Khulna Sewerage System Development Project (RRP BAN 49329-007)

SECTOR ASSESSMENT (SUMMARY): WATER AND OTHER URBAN INFRASTRUCTURE AND SERVICES

A. Sector Road Map

1. Sector Performance, Problems, and Opportunities

1. ’s urbanization. Rapid urbanization featured prominently in Bangladesh during 2010–2018 , exacerbating challenges in a country that has one of the highest population densities in the world.1 Annual urban population growth averaged 3.17% during 2015–2018— significantly higher than the national average of 1.37%. In 2018, about 61 million people, or 37% of the country’s total population (164 million), lived in urban areas.2 Rapid urbanization spurs economic productivity through agglomeration advantages, but may lead to acute shortages of water supply, sewerage, drainage, transport, and other urban infrastructure. These shortages in turn threaten public health, exacerbate gender inequalities, and decrease urban mobility. 3 Bangladesh is extremely vulnerable to natural hydro-meteorological hazards. Monsoon flooding, tropical cyclones, and droughts are the three most common natural disasters, and are likely to become more severe because of climate change. 4 Urban infrastructure and services must urgently adapt to these threats.

2. Urban sanitation services. Bangladesh showed impressive progress in sanitation during 2010–2017, with 61% of households having access to improved sanitation and open defecation reduced to 1% in 2017.5 Launched in 2005, the National Campaign for Sanitation contributed to drastically reducing open defecation and increasing coverage of sanitation facilities. Nevertheless, only the capital of has a piped sewer network, which serves 18% of its residents; the remainder of the population uses on-site options such as septic tanks, pit latrines, unhygienic latrines, or nothing at all. Sewage and fecal sludge from on-site options are rarely treated. As a result, vast quantities of untreated sewage are discharged into rivers, canals, and groundwater, posing threats to the environment and to public health. Residents in urban slums suffer the most from poor sanitation, as they often live in proximity to polluted water bodies. Only 8%–12% of households in slums have hygienic latrines.6

3. Institutional setup for water and sanitation. At the national level, the Local Government Division of the Ministry of Local Government, Rural Development and Cooperatives is responsible for the overall development of water supply and sanitation (WSS) systems. Four major — , Dhaka, Khulna, and —have a Water Supply and Sewerage Authority (WASA). WSS services in other urban areas are maintained by city corporations or pourashavas, which can charge tariffs to meet operation and maintenance (O&M) costs. The Department of Public Health Engineering (DPHE) is responsible for implementing WSS projects in rural areas as well as providing technical support and guidance to pourashavas. The unions of committees

1 The population density of Bangladesh was the ninth highest in the world in 2018. Source: The World Bank Group. 2020. Population density (people per square kilometer [km2] of land area) database (accessed 15 July 2020). https://data.worldbank.org/indicator/EN.POP.DNST. 2 United Nations. 2018. World Urbanization Prospects: The 2018 Revision. New York. 3 Cyclones and floods have killed nearly 520,000 since 1980. Cyclone Sidr (2007) alone killed about 15,000 people and caused about $1.7 billion in damages and losses. https://www.gfdrr.org/en/region/bangladesh 4 Government of Bangladesh, Ministry of Environment and Forests. 2009. Bangladesh Climate Change Strategy and Action Plan 2009. Dhaka. 5 United Nations Children’s Fund (UNICEF) and World Health Organization (WHO). 2017. Progress on Drinking Water and Sanitation: 2017 Update. New York. 6 Government of Bangladesh. 2010. Sector Development Plan FY2011–FY2025: Water Supply and Sanitation Sector. Dhaka. 2 of WSS, which include community leaders and DPHE representatives, are responsible for promoting hygiene education and approving the distribution of tube wells. In addition to government institutions, nongovernment organizations (NGOs) and the private sector are also involved in WSS services. However, private sector participation in the water and other urban infrastructure and services (WUS) sector remains limited to small businesses selling hand pumps, pipes, tube well materials, and other supplies.

4. Sewerage problems in Khulna. Khulna has a population of about 1.5 million and a population density of 6,877 people per square kilometer (km2), well above the national average of 1,240 people per km2. The city is expected to see increased commercial and industrial activity upon completion of the Padma Multipurpose Bridge, which will provide improved connectivity with Dhaka.7 Khulna’s residents experience persistent urban service limitations, particularly in sewage management. There is no centralized sewerage system in Khulna and no sewerage tariffs. Most households depend on on-site sanitation systems such as pit latrines or septic tanks, and the city lacks a systematic service approach for collection, treatment, and disposal of fecal sludge from on-site systems—known as fecal sludge management (FSM).8 As a result, sewage and fecal sludge enter groundwater or surface drains, causing clogging and serious environmental problems, including contamination of rivers near Khulna. About 0.5 million people living in low- income communities (LICs) are most vulnerable to the impacts of poor sanitation services. Moreover, the lack of access to sewage places particular burden on women, given that they are primarily responsible for household sanitation. Two institutions provide sanitation services in Khulna: (i) the (KCC), which is responsible for FSM;9 and (ii) the Khulna Water Supply and Sewerage Authority (KWASA), which is in charge of developing, constructing, and operating the sewerage system.10 KWASA does not have any sewerage system to manage at present, hence, coordination between KWASA and KCC is not in place.

2. Government’s Sector Strategy

5. The Government of Bangladesh has committed to achieving the United Nations 2030 Sustainable Development Goal 6 (SDG 6) target of “safe and sustainable sanitation, hygiene, and drinking water used by all.”11 The government’s Sector Development Plan (SDP) 2011–2025 (footnote 6) and the National Strategy for Water Supply and Sanitation 201412 are aligned with the SDGs and support achieving targets under SDG 6. Although development partners have supported the WUS sector significantly, the public sector plays a dominant role in the overall planning, design, and implementation of programs and projects. In most cases, public sector agencies handle the planning, programming, and managing of WSS programs.

7 This multipurpose road–rail bridge across the Padma River, which is expected to be completed in 2021, will link the southwest part of the country to the northern and eastern regions. When completed, it will be the longest bridge in Bangladesh, with a main bridge length of 6.15 km. 8 Of Khulna’s population, 64% use septic tanks (average volume: 16.6 cubic meters [m3]), and the remaining 36% use pit latrines (average volume: 2.0 m3). Most septic tanks are not connected to soak pits and discharge directly into open drains. The one operational FSM system, in the northern part of Khulna, covers only 2% of the city’s population. 9 Government of Bangladesh. 2015. Institutional and Regulatory Framework for FSM for City Corporation. Dhaka. 10 KWASA was established in 2008 as an independent organization responsible for water supply and sewage management in Khulna city, under the Water Supply and Sewerage Act 1996. 11 The Sector Development Plan 2011–2025 target for piped water supply coverage by 2020 is 80 percent in large municipalities and 70% in small municipalities; and by 2025 90% in large municipalities and 70% in small municipalities. The plan addresses integrated resources management, water quality, FSM, response to urbanization, management of disasters and climate risks, and more. 12 Government of Bangladesh. 2014. National Strategy for Water Supply and Sanitation 2014. Dhaka. 3

6. The sector review identified policies and strategies directly and indirectly related to WSS services. The National Policy for Safe Water Supply and Sanitation (1998) provides guidelines to ensure that all people have access to safe water and sanitation services at an affordable cost.13 The National Water Policy 1999 provides guidance to all agencies and institutions working directly or indirectly in the WUS sector to improve the country’s water resource management system.14 The National Water Management Plan 2004 is an operational framework for the central and local governments, and other stakeholders, to implement activities and projects. 15 The Pro-Poor Strategy for Water and Sanitation Sector 2005 succeeded in defining the basic minimum level of WSS service up to which the government should provide special support to the hard-core poor.16 Finally, the SDP, 2011–2025 aims to deliver universal coverage of improved WSS services to the population.

7. The sector review found that most policies and strategies suffer from insufficient coordination among government departments, city corporations, and pourashavas. For example, the Pro-Poor Strategy for Water and Sanitation Sector does not reach the lowest level of local government institutions that are supposed to implement many parts of the strategy and interagency coordination in the WUS sector has been lacking. Although policies highlight the importance of government–NGO collaboration and public–private partnerships, neither are visible in practice.

B. Major Development Partners: Strategic Foci and Key Activities

8. The major development partners active in WUS sector of Bangladesh are the Asian Development Bank (ADB), Agence Française de Développement, Danish International Development Assistance (Danida), the European Investment Bank, the Japan International Cooperation Agency (JICA), and the World Bank. The contributions of development partners to the WUS sector are in the table.

9. ADB is a major development partner in the WUS sector of Bangladesh, with a large portfolio covering planning, development, implementation, and O&M of WSS systems. ADB has supported improved water supply systems in Dhaka and Khulna, aiming to encourage a shift from groundwater supply to surface water supply and to improve service efficiency by reducing nonrevenue water. The Khulna Water Supply Project, cofinanced by ADB and JICA, was completed in 2019.17 The project increased the water supply in Khulna to 113 liters per capita per day, with 875,000 beneficiaries, by supporting the establishment of 65 district metering areas and by constructing a water treatment plant(s) capable of treating 110,000 cubic meters of water per day. ADB has supported policy reforms in the WUS sector and rehabilitation of Dhaka water supply systems under the Dhaka Water Supply Sector Development Program (2007) and the ongoing Dhaka Water Supply Network Improvement Project.18 Both projects target sustained economic growth and improved health conditions in Bangladesh’s urban centers by reducing nonrevenue water to 15%.

10. The World Bank is another major development partner active in Bangladesh’s WUS sector. World Bank projects have targeted integrated urban development, WSS, urban transport, and

13 Government of Bangladesh. 1998. National Policy for Safe Water Supply and Sanitation. Dhaka. 14 Government of Bangladesh. 1999. National Water Policy 1999. Dhaka 15 Government of Bangladesh. 2004. National Water Management Plan 2004. Dhaka. 16 Government of Bangladesh. 2005. Pro-Poor Strategy for Water and Sanitation Sector 2005. Dhaka. 17 ADB. Bangladesh: Khulna Water Supply Project. 18 ADB. Bangladesh: Dhaka Water Supply Sector Development Program, and (ii) ADB. Bangladesh: Dhaka Water Supply Network Improvement Project. 4 urban environment. JICA has supported water supply in Khulna and solid waste management in Dhaka. The United Nations Development Programme and the Department for International Development of the United Kingdom focus on addressing urban poverty issues, with the aim to of improving livelihoods and living conditions for the urban poor. Danida has focused on WSS.

Major Development Partners Development Amount Partner Project Name Duration (million) Integrated Urban Development ADB Second City Region Development Project 2019–2024 $150.0 ADB Urban Infrastructure Improvement Preparatory 2019–2022 $11.0 Facility ADB Third Urban Governance and Infrastructure 2017–2021 $200.0 Improvement (Sector) Project (Additional Financing) ADB, OFID Third Urban Governance and Infrastructure 2014–2020 ADB: $125.0 Improvement (Sector) Project OFID: $40.0 ADB Coastal Environmental Infrastructure 2014–2020 $100.0 Project JICA Inclusive City Governance Project 2014–2020 ¥30,690.0 World Bank Municipal Services Project 1999–2011 $138.6 World Bank Municipal Services Project (Additional Financing) 2008–2011 $25.0 World Bank Municipal Governance and Services Project 2014–2020 $410.0 JICA Northern Bangladesh Integrated Development 2013–2020 ¥20,556.0 Project ADB, KfW, Sida City Region Development Project 2011–2018 $150.0 ADB Urban Public and Environmental Health Sector 2009–2018 $36.0 Development Program

Urban Water Supply; Urban Sanitation World Bank Additional Financing to Chittagong Water Supply 2017–2020 $47.5 Improvement and Sanitation Project IDB Urban Water Supply and Sanitation in 23 2017–2021 $82.3 Pourashava Project ADB Dhaka Water Supply Network Improvement 2016–2021 $275.0 Project AFD, Danida, EIB Saidabad Water Treatment Plant Project 2015–2020 $360.0 (Phase 3) Government of Dahserkandi Sewerage Treatment Plant Project 2015–2019 $258.0 the PRC JICA Karnaphuli Water Supply Project (Phase 2) 2013–2021 ¥34,847.0 ADB, AFD, EIB Dhaka Environmentally Sustainable Water Supply 2013–2020 $450.0 Project Government of Padma Water Treatment (Phase 1) 2013–2019 $269.0 the PRC EDCF Bandar–Juri Water Supply Project 2015–2020 $97.0 ADB, JICA Khulna Water Supply Project 2011–2019 ADB: $75.0 JICA: ¥15,729.0 World Bank Chittagong Water Supply Improvement and 2010–2020 $170.0 Sanitation Project ADB Dhaka Water Supply Sector Development Program 2007-2020 $200 ADB = Asian Development Bank, AFD = Agence Française de Développement, Danida = Danish International Development Assistance, EDCF = Economic Development Cooperation Fund (Republic of Korea), EIB = European Investment Bank, IDB = Islamic Development Bank, JICA = Japan International Cooperation Agency, OFID = OPEC 5

Fund for International Development, PRC = People’s Republic of China, Sida = Swedish International Development Cooperation Agency. Source: Asia Development Bank.

C. Institutional Arrangements and Processes for Development Coordination

11. The Economic Relations Division of the Ministry of Finance coordinates overall assistance to Bangladesh from major development partners. The government and development partners signed the Joint Cooperation Strategy (JCS) in June 2010 to improve the way for all parties to work together in the spirit of the Paris Declaration and the Accra Agenda for Action.19 The JCS is aligned with the government’s Seventh Five-Year Plan. 20 The JCS aims to harmonize programs in support of the country’s development by establishing an inclusive partnership in which all parties commit to maximizing aid effectiveness.

12. In support of the JCS, joint government–development partner local consultative groups (LCGs) hold regular dialogue at sector and thematic levels. LCGs seek to ensure effective and coordinated implementation of national policies, strategies, plans, and programs through a joint results and monitoring framework. The LCG subgroup on WSS meets regularly and has proved to be a successful platform for dialogue and coordination. The government and development partners work together in the spirit of international commitments made under the Paris Declaration, the Accra Agenda for Action, and other forums. The LCGs and their subgroups have been successful platforms for sector dialogue, consultation, coordination, and decision-making.

13. It is recommended that the LCG subgroup on WSS continues to be a mechanism for coordinating work in the sector and promoting harmonization and alignment of activities. The subgroup can promote further harmonization and integration of development cooperation through partnerships such as cofinancing. As the improvement of WSS facilities is critical for integrated urban development, linkage should be maintained between the LCG subgroup on urban development and the subgroup on WSS.

D. ADB Experience and Assistance Program

14. ADB is a major development partner in the WUS sector in Bangladesh. ADB has also supported the improvement of urban infrastructure and municipal governance reform, especially for urban transport, drainage and other municipal infrastructure, and solid waste management. This support has significantly improved the quality of life for urban residents.

15. ADB will continue to assist Dhaka, Khulna, and secondary towns with WSS systems improvement, which will expand and shift the water supply from groundwater to surface water, establish centralized sewerage and fecal sludge treatment systems, and improve service efficiency by enhancing capacities of WASAs, city corporations, and pourashavas. The WUS sector is a high priority of ADB’s country partnership strategy and country operations business plan.21 ADB is also expanding its efforts to work directly with city corporations for integrated urban development projects. Overall, ADB will continue to support WASAs, city corporations, and

19 Government of Bangladesh. 2010. Bangladesh Joint Cooperation Strategy, 2010–2015. Dhaka. Development partner signatories were ADB, the European Union, the Islamic Development Bank, the United Nations, and the World Bank, as well as the governments of Australia, Canada, Denmark, Germany, Japan, the Republic of Korea, the Netherlands, Norway, Spain, Sweden, Switzerland, the United Kingdom, and the United States. 20 Government of Bangladesh, Planning Commission. 2015. Seventh Five Year Plan, FY2016–FY2020: Accelerating Growth, Empowering Every Citizen. Dhaka. 21 ADB. 2019. Country Operations Business Plan, 2020–2022. Manila 6 pourashavas in improving WSS services, urban planning, and urban infrastructure and services such as urban roads, drainage, waste management, and other municipal facilities. Such investments will target specific regions and will be linked to the development of economic corridors to foster economic growth.

16. ADB will also be actively engaged with the government to improve the policy, regulatory, and institutional issues that confront the WUS sector. Strong synergies between public and private sector operations will be encouraged. ADB's private sector operations will focus on identifying innovative projects and companies meriting support in WSS services.

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Problem Tree for Water and Other Urban Infrastructure and Services