India: ajasthan Urban Sector Development Investment Program (Tranche 1)

Horizontal Tabs

Lessons

Enhancing project preparedness prior to loan approval helps ensure timely and effective project implementation.

A $1.5 million component technical assistance supported several project preparatory activities, including the preparation of infrastructure base maps, subproject detailed designs, and bidding documents and program management capacity building. These activities developed a high degree of project readiness that accelerated project start-up and supported the timely completion of infrastructure subprojects.

A project-specific design and monitoring framework (DMF) enables a comprehensive and accurate assessment of project achievements.

A DMF for the multitranche financing facility (MFF) was prepared during the preparation of the investment program of which this project was part. Without a DMF of its own, the performance indicators and targets for the project were derived from the MFF’s DMF. Weak alignment in the indicators, targets, and actual accomplishments was thus unavoidable. A separate DMF for each project must be prepared in future MFFs to ensure that the indicators and targets directly correlate with the project interventions. This would also enable a comprehensive and accurate assessment of the project accomplishments.

Incorporation of new innovations and best practices enhances the design of projects.

While this project’s design was appropriate, it could have considered new innovations and best practices in urban sector development such as 24x7 water supplies and non-revenue water reduction measures. These enhancements would have improved the project’s water services and prevented the emergence of illegal water connections that subverted the equitability of the water supply mechanism. Similarly, the project design should have included sewerage connections in the scope of works for wastewater management to ensure timely realization of benefits.

Financial management reforms are more beneficial if implemented by the local authorities themselves.

Reforms such as double-entry accounting systems should have been implemented by the urban local bodies (ULBs) rather than consultants. This would have promoted better internalization by the ULBs and continued application beyond the project period.

Operation and maintenance (O&M) capacity development of local governments and dedicated revenue streams enhance the sustainability of project outcomes.

Including 5 years of O&M in the works contracts, even with performance guarantees, is inadequate to ensure sustainable outcomes. More important than this would be to provide dedicated revenues and develop local government capacity for O&M. At project completion, the untied transfers recommended by India’s central finance bodies could assist the ULBs in meeting O&M costs. Additional revenues will also be generated by the ongoing tariff revisions. Implementation of the asset transfer plans agreed between the Investment Program Management Unit and the ULBs should be ensured to provide a stronger basis for ULB O&M of the project assets.

Thorough alignment with project interventions enhances the effectiveness of loan covenants.

Project water supply interventions were limited to the rehabilitation of old leaking pipelines and laying of new pipelines in selected areas. Hence, the covenant related to unaccounted-for-water reduction was unrealistic. Care must be taken in future projects to align loan covenants with projects interventions to ensure that they are complied with in a timely and effective manner.

Background

At 24% in 2001, the urbanization level in Rajasthan in northwestern India was lower than the national average. However, slums were emerging fast and by then were already home to more than 20% of the urban population. The growth in slums and slum populations hastened the deterioration of the urban environment. As overall, urban population growth outstripped the development of basic infrastructure and services, living conditions worsened.

To help prevent the situation from further deteriorating, the Asian Development Bank (ADB), at the request of the Government of India, approved in October 2007 a $273 million, 7-year multitranche financing facility (MFF) for the Rajasthan Urban Sector Development Investment Program. The program sought to improve the urban environment and promote ongoing reforms for sustainable, efficient, and responsive service delivery in 15 urban local bodies (ULBs). Its envisaged impact was to increase economic growth, reduce poverty, and sustain improvements in the urban environment and quality of life in the program ULBs. Its planned outcomes were increased access to sustainable urban infrastructure and services for 1.6 million people and improved capacity and sustainable management of urban services by the ULBs. It had 2 components: (i) urban infrastructure improvements and (ii) capacity development and implementation support.

The first $60 million loan for the program, approved in November 2007, improved urban infrastructure and services in 3 ULBs. Water supply systems were augmented and upgraded. Sewerage systems were developed, and a 30-million liters per day treatment capacity was created, reducing untreated wastewater discharge to water bodies. Comprehensive drainage plans were prepared, and drains were constructed, improving flood protection in low-lying areas. A rail over bridge (ROB), built in 1 ULB, eliminated vehicle idling time, increased mobility, and reduced travel cost, traffic congestion, and accidents at the railway crossing.

Under component 2, infrastructure base maps were produced; financial management systems were computerized; and asset management systems were improved. Community action and participation programs and information, education, and communication campaigns were also undertaken to sustain the environmental improvements.

Completion of over 80% of the infrastructure targets significantly enhanced the quality of life in the tranche 1 ULBs. It provided 0.52 million people or 94.9% of the population with safe drinking water and 0.1 million people with wastewater management facilities. 66,705 slum dwellers benefited from the improved infrastructure and services. The ROB benefited all road users, including the poor, in terms of time and cost savings.

However, the outcome targets in solid waste management were not achieved as landfills had remained non-functional. A local government decision to develop compost plants led to ineffective facilities.

The project had no significant delays. The $63.54 million actual project cost was below the appraisal estimate. $50.02 million of the ADB loan was utilized.

ADB’s South Asia Department rated the project successful. The government of Rajasthan’s Local Self Government Department was the executing agency (EA). An Investment Program Management Unit within the EA, supported by an investment program implementation unit in each project town, served as the implementing agency.

Project Information

Project Name:

Rajasthan Urban Sector Development Investment Program (Tranche 1)

Report Date:

July, 2017

Main Sector:

Multisector

Country:

India

Project Number:

40031-023

Project/Modality:

Loan

Themes:

Environmentally Sustainable growth

Inclusive Economic Growth

Governance and Capacity Development

Private Sector Development and Private Sector Operations

No gender elements

Sub Sector:

Urban roads and traffic management

Urban flood protection

Urban policy, institutional and capacity development

Urban sewerage

Urban solid waste management

Urban water supply

Report Rating:

Successful