document of the world bank · islamic republic of iran for an environmental management support...
TRANSCRIPT
Document of The World Bank
Report No: ICR00001047
IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-46880)
ON A
LOAN
IN THE AMOUNT OF US$20 MILLION
TO THE
ISLAMIC REPUBLIC OF IRAN
FOR AN
ENVIRONMENTAL MANAGEMENT SUPPORT PROJECT
October 14, 2009
Sustainable Development Department Middle East and North Africa Region
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
Pub
lic D
iscl
osur
e A
utho
rized
ii
CURRENCY EQUIVALENTS
(Exchange Rate Effective February 15, 2009)
Currency Unit = Iranian Rials (Rls)
US$ 1.00 = Rials
FISCAL YEAR
March 20 – March 21
ABBREVIATIONS AND ACRONYMS CAS Country Assistance Strategy CoED Cost of Environmental Degradation DO Development Objective DOE Department of Environment EIA Environmental Impact Assessment EIMS Environmental Information Management System EMSP Environmental Management Support Project FC Financial Controller FM Financial Management FMS Financial Management Specialist FY Fiscal Year FYDP Five-Year Development Plan GOI Government of Iran LAESR Institute for Applied Environmental Science and Research LC Letter of Credit IBRD International Bank for Reconstruction and Development IP Implementation Progress MIS Management Information System MNA Middle East and North Africa MPO Management and Planning Organization MTR Mid-Term Review NEC National Expert Committee NGO Non-Governmental Organization PCT Project Coordination Team PDO Project Development Objectives Rls Iranian Rials SA Special Account SC Steering Committee TA Technical Assistance TOR Terms of Reference WHO World Health Organization
iii
Vice President: Shamshad Akhtar
Country Director: Hedi Larbi
Sector Manager: Luis Constantino
Project Team Leader: Alaa Sarhan
ICR Team Leader: Alaa Sarhan
iv
ISLAMIC REPUBILC OF IRAN ENVIRONMENTAL MANAGEMENT SUPPORT PROJECT
CONTENTS
Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph
1. Project Context, Development Objectives and Design ............................................. 112. Key Factors Affecting Implementation and Outcomes ............................................ 163. Assessment of Outcomes .......................................................................................... 224. Assessment of Risk to Development Outcome ......................................................... 255. Assessment of Bank and Borrower Performance ..................................................... 256. Lessons Learned ....................................................................................................... 287. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 29Annex 1. Project Costs and Financing .......................................................................... 31Annex 2. Outputs by Component ................................................................................. 31Annex 3. Economic and Financial Analysis ................................................................. 36Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 37Annex 5. Beneficiary Survey Results ........................................................................... 39Annex 6. Stakeholder Workshop Report and Results ................................................... 40Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 41Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 48Annex 9. List of Supporting Documents ...................................................................... 49
MAP
v
A. Basic Information
Country: Iran, Islamic Republic of
Project Name: ENVIRONMENTAL MANAGEMENT SUPPORT PROJECT
Project ID: P074499 L/C/TF Number(s): IBRD-46880
ICR Date: 10/14/2009 ICR Type: Core ICR
Lending Instrument: SIL Borrower: GOVERNMENT OF THE ISLAMIC REPUBLIC OF IRAN
Original Total Commitment:
USD 20.0M Disbursed Amount: USD 7.2M
Environmental Category: C
Implementing Agencies: Department of Environment
Cofinanciers and Other External Partners: GOI B. Key Dates
Process Date Process Original Date Revised / Actual Date(s)
Concept Review: 06/11/2002 Effectiveness: 06/18/2003
Appraisal: 12/12/2002 Restructuring(s): 06/17/2007
Approval: 04/08/2003 Mid-term Review: 05/20/2006 11/26/2006
Closing: 12/31/2008 12/31/2008 C. Ratings Summary C.1 Performance Rating by ICR
Outcomes: Unsatisfactory
Risk to Development Outcome: Significant
Bank Performance: Unsatisfactory
Borrower Performance: Unsatisfactory
C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)Bank Ratings Borrower Ratings
Quality at Entry: Unsatisfactory Government: Unsatisfactory
Quality of Supervision: Unsatisfactory Implementing Agency/Agencies:
Unsatisfactory
Overall Bank Performance: Unsatisfactory Overall Borrower
Performance:Unsatisfactory
vi
C.3 Quality at Entry and Implementation Performance IndicatorsImplementation
Performance Indicators QAG Assessments (if any)
Rating
Potential Problem Project at any time (Yes/No):
No Quality at Entry (QEA):
None
Problem Project at any time (Yes/No):
Yes Quality of Supervision (QSA):
None
DO rating before Closing/Inactive status:
Unsatisfactory
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Central government administration 70 70
Sub-national government administration 30 30
Theme Code (Primary/Secondary)
Environmental policies and institutions Primary Primary
Participation and civic engagement Secondary Secondary
Pollution management and environmental health Primary Primary
Water resource management Primary Primary E. Bank Staff
Positions At ICR At Approval
Vice President: Shamshad Akhtar Jean-Louis Sarbib
Country Director: Hedi Larbi Joseph P. Saba
Sector Manager: Luis F. Constantino M. Salah Darghouth
Project Team Leader: Alaa Ahmed Sarhan Kanthan Shankar
ICR Team Leader: Alaa Ahmed Sarhan
ICR Authors: Adel Bichara Alaa Ahmed Sarhan Anthony J.Blackwood
F. Results Framework Analysis
Project Development Objectives (from Project Appraisal Document) Strengthen the capacity of the Department of Environment in Tehran, Isfahan, Markazi and Khorasan to monitor air quality, and in Khuzestan to monitor water quality.
vii
Revised Project Development Objectives (as approved by original approving authority) No formal change (see main text). (a) PDO Indicator(s)
Indicator Baseline Value
Original Target Values (from
approval documents)
Formally Revised Target Values
Actual Value Achieved at
Completion or Target Years
Indicator 1 : Routine and accurate collection of air quality monitoring data in the project area (number of air quality monitoring stations installed in project area and used appropriately to collect and analyze accurate data).
Value quantitative or Qualitative)
Ad hoc and limited information available on air quality in the project area.
49 NA
- 20 operational (44 purchased and 43 installed +one mobile station)
Date achieved 06/18/2003 08/20/2008
Comments (incl. % achievement)
Percentage achievement as far as operational stations are concerned is only 41%, although 90% of the equipment has been purchased. Installation hindered by the delays in obtaining necessary permissions and lack of electrical and phone networks whereas operation hindered due to lack of financial resources necessary for O&M.. Another 8 meteorological stations purchased but 4 only installed.
Indicator 2 : Routine and accurate collection of water quality monitoring data in the project area (number of water quality monitoring stations installed in the project area and used appropriately to collect, analyze and report accurate water quality data).
Value quantitative or Qualitative)
Limited information available on the water quality of the Karoun river
24. NA None.
Date achieved 06/18/2003 08/20/2008 Comments (incl. % achievement)
Zero achievement. Contracts awarded for 10 stations on Karoun and 19 stations for seven rivers in northern provinces. However, no equipment has been received as the LCs were not opened due to a host of difficulties.
(b) Intermediate Outcome Indicator(s)
Indicator Baseline Value
Original Target Values (from
approval documents)
Formally Revised
Target Values
Actual Value Achieved at
Completion or Target Years
Indicator 1 : Strengthening DOE institutional capacity. Value (quantitative
Limited capacity in environmental
- Environmental economics study
NA -2 studies prepared only
viii
or Qualitative) economics, EIA and environmental standards.
prepared and translated. - Standards on water and air quality revised. - Establish 2 EIA centers.
-No standards updated -No EIA Centers established
See comments.
Date achieved 06/18/2003 08/20/2008
Comments (incl. % achievement)
This Indicator was radically changed at MTR. Original targets have been replaced by new ones. No achievement against original target except the preparation of two studies. Three soil pollution atlases are on-going by DOE/Water and Soil Department.
Indicator 2 : Build partnership between DOE, NGOs and other institutions by developing joint environmental projects.
Value (quantitative or Qualitative)
Limited collaboration between DOE and other institutions and NGO.
Implementation of 4 environmental projects implemented by NGOs and 2 jointly by DOE and other institutions.
NA
Only one project awarded (see comments)
Date achieved 06/18/2003 08/20/2008
Comments (incl. % achievement)
Target was radically changed at MTR. Percentage achievement is not more than 10%. Progress: 1 project with an NGO is awarded; 1 workshop with NGOs provided; 1 workshop for NGOs to raise environmental awareness was completed; and 8 electronic billboards purchased (seven were installed).
Indicator 3 : Training and public awareness program.
Value (quantitative or Qualitative)
Limited public awareness programs.
- 30 training courses organized. - 2 TV clips prepared and aired. - Environmental publication printed & widely distributed.
NA
- A total of 19 training courses for about 1,000 participants were conducted. - 2 TV clips prepared but not yet aired. - CoED study completed and translated into Farsi- 167 CDs were completed. - 55,000 copies of publications prepared and distributed to stakeholders /children.
Date achieved 06/18/2003 08/20/2008 Comments Achieved not less than 95% of targets.
ix
(incl. % achievement)
G. Ratings of Project Performance in ISRs
No. Date ISR Archived DO IP
Actual Disbursements (USD millions)
1 04/28/2003 Satisfactory Satisfactory 0.00 2 10/27/2003 Satisfactory Satisfactory 0.70 3 04/09/2004 Satisfactory Satisfactory 0.70 4 10/19/2004 Satisfactory Satisfactory 0.70 5 03/18/2005 Moderately Satisfactory Moderately Satisfactory 0.91 6 11/18/2005 Moderately Satisfactory Moderately Satisfactory 3.98
7 03/30/2006 Moderately Satisfactory Moderately
Unsatisfactory 4.08
8 12/21/2006 Moderately Satisfactory Satisfactory 5.76 9 06/26/2007 Moderately Satisfactory Moderately Satisfactory 5.81
10 12/14/2007 Moderately Satisfactory Moderately Satisfactory 5.92 11 06/17/2008 Moderately Satisfactory Moderately Satisfactory 5.92 12 12/31/2008 Unsatisfactory Unsatisfactory 7.16
H. Restructuring (if any)
Restructuring Date(s)
Board Approved
PDO Change
ISR Ratings at Restructuring
Amount Disbursed at
Restructuring in USD millions
Reason for Restructuring & Key Changes Made
DO IP
x
I. Disbursement Profile
11
1. Project Context, Development Objectives and Design
1.1 Context at Appraisal 1. As part of the 2002/2003 Bank's re-engagement with the Government of Iran, a two-year Interim Country Assistance Strategy (CAS), covering April 2001 to April 2003, was presented to the Board in April 2001. The CAS placed emphasis on two main issues: (i) policy dialogue on the reform program through non-lending services; and (ii) targeted lending in social and environmental areas. Considering the priority given to the country's environmental problems, the interim strategy suggested that the Bank could assist the Government by supporting environmental monitoring and enforcement activities. The Environmental Management Support Project (EMSP) was the first in a series of interventions proposed under the Interim CAS. This approach also responded to MNA regional strategy of placing greater emphasis on institutional building and knowledge transfer. . 2. Air pollution in major cities such as Tehran, Mashhad, Isfahan, Tabriz, and Ahwaz exceeds the World Health Organization's (WHO) maximum allowable limits by 40 to 340%, and the quality of rivers and groundwater is deteriorating. In Tehran, as an example, schools are frequently closed and residents are asked to remain indoors due to the health risks of heavy air pollution. The Karoon River’s water quality, with 30% of Iran’s surface water resources, has been deteriorating at an alarming rate due to pollution from untreated municipal wastewater, agricultural drainage and industrial effluents. In addition to serious impacts of water pollution on human health, substantial costs are incurred to treat water and to transport cleaner water from distant sources. 3. Environmental protection is embedded in the country's constitution. At the time of appraisal, the Third Five-Year Development Plan (FYDP) (2001-2005) placed high priority on reducing pollution and preserving the country's natural and cultural resources. In particular, air pollution was to be reduced to meet WHO standards in the cities of Tehran, Mashhad, Tabriz, Ahwaz, Arak, Shiraz and Isfahan. 4. The Supreme Council on Environmental Protection (SCEP, chaired by the President of Iran) is responsible for policy-making and intersectoral coordination.1 The Department of Environment (DOE), with a seat on SCEP, is the regulatory agency in charge of formulating environmental policies, by-laws, regulations and standards for consideration by the Environmental High Council and other government bodies. The DOE is responsible for research; environmental planning, monitoring and enforcement; and for environment-related public awareness and training. Inadequate monitoring and limited
1 It is comprised of the Ministers of Jehad-Agriculture, Industry and Mines, the Interior, Housing and Urban Development and Health and Medical Education; the Heads of the Management and Planning Organization, the Department of Environment (DOE), and four experts recommended by the President of the Islamic Republic of Iran
12
enforcement capacity, however, were seriously undermining the DOE's ability to protect public health and natural resources. 5. Experience in environmental TA projects had shown that broad-based and untargeted environmental management capacity-building initiatives had yielded less than satisfactory results and that stand-alone technical assistance did not work well. Hence, the project piloted targeted interventions (focused technical assistance, procurement of air quality and water monitoring stations and extensive training) which could be scaled up. Lessons Learned from Previous Operations: 6. The project was the first fully fledged environmental project assisted by the Bank in Iran. Nevertheless, the earlier Irrigation Improvement Project had several activities, mainly studies, implemented in cooperation with the DOE. The project design tried to reflect the lessons learned from this irrigation project and from Bank operations worldwide. For example: i) Prioritization: A rapid institutional assessment during preparation suggested two main areas of intervention – capacity-building in monitoring, and participatory environmental investments in air and water quality management; ii) Complex Design: recognizing the impact of local agency capability constraints, the project was designed to be within the capacity of DOE; iii) Fiduciary Aspects: Given past implementation problems, financial and procurement risk assessments were undertaken, leading to the recruitment and training of procurement and financial management staff; and iv) Capacity Building Interventions with Investments: The design intended to anchor capacity building activities through investments – to show results on the ground, to build partnerships and to enhance the creditability of the DOE.
1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 7. The proposed project was expected to be the first phase of longer-term assistance to the Government of Iran (GOI) to improve environmental management. The project objective (drawn from the Project Appraisal Document - PAD) was to enhance the capacity of the DOE to monitor air and water quality through pilot targeted interventions in five provinces: air quality in Tehran, Isfahan, Khorasan, Markazi and water quality in Khuzestan.2 It was expected that these interventions would in due course be scaled up, through a programmatic approach, to cover more provinces. 8. The project’s key outcome indicators in the PAD were: (i) development of joint inter-ministerial strategies and investment programs to reduce the impacts of air and water pollution; (ii) availability of timely and accurate information to the public on air and
2 For unknown reasons, the PAD’s PDO specified the air quality monitoring areas by “provinces”: Tehran, Isfahan, Khorasan [capital Mashhad] and Markazi [capital Arak], whereas the legal documents did not specify the project area in the PDO, but in describing the components listed “cities” (with the same names) as comprising the project area.
13
water quality and (iii) beneficiary surveys that show increased understanding by stakeholders and the public of the DOE's role in protecting public health and well-being. 9. A lack of consistency can be seen between the PDO and these indicators which were intended to track progress and results.3 A set of indicators which is more representative of the project description, based on components of the project, was specified in a supplemental letter (May 13, 2003) to the Loan Agreement (LA). These indicators were used during supervision to monitor progress and are the basis of this performance assessment (as detailed next and in Table 1).4 10. As shown in the Data Sheet above, F. Results Framework Analysis, the PDO Key Indicators became:
(i) Routine and accurate collection of air quality monitoring data in the project area; and
(ii) Routine and accurate collection of water quality monitoring data in the project area.
(iii) Strengthening DOE institutional capacity; and
(iv) Build partnership between DOE, NGOs and other institutions by developing joint environmental projects .5
1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 11. Changes agreed during the Mid-Term Review (MTR) in 2006 expanded project coverage by adding two cities (Shiraz and Ahwaz) for air quality monitoring and extending water quality monitoring to seven other rivers.6 In contrast, reflecting slow progress at that date, five of the nine targets of the key indicators were reduced, with one increased given the larger project area (see sections 1.6 and 3.2, Table 1). Thus, the PDO in the PAD (which specified the project area) changed although the less specific PDO in the Loan Agreement (which did not identify the project area) was not changed. At that
3 Nor did these PAD indicators correspond well with the components of the project which show how loan funds were to be spent. Moreover, the indicators in the PAD’s Annex 1 were different and contained an error: (i) institutionalization of routine and accurate data collection, interpretation and reporting of air and water quality in the project areas; [(ii) omitted] (iii) public accessibility of up-to-date data on air and water quality in the five provinces; (iv) enhanced perception of the DOE's role in protecting human health and well being; (v) development of targeted strategies and programs for reducing the adverse health impacts of air and water pollution. Such drafting looseness was the subject of comments during reviews, but was not fully corrected. 4 These differences are significant and are noted here as indicators of early quality issues and to be clear on what design framework was understood by the parties during implementation and to identify the outcome baseline for this assessment. 5 The last two of these indicators are listed as Intermediate Outcome Indicators in the Results Framework, but might have served as PDO indicators just as well. 6 Both changes were at the request of the Iran authorities.
14
time formal restructuring (i.e., approved by the Bank’s Board) of the project was deemed unnecessary by managers. 1.4 Main Beneficiaries 12. The PAD did not discuss the beneficiaries of the project but by inference they were expected to be the institutions being strengthened and the public in general. Public support for pollution mitigation was to be encouraged by promoting wider awareness of pollution issues. In particular:
(i) DOE would be better equipped and trained to monitor air pollution in the project area and water pollution in the Karoon River Basin;
(ii) key decision-makers would have access to more reliable pollution information;
(iii) the public would be better informed on air and water pollution issues, and mitigation behavior would be encouraged;
(iv) public institutions responsible for monitoring and enforcing environmental regulations would be strengthened;
(v) provincial DOE offices would be better able to respond to pollution problems;
(vi) DOE, including provincial offices, would strengthen their partnerships and improve coordination with line ministries;
(vii) municipalities would enhance their capacity to respond to public demands for attention to air and water pollution; and
(viii) NGOs would play an increased role in air and water quality management and monitoring.
1.5 Original Components 13. The components as approved were: Component 1: Strengthening Institutional Capacity to Monitor Air and Water Quality (US$13.4m.). Capacity building for provincial DOE offices in Tehran, Isfahan, Khorasan, Markazi, and in Khuzestan, supported by five sets of activities:
(i) Mainstreaming environment into sector policies and programs (US$0.78m.). Mainly technical assistance, analytical studies, establishment of a Policy Planning Unit in DOE, and training for government officials, universities, the private sector and NGOs;
(ii) Improving the legal and institutional framework governing air and water quality management (US$0.59m.). Diagnostic assessments; updating of the institutional and legal frameworks consistent with standard international practices; updating quality standards for water and air pollution; studies on economic incentives and dissemination through stakeholder training.
15
(iii) Strengthening the capacity of the Environmental Impact Assessment (EIA) units (US$0.31m.). Consolidation of EIA in central and provincial offices, and establishment of EIA units in Mashhad and Isfahan DOE offices.
(iv) Establishing an environmental management information system (US$0.70m.). Establishing an electronic information network and improving DOE’s capacity to analyze data and provide information to decision-makers.
(v) Supplying air and water quality monitoring equipment (US$11.02m: Financing 49 air quality monitoring stations and 24 water quality monitoring stations, with related facilities, systems and training.
Component 2: Building Partnership through Pilot Environmental Projects (US$2.50m.). Strengthening DOE's partnerships with line ministries, municipalities, universities and civil society organizations by financing joint pilot environmental subprojects on a demand-driven basis. Component 3: Training and Public Awareness Programs to Improve Air and Water Quality (US$3.80 m.).
(i) Strengthening environmental training in air and water quality (US$1.28 m.). Support for the Institute for Applied Environmental Science and Research (IAESR) within the DOE toward improving the performance of public sector personnel and NGOs involved in the management of water and air quality activities and provide technical degree programs for high school graduates.
(ii) Undertaking environmental public awareness programs (US$2.52 m.). Strengthen the DOE's capacity to undertake public awareness campaigns on air and water quality issues to encourage mitigating behaviors; preparation of TV clips, radio programs and mass publications; and a survey to evaluate the effectiveness of the outreach program.
Component 4: Project Management and Coordination (US$1.40 m.). Incremental operating costs of the Project Coordination Team (PCT) within the DOE; equipment; training in project management, procurement and financial management; and preparation of a follow-up environmental project.
1.6 Revised Components
14. At the MTR, although disbursements were only 25% of targets when about 60% of the project period had elapsed, the changes made not only reduced the scale of some activities, as might be expected, but also expanded other activities and the project area. The main changes were: i) limiting the institutional and legal component of the project to the preparation of two policy studies and environmental standards; ii) strengthening the Environmental Impact Assessment (EIA) activities under the project; iii) developing an Environmental Management Information System (MIS) for Khuzestan (only) as a first step (to be expanded to another five provinces including three northern ones if successful; iv) increasing the air quality monitoring stations from 49 to 62 to include two additional cities (Shiraz and Ahwaz), v) reducing the number of water quality stations from 24 to
16
10; vi) expanding the online water monitoring network to include seven additional rivers in the Northern Provinces; and vii) reducing the number pilot projects with line ministries, municipalities and NGOs and associated training activities.
15. The Loan Agreement was amended in June 2007 to reallocate proceeds of the Loan and take into account the changes agreed at the MTR. Category 1 (Works) was increased from $50,000 to US$560,000; Category 2 (Goods) was increased from US$9.8 million to $15.0 million; Category 3 (Consultants. Services, training and workshops) was decreased from US$6.55 million to US$2.8 million; and Category 4 (Incremental operating costs) was increased from US$0.27 million to US$1.24 million. Parts of the Loan Agreement were revised to facilitate the procurement process for goods and the employment of consultants, based on experience gained during implementation.
1.7 Other significant changes None
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry 16. With the hindsight from the project’s implementation experience, it is apparent that design weaknesses handicapped the project from the outset. The key points are:
(a) The project was too complex and unfocused, despite being cut back and simplified in response to comments during processing, with too many activities and objectives across too many institutions. There were studies and assessments, administrative units to be created, air and water quality monitoring stations to be installed, publications to be prepared, training and outreach to be planned and carried out, and pilot investment projects jointly with line ministries and NGOs;
(b) Project design quality was adversely affected by pressure to speed up processing, despite the project’s key significance as an ice breaker for Bank/Iran relations after a period of lending hiatus and the many comments received by the team requiring substantial changes to the design, the region’s operation’s committee asked for faster processing and the team shortened its schedule accordingly (from concept review to appraisal took six months).
(c) Commitment to the project by government was an issue from the start, with requests to the team to “solidify commitment”, although the project had been requested by government (commitment strength was raised at the board discussion);
(d) The complicated implementation arrangements needed for this wide range of activities was insufficiently investigated and understood;
(e) Implications of inter-agency relationships, especially with the lead agency DOE at the sub-ministerial level, and the inherent constraints on cooperation between line ministries, municipalities and NGOs were not sufficiently assessed nor understood;
17
(f) The financial risk assessment carried out at appraisal failed to anticipate the difficulties of implementing the project under the prevailing administrative conditions in the country. The establishment of LCs was delayed due to exogenous factors;
(g) Institutional capacity assessment of DOE was inadequate, such that its operational constraints were neither appreciated nor addressed sufficiently and improvements assured (especially management of a large number of diversified activities and cooperating with many line ministries and municipalities);7
(h) Channeling all funds through DOE made it difficult to enlist participation of other entities in joint investments, both peer entities and even ministries which were of higher rank than DOE. 8 This design flaw is particularly hard to understand as the Bank has long been familiar with the implementation problems that can be caused by flat project organization structures which require cooperation on a collegial basis rather than in a command structure;
(i) Inconsistencies in the PAD and legal description of the project and related indicators, including within the PAD itself, gave different signals on the priorities and on how progress would be monitored and results assessed. For example, the Aide Memoire of the November/December mission of 2006 uses the indicator framework in the supplemental letter to monitor progress, while ignoring the quite different PAD indicator set, without explanation. This confusion is likely to have contributed to later misunderstandings between the parties. 9 The project’s complexity compounded the problem;
These issues led to major delays in project implementation, to cancellation or reduction of some proposed activities and to slow disbursements of Loan funds. However, besides implementation factors discussed next, an overriding point at the beginning was that both the Borrower and the Bank initiated the operation with insufficient understanding of the procedural requirements and constraints of the other partner.
2.2 Implementation 17. Implementation of the project was handicapped by the stop-and-go nature of the country/Bank relationship as well as the difficulties in establishing the LCs. Furthermore, there were the repercussions of a change of government half way along, and a broad combination of factors relating to both support for and commitment to the project, and several process issues including the reluctance of international suppliers to participate in project bidding. Once issues emerged, the uncertain status of the renewed relationship between the Bank and the government inhibited the Bank from taking bolder actions that might have led to improved performance. In the absence of strong cooperation toward meeting project objectives, these problems mostly could not be resolved and continued as
7 Partly this was a result of DOE’s own decisions as noted later in this report, but also the Bank failed to take full note and act on its experience in many environmental projects where a major constraint was weak environmental institutions with low rank in the political and bureaucratic power structure. 8 Thus the institutional benefits of such joint enterprises could not be realized. 9 The ICR mission was advised as such in discussion with project authorities.
18
constraints throughout. A common problem seems to have been unfamiliarity in some agencies with the Bank’s processes and procedures, to which GOI had agreed, and on the Bank’s part, insufficient attention to providing information and coaching to overcome such knowledge gaps. A Project Launch Seminar provided some training, but did not cover Bank processes adequately, especially procurement and financial management. Main factors are summarized as follows.
(a) Bank/Iran relationship constraint on project-specific actions: At the end of a long hiatus in the relationship between the country and the Bank, the project was proposed as the first new lending to re-engage in Iran. However, over the course of implementation, the relationship between the Bank and government was sometimes strained, and as such project issues often did not get the forthright attention that they deserved in the context of their importance to project success, and Bank/country communications on project issues were muted (as a review of routine correspondence revealed). Furthermore, the relationship was put under even greater pressure when there was a government change at elections in mid-2005, which with increasing oil revenues saw, the Bank-funded project lose priority in government circles. These factors were compounded by more project-specific constraints, as next described.
(b) GOI support for the project: Two distinct project personnel factors affected project implementation progress. First, even though commitment at the highest level was strong early on, the pace of project implementation throughout was largely determined by the performance of GOI’s key staff, especially the financial controller (housed in DOE premises). This unit failed to support the project fully and was slow to resolve issues hindering its progress. Bank actions to overcome this institutional constraint included holding several teleconferences with PCT staff as well as agreeing on lists of remedial measures, but these initiatives had limited success. Second, the change of government in September, 2005 led to appointment of new officials in key positions who had less commitment to the project, both reflecting Iran’s global perspective at the time and that sharply rising oil revenues undermined justification for the Bank loan. As a result the project was not implemented with any great urgency and what should have been minor issues often became major constraints on progress.
(c) PCT management and staffing: Due to local restrictions on hiring, only six of the nine specialists agreed at appraisal were hired, and thus PCT remained understaffed. Consequently the PCT was weakened and could not provide sufficient staff inputs on most activities, e.g., such as for follow-up on studies completed to make use of them, on the installation and operation of air quality monitoring equipment, and on coordination with stakeholders. The inability to retain high caliber procurement officers on a permanent basis constrained procurement throughout. When management of DOE changed after the change of government, experienced staff was lost to the project. Changing the main
19
members of the PCT just before the Mid-term Review was particularly inconvenient.10
(d) DOE institutional strengthening objective: DOE’s decision in 2006 not to engage the technical assistance team (intended to strengthen DOE’s institutional capacity) was a missed opportunity. In good measure that change accounts for early performance issues not being corrected, and greatly weakened the overriding capacity focus of the project’s development objective.
(e) Process and procedure constraints: These included (i) strict and lengthy financial procedures which resulted in greatly delayed payments (several times in 2005 and 2008) to PCT members (salaries), and to contractors and consultants; (ii) reluctance to abide by the World Bank’s standard procurement and disbursement procedures; and (iii) the proportionality of payments between the loan and counterpart funds resulted in delays due to the late availability of counterpart funds at the beginning of the Iranian FY.
(f) Procurement difficulties: Procurement of equipment, especially the water quality monitoring stations, proved to be difficult, sometimes due to unforeseen technical issues (e.g., the change in signal transmission mode), due to delays in obtaining permits for electrical and telephone lines, to financial bottlenecks (difficulties in opening LCs causing further procurement and disbursement delays) and to lack of interested suppliers. There were difficulties particularly in dealing with local and international suppliers for the water quality equipment. Also, personnel hired and trained in procurement were not always of high caliber or available when required given government restrictions on hiring and the difficult operating environment in Iran at the time.
(g) Inter-agency cooperation: Limited cooperation by the line ministries and municipalities with DOE, which may have been attributable largely to DOE’s sub-ministerial rank and that project funds were centralized in DOE (the planned financial transfers between the DOE and partnering institutions did not occur), weak ownership of the project, and lack of an inter-agency steering committee.
(h) Pilot projects: Ministries and municipalities were reluctant to implement pilot projects when DOE controlled the funds. Fewer than expected projects were proposed with NGOs and only one was awarded. This seriously constrained both the development of the proposed partnerships strategy and the accumulation of experience that was expected from implementing such pilot environmental sub-projects.11
(i) Tehran MIS: this activity was not pursued under the project when another project stepped in.
10 The morale of PCT staff was affected by salary caps, some being put on to a part time basis, and eventually by lack of pay for eight months from March 2008. 11 Implementation of environmental improvements during projects such as EMSP (directed mainly at enhancing environmental management capability) has been identified as a key ingredient of similar Bank-assisted environmental interventions.
20
(j) Specification change: the Ministry of Telecommunications changed the transmission mode for monitoring stations from telemetry to satellite after procurement of related equipment was already under way;
(k) Bank supervision and follow up was inadequate in volume and of mixed quality: Supervision missions were not carried out on a regular basis (due at to both staff shortages associated with an internal reorganization and, for one critical mid period, health constraints on travel by the task leader), although the Bank tried to keep regular contact with the DOE team through phone calls and emails.12 The early recommendation (October, 2004) by a manager, who participated in a mission and saw the project as “labor intensive”, for supervision “at intervals of three-months or less” was not acted on (with no explanation found). There were only two full missions over the next 26 months. Mission intervals averaged six months overall, even when including less than full missions in the count, and only half the missions were led by the regular task leader. Reporting was inconsistent, with only half the missions filing a prompt formal status update and half the formal status reports being “desk updates” without a mission.13 Consequently, the Bank did not correctly and promptly assess implementation problems and did not take sufficient action towards resolving problems, for example by bringing constraints caused by unwarranted controls to the attention of higher levels of the Government. Lack of sufficient Bank follow-up may have been partly attributable to performance ratings remaining in the satisfactory range for most of the period, despite serious implementation issues. The pattern was set by the first field supervision mission in December 2003, which reported (four months later) a number of serious issues, but gave Satisfactory ratings across the board and “modest risk”. 14 It was March 2005 before a downgrade to Moderately Satisfactory appears, with the one Moderately Unsatisfactory (for implementation progress) in March 2006. More realistic ratings would have attracted management attention and action earlier, with the two Unsatisfactory ratings for outcome and implementation progress in December 2008 coming too late.15 Also, country relations considerations may well have tempered management communications on critical issues (for example, it was not until near the end that management letters even mentioned pending problems, being satisfied with pro forma courtesies and bland comments on purported progress or expectations of progress).
12 Given the continuous implementation problems, the frequency of field supervision missions was especially inadequate over later years, with only three full supervision missions between 2006 and 2008, i.e., one mission a year. 13 Even so, when missions did occur and reported, the level of detail recorded in the files is impressive, and missions generally left behind in their aide memoires a remarkably specific list of next steps (sometimes running to 30 to 40 items) which project staff could have readily followed to accelerate progress if stronger commitment had existed. 14 Bank comments often struck an unwarranted optimistic note, with references to progress being made and disbursements expected to increase, capped by the June, 2007 assessment that the “project is progressing toward meeting its development objective”. 15 Without explanation, the “system generated” disbursement warning flag was never raised, and the country record flag flew on only three occasions – between March 2005 and December 2007.
21
(l) Adjusting for poor performance: The MTR (December 2006) took place six months later than originally scheduled, despite a large implementation lag, to allow more time for the new team of Iranian managers to familiarize themselves with the project. At this time the Bank determined that the project development objectives were still valid and that there was no need for a formal project restructuring (although as noted earlier, new Bank procedures suggested otherwise).16 Nevertheless, the Bank suggested and GOI agreed to some major changes to the project’s sub-components (as detailed earlier). Subsequent experience suggests that formal restructuring and cancellation of some of the Loan proceeds would have been a better choice at that time, and indeed was mentioned in writing by the Bank Team as a possibility. Thus in June, 2006 the agreed Remedial Action Plan recorded in the aide memoire aimed “to avoid major project restructuring during the MTR”.17
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 18. The project had a detailed M & E plan comprising Bank supervision missions, beneficiary impact assessments, financial and procurement audits, and project status reports. This M & E plan was part of the Project Implementation Plan given the central role M&E plays in these types of projects, but the project did not attach priority to implementing this plan. The National Advisory Committee and the provincial Steering Committee were expected to monitor progress and provide advice on project implementation, but neither committee was established. Other M & E tools envisaged technical reviews by independent consultants hired by the PCT, on the establishment and operation of the air and water quality monitoring stations, but none were hired. The PCT was also expected to hire consultants to conduct annual beneficiary impact assessments to monitor key output indicators, but did not do so. 19. Progress reports including Procurement Planning were prepared on an ad hoc basis. The PCT did not have staff solely dedicated to M & E, therefore monitoring was carried by the PCT coordinator with the help of core staff (procurement and financial specialists). In short, the project did not attempt to carry out any systematic evaluations.
2.4 Safeguard and Fiduciary Compliance 20. Initially, project FM performance was weak, however with Bank support capacity was upgraded and the project complied with FM requirements most of the time. The project introduced new Financial Management practices to the DOE. The loan was DOE’s first experience of foreign currency financing and exchange differences. To
16 “Formal” implies that the PDO and/or associated outcome targets are changed, requiring approval by the Bank’s Board. 17 Reviewers of this report in draft queried whether there should have been at his time consideration of cutting back, rather than expansion, and even cancellation. However, that was far from the mood in the Bank at that time, which noted after the MTR in December 2006 to the government that “The project development objective is being met. ….. Based on the progress made to date ….. the team has upgraded the project from unsatisfactory to satisfactory.”
22
facilitate the reporting aspects of the project, the financial reports were prepared independently from DOE’s financial department. 21. However, relations between the project unit and the Financial Controller18 were not always smooth and this had direct impact on the project’s FM performance. Also, the payments of PCT salaries were irregular at times which did not help motivation towards the project and FM requirements. 22. Bank audit guidelines and scope were introduced to the external auditor assigned one year into the project’s life. The project audits initially had qualifications, but these were soon dealt with and eliminated. Throughout the project’s life the FM ratings ranged between Moderately Unsatisfactory and Satisfactory. 23. To ensure full compliance with the Bank procurement guidelines, the Bank’s standard bidding documents were used, but still ex-post procurement reviews found procurement compliance to be moderately unsatisfactory. DOE, Financial Controllers (FCs) and the PCT had to become familiar with the Bank Procurement Guidelines versus the country’s systems, and to find ways to resolve any conflicts through mutual cooperation. Staff turnover, caused by local regulations, and three different FCs reduced familiarity with Bank procedures. Better management of procurement with timely acquisition of the required permits would have contributed to improved implementation.
2.5 Post-completion Operation/Next Phase 24. Most of the project funds have gone towards procurement of air quality monitoring stations, studies, training, and awareness campaigns. At Loan closing much remained to be done to make the physical assets operational.
DOE capacity strengthening: the lost opportunity to strengthen DOE’s institutional capacity – by failing to engage the planned technical assistance team – has contributed to uncertain prospects for effective post-completion operations.
Air quality stations: Only 20 of 43 installed air quality stations were operational. The remaining stations are expected to become operational once the issue of O&M costs are resolved between Central and Provincial DOE. DOE provincial staff has been trained on several occasions on the O&M of such equipment and on the interpretation and analysis of data. The training courses for stakeholders, as well as the large number of publications distributed to a wide variety of stakeholders, are expected to have a lasting effect.
Meteorological stations: only four were installed (eight were purchased) though not operational. It is expected to install the remaining stations as well as commission the already installed ones once the administrative procedures and understandings between DOE and the supplier have been finalized.
18 Even though there were three different Financial Controllers (FCs) throughout the project life, the relationship between the FCs and the PCT has not had any significant change.
23
Water quality monitoring stations: Despite awarding contracts for 29 stations, no LCs were opened and DOE’s further intentions are unclear.
Soil Atlases: The three that were contracted out have not yet been delivered and their status is also unclear (the Water and Soil Department at DOE is responsible for following up).
25. It was agreed during the last supervision mission of August 2008 that the different project activities would be integrated into the respective DOE departments, which has occurred. To facilitate such integration, an advisory committee consisting of the directors of the respective departments was be created and was to oversee the implementation of the activities, involving the staff in the monitoring, follow up and transfer of knowledge generated by the project. However, the advisory committee has not been created. 26. No follow-up project for Bank assistance is envisaged at present.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation 27. Since the project objectives addressed some of the country’s most urgent environmental pollution problems and sought to strengthen environmental management institutions, they were and still are highly relevant. This was reflected in the country’s strategic policies and in the FY01-FY03 CAS priorities.
3.2 Achievement of Project Development Objectives
28. The project’s design flaws and constraints on implementation outlined in section 2 above resulted in generally poor progress toward achieving the project objectives, and the changes introduced at the MTR were ineffective in reviving the project. The details of achievements are in the Data Sheet’s Results Framework and are summarized here for convenience.
1. Routine and accurate collection of air quality monitoring data in the project area: With only 20 stations operational out of 49 planned, this key activity is well down on its target (41%), although 90% of the equipment has been purchased.
2. Routine and accurate collection of water quality monitoring data in the project area: No water quality monitoring stations have been purchased such that achieving this objective is far off.
3. Strengthening DOE institutional capacity: Plans were changed radically at MTR but little has been achieved compared with original intentions.
4. Build partnership between DOE, NGOs and other institutions by developing joint environmental projects: This target was also radically changed at MTR, with only about a tenth of the plan realized.
24
5. Training and public awareness program: This was the one area of significant results. Activities were pursued successfully such that achievement is estimated at not less than 95% of plans.
29. In support of the outcome assessment, details of project outputs and the issues constraining achievement of objectives are in Annex 2 and Table 1 summarizes the main quantities. Table 1 also records the quantitative changes made at MTR, although in the absence of formal revision of PDO targets (approved by the original approving authority), World Bank evaluation criteria require assessment against original targets (ICR Guidelines, Appendix B). Table 1 Outcome Indicators – Targets and Achievements
Activity (numbers 1-5 correspond to the five indicators in the Results Framework)
Outputs Percentage Achievement
(against Appraisal
target) Appraisal
Revised (MTR)
Actual (at closing)
1. Air quality monitoring stations (operational) 49 62 20
(43 installed) 41%
2. Water quality stations (operational) 24 10 0 None
3. Strengthening DOE Institutional Capacity 3a.Policy Units created
1
1
1
100%
3b.EIA Units created 2 1 0 None
3c.MIS installed 3 1 1 33%
3d. Environmental studies & technical/legal reviews 9 5 2 (+3 underway) 22%
4. Pilot Project expenditure with line ministries & NGOs $2.5m. $1.4m. $1.4m.19 56%
5. Training and Public Awareness 5a.TV and radio spots
10
10
2 (not yet aired)
20%
5b.Training courses and workshops 36 28 19 53%
3.3 Efficiency (Net Present Value/Economic Rate of Return, cost effectiveness, e.g., unit rate norms, least cost, and comparisons; and Financial Rate of Return)
19 Only 1 project with municipalities (air quality billboards not yet operational and only 1 project awarded to an NGO.
25
30. Projects of this type do not attempt to quantify efficiency with cost benefit analyses, but in this case it is clear that financial and implementation efficiency was poor. The constraints on implementation described above, some of which were process related or reflected changed priorities, led directly to resource inefficiencies. Capital has been invested in equipment without the equipment yet being put to work as intended. Hence, overall the project is assessed as performing unsatisfactorily in terms of efficiency.
3.4 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs, and efficiency) Rating: Unsatisfactory
31. At project closing, the overall outcome of the project is rated Unsatisfactory, based on relevance, efficiency and the outcome analysis in the Results Framework as summarized above. Although the project objectives are still highly relevant, the weak attempt to follow through on implementation, and the resulting major shortcomings on outcomes with much left to do, fully justify the Unsatisfactory rating.
3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 32. One of the main impacts of the project was better public awareness of air and water pollution issues, which issues have direct poverty and health implications. A large number of training activities were undertaken. About a third of the training efforts were directly on the poverty and health implications of pollution. Public awareness was also raised by the distribution of a large number of books, publications, pamphlets and VCDs, as well as the production of TV clips which will be aired. (b) Institutional Change/Strengthening 33. DOE personnel in Tehran and the five provinces were trained on a wide range of subjects (about 7 themes). Training was also given to personnel in line ministries, local government, universities and NGOs. (c) Other Unintended Outcomes and Impacts (positive or negative)
None.
4. Assessment of Risk to Development Outcome Rating: Significant 34. The risks to the development outcome are rated Significant, based mainly on the failure to implement the project’s original key activities (establishment of accurate air and water quality monitoring), which suggests that commitment to completing monitoring stations, maintaining them in operation and sustaining what was achieved
26
may be weak. The O&M of the installed air quality monitoring stations depends on continuous financial support by DOE and training of staff. DOE’s staffing performance during the project was unsatisfactory.
5. Assessment of Bank and Borrower Performance
5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Unsatisfactory. 35. Section 2.1 details significant design weaknesses that indicate that, taken together, from the beginning the project was severely handicapped. Most of these weaknesses can be traced to faulty judgment and over-ambitious expectations of what could be achieved in the special circumstances of the Bank/Iran relationship at that time. In particular the Bank overestimated DOE’s capability to handle large number of activities and underestimated the difficulties of getting the line ministries and the municipalities to cooperate with DOE (while all funding remained under the direct authority of DOE). From long experience, that last key issue was well known and understood in the Bank elsewhere. Despite the financial risk assessment carried out at appraisal, the Bank failed to appreciate the difficulties of implementing the project under the controlling entities special to Iran. Later events proved that the Bank had not adequately established the commitment of different government entities to the objectives and the implementation requirements of the project. (b) Quality of Supervision Rating: Unsatisfactory. 36. Supervision by the Bank did not fully respond to the needs of the project, especially when it became clear that implementation was falling behind and serious problems started to emerge. Supervision missions were not frequent enough, although the Bank tried to keep regular contact with the DOE team through phone calls and emails. The Bank was slow to identify implementation problems and then did not adopt bold remedial measures, possibly partly because concerns for preserving the whole relationship took precedence over stronger action to resolve issues on a single project. As raised already, while this was happening the project was rated Satisfactory or Moderately Satisfactory for PDO and Implementation Progress on 11 occasions (remarkably, up to June 2008), with only one Moderately Unsatisfactory rating for IP in 2006 (see Data Sheet, G.). This suggests a consistent pattern by the supervision team of supporting greatly inflated ratings, which was not corrected by managers, and probably contributed to a lack of urgency to resolve problems.20 As implementation began to slip, especially as in-country
20 After ratings dropped below Satisfactory, Bank communications with the project authorities refer to the performance ratings in urging implementation actions to improve ratings, especially after the Moderately
27
commitment weakened, much more active intervention by the Bank was needed to stop the slide or at least to minimize the inefficiencies arising. 37. The late changes to the design at MTR were in hindsight impractical and were not implemented. Although changes were made to the project design and to expenditure allocations, cancellation of Loan proceeds (given low disbursements), or suspension of disbursement as means of getting the project back on track, did not occur.21 However, as noted earlier, there were a number of external factors which affected project performance over which the Bank had no control, including the banking difficulties, and the Bank’s concern to reestablish a productive working relationship with Iran was a major consideration most probably affecting its actions on project issues. (c) Justification of Rating for Overall Bank Performance Rating: Unsatisfactory. 38. The Unsatisfactory rating for overall Bank performance reflects the ratings given to Bank performance in ensuring quality at entry and for the quality of supervision, reflecting major shortcomings. In particular, once the design weaknesses began to emerge as implementation slipped, the response of the Bank was inadequate.
5.2 Borrower Performance (a) Government Performance Rating: Unsatisfactory. 39. Despite that the GOI and the DOE top management were supportive of the project and in-country ownership was thought to have been established at the identification, preparation and appraisal phases, discussion above has outlined the several ways in which that original level of commitment did not sustain through to implementing the project according to agreed plans and processes. GOI through its Financial Controller (located in DOE premises) failed to support implementation vigorously and to quickly resolve issues hindering its progress.22 Indeed, as discussed in section 2.2, some actions of key agents contributed to complicating and undermining implementation. (b) Implementing Agency or Agencies Performance Rating: Unsatisfactory.
Unsatisfactory rating for implementation in March, 2006, but starting with first mission’s blanket Satisfactory ratings for a project in difficulty, the ratings did not fall sufficiently to signal adequately the seriousness of problems 21 Although, as already noted, the possibility of restructuring and cancellation of funds had featured in the dialogue with project authorities. 22 Replacing the Financial Controller twice during implementation should have provided opportunity to correct any issues concerning this key position, but also would have had continuity costs.
28
40. Reference to section 2, where factors affecting implementation and outcomes are discussed, provides details on aspects of agency performance as they impacted the project. DOE was closely involved in project identification, and was committed especially to the establishment of the air and water quality monitoring systems. However, when it came to implementation, and the many activities it was expected to manage, it suffered from understaffing and staff changes which further constrained its efforts, and, as was noted above with respect to Bank performance, there were complicated banking arrangements which gave rise to further difficulties for the Iranian authorities in implementing the project. This related especially, as described above, to PCT insufficiently monitoring and following-up on almost all the key activities of the project. The performance of other ministries and NGOs on partnership aspects of the project (in joint sub-projects) was essentially moot as few such activities occurred, largely through unwillingness to cooperate as planned. (c) Justification of Rating for Overall Borrower Performance Rating: Unsatisfactory. 41. The rating of Unsatisfactory reflects Government performance and the Implementing Agency performance ratings above and acknowledges major shortcomings which led to the unsatisfactory outcome of the project.
6. Lessons Learned General Lessons:
i) Choice of project in special situations: The type of intervention chosen and its design in special situations, such as when reopening a Bank/borrower relationship, should be simple and not too demanding on the borrower and its agencies.
(ii) Early restructuring: When major changes in project activities are required, a prompt formal restructuring of the project is preferable to later changes which may come too late to affect outcome.23
ii) Bank options when a project stalls: The Bank should use the possibility of suspending disbursements or canceling funds to encourage prompt remedial measures, when, (a) a Government and/or the implementation agency are failing to efficiently implement a project due to internal institutional, administrative and financial problems, and (b) Bank regulations and guidelines are not being followed.
23 Early restructuring also improves the final outcome performance rating through weighting of performance before and after restructuring (see ICR Guidelines).
29
Project-Specific Lessons:
i) Matching agency implementation capacity: Scope and scale of a project should be well within the implementation capacity of key agencies, especially when prior Bank experience with the implementing agencies is lacking.
ii) Hierarchy and project organization structure: where the flow of funds and project activities involve a number of entities, project organization and the channeling of funds must reflect command structures rather than expect peer coordination on a collegial basis to be a sufficient mechanism for efficient implementation.
iii) Resolving project implementation issues: Resorting to the highest level of the Government may be necessary when a combination of constraining factors is outside the competence and reach of implementing agencies alone.
iv) Supervision resource management: Once it is clear that project’s activities are lagging, more frequent and stronger supervision missions, with adequate managerial support, should be undertaken.
v) Realistic project performance ratings: Managers should take special care to ensure that project performance ratings in supervision reports correctly reflect project status, since inflated ratings can convey a false sense of project well-being which can contribute to denying a failing project the attention and resources it needs.
vi) M&E design and implementation: A strong central M&E system within the lead implementation agency should be standard in projects with multiple activities and several agencies involved, so that problems are detected early and signaled to the Bank and to the Government.
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies The comments of the GOI have been taken into consideration in the final ICR. (b) Cofinanciers Not applicable. (c) Other partners and stakeholders None received.
30
Annex 1. Project Costs and Financing
(a) Project Cost by Component (in US$ million equivalent)
Components Appraisal Estimate
Reallocated Costs at
MTR
Actual/Latest Estimate
Actual as Percentage of
Appraisal
1. Strengthening Institutional Capacity to Monitor Air and Water
13.4 14.5 5.94 44
2. Building Partnership Through Pilot Environmental Projects 2.5 1.4 0.27 11
3. Training and Public Awareness Programs To Improve Air and Water Quality
3.8 1.1 0.58 15
4. Project Management and Coordination 1.4 1.1 1.19 85
Contingencies 1.7 - - -
Total Baseline Cost 22.80 18.1 7.98 35
Physical Contingencies 0.03 0
Price Contingencies 1.67 0
Total Project Costs 24.50 7.98 33
Front-end fee PPF 0.00 0.00
Front-end fee IBRD 0.20 0.20
Total Financing Required 23.00 8.08 35
(b) Financing
Source of Funds Appraisal Estimate
(USD millions)
Actual/Latest Estimate
(USD millions)
Percentage of Appraisal
Borrower 2.10 0.96 46
International Bank for Reconstruction and Development 20.00 7.14 36
Foreign Multilateral Institutions (unidentified) 0.90 0.00 0
31
Annex 2. Outputs by Component Component 1: Strengthening Institutional Capacity to Monitor Air and Water Quality (Total Costs: at appraisal US$11.8 million; at MTR: US$14.5 million) Subcomponent 1.1: Mainstreaming Environment into Policies and Programs. 1. At MTR, it was agreed that this sub-component will be limited to the establishment of the Policy Planning Unit within the new organizational structure of the DOE and that in accordance with the 4th Economic and Social Development Plan, the Management and Planning Organization (MPO) would prepare guidelines, in collaboration with DOE, on economic evaluation and green accounting for high priorities environmental issues. The DOE was reorganized and a department for Education, Research and Planning was established (instead of the proposed Planning Unit). However, the guidelines and the studies were not initiated. 2. Only two of the nine studies proposed at appraisal were completed. The first one was the “Cost of Environmental Degradation” and second one was the “Energy-Environment Review”. Dissemination of those two studies to stakeholders was carried out through presentations, training and workshops. Subcomponent 1.2: Improve the Legal and Institutional Framework Governing Air and Water Quality Management. 3. This sub-component was limited to updating the quality standards for air and water pollution and to the dissemination of those standards to stakeholders. A contract was awarded to a university in early 2008 (US$0.16 million) to carry out the update of the water and soil pollution standards. However, this study was never completed. 4. The rest of this sub-component, mainly the diagnostic assessment of the institutions responsible for air and water quality management has been covered though the work undertaken by the air quality specialist hired by the project (US$0.11 million). Despite having some limited deliverables, the work was not finalized. 5. The other proposed study under this component “Updating the Legal Framework” was not carried out at the request of the Borrower under the pretext that this study should await the re-organization of the DOE. Subcomponent 1.3: Enhancement of the EIA system at the National and Provincial levels. 6. Originally, this sub-component consisted of several tasks: (i) updating and amending the present EIA legal framework in accordance with international good practice; (ii) updating and developing sectoral guidelines for ELA preparation, review and implementation; (iii) strengthening the capacity of line ministries and consulting firms to prepare EIAs through better guidelines and training programs; (iv) building
32
DOE's capacity to monitor the implementation of Environmental Management Plans; (v) establishing EIA units and databases in Tehran, and the provincial DOE offices of Khorasan and Khuzestan; (vi) in collaboration with NGOs and the media, establishing procedures and mechanisms for public participation and consultation in the EIA process and disclosure of relevant project documents; and (vii) increase public awareness and outreach to policy makers and communities. 7. During early implementation and at the request of the new DOE administration, this sub-component was partially cancelled. The remaining task consisted of establishing two EIA units at the provincial levels and the strengthening of the EIA capacity at the central level. No EIA units were established by the project. 8. A contract with a national consultant aiming at in-depth study of the present status and proposed actions was signed though the work did not start to-date. To facilitate this work, the Bank provided the EIA department with a copy of its safeguards policies in Farsi as well as the guidelines for the preparation and review of the EIA. Subcomponent 1.4: Establish an Environment Management Information System at DOE in Khorasan and Khuzestan, Markazi and three Northern provinces (Mazandaran, Guilan and Golestan). 9. The revised sub-component proposed that the project would finance the development of hardware and software for the province of Khuzestan to improve its environmental management information system (at appraisal, the intention was to establish MISs in three provinces: Tehran, Khuzestan and Khorasan). 10. By the closing date, the project was developing software and purchasing the required hardware for the Khuzestan province. The new system aim was to improve the flow of information including air and water quality between the DOE office of Khuzestan and its 13 affiliated sub-offices. Once this system is operational, it was expected to be replicated in the other provinces. The Provincial DOE in Tehran separately financed a contract to improve its MIS. Subcomponent 1.5.1: Air Quality Monitoring. 11. The MTR called for the purchase, installation and operation of 62 air quality monitoring stations in seven cities, although the original number stated in the PAD was only 49 stations. 12. Forty four air quality monitoring stations (MS) and 8 meteorological stations (MES) have been purchased (Euro 4.50 million). A Letter of Credit for an additional 10 stations was opened (Euro 1.00 million), but the equipment was never procured. Out of the purchased and delivered stations to the four cities: Tehran, Mashhad, Isfahan and
33
Arak; 20 MS are operational, 23 MS are installed24 but not yet operational and none of the 8 MES were installed. 13. The reasons for the delays are attributed to the fact that there was no memorandum of understanding (MoU) signed reflecting the responsibility of the DOE and the provinces for the permits, installation, and operation of the equipment, the financial resources required by the provinces, and the budget for O&M of the equipment (see 2.2, Implementation). DOE air quality personnel of all cities have received multiple training on O&M of the equipment. In addition to the above, 11 meteorological towers were manufactured and installed for a total cost of about US$0.30 million. 14. In addition to the above, three studies were contracted (US$0.46 million, partially paid): “Development of air emissions inventory of Iran”, “Source apportionment of ambient airborne particulate matter concentration in Tehran”, and “Air quality survey in Tehran, Arak, Isfahan and Mashad using passive samples”. The first two studies have not been completed due to partial payment whereas the third has not started given that the needed air monitoring equipment was not operational. Subcomponent 1.5.2: Water Quality Monitoring. 15. During the MTR mission, an agreement was reached to extend the online water quality monitoring network proposed for Karun River to 7 other rivers in the Northern provinces that are discharging into the Caspian Sea provided that a field assessment is prepared and approved by the Bank. As a result, the PCT awarded three contracts on a competitive basis as follows: (a) EURO 0.49 million to provide fixed and mobile laboratory equipment for four cities in Khuzestan province (Ahwaz, Dezful, Abadan, Shush tar); (b) US$1.52 million to purchase, install and operate water quality field monitoring and sampling equipment for Karun River; (c) US$2.70 million to purchase, install and operate water quality field monitoring and sampling equipment for 7 rivers in Northern Provinces. 16. The status of implementation of these contracts is as follows:
a. Fixed and mobile laboratory equipment for Khuzestan. The contract was signed in February 2007 and the equipment was supposed to be delivered within 4 months of contract signature. This did not materialize due to significant administrative problems related (unwarranted control by the Financial Controller Office and ongoing delays due to switching the L/C from Melli Bank to Meskan Bank).
24 This is in addition to one mobile station which was also purchased but does not require installation as such.
34
b. Monitoring equipment for Karun and seven rivers. The contract was signed in August 2007. However the L/C was not opened as a result of: (i) a change in the telemetry specifications from wireless to satellite transmission as requested by the Ministry of Telecommunications; (ii) opening of the L/C in Mesken Bank; and (iii) the security bond, required by the contract, was delayed by the supplier due to his inability to provide it.
Component 2: Building Partnership through Pilot Environmental Projects (Total Costs: at appraisal US$2.4 million; at MTR: US$1.4 million) Subcomponent 2.1: Pilot projects in air and water quality to be implemented by municipalities and line ministries 17. At MTR, it was agreed to focus on the following two activities only:
i. To purchase and install 8 electronic billboards that would be linked to the monitoring stations and would broadcast live data on air qualities (2 for the city of Tehran and 2 for Mashhad, 1 for Arak, 1 for Shiraz, 1 for Ahwaz and 1 for Isfahan) for an estimated amount of US$130,000. The 8 electronic boards have been purchased though only 7 have been installed.
ii. To prepare Soil Atlases for the five most polluted provinces (Isfahan, Guilan, Mazendaran, Khuzestan and Khorasan). This would require soil sampling, analysis, statistical analysis and digital mapping. The PCT contracted the work (US$0.84 million partially paid by PCT) though no work on the Atlases had started until project closure. Only three Soil Atlases are currently being prepared under the direct supervision of the Water and Soil Department at DOE.
Subcomponent 2.2: Pilot projects to be implemented by NGOs 18. Only 8 proposals for US$30,000 to US$60,000 each, from 8 provinces (Isfahan, Khorosan, Teheran, Khuzestan, Guilan, Mazendaran and Markazi) were received. Proposals comprised raising awareness for and by the local NGOs including workshops, preparing and distributing printed materials and broadcasting. A contract was signed with a national consultant (US$6,500) to help in reviewing the proposals and only one has been awarded (US$0.057 million). However, the NGO was only able to receive the advance payment and there are still some administrative obstacles for the NGO to initiate the project. Component 3: Training and Public Awareness Programs to Improve Air & Water Quality (Total Costs: at appraisal US$2.7 million; at MTR: US$1.1 million) Subcomponent 3.1: Strengthen Environment Training in Air and Water Quality 19. In total, 19 training courses and workshops have been delivered. There were about 1,000 participants in the training courses. The course themes included: project
35
implementation, environmental degradation, trade and environment, procurement, financial management, banking transaction, communication and air and water quality monitoring, etc. Total costs of all those training programs were about US$0.30 million (partially paid). Subcomponent 3.2: Environmental Awareness 20. This sub-component covers media campaigns, publication of environmental books and the preparation of communication strategy and opinion poll surveys. Total costs for this sub-component was about US$0.30 million. 21. The project successfully prepared two TV clips aimed at raising awareness about environmental issues to the general public. These clips will be broadcasted on TV. However, because of low rates the DOE can obtain for air time, the proposed budget for this activity was reduced. The project also financed the preparation of educational awarded material and publication of various environmental books, pamphlets, and posters that have been widely distributed in Iran. As regards the communication strategy for DOE, it was not developed nor was the opinion poll survey for some Tehran residents conducted as planned. Component 4: Project Management and Coordination (Total Costs: at appraisal US$1.10 million; at MTR US$1.10 million) 22. This component financed the incremental costs for the establishment and operation of the Project Coordination Team (PCT) within DOE. By 2008, the PCT consisted of a full-time project coordinator, liaison officer and part-time procurement and financial specialists, and air and water quality specialists (originally 9 specialists were earmarked for the PCT). 23. The PCT continued to manage and coordinate the project activities; however, it remained understaffed throughout the project duration (see 2.2. Implementation). Salaries of the PCT were suspended as of March 21, 2008 and for a period of 6 months25 on grounds that the type of contract signed by DOE and implemented for the previous years, was not in compliance with consulting services as per the interpretation of the new Financial Controller. 24. In addition, under this project component, six vehicles, five computers, and office equipment and furniture were procured.
25 The ICR Mission in late May 2009 found that the Project Coordinator’s salary was still suspended.
36
Annex 3. Economic and Financial Analysis (including assumptions in the analysis)
Not Applicable - being a TA project.
37
Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/Specialty
Lending Sherif Kamel F. Arif Regional Environment Coordinator MNSRE Environment Mohammed Bekhechi Lead Counsel - Legal Meskerem Brhane Social Scientist MNSRE Sociology Anne Carlin Consultant - Editor Bruce Harris Peer Reviewer - Environment Steve Lintner Peer Reviewer - Environment Rusdian Lubis Sr. Environment Specialist - Environment Nezam Motabar Sr. Financial Manag. Specialist MNSRE Fin. Management Sylvie Pittman Language Program Assistant MNSRE Admin. Support Magalie Pradel Language Program Assistant MNSRE Admin. Support John-Keith Rennie Sr. Social Scientist MSRE Sociology Maria Sarraf Environmental Economist MNSRE Env. Economist Khanthan Shankar Sr. Operational Specialist MNSRE Task Team leader Konrad Van Ritter Peer Reviewer - Inst. Specialist Peter Whitford Consultant - Environment Mahtab Zolghardi Consultant - Procurement
Supervision/ICR Sherif Kamel F. Arif Consultant MNSSD Environment Adel Bichara Consultant MNSSD Operation (ICR) Robert Bou Jaoude Sr Financial Management Specialist MNAFM Fin. Management Marie A. F. How Yew Kin Language Program Assistant MNSSD Admin. Support Maya El-Azzazi Program Assistant MNSSD Admin. Support Sepehr Fotovat Ahmadi Procurement Specialist MNAPR Procurement Maged Mahmoud Hamed Sr Environmental Spec. MNSSD Environment Georges R. Khoury-Haddad Consultant MNAPR Procurement Knut Opsal Sr Social Scientist MNSSD Sociology Magalie Pradel Language Program Assistant MNSSD Admin. Support Indra G. Raja Program Assistant MNSSD Admin. Support Alaa Sarhan Sr. Environment Specialist MNSSD Task Team Leader Maria Sarraf Sr Environmental Econ. SASDI Task Team Leader Velayutham Vijayaverl Senior Procurement Specialist MNAPR Procurement
38
(b) Staff Time and Cost
Stage of Project Cycle Staff Time and Cost (Bank Budget Only)
No. of staff weeks USD Thousands (including travel and consultant costs)
Lending FY02 18 134.05 FY03 20 143.39 FY04 0 0.00 FY05 0 0.00 FY06 0 0.00 FY07 0 0.00 FY08 0 0.00
Total: 38 277.44 Supervision/ICR
FY02 0 0.00 FY03 2 8.20 FY04 21 84.96 FY05 20 97.24 FY06 16 82.76 FY07 17 91.01 FY08 6 30.03 FY09 21 139.46 FY10 2 6.74
Total:105 540.40
39
Annex 5. Beneficiary Survey Results
Not Applicable.
40
Annex 6. Stakeholder Workshop Report and Results Not Applicable.
41
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR Borrower’s ICR was received on July 6, 2009. An excerpt of the Borrower’s ICR is provided herewith. Epilogue Undertaking of the EMSP project by the DOE of I. R. Iran was a very positive and constructive approach to build partnership with leading international agencies and lending institutions and to appreciate and take advantage of the opportunity raised for knowledge and best experience transfer in the field of environmental management and sustainable development for the vulnerable resources such as air, water and soil in major cities and habitable environments. Ministry of Finance and Economic Affairs (MFEA), as the co-signer of the loan for DOE and focal point of Government of Iran (GOI), deserves the credit for undertaking the initiative of obtaining and managing the WB loans, including the first and the smallest loan awarded to DOE. DOE as a major governmental agency has a USD 200 million budget turnover annually. So, for a 5 year duration of the EMSP project an amount almost equal to USD 1 billion was managed by DOE administrators. In other words, managing about USD 4 million per annum would not have made much difference in the scope of the activities of DOE. Receiving a USD 20 million loan was a gesture of good will of GOI to show its value of the environment and to exhibit the openness for international cooperation. DOE, as a responsible agency took upon itself to accept the loan and implement the activities undersigned for. DOE believes in the fact the environment is the global wealth for all and it is the responsibility of all to protect it from pollution and hazard, as is mandated in the Article 50 of the Constitution of I. R. Iran, …. protection of the environment for the current and future generations is a responsibility of all. Despite eagerness to obtain and invest the loan on the environment, EMSP loan, though the smallest, after implementation faced variety of implications and complexities experienced by all other loan recipients combined in I. R. Iran. This might be primarily because it was the first loan to be implemented and the experience gained was applied to other loans to remove obstacles and hindering issues. If so, this, by itself, was an achievement not noticed by many involved in the loan process. EMSP has achieved many of its objectives in air section and public awareness raising and training and inter-ministerial cooperation and partly so in water section. Reasons for achievements and failures are explained further; I should emphasize issues raised here are not to point fingers at specific authorities but to pinpoint the main issues, small or large, that slowed down the project progress and derailed the honest and tireless efforts of PCT staff whom exhausted their efforts and at no point let the frustration take over.
42
Problems and Challenges Although facing challenges was a daily routine for PCT and myself, many sorts of problems be faced PCT since the first day at the job in 2006, just about the MTR mission was to begin. Experience of my colleagues and I on the main problems and issues are categorized as follows:
1. Designing and Structure of the Project In this section 4 kinds of problems are identified as follows:
a. Disagreement on procurement guidelines of WB with those regulations of Iran on bidding and consultancy- This hindering issue was the main problem in neutralizing efforts of PCT for consultancy contracts and slowing down the purchase of goods. The GOI in July 2006, passed a resolution to resolve the issue and bring closer the guidelines of Iran and the WB , but applying this new guideline was not made mandatory ant it allowed the financial controller to choose (or not to choose ) to follow the WB guidelines. In the case of EMSP, the financial controller always decided to follow the local regulations over WB guidelines on procurement, perhaps rightly so, because of auditing issues and judicial implications for the person of the financial contoller. Financial controllers are independent agents of MFEA in governemtal agencies including DOE and it seems a unified approach, not only to demand but also to mandate and require the implementation of the July 2006 resolution, would have resolved the problem to a great extent.
b. Decision on proportional payments of contracts- Given the budget structure for governmental agencies including DOE, allocated funds are usually disbursed late due to late contractual agreement exchange between the agency and MPO. So, if the funds of loan were available in the special account in the local bank and the smaller proportions of the counteropart funds were not, then the contracts could not be paid for by the financial controller. In other words, lack of funds in one account kept the other part hostage. This proportionality became more problematic when allocated funds were available or disbursed late in the year as it occurred in 2007 and to some extent in 2008. I must add and emphasize, that in 2003, when funds of loan were available, there was no counterpart fund available to complete tasks; therefore, the actual duration of using funds from loan for EMSP was 4 years and not 5. This fact must have been taken into account in the design of the project and (1) had marked the starting date of the project when the counterpart funds were available or (2) provisions had been placed into the loan agreement that DOE must have committed enough of its resources to complete the tasks for the first year of the project and or (3) made the proportionality on the loan flexible and floating so, the manager could decide on the proportions how to pay for the commitments depending on his/her available funds.
c. Annual Counterpart funds and budgetting- Division of the project into 2 subsections of Air and Water in annual budget plan complicated the allocation of annual budget request and made it harder to discuss with experts in MPO for the budget. Fortunately, efforts of DOE officials paid off and the budget for the year 2008 was obtained globally
43
enabling the bugget office at DOE to allocate funds as needed, however, there needed to be more flexibility to re-allocate funds between consultancy commitments and purchase of goods.
d. Late payment of contracts- Late payment of contracts was common and contributed to
many activities to slow down or remain incomplete, such as operations of all 44 air monitoring stations, or bilboards and soil atalases. This was due to complex review cycle in the financial department. In many instances, payment of instalments of contracts could not be completed because one activity of the contract had not been completed. For example, on air montoring stations, the training activity had not been performed by the consultant because all stations had not been installed at the designated deadline. This inability to keep up with the workplan or contract deadline, contributed to successive problems in payment of contracts (or vice versa, non-payment of contract instalments on due time caused delays in some instances) and consumed a lot of time of the PCT staff to re-new and or extend contracts and etc.
It must be added there were instances that procurement officer would draft a contract with specific deadline, but when checking of requirements in DOE financial controller office took longer or demanded documents that was required under the local regulations and not the WB procurement guidelines, then payment of contract would become problematic and delay was unavoidable. This issue was resolved with financial controller recently, in such way that all checks on contracts was to be made and all requirements met before financing of the contract.
2. Poor insight and lack of oversight
In designing the project, there were adequate indicators to identify and quantify success but, there were not enough indicators to detect problems and to offer alternatives. Few examples are provided as follows:
a. Designation of National Expert Committee (NEC) comprised of provincial DOE directors and representatives of line ministeries and NGOs and steering committes (SC) at the provincial level were not initiated in the project and apparently were not strongly followed through by the WB task teams.
b. Ownership- I could not find a record in which provincial DOE directors felt the ownership of the project; they always requested funds to be sent to the province so they could be in charge of spending it. Under the design of the project, this was almost impossible. However, the initial impression given to DOE directors at the project design phase, was that they were in charge of the whole operations, but in fact everything was being run from DOE headquarters at EMSP office under the directorship of Deputy for Human Environment. Given the nature of the project, it was necessary to be centralized in dealing with international agencies and the WB, but provincial directors never accepted this fact and remained resistant to the project until equipments were delivered and installed. Still the sense of ownership was never fully realized.
c. WB follow ups in person was always a truly driving force in advancing the project and removing hindering problems in many occasions. I must thank the task team officers and consultants that visited the project in few occasions and suggest that in future, such
44
visits to be promoted by the WB and even be planned into project more vigorousely in advance .
d. Administrative changes in authorities and limited authority of coordinating manager- In EMSP project, my authority as coordinating manager, unlike my predecessor, was very limited and it covered managing daily communications and administrative tasks and lobbying for every instance related to project advancement as well as monitoring and preparation of progress and financial reports and budget plans. Although, through conducting workshops, my predecessor and I had tried to provide insight to the project for DOE managers, efforts were futile for frequent administrative changes and replacement of key authorities in the project. Fortunately, the MTR review took place when the new administration was in place in DOE and it coincided with changes in the priorities of DOE leading to a second ammendment to the loan agreement. Although, this change in priorities was good by nature, its application took few precious months of the project as it was necessaryto be approved by the WB (which took few months) and to be declared to the GOI and DOE. Therefore,it is concluded that at the beginning of the project, providing broad insight to the project for all stakeholders was necessary and assurance of that must have be ascertained. Similarly, oversight through emails, direct communications and in person is a must that needs to be considered for proper progress of the project from WB as well as local authorities, particularly, MFEA, as co-signer of the loan had to establish a more effective and accountable body to control project progress. Input of MFEA through providing consultations and demanding progress reports on a periodic basis was appreciated greatly, but their intervention when the hindering problem concerned the financial controller, needed to be more aggressive and constructive.
3. Multi-layered decision making There were several layers of decision making in EMSP as follows:
A. Primary b. MPO for allocating annual counterpart funds and also WB funds equivalant c. MPO and MFEA for disbursing Funds d. Budget office in DOE for budgetting and allocation of funds e. Financial Office in DOE for disbursing of funds and reporting f. Vice- Head of DOE for Human Environment as Project Director g. Administrative Office for lojestics and daily needs A. Secondary h. Deputy for Education and Research for Daily internet and communication Services i. DOE specialized offices such as air, water and soil departments j. DOE provincial directors k. PCT techincal team and Manager
Coordination between and among above decision makers was a daily routine conducted by PCT staff. Efforts were futile in many occasions when sense of ownership did not prevail or authoritative officials changed frequently. In other instances, controlling project activities in the field became minimal when DOE included the cost of travel in the limited salaries of PCT and did not allow hiring of additional consultants for at the sight
45
control of the project; MPO also resisted hiring additional consultant as needed when PCT was trying to request counterpart funds in 2006 and 2007. This contributed to limited supervision from DOE central. This flaw was, however, removed when Director for Comprehensive Monitoring in DOE was charged with responsibility of controlling equipment operation in October 2008 but did not have financial resources yet to complete the massive burden placed upon his department.
4. Administrative Bureacracy complicated with international circumstances beyond EMSP control
a. Bureacracy was a chronic and hindering problem; for exmple in case of LCs for the project, openning of LCs for the type of equipment purchased for EMSP, required 51 steps to be performed and needed seeking approval of many governmental agencies. This was time consuming and such time requirement was never envisioned into the project design. The same principal applied to release of goods from custumes. Instances of delays have been indicated in periodic reports and emails both to DOE authorities and WB task team leaders. EMSP was unfortunate to have one of its LCs cancelled in one bank and to have had to open a new one in another bank due to international circumatances. This cost the project valuable time on openning LCs for air equipment for Karaj, Shiraz and Ahawaz and water monitoring equipment for Karoon and rivers in 3 Northern Provinces. Such delays must be considered for postponing project closing date.
b. Demand from the WB for opening a EURO account was another case which took a longer than expected time due to DOE financial controller inquiry from the MFEA. This was facilitated with the intervention of MFEA and constant follow up of H. E. Vice - President and Head of DOE.
c. Bureacracy in WB in many instances caused undue delays. For example, announcement of 2nd ammendment took a long time, or adding a step for payments of invoices by obtaining approval codes for invoices over USD 10000 in advance.
5. Payments of Salaraies of PCT consultants Adequate gaurantees were not put in place in the EMSP project to satisfy smooth payments of salaries to PCT staff both in the amount and timing of payments from the beginnig. For the first 2 years, a university was hired as a surrogate consultant to pay the PCT staff. On the 3rd year, when I took the position of coordinating manager of EMPS project, there was no procurement consultant, there was a 2 half day finacial consultant every other week (that means half a day per week in average) from Mashhad, not handy when needed, a liaison officer that only worked in the afternoons and 2 part-time technical consultants. I took over the job and needed to hire services of PCT consultants for liaison, financial and procurement tasks. Hiring of consultants for education and NGO and project field control was terminated after only few months. Salary of PCT staff from 3rd year onward (2005-2009) was paid differently each year with lots of uncertainties. Despite this, the EMSP PCT staff worked wholeheartedly, but the power of PCT manager was limited and no authority had been established beyond the EMSP office.
46
Major issues in this regard are as follows: a. There are not adequately trained consultants on the WB procurement and financial
guidelines and conducting workshops, though useful for updating, are not sufficient for appropriately trained and well qualified experts on WB guidelines.It is suggested that programmed education and training through WB enteties be provided to successful applicants in the form of scholarships or opportunies at the start of each project. Furthermore, publishing WB documents in Local language may also prove beneficial.
b. Method of payments of salaries or consultant fees must be resolved without hassle at the beginning. Issues of amount of salary and method of payment (from kind of contract and the method of payment from WB fund, counterpart fund and or combined) all must be cleared from the beginnig leaving room for adjustments for annual inflation. Expenses for travelling and insurance must be addressed at the time of signing of contracts. Late payment of PCT staff salary was a major breach of trust between parties limiting managers ability to function properly. B: Lessons Learned
1. Transparency and Accountability- Although this issue has been resolved for the WB, financial controlling is the bottleneck of the project. Removing the ambiguities on financial steps and working through them from start of a contract (bidding) to final payment provides a hands on experience to design the project more efficient. Involving the financial controller in the project design phase is a must to be considered seriously in future project design. The same is suggested hiring consulting services of former managers and experts who have worked on projects funded by WB.
2. MFEA should play a more active role in resolving issues related to financial controllers and devise means of universal approach to interpretation of guidelines rather than allowing each controller to do as he/she pleases.
3. DOE should have been more persistent in its approach to EMSP project and should have conveyed the ownership issue more forcefully and demanded accountability for shortcomings, particularly from provincial departments and financial department.
4. WB visits and missions must be encouraged and be planned into the workplan. 5. Ownership issue must be addresed more openly and be resolved locally among all
stakeholders at the inception phase of the project. 6. WB and the Borrower should make sure that multi- layered decision making set up would
not be problematic and work through the decision making process so, a hands on experience is gained; otherwise, project deadline must become more flexible for providing additional time before closing the loan or decision of project director be determinant.
7. Assurance on payment of salaries to PCT consultants must be ascertained both on the amount of payment with due increases for inflation and also for type of contract and method of payment.
8. It is strongly suggested that petty cash be granted to project manager for daily administrative expenses. So much delays could have been prvented in EMSP if only a limited petty cash were available or frequent request of manager was met properly for the petty cash. This could be provided through preferably the borrower and if not possible, then through WB. Current WB guidelines does not allow this.
47
9. Project administration and hiring of PCT staff as per occasion must be realized by project directors, MPO and finacial controller.
10. Multi-layered decision making should be tested before implementation of the project. 11. Interconnecting WB loan funds with those of countepart funds for each contract must be
resolved in advance. Any knd of proportionality and interconnection that makes on time payments problematiic must be discouraged and be replaced with better alternatives.
12. The financial cycle for payment of contracts funded from WB loan must be defined in the PAD and must be simplified to facilitate the process.
48
Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders None received.
49
Annex 9. List of Supporting Documents
1. Project Appraisal Document, February 26, 2003
2. Loan Agreement, May 13, 2003
3. Aide-Memoires
4. Implementation Status Reports - April 2003 through December 2008
5. Mid Term Review, December 2006
6. Project Audit Reports
7. PCT Progress Reports
8. Minutes of teleconferences between TTL and Project Coordinator, 2007