Completion Report

Project Numbers: 32254-013 and 32254-023 Loan Numbers: 2046 and 2456 July 2016

India: Urban Water Supply and Environmental Improvement in Madhya Pradesh Project This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

CURRENCY EQUIVALENTS

Currency Unit – Indian rupee/s (Re/Rs)

At Appraisal (Loan 2046)

At Project Completion (Loan 2456)

11 November 2003 24 June 2014 Re1.00 = $0.0221 $0.0151

$1.00 = Rs45.17 Rs66.06

ABBREVIATIONS ADB – Asian Development Bank AIF – Area Improvement Facilities BME – benefit monitoring and evaluation CAGR CGC

– –

compound annual growth rate community group committee

CIF – Community Initiatives Fund DFID – Department for International Development of the

United Kingdom DSC – design and construction supervision consultant EIRR – economic internal rate of return EOCC FIAP FIRR

– – –

economic opportunity cost of capital financial improvement action plan financial internal rates of return

GAP IEE

– –

gender action plan initial environmental examination

JNNURM

–

Jawaharlal Nehru National Urban Renewal Mission

LIBOR – London interbank offered rate MAPP – municipal action plan for poverty reduction MAS MOU

– –

municipal administration system memorandum of understanding

MPUSP NGO

– –

Madhya Pradesh Urban Services for the Poor program nongovernment organization

O&M – operation and maintenance PCR – project completion report PMC – project management consultant PMU – project management unit PRC STP

– –

public relations consultant sewage treatment plant

SWD – storm-water drainage SWM – solid waste management TA – technical assistance UADD – Urban Administration and Development

Department UIDSSMT ULB

– –

Urban Infrastructure Development Scheme for Small and Medium Towns urban local body

UN-Habitat – United Nations Human Settlements Program UWSEIP – Urban Water Supply and Environmental

Improvement Project WSD WTP

– –

Water and Sanitation Department water treatment plant

WEIGHTS AND MEASURES

ha – hectare kl – kiloliter km – kilometer lpcd

m ml

– – –

liter per capita per day meter million liters

mld – million liters per day mm – millimeter mt – metric ton t – ton

GLOSSARY

anganwadi

e-Nagar Palika nallah

– – –

a government-sponsored child-care and mother-care center citizen services portal drain

NOTES

(i) The fiscal year (FY) of the Government of India ends on 31 March. FY before a

calendar year denotes the year in which the fiscal year ends, e.g., FY2016 begins on 1 April 2015 and ends on 31 March 2016.

(ii) In this report, "$" refers to US dollars. Vice-President W. Zhang, Operations 1 Director General H. Kim, South Asia Regional Department (SARD) Director M. T. Kho, India Resident Mission, SARD Team leaders A. Srivastava, Senior Project Officer (Urban), SARD

V. Vishal, Project Officer (Urban), SARD

Team members P. Khan, Associate Social Development Officer (Gender), SARD B. Kulshreshtha, Executive Assistant, SARD

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

CONTENTS

Page

BASIC DATA i

I. PROJECT DESCRIPTION 1

II. EVALUATION OF DESIGN AND IMPLEMENTATION 2

A. Relevance of Design and Formulation 2 B. Project Outputs 3 C. Project Costs 4 D. Disbursements 5 E. Project Schedule 5 F. Implementation Arrangements 6 G. Conditions and Covenants 7 H. Consultant Recruitment and Procurement 7 I. Performance of Consultants, Contractors, and Suppliers 7 J. Performance of the Borrower and the Executing Agency 8 K. Performance of the Asian Development Bank 8

III. EVALUATION OF PERFORMANCE 9

A. Relevance 9 B. Effectiveness in Achieving Outcome 9 C. Efficiency in Achieving Outcome and Outputs 12 D. Preliminary Assessment of Sustainability 12 E. Impact 13

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS 14

A. Overall Assessment 14 B. Lessons 14 C. Recommendations 15

APPENDIXES

1. Design and Monitoring Framework 16

2. Allocation, Reallocation, and Actual Disbursement 24

3. Project Cost by Component 26

4. Contract Awards and Disbursements 27

5. Implementation Schedule 28

6. Project Implementation Arrangements 29

7. Status of Compliance with Major Loan Covenants 30

8. Evaluation of Economic and Financial Analysis 35

9. Gender Action Plan Implementation and Achievements 46

10. Community Funds and Social Inclusion 63

11. Contribution to ADB Results Framework 67

BASIC DATA

A. Loan Identification 1. Country 2. Loan Number – Original Loan – Supplementary Loan 3. Project Title 4. Borrower 5. Executing Agency 6. Amount of Original Loan – Initial Loan – Revised Loan Amount of Supplementary Loan – Initial Loan –Revised Loan

7. Project Completion Report Number

India 2046 2456 Urban Water Supply and Environmental Improvement in Madhya Pradesh Project Government of India Urban Administration and Development Department of the government of Madhya Pradesh $181.00 million $158.02 million $71.00 million $51.57 million IND 1581

B. Loan Data 1. Appraisal (Original Loan) – Date Started – Date Completed Appraisal (Supplementary Loan) – Date Started – Date Completed 2. Loan Negotiations (Original Loan) – Date Started – Date Completed Loan Negotiations (Supplementary Loan) – Date Started – Date Completed 3. Date of Board Approval – Original Loan – Supplementary Loan 4. Date of Loan Agreement – Original Loan – Supplementary Loan 5. Date of Amended and Restated Loan (Original Loan)

21 April 2003 8 May 2003 28 April 2008 5 May 2008 11 November 2003 12 November 2003 4 September 2008 5 September 2008 12 December 2003 13 October 2008 9 March 2005 10 November 2008 None

ii

6. Date of Loan Effectiveness (Original Loan) – In Loan Agreement – Actual – Number of Extensions Date of Loan Effectiveness (Supplementary Loan) – In Loan Agreement – Actual – Number of Extensions 7. Closing Date (Original Loan) – In Loan Agreement – Actual – Number of Extensions Closing Date (Supplementary Loan) – In Loan Agreement – Actual – Number of Extensions 8. Terms of Loan (Original Loan) – Interest Rate – Maturity (number of years) – Grace Period (number of years) Terms of Loan (Supplementary Loan) – Interest Rate – Maturity (number of years) – Grace Period (number of years)

9 June 2005 17 May 2005 0

9 February 2009 3 December 2008 0

30 September 2009 23 September 2013 2

30 September 2011 24 June 2014 2

London interbank offered rate (LIBOR)-based (floating) 25 5 LIBOR-based (floating) 20 0

9. Disbursements a. Dates (Original Loan)

Initial Disbursement 1 December 2005

Effective Date 17 May 2005

Final Disbursement 23 September 2014

Original Closing Date 30 September 2009

Time Interval 105 months

Time Interval 52 months

b. Dates (Supplementary Loan)

Initial Disbursement 15 December 2008

Effective Date 3 December 2008

Final Disbursement 24 June 2014

Original Closing Date 30 September 2011

Time Interval 66 months

Time Interval 33 months

c. Amount ($ million) under Original Loan

Category Original

Allocation Partial

Cancellation

Last Revised

Allocation1

Amount Disbursed

Undisbursed Balance

2

1. Works 120.53 144.28 141.82 2.46 2. Equipment and Materials

20.70 15.19 4.23 4.18 0.05

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3. Area Improvement Facilities

3.28 3.28 0.00 0.00 0.00

4. Community Initiatives Fund

1.28 1.28 0.00 0.00 0.00

5. Consulting Services

12.74 0.25 12.49 12.02 0.47

6. Unallocated 22.47 0.00 0.00 0.00

Total 181.00 20.00 161.00 158.02 2.98

1 Last revised allocation takes into account the reallocations carried out in December 2012.

2 Undisbursed balance subsequently cancelled.

d. Amount ($ million) under Supplementary Loan

Category Original

Allocation Partial

Cancellation

Last Revised

Allocation1

Amount Disbursed

Undisbursed Balance

2

1. Works 53.11 4.87 48.24 47.65 0.59 2. Equipment and Materials

7.60 7.44 0.16 0.16 0.00

3. Consulting Services

3.84 1.34 2.50 1.72 0.78

4. Area Improvement Facilities

3.28 1.63 1.65 1.80 (0.15)

5. Community Initiatives Fund

1.28 0.83 0.45 0.25 0.20

6. Unallocated 1.89 1.89 0.00 0.00 0.00

Total 71.00 18.00 53.00 51.58 1.42

1 Last revised allocation takes into account the reallocations carried out in December 2012, August 2013, and December 2013.

2 Undisbursed balance subsequently cancelled.

10. Local Costs (Financed) - Amount ($) 94,604,206.00 - Percent of Local Costs 72.54% - Percent of Total Cost 59.87%

iv

C. Project Data

1. Project Cost ($ million)

Cost Appraisal Estimate Actual

Foreign Exchange Cost 93.4 76.0 Local Currency Cost 289.6 235.8 Total 383.0 311.8

2. Financing Plan ($ million)

Cost Appraisal Estimate Actual

Physical Works Borrower Financed 102.4

77.0

ADB Financed 235.4 195.8 Other External Financing 0.5 0.0

Subtotal 338.3 272.8

Implementation Costs Borrower Financed 10.8 12.4 ADB Financed 16.6 13.8 Other External Financing

Subtotal 27.4 26.2

IDC Costs Borrower Financed 17.3 12.8 ADB Financed Other External Financing

Subtotal 17.3 12.8

Total Borrower Financed 130.5 102.2

Total ADB Financed1 252.0 209.6

Other External Financing 0.5

Total 383.0 311.8

ADB = Asian Development Bank, IDC = interest during construction. 1

The actual total of the original ($158.02 million) and supplementary ($51.58 million) ADB loans is $209.60 million.

3. Cost Breakdown by Project Component ($ million)

Component Appraisal Estimate Actual

Part A Water Supply 193.0 227.3 Part A Sewerage and Drainage 73.3 35.8 Part A Solid Waste Management 13.0 6.6 Part B Area Improvement Facilities 8.4 2.5 Part B Canal Improvement Works 3.8 0.6 Part C Implementation Assistance and Capacity Building 27.4 26.2 Contingencies Physical 19.1 0.0 Price 27.7 0.0 Finance Costs 17.3 12.8

Total 383.0 311.8

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4. Project Schedule

Item Appraisal Estimate Actual

Date of Contract with Consultants Design and Supervision Consultants 31 March 2004 6 June 2005 Project Management Consultant 31 March 2004 6 June 2005 Public Relation Consultants 1 July 2004 9 September 2006 Benefit Monitoring and Evaluation Consultant 1 July 2004 15 June 2006 Completion of Engineering Designs 30 September 2009

30 November 2011

Civil Works Contract Date of Award 31 March 2007 1 August 2012 Completion of Work 30 June 2011 31 December 2013 Equipment and Supplies Dates First Procurement 31 December 2005 30 June 2006 Last Procurement 31 December 2006 27 April 2012 Completion of Equipment Installation 30 June 2007 26 October 2012 Start of Operations Completion of Tests and Commissioning 30 September 2011 31 December 2013 Beginning of Start-Up 30 September 2011 31 December 2013

5. Project Performance Report Ratings (Original Loan)

Implementation Period

Ratings

Development Objectives

Implementation Progress

From 12 December 2003 to 31 May 2004 Satisfactory Satisfactory From 1 June 2004 to 30 April 2005 Satisfactory Unsatisfactory From 1 May 2005 to 31 December 2012 Satisfactory Satisfactory

6. Project Performance Report Ratings (Supplementary Loan)

Implementation Period

Ratings

Development Objectives

Implementation Progress

From 12 October 2008 to 31 December 2009 Satisfactory Satisfactory From 1 January 2010 to 31 December 2013 Satisfactory Highly Satisfactory

D. 1. Data on Asian Development Bank Missions (Original Loan)

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Members

Loan Fact-Finding 6–16 March 2000 6 66 a, b, c, d, e, f Loan Consultation 2–10 March 2000 1 9 g Loan Appraisal 23 May–8 June 2000 7 119 a, d, h, i, j, k, l, m Loan Contact 21–22 May 2001 2 4 e, n Special Project Administration 8–14 December 2001 1 7 e Loan Review 11–13 February 2002 1 3 e

vi

Name of Mission

Date

No. of Persons

No. of Person-

Days

Specialization of Members

Project Review Mission 24–28 April 2006 2 10 f, x

Loan Review Mission 28–29 June 2006 2 4 t, f

Loan Review Mission 31 July–8 August 2007 1 9 f

State Level Review Meeting of Externally Aided Projects in Rajasthan and Projects in Madhya Pradesh

8 April 2010 1 1 x

Mid-Term Review Mission 25–29 February 2008;

10–14 March 2008

7

7

35

35

s, f, l, x, c, u, k

s, f, l, x, c, u, k

Mission to Accompany Director (ADB I), Department of Economic Affairs (DEA) Official to Madhya Pradesh

16–18 July 2008

1 3 f

Loan Review Mission 19–23 January 2009 2 11 k, x

Special Project Administration 1–8 June 2009 2 18 f

Loan Review Mission 5–14 October 2009 2 20 f, x

Special Project Administration 20–22 January 2010 2 6 f, t

Loan Review Mission 26 August–3 September 2010

2 11 f, t

Review Mission 12–20 May 2011 2 15 aa, ab

Special Project Administration 15–16 November 2011 1 2 ab

Loan Review Mission 9–13 April 2012 2 10 aa, ab

Special Project Administration 16–19 October 2012 2 7 aa, ab

2. Data on Asian Development Bank Missions (Supplementary Loan)

Name of Mission

Date

No. of Persons

No. of Person-Days

Specialization of Members

Loan Review Mission 19–23 January 2009 2 11 k, x Special Project Administration 1–8 June 2009 2 18 f Loan Review Mission 5–14 October 2008 2 20 f, x Special Project Administration 20–22 January 2010 2 6 f, t Loan Review Mission 26 August–3 September

2010 2 11 f, t

Review Mission 12–20 May 2011 2 15 aa, ab Special Project Administration 15–16 November 2011 1 2 ab Loan Review Mission 9–13 April 2012 2 10 aa, ab Special Project Administration 16–19 October 2012 2 7 aa, ab Loan Review Mission 17–22 February 2013 4 24 aa, h, ab, m Special Project Administration 23–24 May 2013 2 4 aa, ab Special Project Administration 24–26 October 2013 2 6 aa, ab Project Completion Mission Phase 1 11–16 January 2016 6 28 ab, I, a, c Project Completion Mission Phase 2 23–26 February 2016 4 16 aa, ab, g, I, a, c a = senior project engineer; aa = senior project officer; ab = associate project officer; ac = senior safeguard specialist; b = project specialist; c = project economist; d = counsel; e = senior project implementation officer; f = project implementation officer; g = social development specialist; h = environmental specialist; i = director; j = manager; k = financial analyst; l = resettlement specialist; m = gender specialist; n = resident representative, India Resident Mission; o = country director, India Resident Mission; p = head, urban unit; q = head, project administration unit; r = senior control officer; s = urban specialist; t = senior urban development specialist; u = senior environmental specialist; v = senior counsel; w = principal urban specialist; x = project analyst; y = senior social development and resettlement officer; z = senior environment officer.

I. PROJECT DESCRIPTION

1. The Urban Water Supply and Environmental Improvement Project in Madhya Pradesh was formulated to address citywide deficiencies in basic urban services in the state’s six largest urban centers. The Asian Development Bank (ADB) supported the project at the request of the Government of India and the Government of Madhya Pradesh to address the deteriorating quality of municipal services and environmental degradation in urban centers with the highest potential for economic growth in the state.

2. The baseline survey revealed widespread deficiencies in basic urban services across the state’s six largest urban centers (Bhopal, Indore, Ujjain, Ratlam, Jabalpur, and Gwalior). On average, nearly 42% of households in these centers lacked water supply connections and 15% did not have access to a piped water supply. The situation in the project towns and cities was poor, with 40% of households receiving water on alternate days, one in eight households practicing open defecation, 40% of households reporting no solid waste collection, and with reportedly inadequate systems for draining storm-water and controlling floods. Consequently, there was a high risk of waterborne and bacterial diseases, particularly among children. At appraisal, Madhya Pradesh was among the poorest states in India. Inadequate urban services prevented these cities from realizing their economic potential and prospects for future economic growth.

3. The project was designed to (i) reduce the vulnerability of people in these centers to environmental degradation, poverty, and natural hazards; and (ii) increase economic opportunities in the four municipal corporations. More specifically, the project aimed to (i) strengthen the capacities of the project towns and cities to plan and manage urban development in a more effective, transparent, and sustainable manner; (ii) integrate slum improvements with citywide infrastructure through participatory planning with the involvement of municipal authorities and poor communities; (iii) undertake water conservation and demand management in the project cities; and (iv) provide the executing and implementing agencies with necessary support in project planning, policy formulation, and implementation.

4. The project, with an original ADB loan of $200 million, was approved on 12 December 2003 to address citywide deficiencies in basic urban services in the six largest urban centers in Madhya Pradesh. The Urban Administration and Development Department (UADD) of the state government was the executing agency. The loan was signed on 9 March 2005 and became effective on 17 May 2005. Of the initially identified investment need of $303.5 million, ADB was asked to provide a loan of $200 million, representing 65.9% of the total project cost.1 The United Nations Human Settlements Program (UN-Habitat) agreed to provide $0.5 million (0.1%) in parallel grant cofinancing, and the remaining cost was to be borne by the state government (16.7%) and project cities (17.3%). Prior to loan signing, two cities, Ratlam and Ujjain, chose to opt out of the project, reducing the loan amount by $19 million. ADB approved a loan of $181 million for the project. ADB provided a capacity building technical assistance (TA)2 to improve project preparedness and to build the capacity of the UADD and the city-level project implementation units (PIUs) in line with ADB’s procurement procedures and safeguard requirements. In 2007, it was identified that the remaining four cities—Bhopal, Gwalior, Indore, and Jabalpur—required additional funding for various reasons. ADB approved a supplementary loan of $71 million on 13 October 2008; this was signed on 10 November 2008 and became effective on 3 December 2008. The revised estimated total investment cost of the project was

1 ADB. 2003. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to India for the Urban Water Supply and Environmental Improvement in Madhya Pradesh Project. Manila.

2 ADB. 2003. Capacity Building for Project Management and Community Mobilization in Madhya Pradesh. Manila (TA 4086-IND, $520,000 approved on 6 March).

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$383 million.3 Implementation arrangements for the supplementary loan remained the same, except for additional provisions for the use of advance contracting and retroactive financing, a revised implementation period, and continuous engagement of consultants. The original loan closed on 31 December 2012, the supplementary loan closed on 31 December 2013, and the project’s financial closure took place on 24 June 2014.

5. The project comprised the following three parts:

(i) Part A: Urban water supply and environmental improvement. The urban water supply and environmental improvement component aimed to improve and expand the urban water supply, sewerage and sanitation, storm-water drainage (SWD), and solid waste management (SWM) in the project towns.

(ii) Part B: Public participation and awareness program. The public participation and awareness program aimed to increase the awareness and participation of beneficiaries in project implementation. Two community funds under this program, the Area Improvement Facilities (AIF) and Community Initiatives Fund (CIF), were meant to support planning with poor communities on the part of municipal authorities, and integrate slum improvement into citywide infrastructure.4

(iii) Part C: Project implementation assistance. The project implementation assistance was designed to support the project management unit (PMU) and PIUs with activities directly related to project implementation.

6. The design and monitoring framework and project achievements are in Appendix 1.

II. EVALUATION OF DESIGN AND IMPLEMENTATION

A. Relevance of Design and Formulation

7. The project was relevant to government and ADB sector strategies at both formulation and completion. 5 It remains aligned with ADB’s Strategy 2020, which emphasizes infrastructure-led growth, poverty reduction, environmental protection, and institutional strengthening.6 The project aimed to help the state government achieve its goal of sustainable economic growth and poverty reduction in the state’s largest cities, by focusing on (i) reducing the vulnerability of people in these centers to environmental degradation, poverty, and natural hazards; and (ii) increasing economic opportunities in these centers by improving water supply services, sewerage and sanitation, SWD, SWM, and slums and poor settlements.7 It is also relevant to ADB’s policy focus on inclusive growth, infrastructure, and environmental sustainability;8 and consistent with India’s policy on the devolution of powers and functions, and institutional strengthening and capacity building in local governments.9

8. At loan appraisal, the project was consistent with India’s Tenth Five-Year Plan (2002–2007),

3 ADB. 2008. Report and Recommendation of the President to the Board of Directors. Proposed Supplementary Loan to India for the Urban Water Supply and Environmental Improvement in Madhya Pradesh Project. Manila.

4 Another component was the Water for Asian Cities Program covering urban water conservation and demand management, which was financed by UN-Habitat.

5 ADB. 1998. India Urban Sector Strategy. Manila.

6 ADB. 2008. Strategy 2020. The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020.

7 In December 2004, the project’s targeting classification was revised from “poverty intervention” to “targeted intervention-M”. The proposed city-level interventions in the water supply, sanitation, SWM, and the construction of a tertiary water distribution network and community toilets in slums were anticipated to contribute to the achievement of Millennium Development Goal 7, i.e., to ensure environmental sustainability in an inclusive manner.

8 ADB. 2013. Country Partnership Strategy: India, 2013–2017. Manila; ADB. 2013. Country Operations Business Plan: India, 2013–2015. Manila.

9 Government of India. The Constitution (74th Amendment) Act, 1992. New Delhi http://urbanindia.nic.in/programme/lsg/74th_CAA.pdf

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which emphasizes poverty alleviation, governance reforms, institutional capacity building, improved operation and maintenance (O&M) to ensure the effectiveness of infrastructure investments, and the financial strengthening of urban local bodies (ULBs). With regard to urban poverty alleviation and slum improvement, the plan emphasized the need to provide the slum population with improved water supplies and toilets, which were key focus areas under the project’s community funds. In the urban sector, the plan emphasized improving the water supply to achieve prescribed norms, a higher degree of reliability, water quality security, a high standard of O&M, accountability to customers, and recovery of user charges, which were the primary aims of the project’s urban water supply subcomponent.10

9. The adopted project loan modality was more relevant than the alternative program loan modality available at the time of initial approval, as program lending was deemed more suited to mature executing agencies. The loan modality remained the same for the supplementary loan.

10. The project was designed to address the specific urban infrastructure needs and priorities of the project towns. Based on a detailed problem analysis, the project preparatory TA identified six generic project components for the project cities: (i) urban water supply, (ii) sewerage and sanitation, (iii) SWD, (iv) SWM, (v) municipal action plans for poverty reduction (MAPPs), and (vi) institutional development.11 All of these subsectors were initially retained because they were pertinent to the cities’ needs. The SWM and sanitary landfill sites components were later dropped in Bhopal and Gwalior because no suitable site was available in Bhopal, and Gwalior had developed the facility under different funding.12 Similarly, the sewerage and drainage component was dropped in Indore due to subprojects undertaken under other funding sources.13 The proposed construction of five new sewage pumping stations in Jabalpur was dropped after it was established that altering the route of trunk sewers would cause sewage in the selected zones to be carried to the sewage treatment plant by gravity. These changes, which resulted in loan cancellations but did not require scope changes, enhanced the project’s relevance by ensuring the optimum utilization of funds and ensuring efficient infrastructure design.

B. Project Outputs

11. The major outputs achieved were (i) the rehabilitation of 12 water treatment plants (WTPs) (against a target of 9); (ii) the construction of 3 WTPs with a combined capacity of 525 million liters per day (mld), as planned; (iii) the laying of 2,447 kilometers (km) of new water supply pipelines (against a target of 1,030 km); (iv) the completion of 62 elevated service reservoirs (against a target of 58); (v) the laying of 317 km of new sewage pipelines (against a target of 399 km); (vi) the construction and rehabilitation of two sewage treatment plants (STPs) with a combined capacity of 75 mld, the engineering of 1 STP, and the construction of a pumping station with a capacity of 169 mld (against a target of 3 STPs); (vii) the construction of the 2 targeted landfill sites and procurement of targeted equipment; and (viii) the construction of 40 km of storm water drains (against a target of 110 km). The rehabilitation of 10 existing WTPs in Bhopal, Indore, Jabalpur, and Gwalior greatly improved operational efficiency, enhanced water productivity, and reduced power costs. In Indore, the replacement of a 30 year-old water main 1,200 millimeters (mm) in diameter by a main comprising 1,400 mm glass-reinforced plastic pipes reduced pumping head by 7 meters (m). The project improved the efficiency of the water supply system by (i) rehabilitating electrical and mechanical works, (ii) introducing soft starters on the Narmada and Yashwant Sagar pumping stations, (iii) constructing a 132/33 kilovolt substation and switching the power supply from low to high tension,

10

Government of India, Planning Commission. Tenth Five Year Plan (2002–2007). New Delhi. 11

ADB. 2001. Integrated Urban Development in Madhya Pradesh. Manila (PPTA 3759-IND). 12

Drainage works in Gwalior were dropped as they were funded under Urban Infrastructure Development Scheme for Small and Medium Towns.

13 Sewerage works in Indore were dropped as they funded under Jawaharlal Nehru National Urban Renewal Mission.

4

(iv) recycling process water, (v) constructing tunnels to reduce pumping head by 20 m, and (vi) installing supervisory control and data acquisition system to operate pumping stations and WTPs. This resulted in annual savings of about Rs83.15 million for O&M costs at the full capacity of 360 mld. Remaining tasks include (i) laying sewerage pipes, commissioning the pre-treatment facility, and fully commissioning the STP in Jabalpur;14 (ii) decommissioning old water supply pipelines in Bhopal; and (iii) providing interconnections between old and new water pipes in Indore. The state has assured to complete these tasks using its own funds. Changes in anticipated outputs occurred because (i) some components were dropped (para. 10) and available funds used to extend the water supply to additional areas to meet consumer expectations, and (ii) significant grant funding was available under the government’s Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) program.

12. MAPPs were prepared for the four project cities, including (i) the integrated upgrading of slums and poor settlements by improving water supply systems, sanitation, roads, and street lighting; and (ii) the implementation of planned public awareness campaigns for targeted slums. Furthermore, based on the preparation and partial implementation of financial improvement action plans (FIAPs), water tariffs in all four cities have been increased. A strategy to recover outstanding amounts against the electricity bills of municipal corporations was formulated, allowing the state government to recover the dues from ULB grants. Details of the expected outputs and those achieved are in Appendix 1.

C. Project Costs

13. In November 2012, the central government and state government agreed to resize the two loans. An uncommitted amount of $29 million was canceled ($20.0 million from the original loan and $9.0 million from the supplementary loan) due to savings from physically completed contracts, unused amounts from ongoing contracts under the original loan, uncommitted loan amounts, and the fact that some of the works were undertaken by the JNNURM and UIDSSMT.15 In August 2013, based on the government’s second request, $6.5 million was canceled from the supplementary loan, which was resized to $55.5 million.16 In December 2013, at the government’s third request, $2.5 million was canceled from the supplementary loan, which was resized to $53.0 million.17

14. The estimated project cost at the original loan appraisal was $303.5 million, including an unallocated $40.0 million for physical and price contingencies. During the processing of the supplementary loan, the revised project cost was placed at $383.0 million. The actual project cost at completion was $311.77 million, 81.4% of the revised project cost estimated during the supplementary loan appraisal. At completion, the ADB loan totaled $209.60 million, of which $158.02 million was under the original loan out of a revised allocation of $161.00 million, and $51.58 million was under the supplementary loan of $53.00 million. Loan savings of $4.40 million were canceled on completion. The project cost decreased from the estimate made during supplementary loan processing due to the appreciation of the US dollar against the Indian rupee and the dropping of a few sewerage, drainage, and SWM components (para. 10). Water supply projects costs increased due to an increase in the length of distribution pipelines in the project cities; this was funded from savings resulting from a reduced project scope and/or dropped sewerage projects in Indore and Bhopal. At completion, the contribution of the state government and four municipal corporations totaled $101.06 million.

14

The STP currently receives a flow of 18–20 mld, against a capacity of 50 mld. 15

ADB. 2012. Partial Cancellation of Loan Savings: Loan 2046-IND and Loan 2456-IND Urban Water Supply and Environmental Improvement Project (UWSEIP) in Madhya Pradesh. New Delhi.

16ADB. 2013. Partial Cancellation of Loan Savings: Loan 2456-IND Urban Water Supply and Environmental Improvement Project (UWSEIP) in Madhya Pradesh. New Delhi.

17ADB. 2013. Partial Cancellation of Loan Savings: Loan 2456-IND Urban Water Supply and Environmental Improvement Project (UWSEIP) in Madhya Pradesh. New Delhi.

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Appendix 2 provides details of the allocations under the original and supplementary loans and actual disbursements, and Appendix 3 compares the project cost at the loan appraisals with actual costs.

D. Disbursements

15. Disbursements were low in the initial period from June 2005 to December 2006. This was partly due to (i) the UADD’s low project readiness due to delays in recruiting consultants and establishing the onsite offices of the project management consultant (PMC) and design and construction supervision consultant (DSC), and (ii) the prevalent use of project implementation procedures more suited to locally financed projects by the state government and the municipal corporations. A lengthy decision-making process within the state government and municipal corporations resulted in slow decision making and delays in the award of contracts. The use of the state government’s schedule of rates, which is non-commensurate with market rates, caused substantial variations in bid prices compared to the cost estimates, leading to rebidding and further delays. As a result, the cumulative contract award in December 2006 was only $16.7 million.

16. Major business process reforms were introduced in early 2007. These facilitated (i) quick decision making, (ii) reliable costing at market rates and the consideration of factors that could cause variations in construction costs, and (iii) confidence-building measures among contractors, including workshops and confirming the commitment to pay 80% of claimed amounts within 3 days of bill submission. The reform’s effectiveness is reflected in the record amount of contract awards ($155.8 million) in 2007 alone. In 2008, the project disbursed $52 million, the highest amount disbursed in an urban loan in India. The reform became the strength of the project, providing lessons to other projects in India, and accelerated project implementation. The disbursements for both loans totaled $209.60 million (Appendix 4), which is 83.2% of the appraised loan of $252.0 million. The project mainly used the reimbursement method involving statements of expenditures and documented claims, and the direct payment method on few occasions. The loan allowed an imprest account, but this facility was not used. All disbursement-related qualifications raised by the auditors were addressed.

E. Project Schedule

17. The scheduled closing date for the original loan was 30 September 2009. The project schedule was affected by start-up delays in the first 18 months due to (i) delays in setting up a fully functional PMC and DSCs; (ii) the lack of scaled city maps and the consequent need to carry out detailed topographic surveys and utility mapping; (iii) delays in the approval of engineering designs due to the state government’s existing procedures for the approval of packages above $100,000; (iv) the preparation of cost estimates based on the approved schedule of rates, which did not take market rates into account; (v) the procurement of contracts from prequalified contractors only, resulting in low bidding participation; (vi) contractors’ lack of interest in bidding for the large packages for the municipal corporations, which were perceived as a risk to cash flows; and (vii) delayed identification of sites for resettlement, which in turn delayed the handing over of STPs and landfill sites to contractors in Jabalpur. In sum, the delays occurred primarily because (i) the existing implementation procedures were not aligned to the scale of the project, and (ii) its execution was marred by delayed decision making and variations in bid prices and cost estimates, leading to rebidding.18 To prevent such delays in project implementation, the PMU reformed its business procedures with ADB support by (i) waiving contractor prequalification and adopting open competition, (ii) facilitating quick decision making, (iii) introducing reliable costing attuned to market conditions, and (iv) building contractors’ confidence. The effectiveness of these reforms provided lessons to other projects in India. 18

Delays in the approval of engineering designs and cost estimates based on the approved schedule of rates rather than market prices were perceived as a risk by the contractors who prequalified for large packages, and created a lack of interest in the bidding process.

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18. The original loan was extended to 30 March 2011 in November 2008 and again to 31 December 2012 in December 2010. The closing date for the supplementary loan was extended in December 2010 from 30 September 2011 to 31 December 2012. To utilize savings resulting from the devaluation of the Indian rupee, additional works under the water supply component were included, requiring an additional 18 months. Sewerage and drainage works under the original loan took longer than expected at Bhopal and Jabalpur due to the difficulty of execution at some sites, design changes due to site conditions, and the termination of two large contracts in Jabalpur. In September 2012, the supplementary loan was extended a second time from 31 December 2012 to 31 December 2013 to enable important works to be included and completed. Less important works were reprioritized and removed from ADB financing, and are now being completed using government funds. All other works were completed by the end of 2013. Overall, project completion was delayed by 4 years and 3 months, mainly due to (i) the time taken by the ULBs and state government to decide which components to execute using JNNURM and UIDSSMT funds, which were available by the end of 2005; (ii) uncertainty about the escalation of material prices; and (iii) a shortage of contractors due to a sudden increase in construction activities.19

F. Implementation Arrangements

19. The implementation arrangements were appropriate to deliver the project’s envisaged design outputs. As the executing agency, the state government’s UADD set up a state-level PMU headed by a full-time project director who provided overall strategic guidance and supervision for project execution and was responsible for compliance with the loan covenants. The project director was supported by two deputy project directors, one who managed and implemented engineering works, and another who oversaw finance and administration. The PMU was adequately staffed and assisted by consultants with expertise in engineering, finance and accounting, social and gender development, institutional development, community development, procurement, resettlement, and urban planning. Appendix 5 details the overall implementation arrangements.

20. A state-level empowered committee was set up with the chief secretary as chair, the project director as member secretary, and the UADD principal secretary, UADD commissioner, and representatives of the Finance Department and Public Health and Engineering Department as members. The committee had full powers to decide on matters related to the project. City-level steering committees headed by the respective divisional commissioners as chairs were also established. A technical evaluation and assessment committee chaired by the project director was set up, and consisted of three chief engineers from the Public Health and Engineering Department and a representative of the Finance Department to carry out a technical and financial evaluation of each project component and advise the PMU.

21. PIUs headed by the concerned municipal commissioners were located within the participating municipal corporations to ensure greater ownership of the project. Each PIU was supported by a full-time senior engineer experienced in public health and environmental engineering, and was fully involved in the selection and finalization of project components, procurement, award of contracts, and implementation of project components. This created ownership in the PIU or ULB, built capacity, and paved the way for smooth implementation. PIU staffing was initially inadequate, but was eventually enhanced. Decision making authority was delegated to the mayor-in-council of each municipal corporation. Before issuing official correspondence to the PMU, the PIUs and municipal corporations held preliminary dialogues to reach consensus. This substantially reduced decision-making time. The

19

Contractor workshops and the waiving of prequalification in 2006 helped to address these issues. The contractor workshops aimed to brief the contractors about the nature of the works and likely challenges, and to assure them regarding the availability of funds and timely payments, the transparent measurement and billing process, the dispute resolution mechanism, and the grievance escalation matrix .

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PMU appointed a PMC, two DSCs, benefit monitoring and evaluation (BME) consultants, a public relations consultant (PRC), and a resettlement nongovernment organization.

G. Conditions and Covenants

22. Most of the loan covenants (21 of 23) were complied with. One covenant related to the award of a sewerage network contract in Indore did not remain applicable as the work was undertaken using JNNURM funds. The participating corporations have yet to comply fully with the covenant regarding financial reforms agreed in the FIAP. Although the metering of industrial, institutional, and bulk domestic consumers is complete, the introduction of a progressive block rate water tariff for individual domestic water consumers, as required by the loan covenants, was not achieved. Commercial establishments are charged a flat rate. Property tax reforms have been partly complied with. Audited project financial statements along with a management letter were submitted by the UADD till FY2014. Compliance with the audit observations in both the report and management letter is an ongoing process within the extant government system. All four municipal corporations have prepared their entity annual financial statements till FY2014 under the accrual-based, double-entry accounting system. The status of compliance with loan covenants is in Appendix 7.

H. Consultant Recruitment and Procurement

23. Consultants were engaged in accordance with ADB's Guidelines on the Use of Consultants (1999, as amended from time to time) and other arrangements satisfactory to ADB for engaging domestic consultants. An international consulting firm was engaged in 2005 as the PMC to support the project implementation, management, and monitoring. The PMC comprised international and domestic experts. Two national consulting firms were engaged as the DSC, one for Indore in the east and another for Bhopal, Jabalpur, and Gwalior in the west. The DSCs supported the project city PIUs’ design, implementation, and supervision activities; contract management; and the preparation and execution of the MAPPs. These project consultants were fielded within 3 months of loan effectiveness, with the support of the capacity-building TA consultants. A PRC was appointed to deal with public relations and awareness, and another consultancy firm engaged for project components’ BME in the project cities. All consultants were appointed following ADB’s quality-based selection procedures. The firms appointed under the original loan continued to provide services under the supplementary loan throughout the extended project implementation period.

24. ADB’s local and international competitive bidding procedures were followed to procure civil works contracts. Standard specifications for civil works using national codes, practices, and guidelines were compiled and incorporated into bid documents. This facilitated the standardization of project works and quality control. Initial bid failures due to the reasons stated in para. 17, were resolved through contractor outreach, contract repackaging, changing the threshold for international competitive bidding contracts to $10.0 million, and updating engineer’s estimates based on market rates.

I. Performance of Consultants, Contractors, and Suppliers

25. The overall performance of the consultants is rated satisfactory, although their performance varied in quality.20 The use of input-based rather than deliverable-based design contracts posed some

20

ADB. 2008. Report and Recommendation of the President to the Board of Directors. Proposed Supplementary Loan to India for the Urban Water Supply and Environmental Improvement in Madhya Pradesh Project. Manila. p. 11. para. 27 (iii) states that the executing agency found the performance of all of the consulting firms to be satisfactory. Hence, a decision was taken to retain the same firms during the extended loan period, through contract variations.

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challenges to the PIUs in consultant management.21 Inadequate pre-design data and a lack of scaled city maps in Bhopal, Jabalpur, and Gwalior delayed the finalization of designs and bid documents. The DSCs and PMC could not initially field quality staff for a few positions, which delayed engineering design activities; these staffing issues were later rectified.22 The contract awarded to the PRC in September 2006 was terminated in December 2009 due to poor performance.

26. Overall, the contractors’ performance is rated satisfactory. Most of the contracts for sewers and storm-water drains were delayed due to difficult site conditions and challenging completion schedules. Two large contracts for the laying of trunk sewers, one for the Jabalpur landfill, and one for construction of overhead service reservoirs at Gwalior, were terminated due to poor contractor performance. The works under the terminated contracts were subsequently executed by capable contractors. Two contractors initiated arbitration for dispute resolution. The performance of the suppliers is rated satisfactory.

J. Performance of the Borrower and the Executing Agency

27. The performance of the borrower and the executing agency is rated highly satisfactory. The borrower, represented by the government’s Department of Economic Affairs, chaired regular tripartite review meetings with ADB and the executing agency. These periodic meetings helped monitor and expedite the project’s physical and financial progress. The required counterpart funding was provided on time. The state government’s high project ownership was clearly exhibited through timely decisions, close monitoring, and willingness to complete unfinished works beyond the loan closing date using its own resources.23 The PMU’s capacity, leadership, and effort to steer the project through a major business process reengineering during 2005–2007 resulted in efficient and effective decision making.24 This improved the efficiency of project implementation and boosted stakeholder confidence. The PMU also guided the PIUs closely and regularly.25

K. Performance of the Asian Development Bank

28. ADB’s performance is rated satisfactory. ADB undertook regular review missions and closely monitored project progress, provided necessary advice, and facilitated discussions between the participating municipal corporations, the PMU, the PIUs, and the state and central governments, especially on timely project implementation and disbursements. Transparent procedures, regular monitoring, and interaction with the mayors of the municipal corporations as needed by ADB helped avert unnecessary interferences and smoothen project implementation. ADB helped build PMU and PIU capacity by providing their staff with training opportunities relating to project implementation in other regions, and offering continuous support. The state government identified cumbersome documentation requirements and at times overly bureaucratic processes as areas where ADB might improve. It also expressed that legal support from ADB for interpreting contract clauses, as well as

21

Time-bound, deliverable-based engineering consultancy contracts would have helped define the responsibilities and improve the accountability of both the consultants and PIUs.

22 Focus group discussions with low-income community beneficiaries during the PCR mission provided direct, highly positive feedback on consultant performance from the community and beneficiaries.

23 In the project’s initial stages, some decision-making delays were overcome through conscious and sustained efforts at business process reengineering.

24 Major business process reforms included (i) restructuring the organization for quicker decision-making, (ii) organizing a series of workshops in project cities with contractors to avoid a zero-bid scenario, and (iii) introducing a system of reliable costing during detailed engineering design.

25 The PIUs initially lacked qualified and experienced staff to review the consultants’ work and assist in the obtaining of data relating to existing systems in the cities. This hampered project progress in the early stages, and the consultants had to engage additional staff for data collection and survey work. The PMU guided the PIUs through the difficult initial phases, as well as the later stages.

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workshops for PMU and PIU staff on contractual issues, would have helped enhanced capacity.

29. UN-Habitat contributed $0.5 million in cofinancing and helped in awareness activities. The Department for International Development helped to develop the MAPPs, which were used to prioritize the AIF and CIF works. Interventions by both partners were very useful in meeting the project objectives.

III. EVALUATION OF PERFORMANCE

A. Relevance

30. The project was rated relevant to country and sector strategies at appraisal and on completion. It remained aligned with the government’s Tenth, Eleventh, and Twelfth Five-Year Plans by emphasizing improved infrastructure, governance, and the environment.26 It responded to India’s development targets, including the achievement of more rapid, inclusive, and sustainable growth, by removing infrastructure deficits, improving the quality and coverage of basic services, and enhancing environmental sustainability. Certain adjustments were undertaken to enhance the project’s relevance by ensuring the optimum utilization of funds and efficient infrastructure design.27 The project supported the urban sector targets articulated in the government’s Twelfth Five-Year Plan, and remains in sync with ADB’s country partnership strategy for India, which supports the government’s strategic goals.28 The project’s focus on sustainable economic growth and poverty reduction remained in line with the state government’s development objectives. The project also enhanced the capabilities of participating local bodies in handling large investments.

B. Effectiveness in Achieving Outcome

31. Overall, the project was rated effective in achieving its targeted outcome. In terms of the number of people benefited, the outcome indicators and targets in the design and monitoring framework were largely achieved. Of the 14 outcome indicators, one related to the FIAP was not achieved. The target for sewerage was reduced due to availability of grant funds from the government’s JNNURM and UIDSSMT programs and the reduced target was achieved. The outcome target for water supply was achieved in terms of the number of beneficiaries served and volume of supply to beneficiaries, but the target for a continuous supply could not be achieved in the absence of a water balance audit study. Drainage targets were substantially reduced as per the site requirements. Overall, the assessment indicates that over 85% of the outcome indicators were achieved. Effectiveness in achieving outcomes is assessed in the light of how targeted outputs were delivered. Some small impediments are identified; addressing them will be the key to attaining all anticipated benefits and outcomes.

(i) Improved access to water supply benefited 5.6 million people in the four cities. Most consumers in the project cities, including the poor, have benefited from a more reliable water supply in terms of improved supply hours, quality, and pressure, as compared to the baseline. The end-of-project BME survey showed that the percentage of beneficiaries who reported satisfaction with the improved water supply system reached 93% in Bhopal, 85% in Indore, 80% in Jabalpur, and 96% in Gwalior. A reduction in waterborne diseases, resulting in lower health expenditure, and greater awareness of the link between health and hygiene were reported in all four project cities. However,

26

Government of India, Planning Commission. 2012. Twelfth Five-Year Plan 2012–17. New Delhi. http://planningcommission.nic.in/plans/planrel/fiveyr/welcome.html

27 Changes due to the availability of grant funds from the government’s JNNURM and UIDSSMT programs could not have been anticipated at appraisal as these programs were announced in 2005. The scope changes served to ensure the effective utilization of available funds and enhanced the project’s relevance.

28 ADB. 2013. Country Partnership Strategy: India, 2013–2017. Manila.

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certain hurdles to greater effectiveness of the water supply project outcomes were observed in Indore and Bhopal.29

(ii) The SWD component in Jabalpur and Gwalior benefited 0.67 million people, against a target of 1.1 million people; this was largely due to the reduced scope of work in Gwalior from 110 km of drains to 26 km, as the city decided to drop this component and undertake the works with UIDSSMT funding. It has proven effective by successfully preventing waterlogging in vulnerable areas.30 The completion of SWD between Baldev Baug and Ukhari Nallah in Jabalpur not only improved hygiene and sanitary conditions but also facilitated the construction of a four-lane road along the nallah (drain), which has enhanced business and substantially increased property prices in the area. The BME survey revealed that the percentage of households reporting waterlogging has significantly declined from 48%, surveyed in 2006 to 19%, surveyed in 2013 in Jabalpur, and from 52%, surveyed in 2006 to 30%, surveyed in 2013 in Gwalior.31 Expenditure on house repairs due to flood damage is fairly low (<Rs5,000) for 79% of households in Indore and 90% in Gwalior, and higher (Rs10,000–Rs15,000) for the remaining households in the two cities.

(iii) The wastewater management component benefited 0.8 million people against an initial target of 1.6 million people, as the scope of work was reduced in Bhopal and the component was dropped in Indore. Some sewerage networks, pretreatment facilities, sewage pumping stations, and sewage treatment plants remain underutilized due to missing house connections.32 The end-of-project BME survey revealed an 11%–20% increase in the number of individual toilets in the project cities, and a significant reduction in the use of community toilets and open defecation.

(iv) The SWM equipment procured under the project has made solid waste collection more efficient in all four cities, benefiting the targeted 4.7 million people. The landfill site component was dropped in Bhopal due to the unavailability of land, and in Gwalior was constructed under a different program. Although the landfill sites in Indore and Jabalpur were constructed to the required standards, they are presently underutilized. The ULBs contracted out O&M separately, but this was not performed to the desired standards. The ULBs terminated these contracts, and a new O&M contract has been invited for Indore, while a waste-to-energy contractor has been engaged in Jabalpur. While the equipment and their utilization has benefited people in terms of an improved waste collection system, sanitary disposal remains difficult to achieve.

(v) As many as 39,266 people benefited from the CIF, and 47,566 persons benefited from the AIF. The project achieved its revised target coverage of 65 slums in the four project cities and promoted community ownership of the developed facilities. A policy decision was taken to form community group committees (CGC) whose membership included more than 50% women to promote gender-balanced, local community-based governance; 65 CGCs were formed with 760 members, of whom 556 (73.1%) women.33 The CGCs were responsible for coordinating and overseeing the initiatives relating to water supply and sanitation, and they continue to operate after project completion 29

In Indore, the project completion review mission observed that works executed at the intake and water treatment plant were of good quality and properly maintained, and that water was successfully brought up to the city. It also observed that in few areas works related to the water distribution network undertaken towards the end of the project did not benefit consumers as planned. The project objectives will be fully achieved when operational issues and lack of interconnections with the existing system are addressed.

30 Focused group discussion in Gwalior during the project completion review mission confirmed that people perceive the SWD subproject as highly successful as it has helped prevent or reduce the duration of waterlogging.

31 ADB. 2014. Benefit Monitoring and Evaluation: Endline Evaluation Reports for Bhopal, Gwalior, Indore, and Jabalpur. New Delhi.

32 At Jabalpur, arrangements have been made to improve the utilization of created assets. The STP, which was previously underutilized, has recently started receiving flow from a diversion on Omati nallah (a major drainage channel that receives the majority of the city’s wastewater), with a mechanism for the screening of solids. The Jabalpur municipal corporation is in the process of making the STP functional. The ULB has decided to engage the services of an independent O&M contractor for sewerage facilities, using its own resources.

33 The majority of the CGCs visited during the project completion review mission were found to be functional.

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by liaising with local government officials. The project ensured women’s representation in leadership positions within the CGC, and provided equal training opportunities to men and women. Community capacity building involved 953 persons, of whom 727 (76.2%) were women. Vocational training was provided to 4,490 people, of whom 3,610 (80.4%) were women. Women were encouraged to learn and pursue non-traditional livelihood activities such as motor driving and masonry work.34 Educational support benefited 1,228 school children, including 740 girls (60.2%). A total of 24,356 slum dwellers, including 16,604 women (68.1%), participated in health camps. During appraisal, women prioritized toilets and an improved water supply. The communities influenced designs in many instances.35 The construction of toilets, common water facilities, and community halls, including contract awards and the supervision of works, was managed by female CGCs. Improved access to water supplies in slums has led to time savings in fetching water for women, who can now participate in more economic activities. The constructed toilets are convenient and safe facilities for women from poor communities. Appendix 10 summarizes the processes, benefits, and achievements of the AIF and CIF activities.

32. Gender. The project was categorized as effective gender mainstreaming. A comprehensive gender action plan (GAP) was included in the loan design and provided an extensive and detailed comprehensive gender strategy with multiple actions to enhance project benefits for women. Targets were set for the participation of women in all activities, including decision making. A gender manual was developed to guide the integration of gender in the project. The manual was a practical guide for integrating gender in the MAPP processes, including the formation of CGCs, problem identification and analysis, strategy formulation, implementation, monitoring, and evaluation. Special measures were taken to ensure women’s participation in community-driven planning and decision making, and the active participation of women was encouraged and supported. The achievements of the GAP activities are in Appendix 9.

33. Social safeguards. The project was classified as category B for involuntary resettlement and category C for indigenous peoples. Resettlement management followed ADB’s social safeguards requirements. A single short resettlement plan was prepared to address impacts on non-titleholders using the proposed landfill and sewage treatment plant site at Kathonda, Jabalpur. The resettlement plan was implemented and resettlement was successful.36 After the plan’s implementation, affected persons perceived improved economic activities, better living conditions, and a higher quality of life.37 No pending involuntary resettlement issues were flagged during review missions and no complaints were received. Implementation issues such as obstructions to shops were rectified through inspection and prompt action. Outreach campaigns spearheaded by high-level government officers helped build positive public opinion on the project. The efforts of the resettlement nongovernment organization and DSC were key to the successful implementation of the resettlement plant. Reporting on safeguards was regular and institutional arrangements for safeguards were satisfactory.38

34

The project focused on the promotion of entrepreneurship, skills development, and livelihood activities in slums in the project cities. Women were encouraged to undertake skill development program and assisted in finding jobs.

35 Focus group discussions during the project completion review mission revealed that slum communities influenced design decisions (e.g., road widths and community toilet plans with separate entries and exits for men and women). Community members emphasized that they had actively participated in supervision and investment prioritization, that the facilities are being used and maintained, and that user charges are being collected.

36 The actual permanent impacts remained the same as assessed at appraisal. Potential temporary impacts identified in sections ready for the implementation of pipe-laying works were avoided or mitigated through night work in congested areas and ensuring access to properties. There is no data on the extent of temporary impacts identified and avoided or mitigated.

37 Affected persons were provided with alternate land within a 1 km radius where they could continue their livelihood activities. Tenure security at the resettlement site enabled affected persons to invest in two-storey houses, instead of the temporary houses where they had been living.

38 ADB. 2013. Aide-Mémoire of Loan Review Mission 17–22 Feb 2013. New Delhi (Loan 2456-IND).

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34. Environment. Environmental assessments were undertaken and safety, health, and environmental measures incorporated in all contracts. Contractors were initially slow to comply with requirements, but later monitoring by ADB and the PMU ensured compliance. The required consents to establish and operate were obtained. Overall, the project has improved the environment in the four cities. However, the landfill sites in Indore and Jabalpur are not well-managed, and the state government must take corrective action to improve environmental health outcomes.

35. The project successfully introduced several innovative practices, including (i) the use of an e-tendering procurement process, (ii) trenchless technologies for laying sewers under railway lines, (iii) the laying of water supply mains through tunnels to minimize pumping head and save power costs, (iv) the certification of 80% of account payments to contractors without pre-auditing invoices within 7 days of invoice submission, and (v) the procurement of software for designing the water supply and sewerage networks.39 The project also evolved successful approaches to consensus building and engaging with political leaders, ensuring smooth execution. Holding the PIUs accountable for design, procurement, implementation, certification of works, and measurement ensured their involvement and ownership. The adoption of standard safety health and environment practices in contracts helped make operations uniform and greatly improved safety performance. The municipal corporations underwent regular external audits and issued annual financial statements.40 Other good practices included facilitating community development through the MAPP, and empowering women from poor areas through vocational and leadership training. These practices enhanced project effectiveness.

C. Efficiency in Achieving Outcome and Outputs

36. Overall, the project can be rated efficient in achieving its intended outcome and outputs. Economic analysis at the supplementary loan appraisal stage assessed EIRRs ranging from 10.3% (Indore) to 38.2% (Jabalpur) for water supply projects, from 10.5% (Jabalpur) to 32.8% (Indore) for sewerage projects, and from 19.4% (Gwalior) to 39.7% (Bhopal) for solid waste projects. On completion, economic analysis showed that all projects are viable with EIRRs mostly exceeding the benchmark rate of 12%. Only two of the 10 completed subprojects have an EIRR lower than 12%.The EIRRs of the water supply projects ranged from 10.7% (Indore) to 28.6% (Bhopal), of the sewerage projects from 10.1% (Jabalpur) to 12.5% (Bhopal), and of the SWM projects from 15.9% (Jabalpur) to 35.3% (Indore).41 However, at project completion the EIRRs were marginally lower than at appraisal mainly due to cost increases (1.6%–86.5%) and implementation delays of 2–4 years, which is below the sector average delay of 5 years. A notable exception is the Indore water supply subproject, which achieved significant O&M cost savings. Details of the economic analyses are in Appendix 8.

D. Preliminary Assessment of Sustainability

37. Overall, the project is rated likely sustainable. This is based on the assessment that the state government is committed to implement financial reforms and until such time that the reforms are fully achieved, the municipal corporations42 have the necessary available funds in the form of grants as well as income from their own sources for the O&M of most of the created assets, although they have not yet dedicated funds for this purpose. The sustainability of the AIF and CIF components is assessed as highly likely. The, strong sense of ownership of the communities that maintain the facilities, enhanced capacities of ULBs, and empowerment of beneficiaries indicate this likelihood. The sustainability of SWM in Bhopal and Indore is likely, as the cities have introduced waste disposal

39

Software for designing water and sewer networks was procured to ensure that the PMU and PIUs could access drawings based on lessons learned from previously implemented ADB projects.

40 In all four municipal corporations, annual accounts were compiled through FY2014.

41 The sewerage project in Indore and SWM project in Gwalior were dropped and hence not evaluated on completion.

42 Based on annual financial statements from the last 5 years and projections for the next 10 years.

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charges for a section of consumers, and charges will be introduced in Jabalpur in the coming year.43 The water supply component in all the project towns has significantly contributed to sustainable urban service delivery by reducing nonrevenue water and O&M costs. The FIAP is not fully implemented, O&M costs are not being fully recovered, and collection efficiencies are low. The state government’s commitment to financial reforms will likely ensure that financial reforms are implemented.44 In addition, incomes from other sources and budgetary allocations and grants to the municipal corporations, as well as human resources will likely be available for O&M.

38. On completion, financial internal rates of return (FIRRs) are assessed as ranging from 2.0% (Indore) to 6.9% (Bhopal) for water supply projects, from 2.3% (Bhopal) to 3.2% (Gwalior) for completed sewerage projects,45 and from 0.8% (Jabalpur46) to 18.0% (Indore) for completed SWM47 projects. These are marginally lower than the FIRRs assessed at the supplementary loan appraisal stage due to the partial implementation of the FIAP, tariff revisions, and cost and time overruns. The weighted average cost of capital (WACC) was assessed at 3.44% on completion. When compared with the WACC, all projects had positive FIRRs, and a few projects exceeded the WACC with a positive financial net present value. All of the projects were found to have achieved full O&M recovery, and a few had full cost recovery. With the implementation of the proposed FIAP and the ongoing e-Nagar Palika reforms, to which the state government is fully committed (footnote 44), all projects can be expected to achieve full cost recovery during the analysis period. Details of the economic, financial, and financial sustainability analyses are in Appendix 8. Overall, the environmental sustainability of water supply, sewerage, sanitation, and drainage interventions is likely. Environmental sustainability will be further enhanced with the proper management of the two created landfill sites, as envisaged.

E. Impact

39. Economic and social impacts. The rate of growth in gross state domestic product at constant prices increased from 5.31% in FY2006 to 10.19% in FY2014.48 Poverty in urban areas of the state has reduced significantly, from 42.7% in FY2005 to 21% in FY2012. Despite this, the extent of poverty (21%) in Madhya Pradesh is higher than in India overall (13.7%).49 Although economic growth and poverty reduction cannot be solely attributed to the project, it has led to economic benefits and huge positive impacts on the poor in terms of empowerment through meaningful participation and equal access to improved services. Water supply projects ensured coverage and affordable tariffs for most households, including the poor, in project areas.

40. Institutional impacts. The institutional capacity of the UADD and participating municipal corporations (technical staff, management, and elected representatives) increased in areas like

43

Only equipment was procured in Gwalior and Bhopal, while equipment and landfills were provided in Indore and Jabalpur. All four cities put the procured equipment into operation.

44 The state government is committed to implementing the ongoing e-Nagar Palika system in all the state ULBs. The computerized municipal administration system being rolled out covers citizen services (such as property tax, user charges, and grievances) and ULB functions (payroll, financial accounts, legal cases, materials management and fleet management). This targets a key recommendation of the 14th Finance Commission on the levy of service charges to recover O&M expenditure at minimum. The government is also carrying out similar reforms under the Atal Mission for Rejuvenation and Urban Transformation guidelines.

45 Sewerage charges had not been introduced in project towns at the time of the PCR evaluation. Based on discussions with the government, tariff introductions and revisions will be considered for evaluation from FY2017.

46 SWM charges have not yet been introduced in Jabalpur. Based on discussions with government, SWM tariff introduction and revisions will be considered for evaluation from FY2017.

47 In Bhopal, solid waste charges are levied at Rs30 per month per domestic consumer for about 50% of consumers, and in Indore, user charges are being levied for non-domestic consumers only.

48 Gross State Domestic Product for Madhya Pradesh (2014-15).

49 Government of Madhya Pradesh, State Planning Commission. 2005. District-Wise Poverty Estimates for Madhya Pradesh. Bhopal; Government of India, Planning Commission. 2013. Press Note on Poverty Estimates. New Delhi.

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contract management, safeguards, and project formulation as a result of the project.

41. Gender. The project successfully contributed to longer-term capacity in the sector to address gender issues and ensure that the project benefits both women and men.50 The project improved access to sustainable water supplies and sanitation in the four cities.51 With improved household access to water, women have reported more frequent bathing and washing, and the ability to bathe in privacy. In the four cities, 4,209 households contributed 10% of the total cost of constructing individual toilets. Women built on skills developed during social mobilization initiatives and project activities to ensure improved income generation, and many remain active community leaders.

IV. OVERALL ASSESSMENT AND RECOMMENDATIONS

A. Overall Assessment

42. Overall, the project is rated successful. It was appropriate and relevant to the policies of the government and ADB, and remained so on completion. The project is rated effective in achieving the planned outcomes of reducing people's vulnerability to environmental degradation, poverty, and natural hazards; and increasing economic opportunities. The project is rated efficient, and an economic evaluation of project components has reconfirmed the project’s economic viability. Sustainability of the project is considered likely. The project strengthened the institutional capacity of the executing agency.

B. Lessons

43. The project yields the following important lessons:

(i) Fully staffed PIUs and involving municipal engineers in project design and implementation supports local knowledge and creates ownership and commitment.

(ii) Financial covenants should be realistic. Fully involving state and municipal authorities and elected representatives in the preparation, implementation, and monitoring of FIAPs along with intensive public awareness campaigns may help achieve full implementation of the FIAPs.

(iii) Advance actions for procurement and clearances help support timely completion. In addition, the procurement of satellite images and scaled maps and surveys before creating detailed designs can lead to more efficient outcomes, and help avoid design changes and delays.

(iv) That small investments can have large impacts can be seen in the rehabilitation of old water treatment plants in Bhopal, Jabalpur, and Gwalior, and in the AIF and CIF components.52

(v) A cutoff date should be decided for the selection, design, and procurement of project components to allow enough time for the proper implementation of these components.

(vi) The size of contract packages should be optimized based on market conditions to attract contractors. Incentives for quality and timely delivery may foster better contractor performance.

(vii) A water balance audit as a mandatory part of nonrevenue water projects would lead to proper design. An integrated supervisory control and data acquisition system for the water supply would support smooth operation.

(viii) Household service connections for urban water and sewerage should be part of the project scope to ensure the optimum utilization of outputs and timely delivery of benefits.

50

ADB. 2015. Gender Equality Results Case Study: Urban Water Supply and Environmental Improvement Project. 51

The number of women benefitting from water supply and toilets is not available. As per the 2011 census, women account for approximately 47% of the population of the four project towns. Based on census data and BME report, about 2.6 million women benefitted from access to treated water, 0.3 million women benefitted from improved access to sewerage and sanitation, and 2.2 million women benefitted from SWM services.

52 The rehabilitation of old WTPs greatly enhanced the availability of treated water as well as lowering power and O&M costs and led to the recovery of investments through energy savings and nonrevenue water reduction.

15 15

(ix) Innovative practices such as e-tendering, the use of trenchless pipe-laying technologies, and the simplified certification of contractors’ invoices aid timely project execution.

(x) For robust safeguards compliance monitoring, formats with specific monitoring parameters should be included in contracts. Information, education, and communication campaigns are required throughout project implementation, to address people’s concerns expediently.

C. Recommendations

1. Project Related

44. Further action or follow-up. These include the execution of works that would ensure envisaged benefits to consumers, such as (i) interconnections of existing and new water supply pipes, (ii) works to ensure the continuity of sewerage networks, (iii) the laying of pipeline for sewage flow to STPs, (iv) the restoration of power to the pre-treatment facility, (v) engagement of an independent agency for O&M of the STP at Jabalpur, (vi) the execution of household service connections in Bhopal in 3 months, and (vii) monitoring by the UADD.

45. Covenants. Covenants on tariff reforms should be supported by a long-term plan with intermediate steps for the short-, medium-, and long-term, to recover O&M costs in full.

46. Future monitoring. The executing agency and municipal corporations should monitor O&M through periodic audits to ensure the sustainability of the created facilities.

47. Institutional capacity building. A mix of permanent government and municipal employees and long-term consultants in the PMU and PIUs will help build in-house capacity.

48. Timing of the project performance evaluation report. The project performance evaluation report should be prepared at the end of 2018. The execution of works to ensure benefits as envisaged at the consumers’ end (para. 43) will be followed up by the project performance evaluation report.

2. General

49. The project completion report makes the following general recommendations:

(i) Expanded technical assistance inputs. More advanced project preparedness is required, using ADB’s project design facility if necessary.

(ii) Mapping of utilities. Proper mapping of existing utilities and the use of available scaled maps during design would enable precision and rationalize contingency provisions.

(iii) Contract packaging. Contract packaging should be based on technical parameters, size, the availability of potential contractors, and the equitable distribution of risks.

(iv) Contract management. Partial payment of the running account bill and the release of the remaining amount post-audit is recommended. The facility would cease if over 10% variation is observed. This would enable contractor cash flows and encourage accurate bill submission.

(v) Engagement of a contracts and legal expert. Executing agencies should engage a contracts and legal expert from the beginning to assist with the review of standard contract documents and address claims, interpret contract clauses, and deal with disputes.

(vi) Consultancy. Consultant payments for designs based on deliverables, and for supervision based on inputs, and for timely delivery and the efficient use of experts’ inputs improve accountability.

(vii) Operation and maintenance. The contracts for major works should include provisions for the contractor to undertake at least 5–10 years of O&M, with output guarantees along with the procurement of anticipated spares and O&M training of maintenance staff.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary Performance Targets/Indicators Project Achievements

Impact Economic growth enhanced in a sustainable manner, and poverty reduced in the four municipal corporations of Madhya Pradesh.

By end of the project period (2011): (i) Per capita real income increased by 5% in the four municipal corporations. (ii) Percentages of households below the poverty line in the project towns reduced below the 2008 level. (iii) Employment increased in the project towns and state overall. (iv) Perception of urban services improved among town residents, and particularly the poor.

At project completion: (i) Overall per capita income at constant prices in the state increased by 6.85% in FY2013, by 7.99% in FY2014, and by 8.8% in FY2015 (per capita income for urban areas not available). (ii) Proportion of urban below poverty line households in the state reduced from 42.7% in FY2005 to 21% in FY2012. The majority of these households are known to comprise residents of the 4 largest towns. (iii) The employment rate and broad usual activity status in Class I towns in Madhya Pradesh was 446 persons/1000 in 2012 (national sample survey organization 68th round). Baseline data is not available. (iv) End-line BME reports indicate that, on average, 79.8% of urban residents in project cities indicate improved urban services in their ward as a result of the project.

Outcome The four municipal corporations reduce people’s vulnerability to environmental degradation, poverty, and natural hazards, and increase economic opportunities.

By end of the project period (2011), the four municipal corporations have (i) Recovered O&M costs from user charges in accordance with the rescheduled FIAP. (ii) Provided 24-hour access to a treated water supply at 135 lpcd to 5.6 million people (83% of the population of the project towns). (iii) Provided access to sewerage and sanitation to 1.6 million people (24% of the population of the project towns).

By end of the project period (2013): (i) 52% O&M cost recovery for water supply was achieved in the 4 cities. (ii) According to the BME report, a total of 5.6 million people, of whom 2.6 million (47%) were women, in the four cities benefited from access to treated water supply at 135 lpcd. A continuous water supply not achieved as the water balance audit was not conducted. (iii) A total of 0.8 million people, of whom 0.3 million (47%) were women, were provided with improved access to sewerage and sanitation services. Dropping of STPs in Gwalior and Indore and the reduced scope of work pertaining to sewer pipe laying contributed to lower than envisaged benefits

Appendix 1 17

Design Summary Performance Targets/Indicators Project Achievements

(iv) Reduced the volume of waste water discharged to storm drains by 60%. (v) Provided flood protection to 1.1 million people (16% of the population of the project towns). (vi) Provided SWM services with sanitary disposal to 4.7 million people (70% of the population of the project towns). (vii) Provided basic urban services to people residing in 75 slum areas. (viii) Provided livelihood programs and infrastructure to poor, marginalized, and vulnerable groups. By end of the project period (2011) the residents of the four municipal corporations have (ix) Reduced water expenses (from the 2003 baseline), (x) Reduced levels of waterborne diseases (from the 2003 baseline), (xi) Reduced health expenses on waterborne disease (from the 2003 baseline), (xii) Reduced expenses of flood

(iv) Achieved (v) Flood protection was provided to 0.67 million people in the project towns; the reduced scope of work in Gwalior from 110 km to 26 km, contributed to lower than envisaged benefits. (vi) 4.7 million people benefited from the SWM services, of whom 2.2 million (47%) were women. (vii) Basic urban services were provided to people residing in 65 slums (revised number of target slums) (viii) Livelihood programs and infrastructure provided to poor, marginalized, and vulnerable people. (ix) The BME reports confirm that the percentage of households that do not need to purchase water due to improved services is 97.99% in Bhopal, 99.10% in Gwalior, 82.00% in Indore, and 99.90% in Jabalpur. Focus group discussions revealed that households in all 4 cities have perceived significant reductions in water expenses. (x) and (xi) Baseline data on waterborne disease incidence and health expenses is not available. According to the BME survey results, loss of schooldays due to waterborne diseases has reduced from an average of 13 days to an average of 4.5 days per year. The number of working days lost due to waterborne diseases has halved in the project towns, indicating the reduction in waterborne disease incidence and health expenses. (xii) Baseline data on flood damage

18 Appendix 1

Design Summary Performance Targets/Indicators Project Achievements

damage recovery (from the 2003 baseline), and (xiii) Become aware of the benefit of urban services and are more willing to pay for urban services. (xiv) By end of the project period (2011), property values of the improved area have increased.

recovery expenses is not available. On average, 78% of households in the project cities indicated expenses of <Rs5000 on flood damage recovery, and 22% indicated higher expenses according to the end-line BME. Focus group discussions during the project completion review mission revealed reduced expenses on flood damage recovery. (xiii) Levels of willingness to pay for water supply services are high in Bhopal (98.75%) and Indore (84.57%), but low in Gwalior and Jabalpur, averaging 22%, according to the end-line BME reports. (xiv) The end-line BME reports for Bhopal and Jabalpur recorded the community’s perception of increased property values as a result of project interventions.

Outputs:

The four municipal corporations improve their water supply service.

By end of the project (2011) the four municipal corporations have

(i) Revised tariff levels in accordance with the rescheduled FIAP

(ii) Reduced nonrevenue and unaccounted-for water in accordance with the rescheduled FIAP,

(iii) Improved tariff collection efficiency in accordance with the rescheduled FIAP, and

(iv) Managed water demand levels. The Bhopal municipal corporation has: Completed construction of and is

operating seven WTPs at total capacity of 198 mld, and

Completed construction of and is providing more water to additional customers through about 200 km of new distribution networks.

(i) Unmetered domestic tariffs implemented in all project cities. No volumetric tariff implemented, except for bulk consumers in Indore and Bhopal. (ii) Nonrevenue and unaccounted-for water reduced. (iii) Tariff collection efficiency ranged from 11% in Indore to 47% in Bhopal, against an average target of 75%. (iv) Water demand levels managed. Systems in the four cities were designed to meet water demand for 25 years.

The rehabilitation of 7 WTPs (88.53 mld) and raw water pumping stations completed.

7 Reservoirs of 14.25 ml capacity, 6.882 km of transmission mains, and 644.74 km of distribution network laid.

Appendix 1 19

Design Summary Performance Targets/Indicators Project Achievements

Gwalior municipal corporation has: Completed the rehabilitation of

and is operating two WTPs at total capacity of 32 mld,

Completed the construction of and is operating a new 45 mld WTP,

Supplied a greater volume of water through augmented pipes, and

Completed construction of and is providing more water to additional customers through about 200 km of new distribution networks.

Indore municipal corporation has: Completed the construction of and

is operating one WTP at 360 mld (including raw water intake, and pumping stations), and

Completed the construction of and provides more water to additional customers through 70 km of trunk mains and about 400 km of distribution networks.

Jabalpur municipal corporation has: Completed the construction of and

is operating one WTP at a total capacity of 120 mld, and

Completed the construction of and provides more water to additional customers through about 160 km of distribution networks.

Leakage detection and repairs to pipe lines 300 mm in diameter and larger completed.

14 electromagnetic flowmeters installed on feeder mains for water measurement and audit and 1984 meters installed on non-domestic connections.

Completed rehabilitation of 2 WTPs and pumping stations of 135 mld.

Completed

13.20 km of transmission mains,

45.59 km of feeder mains installed, and 20 reservoirs (42.90 ml) constructed to supply more water

309.93 km of a new distribution network developed

Installed 19 flow meters and 1,100 meters more than 0.5” in diameter on non-domestic water connections.

The rehabilitation of 1 WTP and 2

existing clear water pumping stations completed.

Construction of a new intake structure and 900 mld RWPS completed.

63.04 km of transmission mains, 80.26 km of feeder mains, and 670.00 km of distribution network installed. 27 reservoirs (78.50 ml) constructed

Construction of 120 mld WTP with a

220 mld intake and RWPS completed.

Rehabilitation of 2 WTPs at Bhongadwar (27 mld) and at Ranjhi (54 mld) completed.

35.70 km of transmission mains and a 579.38 km distribution network installed.

13 no. reservoirs with a 23.2 ml capacity constructed.

Rectification of the intake gate, dam, and overflow section of the

20 Appendix 1

Design Summary Performance Targets/Indicators Project Achievements

Pariyat Dam completed. 574 bulk water meters on non-

domestic connections installed. 2. The four municipal corporations improve their sewerage, drainage, and sanitation services.

By end of the project period (2011), the four municipal corporations (i) Manage sewage generation, and (ii) Have introduced sewerage tariffs in accordance with the rescheduled FIAP.

Bhopal municipal corporation has: Completed the construction of and

is collecting sewage from about 190 km of new sewage lines, mostly in Old Bhopal zones.

Gwalior municipal corporation has: Completed the construction of and

is operating two STPs at total capacity of 60 mld, and

Completed the construction of and is operating SWD works of about 110 km in length.

Indore municipal corporation has: Completed the construction of and

is collecting sewage from 9 km of new sewage lines.

Jabalpur municipal corporation has: Completed the construction of and

is operating one STP at total

(i) Systems designed to manage sewage generation for 25 years. (ii) Sewerage tariffs were not introduced.

124.10 km of sewer lines laid: 33 km to make functional the existing sewage pumping station and sewer network constructed under the Bhoj wet land project; and 85.10 km of new sewers, 2.61 km of pumping main, and 3.93 km of a gravity main laid to cover new areas.

Construction of a new 169 mld sewage pumping station at Ginnori, and the rehabilitation of a 25 mld STP at Mohali Dhamkheda completed.

6 pieces of sewer jetting and vacuum cleaning equipment procured.

Detailed survey, engineering, and design to drain Patra Nallah completed.

3 pieces of sewer jetting and vacuum cleaning equipment procured.

Engineering and design of an 88 mld STP completed. This component was shifted under a scheme fully financed by the Government of India.

26.432 km of SWD were

constructed in the city center.

Projects under this component were shifted under a scheme fully financed by the Government of India’s special fund.

Construction of a 50 mld STP is complete, and it has started

Appendix 1 21

Design Summary Performance Targets/Indicators Project Achievements

capacity of 50 mld, and

Completed the construction of and

is collecting sewage from about 200 km of new sewerage lines.

receiving flows from the diversion on Omti Nallah. Power to be restored to the pre-treatment facility.

61.549 km of a sewer network completed. The construction of 5 sewage pumping stations (included under original scope) was eliminated by re-engineering and a detailed survey of the city.

7.44 km of SWD constructed

3. The four municipal corporations improve their SWM services.

By end of the project period (2011), the four municipal corporations have (i) Introduced and revised tariffs in accordance with the rescheduled FIAP, and

(ii) Completed the procurement of and is operating equipment for collecting, hauling, and compacting solid waste.

Indore and Jabalpur municipal corporations have Completed the construction of and

are operating landfill sites.

(i) Tariffs introduced (a) in Indore, for non-domestic consumers; and (b) in Bhopal, in 50% of the city area, where a charge of Rs30/household/month is levied. Bhopal 1 bulldozer, 2 excavators, 1 front

end loader, 6 dumpers, 7 refuse compactors, 11 dumper placers, 500 containers, and 600 push carts were procured.

Jabalpur 2 sanitary landfill pits (2.77 lac

metric tonne) were constructed. 1 bulldozer, 1 chain-mounted

excavator, 1 front end loader, 2 dumpers, 1 mechanical road sweeper, 103 dumper placer containers, 407 containers, and 486 push carts were procured.

Indore A sanitary landfill single pit (3.06 lac

metric tonne) was developed. 1 bulldozer, 1 backhoe loader, 1

front end loader, 4 dumpers, 4 truck-mounted compactors, refuse compactors, 20 dumper placers, 480 containers, 480 push carts, and 1 ride-on mechanical sweeper were procured.

4. The four municipal corporations improve slums and poor settlements.

By end of the project period (2013), the four municipal corporations will Implement a municipal action plan

for poverty reduction,

Implemented in the 4 project cities.

22 Appendix 1

Design Summary Performance Targets/Indicators Project Achievements

Implement the AIF and CIF, and Improve water supply, sanitation, and drains in slums and poor settlements.

Bhopal AIF: Construction of 811 individual

household toilets, 4 community toilets, 2 community halls, 15.10 km of concrete roads, and 16.23 km of SWDs was completed.

CIF: Vocational trainings, health camps, social security, educational support programs were held and exposure visits to other towns were organized for representatives of the communities.

Gwalior AIF: Construction of 911 individual

household toilets, 1 community toilet, and 1 community hall, and the rehabilitation of 7 community toilets and 3.23 km of sewer lines were completed.

CIF: Vocational training, health camps, social security, and educational support programs were held, and exposure visits were organized for community representatives.

Indore AIF: Construction of 457 individual

household toilets, and the rehabilitation of 4 community toilets and 1.1 km of concrete roads were completed.

The community-managed water supply scheme was implemented in one of the selected poor settlements.

CIF: Vocational training, health camps, social security, and educational support programs were held, and exposure visits were organized for community representatives.

Jabalpur AIF: Construction of 2,030 individual

household toilets, rehabilitation of 6 community toilets, and a community-managed water supply scheme was completed for 782 households.

CIF: Vocational training, health camps, social security, and educational support programs were held, and exposure visits were organized for community representatives.

Appendix 1 23

Design Summary Performance Targets/Indicators Project Achievements

5. The UADD and four municipal corporations improve their project management capacity.

The UADD and four municipal corporations will have (i) Developed a project administration manual by June 2005,

(ii) Developed a project financial management manual by June 2005, and

(iii) Developed standard bid documents by June 2005,

By the end of the project period (2011), the UADD and four municipal corporations will have:

(i) Reduced discrepancy in projection and results of contract awards and disbursements by 10%,

(ii) Not mis-procured, (iii) Issued quarterly progress reports to the financier on time,

(iv) Reduced the number of audit comments from external auditors,

(v) Reduced the number of rejected disbursement requests, and

(vi) Processed and produced the necessary safeguards compliance documents and reports before contract awards.

(i) Developed (ii) Developed (iii) Developed (i) Achieved (ii) Achieved (iii) Achieved (iv) Achieved (v) System in place for an audit, and is an ongoing process (vi) Achieved

ADB = Asian Development Bank, AIF = Area Improvement Facilities, CIF = Community Initiatives Fund, FIAP = financial improvement action plan, GOMP = Government of Madhya Pradesh, km = kilometer, ml = million liter, mld = million liters per day, mm = millimeter, O&M = operation and maintenance, PPMS = project performance monitoring system, RWPS = raw water pumping station, STP = sewage treatment plant, SWD = storm-water drainage, SWM = solid waste management, UADD = Urban Administration and Development Department, WTP = water treatment plant.

Note: The design and monitoring framework was revisited during supplementary loan processing. Performance targets and indicators of the framework were retained or refined during supplementary loan processing.

24 Appendix 2

ALLOCATION, REALLOCATION, AND ACTUAL DISBURSEMENT

ORIGINAL LOAN (LOAN 2046)

($ million)

Category Code Category ADB Financing

Original Allocation

Revised Allocation

(17 Dec 2012)

Net Amount

Available Amount

Disbursed Undisbursed

Balance

01 Civil Works 75% (23% foreign and 52% local expenditure)

120.53

144.28 144.28 141.82 2.46

02 Equipment and Materials

100% of foreign and 70% of local expenditure

20.70 4.23 4.23 4.18 0.05

03 Area Improvement Facilities

80% of local expenditure

3.28 0.00 0.00 0.00 0.00

04 Community Initiatives Fund

80% of local expenditure

1.28 0.00 0.00 0.00 0.00

05 Consulting Services

100% of foreign and 80% of local expenditure

12.74 12.49 12.49 12.02 0.47

06 Unallocated 22.47 0.00 0.00 0.00 0.00

Total 181.00 161.00 161.00 158.02 2.98

Source: Asian Development Bank loan financial information system.

Appendix 2 25

SUPPLEMENTARY LOAN (LOAN 2456) ($ million)

Category Code Category ADB Financing

Original Allocation

Revised Allocation (Dec 2012)

Revised Allocation

(Aug 2013)

Last Allocation (Dec 2013)

Net Amount

Available Amount

Disbursed Undisbursed

Balance

01 Works 75% of total expenditure 53.10 52.27 49.16 48.24 48.24 47.65 0.59

02 Equipment and materials

70% of total expenditure

7.61 0.16 0.16 0.16 0.16 0.16 0.00

03 Consulting Services 80% of total expenditure 3.84 3.84 3.48 2.50 2.50 1.72 0.78

04 Area Improvement Facilities

80% of local expenditure 3.28 2.75 2.00 1.65 1.65 1.80 (0.15)

05 Community Initiatives Fund

80% of local expenditure 1.28 1.10 0.50 0.45 0.45 0.25 0.20

06 Unallocated — 1.89 1.89 0.20 0.00 0.00 0.00 0.00

Total 71.00 62.00 55.50 53.00 53.00 51.58 1.42

Source: Asian Development Bank loan financial information system.

26 Appendix 3

PROJECT COST BY COMPONENT ($ million)

Appraisal Estimate Actual

Item Foreign Local Total Total

A. Base Cost

1. Water Supplya 46.0 147.0 193.0 227.31

2. Sewerage and Drainageb

17.6 55.7 73.3 35.84

3. Solid Waste Managementc

3.1 9.9 13.0 6.62

4. Area Improvement Facilitiesd

0.0 8.4 8.4 2.46

5. Community Initiative Funde

0.0 3.8 3.8 0.60

6. Implementation Assistance and Capacity Buildingf

2.1 25.3 27.4 26.18

Subtotal (A) 68.8 250.1 318.9 299.00

B. Contingencies

1. Physical 3.4 15.7 19.1 0.00

2. Price 3.9 23.8 27.7 0.00 Subtotal (B) 7.3 39.5 46.8 0.00

C. Finance Chargesg

17.3 0.0 17.3 12.77

Total 93.4 289.6 383.0 311.77

Note: Contingencies were used for contract variations and price escalations during implementation. a Actual cost increased because prices and distribution networks increased and the US dollar depreciated against the Indian rupee.

b Actual cost decreased because the sewerage component in Indore was dropped and the sewer network was reduced.

c Actual cost decreased because landfill sites were not developed.

d Actual cost decreased due to a reduction in scope.

e Actual cost decreased due to a reduction in scope.

f Actual cost decreased due to changes in the input requirements of consultants.

g Finance charges decreased due to a reduction in the London interbank offered rate.

Source: Asian Development Bank.

Appendix 4 27

CONTRACT AWARDS AND DISBURSEMENTS

Table A4.1: ORIGINAL LOAN (LOAN 2046)

($ million)

Year

Contract Awards Disbursements

Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

2004 Projection 0.00 0.00 0.00 5.00 5.00 0.00 0.00 0.00 2.00 2.00 Actual 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

2005 Projection 12.00 0.00 0.20 0.20 12.40 0.00 1.20 0.10 0.20 1.50

Actual 0.00 0.00 11.76 0.00 11.76 0.00 0.00 0.00 0.36 0.36

2006 Projection 2.00 3.00 7.00 58.00 70.00 0.30 1.60 2.10 4.00 8.00

Actual 0.00 0.00 1.12 4.01 5.13 0.18 0.91 0.25 1.20 2.53

2007 Projection 19.10 109.70 25.10 0.00 153.90 1.40 3.40 5.10 5.80 15.70

Actual 21.79 5.86 66.63 32.33 126.60 2.31 1.01 2.70 11.32 17.34

2008 Projection 0.00 0.00 0.00 0.00 0.00 10.70 13.00 15.70 12.30 51.70

Actual 0.00 0.00 0.00 0.59 0.59 12.31 11.49 13.11 15.12 52.03

2009 Projection 0.00 5.90 0.00 0.00 5.90 14.20 16.90 10.60 7.80 49.50

Actual 0.00 2.12 2.52 0.40 5.04 5.03 9.06 10.39 13.74 38.22

2010 Projection 1.80 0.00 0.00 0.00 1.80 9.00 10.60 6.10 3.30 29.00

Actual 0.00 1.85 0.00 0.00 1.85 1.93 6.50 3.38 7.34 19.15

2011 Projection 0.00 0.00 2.00 0.00 2.00 3.40 3.90 2.40 3.30 13.00

Actual 0.00 0.00 0.00 0.00 0.00 0.78 6.09 1.40 3.87 12.14

2012 Projection 6.40 0.00 0.00 0.00 6.40 2.85 3.55 1.90 3.10 11.40

Actual 0.00 0.84 1.28 4.94 7.06 1.06 1.19 0.90 7.23 10.38

2013 Projection 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Actual 0.00 0.00 0.00 0.10 0.00 1.41 1.67 2.83 0.00 5.91

Table A4.2: SUPPLEMENTARY LOAN (LOAN 2456)

($ million)

Year

Contract Awards Disbursements

Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total

2008 Projection 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Actual 0.00 0.00 0.00 14.30 14.30 0.00 0.00 0.00 3.42 3.42

2009 Projection 0.20 22.20 4.20 9.60 36.20 2.30 3.60 3.30 3.40 12.60

Actual 2.05 0.00 0.00 2.14 4.18 1.03 0.92 0.60 2.53 5.08

2010 Projection 19.10 12.50 0.00 0.00 31.60 2.90 5.90 4.00 4.80 17.60

Actual 9.79 4.54 0.00 1.72 16.05 0.40 2.18 1.83 2.85 7.25

2011 Projection 0.70 4.70 0.00 0.00 5.40 2.10 4.30 4.90 5.20 16.50

Actual 0.33 0.23 1.31 1.10 2.97 0.70 3.27 1.13 3.20 8.30

2012

Projection 3.50 13.60 0.00 0.00 17.10 3.80 5.90 5.10 4.50 19.30

Actual 0.00 1.76 8.90 0.00 10.66 1.24 1.78 2.00 4.90 9.93

2013 Projection 3.50 2.00 0.00 0.00 5.50 2.70 5.90 5.20 4.20 18.00

Actual 3.25 0.00 0.14 0.03 3.42 1.19 3.22 1.75 5.14 11.30

2014 Projection 0.00 0.00 0.00 0.00 0.00 7.70 0.00 0.00 0.00 7.70

Actual 0.00 0.00 0.00 0.00 0.00 3.17 2.59 0.00 0.00 6.30

Q = quarter. Source: Asian Development Bank.

28 Appendix 5

IMPLEMENTATION SCHEDULE

Task

Target Actual

Start Date End Date Start Date End Date Water Supply

a. Civil Works 1 May 2007 30 June 2011 1 May 2007 31 Dec 2013

b. Equipment 31 Dec 2005 31 Dec 2006 30 June 2006 27 April 2012

Sewerage and Drainage

a. Civil Works 1 May 2007 30 June 2011 1 May 2007 31 Dec 2013

b. Equipment 31 Dec 2005 31 Dec 2006 30 June 2006 27 April 2012

Solid Waste Management

a. Civil Works 1 May 2007 30 June 2011 1 May 2007 31 Dec 2013

b. Equipment 31 Dec 2005 31 Dec 2006 30 June 2006 27 April 2012

Area Improvement Facilities 1 July 2007 30 June 2011 30 April 2008 31 Dec 2013

Community Initiative Fund 1 July 2007 30 June 2011 30 April 2008 31 Dec 2013

Implementation Assistance

a. Incremental Administration 1 Jan 2005 30 June 2011 1 Jan 2005 31 Dec 2013

b. Project Management Consultants 1 Jan 2005 30 June 2011 1 Jan 2005 31 Dec 2013

c. Design and Supervision Consultants 1 Jan 2005 30 June 2011 1 Jan 2005 31 Dec 2013

Appendix 6 29

PROJECT IMPLEMENTATION ARRANGEMENTS

CD = cross drainage, DSC = design and construction supervision consultant, NGO = nongovernment organization, PIU = project implementation unit, PMC = project management consultant, PMU = project management unit, UADD = Urban Administration and Development Department.

Steering Committees (City-Level) The divisional commissioner was the chair,

the project director was the member secretary; other members of the committee

were mayors of the respective cities, leaders of opposition in the cities, member

secretary of the state pollution control board, representative of chamber of

commerce, prominent female social workers

PIU (City-Level) The municipal commissioner was the head, supported by a full-time senior engineer experienced in public health and environmental engineering and staff experienced in engineering, finance and accounting, and community development. NGOs were engaged to deal with resettlement issues.

Empowered Committee (State-Level) The chief secretary was the chair, the project

director was the member secretary; other members of the committee were the UADD

principle secretary, the UADD commissioner, and representatives from the Finance, Public Health,

and Engineering Departments

PMU (State-Level) The full-time project director was the head,

supported by 2 deputy project directors (Technical and Administration) and staff with

expertise in engineering, finance and accounting, social and gender development, institutional

development, community development, procurement, resettlement, and urban planning

Executing Agency (State-Level) The UADD of the Government of Madhya

Pradesh

PMC (State-Level)

DSC (City-Level)

Public Relations Consultant

Benefit Monitoring and Evaluation Consultant

NGO for CD Work and Resettlement Issues

Technical Evaluation and Assessment Committee

30 Appendix 7

STATUS OF COMPLIANCE WITH MAJOR LOAN COVENANTS

Covenant Reference in Loan Agreement Status of Compliance

Project Implementation

After Loan effectiveness the State will ensure establishment of a City Steering Committee by each of the Project City Corporation and first review meeting to be held by the Steering Committees in each project city within 3 (three) months of Loan Effectiveness. The Project Steering Committee shall meet quarterly.

The state will cause the Empowered Committee to be established and the first meeting held within 3 months of loan effectiveness. The state will ensure that the four project city corporations execute the financial improvement actions in accordance with the agreed-upon timetable (Appendix 12), including (a) revising water charges and introducing a progressive block rate water tariff; (b) reassessing properties and revising taxes; (c) introducing a sewerage surcharge; and (d) improving collection efficiency. There will be no amendments to the timetable without the prior consent of ADB.

LA, Schedule 6, para. 1 of the Original Loan LA, Schedule 6, para. 1 of the Original Loan LA, Schedule 6, para. 1 of the Original Loan

Complied with. Complied with. Partially complied with. An unmetered domestic water supply tariff was implemented in all project towns. No volumetric tariff was implemented, except for bulk consumers in Indore and Bhopal. Tariff collection efficiency ranged from 11% in Indore to 47% in Bhopal, against an average target of 75%. No sewerage surcharge was introduced. All four project cities have reassessed and revised property valuation and tax.

The State shall ensure that the PMU and PIUs establish and maintain separate accounts and records adequate to identify the incomes and expenditures related to the Project. Detailed consolidated annual Project accounts, as maintained by the PMU, shall be audited by independent auditors acceptable to ADB and shall be submitted to ADB within nine months of the close of the related fiscal year. The annual audit shall include the audit of the SGIA and SOE procedure, and a separate audit opinion on the use of the SGIA and SOE procedure shall be included in the annual audit report. The state will ensure that the four project city corporations undertake actions to meet the long-term objective of improving urban water supply management in accordance with the agreed-upon

Loan 2456, LA Accounts, Auditing and Reporting, para 22. LA, Schedule 6, para. 2(a) of the Original Loan

Complied with. Complied with.

Appendix 7 31

Covenant Reference in Loan Agreement Status of Compliance

timetable (Appendix 9).

The state will ensure that (a) each of the six project corporations prepares an initial MAPP within 1 year after loan effectiveness and annually thereafter for submission to the PMU in accordance with the agreed-upon MAPP framework (Supplementary Appendix E); (b) adequate allocations are made from the AIF to the project city corporations, and from the CIF to the PIUs for community-based activities, in each case only for approved schemes under the MAPP; (c) the quarterly reports prepared by the PMU include progress made and statements on the use of funds under AIF and CIF; and (d) the PMU appraises each MAPP, including the schemes funded from the AIF and the CIF, annually in the third quarter of each MAPP cycle.

LA, Schedule 6, para. 2(b) of the Original Loan

Complied with.

The state will ensure that the gender action plan as set out in Supplementary Appendix J is implemented and that the PMU prepares field manuals and conducts training on the gender action plan for PMU and PIU staff.

LA, Schedule 6, para. 3(a) of the Original Loan

Complied with.

The state will ensure that route of the proposed water supply transmission pipeline from Narmada River to Indore is within the existing right-of-way, with no new acquisition of forest or other land, unless identified as necessary during detailed project design.

LA, Schedule 6, para. 3(b) of the Original Loan

Complied with.

The state will ensure that the project city corporations adopt ADB's approved standard bidding documents, evaluation criteria and procedures for awarding contracts for all procurement contracts under the Project and before any procurement.

LA, Schedule 6, para. 3(c) of the Original Loan

Complied with.

The state will endeavor that the project city corporations regularly pay their electricity bills to the Madhya Pradesh State Electricity Board and will not accumulate any new arrears starting FY2005.

LA, Schedule 6, para. 3(d) of the Original Loan

Complied with.

The state will ensure that a system for audit of accounts by external auditors is introduced for the four project cities. The external auditors will complete the audit of FY2004 accounts of the project city corporations by 31 December 2004. Thereafter, the audits will be completed annually within 9 months of each year end.

LA, Schedule 6, para. 3(e) of the Original Loan

Complied with.

The state will allocate, and will ensure that each project city corporation allocates adequate amount in annual budget to meet the investment requirements in accordance with the disbursement schedule of the project city.

LA, Schedule 5, para. 1 of the Supplementary Loan

Complied with.

32 Appendix 7

Covenant Reference in Loan Agreement Status of Compliance

The state will cause each project city corporations to prepare and submit a resolution to its municipal council to execute the Financial Improvement Action Plan in accordance with the agreed-upon timetable, within 1 month from loan effectiveness.

LA, Schedule 5, para. 2(a) of the Supplementary Loan

Complied with.

The state and the four project city corporations will ensure that (a) the Project is carried out in accordance with the existing environmental laws and regulations of India and the Environment Policy of the Asian Development Bank (2002) and ADB’s Environmental Assessment Guidelines (2003); (b) all monitoring and mitigation measures indicated in the IEE and provided for under the environmental management plan are undertaken for the Project; (c) project implementation will include consultation with local communities on environmental issues; (d) ULBs will take a proactive role in environmental planning, management, and monitoring; (e) State Pollution Control Board clearance will be obtained for all applicable project components before starting work on those components; and (f) existing waste disposal sites that have reached full capacity will be properly sealed after 3 months of operation of the new sanitary landfills.

LA, Schedule 5, para. 2(b) of the Supplementary Loan

Complied with.

The state will ensure that (a) project components are designed to minimize resettlement; (b) if, during detailed design of project components, involuntary resettlement arises from land acquisition or temporary disruption of income generation, a resettlement plan will be prepared and implemented in accordance with government laws and procedures, ADB’s policy on involuntary resettlement, and the Project’s agreed-upon land acquisition and resettlement framework (Supplementary Appendix F). Based on the final engineering designs, the state will update and revise the resettlement plan and submit this for ADB’s review and approval before civil works contracts are awarded. ADB’s approval of the resettlement plan will be a condition for awarding civil works contracts. All land required for a project component, including any that may entail involuntary resettlement, will be acquired not later than 12 months after loan effectiveness; if not, the component will be eliminated from the Project unless ADB agrees otherwise. The state will cause the short resettlement plan relating to the sewage treatment plant in Jabalpur to be implemented

LA, Schedule 5, para. 3 of the Supplementary Loan

Complied with.

Appendix 7 33

Covenant Reference in Loan Agreement Status of Compliance

The state will ensure that project city corporations maintain a facility for providing financial assistance to low-income households (income limit will be fixed in consultation with ADB) to ensure connection to the water and sewer systems.

LA, Schedule 5, para. 4 of the Supplementary Loan

Complied with.

The state will ensure that Indore city corporation is allowed to discharge and treat sewage in the sewage treatment plant constructed under the centrally sponsored schemes before awarding the sewerage network contracts. Conditions for Loan Effectiveness The onlending agreements between the state and each project city corporation (by which the state will onlend to the six project cities the proceeds of the loan), will have been executed and delivered and will have become effective and legally binding upon the parties thereto in accordance with their terms.

LA, Schedule 6, para. 4 of the Original Loan LA, Schedule 6, para. 4 of the Original Loan

No sewerage network contract was awarded under this ADB-funded project, as works were funded by the JNNURM. Complied with.

The GOI will make available to the GOMP the proceeds of the financing provided by ADB. The GoMP commits to bear the foreign exchange risk for such proceeds of the financing provided by the GOI.

LA, Schedule 6, para. 6 of the Original Loan

Complied with.

The GOMP will ensure that the existing onlending agreement, signed between the GOMP and the municipal corporations, may be revised to reflect the changes, if any, but limited to stipulating for the Loan amount arising from the proposed supplementary loan.

LA, Schedule 6, para. 7 of the Original Loan

Complied with.

The GOMP will cause the Project municipal corporations to ensure that sufficient funds will be provided to meet any shortfall between the cost of and revenues for the operations and maintenance of the infrastructure assets created under the Project. The GOMP will ensure that loan proceeds allocated for the area improvement facilities and the community initiative fund will not be reallocated until each Project municipal corporation awards a contract under the area improvement facilities and/or community initiative fund.

LA, Schedule 6, para. 7 of the Original Loan LA, Schedule 6, para. 7 of the Original Loan

Complied with. Complied with.

The EA shall ensure that civil works contracts 17 under the Project follow all applicable labor laws of GOI and the GOMP, and that these further include provisions to the effect that contractors (a) carry out HIV/AIDS awareness programs for laborers, and disseminate information at worksites on risks of sexually transmitted diseases and HIV/AIDS as part of health and safety measures for those employed during construction; and (b) follow and implement all statutory provisions on labor (including

LA, Schedule 6, para. 8 of the Original Loan

All civil works contracts had provisions for applicable labor laws of the Government of India and Government of Madhya Pradesh, including those relating to the non-employment or nonuse of children as laborers, equal pay for equal work, health,

34 Appendix 7

Covenant Reference in Loan Agreement Status of Compliance

not employing or using children as laborers, equal pay for equal work), health, safety, welfare, sanitation, and working conditions. Such contracts shall also include clauses for termination by the GOMP and/or EA in case of any breach of the stated provisions by the contractors.

safety, welfare, sanitation, and working conditions.

ADB = Asian Development Bank, AIF = Area Improvement Facilities, CBP = capacity-building program, CIF = Community Initiatives Fund, DFID = Department for International Development, Government of the United Kingdom, EA = executing agency, EIA = environmental impact assessment, EMP = environmental management plan, GOI = Government of India, GOMP = Government of Madhya Pradesh, IEE = initial environmental examination, IWD = Irrigation and Waterways Department, JNNURM = Jawaharlal Nehru National Urban Renewal Mission, LA = loan agreement, MAPP = Municipal Action Plan for Poverty Reduction, NGO = nongovernment organization, PIU = project implementation unit, PMU = project management unit, SGIA = second generation imprest account, SOE = statement of expenditures, UABPT= unit area-based property tax, ULB = urban local body.

Appendix 8 35

EVALUATION OF ECONOMIC AND FINANCIAL ANALYSIS

A. Background

1. The economic internal rates of return (EIRRs) and financial internal rates of return (FIRR) of all of the components of the Urban Water Supply and Environmental Improvement Project (UWSEIP) in Madhya Pradesh were evaluated at project completion using the data provided by the Government of Madhya Pradesh, the four municipal corporations of Bhopal, Gwalior, Indore, and Jabalpur, and the project management unit in Bhopal. Relevant information was also collected from the websites of the Government of India and other institutions. These EIRRs and FIRRs were compared with the supplementary loan appraisal estimates.

2. The economic and financial analysis of the project used the framework provided in ADB’s Guidelines for the Economic Analysis of Water Projects and Financial Management and Analysis of Projects.1

3. The economic and financial analysis focused on the economic benefits generated by the project and its financial sustainability. The analysis also considered the financial and fiscal capacity of the four municipal corporations to service project debts and ensure the sustainable provision of urban services. The reassessment of the EIRRs, FIRRs, and financial and fiscal performance of the four municipal corporations as estimated during project appraisal provided insights into the financial and economic performance of the investments during the project implementation period (2005–2014). Sensitivity tests of the EIRRs and FIRRs were undertaken to understand the institutional and service management reforms required to sustain these investments. The economic and financial viability of the project was evaluated for a period of 25 years, with no subsequent salvage value assumed. This appendix summarizes the economic and financial viability evaluation of the project at completion and compares its findings with those of the evaluation carried out during appraisal of the original and supplementary loans for the project.2

B. Economic Evaluation

I. Analysis at Appraisal

4. An economic analysis of the original project loan was carried out to confirm its economic viability during the loan appraisal, and reported in the Report and Recommendation of the President3 in 2003. Subsequent financing was extended through the supplementary loan to mitigate the impact of foreign exchange fluctuation and price escalation in 2008 with no variation in the project scope and benefit levels. The cost–benefit analysis was revised accordingly without changing its original approach. Thus, economic evaluation was carried out twice during the processing of the original and supplementary loans. The available evaluation results are in Table A8.3. The current economic analysis is for the project completion report (PCR) and

1 ADB. 1998. Guidelines for the Economic Analysis of Water Supply Projects. Manila; ADB. 2005. Financial Management and Analysis of Projects. Manila.

2 ADB. 2003. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to India for the Urban Water Supply and Environmental Improvement in Madhya Pradesh Project. Manila; ADB. 2008. Report and Recommendation of the President to the Board of Directors. Proposed Supplementary Loan to India for the Urban Water Supply and Environmental Improvement in Madhya Pradesh Project. Manila.

3 For details, see Appendix 11 of ADB. 2003. Report and Recommendation of the President to the Board of the President Directors on a Proposed Loan to the Urban Water Supply and Environmental Improvement in Madhya Pradesh Project. Manila.

36 Appendix 8

focuses on the revised economic cost–benefit analysis by comparing the earlier analyses done during the supplementary financing stage in 2008, and adopting the same approach.

5. The project covered three sectors (water supply, sewerage, and solid waste management [SWM]) in four towns (Bhopal, Gwalior, Indore, and Jabalpur). At the project completion stage, all four water supply projects were completed, whereas sewerage projects were completed only in Bhopal and Jabalpur. Drainage works were completed and equipment procured in Gwalior while in Indore only equipment was procured. SWM projects were partially completed in three towns—Indore and Jabalpur (both equipment and landfill site components implemented as planned), and Bhopal (only equipment procured)—and completely dropped in Gwalior. In the present PCR stage analysis, all of the completed projects were considered to facilitate a better comparison with the earlier analysis.

6. Change in the project cost. The project cost variations at the three stages of the project (i.e., original loan, supplementary loan, and project completion) are presented in Table A8.1. Overall, project costs at completion had increased by about 7% from the supplementary loan stage. The increase in the water supply project costs, which ranged from 9% in Indore to 69% in Bhopal is due to an increase in prices and additional distribution networks.

Table A8.1: Changes in Subproject Cost (Rs million)

Subproject

Original

Estimatea

(O)

Bid Price and Revised

Estimatea

(S)

Project

Completion (PC)

Variation

(%) (S/O)

Variation

(%) (PC/S)

Water Supply Bhopal 678.8 719.4 1215.4 6% 69% Gwalior 767.5 995.6 1,237.0 30% 24% Indore 4,357.0 6,075.0 6,629.0 39% 9% Jabalpur 932.0 1,868.3 1,669.4 100% -11% Subtotal 6735.3 9658.3 10750.7 43% 11%

Sewerage and Sanitation

b

Bhopal 501.8 823.5 836.5 64% 2% Gwalior 739.6 325.3

c 301.3 -56% -7%

Indore 668.3 105.3 6.3 -84% -94% Jabalpur 933.6 843.9 630.4 -10% -25% Subtotal 2843.3 2098.0 1774.4 -26% -15%

Solid Waste Management

c

Bhopal 124.5 37.2 69.0 -70% 85% Gwalior 77.8 1.9 1.7 -97% -10% Indore 139.1 153.1 129.9 10% -15% Jabalpur 88.3 88.1 98.0 0% 11% Subtotal 429.7 280.3 298.6 -35% 7% Total 10,008.3 12,036.6 12,823.8 20% 7%

O = original loan estimates, S = supplementary loan estimates, PC = actual costs on project completion. a

Figures include contingencies and tax. For the cost–benefit analysis, the estimated amount of tax was reduced. b

Due to a shortage of loan proceeds despite an urgent need for the proposed urban infrastructure, some portions of works were fully financed by municipal corporations using their own sources and the Government of India’s special funds. However, the cost–benefit analysis incorporated the investment costs of the urban infrastructure financed by municipal corporations.

c Represents the cost of jetting cum suction machines (Rs4.6 million) and 26.4 km of drains (Rs296.6 million). Source: Asian Development Bank estimates based on the project management unit data.

Appendix 8 37

7. Economic cost–benefit analysis. To assess the economic efficiency of the project investments, the EIRR in 25 years has been estimated. The shadow exchange rate factor4 and shadow wage rate5 used in the original economic analysis were applied.

8. Economic costs. There are two types of costs: (i) capital investment,6 and (ii) operation and maintenance (O&M). Actual disbursements during project implementation are considered project financial costs and are converted into economic costs using the conversion model used at appraisal. The O&M costs include energy, chemicals, salary, and repair and maintenance costs.

9. Economic benefits. The economic benefits of the water supply projects include (i) savings accrued by replacing existing water sources with piped household connections,7 and (ii) the value of water that consumers are willing to purchase8 for additional consumption due to greater availability of water. The benefits of improved sewerage and sanitation are primarily improved public health and environment. As these benefits are reflected in the willingness to pay, the economic benefit of sewerage and sanitation projects are valued using the willingness of residential households and businesses to pay.9 The economic benefits of SWM projects were estimated similarly.10 As benefits have been valued at 2003 values without any update, they are conservative estimates. The willingness to pay figures used in the revised PCR analysis are the same as in the revised economic analysis in 2008 due to a lack of updated data. Therefore, the analysis is also a conservative estimate.

10. Economic opportunity cost of capital. The level of benefit is measured by willingness to pay and is most likely underestimated. This is because respondents of the willingness to pay survey may have only perceived the immediate benefits and been unable to reflect on the value of other kinds of benefits, being unaware of them. As significant unquantifiable net benefits are believed likely, the economic opportunity cost of capital (EOCC) is placed at 10%. 11 Nevertheless, considering the government’s cost of raising capital in India, 12 this is likely overestimated. Furthermore, a do-nothing option will cause increasing economic cost of water supply shortages and deterioration of the environment.

4 The standard conversion factor used was 0.85, which was equal to the shadow exchange rate factor of 1.17. The

original economic analysis worksheets provided no background information. The revised shadow exchange rate factor using external trade data was 1.06.

5 The shadow wage rates were 0.75 for unskilled labor and 0.98 for skilled labor. The original economic analysis

worksheets provided no background information. 6 For large urban infrastructure, a 40-year life was assumed and the residual values were taken into consideration in

the 25th year. For equipment and landfill sites, a 10-year life is assumed, and the same amount of the cost incurred every 10 years during the analysis period.

7 The original economic analysis in 2003 estimated resource cost savings at Rs22.6 per cubic meter based on the

findings of the project preparatory technical assistance. 8 Willingness to pay was estimated through a survey during the project preparatory technical assistance. According

to the original economic analysis, survey respondents underestimated the value, since the incremental benefit of providing enough water to avoid a water crisis and ensure economic survival was much higher than reflected by the willingness of individual households to pay.

9 The amounts per month that residential households and businesses were willing to pay was Rs76 and Rs238 in

Bhopal, Rs61 and Rs126 in Gwalior, Rs69 and Rs273 in Indore, and Rs61and Rs85 in Jabalpur. 10

The amounts per month that residential households and businesses were willing to pay was Rs16 and Rs71 in Bhopal, Rs11 and Rs31 in Gwalior, Rs17 and Rs42 in Indore, and Rs13 and Rs52 in Jabalpur.

11 The Operations Manual Section G1/OP para. 2 (vi-b) states that “where significant unquantifiable net benefits are believed to be likely, the discount rate or EIRR may be between 10% and 12%.”

12 As the government’s long-term bond rate is 8.5%, the government’s cost of raising capital in India is likely 8%–9%.

38 Appendix 8

11. Conclusion. As Table A8.2 shows, all of the completed projects are economically viable, despite the cost and time increases, with the estimated EIRR values exceeding the EOCC in all cases.

Table A8.2: Revised Economic Internal Rate of Return Item Bhopal Gwalior Indore Jabalpur

Water Supply Base case EIRR (%) 28.6% 22.0% 10.1% 27.3% NPV (Rs million) 1,331 786 -580 2,037

Sewerage Base case EIRR (%) 12.5% 12.1% NE 10.1% NPV (Rs million) 18 1 -40

Solid Waste Management Base case EIRR (%) 31.2% NE 35.3% 15.9% NPV (Rs million) 103 223 23

EIRR = economic internal rate of return, NPV = net present value, NE = not evaluated as project not executed and completed. Source: Asian Development Bank estimates.

12. Although the project coverage and benefit realization were same as originally planned, the economic feasibility of most of the completed projects has declined considerably, mainly due to cost and time overruns. In case of the Indore water supply project, significant O&M cost savings of Rs55.5 13 million annually were achieved due to technological innovations. Consequently, the end-of-project EIRR at 10.7% is higher than the supplementary loan EIRR of 10.3%. The EIRRs of most of the projects are lower than the original estimates, mainly due to (i) delays of 2–4 years, which are below the sector average delay of 5 years; and (ii) cost overruns ranging from 1.6% to 86.5% as compared with the cost estimates made during the supplementary financing stage (Table A8.3). Some projects ended with a reduced project cost because the detail engineering design’s cost estimates for these projects were less than the feasibility study estimates, and O&M costs fell below what was originally envisaged. However, these projects also saw reduction in their EIRRs, mainly due to time overruns of 3–5 years.

13

Reduction in pumping head yielded annual savings in O&M costs of Rs34.75 million, electrical and mechanical works yielded annual savings in energy costs of Rs12.4 million, and the design of 132 kilovolt electric sub-station yielded annual savings in energy costs of Rs30 million.

Appendix 8 39

Table A8.3: Comparison of Subprojects at the Project Completion Stage Details Bhopal Gwalior Indore Jabalpur

A. WATER SUPPLY

Base Cost (2005–2006 prices) (Rs million)

i. During the Bidding Stage 719 996 6,075 1,868

ii. During the Completion Stage 1,215 1,237 6,629 1,669

Cost Overrun (Rs million) 496 241 554 -199

Cost Overrun (%) 68.9% 24.2% 9.1% -10.7%

Project Completion (Year)

i. Planned Bidding Stage 2010–2011 2010–2011 2010–2011 2010–2011

ii. Actual Completion 2013–2014 2013–2014 2014–2015 2013–2014

Time Overrun (Years) 3 3 4 3

Project Beneficiaries Coverage (%)

i. Planned Bidding Stage for 2011 90% 90% 90% 90%

ii. Actual Completion in 2015 90% 90% 90% 90%

EIRR (%)

i. Planned During the Bidding Stage 36.8% 25.8 % 10.30% 38.2%

ii. During the Completion Stage 28.6% 22.0% 10.70% 27.3%

B. SEWERAGE

Base Cost (2005–2006 prices) (Rs million)

i. During the Bidding Stage 823 325 105 844

ii. During the Completion Stage 836 301 6 630

Cost Overrun (Rs million) 13 -24

-214

Cost Overrun (%) 1.6% -7.4% Dropped -25.3%

Project Completion (Year)

i. Planned Bidding Stage 2010–2011 2010–2011

2010–2011

ii. Actual Completion 2013–2014 2013–2014

2013–2014

Time Overrun (Years) 3 3

3

Project Beneficiaries Coverage (%)

i. Planned Bidding Stage for 2011 57% 68% 38% 48%

ii. Actual Completion in 2015 57% 54% Dropped 48%

EIRR (%)

i. Planned During the Bidding Stage 15.7% 12.4% 32.8% 10.5%

ii. During the Completion Stage 12.5% 12.1% NE 10.1%

C. SOLID WASTE MANAGEMENT

Base Cost (2005–2006 prices) (Rs million)

i. During the Bidding Stage 37 2 153 88

ii. During the Completion Stage 69 2 130 98

Cost Overrun (Rs million) 32 0 -23 10

Cost Overrun (%) 86.5% Dropped -15.1% 11.4%

Project Completion (Year)

40 Appendix 8

i. Planned Bidding Stage 2007–2008

2009–2010 2008–2009

ii. Actual Completion 2009–2010

2012–2013 2013–2014

Time Overrun (Years) 2

3 5

Project Beneficiaries Coverage (%)

i. Planned Bidding Stage for 2011 75% 75% 75% 75%

ii. Actual Completion in 2015 75% Dropped 75% 75%

EIRR (%)

i. Planned During the Bidding Stage 39.7% 19.4% 44.0% 32.9%

ii. During the Completion Stage 31.2% NE 35.3% 15.9% NE = not evaluated as the project was not executed and completed. Note: Details of bidding stage data were derived from supplementary loan processing documents (Appendix 10, the revised economic analysis, and working files). Completion stage details are from the present project completion report stage analysis. For the project completion report stage project beneficiary coverage, details from discussions with beneficiary town officials and nongovernment organizations were used.

13. Based on this analysis, the project can be rated efficient in achieving its intended outcome and outputs. The overall EIRR calculated at completion was higher than the EOCC of 10% (para. 10 of this Appendix), which justifies the investments.

14. Many benefits, such as health cost savings due to a reduction in the incidence of vector-borne diseases and an improvement in the visual appeal of the city, could not be quantified or captured in the analysis. The qualitative assessment of other components showed that they helped improve the overall environment of the project areas and the quality of life of individuals.

B. Financial Evaluation

I. Analysis at the Supplementary Loan Appraisal

15. The project’s financial viability was assessed during the appraisals of the original and supplementary loans. Financial evaluations as well as financial sustainability analyses of the four municipal corporations were carried out with assumptions as to the implementation of the financial improvement action plan (FIAP) and other financial reforms. The supplementary loan appraisal included an updated financial analysis to confirm the financial viability of the water supply, sewerage, and SWM components in four municipal corporations designed under the original project. It used revised cost estimates and paid particular attention to the components considered for funding under the original and proposed supplementary loan.

16. The project aimed to improve the generation of revenues from own sources, and to ensure that the O&M of both existing and new assets can be adequately covered. The original financial analysis assumed the timely construction of urban infrastructure and implementation of the FIAP, which was designed mainly to increase (i) property tax, (ii) water charges, (iii) sewerage surcharges, and (iv) SWM fees.

17. A financial analysis at project completion was carried out for all of the completed revenue-earning sub-projects and compared with the evaluation done at supplementary loan appraisal. A financial cost-benefit analysis was carried out based on the actual cost of completion and implementation of the FIAP, which was finalized at supplementary loan appraisal and adopted by the project. This revisited financial analysis focuses on the FIAP implementation, financial cost-benefit analysis, and financial sustainability of the completed projects at the four municipal corporations.

Appendix 8 41

18. Progress of the financial improvement action plan. The FIAP was embedded under the assumption that people would not accept increased tariffs unless urban services were visibly improved. Major tariff increases were envisaged to start from the second year of project implementation when some newly created urban infrastructure were meant to become operational. However, most contract works were only awarded to the contractors in the second half of 2007 and became operational in 2009–2010. Consequently, the FIAP implementation was also delayed.

19. The present unmetered water tariff ranges from Rs140 per month (in Jabalpur) to Rs200 per month (in Indore) per domestic consumer. In Bhopal and Gwalior the present water tariff is Rs180 and Rs150 per month per domestic connection. There was no major water tariff increase in the project completion year, and the last revisions were done mostly in FY2012 or before. A volumetric tariff has not yet been introduced in any of the towns, except for bulk consumers in Indore and Bhopal. Water collection efficiency in the four towns according to the account books for FY2014 ranged from 10.8% (Indore) to 46.9% (Bhopal), with Gwalior reporting 43.5% and Jabalpur reporting 21.5%. The introduction of sewerage surcharges and SWM fees14 are still pending, along with revisions to property tax rates and assets valuation. The current status of the FIAP implementation has significantly impacted the subprojects’ projected FIRRs on project completion as compared to those estimated at supplementary loan processing.

20. The FIAP implementation schedule was rescheduled to synchronize with the progress of physical investment, to ensure the full understanding of the people of the municipal corporations. This has been updated with the present status on project completion. All four municipal corporations are yet to implement fully the new municipal administration system (MAS) being developed with the United Kingdom’s bilateral assistance. Once fully implemented this system is expected to significantly impact the financial management of the four urban local bodies (ULBs).15

21. Financial cost–benefit analysis. This financial analysis reassessed the sustainability of all revenue-generating projects based on the revised cost estimates and contract prices and the rescheduled FIAP in accordance with ADB’s Guidelines on the Financial Management and Analysis of Projects (2005). Financial analysis was conducted on a with- and without-project basis by estimating incremental costs and revenues over 25 years. The life of the newly created water infrastructure is assumed to be 40 years. The base case compared the estimated FIRR with the relevant weighted average cost of capital (WACC) to determine the financial viability of the revenue-generating projects.

14

The Indore municipal corporation has introduced SWM charges for non-domestic consumers, and the Bhopal municipal corporation has introduced SWM charges in about 50% of its wards. Gwalior and Jabalpur have not yet introduced SWM charges.

15 The state government is firmly committed to implement the ongoing e-Nagar Palika system in all of the state’s ULBs. This program is envisaged as a way to roll out the computerized MAS across all ULBs to cover citizen services (such as property taxes; water charges; birth, death, and marriage registrations; commercial licenses; user charges; building permissions; and grievances) and ULB functions (payroll, financial accounts, legal cases management, materials management, fleet management, and project system). This will target one of the key recommendations of the 14th Finance Commission (i.e., the levy of service charges enabling the recovery of O&M expenditure at least). The state government is already carrying out various reforms as required under the Atal Mission for Rejuvenation and Urban Transformation guidelines to strengthen the ULBs’ financial management and institutional capacity.

42 Appendix 8

22. Weighted average cost of capital. The WACC calculation reflects the fund flow arrangement between the central and state governments. The nominal cost of the grant is considered to be 8.0% based on the central government’s long-term bond rate, while the nominal cost of the financing portions of the state government and municipal corporations is estimated at 10%, taking the value from the EOCC.16 The WACC was estimated at 3.44% at completion stage as shown in the following Table.

Table A8.4: Weighted Average Cost of Capital (%) Original Loan

Suppl. Loan

Item

GOI Onlending

GOIa

Grant GOI

Onlending GOMP

and MCs WACC

Amount ($ million) 110.62 47.41 51.58 102.20 Weighting 35.48% 15.20% 18.54% 32.78% Nominal Cost 10.50% 8.00% 3.00% 10.00% Tax Rate 0.00% 0.00% 0.00% 0.00% Tax-Adjusted Nominal Cost 10.50% 8.00% 3.00% 10.00% Inflation Rate 5.50% 5.50% 5.50% 5.50% Real Cost 4.74% 2.37% -2.37% 4.27% Weighted Component 1.68% 0.36% 0.00% 1.40% 3.44%

GOI = Government of India, GOMP = Government of Madhya Pradesh, MCs = municipal corporations, Suppl. = supplementary, WACC = weighted average cost of capital. a

The nominal cost of the Government of India’s grant is estimated at 8.0%, based on the government’s long-term bond rate.

Source: Asian Development Bank estimates.

II. Analysis at Completion

23. Financial internal rate of return. Cost and revenue projections are made over a 25-year period, and salvage value is considered at the end of the period. The cost includes (i) capital expenditures under the project including physical contingencies, tax, and duties; and (ii) O&M expenditures. The revenue projection includes tariff and connection fees from new customers for water supply and sewerage as prevailing on completion of the projects for all projects considered through FY2014. Table A8.5 summarizes the results of the financial analysis at the supplementary loan appraisal and project completion stages.

16

As suggested in ADB’s Guidelines for the Financial Management and Analysis of Projects (2005), grant funds provided to the project also have an opportunity cost. As such, it is proposed that grants be treated in a similar fashion to equity and the cost of the grant be assumed to be the cost of equity, which is assumed to equal the government’s economic cost of capital. The Operations Manual Section G1/OP provides that “given the complexity of estimating country-specific economic opportunity cost of capital (EOCC, a discount rate of 12% in constant economic prices is generally used as a proxy for EOCC in the economic analysis of ADB-financed projects. Where significant unquantifiable net benefits are believed to be likely, the discount rate or EIRR may be between 10% and 12%.” Since water supply, sewerage, and SWM projects have significant externalities, the analysis takes 10% as the EOCC.

Appendix 8 43

Table A8.5: Financial Internal Rate of Return—Appraisal and Completion Stage Item Bhopal Gwalior Indore Jabalpur

At Supplementary Loan Appraisal Water Supply

Base case FIRR (%) 9.9 12.9 3.5 8.8 NPV (Rs million) 1,559.5 1,191.3 -288.4 1,119.8

Sewerage Base case

FIRR (%) 3.4 3.8 3.5 4.7 NPV (Rs million) -35.9 -4.4 33.8 88.7

Solid Waste Management Base case

FIRR (%) 6.4 7.7 18.5 8.7 NPV (Rs million) 26.9 35.0 266.3 33.5

At Project Completion Water Supply

Base case FIRR (%) 6.9 4.6 2.0 4.5 NPV (Rs million) 395 126 -1,385 128

Sewerage Base case

FIRR (%) 2.3 3.2 NE 3.0 NPV (Rs million) -142 -22 -51

Solid Waste Management Base case

FIRR (%) 6.3 NE 18.0 0.8 NPV (Rs million) 23 295 -30

FIRR = financial internal rate of return, NE = not evaluated as the project was not executed and completed, NPV = net present value, NRW = nonrevenue water, O&M = operation and maintenance. Source: Asian Development Bank estimates.

III. Reevaluation of Findings

24. At appraisal, the base-case FIRRs were estimated at 3.5%–12.9% for water supply, 3.1%–4.7% for sewerage, and 6.4%–18.5% for the SWM subprojects.

25. FIRRs for completed water supply, sewerage, and SWM subprojects at were assessed at the project completion stage. The FIRRs of the water supply projects were assessed as ranging from 2.0% (Indore) to 6.9% (Bhopal).

26. With regard to the sewerage projects, at the time of PCR evaluation, no sewerage charges had be introduced in project towns. Based on discussion with the government, the financial evaluation was carried out considering the introduction of a sewerage tariff and periodic revisions from FY2017. FIRRs were assessed as ranging from 2.3% (Bhopal) to 3.2% (Gwalior).

27. The FIRRs of the SWM projects are assessed as ranging from 0.8% (Jabalpur) and 18.0% (Indore). In Bhopal and Indore, SWM charges have been introduced and partially levied partially; Bhopal is levying user charges from about 50% of consumers at Rs30 per month per domestic consumer, and Indore is levying user charges from non-domestic consumers alone. At

44 Appendix 8

the time of the PCR evaluation, Jabalpur had introduced no SWM charge. Based on discussion with the government, the financial evaluation will be carried out considering the introduction of the solid waste tariff and periodic revisions from FY2017.

28. All of the FIRRs for the completed projects are lower than those assessed at the supplementary loan appraisal stage, due to the partial implementation of the FIAP by the four municipal corporations and time and cost overruns. The WACC was assessed at 3.44% on completion. When compared with the WACC, all projects had a positive FIRR, and few projects exceeded the WACC. All projects were found to have achieved full recovery of O&M costs and a few had recovered full costs. On the implementation of the proposed FIAP and the ongoing e-Nagar Palika reforms, all of the projects can be expected to achieve full cost recovery during the analysis period. However, the positive FIRRs indicate that O&M costs are being recovered in full from the revenues.

C. Fiscal and Financial Sustainability of Bhopal, Gwalior, Indore, and Jabalpur Municipal Corporations

29. All four municipal corporations have computerized their accounting and now follow the accrual system of accounting. As of January 2016, the financial statements and accounts for FY2014 have been compiled and audited, and financial statements for FY2015 were being prepared and finalized.

30. A new MAS has been developed with bilateral assistance from the United Kingdom, and is being implemented in all four municipal corporations. Once this is complete, the financial management of the four municipal corporations will be strengthened significantly.

31. All four municipal corporations’ overall revenues (i.e., own revenues and revenue compensation, transfers, and grants from the state government) have grown significantly at a compound annual growth rate (CAGR) of about 20% from FY2006 to FY2014, when the project was completed. Own revenues have also shown impressive growth in all four municipal corporations. The CAGR ranged from 17.5% in Bhopal to 28.1% in Gwalior. Tax revenues have also grown significantly across the four municipal corporations with CAGRs ranging from 17.4% in Bhopal to 41.8% in Gwalior. Similarly, operating expenditures, comprising salary, O&M, and administration expenses, grew at a CAGR that ranged from 12.4% in Bhopal to 16.4% in Gwalior. The CAGRs of Indore and Jabalpur were both 14.6% during the corresponding period in operating expenditures.

32. Overall, all four municipal corporations are capable of sustaining the O&M expenses of all municipal services. The operating ratios of all four municipal corporations were less than one during the last five financial years (FY2010–F2014) according to their financial statements. Financial performance, ratios, and projections of the four municipal corporations have been analyzed. During this period, the CAGR of revenue grants ranged from -4.4% in Indore to 15.0% in Bhopal, while that of assigned revenues and transfers ranged from 9.0% in Jabalpur to 17.8% in Gwalior.

33. The efficiency of water tariff collection was far below the FIAP. The efficiency of property tax collection in Bhopal and Gwalior was in line with the FIAP, but much improvement is needed in Indore and Jabalpur. With the financial reforms and MAS having been fully implemented, this and other parameters for improved financial management are expected in the four municipal corporations.

Appendix 8 45

34. According to the financial statements for FY2014, all four municipal corporations are capable of meeting the existing debt service obligations, including the project debt service, from their overall revenues (own revenue plus revenue grants, compensations, and transfers). The situation can and will improve drastically as the collection of own revenues becomes more efficient.

46 Appendix 9

GENDER ACTION PLAN IMPLEMENTATION AND ACHIEVEMENTS

Gender and Development Analysis

A. Introduction

1. The Urban Water Supply and Environmental Improvement Project in Madhya Pradesh was designed to rehabilitate and expand urban water supply systems and improve the wastewater collection and treatment systems in the four project cities of Bhopal, Gwalior, Indore, and Jabalpur. In doing so, the project has also financed infrastructure, construction, and rehabilitation pertaining to solid waste management (SWM), built the capacity of existing municipal corporations, created community development and awareness programs, and upgraded slums under municipal action plans for poverty reduction (MAPPs). The project’s broad outputs were (i) improved urban water supplies and environment, (ii) a public participation and awareness program, and (iii) project implementation assistance through state- and city-level management and implementation units. 2. Since women are the primary users of water within the household and are primarily responsible for household water management, scarcity of water and sanitation affects women adversely. The Area Improvement Facilities (AIF) and Community Initiative Fund (CIF) allocations within the project were designed with a gender-inclusive approach to ensure that interventions address gender inequalities, reduce the gender gap, and improve women’s access to water, sanitation, and infrastructure by strengthening community collectives, including women who participated in municipal planning and management.

3. A gender action plan (GAP) was prepared for the project. The project strategy and actions incorporated the gender equality issues that emerged from a rapid gender assessment of the four project cities. A baseline survey was also conducted. The project design was informed by women’s priorities from all of these sources. Several strategies were included to facilitate the women’s participation and to ensure that activities identified and responded to their needs. Women’s needs were prioritized, with at least 50% of all civil and small-scale community infrastructure activities being based on priorities identified by women and incorporated in the microplans. Social mobilization was a core strategy within the public participation and awareness component to target the most vulnerable communities. The gender manual developed for the project was a practical guide for integrating gender in the MAPP processes, including the formation of community group committees (CGCs), problem identification, analysis, strategy formulation, implementation, monitoring, and evaluation. This was meant to support the preparation of the municipal reforms and environmental infrastructure proposals. Special measures were taken to ensure women’s participation in community-driven planning and decision making.

B. Methodology

4. The GAP analysis summarizes the project’s achievements with regard to the GAP, the set objectives, and targets compared to the achievements accumulated during the project period. The analysis included field visits made during missions, references to aide-mémoires, project records obtained from the PMU and PIUs, periodic progress reports submitted by the PIU community development experts, reports submitted under technical assistance projects, such as public relations consultant, benefit monitoring and evaluation (BME), and project reports related to the Water for Asian Cities Program supported by UN-Habitat.

Appendix 9 47

C. Gender Assessment

5. The project was categorized as effective gender mainstreaming as it was designed to (i) directly improve women’s access to urban water supplies, sanitation, and infrastructure, and (ii) contribute to gender equality and women’s empowerment by enhancing their participation. The key gender issues in the project included:

5.1. Women as primary users of water. Women are the primary users of water within the household and have primary responsibility for household water management. They are mostly responsible for collecting and transporting water for drinking, food preparation, personal and household hygiene, washing, cleaning, and caring for dependents. 5.2. Scarcity of water adds hardship to the lives of women and girls. The baseline survey conducted by WaterAid, a project partner, indicates that in more than 60% of the households surveyed in the four project cities, female members (including mothers, daughters, and daughters-in-law) were responsible for water collection. 1 Dependence on water at distant sites affected women’s lives negatively by forcing them to spend much time collecting and transporting water. This not only added to hardship to women’s but also exposed them to risks, the threat of violence, and health care burdens. 5.3. Scarcity of water adversely affects women’s sanitation conditions. Baseline surveys of slums show that women and girls depend heavily on open defecation sites with a scarcity of water. This led to health and safety concerns. Women and girls accessing community toilets faced inconvenience and threats due to their locations, unsanitary conditions, and poor maintenance. Thus, the lack of sanitation facilities in sample slums adversely affected the lives of women. 5.4. Women were overlooked in water management. Although women are primarily responsible for the management of domestic water and are potential promoters of home- and community-based sanitation activities, they were often overlooked in the planning and implementation of infrastructure projects. Consequently, no cooperation framework involved both men and women in development activities. 5.5. Women and girls benefit most from improved basic services. The provision and improvement of services at the slum level benefits women and girls the most. This is because household composition and the division of labor influences the amount of water collection work within the family. Depending on the mothers’ workload, girls become involved in water collection and transportation. While men mostly carry water on bicycles or motor vehicles, women carry buckets or head loads. Single, elderly, and disabled women have no help and are constrained. 5.6. Limited capacities constrain women from participating. Limited capacity-building opportunities for women constrains them from participating in productive and community roles. Reproductive roles provide little time for women to take part in activities outside home. They have limited networking and training opportunities to develop women’s collectives and to take up technical and management roles in water and sanitation projects. Moreover, their participation in decision making is often restricted. 5.7. Weak institutional capacity affects gender issues in projects. When the institutional capacity of the executing and implementing agencies to implement gender strategies is weak, allocating resources and building institutional awareness to promote gender equality is a challenge. 5.8. Women are discriminated against as labor. Despite a range of equality labor laws and initiatives, the construction industry remains male-dominated. Women are

1 WaterAid India. 2009. Baseline Survey: Status of Water and Sanitation in Slums of Indore, Bhopal, Jabalpur, and

Gwalior. New Delhi.

48 Appendix 9

discriminated against in construction activities with regard to wages and working conditions. Construction sites often overlook health and safety concerns of women and children.

D. Project Features

6. To address these gender inequality issues, the project features included: 6.1. Gender concerns at the planning stage. The project preparatory technical assistance looked into the community perspective and identified lack of access to reliable water supply and sanitation (toilets) as prime concerns, with toilets as a slightly higher priority amongst women.2 6.2. Area Improvement Facilities and Community Initiatives Fund provisions. While the project was designed and implemented to improve the efficiency of the water supply, sewerage, and SWM systems and benefit the city’s population through main packages, the AIF and CIF provided additional investments for the slum dwellers. The AIF was made available to the municipal corporations for physical infrastructure improvements in poor and infrastructure-deficient settlements within the framework of the MAPP, and included schemes such as community-led and managed water supply and sanitation. The CIF was directed towards training and non-physical initiatives based on priorities identified by the community. 6.3. Performance-based flexible budgeting provisions. Allocations under the AIF and CIF were performance-based. In this manner an adaptive and process-oriented approach was followed, which encouraged continuous dialogue between the project staff and target communities. This ensured adequate and flexible budgeting based on a “learning by doing” approach. 6.4. Evidence-based approach and strategies. The project collaborated with the Water for Asian Cities program under the memorandum of understanding (MOU) between ADB and UN-Habitat for drafting the Gender Mainstreaming Strategy.3 The strategy and actions under the project have incorporated the gender issues emerging from a rapid gender assessment of four cities undertaken under the Water for Asian Cities program.4 The gender mainstreaming strategy was used as a practice tool to plan and implement pro-women community-based initiatives. A baseline survey was also conducted after the slum selection, and the project design was informed by the evidence of women’s priorities from all sources. 6.5. Community mobilization. Sixty-five resident CGCs were formed to respond to community concerns regarding water and sanitation issues and to actively participate in the construction, maintenance, and oversight of community toilets and other civic amenities at the slum level in four cities. Of the 760 CGC members, 556 (73.1%) are women. These committees have gained legal status as they are registered under the State Societies Registration Act 1973. The CGCs were trained for pro-poor governance at the settlement level and were involved in collecting baseline information, micro-planning, and developing detailed project reports. Resource mobilization was enabled by developing women’s self-help groups to mobilize their own savings and engage in inter-loaning. Water, waste, and sanitation activities for hygiene education targeted towards children and the larger community were also organized.

2 ADB. Draft Final Report: Integrated Urban Development in Madhya Pradesh Project Preparation. 3. Manila (TA 3759 - IND). December 2002.

3 PMU letter 3493/UWSEIMP/PMU/CDO dated 27 May 2006.

4 UN-Habitat. 2006. Navigating Gender in Development of Water and Sanitation in Urban Areas: A Rapid Gender Assessment of the Cities of Bhopal, Gwalior, Indore and Jabalpur in Madhya Pradesh (India). Nairobi.

Appendix 9 49

6.6. Partnerships with nongovernment organizations. In collaboration with the Water for Asian Cities program and the Department of Urban Administration and Development, the state government signed an MOU with UN-Habitat and its partner WaterAid to collaborate with their partner nongovernment organizations in four cities to penetrate and expand coverage for participatory planning and ascertaining community participation throughout the project. 6.7. Convergence with other slum improvement programs. The project has converged with the Madhya Pradesh Urban Services for the Poor program (MPUSP) (assisted by the Department for International Development [DFID]) to address infrastructure deficiencies in some slums. Both programs have targeted the urban poor following a 3x3 deficiency matrix5 and demonstrated participatory slum improvements. This is especially demonstrated in some slums such as Ram Nagra where cement concrete roads and a community hall were supported by the MPUSP. The MPUSP also connected its tertiary network to the main water pipelines laid under the project to supply water to the slums prioritized under the program. 6.8. Inclusive norms for water and sanitation. The project encouraged tap connections at the household level with arrangements including the payment of connection charges in instalments, subsidization of charges and tariffs,6 and simplified procedures. Specific efforts were made to overcome technological and locational barriers to accessing legal tap connections by organizing slum-level connection camps and facilitating applications. The four municipal corporations signed MOUs with CGCs under the State Municipal Act 1956 to implement the AIF and CIF. Community-level consultations were undertaken for the planning and implementation of 116 AIF proposals in 63 slums at a value of Rs137.91 million. In addition, 295 CIF proposals in 65 slums at a value of Rs25 million were implemented, involving both men and women in target communities.7 The project constructed 4,209 individual household toilets in four cities following pro-poor guidelines with 90% of the decided cost estimates borne by the project and 10% by community. 6.9. Institutional commitment to promote gender-sensitive labor working conditions. The contracts were governed by the labor laws regarding equal wages for equal work. The contract documents include clauses investing the contractor with the responsibility for safety and safeguards, for ensuring protective measures, and for providing laborers with water and sanitation. Onsite training regarding hygiene and safety was provided for both male and female workers, and HIV/AIDS awareness was also organized at Indore for laborers. 6.10. Institutional awareness and capacities to promote gender equality. Dedicated PMU staff positions of a community development officer and social and gender officer were put in place for the project period and their capacities built. The PMU and PIU were assisted by trained experts on community development and provided with orientation workshops on gender. Public relations consultant was engaged to generate awareness and participation. The BME framework has been incorporated at the baseline, middle, and end of the project. 6.11. Communities were trained on various aspects of participation, leadership, water and sanitation management, health, hygiene, rights, and entitlements. The CGCs were provided with focused training on leadership, micro-planning, participatory learning methods, self-help group strengthening, record keeping, financial management, masonry

5 Vulnerability matrix to prioritize slums on the basis of poverty and infrastructure deficiency.

6 The Jabalpur municipal corporation formulated the scheme Dada Baburao Paranjape Smriti Water Connection

Yojana during 2005–2006 to benefit poor urban households living in slums below the poverty line. 7 Report on Gender and Development Analysis, PMU, UADD letter 365/PMU/CDO/AIF-CIF/365 dated 5 April 2014.

50 Appendix 9

skills, and operation and management. This training was organized to empower them, encourage effective participation, and improve their own living standards. 6.12. Gender Action Plan as a loan covenant: The GAP was implemented as a loan covenant and included broadly:

Capacity building of project managers on gender equality; Awareness of water and sanitation issues in community, especially targeting

women; Establishing BME within the overall BME framework; Incorporating gender perspectives in all aspects of urban governance and

institutional development programs; Building capacity within municipal corporations for participatory planning and

undertake AIF and CIF schemes and management through participatory planning, especially involving women; and

Governing contracts that are pro-poor and gender-sensitive.

E. Contribution of Gender Equality Results to Project Effectiveness

7. This project aimed to (i) provide sustainable, basic urban infrastructure and services to all citizens of the four project cities; and (ii) strengthen the capacities of the project cities to plan and manage urban water supply and sanitation systems in a more effective, transparent, and sustainable manner. To this end, the project can demonstrate the following outcomes:

7.1. Increased access to affordable water and sanitation.8 Along with improving the city-level water supply, the project has increased access to water in poor and water-deprived slums. The water supply at the settlements are linked to individual household tap connections with subsidized connections, tariffs, and flexible payment arrangements. 7.2. Reduced safety risks for women and girls from collecting water, bathing, washing, and open defecation. The project made sanitation and hygiene improvement a high priority in household investment. Due to a lack of water supply and sanitation facilities, women and girls suffered a lack of dignity and were exposed to safety risks. Improving ease of access to water by enabling individual household tap connections has reduced safety risks associated with collecting water, bathing, washing, and open defecation. The locations of the sanitation facilities have also reduced the risks and threats to the safety of women and girls. Individual household tap connections (3,607 in four cities) have positively altered the location of sanitation facilities by bringing them into the household. Community toilets have been designed and located while considering the safety of women and girls. 7.3. Improved sanitation practices and environmental conditions. The availability of water has encouraged the households to construct individual toilets. The project provided support for infrastructure with pro-poor methodologies that has encouraged 4,209 households in four cities to contribute 10% of the cost of the unit for individual household toilets. A total of 3,500 persons (1,316 women and 2,184 men) have been trained and motivated to pay for the O&M of community toilets across four cities. With the AIF targeting infrastructure in poor and sanitation deprived slums, the environmental conditions in these settlements have improved due to the reduction of open defecation

8 The exact number of women benefitting from water supply and household toilets is not available. According to the

2011 census, women account for approximately 47% of the population of the four project towns. Based on census data and BME report, about 2.6 million women benefited from access to treated water, 0.3 million women benefitted from improved access to sewerage and sanitation services, and 2.2 million women benefitted from SWM services.

Appendix 9 51

practices. Sewer lines in Gwalior have provided households with improved sanitation, as households have connected individual toilets to these lines. 7.4. Improved hygiene practices at the household and community level. Hygiene education at the slum level has encouraged hygiene at the personal, household, and community levels. Although garbage disposal and management at the secondary level remains a challenge, households are conscious of garbage disposal at the primary level. Women’s groups have demonstrated vigilance in their neighborhoods and motivated households to dispose of garbage at defined locations. Households have also begun sweeping the portions of the roads in front of their houses or hiring sweepers for road sweeping. 7.5. Increased opportunities for employment and income generation for men and women. Access to reliable and quality water has significantly reduced the workload of men and women and helped them reallocate the saved time and energy for productive, and community work. This is especially significant in the slums, where it was necessary to make multiple trips to collect water and where they now have a properly functioning water supply system. Overall, this improved situation has led to:

Reduction in the amount of income lost due to the suspension of income-generating activities to collect and transport water;

Additional income earned due to the productive use of time saved as a result of an improved and reliable water supply;

Allocation of more time by women to their reproductive roles, such as domestic work, child care, hygiene, and heath care;

Women’s participation in community development and decision making processes; and

Vocational training provided under the CIF which has supported market and credit linkages and provided livelihood opportunities to men and women.

7.6. Women and men benefit equitably from capacity building activities. The project has provided equal opportunities for men and women at the community level for capacity building. 7.7. Increases women’s participation, leadership, and decision making in water and sanitation. The project was able to address to a considerable extent gender stereotypes related to the abilities of men and women by ensuring women’s representation in the capacity of office bearers within the CGCs so that the decisions are equitable and representative. 65 CGCs (760 members) have been formed, of whom 73.1% of members (556) are women, to promote gender-balanced local community-based governance. These women have reported that these opportunities have not only

A Woman’s Story Relating to Project Benefits. We used to make cotton battees (cotton wicks used for religious rituals) used for pooja (worship). By working for about 6–7 hours a day, we could earn a meager amount of Rs500–Rs600 a month. Moreover, the cotton dust produced during the process was affecting ours and our children’s health. Then, we got the opportunity to undertake training in tailoring under “Project UDAY.” After training, we took a job for 2 months and then decided to start on our own. We took a loan of Rs10,000 from the bank and procured the sewing machine. Now, we get orders for stitching school dresses, salwar (pleated trousers tapering to a tight fit around the ankles), blouses, and so on, and easily earn Rs4,000–Rs5,000 per month. We get continuous work orders, not only from our slum but also from nearby areas. Our husbands and family are very happy.

—Chetna Bhargav, Anita Rathore, and Manu Yadav (beneficiaries from Guru Nagar)

Focus Group Discussion, December 2013

52 Appendix 9

improved their living conditions but also their own sense of empowerment, self-determination, and self-esteem. Both men and women reported a change in gender relations. Men also realized a significant degree of change in the women. Men’s knowledge also increased, as women transferred information within the household. Exposure visits were undertaken for 302 community members, including 250 women (82.7%).

7.8. Strengthened institutional capacity of the executing agency to ensure that women and men benefit equably from water and sanitation investments. As a part of the gender mainstreaming strategy, the PMU incorporated as focal points the positions of a community development officer, gender officer, BME officer, and public relations officer to equip itself to promote pro-poor governance and mainstream gender in the project activities. This institutional arrangement has demonstrated the increased capacity of the executing and implementing agencies to consult with women and men and respond to women’s priorities. By collaborating with the Water for Asian Cities program, a joint initiative between UN-Habitat and ADB under the MOU focused on pro-poor governance, water demand management, integrated urban environment sanitation, and income generation in the four cities. This collaborative framework resulted in the building of partnerships with nongovernment organizations and the capacity of project staff and communities. 7.9 Public relations consultant was engaged to work closely with the PMU, project managers, and specialists to produce knowledge management products such as newsletter, brochures, and other information, education, and communication materials to disseminate good practices. The BMEC framework was designed, made operational at three levels (baseline, midterm, and end-line), and helped the PMU monitor and evaluate benefits to women as the target population for the incorporation of gender issues. 7.10 Mechanisms to respond to citizens’ requests and grievance were established by setting up grievance redressal committees, response mechanisms under the Right to Information Act 2005, and toll-free numbers for grievances related to municipal corporations. The CGCs undertook community-level initiatives to increase access to municipal services through this act, as in the case of Guru Nagar, Indore. 7.11 Increased understanding of project staff on gender issues in water and sanitation. Training, orientation, and learning from other urban development projects enabled project staff and public representatives to understand gender issues in water and sanitation better and subsequently address social, legal, technological, financial, and institutional barriers keeping the poor from accessing water and sanitation. 7.12 Increased capacity of the executing agency to ensure that the contractors are gender sensitive in their operations. The contracts were governed by the labor laws stating equal wages for equal work, and the contract documents include clauses investing the contractor with the responsibility for the laborers’ safety and safeguards, and for ensuring protective measures and the provision of water and sanitation for the laborers. The BME consultant’s end-line survey recorded no accidents at the project sites due to the incorporation and monitoring of adequate safeguards.

Reflection of a Community Leader. There was no development work in the slum in last 30 years. This is the first time that we as a community have improved our environment. Ms. Iqbal Bano, CGC President, December 2013 Ms. Iqbal Bano has had no formal education but now confidently manages the documentation

related to the project. She and other CGC members were trained on water and sanitation

management.

Appendix 9 53

Table A9.1: Summary of GAP achievements

ACTIVITIES ACHIEVEMENTS Bhopal, Gwalior, Indore, and Jabalpur

IMPLEMENTATION STATUS

Area of Focus: Project Implementation

Objective 1.1: To mainstream a gender perspective in project implementation

1. Conduct gender awareness workshops with all project consultants and PMU and PIUs

Indicator: Workshops for all target groups

Capacity-building materials developed on gender

for the project management staff, implementation

staff, and experts.

Public relations consultations organized:

o Workshop and events involving public

representatives on 8 March 2007 to

celebrate International Women’s day in Bhopal, Indore, and Jabalpur focusing

on issues of women’s health and

hygiene.

o Sessions dedicated to community and

gender concerns during citywide

workshops on urban challenges and

solutions to inform and influence public

representatives, ULB officials, project

staff, experts, funding organizations like

UN-Habitat, and the media, with a total

of 522 participants in 4 cities during 4–24 October 2007.

9

Workshops on gender organized by the PMU for

project staff and contractors in 4 cities on 7 June

2008 with 35 participants, including project staff,

contractors, consultants, and experts.

City-level events and community-level

workshops having 739 participants, of whom 489

(66.1%) were women:10

o Bhopal: 150 participants—50 men and

100 women (66.6%)

o Indore: 160 participants—22 men and

138 women (86.2%)

o Jabalpur: 210 participants—45 men and

165 women (78.5%)

o Gwalior: 219 participants—133 men and

86 women (39.2%)

Leveraged with the Water for Asian Cities program under the MOU signed between UN-Habitat and ADB for the implementation of the gender mainstreaming strategy.

Completed

9 Public Relations Consultants’ Reports, Urban Water Supply and Environmental Improvement in Madhya Pradesh

Project. 10

Periodic progress reports from the PIU, Urban Water Supply and Environmental Improvement in Madhya Pradesh Project.

54 Appendix 9

Objective 1.2: To ensure women’s full awareness of and involvement in project implementation and benefits

2. Conduct project awareness, hygiene education, and water management campaigns specifically targeting women

Indicator: 25% of women interviewed in project cities are aware of the project and its hygiene behavioral, health, and social benefits

Public relations consultant engaged during the project period. The consultants helped the PMU design training materials that were promoted in cooperation with the PIUs under the PMU’s overall supervision. A number of mass awareness programs targeting men, women, and children were organized, including the WATSAN campaign with:

o Workshops on water conservation, sanitation, and SWM;

o Display of posters and banners with messages on health hygiene and its benefits;

o Demonstrations of methods for the storage and utilization of water;

o Sessions on personal hygiene; o Sanitation and handwashing

practices; and o Environmental sanitation.

A total of 1,990 sessions at schools and anganwadis were organized in 4 cities to orient children under the WATSAN campaign

11:

o Bhopal: 644 sessions benefitting a total of 43,935 students (30,027 girls and 13,908 boys).

o Indore: 288 sessions benefitting a total of 43,879 students (22,839 girls and 21,040 boys).

o Jabalpur: 509 sessions benefitting 38,426 students (21,396 girls and 17,030 boys).

o Gwalior: 549 sessions benefitting 67,468 students (36,635 girls and 30,833 boys).

Demonstration and distribution of WATSAN Magic kits depicting the message “Swach raho, Mast raho (be clean and enjoy life)”

Awareness program in association with package contractors at the package implementation level to generate public cooperation in implementation, safety, and safeguards.

Events on World Health Day in 4 cities on 7 April

2007 with community women involving public

representatives.

Quizzes on water conservation held on 10 March

2007 with 97 participants (32 girls).

Events on World Water Day in Bhopal and

Indore with 105 participants.

Completed

11

Public Relations Consultants’ reports, Urban Water Supply and Environmental Improvement in Madhya Pradesh Project.

Appendix 9 55

Broadcasting of phone-in-live programs through

All India Radio in 2006 and 2007 with interactive

sessions.

School-based education program on 17–28

February 2007 in Jabalpur inviting schoolchildren

from 27 schools and benefitting 2,003 students

(1,026 girls and 977 boys).

194 female and 9 male CGC members

oriented on the project in Jabalpur.

Rallies, competitions, exposure visits,

children’s radio programs, IEC material

development, IEC campaigns, newsletters,

printed brochures, hoardings, exhibitions,

and small interactive sessions have been

organized with women’s groups during the

project period near proposed sites.

The BME midterm survey based on discussions with schoolteachers, students, and anganwadi workers relating to awareness of the project revealed a substantial increase in awareness at the midterm level when the implementation of activities was ongoing.

The increase is recorded as: o Bhopal: from 6.45% to 30.00% o Indore: from 3.8% to about 18.0% o Jabalpur: from 5.0% to about 30.0% o Gwalior: from 0.2% to about 25.0%.

Objective 1.3: To ensure that project benefits positively impact women and that benefits are equitable

3. Establish a BME system that can report the impact of the project on women (within the overall BME)

Indicator: Reviews and impact assessment are able to report gender impact of project

The BME consultant commissioned and

completed the baseline, midterm, and end-line

evaluations. The BME consultant’s report

includes separate chapters on benefits from

community development initiatives (AIF and CIF)

and from the project’s gender and equity

component. During implementation, the BME

consultant recorded gender-disaggregated data

on:

o Responsibility for water collection, o Awareness on waterborne diseases

and losses, o Availability of public toilet seats for

men and women at sample sites, o Status of children (below 16 years

and school enrolment, o Schoolchildren engaged in earning

activities, o Involvement of self-help groups in

Completed

56 Appendix 9

activities, o Safety of women and children, and o Preferred area reported for

vocational training.

Baseline information on the above informed the

design of AIF and CIF components.

A reduction in water collection quarrels was

reported in the BME consultant’s reports, for

example, in the case of One Tree Hill, Bhopal (a

locality with 2500 households) replacing old

water supply pipes provided the population with

increased pressure, improved frequency,

regulated timing, and improved quality. Due to

increased awareness, 2,000 households

switched over to new pipeline connections and

women’s workload were reduced.

Internal project reports based on community

consultation with project staff demonstrate both

strategic and practical gender benefits to women

such as:

o Capacity development of community-

based organizations led by women to

plan, implement, monitor, and maintain

infrastructure provisions;

o Women trained as behavioural change

agents to influence hygiene practices

and health-seeking behaviour within the

household and in communities;

o Reduced workload for women and

adolescent girls due to the provision of a

piped water supply;

o Increased access to livelihood and skills

improvement opportunities through

training;

o Increased access to market information

and agents with improved accessibility

and mobility;

o Reduced waterlogging due to road

construction, thereby improving access

and mobility;

o Reduced incidence of waterborne

diseases in households;

o Increased land values with improved

basic services;

o Increased access to emergency public

transport, such as ambulances

Appendix 9 57

Area of Focus: Urban Governance

Objective 2.1: To promote gender awareness and equality in the urban governance and institutional development program (to be supported by CIDA)

4. Incorporate the gender perspective in all aspects of the urban governance and institutional development program

Indicator: Modification of the urban governance and institutional development program

A policy decision was undertaken in 2007 to form CGCs involving more than 50% women members to promote gender-balanced local community-based governance.

760 community members, of whom 556 were women (73.1% women), formed 65 groups and registered as community group committees (CGCs) with bank accounts in 4 cities:

o Bhopal: 15 CGCs, 167 members, 86 men and 81 women (48.5%)

o Indore: 16 CGCs, 180 members, 21 men and 159 women (88.3%)

o Jabalpur: 17 CGCs, 200 members, 17 men and 183 women (91.5%)

o Gwalior: 17 CGCs, 213 members, 80 men and 133 women (62.4%)

All 65 CGCs have become legal entities by registering under the Madhya Pradesh Societies Registration Act 1973. The CGCs have been mobilized and trained for pro-poor governance.

Dedicated PMU staff positions, including that of community development officer, social and gender officer for the project period, ensured and their capacities built.

The PMU and PIU were assisted by trained community development experts.

The project leveraged with the Water for Asian Cities program under the MOU between ADB and UN-Habitat for the drafting of the gender mainstreaming strategy. The document was used as a practical tool to implement women-centered, community-based initiatives.

The draft gender manual was developed during the project period. The document was used as a working draft and reference tool to plan and implement AIF and CIF activities.

Convergence was established with UN-Habitat and the Water for Asian Cities program for capacity building of 64 ULB women members on local self-governance, resource mobilization, and gender mainstreaming in water and sanitation. The women came from all 4 cities, as follows:

o Bhopal: 10 o Indore: 14 o Jabalpur: 24 o Gwalior: 16

Capacity enhancement training programs were organized to promote the effective delivery of water and sanitation services organized at the ASCI in collaboration with UN-Habitat and Water for Asian Cities in 2 phases, with a participation of:

Completed

58 Appendix 9

o 278 municipal elected representatives and functionaries in the first phase in 2006–2007

o 342 municipal elected representatives and functionaries in the second phase in 2008–2010

The ASCI training program included services to the urban poor and poverty alleviation as a priority enhancement area, along with exposure visits to slums in Andhra Pradesh, which were upgraded with participatory processes.

Objective 2.2: To develop participatory MAPPs for each city

5. Build capacity within municipal corporations for participatory planning with community representatives, particularly women

Indicator: 6 MAPPs

completed through participatory workshops including 30% women

Poverty analysis includes position of women

MAPPs were prepared and completed through participatory workshops at the beginning of the project.

12

Convergence was established with UN-Habitat and the DFID—MPUSP to select slums and undertake slum planning.

A rapid gender needs assessment commissioned by UN-Habitat in collaboration with the state government was used as evidence for planning water and sanitation services as a priority area.

Slums were selected on the basis of a 3x3 matrix, a prioritizing tool to identify vulnerable slums with high poverty and deficient infrastructure.

Slum selection was undertaken with the involvement and approval of mayors-in-councils of participating ULBs.

All CGC members (more than 70% women in 4 cities) participated in collecting baseline information and provided data inputs to the DPRs.

The sensitive inclusion of municipal corporations in procedures, rules of participation, standards of water, and sanitation services was demonstrated through the following measures:

o MOUs between ULBs and CGCs under the State Municipal Act 1956 for the implementation of the AIF and CIF;

o A community-level consultative process for the planning and implementation of AIF and CIF proposals involving women;

o Pro-poor guidelines for individual household toilets, with 90% of the decided cost estimates borne by the project and 10% by the community to address issues of open defecation, women’s privacy, and safety concerns;

o Camps organized to facilitate household tap connections;

o Pro-poor individual household tap

Completed

12

Two cities, Ratlam and Ujjain chose to opt out of the project resulting in preparing of 4 MAPPs.

Appendix 9 59

connection charges to encourage legal tap connections and reduce women and girls’ workload;

o Design modifications based on community consultation in Bhopal, where cement concrete roads replaced bituminous roads; and

o Community tender evaluation committees comprising municipal project staff and CGC officers.

Demonstration of community-based water and sanitation pilot initiatives in the most vulnerable slums.

Capacity of municipal corporations on community concerns and gender built by placing and training community development officers in PIUs for the project period under the PMU’s supervision and guidance and supported by community development experts with the DSCs and PMC.

Objective 2.3: To implement activities supported by the AIF and CIF in priority slums through the involvement of women

6. Undertake the AIF and CIF through participatory planning, especially involving women

Indicator: Reports include

a record of participatory planning and community participation, especially of women

Schemes respond to women’s needs and priorities

Schemes implemented using 30% female labor for equal wages

Partnerships with NGOs through convergence with UN-Habitat and WaterAid for participatory planning and community participation.

Women–led participatory AIF and CIF proposals developed in 65 selected slums (Bhopal: 15, Indore: 16, Jabalpur: 17, Gwalior: 17).

Women participated actively in the construction, maintenance, and monitoring of community toilets and other civic amenities.

Capacity building of CGCs undertaken on O&M, institutional systems such as tariff collection, complaints and referral, bylaws for private tap connections, and are an integral part of the DPRs.

Schemes responding to women’s priorities undertaken in the CIF including:

o Community preparatory capacity-building training benefitting 953 community members, of whom 727 were women (76.2%):

Bhopal: 170 trained—65 men and 105 women (61.7%)

Indore: 278 trained—28 men and 250 women (89.9%)

Jabalpur: 373 trained—85 men and 288 women (77.2%)

Gwalior: 132 trained—48 men and 84 women (63.06%)

o Vocational training provided to 4,490 beneficiaries, of whom 3,610 were women (80.4%):

Bhopal: 812 trained—52 men and 760 women (93.5%)

Completed

60 Appendix 9

Indore: 2,044 trained—812 men and 1,232 women (60.27%)

Jabalpur: 1,047 trained—16 men and 1,031 women (98.4%)

Gwalior: 587 trained—all were women (100.0%)

o Educational support (coaching classes)

benefitting 1,228 schoolchildren of whom 740 were girls (60.2%):

Bhopal: 71—25 boys and 46 girls (64.7%)

Indore: 504—98 boys and 406 girls (80.5%)

Jabalpur: 653—365 boys and 288 girls (44.1%)

o Health Camps organized benefitting 24,356 slum dwellers, of whom 16,604 (68.1%) were women:

Bhopal: 5,500 beneficiaries—2,500 men and 3,000 women (54.5%)

Indore: 9,500 beneficiaries—1,900 male men 7,600 women (80.0%)

Jabalpur: 3,865 beneficiaries—1,081 men and 2,784 women (72.0%)

Gwalior: 5,491 beneficiaries—2,471 men and 3,020 women (54.9%)

o Exposure visit of 302 members to good practices in participatory slum improvement, of whom 250 (82.7%) were women:

Bhopal: 34—12 men and 22 women (64.7%)

Indore: 68—14 men and 54 women (79.4%)

Jabalpur: 160—7 men and 153 women (95.6%)

Gwalior: 40—19 men and 21 women (52.5%)

o Events organized to increase access to social security and welfare schemes organized in Bhopal.

Community-level initiative undertaken by CGCs to increase access to municipal services through RTI, as in the case of Guru Nagar, Indore.

Area of Focus: Physical Infrastructure

Objective 3.1: To empower women in the detailed design of the project

7. Awareness campaign targeting women

Community participation with women’s representation was ensured in planning AIF and CIF activities.

Regular meetings held by community members

Completed

Appendix 9 61

Indicator: Women able to

attend and participate in meetings

Separate women’s meetings and/or 30% women’s participation in planning meetings

Women’s views influence design outcomes

and members of 65 CGCs in 4 cities; 73.1% of CGC members are women during the project period.

A gender checklist included in DPRs developed by the Bhopal municipal corporation.

Preferred options for water supply and sanitation, such as piped water supply, individual household toilets, and community toilets, with defined O&M procedures through community consultation endorsed by the CGCs.

Design modifications based on community consultation, as in the case of Sector 5, Bhopal, where cement concrete roads replaced bituminous roads.

Design modifications as in the case of the community toilet at Kanch Nagar, Jabalpur, where women were first allotted the first floor, but where usage later changed based on the women’s articulated needs.

Objective 3.2: To ensure women gain benefits from construction process

8. Contractors required to engage a considerable amount of female labor and ensure the least possible difference in wages between men and women for equal work

Indicator: Women employed at equal wages for equal work

The contracts were governed by the labor laws stating equal wages for equal work. The contract documents include clauses investing the contractor for laborers’ safety and safeguards, and for ensuring the provision of protective measures, water, and sanitation for laborers.

CGCs were alert in this regard during the monitoring of construction activities.

All women employed by contractors were given equal wages for equal work.

Onsite training regarding hygiene and safety was provided to male and female workers, and HIV/AIDS awareness training was organized at Indore for laborers.

Completed

OVERALL RATING FOR 8 GAP ACTIVITIES All activities successfully implemented

AIF = Area Improvement Facilities, ASCI = Administrative Staff College India, BME = benefits monitoring and evaluation, CGC = community group committee, CIF = Community Initiatives Fund, DFID = Department for International Development, DPR = detailed project report, DSC = design and construction supervision consultant, IEC = information, education, and communication, MAPP = municipal action plan for poverty reduction, MOU = memorandum of understanding, MPUSP = Madhya Pradesh Urban Services for the Poor program, NGO = nongovernment organization, O&M = operation and maintenance, PIU = project implementation unit, PMC = project management consultant, PMU = project management unit, RTI = right to information, ULB = urban local body, UN-Habitat = United Nations Human Settlements Program, WATSAN = water and sanitation.

62 Appendix 9

F. Evidence of Project Outcomes on Women

8. Practical and Strategic Gender Benefits are as under:

Practical Gender Benefits Strategic Gender Benefits

Improved and more reliable water

supply Access to individual household toilets Access to safer community sanitation

blocks Access to improved drainage Access to cemented or concrete roads Reduction in water collection workloads,

transportation, and healthcare burdens Marginal increase in income Reduced waterlogging and improved

environment

Leadership Access to skills upgrading training Enhanced participation in decision-

making as CGC members Contract labor covered under

safeguard and equal wages policies Equal training opportunities Majority of women in office-bearing

capacity within the CGCs Women leading the management of

community-based water supply and sanitation schemes

G. Lessons learned

9. The following lessons can be drawn from the project: 9.1. Gender and social issues are interlinked and intersectional. Hence, caste, age, social status, marital status, and different abilities need to be taken into account when performing gender analysis before planning the project design. 9.2. An informed and participatory approach in selecting beneficiaries is a successful strategy that can be considered in other projects to promote people’s sense of ownership, the success, and the sustainability of program initiatives. 9.3. The project realized that close monitoring is necessary during social mobilization to ensure that measures are taken to encourage women to attend the meetings. 9.4. Other special measures were also necessary to create a gender-friendly environment so that women felt confident about presenting their ideas in public discussions. 9.5. Raising the awareness of men and women within communities was necessary, along with additional training for implementing NGOs to ensure that this approach was fully and consistently implemented. Gender awareness and training conducted by NGOs for communities has encouraged strong commitment to the project’s gender equality aspects. 9.6. Partnership with the government and NGOs helps to optimize existing assets and resources in the government and private sector. 9.7. Information systems and data collection are important. The project used several participatory tools to gather and analyze information. However, more efforts could have been made to collect and use sex-disaggregated data to guide future policy and investments.

Appendix 10 63

COMMUNITY FUNDS AND SOCIAL INCLUSION

1. Background. This appendix deals with the Area Improvement Facilities (AIF) and Community Initiatives Fund (CIF) created under the Urban Water Supply and Environment Improvement Project in Madhya Pradesh, and documents the processes followed, achievements, and lessons learned. The project targeted poverty reduction and sustainable economic growth through the provision of sustainable, city-wide, municipal infrastructure and governance reforms, to integrate poor settlements in the overall development process. To maximize social benefits and integrate poor communities, it was imperative to implement project works with an emphasis on community participation, awareness, and livelihood generation focusing on participatory planning. In this context, the project evolved a comprehensive strategy to reach poor settlements in a phased, planned manner not only to meet the settlement’s infrastructural needs but also to build the communities’ capacity and enable them to come out of poverty. 2. Process. In conjunction with the project’s overall focus on sustained improvements in water supply, sanitation, solid waste collection, and disposal through city-level infrastructure development, a small investment in participatory planning to include the financially weaker sections in project benefits was proposed. Two community-level funds to support the integrated upgrading of poor settlements were created: the AIF and CIF, with provision for Rs170.30 million and Rs50.59 million. Initially, 20 slums per city (a total of 80 slums in the four project cities) were proposed to be targeted under the AIF and CIF; this target was reduced to 75 during supplementary loan processing, and subsequently to 65 slums in the four cities. 3. Selection of slums in each city was done on the basis of a matrix developed with the criteria of infrastructure deficiency and poverty level. Proposed works included integrated water and sanitation works, community toilets, community halls, cement concrete roads, and drains. 4. To ensure the communities’ active participation, community group committees (CGCs) were formed, one in each slum. The needs assessment exercise leading to a citywide concept report and preparation of slum-wide detailed project reports was undertaken in consensus with and with contributions from the local community. These reports were duly approved by the respective mayors-in-council. 5. Interventions under the AIF and CIF began with the formulation of separate methodologies and guidelines for the AIF and CIF, to ensure clarity among stakeholders on their roles and responsibilities during the implementation of activities under the community funds. These guidelines were adopted by other projects such as the Department for International Development-supported Project Utthan. Community mobilisation, awareness creation, and preparedness was undertaken through various activities such as community meetings, household meetings, street plays, wall writings, and mobile vans. Capacity building of CGCs was undertaken by a community development team comprising the project implementation unit, design and construction supervision consultant, and nongovernment organization (NGO), who provided close support during the CGC registration, opening of bank accounts, and similar activities. The CGC members were oriented on project modalities and training on aspects such as operation and maintenance (O&M), accounts keeping, documentation, masonry work, and its supervision and vigilance over the quality of works. 6. Interventions. A total of 65 slums were ultimately taken up under the project under AIF and CIF activities (13 in Bhopal, 16 in Indore, 17 in Jabalpur, and 19 in Gwalior). The 15 initially identified 80 slums that could not be taken up under the project for infrastructure works benefited from community mobilization, capacity building, and the formation and strengthening of CGCs undertaken by the project. Infrastructure works were later taken up in these slums under other

64 Appendix 10

projects such as Department for International Development-supported Project Utthan and Jawaharlal Nehru National Urban Renewal Mission. The savings from the dropped slums were adjusted to meet the requirements of some of the remaining slums, which needed more funds due either to cost escalation or variations in works.

7. Infrastructure improvements, including community toilets, community-managed water supply schemes, cement concrete roads, drains, small sewer lines, and individual household toilets, were constructed under the AIF in the selected slums in project cities. Social sector activities and non-physical improvements, such as capacity building and awareness generation among slum dwellers, health camps, hygiene education, blood donation camps, exposure visits, vocational training, educational support programs, social security scheme and life insurance, door-to-door garbage collection, and multi-purpose community centers were taken up under the CIF. Exposure visits to another city (Hyderabad) served as a strong means of motivation and mutual learning. Vocational training programs provided sustained solutions for regular income generation. All detailed project reports included a training component, depending on people’s interests and locally available market opportunities. Each municipal corporation identified local training agencies. 8. The AIF and CIF activities were unique due to the intensive involvement and participation of communities in civil works, including project identification and prioritisation, contract awards, supervision and vigilance over the quality of works executed by contractors, and design decisions. 10. The project’s AIF and CIF efforts were recognized at various forums. The community-managed toilet in Laxmanpura won the Urban Water Award (from the Administrative Staff College India) in 2009, and the five open defecation free slums in Gwalior won this award in 2010. The community-managed water supply scheme in Ramnagara, Jabalpur was also awarded. 11. Partnership with UN-Habitat provided access to their partner NGOs, which conducted all necessary baseline surveys, held focus group discussions to identify infrastructure interventions, and collaborated in community capacity building through group formation, the formalization of groups, and the promotion of additional income-generation options. 12. Before and after situation. Before project implementation, the selected slums had (i) inadequate sanitation, resulting in unhygienic living conditions and creating widespread public health problems; (ii) inadequate and deficient infrastructure including water supply, roads, storm-water drains and toilets, and frequent open defecation; (iii) nonfunctional community toilets due to a lack of water and electricity; (iv) inadequate O&M due to a lack of ownership by the community; (v) waterlogging during the rainy season due to the non-existence of proper drainage systems; (vi) lack of connectivity to the main urban center and lack of motorable roads, which constrained access to even emergency vehicles (ambulances, fire engines), and where vehicular access was possible, there was traffic congestion due to encroachment and narrow lanes; and (vii) social and law and order problems and insecurities faced by women, including the personal safety of adolescent girls. 13. Works executed under the AIF include (i) water supply schemes in Ramnagara and NaiBasti, Jabalpur, and Ramajikapura, Gwalior; (ii) sewer lines in the Gwalior slums; (iii) individual household toilets in all four cities; (iv) the rehabilitation of community toilets in all four cities; (v) storm-water drainage in the Bhopal slums; (vi) solid waste management (door-to-door garbage collection); and (vii) road access to slums in Bhopal (all Gandhi Nagar slums). Works implemented under the CIF include: (i) capacity building on leadership and account management for all CGC members of all selected slums; (ii) vocational training for participants from selected slums on various trades, such as sewing and tailoring, computer operating, beauty parlor services,

Appendix 10 65

manufacturing of handmade paper plates and serving bowls, masonry work, and four-wheel motor driving; (iii) provision of the Group Life Insurance Scheme through life insurance corporation of India for 4,340 families from all 13 slums in Bhopal; (iv) health check-up camps organized in all 65 slums; and (v) two multipurpose community centers constructed at Sector 2, Gandhi Nagar, ward no. 1 and Daulatpura, Kokta ward no. 59.

Table A.10.1: Summary of the Status of the Area Improvement Fund and Community Initiatives Fund Works

No. City AIF Works CIF Works

Total

Works

Works

Completed

Population

Benefited

Total

Works

Works

Completed

Population

Benefited

1 Bhopal 37 37 17,504 7 7 9,855

2 Gwalior 27 27 8,287 4 4 7,610

3 Indore 17 17 7,085 6 6 13,071 4 Jabalpur 22 22 14,690 5 5 8,693

Total 103 103 47,566 22 22 39,229

AIF = Area Improvement Facilities, CIF = Community Initiatives Fund. Source: Urban Water Supply and Environment Improvement in Madhya Pradesh Project Management Unit, Bhopal.

14. Benefits. The key benefits and achievements of the AIF works included (i) increased access to affordable water and sanitation facilities in the project slums; (ii) improved sanitation practices and environmental conditions in all of the selected slums; (iii) reduced incidence of waterborne diseases in all the slums reported; (iv) economic and social benefits associated with access to water and sanitation at the household level; (v) increased access to the main road, ease of movement in all seasons, including the rainy season, and the prevention of waterlogging and entry of water into homes due to road and drain components; and (vi) increased land and property values in slums due to the investments in infrastructure. As indicated during focus group discussions at the time of the project completion review mission, for women and girls in particular, the individual and community toilets were safe, secure, and hygienic, saved time, made it easy to maintain personal hygiene, reduced the stress of going out at odd hours and finding friends to accompany them, reduced their risk of contracting waterborne diseases, and boosted their self-confidence and dignity. The water supply schemes were recognized as having contributed to time and energy savings, the availability of free time for productive work for women and education for girls, reduced health risks due to carrying water pots on their heads, and reduced tension and stress. 15. Key achievements of CIF activities were community empowerment; awareness; improved hygiene and health conditions at the household and community levels; increased opportunities for employment and income generation; increased social and economic activities, especially among women; increased business activities within the slums due to improved accessibility; equitable accrual of benefits to women and men from capacity building activities; and the availability of affordable spaces for small community events such as wedding, birthday parties, vocational training, and workshops. Of the 65 CGCs formed, a majority of those visited during the project completion review mission were found to continue to participate actively in the construction, maintenance, and supervision of community toilets and other civic amenities. Women became behavioral change agents and influenced households to promote improved sanitation, hygiene, and health-seeking behavior. Piped water supply in the homes reduced the household work burden of women and adolescent girls, and women’s participation in the workforce and their livelihood security is enhanced, resulting in an increased income for women-headed and poor households, reportedly ranging from Rs1,000 to Rs3,000 per month during the project completion review mission.

66 Appendix 10

16. CGCs were formed with more than 50% women members to promote gender-balanced community-led governance; ultimately, 65 CGCs were formed with 760 members (73.1% women). The project addressed gender stereotypes by ensuring women’s representation in leadership positions within the CGCs, and provided equal training opportunities to men and women. Activities to build community preparedness involved 953 persons, of whom 727 (76.2%) were women. Vocational training was provided to 4,490 people, of whom 3,610 (80.4%) were women. Women were motivated to learn and pursue non-traditional livelihood activities such as motor driving and masonry work. Educational support (coaching) benefited 1,228 schoolchildren, including 740 girls (60.2%). A total of 24,356 slum dwellers, including 16,604 women (68.1%), participated in health camps. Exposure visits for participatory slum improvement were undertaken for 302 members, including 250 (82.7%) women. Women prioritized toilets and an improved water supply at appraisal. Participatory design was achieved, with the communities influencing design in many instances. The construction of toilets, common water facilities, and community halls, including contract awards and the supervision of works, was managed by women CGCs. 17. Challenges. Some of the challenges faced in the AIF and CIF activities were (i) a lack of NGO support in the post-implementation phase (especially O&M support), (ii) a lack of understanding of women’s needs by service providers, (iii) initial proposals in inappropriate locations and planning of community toilets in slums, (iv) low participation and low levels of willingness to contribute in a few slums, and (v) a lack of institutional capacity in urban local bodies for implementing, community-based interventions. 18. Lessons learned. The following lessons emerge from the implementation of the AIF and CIF activities:

(i) The full-time support of good NGOs, support of senior officers as champions in

government, and dedicated staff of government representatives and consultants are required to ensure a high level of community participation.

(ii) Financial arrangements for O&M must be clear to ensure the sustainability of community-based systems.

(iii) The inclusion of poor communities in city-wide infrastructure projects requires an emphasis on a combination of soft and hard components addressing practical needs, such as water and sanitation, and strategic gender needs, such as livelihood security, participation, decision-making, leadership training, and a focus on health and hygiene.

(iv) Project timelines need to take into account the fact that, although capacity building is time-consuming and can demonstrate results after a long period, the results are more sustainable.

Appendix 11 67

CONTRIBUTION TO ADB RESULTS FRAMEWORK

No. Level 2 Results Framework Indicators

Target Revised Target

Aggregate Output

Method/Comments

1. Households with a new or improved water supply (number)

1,100,000

1,120,000

5.6 million people benefitted from an improved water supply.

2. Households with new or

improved sanitation (number)

300,000 160,000 0.8 million people, were provided with improved access to sanitation services. Sewage treatment plants in Gwalior and Indore were dropped and the scope of work pertaining to the laying of sewer pipes was reduced.

3. Wastewater treatment

capacity added and/or improved (m

3 per day)

110,000 75,000 Although a plant intended to treat 88,000 m

3 of sewage

per day at Gwalior was engineered and designed under the project, the plant’s implementation was shifted under a scheme fully financed by the Government of India.

4. Water supply pipes installed or upgraded (length of network in km)

1,030 2,450

5.

Households with a reduced flood risk (number)

1,100,000

670,000

The scope of work in Gwalior was reduced from 110 km to 26 km due to lower than envisaged benefits.

km = kilometer, m3 = cubic meter.

Source: Asian Development Bank project completion review mission.