensus of affected persons, is disclosed with all necessary information made available to persons affected by the Project and confirm that it be uploaded onto ADB’s web site. The State shall ensure through its SEA that all compensation programs are completed as outlined in RPs prior to the commencement of civil works. 6. Each State shall provide adequate budgetary LA Sch 5 No longer relevant. The project was category support to cover the costs of land acquisition and C for Involuntary Resettlement. resettlement. Each State with the assistance of its SEA shall submit progress and completion reports on land acquisition and resettlement for Subprojects under the quarterly progress reports for the Project. In addition, the external monitoring report shall be submitted to ADB by the State on a semiannual basis for review with regard to land acquisition and resettlement. Indigenous Peoples LA Sch 5 No longer relevant. The project was category 7. Each State through its SEA shall ensure that C for Indigenous Peoples. the requirements set out in the IPDF shall be implemented as required. In case any indigenous people are affected by the Project, appropriate IPDP shall be formulated and implemented in accordance with the IPDF. Social and Labor Standards LA Sch 5 8. (a) Each State through SEA shall ensure that (a) Complied with. The insurance cover for civil works contracts under the Project follow all laborers was observed to be unavailable and applicable labor laws of the Borrower and the the PMU agreed to ensure compliance. State and that these further include provisions to HIV / AIDS awareness campaigns were the effect that contractors; (i) carry out HIV/AIDS conducted at regular frequencies for SEA awareness programs for labor and disseminate and contractor’s staff. It was ensured that the information at worksites on risks of sexually contractors adhered to legally mandated

Appendix 7 35

Loan covenant Reference Status transmitted diseases and HIV/AIDS as part of provisions of labor (including equal pay for health and safety measures for those employed equal work), health, safety, sanitation, during construction; (ii) do not use children as welfare and working conditions. PMU was labor; and (iii) follow legally mandated provisions responsible for monitoring this. of labor (including equal pay for equal work), health, safety, sanitation, welfare and working conditions. The contracts will also include clauses for termination in case of any breach of these provisions by contractors. (b) Each State shall ensure that its SEA ensures that the anticorruption provisions acceptable to ADB are included in all bidding documents and (b) Complied with. contracts, including provisions specifying the right of ADB to audit and examine the records and Anticorruption provisions were included in all accounts of the executing and implementing bidding documents. agencies and all contractors, suppliers, consultants, and other service providers as they relate to the Project.

(c) Each State through SEA shall ensure that (i) women constitute up to 30% of beneficiaries of 50 (c) Partially complied with. In Karnataka, the communities that will be supported at each project benefitted people living in the intervention district and (ii) Shoreline proximity of Ullal and Bengre shorelines. Management activities in each State shall have at SMO Bengre has 15 members with more least 30% women representation. than 30% women representation. SMO Ullal has 7 members with no women representation. Active efforts have been made to increase the involvement of women in coastal activities. However, women representation fell short of target, because fisherwomen are preoccupied with fish retailing for livelihood and therefore had limited time to spare for sub-project tasks. In Maharashtra, similar difficulties were faced in obtaining active participation of women. Institutional Reforms LA Sch. 5 Complied with. 9. Each State shall ensure timely compliance with the institutional development actions identified in the sector road map in table 1 of Schedule 1 to the FFA. 10. Each State shall ensure that its SEA LA Sch. 5 (a) introduces dual signing system in which the (a) Complied with. All contractors signed civil works contractor awarded the contract shall Anti-corruption agreements. Covered under also sign an anticorruption contract with the SEA; FIDIC contracts. (b) ensures periodical inspection by its Project management unit of the contractor's activities (b) Complied with. Construction supervision related to fund withdrawals and settlements; and and monitoring was a regular feature. Site (c) sets up website to foster transparency, timely visit logbooks were maintained. awarding of contracts, and uploading detailed on Project activities and implementation. (c) Complied with. In Karnataka, the EA maintains a website www.scpmip.org in which the project information, SMP plans and tender details are uploaded. The web site was regularly updated. The Coastal Management Information system (CMIS) has been developed and maintained by the PMU. In Maharashtra, active project website was also developed within the MMB website.

36 Appendix 7

Loan covenant Reference Status

11. Each State shall take all necessary steps to LA Sch. 5 Complied with. GO was issued for the empower the SEAs to coordinate all coastal formation of CIMU on 21 February 2014. An protection and management programs. Towards office order was also issued on 17 April 2015 this the capacity of the SEAs shall be enhanced with roles and responsibilities of the under the Program. Establishment of a coastal identified CIMU officers. The services of the information management unit (CIMU) within the identified persons was utilized on need SEAs shall support the coordination of MIS. basis. In Maharashtra, MMB is fulfilling role.

12. Each State shall ensure evaluation of LA Sch. 5 Complied with. Project funds were included adequacy of budgetary requirements for in the departmental budget by the state necessary expenditures, in particular for operations and maintenance of subprojects. To ensure availability of the funds required to meet such expenditures, each State shall take into consideration various funding sources, including subsidies, financial performance of local bodies, introduction of schemes as necessary, to ensure financial sustainability through introduction of appropriate taxes as required and feasible. Counterpart Support and Financial LA Sch. 5 Management (a) Complied with. Project funds were 13. (a) Each State shall ensure that its budget included in the departmental budget by the incorporates annual funding requirements of the state. project for its contribution and the release of funds. (b) Complied with. Regular fund flow was (b) Each State shall ensure that sufficient assured by the SEA. No instances of fund counterpart funds are available from its budget for shorted faced by PMU each fiscal year, in a timely manner, for the efficient implementation of the Projects under the Facility. 14. A finance and administration unit shall be LA Sch. 5 Complied with. established in each Project Management Unit of Deputy Controller Finance was posted within relevant SEA to ensure compliance with Rules the PMU for ease of fund disbursement and regulations and reporting formalities to ADB. The Project finance manager shall be responsible for overseeing budgeting, accounting, and reporting of all financial transactions relating to the implementation of the Project under the overall supervision of the Project Director. Performance Monitoring and Progress Reports LA Sch. 5 Complied with. 15. Within 3 months of the Effective Date, each Web based PPMS has been fully established State through its SEA shall establish an IPPMS for reporting for the Facility as also PPMS for the Project, both in form and substance acceptable to ADB. The PPMS shall track the Investment Program and Project implementation activities, corresponding target dates, expected outcomes, and assigned responsibilities under a monitoring mechanism that can be used to track progress on specific activities. The IPPMS and PPMS shall respectively aim to detect any deficiency and discrepancy between the plan and the execution of the Investment Program and Project in using the resources efficiently in order to ensure that timely corrections can be made to adjust the design of the Investment Program and Project as feasible. 16. Without limiting the generality of Section 2.08 LA Sch. 5 Complied with. of the Project Agreement, each State through its

Appendix 7 37

Loan covenant Reference Status

SEA shall prepare and provide ADB with quarterly Each EA shared their quarterly progress progress reports on implementation of the Project reports to ADB. However, sometimes there and the Investment Program within 45 days of were delays in submissions, but the reports each quarter, that shall include report on progress included physical and financial progress made during the period of review, changes if any achieved, and output wise progress on implementation schedule, problems or achieved till such dates. difficulties encountered and remedial actions taken, work to be undertaken and Subprojects/Components to be proposed for financing in the coming quarter. The reports shall also include a summary financial account for each SEA, expenditures to date, and report on benefit monitoring undertaken pursuant to previous paragraph of this Schedule. Review and Reports LA Sch. 5 17. (a) Based on a review of quarterly progress (a) Complied with. Periodical Missions were reports submitted in accordance with the undertaken to review implementation status preceding paragraph, ADB and the State, as as per requirement. required, will meet to discuss progress of the Investment Program and the Project, any changes to implementation arrangements or remedial measures required to be undertaken towards achieving overall objectives of the Project (b) Complied with. Midterm review was and the overall Investment Program. carried out from 12 to 27 June 2013. (b) In addition to regular reviews including a midterm review for the Project a mid-term review of the Investment Program shall be undertaken, in July 2014 by ADB, the Borrower and the State. The mid-term review shall include a detailed evaluation of the respective Project and Investment Program scope, implementation arrangement, any outstanding issues, environment, resettlement and other safeguard issues, achievement of scheduled targets, and other issues, as appropriate. 18. Within 3 months of physical completion of the LA Sch. 5 Complied with. Project, the respective SEAs shall with intimation to the Borrower submit to ADB Project completion report. Likewise, within 3 months of physical completion of all the projects under the Facility, the respective SEAs shall with intimation to the Borrower submit to ADB Facility completion report Project Agreements for Karnataka and Maharashtra

Section 2.01. (a) The State shall carry out the PA Article II (a) Complied with. Project with due diligence and efficiency, and in conformity with sound administrative, financial, engineering, environmental and development practices. (b) In the carrying out of the Project and operation (b) Complied with. of the Project facilities, the State shall perform all obligations set forth in the Loan Agreement to the extent applicable. Section 2.02. The State shall make available PA Article II Complied with. Regular fund flow was promptly as needed, the funds, facilities, services, assured by the SEA. No instances of fund equipment, land and other resources which are shorted faced by PMU required, in addition to the proceeds of the Loan, for the carrying out of the Project.

38 Appendix 7

Loan covenant Reference Status

Section 2.03. (a) In the carrying out of the Project, PA Article II (a) Complied with. PMU employed PMDC the State shall employ competent and qualified and contractors following ADB procurement consultants and contractors, acceptable to ADB, guidelines. to an extent and upon terms and conditions satisfactory to ADB. (b) Except as ADB may otherwise agree, all (b) Complied with. Goods, Works and consulting services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to the Loan Agreement. ADB may refuse to finance a contract where Goods, Works or consulting services have not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB. Section 2.04. The State shall carry out the Project PA Article II Complied with. in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to ADB. The State shall furnish to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request. Section 2.05. (a) The State shall take out and PA Article II Complied with. maintain with responsible insurers or make other arrangements satisfactory to ADB for insurance of Project facilities to such extent and against such risks and in such amounts as shall be consistent with sound practice. (b) Without limiting the generality of the foregoing, the State undertakes to insure, the Goods to be imported for the Project and to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such Goods. Section 2.06. The State shall maintain, records PA Article II Complied with. and accounts adequate to identify the Goods, Works and consulting services financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, its operations and financial condition. Section 2.07. (a) ADB and the State shall PA Article II Complied with. cooperate fully to ensure that the purposes of the Loan will be accomplished. (b) The State shall promptly inform ADB and the Borrower of any condition which interferes with, or threatens to interfere with, the progress of the Project, the performance of its obligations under this Project Agreement, or the accomplishment of the purposes of the Loan. (c) ADB and the State shall from time to time, at the request of either party, exchange views

Appendix 7 39

Loan covenant Reference Status through their representatives with regard to any matters relating to the Project, the State, and the Loan. Section 2.08. (a) In so far as it relates to the PA Article II (a) and (b) Complied with during the Loan life Project, the State shall furnish to ADB all such cycle. All reports and information concerning reports and information as ADB shall reasonably expenditure, Goods, Works and Consulting request concerning (i) the Loan and the Services etc. were submitted to ADB, in line expenditure of the proceeds thereof; (ii) the with the requirement, although there were Goods, Works and consulting services financed some delays in submitting MPRs and QPRs out of such proceeds; (iii) the Project; (iv) the due to unavoidable reasons. administration operations and financial status of the State,; and (v) any other matters relating to (c) Complied with. the purposes of the Loan. (b) Without limiting the generality of the foregoing, the State shall furnish to ADB quarterly reports on the execution of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following quarter. (c) Promptly after physical completion of the Project, but in any event not later than 3 months thereafter or such later date as ADB may agree for this purpose, the State shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the State of its obligations under this Project Agreement and the accomplishment of the purposes of the Loan. Section 2.09. The State (i) maintain separate PA Article II Complied with. accounts for the Project and for its overall  During FY 2011-12 to 2018-19, ADB operations; (ii) have such accounts and related received 16 audit reports and APFS from financial statements (balance sheet, statement of states of Karnataka and Maharashtra. income and expenses, and related statements)  The audit reports are from Office of the audited annually, in accordance with appropriate Accountant General (E&RSA), Karnataka auditing standards consistently applied, by and from Office of the Principal Accountant independent auditors whose qualifications, General (Audit)-I, Maharashtra, experience and terms of reference are acceptable respectively. to ADB; and (iii) furnish to ADB, promptly after  Out of 16 reports, three reports received their preparation but in any event not later than 6 were on time. Rest were delayed between months after the close of the fiscal year to which 0.2 to 4.1 months, with an average delay of they relate, certified copies of such audited 1.15 months. All qualifications to reports accounts and financial statements and the report were later resolved. Specific opinion on of the auditors relating thereto (including the use of funds were also issued. auditors' opinion on the use of the Loan proceeds  It is to be noted that aggregated value of and compliance with the covenants of the Loan audit observations that remain unresolved Agreement as well as on the use of the until loan closure amounted to INR 0 and procedures for imprest account/statement of INR 13,114 for the states of Karnataka and expenditures), all in the English language. The Maharashtra, respectively. State shall furnish to ADB such further information  ADB’s main requirement during FM concerning such accounts and financial implementation from an audit report about statements and the audit thereof as ADB shall opinion on loan proceeds was however from time to time reasonably request. made favorable by the auditor; thus,

40 Appendix 7

Loan covenant Reference Status

lowering ADB’s concern on misuse of ADB funds. Section 2.10. The State shall enable ADB's PA Article II Complied with. representatives to inspect the Project, the Goods and Works financed out of the proceeds of the Loan, all plants, sites, properties and equipment of the as required for the Project, and any relevant records and documents. Section 2.11. (a) In so far as it relates to the PA Article II Complied with. Project, the State shall, promptly as required, take all action within its powers to carry on its operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are necessary in the carrying out of the Project or in the conduct of its business. (b) The State shall at all times to undertake Project operations in accordance with sound administrative, financial, environmental and development practices, and under the supervision of competent and experienced management and personnel. (c) The State shall at all times to operate and maintain its plants, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound administrative, financial, engineering, environmental, developmental, and maintenance and operational practices. Section 2.12. Except as ADB may otherwise PA Article II Complied with. agree, the State shall not sell, lease or otherwise dispose of any of its assets which shall be required for the efficient carrying on of Project operations or the disposal of which may prejudice its ability to perform satisfactorily any of its obligations under this Project Agreement. Section 2.13. Except as ADB may otherwise PA Article II Complied with. agree, the State shall apply the proceeds of the Loan to the financing of expenditures on the Project in accordance with the provisions of the Loan Agreement and this Project Agreement, and shall ensure that all Goods, Works and consulting services financed out of such proceeds are used exclusively in the carrying out of the Project. Section 2.14. Except as ADB may otherwise PA Article II Complied with. agree, the State shall to duly perform all its obligations under the financing arrangements with the Borrower for the Loan, and shall not take, or concur in, any action which would have the effect of assigning, amending, abrogating or waiving any rights or obligations of the parties under the financing arrangements with the Borrower for the Loan. Section 2.15. The State shall cause the PA Article II Complied with. Maharashtra Maritime Board to promptly notify (Maharashtra) ADB of any proposal to amend, suspend or repeal No amendments were made in the charter or any provision of its Charter or governing governing documents of MMB. documents and shall give ADB an adequate opportunity to comment on such proposal prior to taking any action thereon, in so far as it relates to the Project.

Appendix 7 41

Loan covenant Reference Status

Framework Financing Agreement Formal establishment of States’ Program FFA Sch 1 Complied with. Steering Committees (PSC). Improved liaison and cooperation between the State Environment PSC was established as per GOK Order Department, coastal management programs and dated 15 Dec 2012 and the committee SEA Coastal Protection and Management remained fully active and provided decision Project, MOEF and MOWR. making leadership support. Empowerment and defining roles of SEA with that FFA Sch 1 Complied with. Both SEA have established of central agencies such as CWC, CWPRS and regular interaction with CWPRS and CWC CPDAC (Coastal Protection and Advisory for consultation and technical advice for Committee) Tranche 1 and Tranche 2 projects. Director Ports, GoK and CEO, MMB are members of CPDAC. Mandating the SEA as the lead agency to FFA Sch 1 Complied with. GO was issued for the coordinate coastal management and formal formation of CIMU on 21 February 2014. An establishment of Coastal Information office order was also issued on 17 April 2015 Management Unit (CIMU) with roles and responsibilities of the identified CIMU officers. The services of the identified persons utilized on need basis. In Maharashtra, MMB is fulfilling role. Establishment of processes and procedures for FFA Sch 1 Complied with. Karnataka SEA has approval of coastal infrastructure plans and established committees (PSC, TAC, PAC designs within SEA and EC) as per loan covenant. These committees review and approve coastal infrastructure plans and designs. Subject matter experts and CWPRS engaged for approval of coastal infrastructure plans and designs. In Maharashtra, CIMU formed under chairmanship of CEO, MMB and members from PMU and MMB staff Preparation of operation and maintenance plans FFA Sch 1 Complied with. In Karnataka CIMU is the for existing shoreline responsible agency. GO was issued for the formation of CIMU on 21 February 2014. An office order was also issued on 17 April 2015 with roles and responsibilities of the identified CIMU officers. Operation and maintenance have been included as one of the key roles and responsibilities of the officers. In Maharashtra, CIMU established at headquarter level to take care of operations and maintenance activities. Shoreline protection and management plans FFA Sch 1 Complied with. Shoreline management plans (SMP) has been completed for all coastal districts and the state as a whole for both States. In Karnataka, the SMPs of DK, Udupi and UK districts were approved by the 3rd PSC and 4th PSC meetings. The state SMP was approved in the 10 th meeting of the PSC. Organizational restructuring within SEAs for FFA Sch 1 Complied with. CIMU has been established sustainable coastal protection and operationalized. Part time staff in position. In Karnataka, KMB will be responsible for upkeep in the long term.

42 Appendix 7

Loan covenant Reference Status

Increased PPP in coastal protection FFA Sch 1 Not complied with. In Karnataka PPP options for dredging and survey vessels were explored by the SEA. However, PPP options were not pursued further due to the relatively high maintenance costs. In Maharashtra, various PPP options and modalities were explored for future subprojects. The next investment has not materialized due to less implementation period remaining under the program.

Private sector involvement in coastal management is peripheral at this stage with inclusion of measures for promotion of private sector participation and PPP into coastal economic activities through peripheral policies for tourism and maritime development which would be helpful for encouraging private sector participation in the integrated coastal protection and management in the future Development of criteria and guidelines for FFA Sch 1 Complied with in in both States. planning design for coastal projects including the In Karnataka, the criteria and guidelines for use of soft technologies and requirements for sub-project selection have been formalized. environmental and social assessments. Agreed They include (i) review of the base list processes for selection of sub-projects prepared under PPTA by the PMU and the PMDC-K1; (ii) site visits, site-specific surveys, data collection and validation; (iii) consultations with district, state and community level stakeholders; (iv) prioritization of protection needs and (v) selection of short-listed sites for PSC approval. All future selection of sites will be put through the guidelines test prior to finalization. In Maharashtra, similar activity undertaken, with active participation in ADB TA on CRCPMP, and cooperation with development of pilot project at Bhatye in Ratnagiri. Development of capacity through private sector FFA Sch 1 Complied with. and government institutions for detailed planning An Institutional review and training plan, for and design of projects including specialist skills in Karnataka was prepared in July 2012 and numerical modeling and design of soft updated in June 2014. This training plan engineering solutions identified 15 training and capacity building modules such as Project Management and Monitoring, Innovation in Coastal Protection and Management, ADB environmental and social safeguard and other project related training were implemented. NICMAR, ASCI, CPDAC, CWPRS and NWA were the main training service providers. Training in numerical modeling, soft solutions and community training was provided by PMDCK1. International tour was organized for high level officials. Training in Maharashtra curtailed by withdrawal of PMDC team, but shared some training with Karnataka and used CRCPMP training opportunities

Appendix 7 43

Loan covenant Reference Status

Training and capacity building to prepare FFA Sch 1 Complied with. Training was provided to shoreline plans project staff on preparing coastal data supported shoreline plans. Beneficiary stakeholder including local bodies FFA Sch 1 Complied with. The SMO framework has engaged in the management and maintenance of been established following multiple levels of subprojects. consultation with various stakeholders. In Karnataka. Two SMOs have been formed (Ullal and Bengre). They were engaged through a detailed work plan. They are also involved in the management and maintenance of berms, breakwaters, and beaches mainly from tourism and livelihood perspective. In Maharashtra, 7 SMOs involved and taken up community-based shoreline management activities. Community development and shoreline economic FFA Sch 1 Complied with. Community development and development initiatives established. shoreline economic development initiatives have been initiated. SMOs were involved in income generation using beach maintenance and tourism promotion activities. Promotion of private sector participation in the FFA Sch 1 Not complied with. PPP options for dredging Coastal protection and management, to be and deployment of survey vessel were incorporated into the project planning and explored. However, PPP was not a preferred development. This would include a preliminary option due to high maintenance cost and low plan for PPP in the coastal protection and revenue generation potential. Coastal management, scoping of investor opportunities, protection being a public cause, PPP model contracts and agreements for specific projects. for coastal protection and management was not pursued. Private sector involvement in coastal management is peripheral at this stage with inclusion of measures for promotion of private sector participation and PPP into coastal economic activities through peripheral policies for tourism and maritime development which would be helpful for encouraging private sector participation in the integrated coastal protection and management in the future

Source: ADB and EA reports

44 Appendix 8

PROJECT ECONOMIC AND FINANCIAL REEVALUATION

1. Introduction 1. This re-analysis of the economic returns on the investment made in Tranche 1 of this project has been based on the approach used for the PPTA 25 and which was updated for the RRP 26 . This update uses actual project costs and updated analysis of project benefits. 2. The project has successfully developed measures to combat coastal erosion at two locations, introducing techniques that are internationally recognized as appropriate for coastal management and sustainable ways to create climate-resilient protection to coastal infrastructure. Early monitoring data confirms the effectiveness of the solutions to the coastal erosion problems that have been adopted 27 . 3. The project provides a key step for India towards developing coastal management systems that will stabilize the present issues of coastal erosion, particularly in the face of challenges presented by climate change. The project has worked with key expert institutes of India, therefore assisted in the development of widespread benefits from the new approach throughout India. 4. Analysis of the main sub-schemes has been made separately. In Maharashtra, the Tranche 1 work has been focused on the Mirya Bay scheme, and in Karnataka the Tranche 1 works have been at Ullal, near Mangalore.

2. Methodology and Assumptions 5. The primary objective of the economic re-evaluation was to re-compute the economic internal rate of return (EIRR) at project completion and to compare with that estimated at project appraisal. A discount rate of 12% is used in the economic assessment, as this was the rate used at Appraisal. It is recognized that current ADB practice is to use a 9% discount rate, but it was decided to use the 12% discount rate for clarity in comparisons with appraisal findings. 6. All costs and benefits are expressed in Indian rupees in 2019 prices using the domestic price numeraire. The year 2019 prices were used as these are applicable at time of project reappraisal. 7. Project costs in financial prices (excluding taxes) are converted to economic prices by (i) assuming no residual value for civil works and equipment, (ii) converting tradable (foreign cost) items to rupee equivalent using a shadow exchange rate factor (SERF) (iii) converting non- tradable (local cost) items at a conversion factor of 1.0 25 (iv) adjusting construction costs by using a shadow wage rate factor (SWRF) on the unskilled labor element of the construction work. At appraisal a SWRF value of 0.85 was used. Review of recent PCRs for India projects suggests 0.75 as a more commonly adopted value at the time of re-appraisal, and this has been adopted in the computations. 8. A review of values for the SERF was undertaken, and while the appraisal used a value of 1.11 – a value also used for a recent PCR for an irrigation project in Orissa 28 , more recent PCRs

25 ADB 2007. Technical Assistance to India for Sustainable Coastal Protection and Management. Manila, 26 Sustainable Coastal Protection and Management Investment Program (RRP IND 40156-01) 27 Black, K.P.; Reddy, K.S.K.; Kulkarni, K.B.; Naik, G.B.; Shreekantha, P., and Mathew, J., 2020. Salient evolution and coastal protection effectiveness of two large artificial reefs. Journal of Coastal Research, 00(0), 000–000. Coconut Creek (Florida), ISSN 0749-0208. 28 India: Orissa Integrated Irrigated Agriculture and Water Management Investment Program – Project 1. Project Completion Report. August 2017

Appendix 8 45 for Indian projects published in 2019 and 2020 29 adopt a value of 1.04. This value was adopted for the re-analysis. 9. It is noted the unskilled labor element of construction costs is small: for example, for the Gujarat Solar Power PCR 30 assumed 18% of works costs represented skilled labor and 2% unskilled labor. Jha (2011) 31 found that in India the labor element is about 10% to 15% of construction costs, and so it has been assumed for this project 15% of construction costs being attributable to labor, and 30% of the labor costs being for unskilled labor. This produces an adjustment factor for construction costs of 0.989. The impact of both SERF and SWRF are marginal in the outcomes of the economic analysis.

3. Benefit Estimates 3.1. Nature of the Benefits 10. The primary benefits from the project works derive from management of coastal erosion, reductions of threats from coastal flooding through development of more resilient coastal protection systems, and the saving of land from coastal erosion. These benefits have been identified and quantified in the work of the PPTA study and are described in more detail in the following sections, by sub-scheme. The areas protected by the scheme at both Ullal and Mirya Bay are precisely those assumed by the PPTA study. 11. There are considerable secondary benefits from the Tranche 1 work that has been completed. These have also been identified by the PPTA work in part, but not been directly quantified. Secondary benefits include:  Greater sense of security for those living along the bay, leading to increased investments in land, housing and local enterprise.  It will improve the shoreline, creating opportunities related to tourism and the stability of shoreline and harbors for fishing industry, both in the immediate vicinity of the schemes constructed, but also throughout both States due to the state-wide system of shoreline management planning introduced during the project, including development of district and State shoreline management plans for both States.  Environmental benefits relating to the environment of the reef, including new ecosystems that can be exploited around the reefs.  Development of institutional skills and capacity to effectively manage the coastline within each state.  Development of Tranche 2 projects. Significant effort of the Tranche 1 consultancy teams has been focused on development designs and documentation of letting contracts to be funded under Tranche 2 of the loan. 12. Within the DMF an outcome anticipated from the project is an increase in coastal shipping and fish-landings due to stabilized coasts in the project areas.

29 Examples are from the PCR for projects National power Grid Development, Gujarat Solar Power Project and Rajasthan Urban Sector Development 30 ADB 2019. India: Gujarat Solar Power Transmission Project Completion Report. Manila 31 Jha, K N. Construction Project Management: Theory and Practice. Pearson Education India, 2011. Data collected from responses to questionnaire to identify labor component of construction costs through India, and these were 10- 15% of all costs consistently across all construction sectors.

46 Appendix 8

13. The quantification of benefits has used more recent data – where available. Where more recent data could not be easily obtained the values used in the PPTA study have been revised to 2019 prices by using the Indian wholesale price index (WPI) values. These have been the website of the office of the economic advisor 32 and the Reserve Bank of India 33.. The value of the multiplier to obtain 2019 prices used is 1.482. 14. It is understood that routine maintenance of existing structures and dredging ceased on start of the civil works, and the shoreline stabilization started once substantial elements of offshore reefs had been constructed. It has been assumed that benefits from these schemes started with these milestones.

3.2. Mirya Bay 15. In the analysis of the PPTA Team the primary benefits of the intervention at Mirya Bay comprised: • Savings in dredging costs for the fishing harbor • Prevention of erosion and storm damage to land and buildings • Avoiding the cost of replacing the road behind the bay in case it were washed out by a major storm • Avoided resettlement costs • Benefits of future tourism and recreational development of the beach 16. These are still considered to be the primary benefits of the scheme. 17. The road lies behind the bay at the northern end, linking Ratnagiri and the northern bay area. This provides access for a ship-building yard, and thus an essential link that would need urgent replacement if lost to storm damage. Analysis of the PPTA team indicated replacement would probably require construction of a causeway across the damaged zone – perhaps 900 m long. The risk of incurring the cost of replacement has been estimated to be an 80% chance in 25 years. 18. The annual benefit of avoiding an event that is expected to have an 80% chance of occurring in 25 years is estimated to be the cost of the work multiplied by the risk of the event occurring. For an event to have an 80% chance of occurring in 25 years, the annual risk R is calculated on the basis that the probability of the event not occurring (1-R) in all 25 years is (1- R) 25 and this equals (1- 0.8). Thus, the annual risk is calculated to be 6.3%, and the factor to estimate the benefit from the protection is 0.063 of the potential damage, each year 34 . 19. Other benefits accruing from land damage and buildings damage also reflected the expected annual loss under “without project” conditions, multiplying the damage done by a large storm by the risk of such a storm occurring in any particular year. Land values were assumed at appraisal to be equivalent to agricultural productivity, but more detailed local data provided for reappraisal by MMB valued the land at market value of ₹19,400 per m2. This was much greater than the appraisal value and seemed excessive. It was noted a recent evaluation made of the

32 https://eaindustry.nic.in/ 33 https://dbie.rbi.org.in/DBIE/dbie.rbi?site=home 34 It is noted that the Appraisal analysis used a factor of 3.2% for the annual benefit of avoiding an event with a risk of 80% chance of occurring in 25 years. This is believed to be an error, with the 6.3% factor described being the correct calculation.

Appendix 8 47

feasibility of a Tranche 2 project in Karnataka 35 used a value for land protected at the coast, in a similar situation to Mirya, at ₹19,400 per m 2. This was adopted as a conservative estimate of land value at Mirya for benefit estimation. Building replacement costs provided by MMB indicate an average of ₹400,000 per building, an increase over the appraisal estimate of ₹260,000 per building. 20. Dredging costs are the “without project” dredging regularly done to maintain navigation into the harbors in the bay, and rates for dredging costs have been provided for 2019 by MMB of ₹435/m 3. Resettlement is the cost associated with resettling victims of housing damage from storms in the “without project” scenario, and the PPTA rates adjusted for inflation have been used for these. 21. With the project implemented, growth of tourism is anticipated, driven by improved beaches and proximity to Goa. The calculated tourism benefit is based on an average of an increase of 500 visitors a day (current MMB estimate) for 150 days a year, growing at 5% per annum, with daily spend of 50% of the average daily spend of domestic tourists in Goa. Current (2019) expenditure by domestic tourists on the west coast have been given by holiday budget websites 36 as about ₹1,200 a day. Current value of a domestic tourist visit per day has been assumed to be 50% of this value. The Appraisal assumptions concerning season duration (150 days per year) and growth have been adopted in this analysis. 22. One element not taken into account in the 2009 analysis was increases in local fish landings and coastal shipping that are targeted as project outcome in the DMF. If these were to happen, the additional benefits accrued might be estimated to 2 000 to 3 000 tons of fish landed (using figures provided in the 2009 report for fish catches at Mirya Bay). With a value of INR 65,000 per tonne, and assuming cost of fish production represents 80% of the landed value, this represents additional benefit of between 2.60 and 3.90 million rupees a year. These are small compared to the identified primary benefits of the scheme. These have not been included in the assumed benefits and are part of secondary benefits.

3.3. Ullal 23. The PPTA report identified benefits of the scheme as: • Protection of the spit on the southern side from breaching • Protection of land and buildings south of the existing breakwaters from damage and erosion • Avoidance of resettlement costs arising from loss of land and buildings from erosion • Enhancement of tourism. 24. These are still considered to be the primary benefits of the scheme. 25. The benefits from protecting against breach of the spit are largely due to the fish processing plants located at the end of the spit, and their associated landing points. The 2009 study identified 14 works which would be isolated should the spit be seriously breached, and the breach is assumed to lead to total loss of these works (as they would no longer be accessible), plus loss of 1 year’s production while replacement works are constructed elsewhere. The risk of breach was estimated to be an 80% chance in the 25-year period meaning a 6.3% chance of

35 Sustainable Coastal Protection and Management Investment Program Tranche -2 Sub-Project Mukkachery Tranche- 2 Sub Project Rehabilitation of Existing Seawall with 2.5T Tetrapods and RCC retaining wall Detailed Project Report. January 2019. 36 Websites such as https://www.budgetmytravel.com/

48 Appendix 8 occurrence each year (see paragraph 18). The benefit to the project of avoiding the breach is therefore computed as 6.3% of the costs each year. In addition, the on-going maintenance works undertaken to protect the spit from breach can be saved with permanent protection from the constructed scheme. Other derived benefits were calculate using similar assumptions to those described for Mirya Bay above. 26. Tourism at Ullal is already established but has declined in recent years due to erosion of the beach. While tourism benefits per visitor are similar to the situation at Mirya Bay, potential numbers of tourists were assumed slightly lower (a base of 400 per year) at Appraisal, and this assumption has been continued for this analysis. It was also assumed at Appraisal that tourism growth would be slower than at Mirya Bay – at 2% per year. This again appears a reasonable and conservative assumption, and so was assumed for this analysis. 27. The projects will also provide secondary benefits, including it will improve the shoreline, creating opportunities related to tourism and the stability of shoreline and harbors for fishing industry, plus environmental benefits relating to the environment of the reef, including new ecosystems that can be exploited around the reefs. 28. Again, it has been assumed the project will stimulate 10% increase in coastal shipping and fish landings. With fish landings of the order of 80 000 tons in south Kannada district (reported in 2009 report), with a value of about 6300 million rupees. The 10% increase – assuming production costs 80% of the value, provides a net benefit of about 13 million rupees a year. This is insignificant compared to the primary project benefits, and has not been included in the assumed project benefits

4. Project Costs 29. The costs incurred during the implementation of Tranche 1 of the project have been assumed all applicable to the two sub-projects being evaluated. Costs incurred have been adjusted to 2019 prices using the WPI index. The key elements of the costs include: • Construction costs for the 5 major contracts let – two for Mirya Bay, and three for Ullal. These were all contracted in Indian rupees, without foreign payment element. • Consultancy contracts. One main international consultancy contract in each State. These were paid both in rupees and in international currencies (US dollars and euros). In Maharashtra, because the main consultant withdrew part way through, an additional consultancy was contracted in local currency to support project implementation. • Minor equipment procurement and support funds for local NGOs supporting local coastal management. These were all paid in local currency. • Government project costs – salaries and other costs of the PMUs 30. In the development of the project, it was agreed that the State Government would cover 9% of the construction costs (91% being covered by the ADB loan) as it was estimated that the 9% was the equivalent of the tax element of the construction costs. It has therefore been assumed in the reappraisal that the 9% payment by the States continues to be equivalent to the tax payment element of these costs. 31. It has been assumed that all consultancy payments, and minor payments, have all been without tax element and direct tax payments would have been made separately by the State authorities. 32. Tradeable currency payments have been adjusted by the SERF to determine economic costs and converted to equivalent rupees using exchange rates for each calendar year identified

Appendix 8 49 from ADB data on loan withdrawals. Construction costs have also been adjusted for SWRF (paragraph 9). 33. The key project costs are summarized in Table 1.

Table 1: Construction and Consultancy Economic and Financial Costs 37

Financial costs Economic costs Construction costs Mirya Bay ₹195,614,630 ₹176,006,708 Ullal ₹2,045,516,833 ₹1,840,479,339 Consultancy Costs Mirya Bay INR ₹34,497,322 ₹34,497,322 USD $586,050 $609,492 USD in equiv INR ₹35,283,312 Ullal INR ₹118,036,031 ₹118,036,031 USD $2,076,609 $2,159,674 USD in equiv INR ₹128,794,439 Source: ADB analysis

34. For the analysis, another important cost is the operating costs of the schemes. Operation and maintenance costs for the schemes have been assumed using the information provided in the RRP report of 2010 (see Table 2 below). There are annual cost streams associated with both the “without scheme” and the “with scheme” scenarios. With the scheme, the O&M costs are largely associated with the level of routine maintenance needed to secure the stability and utility of the structures. Without the scheme, O&M costs would be associated with routine repair of damage done to the weaker defenses, and associated costs such as dredging to maintain channels to ports and the like and other areas where costs might be impacted by the constructed schemes. Table 2: With and Without Project O&M Requirements Assumed (2010)

Project Present Annual Future Annual O&M Net change O&M Responsibility O&M Costs Costs of O&M Costs Mirya Bay O&M dredging of None Reduction of Present and future: state harbor: $162,000 Geotextile reef does not $162,000 per government (Maharashtra per annum require maintenance year Maritime Board) Ullal Saved cost of Maintenance of the rock Savings in Present shoreline protection: shore rock entrance breakwaters would shoreline rock 50% from state government plus protection along cost $1,450,000 every 5 protection 50% from private factories Ullal spit: $340,000 years. Maintenance of would be Future 5-year repairs and/or per annum Geotextile reefs have no about the maintenance: rock entrance Rock entrance maintenance costs same as the breakwaters would be done by breakwaters: no No further beach new costs to state government maintenance is nourishment required once maintain the Some shift of maintenance presently carried remodeling/ realignment of entrance responsibilities to state out breakwaters has been breakwaters. government completed Source: RRP Economics Annex

37 Before correction to 2019 prices

50 Appendix 8

35. The Operation and Maintenance (O&M) manuals provided for the completed structures identify the expected work to be done to maintain and operate the schemes, and this has been used to identify likely recurrent costs, over and above existing O&M requirements for the “without project” situation. Savings on O&M due to construction is identified as benefit and itemized within that category. Where additional O&M is required, this is included in the analysis as an additional cost. These are taken to be:  Annual inspections required for reef and groin structures: assume a few days’ work for a senior engineer and a minor survey to cost ₹100,000 per annum per State  Maintenance of rock entrance breakwaters as described in the Appraisal report (Table 2) adjusted for inflation through the WPI

5. Economic Evaluation and Sensitivity Analysis 5.1. Mirya Bay 36. The table at the end of this Appendix illustrates the base case analysis of the economic viability of the completed Tranche 1 scheme in Maharashtra. 37. The economic benefit and cost streams have been identified, and the net benefit streams have been used to determine the economic internal rate of return (EIRR) and the Net Present Value (NPV) at the discount rate of 12%.In the appraisal, the calculated EIRR for the base case for the Mirya Bay works was 16.8%, and the NPV (at a discount rate of 12%) was calculated to be 89.2 million rupees. 38. For the present analysis of the Mirya Bay scheme, and the best estimate of the benefits determined to be derived from the scheme, the EIRR is calculated to be 35.9%, with an NPV of 1,199 million rupees. The improved economic performance is largely due to considerable savings in the construction cost of the scheme, as well as increases in value of the benefits, particularly for dredging and building damage. 39. Sensitivity analyses have also been carried out, as summarized in Table 3.

Table 3: Sensitivity Analysis of Economic Returns for Mirya Bay

Case Change EIRR NPV (million Switching value Rupee) Base Case 35.9% 1,199 Total Benefits +20% 40.2% 1,509 77.3% -20% 31.2% 889 Building damage +50% 42.3% 1,627 -50% 28.4% 770 Source: ADB Analysis 40. The economic viability of this scheme is not very sensitive to changes in the benefits, with switching values for individual benefits being in excess of 100%.

5.2. Ullal 41. The table at the end of this Appendix illustrates the base case analysis of the economic viability of the completed Tranche 1 scheme in Karnataka.

Appendix 8 51

42. In the PPTA analysis, the Ullal sub-scheme had an EIRR of 14.5% with a NPV of 180 million rupees, calculated at a discount rate of 12%. 43. In the reappraisal the base case for Ullal economic returns has been calculated to be an EIRR of 15.2%, with an NPV of 348 million rupees using a discount rate of 12%. This is a broadly similar result to the earlier study but is achieved through a combination of significant cost savings in construction, but this is off-set by delayed completion and so later arrival of project benefits. 44. Sensitivity analyses conducted on the cost and benefit streams are summarized in the following table.

Table 4: Sensitivity Analysis of Economic Returns for Ullal Case Change EIRR NPV (million Switching value Rupee) Base Case 15.2% 348 Total Benefits +20% 18.2% 696 20.0% -20% 12.0% 1 Value of lost fish factory +20% 16.5% 499 production -20% 13.9% 198 Source: ADB Analysis

5.3. The Combined Project 45. A further economic analysis was carried out for the combined project – combining cost streams and benefit streams to derive an overall economic return for the project. The results are provided in Table 5 below. The analysis uses a discount rate of 12%. The discounted cash flows for subprojects Ullal, Mirya and the two combined are given in Table 6.

Table 5: Economic Returns for Combined Project Case Change EIRR NPV (million Switching value Rupee) Base Case 21.9% 1,547 Total Benefits +20% 25.6% 2,205 47.0% -20% 18.0% 889 Source: ADB Analysis

52 Appendix 8

Table 6: Discounted Cash Flows for Subprojects Ullal, Mirya and Combined Project (₹ million)

Ullal Mirya Combined

Costs Costs Costs Year Total Net Total Net Total Net Capital O&M Total Benefits Benefits Capital O&M Total Benefits Benefits Capital O&M Total Benefits Benefits Costs Costs Costs Costs Costs Costs Costs Costs Costs

2011 28.37 28.4 -28.4 77.78 77.8 -77.8 106.15 106.15 -106.1 2012 76.11 76.1 -76.1 74.15 74.2 -74.2 150.26 150.26 -150.3 2013 126.84 126.8 -126.8 80.21 80.2 -80.2 207.05 207.05 -207.0 2014 422.78 422.8 -422.8 36.03 36.0 -36 458.81 458.81 -458.8 2015 434.97 435 25.9 -409 84.16 84.2 -84.2 519.14 519.14 25.9 -493.2 2016 630.3 630.3 25.9 -604.4 57.07 57.1 296.7 239.6 687.37 687.37 322.6 -364.7 2017 464.72 464.7 417.1 -47.6 127.31 127.3 296.7 169.4 592.03 592.03 713.8 121.8 2018 271.31 271.3 400.9 129.6 20.93 20.9 296.7 275.8 292.24 292.24 697.6 405.4 2019 - 400.9 400.9 296.7 296.7 697.6 697.6 2020 0.1 0.1 400.9 400.8 0.1 0.1 296.7 296.6 0.2 0.2 697.6 697.4 2021 0.1 0.1 400.9 400.8 0.1 0.1 296.7 296.6 0.2 0.2 697.6 697.4 2022 105.6 105.6 436.9 331.3 0.1 0.1 341.7 341.6 105.66 105.66 778.6 672.9 2023 0.1 0.1 437.6 437.5 0.1 0.1 346.2 346.1 0.2 0.2 783.8 783.6 2024 0.1 0.1 438.3 438.2 0.1 0.1 351.2 351.1 0.2 0.2 789.5 789.3 2025 0.1 0.1 439.1 439 0.1 0.1 356.6 356.5 0.2 0.2 795.7 795.5 2026 0.1 0.1 439.9 439.8 0.1 0.1 362.6 362.5 0.2 0.2 802.4 802.2 2027 105.6 105.6 440.6 335.1 0.1 0.1 369.2 369.1 105.66 105.66 809.8 704.2 2028 0.1 0.1 441.4 441.3 0.1 0.1 376.4 376.3 0.2 0.2 817.9 817.7 2029 0.1 0.1 442.2 442.1 0.1 0.1 384.4 384.3 0.2 0.2 826.6 826.4 2030 0.1 0.1 443.1 443 0.1 0.1 393.2 393.1 0.2 0.2 836.2 836 2031 0.1 0.1 443.9 443.8 0.1 0.1 402.8 402.7 0.2 0.2 846.7 846.5 2032 105.6 105.6 444.8 339.2 0.1 0.1 413.4 413.3 105.66 105.66 858.2 752.5

Appendix 8 53

2033 0.1 0.1 445.7 445.6 0.1 0.1 425.1 425 0.2 0.2 870.7 870.5 2034 0.1 0.1 446.5 446.4 0.1 0.1 434.9 434.8 0.2 0.2 881.4 881.2 2035 0.1 0.1 447.5 447.4 0.1 0.1 446 445.9 0.2 0.2 893.4 893.2 2036 0.1 0.1 448.4 448.3 0.1 0.1 458.5 458.4 0.2 0.2 906.8 906.6 2037 105.6 105.6 449.3 343.8 0.1 0.1 472.5 472.4 105.66 105.66 921.8 816.2 2038 0.1 0.1 450.3 450.2 0.1 0.1 488.3 488.2 0.2 0.2 938.6 938.4 2039 0.1 0.1 451.3 451.2 0.1 0.1 505.9 505.8 0.2 0.2 957.2 957 2040 0.1 0.1 452.3 452.2 0.1 0.1 525.6 525.5 - 0.2 0.2 977.9 977.7 2041 0.1 0.1 453.3 453.2 0.1 0.1 547.6 547.5 - 0.2 0.2 1,000.90 1,000.70 2042 105.6 105.6 454.4 348.8 0.1 0.1 572 571.9 - 105.66 105.66 1,026.40 920.8 2043 0.1 0.1 455.5 455.4 0.1 0.1 599.3 599.2 - 0.2 0.2 1,054.70 1,054.50 Net Present Value (NPV) 349 Net Present Value (NPV) 1,199 Net Present Value (NPV) 1,547 Economic Internal Rate of Return 15.20% Economic Internal Rate of Return (EIRR) 35.90% Economic Internal Rate of Return (EIRR) 21.90% (EIRR) Discount Rate 12% Discount Rate 12% Discount Rate 12%

54 Appendix 8

6. Financial Analysis 46. A Standard financial cost-benefit financial analysis is not appropriate undertaken for the project as the project is not income-generating. Project benefits lie only in the avoidance of costs otherwise incurred through damage to infrastructure and livelihoods. Following guidelines, financial sustainability assessment showing fiscal capacity of Karnataka and Maharashtra Maritime Board to support project O&M expenditure is prepared. The assessment results are presented in Section 6, Appendix 9. 7. DMF Targets 47. The Design and Monitoring Framework (DMF) for the project identifies a number of parameters to be used to evaluate project impact, outcomes and outputs. 48. For the evaluation of impact, the DMF identifies indicators of: • Higher per capita income in sub-project areas • Contribution from tourism to state GDP increased • Poverty incidence in coastal communities reduced. 49. The collation of publicly available data to support these parameters takes time, so there is some delay in making appropriate data available for such assessments. Because of delays in completion of the schemes, direct data to assess impact of Tranche 1 is not yet available. Anecdotal evidence suggests increases in local businesses in the sub-project areas related to improved beaches, plus greater security from erosion and flooding will provide the impact expected, and this should be re-assessed once appropriate data are available. 50. For outcome assessment physical measures of length of coastline protected can be identified and provided. Measurements have been provided by the EAs (at 1.6 km in Maharashtra and 6 km in Karnataka) of the length of shoreline protected. Measurements made via Google Earth have indicated a length of protected coastline in Mirya Bay of 2.8km, and at Ullal of 4.2 km. However, This is also the total length of shoreline intended to be protected by the project schemes, so the source of the target measurement of 10 km is questioned, and while the achieved total measurement of 7 km coastline protected is less than the 10km target, it is nevertheless observed that the full target has actually been achieved. 51. Levels of community participation in shoreline management have also been provided by the PMUs to confirm outcome. Measures of levels of coastal shipping and fish landings have also been sought, but again there is a problem in the time taken to compile such data, and delayed scheme completion meaning the expected outcome is also delayed. 52. Outputs from the schemes have been assessed directly, with data sought to confirm completed activities and levels of participation in project activities. Key weaknesses in scheme outputs include: • Levels of participation of women in shoreline management activities • Involvement of private sector in shoreline management activities • Investments made by private sector in shoreline management 53. Otherwise, outputs have very largely been satisfactorily achieved.

Appendix 8 55

8. ADB Strategy 2030 Indicators 54. At Appraisal Indicator used was: “Land area improved through flood management in hectares”. The target set was 171 ha. Economic analysis in PPTA (footnote 11) has estimated the area benefiting from the project intervention as 175 ha in Karnataka and 24 ha in Maharashtra. Due to COVID-19 impact, PCR team could not field any missions or conduct a separate study to reassess this exact area protected. Since the protection interventions have not only prevented erosion in the project areas but also have widened the existing beaches, it is inferenced that in both states this indicator has been achieved

Table 7: Project Contribution to ADB Strategy 2030 Operational Priorities Indicator Achieve ment OP 3.3.3 Terrestrial, coastal and marine areas 24 ha (Mirya Bay) conserved, restored and/or enhanced (hectares) 175 ha (Ullal) OP 3.2. People with strengthened climate and disaster 5,000 (Mirya Bay) resilience (number) 37,600 ( Ullal)

OP 6.1.1. Government officials with increased 37 (Maharashtra) capacity to design, implement, monitor and 50 (Karnataka) evaluate relevant measures Source: PPTA Final Report (footnote 11) and PMU Reports

56 Appendix 8

Mirya Bay Scheme WPI Inflation index from 2008: 1.482

With revised governmet costs With additional government information on benefits

With full consultancy costs and Government costs in million rupees in 2019 prices land loss building damage Net Total causeway resettle- Year Costs O&M Total Benefits Benefits Dredging north middle north middle replacement ment Tourism 2011 -7 77.78 77.8 - 77.8 0 2012 -6 74.15 74.2 - 74.2 0 2013 -5 80.21 80.2 - 80.2 0 2014 -4 36.03 36.0 - 36.0 0 2015 -3 84.16 84.2 - 84.2 - 2016 -2 57.07 57.1 239.6 296.7 30.5 17.0 2.4 141.8 47.3 45.8 12.0 - 2017 -1 127.31 127.3 169.4 296.7 30.5 17.0 2.4 141.8 47.3 45.8 12.0 - 2018 0 20.93 20.9 275.8 296.7 30.5 17.0 2.4 141.8 47.3 45.8 12.0 - 2019 1 - - 296.7 296.7 30.5 17.0 2.4 141.8 47.3 45.8 12.0 - 2020 2 0.1 0.1 296.6 296.7 30.5 17.0 2.4 141.8 47.3 45.8 12.0 2021 3 0.1 0.1 296.6 296.7 30.5 17.0 2.4 141.8 47.3 45.8 12.0 2022 4 0.1 0.1 341.6 341.7 30.5 17.0 2.4 141.8 47.3 45.8 12.0 45.0 2023 5 0.1 0.1 346.1 346.2 30.5 17.0 2.4 141.8 47.3 45.8 12.0 49.5 2024 6 0.1 0.1 351.1 351.2 30.5 17.0 2.4 141.8 47.3 45.8 12.0 54.5 2025 7 0.1 0.1 356.5 356.6 30.5 17.0 2.4 141.8 47.3 45.8 12.0 59.9 2026 8 0.1 0.1 362.5 362.6 30.5 17.0 2.4 141.8 47.3 45.8 12.0 65.9 2027 9 0.1 0.1 369.1 369.2 30.5 17.0 2.4 141.8 47.3 45.8 12.0 72.5 2028 10 0.1 0.1 376.3 376.4 30.5 17.0 2.4 141.8 47.3 45.8 12.0 79.7 2029 11 0.1 0.1 384.3 384.4 30.5 17.0 2.4 141.8 47.3 45.8 12.0 87.7 2030 12 0.1 0.1 393.1 393.2 30.5 17.0 2.4 141.8 47.3 45.8 12.0 96.5 2031 13 0.1 0.1 402.7 402.8 30.5 17.0 2.4 141.8 47.3 45.8 12.0 106.1 2032 14 0.1 0.1 413.3 413.4 30.5 17.0 2.4 141.8 47.3 45.8 12.0 116.7 2033 15 0.1 0.1 425.0 425.1 30.5 17.0 2.4 141.8 47.3 45.8 12.0 128.4 2034 16 0.1 0.1 434.8 434.9 27.4 17.0 2.4 141.8 47.3 45.8 12.0 141.2 2035 17 0.1 0.1 445.9 446.0 24.4 17.0 2.4 141.8 47.3 45.8 12.0 155.4 2036 18 0.1 0.1 458.4 458.5 21.3 17.0 2.4 141.8 47.3 45.8 12.0 170.9 2037 19 0.1 0.1 472.4 472.5 18.3 17.0 2.4 141.8 47.3 45.8 12.0 188.0 2038 20 0.1 0.1 488.2 488.3 15.2 17.0 2.4 141.8 47.3 45.8 12.0 206.8 2039 21 0.1 0.1 505.8 505.9 12.2 17.0 2.4 141.8 47.3 45.8 12.0 227.5 2040 22 0.1 0.1 525.5 525.6 9.1 17.0 2.4 141.8 47. 3 45.8 12.0 250.2 2041 23 0.1 0.1 547.5 547.6 6.1 17.0 2.4 141.8 47. 3 45.8 12.0 275.2 2042 24 0.1 0.1 571.9 572.0 3.0 17.0 2.4 141.8 47. 3 45.8 12.0 302.7 2043 25 0.1 0.1 599.2 599.3 - 17.0 2.4 141.8 47.3 45.8 12.0 333.0

Discount rate: 12% EIRR 35.9% NPV 1,199

Note: Investment costs are : 1 Without taxes (covered by Government contribution to project funding) 2 Shadow wage rate factor of 0.75 applied to 5% of c onstruction contract value 3 Shadow exchange rate factor applied to foreign cur rency payments 4 Consultancy costs assumed to be fully attributable to the sub-scheme Appendix 8 57

Ullal Scheme WPI Inflation index from 2008: 1.482

With full consultancy costs and Government costs in million rupees in 2019 prices prevention of spit washout Net Total lost saved spit Land Buildings resettlement incremental Year Costs O&M Total Benefits Benefits factories production maintenance replacement protection protection saved tourism 2011 -7 28.37 28.4 - 28.4 0 2012 -6 76.11 76.1 - 76.1 0 2013 -5 126.84 126.8 - 126.8 0 2014 -4 422.78 422.8 - 422.8 0 2015 -3 434.97 435.0 - 409.0 25.9 25.9 2016 -2 630.30 630.3 - 604.4 25.9 25.9 2017 -1 464.72 464.7 - 47.6 417.1 51.3 186.7 25.9 71.3 - 36.0 45.8 2018 0 271.31 271.3 129.6 400.9 51.3 186.7 25.9 71.3 4.8 15.0 45.8 2019 1 - 400.9 400.9 51.3 186.7 25.9 71.3 4.8 15.0 45.8 2020 2 0.1 0.1 400.8 400.9 51.3 186.7 25.9 71.3 4.8 15.0 45.8 2021 3 0.1 0.1 400.8 400.9 51.3 186.7 25.9 71.3 4.8 15.0 45.8 2022 4 105.6 105.6 331.3 436.9 51.3 186.7 25.9 71.3 4.8 15.0 45.8 36.0 2023 5 0.1 0.1 437.5 437.6 51.3 186.7 25.9 71.3 4.8 15.0 45.8 36.7 2024 6 0.1 0.1 438.2 438.3 51.3 186.7 25.9 71.3 4.8 15.0 45.8 37.5 2025 7 0.1 0.1 439.0 439.1 51.3 186.7 25.9 71.3 4.8 15.0 45.8 38.2 2026 8 0.1 0.1 439.8 439.9 51.3 186.7 25.9 71.3 4.8 15.0 45.8 39.0 2027 9 105.6 105.6 335.1 440.6 51.3 186.7 25.9 71.3 4.8 15.0 45.8 39.7 2028 10 0.1 0.1 441.3 441.4 51.3 186.7 25.9 71.3 4.8 15.0 45.8 40.5 2029 11 0.1 0.1 442.1 442.2 51.3 186.7 25.9 71.3 4.8 15.0 45.8 41.4 2030 12 0.1 0.1 443.0 443.1 51.3 186.7 25.9 71.3 4.8 15.0 45.8 42.2 2031 13 0.1 0.1 443.8 443.9 51.3 186.7 25.9 71.3 4.8 15.0 45.8 43.0 2032 14 105.6 105.6 339.2 444.8 51.3 186.7 25.9 71.3 4.8 15.0 45.8 43.9 2033 15 0.1 0.1 445.6 445.7 51.3 186.7 25.9 71.3 4.8 15.0 45.8 44.8 2034 16 0.1 0.1 446.4 446.5 51.3 186.7 25.9 71.3 4.8 15.0 45.8 45.7 2035 17 0.1 0.1 447.4 447.5 51.3 186.7 25.9 71.3 4.8 15.0 45.8 46.6 2036 18 0.1 0.1 448.3 448.4 51.3 186.7 25.9 71.3 4.8 15.0 45.8 47.5 2037 19 105.6 105.6 343.8 449.3 51.3 186.7 25.9 71.3 4.8 15.0 45.8 48.5 2038 20 0.1 0.1 450.2 450.3 51.3 186.7 25.9 71.3 4.8 15.0 45.8 49.4 2039 21 0.1 0.1 451.2 451.3 51.3 186.7 25.9 71.3 4.8 15.0 45.8 50.4 2040 22 0.1 0.1 452.2 452.3 51.3 186.7 25.9 71.3 4.8 15.0 45.8 51.4 2041 23 0.1 0.1 453.2 453.3 51.3 186.7 25.9 71.3 4.8 15.0 45.8 52.4 2042 24 105.6 105.6 348.8 454.4 51.3 186.7 25.9 71.3 4.8 15.0 45.8 53.5 2043 25 0.1 0.1 455.4 455.5 51.3 186.7 25.9 71.3 4.8 15.0 45.8 54.6

Discount rate: 12% EIRR 15.2% NPV 349

Note: Investment costs are : 1 Without taxes (covered by Government contribution to project funding) 2 Shadow wage rate factor of 0.75 applied to 5% of construction contract value 3 Shadow exchange rate factor applied to foreign currency payments 4 Consultancy costs assumed to be fully attributable to the sub-scheme

58 Appendix 9

PERFORMANCE OF COASTAL PROTECTION STRUCTURES

1 THE CONCEPT 1. In the PPTA Study (2009) 1 it was stated that design of coastal protection systems were changing, and that “shoreline protection using hard engineering structures such as groynes, seawalls and breakwaters cannot be supported as long-term strategies”. Consequently, alternative approaches were suggested, notably the construction of offshore reefs to provide “economically viable protection works using environmentally and socially appropriate solutions”. 2. The PPTA consultants proposed construction of offshore reefs for Mirya Bay and Ullal. The projects considered are listed in Annex 1 to this Appendix. The outline schemes considered in detail were: 3. Mirya Bay . The problem of erosion in the northern part of the bay was identified to be accumulation of sand in front of the breakwaters constructed for the fishing harbors in the southern part of the bay – trapping sand that would no longer circulated to the northern part of the bay, thus reducing the beach and hence protection in the northern bay. Construction of the reefs would create a zone behind the reefs where sand would naturally be deposited, reducing erosion. This was to be supported by removal of sand accumulated at the southern end to be used by placement in the shadow of the new reef to encourage build-up of the new beach.

1 “India: Sustainable Coastal Protection and Management”, PPTA Final Report, April 2009. ANZDEC Limited in association with ASR Maritime Consulting and Research, New Zealand. For ADB, Manila.

Appendix 9 59

4. The reef was specified in the PPTA report as 260 m offshore, in water 2.5-3.0 m in depth, with a crest level the same as lowest astronomic tide level, and a length of 360 m. The reef was proposed to be constructed from geotextile bags, filled with sand. 5. Ullal. Erosion has been a problem to the south of the main harbor entrance for Mangalore old port, where breakwaters have been constructed in 1995 to protect the entrance, interrupting movement of sand southward along the coast, creating development of sand deposits to the north of the port entrance, and leading to erosion of the Ullal spit and beaches to the south. The intervention concept proposed in the PPTA report was fourfold: i. Shortening and repair of the southern breakwater to allow better bypassing of sand ii. 220 m extension of the north breakwater wall (with re-alignment) also to improve sand by-passing iii. Beach nourishment to the south iv. Construction of off-shore artificial reefs to trap sand on Ullal beach

6. The off-shore reefs proposed were to be three in number, located 700 to 900 m off-shore where water depths were about 7 m, with the total reef length being 660 m. The reefs were proposed to be cup-shaped and made from geotextile tubes filled with dredged sand. The geotextile tubes were to be up to 2.7 m diameter and 20 m long and laid in three layers. 7. At the time of making these proposals, the PPTA Consultants drew on experience in development of off-shore reefs constructed from sand-filled geotextile containers reported in technical literature, particularly developments on Gold Coast, Australia and Mount Maunganui, New Zealand. A review of abrasion-resistance of the geotextile material, and settlement of the structures in soft alluvial material typically found in shallow, offshore locations was undertaken. The application of these techniques in India raised further issues because of the monsoon conditions and the stresses imposed by these conditions in the near-shore environment.

60 Appendix 9

2 THE DESIGN PROCESS 2.1 Introduction 8. The designs produced by the PPTA team were basically taken through by the SEA teams (supported by expertise provided by ADB assistance) to obtain necessary clearances for construction, and to prepare bidding documents for construction of the two off-shore reef schemes, and the Ullal Breakwater rehabilitation works. The PPTA design for shore protection works at Ullal had been modified from the original three off-shore reefs to two reefs and four onshore berms by the time of preparation of the Facility Administration Manual 2. 9. In the Consultation Mission of the ADB in December 2010 efforts were made to try to speed up preparation of key initial contracts – including the construction of the off-shore reefs at Ullal and Mirya Bay. The ADB Consultants and the SEA followed up using the designs to get all approvals of the technical reviews by State and Central Government, prepare bidding documents and get clearance for floating an ICB process for contract award. At this time, efforts we also being made to finalize shortlisting for the procurement of the PMDC consultancy contracts to support the SEAs in project delivery. 10. ADB Inception Mission in January/February, 2012 included technical specialists from ADB and from the PPTA team, and also a visit to a recently completed off-shore reef constructed from geo-bags in Kovalam, Kerala, in a similar environment to the one at Ullal. The Kovalam reef had suffered damage in the 2010 and 2011 monsoon seasons, with leakage of sand from some bags and abrasion and settlement problems. This experience was brought into the Mission discussion of design of the reefs at both Ullal and Mirya Bay. The PMDC Consultants for both Maharashtra and Karnataka were mobilizing at the time of this mission. 2.2 Mirya Bay 11. The tender for the Mirya Bay offshore reef was floated in March 2011. The bidding had to be extended twice due to contractor enquiries concerning the specification of the geotextile to be used, with only one supplier of the appropriate material being found in a world-wide search 3. 12. For Mirya Bay reef, the contractor for the reef was already appointed at the time of the Inception Mission and was preparing proposals for his geotechnical investigations and design review. The Mission’s advice to the contractor was that the design review should focus on five key areas including likely settlement and crest level needed, the location of the reef and the geo- bags arrangements to achieve optimum efficiency. Design modifications were suggested by the ADB Consultants recommending bringing the reef shoreward, increasing its length and width, reducing the size of geo-bags to simplify construction, and building the reef in two layers. It was later suggested by CWPRS that the reef be constructed in phases, with the first layer constructed and monitored, and then the second layer added if needed. This was agreed with the July 2012 Mission. The Contractor agreed these changes in September 2012. 13. It was noted in the Mid-term review mission in June 2013 that the MMB anti sea erosion wing started construction of a revetment in the vicinity of the Mirya Bay reef site at Mirkerwada Harbor – conflicting with the solution adopted by the PMU for the erosion problems in the bay. The work comprised extension of the western breakwater by 150 m, and construction of a new northern breakwater 675 m long.

2 Prepared in September 2010. 3 Aide Memoire of ADB Consultation Mission (June 2011)

Appendix 9 61

2.3 Ullal 14. While the original intention was that the offshore reefs and the inshore berms would be let as a single ICB contract, this was revised to having two contracts. 15. The Ullal tenders for the offshore reefs were floated in April 2011. The bidding was not extended, with bids opened on 6 June 2011. However, only one bid was received for the Ullal reefs, and was rejected because of a conflict of interest issue. 16. For the Ullal reefs, the Inception Mission design review recommended changing the reef design to constructing the reefs from concrete and rock rather than geo-textile bags. The redesign work was agreed to be carried out by CWPRS, in a process that included using physical modelling. This was a process that the Mission was told would take about 4-5 months, and so would be complete by August/September 2012. 17. At the time of the August 2012 Mission it was noted that the Ullal reef redesign was proceeding slowly, with significant delays in resolving the contract for the CWPRS design work, with this starting only in late July 2012. Following problems with model testing, the final design review report was provided by CWPRS in May 2013, some 8 months later than the agreed schedule. In the Mid-term review mission of June 2013, it was noted that the re-design of the reefs would also require technical clearance and approvals before construction. The revised design was approved by the Project Steering Committee in July 2013 and tenders floated. Unfortunately, only one bid was received, and this was much higher than the Engineer’s estimate for the work, and in March 2014 ADB agreed with the SEA request to allow the contract to be re- bid with a revised Engineer’s estimate. This rebidding again produced a single bid, and this was accepted, and the contract was signed in November 2014. 18. For the onshore berms, the Inception Mission design review identified no problems with the proposed design of 1.7 m diameter geo-bags with lengths of 18 and 9 meters. The mission confirmed that detailed design and bidding documents would be prepared by ADB-funded individual consultants. 19. Designs for the rehabilitation of the north and south breakwaters of the old Mangalore harbor were not changed by the Inception Mission review. The Mission flagged that additional modelling and design work was needed from the newly appointed PMDC team of consultants, and CWPRS technical clearance of the finalized design would be needed.

3 THE CONSTRUCTION PROCESS 3.1 Mirya Reefs and Beach Nourishment 20. The construction of the Mirya Bay offshore reef contract was awarded in October 2011. Delays to mobilization, agreement over surveys and investigations and then re-design of the reef following decisions made during the Inception Mission meant that progress was slow until the revised design was agreed by the Contractor in September 2012. The Contractor completed mobilization and procurement of geotextile material in January 2013. The Contractor then faced issues with community resistance to the construction, and necessary permissions from local government for movement and use of sand to fill the geo-bags. The January 2014 ADB Mission was informed that while these issues were resolved, there remained problems with establishing agreed rates for some of the construction activities. Progress in these matters was not helped by disputes with the PMDC team, leading to the Consultant firm issuing notice to quit on 30 October 2013, and formally withdrawing from the project on 28 November 2013. Construction supervision at Mirya Bay was then through a specially appointed consultant to support the PMU. In the first construction season (pre-monsoon, 2015) work largely constituted preparatory works and filling

62 Appendix 9

and placing of geo-bags. Construction of the reef (first layer) was achieved in the second working season, in February 2016. 21. Post-completion, the reef at Mirya Bay suffered damage. In 2016, damage to 1 geo-tube was noted, and this was replaced by the Contractor under warranty. In 2017 monsoon, two further geo-tubes were damaged (one was missing, one deflated) and these were also replaced by the contractor under warranty. 22. Beach nourishment was carried out under a separate contract, following completion of the reef. The amount of sand used to nourish the beach was only 120,000m 3, largely because this was the volume of sand available locally that could be used. Sand availability was further reduced by its interception by the Mirkarwada Fisheries Harbor breakwaters recently constructed by MMB within the bay. Nevertheless, adequate beach has developed to protect against erosion and so the work done has been effective. 3.2 Ullal Breakwater 23. The award of construction contract and execution of the contract to remodel the northern breakwater and to reduce the length of the southern breakwater proceeded without serious issues, and in accordance with the designs finalized by CWPRS. The contract was awarded in July 2014, with completion by May 2017. 3.3 Ullal Offshore Reefs 24. At Ullal, the initial challenge which confronted the contractor was the geotechnical survey revealing extensive marine clay, with poor bearing capacity leading to fears for stability of the structure as designed. CWPRS reviewed the information, and feared settlement might be in excess of 1 m, and so remedial measures would be needed to ensure the integrity of the structure. Stabilization of the foundation was extensively discussed and eventually a solution using a system of polypropylene gabions overlying a composite layer of geogrid and geotextile was adopted. The soil stabilization for the south reef was completed by December 2015. Full completion of construction was achieved in June 2017. 3.4 Ullal Inshore Berms 25. The contract for the construction of the inshore berms was awarded in February 2013. 26. The design of the inshore berms was subsequently revised on the advice of the CWPRS, citing construction difficulties in developing the dog-legged shape of berm, and advising a T- shaped berm instead. Later, the number of berms was increased from 4 to 6 to increase the extent of the beach improvement as a result of berm performance, and utilizing the geo-bags earlier procured for the longer, dog-leg design in the original contract. 27. Later, the number of inshore berms was increased to eight, on advice from CWPRS to laterally extend and consolidate the benefits of erosion control provided by the offshore reefs. 28. The completed works at Ullal are identified in the following Figure.

Appendix 9 63

4 OUTCOME 29. The impact of the offshore reefs at Ullal and Mirya Bay are reportedly better than expected. 30. A recent paper by Black et al 4 drew a conclusion that “The offshore reefs are providing successful restoration of the beach, with rapid and substantial sediment accumulation in their lee. The reefs have induced permanent beach widening plus sand accumulation on the inner shelf, including during the monsoon”. 31. The impact of the Mirya Bay reef has also benefitted from the beach nourishment element of the project, but this has had limited impact. Available sand for beach nourishment was less than anticipated, with only 120,000 m 3 being relocated to the northern beaches compared to the planned 450,000 m 3. The construction of the northern breakwater Mirkerwada harbor (under an unrelated project) has also trapped sand, creating an additional fillet of sand in the southern part of the bay, removing more sand from circulation within the sediment cell, and thus reducing the

4 Black, K.P.; Reddy, K.S.K.; Kulkarni, K.B.; Naik, G.B.; Shreekantha, P., and Mathew, J., 2020. Salient evolution and coastal protection effectiveness of two large artificial reefs. Journal of Coastal Research, 00(0), 000–000. Coconut Creek (Florida), ISSN 0749-0208.

64 Appendix 9

amount of sand available for natural deposition on the northern beaches. Measures to mitigate the impact of this development could not be implemented before closure of the loan. 32. The key impact of the works at Ullal has been the recovery of the beach. This is shown in the figure below.

33. In a presentation to the sub-committee of the Coastal Protection and Development Advisory Committee meeting held in Mangalore on 35 May 2019, an assessment of the impact of the works at Ullal was made. Key observations made were:  The Ullal sub-project has successfully prevented erosion at Ullal which was once highly vulnerable;  Since commissioning in June 2017, the sub-project has been successfully protecting the coast without any subsidence, settlement or washing away of the structures for the last two monsoons;  Approximately 80 m wide newly formed beach at Ullal with depth of 3 meters is composed of coarse sediments, which indicate the beach is formed of river sand deposits, rather than fine sea sediments;  Major portion of the inshore berms are submerged under the newly formed beach sand which indicates accretion process taking place; and  The two offshore reefs are seen to be successfully arresting wave propagation towards the shore and hence preventing erosion at the coast.

34. The 2019 beach profiles at Ullal are compared to the pre-project profiles in following figures 5.

5 From presentation to CPDAC sub-committee

Appendix 9 65

Beach profile opposite Reefs

5 LESSONS 35. The project has contributed significantly to the development of the use of offshore, artificial reefs as a technique for protecting beaches in India from erosion. This method ticks all the right boxes for being an environmentally friendly, sustainable, and resilient methodology for coastal protection, particularly with changes in the coastal environment due to climate change. The technical assistance for CRCPMP, associated with tranche 2 investment strongly endorsed such methods for much wider adoption around the Indian coast. The contribution of this project is therefore very important for these reasons. 36. There are other lessons that can be drawn from this project experience. 1) The lack of coordination on the Mirya Bay situation within MMB for undertaking the cumulative impact assessment during construction of additional Jetty, is a big disappointment and suggest the need for much stronger technical skills and communication. The use of shoreline management planning should have prevented this problem by way of assessing larger impact area for suggested additional interventions. 2) Monitoring of sea conditions, and performance of marine and coastal structures is not undertaken enough in India, and pooling of data in appropriate databases and data repositories is still insufficient. The Mirya Bay structure was re-designed with the recommendation that the performance of the reduced structure is carefully monitored so that the height of the structure can be increased if needed, but there is little evidence of such monitoring being done. The project has sought to establish databases to share such data, but this is not developing quickly. 3) Problems with the procurement of the construction of the reefs have caused considerable delay in project delivery, and for several reasons. The main issues have been:  Availability of high-specification geotextile material;  Poor knowledge of geotechnical conditions prior to letting contracts;

66 Appendix 9

 Significant redesign needed as original design could not draw on local experience in the use of geotextile material at the design stage, and the issues found at Kovalam had to be incorporated in the re-design late in the procurement process; and  Lack of contractor experience, and confidence in the construction process and risks involved. 4) Technical knowledge within India for coastal-related engineering is sparse and needs considerable strengthening. This project, and the related CWPRS TA have made great strides to bring new ideas and approaches to the experts within India, but institutionally there remain significant issues including:  The key engineering centers of expertise and technical screening of projects – the CWPRS and CWC under Ministry of Water Resources, River Development & Ganga Rejuvenation (MoWR,RD&GR) are focused on water resources management, and coastal engineering remains a sideline within these organizations, leading to a lack of wider recognition for particular expertise in coastal matters  Responsibilities for coastal areas remains split between MoWR, RD&GR and the Ministry of Environment, Forests and Climate Change (MOEF&CC) which has responsibility for regulation of development within the coastal zones. Communication and cooperation between these ministries need improvement  Technical expertise within the States suffers from similar problems, whereby coastal engineering is a niche expertise, with most engineers posted to work in this discipline having little knowledge of latest developments and key scientific issues of coastal management.

37. In conclusion, the project has demonstrated very important new techniques of sustainable and environmentally friendly coastal management in India, showcasing the effectiveness of these approaches and showing a very important lead into the widespread adoption of these new methods of coastal management. Tranche 2 works are expected to develop and emphasize these advantages, and lead to a very positive change in the methods of coastal management employed in India, providing very considerable benefit to the nation’s beaches and the preservation of the natural beauty of most of the coastline.

6 SUSTAINABILITY 6.1 Structures 38. Following completion of the project, it is important that the structures built are properly maintained and operated. The engineering department under both state organizations undertakes construction and maintenance of the created assets. The concerned unit taking on the responsibility for operation and maintenance are:  In Maharashtra, the office of the Executive Engineer, Ratnagiri of the MMB  In Karnataka, the office of the Director, Ports, and Inland Water Transport, (pending development of the Karnataka Maritime Board) 39. These offices and personnel have not been directly involved in the project implementation, but it is hoped that the organization will pass on knowledge, training and share O&M manual provided under the project. There are established institutional links with specialist

Appendix 9 67

centers of expertise such as the CWPRS, and so reliable technical advice on developing problems should be obtainable for the responsible agencies. 40. Operation and Maintenance manuals have been prepared for the reefs. These identify routine maintenance requirements, which are predominantly surveys of the structures to identify developing problems with the structures so repairs can be affected. Some repairs will need to be undertaken by specialist contractors – for example with experience of construction with geotextiles, or marine repair work. 41. Survey work will involve visual inspection and physical survey of reefs and groynes, and in Ullal geophysical survey of the off-shore reefs to identify if tetrapods have been displaced. The Mirya Reef manual indicates a requirement to undertake surveys of the offshore reef and onshore berms twice a year for damage, and to promptly repair or replace any damaged geotube or tetrapod. 42. The budgetary requirement for this type of work is estimated to be:  Mirya Reef . Twice a year visual inspection and topographic survey at low tide. Carried out by experienced engineer plus surveyor with total station. Cost about ₹50,000 per survey, or ₹100,000 per year. Budget needed in case geotube replacement needed. This would need to be carried out by specialist contractor. Budget for ₹1 million once in five years.  Ullal Reefs . Annual inspection with boat-mounted geophysical sounding and survey equipment. Cost about ₹500,000 per year. Not expected to require significant maintenance.  Ullal Groynes . Physical inspection twice a year: say ₹100,000 per year. Budget for repair by specialist contractor if geotubes need replacement. Allow for ₹3 million once in five years for this work.  Ullal Breakwater . Routine inspection and minor repairs, similar in scope to budget and skills already being used for this task. 43. MMB have provided an overview of the budgets of the Departments with responsibility for asset management. These are indicated in the table below.

MMB Budget Year 2018-19 Year 2019-20 Year 2020-21 Head (INR million) (INR million) (INR million)

Budgeted Expenditure Budgeted Expenditure Budgeted Expenditure Repairs to 150.0 40.016 128.529 16.339 83.942 To be existing updated Buildings Repairs to 400.0 166.571 302.983 72.466 289.239 To be existing jetty updated Navigational 10.0 7.845 60.0 5.129 25.0 To be Aids(Marine updated Engineer)

44. The table above confirms adequate financial resources to undertake and maintenance or repair of the project assets. In Karnataka, the PWD section with maintenance responsibilities have

68 Appendix 9

much larger budgets and expenditure and similarly the workload added by the project will be easily covered by existing budgets.

6.2 Shoreline Management 45. The ability to maintain and regularly update the shoreline management plans, and to regulate developments along the shoreline to keep in accordance with current planning will be the responsibilities of the State Maritime Boards. Engagement with the development of the control of planning through the SMP has been variable. As an example of the challenges, the SMP development in Uttara Kannada district was weighed down by the long-drawn engagement with the district administration. The endorsement process had to be downplayed because the technicality of the SMP was not well understood by the district administration; their predominant need was on regulatory compliance (e.g. CRZ) rather than viewing it from a long-term planning perspective. 46. The further development of the SMP process will be supported through the Tranche 2 project in Karnataka, and hopefully the new SCPMIP project being developed for Maharashtra. These will be very important for capacity-building in the shoreline management capability within each State, and to make sure shoreline development embraces the principles embodied in the SMPs developed under this project.

Appendix 9 69

ANNEX 1

Long-listed projects identified by the PPTA consultants:

70 Appendix 10

SAFEGUARDS

1. Environmental Safeguards 1. The first Tranche works of the project have been given Category A status because of concerns that the design of the initial works was based on model simulations and less field monitoring data than ideal. While Category A is normally kept for projects likely to have significant adverse environmental impacts that are irreversible, diverse, or unprecedented, these are not expected within the Tranche 1 schemes. The design of these schemes is with the intention of creating a positive environmental impact, making a sustainable positive improvement in the impacted coastline. ADB’s Environment Policy (EP), 2002 is applicable for this Loan. 2. As a category A project, a full environmental impact assessment was undertaken for each scheme, with appropriate environmental management plan (EMP) and environmental management and monitoring plans (EMMP) for each construction contract. The SEIA was amended in December 2012 to reflect the change pertaining to the type of materials proposed for the construction of the Ullal reefs and dropping of Goa state component from the scope. This amended SEIA incorporated a description of the proposed changes, the rationale for the changes and possible environmental and other implications of the change in materials for the Ullal offshore reefs). 3. The India national requirements for environmental review under the Environmental (Protection) Act, 1986, requires an EIA and Environmental Clearance from MOEF&CC prior to start of construction. For work in the coastal area, there are further regulations under the 1991 Coastal Zone Regulation Notification requiring clearance from the appropriate State Coastal Zone Management Authority and the MOEF&CC. 4. For all major construction contracts these clearances were obtained prior to start of construction, and prior to the arrival of the technical assistance consultants. Because the design of the interventions changed after clearances were obtained, under the regulations revised clearances were required. This was understood by the PMUs after some delay, and appropriate post-event clearances for the revised designs were sought. 5. The ADB procedures for environmental safeguarding of the project were all followed, with some delays in the processing. A Safeguards mission to Karnataka in January 2015 noted that there were significant deficiencies in the safeguarding process, including a lack of environmental reporting required under ADB procedures, with the initial submitted report covering the period January 2012 to June 2014 being dated in February 2015. Later reports were submitted in a satisfactorily timely manner. 6. Key environmental concerns during the implementation of Tranche 1 schemes included:  Sources of rock material from Government approved quarries, and appropriate management of these quarries  Transportation of materials to site  Site management, especially health and safety procedures and dust management  Identification of appropriate sources of sand for beach nourishment, clearance for the use of the sand, and procedures to be used to transport and deposit sand for most effective beach restoration. 7. These issues were all carefully addressed and managed under the construction contracts. The safeguards mission to Karnataka had identified several issues related to health and safety

Appendix 10 71

procedures, but follow-up visits confirmed all recommended improvements had been implemented. 8. A further issue flagged in the review of safeguards was the lack of experienced environmental officers to oversee the implementation and monitoring of the EMPs. The PMUs experienced considerable difficulties in identifying and retaining appropriate staff, and provisions for technical assistance in this area under the PMDC contracts were not sufficient to provide enough support in these circumstances. The situation improved following the January 2015 review. 9. There was no appointment of an external monitor for safeguards, and the environment specialist from the ADB project team undertook the necessary due diligence. Also, the technical support available from the PMDC in terms of the subject expertise and reassessment of the environmental aspects during implementation, the need for engagement of an external monitor was not observed essential. 10. No written grievances have been received by the project, and there is no record of other grievances either. 11. The management of public interfaces and administration of the public grievance system improved during the implementation of the project. Early on, Maharashtra had problems with the public restricting contractor activity led by a lack of understanding of the project, and there were improvements needed to establish a grievance redressal process in each State. No significant grievances were, however, received. 12. In Karnataka there was one incident during reef construction when the contractor’s barge ran aground on the reef and had to be salvaged. The management of this incident was managed and resolved by the contractor, although the process took time to implement. No significant impact on the environment resulted from this incident, and no lasting damage was done. 13. The outcome impact of the construction of Tranche 1 sub-projects has been assessed as very positive, with recovered beaches and improved habitats and amenity. 2. Social Safeguards 14. The Tranche 1 projects have been approved for Category “C” for involuntary resettlement and indigenous people categories. It was confirmed that none of the sub-projects had any significant impacts in these areas. 15. The DMF for the Tranche 1 project has a number of outcomes and outputs liked to local communities and participation in shoreline management. Efforts made under the project to improve outcomes included several training events, and establishment and support of shoreline management organizations (SMOs). This work proved effective in several ways, but the level of participation in coastal management by local organizations was not as great as hoped for, and the gender ratios of the supported SMOs did not reach the target 30% level. 16. The compliance with the social and environmental loan covenants by both States was largely complete. Table 1: Safeguards documents disclosed on the ADB website Title Document Type Document Date Sustainable Coastal Protection and Summary Environmental Mar 2010 Management Investment Program - Summary Impact Assessments Environmental Impact Assessment

72 Appendix 10

Title Document Type Document Date Sustainable Coastal Protection and Resettlement Jun 2010 Management Investment Program Frameworks Sustainable Coastal Protection and Environmental Jun 2010 Management Investment Program Assessment and Review Framework Sustainable Coastal Protection and Indigenous Peoples Jun 2010 Management Investment Program Planning Frameworks/Indigenous Peoples Development Frameworks Sustainable Coastal Protection and Summary Environmental Dec 2012 Management Investment Program - Amended Impact Assessments Summary Environmental Impact Assessment Sustainable Coastal Protection and Environmental Monitoring Aug 2015 Management Investment Program - Karnataka Reports (Tranche 1): Environmental Monitoring Report (July -December 2014) Sustainable Coastal Protection and Environmental Monitoring Aug 2015 Management Investment Program - Karnataka Reports (Tranche 1): Environmental Monitoring Report (January 2012 -June 2014) Sustainable Coastal Protection and Environmental Monitoring Nov 2015 Management Investment Program - Tranche Reports 1: Environmental Monitoring Report (January- June 2015) Sustainable Coastal Protection and Environmental Monitoring Mar 2018 Management Investment Program - Tranche Reports 1: Environmental Monitoring Report (January- June 2016) Sustainable Coastal Protection and Environmental Monitoring Mar 2018 Management Investment Program - Tranche Reports 1: Environmental Monitoring Report (January- June 2017) Sustainable Coastal Protection and Environmental Monitoring Mar 2018 Management Investment Program - Tranche Reports 1: Environmental Monitoring Report (July- December 2015) Sustainable Coastal Protection and Environmental Monitoring Mar 2018 Management Investment Program - Tranche Reports 1: Environmental Monitoring Report (July- December 2016)