India: Rajasthan Urban Sector Development Investment Program (Tranche 2)

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Lessons

Incorporation of 24x7 water supply could have enhanced the project design.

While the design of this project was appropriate to achieve its intended outcomes, it could have been further enhanced by the incorporation of 24x7 water supply. Non-inclusion of the feature in the original project design should have been addressed through changes or adjustments in the project scope during implementation.

Project Cycle Stage:

Preparation

Implementation

Synchronizing sewer network improvements and household property connections would have enabled the realization of the project benefits in a timely manner.

The project rehabilitated or installed new sewerage facilities, including outfalls, trunk sewers, and tertiary networks in eight urban local bodies (ULBs). In addition, sewage treatment plants (STPs) were built in six of the said ULBs without prior STPs. However, these facilities had not been optimized, as until project completion, not all the households in the covered ULBs had been provided with household sewer connections (HSCs). Delayed installation of the HSCs, which was outside the project and investment program scope but agreed to be undertaken by the state government of Rajasthan, delayed the delivery of the sewerage component’s full benefits to their target beneficiaries. Synchronizing the implementation of project activities with complementary, external ones should be worked out in future interventions.

Project Cycle Stage:

Implementation

Implementing agencies should have dedicated cadres, instead of staff on deputation.

The implementing agency for this project and the entire multitranche financing facility (MFF), the investment program management unit (IPMU), generally exhibited strong leadership with the placement of state government senior officers in its management. However, it would have been better if it were staffed by dedicated cadres. Such an arrangement would have ensured continuity in implementation. Creation of a legal cell in the IPMU would also have improved its handling of techno-legal cases.

Project Cycle Stage:

Preparation

Implementation

The statement of expenditure (SOE) threshold should consider the institutional capacity of implementing agencies (IAs) and size and nature of contracts.

The SOE procedure allowed this project up to $100,000 equivalent per individual payment. This could have been improved given the high implementation capacity demonstrated by the IPMU. In future, the statement of expenditure (SOE) threshold of projects should consider the institutional capacity of IAs and the size and nature of contracts. This will give IAs leeway in meeting unforeseen expenditure needs that enhance their projects’ likelihood of success.

Project Cycle Stage:

Implementation

Optimal contingency allocations minimize the likelihood or partial loan cancellations or closing extensions.

Loan savings mainly because of the appreciation of the United States dollar and the overestimation of contingencies were leveraged by the project to increase its allocation for civil works. Consequently, it was able to expand infrastructure coverage, implement additional new subprojects, and meet the marginal cost overruns in a few contracts. These new expenditures enhanced its relevance and impact; however, they also necessitated the 4-time extension of the loan closing, for a total of 36 months, to coincide with the MFF closing in June 2017. Despite the loan extension and new and additional expenditures, $28 million of the $150 million project loan was cancelled, highlighting the importance of making realistic cost estimates, especially for contingencies that are completely within control.

Project Cycle Stage:

Preparation

Inconsistencies in the design and monitoring frameworks (DMFs) of a multitranche financing facility (MFF) and its component projects hinder a reliable assessment of end-of-project accomplishments and contributions to the MFF results.

While the results chain for the DMF of project 2 was logical, it had several weaknesses that made it difficult to reliably assess end-of-project accomplishments and contributions to achieving the MFF intended results. For example, its numeric targets in population coverage did not accord with the figures in the Census of India, 2001. It targeted a 100% population coverage of sewage treatment facilities in seven ULBs, the attainment of which depended not just on the project but the implementation by the Rajasthan state government of an activity that was complementary but external to the project, the installation of house sewer connections. Instead of setting numerical targets, it also simply described a range of results and interventions that can be expected from project 2’s nature as a sector loan. There was also a misclassification in some of its indicators; specifically, some of its outcome indicators pertained to outputs rather than outcomes. Moreover, there were significant inconsistencies in the indicators and metrics in the MFF’s DMF and that of the project, particularly at outcome and impact levels. In future, the DMFs of MFF projects should be aligned to those of their parent investment programs. Target-setting should be based on reliable data baseline data, in the absence of which, baseline research may be undertaken at early implementation stage and followed by DMF adjustments, as appropriate.

Project Cycle Stage:

Preparation

Implementation

Completion and Evaluation

Contract periods must be realistic.

The contract periods for this project’s water supply and wastewater works were ambitious, considering that the works were in existing unplanned towns and needed to be executed without causing public inconvenience and undue disruption to service delivery and traffic movement. Nevertheless, the loan extension allowed for the completion of most of the 57 works contracts. By loan closing, only six were ongoing and these were completed using state government funds. Contract periods need to be realistic to ensure adherence to implementation milestones.

Project Cycle Stage:

Implementation

End-to-end e-procurement and contract management will improve project efficiency and organizational effectiveness.

The e-portal established by the government of Rajasthan greatly facilitated the procurement of the contracts that employed national competitive bidding and shopping methods. Moving forward, the procurement capacity of the state government, demonstrated by the IPMU as a core strength, could be further enhanced by the adoption of end-to-end e-procurement and contract management systems. This will not only improve procurement and overall project efficiency but also enhance the effectiveness of program/project implementation units by promoting transparency, auditability, and collaboration among all users of the systems.

Project Cycle Stage:

Implementation

Ensuring project readiness prior to contract awarding fosters the efficient and effective implementation of projects.

Lessons from the first ADB loan in Rajasthan, the Rajasthan Urban Infrastructure Development Project, the previous tranche under the MFF, and other ADB projects in India were applied in this project’s design and implementation. Areas of focus were delineated. The availability of all the required land, except in one site, was ensured before project commencement. The investment program implementation units (IPIUs) were established in the ULBs of project 2, and project consultants were mobilized before loan signing. ULBs and subprojects were identified according to the MFF subproject selection criteria of the MFF. These measures, undertaken prior to contract awarding, facilitated the implementation of project 2 in a generally responsive and efficient manner. Delays in the completion of some water supply and sewerage subprojects were due mainly to poor resource mobilization by some contractors, which should be addressed in future projects through the adoption of more stringent contractor qualification criteria.

Project Cycle Stage:

Implementation

Background

In October 2007, the Asian Development Bank (ADB) approved a $273 million multitranche financing facility (MFF) for the Rajasthan Urban Sector Development Investment Program. The MFF or investment program was designed to improve the urban environment; promote ongoing reforms for sustainable, efficient, and responsive urban service delivery; and close the development gap in the state through increased economic growth, reduced poverty, and sustained improvements in the urban environment and quality of life of 1.6 million people in 15 urban local bodies (ULBs). It had two components: (i) improvements in urban infrastructure, including water supply, wastewater management, solid waste management (SWM), urban drainage, road rehabilitation and safety, and social and cultural heritage infrastructure; and (ii) capacity development and implementation support.

The MFF was provided in three tranches. Tranche 1, which comprised a $60 million loan approved along with the MFF, supported project 1 that closed in December 2014. Tranche 2, approved for a $150 million sector loan in January 2009, supported project 2, the subject of this report that, along with project 3 and the MFF, closed in June 2017.

At appraisal, project 2 was expected to benefit 12 ULBs by (i) improving the access to treated, piped water supply of 1.2 million people or 90% of the population in 10 ULBs; (ii) providing sewerage facilities, including sewage treatment plants (STPs) in high density areas in seven ULBs, and reducing the volume of wastewater discharged to water bodies; (iii) rehabilitating drainage outfalls and constructing new roadside drains in three ULBs with a high risk of flooding; (iv) improving the traffic flow and travel times in five ULBs; and (v) improving institutional capacity, including technical and financial resources.

At completion, the project achieved 11 of its 12 output targets, enabling it to contribute the following to ADB’s results framework: (i) 259,208 households in 10 ULBs provided with new or improved water supply, (ii) 54 million liters per day (mld) added to wastewater treatment capacity in seven ULBs, (iii) 1,185 kilometers of water supply pipes installed or upgraded, and (iv) 400 hectares of land improved through drainage and/or flood management. All sample subprojects appraised during processing were implemented, allowing the project to achieve all its outcome targets.

The water supply component resulted in asset creation; production, pumping and distribution improvements; and reduction in unaccounted-for-water and operation and maintenance (O&M) cost thereby providing all households in the project 2 areas with regular and reliable service, and additional quantity of water. The wastewater management component enabled asset creation and systemic improvements and developed safe disposal systems for sewage and protected water bodies. Sewerage facilities developed in eight hitherto unserved ULBs exceeded the target of seven ULBs. The discharge of untreated wastewater to water bodies consequently dropped by more than 20 mld.

Besides the construction of new roadside drains, the urban drainage component rehabilitated drainage outfalls in two ULBs, reducing the incidence of flooding and the number of days the ULBs are impacted and benefitting more than 0.68 million people. The urban transport component improved the mobility of more than 1.76 million residents in nine ULBs, exceeding the target of five ULBs. It consequently enhanced the poor’s access to economic opportunities, reduced travel times from an average of 40 minutes per crossing to less than 5 minutes during peak hours, cut travel costs, and diminished accidents at the intervention sites.

Recognizing the risk that ULBs might not be able to generate enough revenues to manage and maintain the existing and newly acquired assets, the loan covenanted that the state government shall ensure adequate O&M of the project facilities through budgetary allocations or other means, to be provided to the investment program management unit (IPMU), the appropriate ULB, or line agencies, during and after subproject completion. As of loan closing, ULBs and state-level bodies had consistently been able to meet the O&M costs of all urban services through well-structured and planned budgetary allocations.

On-the-job learning opportunities were provided to the implementing agency staff, consultants, and contractors. Financial management systems were improved. Training programs conducted effectively reoriented the staff of ULBs and state-level bodies toward the professionalization of municipal services and better urban governance.

As with the investment program, project 2 had the Local Self Government Department of Rajasthan as executing agency. The IPMU served as the overall implementing agency, supervising the work of the investment program implementation units in each project town.

Project Information

Project Name:

Rajasthan Urban Sector Development Investment Program (Tranche 2)

Report Date:

June, 2019

Main Sector:

Transport

Water and Other Urban Infrastructure and Services

Country:

India

Project Number:

40031-033