Kerala Sustainable Urban Development Project: Project ... · 3. Project title Kerala Sustainable...

Completion Report

Project Number: 32300-013 Loan Number: 2226 July 2018

India: Kerala Sustainable Urban Development 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 (₹)

At Appraisal At Project Completion 15 November 2005 30 June 2016

₹1.00 = $0.0219 $0.0148 $1.00 = ₹45.5500 ₹67.4263

ABBREVIATIONS

ADB – Asian Development Bank CIF – community infrastructure fund CTO – consent to operate DMF – design and monitoring framework DSC – design and construction supervision consultants EIRR – economic internal rate of return FIRR – financial internal rate of return GAP – gender action plan GOK – Government of Kerala KWA – Kerala Water Authority LCS – low-cost sanitation LGID – local government infrastructure development LSGUD – Local Self Government (Urban) Department O&M – operation and maintenance PIU – project implementation unit PMU – project management unit PPMS – project performance and management system PCR – project completion review PSF – poverty social fund RRP – report and recommendation of the President SRP – short resettlement plan STP – sewage treatment plant SWM – solid waste management TSU – technical support unit UFW – unaccounted-for-water ULB – urban local body WACC – weighted average cost of capital WTP – water treatment plant

WEIGHTS AND MEASURES

km – kilometer lpcd – liters per capita per day m – meter mld – million liters per day

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., FY2018 ends on 31 March 2018.

(ii) In this report, "$" refers to United States dollars.

Vice-President Wencai Zhang, Operations 1 Director General Hun Kim, South Asia Department (SARD) Director Kenichi Yokoyama, India Resident Mission, SARD Team leader Pushkar Srivastava, Senior Project Officer, SARD Team members Bhawna Kulshreshtha, Executive Assistant, SARD

Girish Mahajan, Senior Environment Officer, SARD Suhail Mircha, Safeguards Officer, 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. DESIGN AND IMPLEMENTATION 2

A. Project Design and Formulation 2 B. Project Outputs 3 C. Project Costs and Financing 5 D. Disbursements 6 E. Project Schedule 6 F. Implementation Arrangements 6 G. Technical Assistance 7 H. Consultant Recruitment and Procurement 7 I. Gender Equity 8 J. Safeguards 8 K. Monitoring and Reporting 8

III. EVALUATION OF PERFORMANCE 9

A. Relevance 9 B. Effectiveness 9 C. Efficiency 10 D. Sustainability 10 E. Development Impact 11 F. Performance of the Borrower and the Executing Agency 12 G. Performance of the Asian Development Bank 12 H. Overall Assessment 12

IV. ISSUES, LESSONS, AND RECOMMENDATIONS 13

A. Issue and Lessons 13 B. Recommendations 14

APPENDIXES 1. Design and Monitoring Framework 16 2. Project Cost at Appraisal and Actual 28 3. Project Financing at Appraisal and at Completion 30 4. Disbursement of ADB Loan Proceeds 32 5. Technical Assistance Completion Report 33 6. Contract Awards of ADB Loan Proceeds 35 7. Summary of Contract Details 36 8. Implementation of Gender Action Plan 47 9. Safeguards Assessment 55 10. Status of Compliance with Loan Covenants 57 11. Economic and Financial Reevaluation 65

BASIC DATA A. Loan Identification 1. Country India

2. Loan number and financing source 2226, ADB’s Ordinary Capital Resources

3. Project title Kerala Sustainable Urban Development Project

4. Borrower India

5. Executing agency Local Self Government (Urban) Department, Government of Kerala

6. Amount of loan $221.20 million

7. Project completion report number 1687

8. Financing modality Project loan B. Loan Data 1. Appraisal – Date started 28 August 2005 – Date completed 6 September 2005

2. Loan negotiations – Date started 14 November 2005 – Date completed 16 November 2005

3. Date of Board approval 20 December 2005

4. Date of loan agreement 8 December 2006

5. Date of loan effectiveness – In loan agreement 8 March 2007 – Actual 19 March 2007 – Number of extensions None

6. Project completion date – Appraisal 31 December 2011 – Actual 30 June 2016

7. Loan closing date – In loan agreement 30 June 2012 – Actual 30 June 2016 – Number of extensions 2

8. Financial closing date – Actual 25 November 2016

9. Terms of loan – Interest rate London interbank offered rate (LIBOR)-

based (floating) + 0.60% – Maturity (number of years) 25 – Grace period (number of years) 5

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10. Disbursements

a. Dates

Initial Disbursement

15 July 2007

Final Disbursement

25 November 2016

Time Interval

112 months

Effective Date

19 March 2007

Actual Closing Date

30 June 2016

Time Interval

111 months

b. Amount ($ million)

Category

Original Allocation

(1)

Increased during Implementation

(2)

Canceled during Implementation

(3)

Last Revised Allocationa (4 = 1+2–3)

Amount Disbursed

(5)

Undisbursed Balance (6 = 4–5)

01 Civil works 128.60 42.21 86.39 78.14 8.25

02A Equipment, materials, vehicles, and furniture

9.60 7.05 2.55 2.54 0.01

02B Local training, workshops, surveys, and studies

1.50 1.05 0.45 0.44 0.01

03 Livelihood promotion programs

9.80 8.59 1.21 1.17 0.04

04 Local government infrastructure development

15.00 15.00

05 Consulting services and incremental admin costs

12.20 8.30 20.50 19.89 0.61

06 Interest & commitment charges

29.30 17.00 12.30 11.69 0.61

07 Unallocated 15.20 15.20

Total 221.20 8.30 106.10 123.40 113.88 9.52

a Last revised allocation takes into account the partial loan cancellations carried out in August 2013, May 2014, and May 2016, and reallocations undertaken in September 2012 and August 2016.

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C. Project Data 1. Project cost ($ million)

Cost Appraisal Estimate Actual

Foreign exchange cost 107.70 53.84 Local currency cost 208.40 104.19 Total 316.10 158.03

2. Financing plan ($ million)

Cost Appraisal Estimate Actual

Implementation cost Borrower financed 94.90 44.15 ADB financed 191.94 102.19 Total implementation cost 286.84 146.34

Interest during construction costs Borrower financed ADB financed 29.26 11.69 Total interest during construction cost 29.26 11.69

ADB = Asian Development Bank.

3. Cost breakdown by project component ($ million)

Component Appraisal Estimate Actual

Component A: Urban Infrastructure Improvement

Water supply scheme 28.26 19.47 Sewerage and sanitation 62.29 35.27 Urban drainage 18.59 14.94 Solid waste management 7.32 5.34 Road and transport 28.07 29.91 Land acquisition and resettlement 1.45 0.40

Subtotal (A) 145.98 105.33 Component B: Urban Community Upgrading

Community infrastructure & services 10.00 14.68 Livelihood promotion 12.50 2.20

Subtotal (B) 22.50 16.88 Component C: Local Government Infrastructure Development

Subprojects 21.43 – Project development 32.70 –

Subtotal (C) 54.13 – Component D: Support for Capacity Building and Project Implementation

Capacity building 2.88 16.05 Project implementation 14.60 8.06

Subtotal (D) 17.48 24.12

Contingency 25.74 – Tax and duties 21.02 – Interest and charges 29.26 11.69

Total 316.10 158.03

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4. Project Schedule

Item Appraisal Estimate Actual

Date of contract with consultants Technical support unit 31 March 2007 6 July 2007 Design and supervision consultant-I 31 March 2007 3 May 2007 Design and supervision consultant-II 31 March 2007 3 May 2007 e-Tendering consultants 31 March 2007 21 June 2007 Environmental due diligence consultant 31 March 2007 2 September 2013 Monitoring and evaluation consultants 31 March 2007 26 November 2015

Completion of engineering designs 30 April 2007 30 August 2014 Civil works contracts

Date of award 30 April 2007 19 March 2007 Completion of work 31 January 2011 30 June 2017

Equipment and supplies First procurement 30 April 2008 19 October 2007 Last procurement 30 April 2009 16 May 2012 Completion of equipment installation 31 January 2011 22 June 2016 Completion of tests and commissioning 31 January 2011 30 June 2017 Beginning of start-up 31 January 2011 30 June 2017

5. Project Performance Report Ratings

Implementation Period

Ratings

Development Objectives Implementation Progress

From 1 January to 31 May 2006 Satisfactory Satisfactory From 1 June to 31 December 2006 Satisfactory Unsatisfactory From 1 January to 27 February 2007 Satisfactory Unsatisfactory From 28 February to 31 December 2007 Satisfactory Satisfactory From 1 January to 31 December 2008 Satisfactory Satisfactory From 1 January to 31 December 2009 Satisfactory Satisfactory From 1 January to 31 December 2010 Satisfactory Satisfactory From 1 January to 31 March 2011 Satisfactory Satisfactory From 1 April to 31 December 2011 Satisfactory Satisfactory

Single Project Rating

From 1 January to 31 March 2012 On track From 1 April to 30 June 2012 Potential Problem From 1 July to 31 December 2012 On track From 1 January to 31 December 2013 On track From 1 January to 31 December 2014 On track From 1 January to 31 December 2015 On track From 1 January to 30 June 2016 On track

D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons No. of

Person-Days Specialization of Members

Loan Appraisal Mission 28 Aug–6 Sep 2005 3 9 a, b, c Loan and TA Review 1 10–12 Sep 2006 3 9 b, d, e Loan and TA Review 2 19 – 24 Nov 2006 2 12 e, f Loan and TA Review 3 15 – 23 Mar 2007 2 18 b, e Loan and TA Review 4 31 Jul – 4 Aug 2007 3 5 e, f, g e-GP Assessment 18–21 Sep 2007 2 8 f, h Loan Review 1 23–27 Jul 2008 1 5 f Loan Review 2 17–25 Feb 2009 2 18 f, i Loan Review 3 6–10 Aug 2009 2 10 d, f Loan Review 4 12–14 Apr 2010 3 9 e, f, j Special Project Administration 1 22–25 Nov 2010 2 8 k, j Midterm Review 4–12 Jul 2011 5 28 l, m, n, o, p Special Project Administration 2 12–16 Mar 2012 5 20 l, m, o, p, k Special Project Administration 3 16–17 Jul 2012 3 6 l, q, n Special Project Administration 4 13–14 Sep 2012 2 4 l, o Loan Review 5 12–20 Aug 2013 3 24 l, r, o

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Name of Mission Date No. of

Persons No. of

Person-Days Specialization of Members

Special Project Administration 5 20–22 Nov 2013 1 2 r Special Project Administration 6 22–24 Apr 2014 4 12 l, r, o, p Special Project Administration 7 23–24 Sep 2014 1 2 l Special Project Administration 8 26 Feb 2015 2 2 l, r Loan Review 7 18–23 May 2015 3 15 l, r, s Loan Review 8 31 Aug–8 Sep 2015 4 32 l, r, t, o Loan Review 9 20–25 Jan 2016 2 12 l, r Loan Review 10 23–30 May 2016 3 21 l, s, u PCR Mission 29 Nov–7 Dec 2017 7 63 l, s, u, o, v, w, x

a = director, south Asia social sector division, b = project economist, c = urban development specialist, d = director, south Asia urban development division, e = senior finance and administration officer, e-GP = [insert explanation], f = urban economist, g = project administration unit head, India resident mission, h = consultant, i = transport specialist, regional and sustainable infrastructure division, j = project implementation officer, k = senior urban development specialist, l = senior project officer, m = associate project analyst, n = senior project officer (finance), o = senior environment officer, p = senior safeguards officer, q = country director, India resident mission, r = associate project officer, s = gender specialist (consultant), t = senior safeguards specialist, TA = technical assistance, u = project analyst (consultant), v = safeguards officer, w = benefit monitoring specialist (consultant), x = financial management specialist (consultant).

I. PROJECT DESCRIPTION 1. The Kerala Sustainable Urban Development Project was designed to (i) improve, upgrade, and expand existing basic urban infrastructure facilities and basic urban environmental services in five municipal corporations and 53 urban municipalities in Kerala; (ii) build the institutional capacity of state and municipal agencies in urban management and urban services provision; and (iii) undertake poverty reduction initiatives. The project, supported by the Asian Development Bank (ADB), included improvements in water supply, sewerage and sanitation, urban drainage, solid waste management (SWM), and urban transport and roads, including institutional strengthening and capacity building of state and municipal agencies in urban management and urban services provision and poverty reduction initiatives. 2. The envisaged impact of the project was to increase the growth potential of and reduce poverty in the five project cities (Kochi, Kollam, Kozhikode, Thiruvananthapuram and Thrissur), as Kerala’s prospects for economic development was adversely affected by its deficient urban infrastructure and service delivery. The expected outcome of the project was a better environment, a stronger economy, and improved living conditions for the 2.6 million people living in the project cities and urban local bodies (ULBs) under the project. 3. The investment need of $316.1 million was identified through preparatory technical assistance.1 On 20 December 2005, ADB approved a loan of $221.2 million for the project, with the Government of Kerala (GOK) contributing $59.8 million and the five municipal corporations contributing $35.1 million.2 The loan agreement was signed on 8 December 2006 and declared effective on 19 March 2007. The original loan closing date of 30 June 2012 was extended twice and closed on 30 June 2016. ADB’s loan account was closed on 25 November 2017. 4. The project comprised the following four parts:

(i) Part A: Urban infrastructure and services improvement. This component aimed to improve urban infrastructure and services, including the rehabilitation, improvement, and expansion of (a) the water supply, (b) sewerage and sanitation, (c) urban drainage, (d) SWM, and (e) roads and transportation.

(ii) Part B: Urban community upgrading. This component directly targeted poor communities through integrated interventions for improvements to basic infrastructure and services and livelihood enhancement.

(iii) Part C: Local government infrastructure development. This component was planned to provide ULBs with assistance for urban infrastructure subprojects that contributed to improving the living standards of urban populations. A specialized financial intermediary for local government infrastructure financing was planned to be established under the component.

(iv) Part D: Support for capacity building and project management. This component was designed to improve urban management and institutional development through capacity building activities to support the sustainability of investments under part A. It also supported project management and implementation activities at the project management unit (PMU) at the state level, and at the project implementation units (PIUs) at the city level.

1 ADB. 2003. Technical Assistance to India for preparing the Kerala Sustainable Urban Development Project. Manila

(TA-4106-IND, $1.00 million, 9 May 2003). 2 ADB. 2005. Report and Recommendation of the President to the Board of Directors: Proposed Loan to India for the

Kerala Sustainable Urban Development Project. Manila.

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II. DESIGN AND IMPLEMENTATION 5. At appraisal, the project was expected to benefit five municipal corporations with (i) continued access to piped municipal water supply system to 1.3 million people; (ii) access to proper sanitation either through sewerage or on-site facilities with access to regular septic tank or pit desludging to 1.9 million people; (iii) proper functioning drainage system serving 0.4 million people; (iv) adequate solid waste collection and disposal services to 1.7 million people; (v) access to better road facilities for traffic and pedestrian movement to 1.2 million people; and (vi) reduced water-logging in low-lying areas in the project cities (footnote 2). The project was also expected to benefit 0.3 million poor people with access to piped drinking water and proper sanitation. A. Project Design and Formulation 6. The project was relevant to the Government of India’s and ADB’s sector strategies at appraisal and remains relevant at completion. The project was in line with ADB’s country strategy and program, 2003 for India, and supported the 2004 country strategy and program update, which considered poverty reduction as a goal, highlighted interventions to address inter-regional disparities, and recognized urban infrastructure as one of the vehicles to achieve its goals.3 The project was also aligned with ADB’s Water for All Policy, 2001.4 At appraisal, it was consistent with India’s Tenth Five-Year Plan, 2002–2007. 5 In the urban sector, the plan’s emphasis was on improved water supply, higher reliability, quality, operation and maintenance (O&M), and recovery of user charges, which were also the thrusts of the urban water supply intervention of the project. It was also consistent with GOK’s Urban Policy and Action Plan for Kerala, 2002, which underlined the need for the creation and maintenance of critical urban infrastructure facilities, strengthening of urban governance, long-term strategic urban planning, and addressing the basic needs of the urban poor and increasing their income levels.6 At completion, the project remains relevant to ADB’s policy focus for India in the areas of inclusive growth, infrastructure, and environmental sustainability. It is aligned with India’s successive five-year plans and GOK’s 12th plan, which targets the universalization of access to urban water supply and sanitation, development of critical urban infrastructure, participatory planning of municipal services, and capacity building of ULBs, in addition to supporting GOK’s program on poverty alleviation and gender equity. 7 7. At appraisal, the design was appropriate to achieve the expected outcome derived from the consultative process, though with limited stakeholder participation. Learnings from the other ADB projects in India were applied, including (i) risk mitigation of start-up delays through technical assistance for capacity building of the project staff, (ii) nesting of PIUs in concerned municipal corporations to ensure ownership, (iii) digital mapping of project cities, (iv) allocation of loan proceeds for the area improvement fund and community initiative fund for interventions directly targeting poor communities. The project loan modality adopted for the project was the most suitable of the two modalities available at appraisal—project and program loans. However, the low readiness levels of some of the major components led to significant delays and impacted project outcomes. While the project design included an innovative local government infrastructure development (LGID) component, it could have also incorporated implementable transformative features, such as 24x7 water supply.

3 ADB. 2003. Country Strategy and Program. India. 2003–2006. Manila; and ADB. 2003. Country Strategy and

Program Update. India. 2004–2006. Manila. 4 ADB. 2001. Water for All: The Water Policy of the Asian Development Bank. Manila. 5 Government of India, Planning Commission. 2002. Tenth Five-Year Plan, 2002–07. New Delhi. 6 Government of Kerala. 2002. Urban Policy and Action Plan for Kerala. Thiruvananthapuram. 7 Government of Kerala, State Planning Department. 2013. Twelfth Five-Year Plan, 2012–17. Thiruvananthapuram.

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8. The performance indicators of impact, outcome, and outputs were defined in the design and monitoring framework (DMF) at appraisal. The DMF outcome targets were set based on the population of project cities, rather than project interventions, which led to low achievements. The output targets of part A defined in Supplementary Appendix C of the report and recommendation of the President (footnote 2) has been used for assessing the achievement of outputs in the DMF. The DMF could have included measurable outcome targets for parts C and D, and the gender action plan (GAP) of the project. 9. The project output was reduced during implementation due to GOK’s decision to (i) rehabilitate major drainage canals in Kochi through another agency and (ii) continue the use of the existing sanitary landfill in Kochi. The LGID component also had to be deleted during implementation as the state could not reach consensus on the business processes and operating procedures of the financial intermediary (paras. 18 and 31), adversely affecting project outcome. B. Project Outputs 10. The project delivered its planned outputs, except the environmental sanitation and LGID components.8 The DMF achievements are in Appendix 1. The achievements of project outputs are summarized in paras. 11–21.

Part A: Urban Infrastructure and Services Improvements 11. Water supply. The output targets of (i) process monitoring and efficiency improvements to existing water treatment plants (WTPs), (ii) replacement of transmission mains and pumping machinery, (iii) leak detection program including rehabilitation of existing distribution networks, and (iv) provision of bulk and service water meters, were partly achieved. Water supply interventions were not proposed in Kozhikode and Thiruvananthapuram. The following elements were completed: (i) the rehabilitation of WTPs of 323.5 million liters per day (mld) cumulative capacity in Kochi, Kollam, and Thrissur; (ii) the construction of two clear water reservoirs of 1.8 million liters cumulative capacity and associated pump houses; (iii) the construction of two sumps with a total storage capacity of 1.3 million liters; (iv) the laying of new transmission mains of 19.7 kilometers (km) against a target of 81.5 km; (v) the laying of 47.5 km of distribution pipelines including replacement of old pipelines against a target of 330.0 km; and (vi) the installation of nine bulk meters. Delivery losses were reduced from 60% to 40% against a target of 24%, and average per capita water supply was increased 89 liters per capita per day (lpcd) to 92–145 lpcd, against a target of 115–145 lcpd. Piped water supply in the three project cities improved from less than 2–3 hours per day to over 5.5 hours per day. 12. Sewerage and sanitation. Of the five sewage treatment plants (STPs) proposed for four project cities with a cumulative treatment capacity of 196.0 mld, only one STP of 107.0 mld capacity (54.6% of target) was commissioned at Thiruvananthapuram. STPs could not be taken up in Kozhikode, due to judicial intervention regarding siting of the STP, and in Kochi and Kollam, due to non-availability of land and public protests. About 25.0 km of existing sewers were rehabilitated and 43.4 km of new sewers were laid against the design target of 554.0 km. Only 11 of the 32 proposed sewage pumping stations were taken up, all of which are yet to be completed and commissioned. Providing the targeted 118,000 houses with sewerage connections and supply of sanitation and sewer maintenance equipment could not be achieved, due to the poor

8 The subprojects’ outputs were revised during detailed engineering design, wherein (i) the cumulative capacities of

the STPs were reduced to 144.5 million liters per day (mld); (ii) sewer length reduced to 350.0 km; and (iii) number of pumping stations were reduced to 21.

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performance of contractors, “not-in-my-backyard” attitude of the public in Kochi, Kollam, and Kozhikode, and non-issuance of notification for land acquisition despite several consultations. 13. Drainage. A total of 51.9 km of stormwater drains were constructed or rehabilitated, and 38 culverts and sea-outlets at three locations were provided under this component. Output targets of (i) the desilting, side-protection, widening, rehabilitation, and improvement of existing culverts, drainage canals, and drains, including covering of open drains; (ii) construction of primary, secondary, link drains, culverts, silt-pits, and sea-outlets; and (iii) renovation of the Vanchikulam tank, were achieved. Moreover, 26.4 km of roadside drains were constructed in five project cities. 14. Solid waste management. Output targets in Kochi, Kollam, Kozhikode and Thrissur that were partly achieved were (i) the development of sanitary landfills; (ii)the development of compost plants in Kochi and Kollam; and (iii) the supply of equipment for the collection and transportation of solid waste. The equipment was procured, supplied, and utilized by the respective cities as planned. The existing sanitary landfill was redeveloped in Kozhikode along with the construction of a 75 cubic meters (m3)/day leachate treatment plant. Works were not taken up in Kochi, as an existing landfill and compost plant were in use. In Kollam, eight biogas plants with a cumulative capacity of 4.25 tons per day were installed and are operational. ADB funds could not be used in Kollam for the municipal solid waste landfill due to environmental safeguard non-compliance and for the compost plant due to public protests (para. 30). 15. Roads and transport. Under this component, the upgrading or construction of (i) 50.1 km of critical roads; (ii) 21 junctions; (iii) one bridge, one flyover, one underpass, and two pedestrian subways; (iv) 30.7 km of footpaths; (v) 24.2 km of drains; and (vi) parking area of 2,427 square meters were completed. Road safety measures, such as installation of 629 street lights, handrails, and signages, were also implemented. The output targets of upgrading critical roads totaling 70.8 km and 41 junctions, construction of one bridge, one flyover, one underpass, and three pedestrian subways, were partly achieved. In Kollam, upgrading three major roads totaling 11.0 km and eight junctions were not financed by ADB due to non-fulfillment of social safeguard requirements (para. 30).

Part B: Urban Community Upgrading 16. Community infrastructure and services. This component provided for community-driven integrated interventions for basic infrastructure and services in poor settlements. Community schemes were developed at ward level and integrated into municipal development plans. A total of 465 works were completed in the five project cities, including construction of community halls, anganwadis, public health centers, libraries, parks and playgrounds, water supply works, stormwater drains, footpaths, road works, and biogas plants in poor settlements.9 The component also financed low-cost sanitation with the construction of 2,245 household toilets. Over 95% of poor households have access to safe drinking water in Kochi, Kollam, and Thrissur and over 98% of poor households have access to hygienic sanitation. The component provided significant benefits with improved quality of life to over 0.6 million poor in the five project cities. 17. Livelihood promotion: The project supported state poverty eradication mission through its various livelihood development and support activities. The component financed 71 general training and capacity building programs and 118 skill development training programs benefitting over 4,000 poor people. The component also financed the poverty social fund to support income

9 Anganwadi centers provides day care, food, preschool education, and primary healthcare to children under 6 years

of age, and nutrition and health care to expectant mothers.

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generation programs for confederations of self-help groups and established 17 microenterprises for poor and vulnerable women and businesses for 124 groups. This component had a strong collaboration with gender equity activities and was a successful project component (para. 29).

Part C: Local Government Infrastructure Development 18. The LGID component was designed to assist 53 municipalities in developing and financing basic municipal infrastructure and services. GOK intended to implement the component through the creation of a financial intermediary, but instead decided to restructure Kerala Urban and Rural Development Finance Corporation Limited to act as the financial intermediary. However, due to inordinate delay in reaching consensus among stakeholders on the business processes and operating procedures of the financial intermediary, this component was deleted from the scope.

Part D: Support for Capacity Building and Project Management 19. Capacity building for improved urban management: Under this component, a database and management information system on municipal services was established, which is currently being managed by Information Kerala Mission. Municipal financing was strengthened by formulating guidelines for financing infrastructure projects and the enforcement of an improved tariff structure for water supply and sewerage. Fiscal transparency and accountability were introduced through double entry accounting and the disclosure of the balance sheets of the five municipal corporations. The GOK provided training programs for integrating community participation into municipal planning as per the Kerala Municipal Act. 20. Support for project management and implementation. The technical support unit (TSU) provided consulting services to assist the PMU while design and supervision consultants (DSCs) assisted PIUs in project management. Independent consultants carried out the environmental due diligence and evaluation of the implementation of resettlement plans. 21. Community awareness and participation. While this component was well executed for part B of the project (urban community upgrading), it was not successful for part A (urban infrastructure and services improvement), as it could not manage public perceptions and understanding of project benefits. This led to public protests and the eventual stalling of works, particularly of the environmental sanitation works. As part of the dissemination activities under the project, a monthly newsletter in Malayalam—Nagaravartha—and quarterly newsletter—Cityscape—providing project updates were published, but with limited circulation to stakeholders. C. Project Costs and Financing 22. The estimated project cost at loan appraisal was $316.1 million, with an ADB loan component of $221.2 million, GOK’s contribution of $59.8 million, and municipal corporations’ contribution of $35.1 million. At completion, the actual project cost was reduced to $158.0 million, consisting of ADB’s loan amount of $113.9 million and GOK’s contribution of $44.1 million. During implementation, the cost of consulting services and incremental administration increased by $6.6 million due to the extension of the implementation period by 4 years and the use of consulting services beyond the originally planned 5-year period. Costs decreased by (i) $40.7 million (12.9%) for urban infrastructure improvement due to the stalling or termination of environmental sanitation contracts and significant revision of outputs during detailed engineering (para. 9 and footnote 8); (ii) $5.6 million (1.8%) for urban community upgrading, due to lower than estimated expenditure against livelihood promotion activities; (iii) $54.1 million (17.1%) due to the deletion of the entire LGID component from the scope of the project; and (iv) a $17.5 million (5.5%) reduction in interest

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and charges due to lower cost of financing. Consequently, cumulative loan cancellations of $107.3 million were undertaken between 2013 and 2016. 10 The ratio of ADB loan to GOK contribution changed from 70:30 at appraisal to 72:28 at completion. Local cost financing was not applied to this loan although the loan was approved before March 2006. Appendix 2 provides details of the project cost at appraisal and actual and the project cost by project cities. Appendix 3 describes the original financing plan and allocations of loans by financier at appraisal and at completion, and the variances within cost categories. D. Disbursements 23. A total of $113.9 million (92.3% of the revised loan amount of $123.4 million) was disbursed by project completion. ADB loan proceeds were re-lent by the borrower (the Government of India) to GOK on back-to-back arrangements. Retroactive financing of up to 15% of the loan amount was approved to facilitate project implementation. Disbursements in the first 2 years were low, only $1.8 million in 2007 and $5.8 million in 2008, mainly due to delay in subproject preparation, procurement, and implementation issues. Though the disbursements improved in subsequent years, only $47.5 million (21% of original loan amount) had been disbursed by the midterm review mission in July 2011. About 71% of total loan disbursements were between 2009–2013. Partial loan cancellations (footnote 10) commenced toward the end of this period. Appendix 4 provides the annual and cumulative disbursements against projections. E. Project Schedule 24. The original loan closing date of 30 June 2012 was extended twice on 13 June 2012 and 3 June 2014, each time by 2 years, to optimize loan utilization and enable the completion of the subprojects. The project was physically completed on 30 June 2016 and the loan account closed on 25 November 2016. There were significant delays due to the state’s low preparedness at appraisal (para. 28), non-availability of land for sewerage subprojects, delayed permissions from railways, highways, and municipal authorities, and lack of public support for the environmental sanitation subprojects, as well as poor capacity for implementation and lack of inter-departmental coordination. While most works were completed by loan closure, as of 30 June 2016, eight sewerage works are still stalled due to contractors’ poor performance, legal injunctions, and public protests. These works are being completed by GOK. F. Implementation Arrangements 25. The project’s implementation arrangements were initially appropriate and comprised the Local Self Government (Urban) Department of GOK as the executing agency, two state-level committees—an empowered committee to guide project-related policy and administrative matters, and a coordination committee for ensuring smooth project implementation—and the GOK’s state poverty eradication mission. The PMU, headed by a project director, managed overall implementation with assistance from PIUs at each project town as well as city-level steering committees in each project city, which were constituted for execution and coordination. By 2011, a memorandum of understanding was signed with the Kerala Water Authority (KWA) for the implementation of water and sewerage projects in the five project cities. Based on this memorandum of understanding, the city’s superintending engineer, KWA, in the capacity of “additional project manager, PIU”, executed the contract agreement with the contractor and acted

10 Partial loan cancellations of $25.0 million was undertaken on 6 August 2013, $27.8 million on 16 May 2014, and

$45.0 million on 18 May 2016, while the unutilized $9.5 million was cancelled at loan closure on 25 November 2016. Reallocations of loan funds were undertaken on 6 September 2012 and 24 August 2016.

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as the engineer to the contract. The TSU and two DSCs assisted the PMU and PIUs prepare design documents, manage procurement, and supervise construction. An external monitoring and evaluation consultant assisted in the evaluation of the implementation of resettlement plans. G. Technical Assistance 26. The project design was carried out under ADB’s $1.3 million project preparatory technical assistance, of which $1.0 million was financed on a grant basis by the Government of the United Kingdom with counterpart funding of $0.2 million by GOK (footnote 1). The deliverables of the technical assistance were sound and included (i) surveys, data collection on infrastructure and municipal services delivery, and the preparation of an indicative investment program, (ii) the design of the Kerala municipal challenge fund, (iii) studies to prepare the preliminary engineering design of the proposed project components and cost estimates, (iv) financial and economic analyses, and (v) safeguard framework and documents for sample subprojects. Separate technical assistance for capacity building of the project’s executing and implementing agencies—financed by the Government of Japan’s Special Fund up to $0.50 million and by GOK providing counterpart funding of up to $0.1 million—delivered the intended outcome targets of strengthening executing and implementing agencies’ institutional capacity, public consultations, assistance in the preparation of standard bid documents, assistance in recruitment of consultants, and establishing a financial management system and procurement management system. The technical assistance project, implemented from December 2004 to March 2007, was rated as successful (Appendix 5).11 In retrospect, however, the technical assistance for project preparation failed to identify potential problems during the design phase, such as the lack of public support for the environmental sanitation component despite consultations. Also, the capacities built under the other technical assistance could not be sustained during the remaining implementation period due to frequent changes in management and staff. H. Consultant Recruitment and Procurement 27. The PMU adopted the quality- and cost-based selection procedures for the recruitment of the project management consultants and two design and supervision consultants (DSCs). The services of the two DSCs were divided geographically between the five PIUs with Kollam and Thiruvananthapuram in one group, and Kochi, Kozhikode, and Thrissur in another. The overall performance of the consultants is rated unsatisfactory. Poor teamwork and conflicts arising from the mismanagement of difference of opinion between the TSU and DSCs were the major reasons for the delays in the preparation of detailed project reports, detailed designs, and construction drawings. Frequent replacement of personnel, who could not deliver the requisite outputs, was also a major hindrance. The performance of the project performance and management system consulting firm was assessed as poor, as the end-line survey, which accounted for 50% of the contract’s output, was not undertaken satisfactorily. 28. The procurement of civil works commenced in 2008 with roads and SWM. Prior to this, only consulting and community infrastructure works were awarded. In 2009, the balance of roadworks, low-cost sanitation works, SWM equipment, and one package each of STP, water supply, and drainage were awarded. After a lull of over 1 year due to delays in administrative decisions, the award of civil works for water supply, sewerage, and drainage were completed in 2011 and 2012. Around 20% of the civil works were awarded after the original loan closing date. Inordinate delays in administrative approvals of procurement cases from 2010 adversely impacted

11 ADB. 2007. Technical Assistance Completion Report. Capacity Building for Kerala Sustainable Urban Development.

Manila (TA 4518-IND).

8

project performance. Overall, the performance of contractors and suppliers is rated satisfactory, barring the contractors executing the sewerage subprojects (para. 24). The combination of poor decision-making during execution and delays due to insufficient resource mobilization by the sewerage contractors aggravated public opinion against the environmental sanitation works, which resulted in almost the entire component being terminated or stalled (paras. 12, 21, and 24). Appendix 6 details the contracts awarded against projections, and Appendix 7 lists the contracts. I. Gender Equity 29. The project was categorized as effective gender mainstreaming and included a GAP comprising ten activities spanning five objectives and three focus areas. Subcomponent-specific gender issues, assessed in the preparatory phase, informed the project design and were addressed through the actions listed in the GAP. Community- and gender-specific elements were incorporated into all project components with six activities under part B, three activities under part A, and one under part D. The project defined implementation modalities, partnerships, monitoring mechanisms, and dedicated human resources. All activities were timely implemented, sustainable, and systematically reported, with achievements for female participation surpassing defined targets. Details are in Appendix 8. J. Safeguards 30. The project was classified category B for environment, category B for involuntary resettlement and category A on indigenous peoples as per ADB’s safeguard policies.12 The environmental assessment and review framework, resettlement framework, and indigenous peoples planning framework were prepared during loan processing. ADB approved five town-specific initial environmental examination reports and one short resettlement plan, which served as the template for additional requisite short resettlement plans prepared during implementation.

Details of safeguard assessment are in Appendix 9. Likely impacts to indigenous peoples, expected under part C of the project, were negated as the component was deleted from the scope, and no indigenous peoples were affected in the implementation of the remaining components. While the implementation of safeguards was initially weak due to lack of specialized personnel, the safeguard implementation and monitoring improved with the engagement of full-time professionals in PIUs, DSCs, and contractors, as well as with adherence to the corrective action plans jointly prepared with ADB. Except for the renewal of the consents to operate (CTO) the WTPs and STP, the overall compliance was found to be satisfactory (Appendix 9). The extent of public consultations and outreach activities was inadequate throughout the implementation stages, resulting in major public protests against the environmental sanitation subprojects, and some of these works had to be deleted from the scope. ADB received complaints citing environmental concerns in a drainage project in Kochi, which was resolved through extensive consultations with complainants and design revision. ADB did not finance SWM and road subprojects in Kollam citing regulatory and safeguard non-compliance (paras. 14 and 15). Overall, safeguard compliance management was rated less than effective. K. Monitoring and Reporting 31. Most of the loan covenants (64 out of 69) were complied with (Appendix 10). Two covenants related to the LGID could not be complied with, as the component was deleted from the scope, resulting in smaller municipalities being deprived of financing of basic municipal

12 ADB. 2002. Environmental Policy of the Asian Development Bank. Manila; ADB. 1995. Involuntary Resettlement.

Manila; and ADB. 1998. The Bank’s Policy on Indigenous Peoples. Manila.

9

infrastructure and services (para. 18). Three covenants were partly complied with, including (i) the renewal of CTO for the treatment plants not being timely obtained after project closure; (ii) the reform-related covenant on the levying of plinth area-based property tax; and (iii) the conversion of stand-posts to individually metered house service connections or metering the stand-posts. Items (ii) and (iii) resulted in revenue losses. GOK has committed to obtain the CTO immediately, re-introduce the levying of plinth area-based property tax, and convert stand-posts under a new water supply project, for which approval has been obtained. The project met all the monitoring and reporting requirements, including the regular submission of quarterly progress reports, and audited project financial statements. The financial management of the borrower and the executing and implementing agencies were adequate and in compliance with statutory requirements, though the submission of the financial audit report for FY 2017 was delayed.

III. EVALUATION OF PERFORMANCE A. Relevance 32. The project is rated relevant to the borrower’s development objectives and ADB’s country and sector strategies (para. 6) at both appraisal and completion. While the project predates ADB’s Strategy 2020, it remains relevant to the strategy with its focus on infrastructure-led growth, poverty reduction, environment protection, and institutional strengthening.13 The project is aligned with ADB’s Water Operational Plan, 2011–2020. 14 Although the project design and identification of subprojects followed due process (para. 26), the risk assessment did not envisage delays and, consequently, risk mitigation measures—like continuous stakeholders’ consultation during implementation—were not undertaken. GOK’s decision to rehabilitate major drainage canals in Kochi through another agency and to continue the use of the existing sanitary landfill could not have been anticipated at design stage (para. 9). The inclusion of the KWA as the implementing agency for water supply and sanitation subprojects would have improved the relevance of the implementation arrangements (para. 25). B. Effectiveness 33. Overall, the project is rated less than effective in achieving its outcome targets. The outcome targets in the DMF related to urban transport, drainage, and flooding, were exceeded, while those related to the reduction of delivery losses and increase in the water supply (in lpcd), and access to sewage and solid waste treatment and disposal, were partly achieved. About 1.0 million people against a target of 1.3 million benefited from water supply interventions in Kochi, Kollam, and Thrissur. Delivery losses were reduced to 40% against a target of 24%, and average supply increased to 92–145 lcpd, against a target of 115–145 lcpd. The project benefited 0.6 million people in Thiruvananthapuram with adequate sewage treatment facilities, against a target of 1.4 million. Proper on-site sanitation facilities with access to regular septic tank or pit desludging are now available to 0.7 million people in Kochi and Thiruvananthapuram against a target of 0.5 million. 15 About 0.6 million poor have access to piped drinking water and proper sanitation, against a target of 0.3 million poor in the five project cities. The project interventions under part B (urban community upgrading), which directly targeted the poor with water supply and low-cost sanitation works, were effective. The project benefited 0.6 million people with adequate sewage treatment facilities in Thiruvananthapuram, against a target of 1.4 million people in four

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

Manila. 14 ADB. 2011. Water Operational Plan, 2011–2020. Manila. 15 Kerala Municipal Building Rules. 1984. http://lsgkerala.gov.in/htm/kmbr.asp The rules mandate provision of at least

one water closet in every building with on-site sewage treatment facility or septic tank or soak pit.

http://lsgkerala.gov.in/htm/kmbr.asp

10

project cities. The upgraded and new drainage system significantly benefited 0.5 million people against a target of 0.4 million, and 7,523 hectares of land in the five project cities experienced reduced flooding, thereby contributing to a multifold increase in land prices. Solid waste management interventions were proposed in four project cities under the project but could benefit only 1.2 million people in Kochi and Kozhikode against a target of 1.7 million. The project introduced source segregation of municipal waste in Kochi and Thrissur. Urban transport interventions contributed to improved traffic movement and pedestrian safety, benefiting over 3.0 million people against a target of 1.2 million in the five project cities. Output targets and achievements related to the above outcome targets are in paras. 11–15. 34. Safeguard compliance management was rated less than effective (para. 30). Gender mainstreaming activities including livelihood initiatives under the project were assessed as satisfactory, as it resulted in strategic benefits for community members, particularly women and slum dwellers, and enabled a sustained increase in economic opportunities for women (Appendix 8). However, as the project could not achieve 80% of its outcome targets, it was rated less than effective. C. Efficiency 35. Overall, the project is rated less than efficient. The economic internal rate of return (EIRR) of the project at completion was recalculated at 14.9% against an appraisal estimate of more than 19%. The EIRR at completion for the water supply subcomponent, which comprised 12.6% of the project cost, is assessed to be 14.2% against the appraisal estimate of 21.0%. For the environmental sanitation subcomponent (wastewater management, SWM, and drainage), comprising 29.9% of the project cost, the EIRR at completion is assessed at 9.9% against the appraisal estimate of 22.0%; and the EIRR of the urban transport subcomponent, constituting 19.1% of the project cost, is assessed to be 19.1% at completion against the appraisal estimate of 34.0%. Thus, the recalculated EIRRs are above the 12% threshold for economic viability at appraisal, except for the environmental sanitation subcomponent. However, as the EIRR of the project at completion was assessed only for part A investments and did not consider the deleted part C component, which constituted 22.5% of the project cost at appraisal, the project is rated less than efficient. A sensitivity analysis was carried out, which indicated that the project was economically viable for most tested scenarios. The lower economic returns were due to higher unit capital cost, prolonged implementation period, reduced outputs and benefits, and the dropping of the part C component. The details of the economic reevaluation and sensitivity analysis are in Appendix 11. Process efficiency issues such as procurement and implementation delays led to the extension of the project period and curtailment of project costs, outputs, and outcomes, despite the timely availability of counterpart funds, also affected efficiency ratings. D. Sustainability 36. Overall, the project is rated as likely sustainable. As the project was not designed for capital cost recovery, operating ratios were calculated at completion for the water supply and wastewater management subcomponents as they generate revenues, while it was not calculated for the SWM subcomponent, as revenues from the SWM user fee do not accrue to the respective municipal corporations. The revenue to O&M cost ratio for the water supply subcomponent in nominal terms for the period 2016–2025 averaged at 1.13:1, while that of the sewerage subcomponent was 0.34:1. The water supply tariffs are maintained at levels adequate to cover O&M costs. However, the 10% sewerage surcharge on water bills is insufficient to cover the sewerage O&M costs necessitating a government subsidy for both routine O&M and future large rehabilitations. GOK’s policy mandates the support of urban infrastructure in the state through

11

budgetary allocations and revenues from taxes and tariffs and has consistently been implemented by the state. The financial internal rate of return at completion for the water supply subcomponent was recalculated at 3.6% against the appraisal estimate of 5.9%, and for the wastewater management subcomponent was recalculated at 3.7% against the appraisal estimate of 13.1%.16 The financial reevaluation is in Appendix 11. 37. The development and operation of water supply and sewerage infrastructure in the state is the mandate of KWA, while the ULBs are responsible for other municipal infrastructure and services like drainage, SWM, urban transport, street lighting, health and education. Institutional measures and operational efficiency initiatives have improved sustainability from meeting 50% of the O&M costs of the water supply at appraisal to cover over 100% of the O&M cost at completion. KWA has sufficient human resources and institutional capacity for the O&M of water supply and sewerage assets. The ongoing ULBs’ initiatives to improve human resources and institutional capacity for better municipal asset management and governance will positively contribute to sustaining project outcomes. 38. The project is assessed to be environmentally sustainable as it contributes to water- and fuel- resource conservation, control of vector-borne diseases, and the abatement of air, water, and noise pollution, thus improving quality of life and the urban environment. The project is also assessed to be socially sustainable as the infrastructure interventions and livelihood promotion activities ensure continuous access to project benefits and economic opportunities. However, the sanitation component did not receive adequate social acceptance due to a lack of comprehensive consultation on the need for sanitation. E. Development Impact 39. The development impact of the project is rated satisfactory as the project contributed to the impact indicators of increased growth potential and lower poverty in the project cities. The real annual growth rate of non-primary sector income (Appendix 1, footnote 1) in project cities increased from constant to moderate levels in FY2005 to 8.9% in Kochi; 10.8% in Kollam; 9.1% in Kozhikode; 6.6% in Thiruvananthapuram; and 9.2% in Thrissur between FY2012 and FY2016, thus contributing to achieving the project’s strategic agenda of inclusive access to economic opportunities. Urban poverty in Kerala also fell from 20.2% in FY2005 to 15.3% in FY2011 (Appendix 1, footnote 2). Water supply was enhanced to 24x7 in some parts of the project cities and unaccounted-for-water (UFW) was reduced, while drainage interventions reduced flooding in low-lying areas. Urban transport interventions improved the riding quality and pedestrian safety, reduced traffic congestion, travel time, and vehicle operating cost, thus contributing to an improvement in the health and quality of the urban environment, thereby achieving one of the two strategic agendas of the project. Project contribution to ADB’s result framework are (i) 211,497 households with new or improved water supply in three project cities (Kochi, Kollam and Thrissur), (ii) wastewater treatment capacity added or improved by 107,000 m3 per day, (iii) 67.3 km of water supply pipes installed or upgraded, and (iv) 7,523 hectares of land improved through drainage and/or flood management in five project cities. The project contributed significantly to an improvement in the quality of life indices and poverty reduction, though impact level achievements cannot be attributed solely to project interventions. 40. The provision of basic infrastructure and services in poor settlements under the community infrastructure and services component significantly contributed to social inclusion and improving

16 The financial internal rates of return have been re-calculated at completion to facilitate comparison with the financial

analysis undertaken at appraisal.

12

the quality of life indices of residents (para. 16). The livelihood initiatives successfully targeted the poor and vulnerable households, particularly the women in the weaker economic strata, and provided them with increased access to sustainable economic opportunities (para. 17). The project’s poverty social fund supported GOK’s Ashraya project, which targets interventions to benefit the most disadvantaged and vulnerable people, mostly destitute women, thus promoting social inclusion. The low-cost sanitation intervention accrued gender-based advantages of improved sanitation with 2,245 toilets constructed in slums benefiting over 9,000 poor people. Under the SWM component, transportation equipment was provided to enable primary collectors, mostly self-help groups, to enhance the door-to-door collection. The project’s drivers of change, namely (i) effective gender mainstreaming and (ii) knowledge sharing activities, were thus achieved and are detailed in Appendix 8. F. Performance of the Borrower and the Executing Agency 41. The overall performance of the borrower is rated satisfactory and the executing agency less than satisfactory. The borrower, represented by the Government of India’s Department of Economic Affairs, provided timely guidance and decisions to GOK and undertook regular tripartite review meetings with ADB, GOK, and the PMU, which helped identify bottlenecks, provided solutions to issues, and monitored progress. GOK’s contribution to the project preparation was significant, though limited to some components, and its support to the PMU in the timely release of counterpart funding was adequate. However, poor financial planning and risk assessment led to a reduction of the project’s scope, thus curtailing project achievements. Midstream changes in institutional arrangements by the inclusion of KWA adversely impacted contract implementation, as the overburdened KWA staff lacked ownership of the project (para. 25). Frequent changes in leadership, inadequate deployment of human resources throughout the project period, and poor inter-agency coordination also impacted implementation. The PMU spent considerable time and effort managing unfavorable public perceptions and legal issues relating to the environmental sanitation contracts. The PMU was prompt in meeting the reporting and safeguard requirements and fiduciary compliance during the entire project implementation period. G. Performance of the Asian Development Bank 42. The performance of ADB is rated satisfactory. ADB fielded regular project administration and review missions to assess progress and provide guidance on procurement, including the avoidance of duplication with parallel government schemes, safeguards, financial management, and reforms implementation, and advise on the resolution of critical issues. The July 2011 midterm review mission identified challenges in the implementation of the sewerage and sanitation components, including the lack of requisite clearances, need for a significant loan extension, and downsizing of loan funds, and discussed these with GOK functionaries at the highest level. Monitoring and capacity building was carried out by ADB throughout the project cycle, which helped define processes and address issues through time-bound actions and targets, to facilitate project implementation. The PMU found ADB’s support and advice effective in the resolution of project management issues. ADB’s prudent monitoring and support ensured adherence to due processes and transparency in procurement, disbursements, and safeguards while upholding integrity and ethical standards. H. Overall Assessment

43. Overall, the project is rated less than successful. The project was relevant to the government’s overall development objectives and ADB’s policies at appraisal and remains so upon completion. The project is assessed less than effective in achieving the envisaged outcome

13

targets, besides non-achievement of the environmental sanitation component. The project is rated less than efficient, as the EIRRs for all interventions were reassessed to be lower than at appraisal, the EIRR of the sanitation component at 9.9% was less than the economic opportunity cost of capital of 12%, and part C of the project was deleted. The project is rated likely sustainable as the O&M of project assets is supported by mandatory budgetary allocations. The development impacts are rated satisfactory, as all the impact indicators have been achieved, with significant—though not solely—contribution by the project to the improvement in the quality of life indices, poverty reduction, social inclusion, and gender equality in project cities. Though the performances of the borrower and ADB are rated satisfactory, the performance of the executing agency is rated less than satisfactory, primarily due to the lack of meaningful stakeholders’ consultation and low institutional capacity. Ratings are summarized in Table 1.

Table 1: Overall Ratings

Criteria Rating

Relevance Relevant Effectiveness Less than effective Efficiency Less than efficient Sustainability Likely sustainable Overall assessment Less than successful Development impacts Satisfactory Borrower and executing agency Satisfactory for the borrower; less than satisfactory

for the executing agency Performance of ADB Satisfactory

Note: The Government of Kerala has assessed the project as effective, efficient, and likely sustainable, as 88 of the 102 contract packages were completed and their operations and maintenance ensured through urban local bodies.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS

A. Issues and Lessons 44. The completion of eight sewerage contracts is critical to achieving the improved sanitation outcome targets of the project. The current levels of financial, human resources, and institutional capacity of the municipal authorities are constraints for the continued sustainability of project assets. Low water tariffs and high UFW, with no willingness for a periodic water tariff revision, low sewerage surcharge, and no revenue generation from SWM, are critical policy issues that need to be addressed. 45. The following major lessons emerge from the project:

(i) Project design needs to be realistic and adequately informed. There is a strong interplay among various factors, such as (i) the level of capacity of the executing agencies in the development of project components, safeguard management, and determination of project duration; (ii) the scope of project interventions in the identification of targets; and (iii) the scope of project components in the selection of an appropriate implementation arrangement, among others. Failure to recognize these interactions have led to the pitfalls of an overambitious project design (paras. 7, 18, 24, and 41).

(ii) The project design could have considered transformative physical interventions such as 24x7 water supply and focused UFW reduction measures, instead of ambitious policy level interventions (part C) with a new executing agency (paras. 7 and 18).

14

(iii) The lack of extensive and continuous public consultations and community-driven prioritization of interventions right from the design phase until project completion could deprive critical public ownership of the project and lead to “not-in-my-backyard” public reactions (paras. 12 and 30).17

(iv) Frequent replacement of personnel, below-par performance and conflicts between the project consultants could have been better managed by the executing agency to ensure the required pace of delivery (paras. 27 and 41).

(v) Late finalization of detailed project reports and bid documents for water supply, sewerage, and drainage contracts, and delays in the possession of land for treatment plants and pumping stations, that require a longer implementation period disrupted project implementation schedules (para. 27).

(vi) Timely contract implementation requires seamless inter-agency coordination to ensure timely permissions and approvals (para. 24).

(vii) Dedicated revenue streams, human resources, and institutional capacity of the ULBs are critical for project asset management and sustainability (para. 37).

(viii) The project performance report does not capture outcome and output achievements or the likelihood thereof during implementation, leading to satisfactory or on-track ratings regardless of the project’s performance in achieving its targets.

46. Community awareness, participatory planning, and decision-making mechanisms developed during the implementation of the upgrading of the community infrastructure component of the project is a successful, replicable, and scalable model for grassroots, community-driven infrastructure development (para. 40). The strategy of leveraging existing institutional frameworks with a dedicated team for livelihood interventions was effective in identifying beneficiaries and assessing needs, followed by the planning and delivery of such interventions. Training of Kudumbashree community network members and elected representatives to develop and implement participatory plans for poverty alleviation, and their continued involvement post project completion, contributed to the sustainability of skill enhancement initiatives and capacities developed under the project (Appendix 8).18 B. Recommendations 47. The project-specific recommendations for project implementation are:

(i) Extensive, regular, and meaningful two-way stakeholder consultations and public outreach, and community-driven prioritization of project interventions, from design to completion stage, to be institutionalized to ensure public ownership and support;

(ii) Ensure need-based planning and high project preparedness, particularly for sewerage works, through early preparation of detailed designs, finalization of land required, and coordination for utility shifting, prior to contract award, for timely project completion; and

(iii) Determine the implementation agency considering quantum of sectoral investment within the project, technical and human resource capacities, asset ownership and sustainability of post-project operation and asset management mechanisms.

17 A positive outcome of GOK’s experience in implementing the environmental sanitation component led to extensive

consultations and its policy decision to move towards decentralized sewerage and solid waste management systems. 18 Kudumbashree is a poverty eradication and women empowerment program of GOK, implemented by the State

Poverty Eradication Mission (SPEM).

15

48. General recommendations for future project are:

(i) Loan period must be determined considering the experience of the executing agency. Loan size and period should be designed considering annual disbursement capacity to be between $15-20 million for a new executing agency in urban sector.

(ii) DMF indicators and performance targets must directly correlate to each project intervention including GAP, be proportionate to contribution attributable to the project, and be concise to facilitate monitoring and evaluation.

(iii) Hybrid payment structure involving deliverable-based payments for designs, reports and documents, and input-based payments for supervision will reduce personnel turnover and improve accountability and effectiveness of consultants’ performance.

(iv) Institutional mechanism should be devised and implemented for seamless and continuous working-group level inter-agency coordination, including representation from district administration, for road cutting permissions, utility shifting, land acquisition and regulatory compliance.

(v) Self-sustainability of municipal assets created under the project must be a critical design consideration of the project and ensured by including covenant measures for establishing dedicated revenue streams and building adequate human resources and institutional capacities.

(vi) The project performance reporting format should incorporate outcome and output achievements, or the likelihood of the project achieving its targets.

49. Future monitoring. Operational aspects for monitoring include the timely renewal of the CTO for treatment plants and submission of audited project financial statements for FY 2017, which GOK has committed to comply with and report to ADB by 30 September 2018. The sustainability of project assets managed by KWA and ULBs would require periodic revision of water tariffs and the sewerage surcharge, levying of the SWM treatment and disposal charge, and levying of the plinth area-based property tax. 50. Covenants. The two covenants related to the LGID is recommended to be dropped as part C of the project has been deleted and the covenants are no longer applicable. Future ADB financing to the state must be subject to compliance to the covenant on the renewal of CTO for the treatment plants. The time available for the implementation of covenants on the levying of the plinth area-based property tax and conversion of stand-posts to individual metered house service connections or metering the stand-posts is inadequate and their compliance could be made part of future ADB projects. 51. Further action. Completion of the balance of sewerage works, including the STP at Kozhikode, should be ensured by GOK in line with safeguard requirements for the achievement of the planned project outcome. Citywide 24x7 water supply and reduction of UFW in the project cities of Kochi, Kozhikode, and Thiruvananthapuram to meet the project’s benchmarks and ensure sustainability would require additional assistance of about $300 million. 52. Timing of the project performance evaluation report. The project performance evaluation report should be prepared in 2020, by when the sewerage subprojects are likely to be completed.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Indicators or Targets

Output Targets as in Supplementary Appendix C

of RRP

Project Achievements

Impact

Increased growth potential and lower poverty in the project cities

By end of Project plus 3 years (2014):

Sustained economic growth

Real growth rate in non-primary sector income in districts encompassing project cities

The real annual growth rate in non-primary sector income in districts with project cities are: 6.6% in Thiruvananthapuram; 10.8% in Kollam; 8.9% in Kochi; 9.2% in Thrissur; and 9.1% in Kozhikode.1

Reduced urban poverty Urban poverty in Kerala reduced from 20.2% in 2004-2005 to 15.3% in 2011.2

Outcome Project Achievements3

Better urban environment, economy, and living conditions for the 2.6 million people living in the five municipal corporations of Kerala

By end of Project (2011):

Increased population coverage of infrastructure services (poor and non-poor)

1.3 million people with continued access to piped municipal water supply system.4

Production and delivery losses reduced from 60% to 24% and average per capita water supply increased from 89 liters per capita per day (lcpd) to 115-145 lcpd by project completion (footnote c).

Partly achieved. 1.04 million people benefitted with piped municipal water supply in three cities. Water supply interventions were not proposed in Kozhikode and Thiruvananthapuram. Delivery losses reduced from 60% to 40% and average per capita water supply increased from 89 lcpd to 92-145 lcpd.

0.3 million poor people gain access to piped drinking water and proper sanitation

Achieved. 0.61 million poor people (90.47% of poor population) have access to piped drinking water in five municipal corporations.

Achieved. 0.63 million poor people (94.40% of poor population) have access to proper sanitation in five municipal corporations.

1 Government of Kerala, Department of Economics and Statistics, Thiruvananthapuram. 2017. Gross District Value

Added (At Basic Prices) – At Constant Prices, Year 2011-2012 and 2015-2016 (Quick). Thiruvananthapuram. Non-primary income includes incomes from secondary (manufacturing, utility, construction) and tertiary (services) sectors.

2 Government of Kerala, State Planning Board, Thiruvananthapuram. 2017. Economic Review 2016. Thiruvananthapuram. http://spb.kerala.gov.in/EconomicReview2016/web/chapter01_04.php.

3 Sources: Project Management Unit and Municipal Corporations of the five project cities. 4 At present piped water supply in all towns provides water for less than 2–3 hours every day or every other day.

Production and delivery losses reduced from 60% to 24% and average per capita water supply increased from 89 liters per capita per day (lcpd) to 115-145 lcpd by project completion.

http://spb.kerala.gov.in/EconomicReview2016/web/chapter01_04.php

Appendix 1 17

Design Summary



of RRP


1.9 million people with access to proper sanitation either through sewerage or on-site facilities with access to regular septic tank or pit desludging.5

Sewage treatment facilities for 1.4 million people, and improved sanitation and digestion facilities for approximately 500,000 people (footnote d).

Partly achieved. Project benefitted 0.58 million people in Thiruvananthapuram with adequate sewage treatment facilities, against a target of 1.4 million. Proper on-site sanitation facilities with access to regular septic tank or pit desludging available to 0.69 million people in Kochi and Thiruvananthapuram.

0.4 million people served by proper functioning drainage system

Achieved. 0.54 million people benefitted by proper functioning drainage system.

1.7 million people receiving solid waste adequate collection and disposal services

Partly achieved. 1.15 million people benefitted in Kochi and Kozhikode. Solid waste management interventions were not proposed in Thiruvananthapuram under the project.

1.2 million people with access to better road facilities–traffic and pedestrian movement

Achieved. 3.0 million people benefitted with better road facilities, flyovers, underpass and subways, improving traffic movement and pedestrian safety.

Less water-logging in low-lying areas

Achieved. Water-logging reduced in 7,523 hectares in five project cities.

Outputs Project Achievements6

Part A: Urban Infrastructure and Services Improvement

Water supply

Kollam

Investment program for water supply rehabilitation and distribution network strengthening (in Kochi, Kollam, and Thrissur)

By January 2011:

Water supply infrastructure improved to agreed design standards

Process monitoring and efficiency improvements to the 2 existing water treatment plants.

Partly achieved. Two bridges of clari-flocculator and 6 filter beds rehabilitated, 1 vertical turbine and 3 clearwater pump sets installed, filtration system automated and production efficiency improved from 7.0 million liters per day (mld) to 37.5 mld at Sasthamkota water treatment plant (WTP).

Replacement of 26 km existing transmission main

Not achieved.

5 At present, adequate sewage treatment is exclusively provided in Kochi to 30,000 people. The project will provide

sewage treatment facilities for 1.4 million people, and improved sanitation and digestion facilities for approximately 500,000 people.

6 Sources: Project Management Unit and Municipal Corporations of the five project cities.

18 Appendix 1

Design Summary



of RRP


Leak detection program to including rehabilitation / strengthening of 60 km of existing distribution network

Partly achieved. Rehabilitation of 16.3 kilometers (km) of distribution network.

Provision of bulk and service water meters

Partly achieved. 3 Bulk meters installed.

Kochi

Trunk water transmission main (37 km) rehabilitation

Partly achieved. 0.5 km of water transmission main rehabilitated in Vennala and Elavankara and 0.67 km in Matancherry and Fort Kochi. Process monitoring improved by automation and production efficiency improved by 40 mld at Aluva WTP.

Leak detection program with rehabilitation / strengthening of 195 km of existing distribution network

Partly achieved. Rehabilitation of 22.5 km of distribution network.


Partly achieved. 3 Bulk meters installed.

Thrissur

Replacement / rehabilitation of existing transmission mains (18.5 km) and pumping machinery

Achieved. 18.6 km of water transmission, flash mixers and alum tank rehabilitated, clarifier, flocculator, 6 filter beds, clear water reservoir, 2 centrifugal pumps installed, and efficiency improved at 36 mld Peechi WTP.

Leak detection program and rehabilitation / strengthening of 75 km existing city water distribution network

Partly achieved. Rehabilitation of 8.7 km of distribution network between Chembukkavu and Olari.


Partly achieved. 3 Electromagnetic flow meters installed.

Investment program for rehabilitation and extension of sewerage system, and supply of sanitation maintenance equipment (in Kochi, Kollam, Kozihikode and

Sewerage and Sanitation

By January 2011: Thiruvananthapuram

Sewerage infrastructure improved to agreed design standards

Rehabilitation of existing sewerage for 350,000 persons including 10 km pressure main

Not achieved.

Interceptor sewers (20 km) along TS canal and 50 km extension of sewerage with 8 P/stns in coastal areas for 150,000 persons

Partly achieved. 10.4 km of interceptor sewers laid and three pumping stations partly completed.

Appendix 1 19

Design Summary



of RRP


Thiruvananthapuram)

120 mld FAB STP for existing and extension sewerage

Achieved. 107 mld STP constructed and commissioned.

30,000 house connections Not achieved. No new connections provided.

By January 2008:

Sanitation maintenance equipment procured to agreed specifications

Supply of sanitation and sewer maintenance equipment (3 septic cleaners and 2 sewer vacuum / jetter).

Not achieved.

Kollam

Rehabilitation of 38 km existing sewer lines and laying 90km of new sewers in old municipal area

Partly achieved. 25 km of the 38 km existing sewer lines rehabilitated and 15.1 km of new sewers laid.

Construction of 11 pumping stations

Partly achieved. Four pumping stations partly completed.

Construction of 16 mld FAB STP at Kureepuzha

Not achieved.

27,000 house connections Not achieved.

Supply of sanitation and sewer maintenance equipment (3 septic cleaners and 2 sewer vacuum / jetter).

Not achieved.

Kochi

Extension of 90km sewerage and 3 P/Stns with 4km pressure mains in S. Ernakulam – 60,000 persons with 10 mld FAB STP

Not achieved. However, works at two pumping stations commenced.

Extension of 110 km sewerage, 4 P/Stn. With 8 km pressure main in North Kochi -100,000 persons with 20 mld FAB STP

Not achieved.


Supply of sanitation and sewer maintenance equipment (2 sewer and 7 septic cleaners)

Not achieved.

Thrissur

5 No. Septic tank emptying vacuum tankers

Not achieved.

Development of sludge treatment facilities

Not achieved.

20 Appendix 1

Design Summary



of RRP


Kozhikode

Rehabilitation of 17 km existing sewers and 105 km. of new sewers with 6 P/Stns with 12 km pressure mains for 170,330 persons

Partly achieved. 18.3 km of new sewers laid and works at one pumping station and one lift station commenced.

Construction of 30 mld FAB STP

Not achieved.


Supply of sanitation and sewer maintenance equipment (2 sewer and 5 septic cleaners)

Not achieved.

Implemented investment program for rehabilitation and improvement of city center drainage system. (in all municipal corporations)

Urban Drainage

By April 2009:

Urban drainage infrastructure improved to agreed design standards

By January 2008:

Equipment procured to agreed specifications

In all, 51.9 km of storm water drains were rehabilitated, and 26.4 km of roadside drains constructed, in five project cities.

Thiruvananthapuram

Rehabilitation of existing culverts, construction of by-pass culvert, silt pits etc. and widening of Pazhavangadi Thodu (main canal)·

Achieved. Rehabilitation of 0.36 km of Pazhavangadi Thodu, including desilting, silt traps, screens, 135 m of side walls and cover slabs were undertaken.

Improvement of other secondary drains

Achieved. Desilting of Amayizhanjan drain and improvement of side walls completed.

Kollam

Improvement of existing storm water drains-citywide

Achieved. Desilting and reconstruction of 9 storm water drains completed.

Construction of new drains to improve the storm water drainage network of the city

Achieved. 11 culverts and 21 storm water drains (19.77 km) were constructed.

Kochi

Improvement of link drains in the most flood prone and waterlogged areas of city centre

Achieved. Waterlogging significantly reduced in Ravipuram, Ambikapuram, Panampilly Nagar and adjoining areas by improving link drains.

Rehabilitation of the major drainage canals in the central city zone

Not achieved.

Appendix 1 21

Design Summary



of RRP


Improvement of secondary drains and covering of existing open drains

Achieved. Storm water drains (8.37 km) and culverts (5 numbers) constructed and link drains improved in central zone of the city covering Chittoor road, VRM road, Convent road, TD road, Market road, Rajaji road, Pullepady road, etc..

Thrissur

Side protection and de-silting of primary canals and in all drainage zones (15km)

Achieved. Random ruble masonry side protection works, desilting of canals and construction of 18.7 km of drains were completed.

Renovation of existing and construction of new culverts on the primary canals.

Achieved. 20 culverts were constructed at several places on primary canals.

Renovation of Vanchikulam Tank

Achieved. Culvert constructed at Vanchikulam thodu.

Covering and channel improvements to existing secondary drains

Achieved. Channel improvements to 16 secondary drains and 0.27 km of cover slabs constructed.

Kozhikode

Secondary drains and inlets to Elathur-Kallai (EK) Canal.

Achieved. Secondary drains and inlets to EK Canal constructed at 12 locations. In all, 4.72 km of drains were constructed across the city.

Drainage improvements in Wards 15 and 17.

Achieved. Drainage channel reconstructed at Pudiyapam and from Nadapalam to Paingottupuram.

Construction of wall and fencing to EK Canal from Karaparamba Bridge to Arayadathpalam

Achieved. Parapet wall of 2.75 km constructed between Karaparamba Bridge and Arayadathpalam.

Construction of Culverts at Kuzhippavayal and Varuthichery Vayal.

Achieved. Culvert constructed at Kaippurath bridge.

Construction of drainage outlets to the sea.

Achieved. Drainage outlets to the sea at Butt Road junction, Kamburam and Edakkal thodu constructed.

22 Appendix 1

Design Summary



of RRP


Investment program for solid waste collection and transportation equipment, compost plant installation and development of landfill site (in Kochi, Kollam, Kozihikode, and Thrissur)

Solid Waste Management

By July 2008:

Solid waste disposal and treatment infrastructure improved to agreed design standards

By January 2011:

Infrastructure improved to agreed design standards

Kollam

Supply of brooms, 6-bin containerized wheelbarrows, metal trays, shovels, etc.

Not achieved.

66 small (0.5 m3) and 44 medium (1.0 m3) and 47 dumper placer (3.0 m3) containers together with 24 auto pickups7

Not achieved.

8 dumper placer trucks and 1 refuse collector

Not achieved. However, 57 auto tippers and 1 front end loader and sheep foot roller supplied.

35 MT/day compost plant installation

Not achieved. However, 8 biogas plants of cumulative 4.25 tons per day (TPD) capacity installed and operational.

Development of sanitary land fill site

Not achieved.

Kochi

Supply of brooms, 6-bin containerized wheel barrows, metal tray, shovels, etc.

Partly achieved. 130 containerized and 34 hand carts, 72 wheel barrows, 120 shovels, 260 metal trays, etc. were supplied and utilized.

Purchase of 130 small (0.5 m3), 87 medium (1.0 m3) and 69 dumper placer (3.0 m3) containers plus 48 auto pickups

Partly achieved. Over 0.3 million bins for organic and inorganic waste, 35 auto 4-wheelers, 30 auto 3-wheelers, etc. were supplied and used.

Procurement of 14 dumper placers

Partly achieved. 6 covered tipping trucks, 6 vehicle washing equipment, 6 compressors, 1 hydraulic lift, etc. were supplied and used.

70MT/day compost plant installation

Not achieved. Existing compost plant at Bramhapuram is being used.


Not achieved. The existing landfill site at Bramhapuram is being used.

7 Small (0.5 m3) and medium (1.0 m3) have been considered as bins.

Appendix 1 23

Design Summary



of RRP


Thrissur


Achieved. 330 brooms, 150 containerized carts, 71 hand carts, 64 wheel barrows, 330 metal trays and 100 shovels were supplied and used.

Purchase of 9 small (0.5 m3) and 43 dumper placer (3.0 m3) containers together with 22 auto pickups for primary collection of waste

Partly achieved. 210 litter bins, 48,000 bins for organic and inorganic waste, 27 auto 3-wheelers, 11 auto tippers, 30 dumper containers and 2 dual loader dumpers were supplied for primary waste collection and utilized.

7 dumper placer trucks and 1 refuse collector

Partly achieved. 1 covered tipping truck and 1 tipper truck were supplied and utilized.


Not achieved. Compost plant, internal roads and drains only were completed, but not used.

Kozhikode


Achieved. 215 brooms, 38 containerized carts, 215 metal trays and 80 shovels were supplied and used.

Purchase of 79 small (0.5 m3) and 53 medium (1.0 m3) and 57 dumper placer (3.0 m3) containers together with 29 auto pickups for primary collection of waste

Partly achieved. 20 dumper containers (3.5 m3), 2 dual dumper placer, 19 auto 3-wheelers, and 66 auto 4-wheelers were supplied and used.

9 dumper placer trucks and 2 refuse collectors

Partly achieved. 4 rear loader compactors, 1 tipper truck, 16 auto 3-wheeler tippers, 16 power sprayers, etc. were supplied and used.

Development of sanitary land fill site on existing site

Achieved. The existing sanitary landfill developed and a 75 m3/day leachate treatment plant constructed and commissioned.

24 Appendix 1

Design Summary



of RRP


Investment program for road and junction capacity augmentation, new road links and road safety improvements (in all project cities)

Urban Transport and Roads

By January 2011:

Infrastructure improved to agreed design standards

Thiruvananthapuram

Upgrading 6 critical roads – totalling 22.5 km

Partly achieved. Three roads (9.17 km) from Attakulangara to NH Bypass, Poojapura to Thirumalla and Valiyavila to Peyad, with 10.59 km drains and 2.74 km of footpath constructed, and 1 junction improved.

Kollam

Upgrading 3 major roads (total 11 km) and 8 junctions

Not achieved. Not financed due to non-fulfilment of social safeguard requirements.

Street lighting improvements for 25 km major roads and 75 km minor streets.

Achieved. 177 streetlights were installed on major roads.

Underpass to existing ROB at Chinnakada

Achieved. Chinnakada underpass constructed with 0.78 km of bitumen roads, 0.23 km of drains, 0.37 km of footpath and 2,427 m2 parking area.

Kochi

Upgrading 3 roads (total 5.4 km) and 12 junctions

Partly achieved. 2 roads – SA Road and Edapally-High Court Road – totaling 10.16 km in length, 9 junctions, 16.04 km footpath and 7.45 km drains were upgraded.

Road safety proposals for 39 km length on 8 critical roads

Partly achieved. Road safety measures for SA Road and Edapally-High Court Road were implemented.

Construction of link road to stadium

Not achieved.

Twin carriageway bridge over canal on SA Road

Achieved. 0.48 km bridge over canal on SA Road completed, with 0.59 km footpath and 0.35 km drains.

Thrissur

Upgrading 8 critical city roads (total 27.5 km)

Partly achieved. 12.1 km length of roads upgraded

Safety improvements for central city roads

Partly achieved. Road safety measures for four roads implemented, footpaths and hand rails constructed.

Appendix 1 25

Design Summary



of RRP


3 Pedestrian sub-ways on Swaraj Road

Partly achieved. 2 subways were constructed.

Improved street lighting for all major roads

Achieved. 52 street lights were installed in major roads.

Kozhikode

Upgrading 3 critical urban roads (total 4.4 Km) and 13 junctions.

Achieved. 17.9 km of roads and 11 junctions were upgraded.

Flyover at Arayidathupalam on Mavoor Road

Achieved. Flyover at Arayidathupalam on Mavoor Road (0.34 km length) constructed and commissioned.

GL off-street parking Achieved.

Footpaths & pedestrian safety improvements

Achieved. 11 km footpath and 7.8 km of drains were constructed to improve pedestrian safety.

Street lighting improvements for 58 Km of major roads

Achieved. 400 street lights were installed in major roads.

Part B: Urban Community Upgrading

Improved community planning processes for city development

By April 2009:

Community schemes integrated into municipal development plans

Achieved. Community schemes for economic development and creation of employment opportunities developed at ward level, and integrated into municipal development plans.

Improved infrastructure in target poor settlements and basic facilities for vulnerable groups

By January 2011:

Access to safe drinking water increased from 68% of the population in target communities to 95%

Achieved. Over 95% of urban poor households have access to safe drinking water in three project cities (no water supply interventions in Kozhikode and Thiruvananthapuram).

Access to hygienic sanitation increased from 46% of the population in target communities to 95%.

Achieved. Over 98% of urban poor households have access to hygienic sanitation.

Improved livelihoods and employment

By January 2011:

Increase in the number of poor people participating in skill development programs under SPEM.

Achieved. Over 4,000 poor people provided with skill development training programs under SPEM.

26 Appendix 1

Design Summary



of RRP


Part C: Local Government Infrastructure Development

Completed subproject designs and implementation in emerging urban areas in Kerala

By January 2011:

Fully fledged operating procedures to implement improvements in urban infrastructure and services

Not achieved. Component deleted due to lack of consensus on business processes and operating procedures.

Part D: Support for Capacity Building and Project Management

Updated database on municipal services and finances, staff and assets for all local governments

By July 2009:

Municipal management information system established at the Directorate of Urban Affairs (DUA).

Achieved. Information Kerala Mission (IKM), an autonomous body under LSGD, manages the updated database on municipal services under a comprehensive management information system.8

Improved tariff structure for municipal services (water, sewerage & solid waste management).

By July 2007:

State guidelines on financing patterns for infrastructure projects prepared

Partly achieved. Detailed guidelines for financing infrastructure prepared.9 Improved tariff structure for water supply and sewerage enforced since September 2014.

Improved accounting practices (including a double-entry system).

By April 2007:

Balance Sheet for FY2007 for five municipal corporations prepared

Achieved. Balance sheets of the five municipal corporations being prepared and disclosed.10

8 Information Kerala Mission, Government of Kerala. URL: http://www.infokerala.org/ 9 Kerala Infrastructure Investment Fund Board. 2016. Government Order No. 315/2016/Fin, dated 8 August 2016 –

Implementation procedure for carrying out infrastructure plans. URL: http://www.kiifb.kerala.gov.in/includes/fileViewer.jsp?fmde=res&did=11&fname=GO(Ms)No315-2016-Fin-Dated08-08-2016.pdf&dPrfx=GOnC

10 Financial statements are available at http://www.corporationoftrivandrum.in/financial-statements; http://www.kollam corporation.gov.in/financial-statements; http://www.publicfinance.in/userpanel/viewfiles?isdesired=0&reporttype= 1345; http://www.corporationofthrissur.org/financial-statement; http://kozhikodecorporation.lsgkerala.gov.in/ financial-statement;

http://www.infokerala.org/

http://www.kiifb.kerala.gov.in/includes/fileViewer.jsp?fmde=res&did=11&fname=GO(Ms)No315-2016-Fin-Dated08-08-2016.pdf&dPrfx=GOnC

http://www.kiifb.kerala.gov.in/includes/fileViewer.jsp?fmde=res&did=11&fname=GO(Ms)No315-2016-Fin-Dated08-08-2016.pdf&dPrfx=GOnC

http://www.corporationoftrivandrum.in/financial-statements

http://www.publicfinance.in/userpanel/viewfiles?isdesired=0&reporttype=%201345

http://www.publicfinance.in/userpanel/viewfiles?isdesired=0&reporttype=%201345

http://www.corporationofthrissur.org/financial-statement

http://kozhikodecorporation.lsgkerala.gov.in/%20financial-statement

http://kozhikodecorporation.lsgkerala.gov.in/%20financial-statement

Appendix 1 27

Design Summary



of RRP


Training and workshops in preparing development plans by 53 municipalities and five municipal corporations.

By April 2009:

Municipal staff preparing integrated development plans in accordance with the Kerala Municipal Act (section 51).

Achieved. Integrated development plans are being prepared in the prescribed form, approved and disclosed as per the Kerala Municipal Act.11

Improved financial management systems, procedures and practices

By July 2009:

Increase in municipal corporation year-on-year revenue for support O&M of infrastructure services

Achieved. Municipal corporations support O&M of infrastructure services through own revenue streams and fund transfers from the State budget.12

ADB = Asian Development Bank, CDS = community development societies, DSC = design and supervision consultants, DUA = Directorate of Urban Affairs, FY = fiscal year, GoK = Government of Kerala, ULBs = urban local bodies, MIS = management information systems, O&M = operation and maintenance, PIU = project implementation unit, PMC = project management consultants, PMU = project management unit, PPMS = project performance monitoring system, SPEM = State Poverty Eradication Mission (Kudumbashree), SWM = solid waste management.

11 Integrated master plans are available at Department of Town and Country Planning.

URL: http://www.townplanning.kerala.gov.in/sanctioned_master_plan.html 12 Budget statements are available at http://www.corporationoftrivandrum.in/budget;

http://www.kollamcorporation.gov.in/content/budget; http://www.corporationofthrissur.org/projectwise-expenditure-budget-details; http://www.publicfinance.in/userpanel/viewfiles?isdesired=0&reporttype=2206; http://www.publicfinance.in/userpanel/viewfiles?isdesired=0&reporttype=1345

http://www.townplanning.kerala.gov.in/sanctioned_master_plan.html

http://www.corporationoftrivandrum.in/budget

http://www.kollamcorporation.gov.in/content/budget

http://www.corporationofthrissur.org/projectwise-expenditure-budget-details

http://www.corporationofthrissur.org/projectwise-expenditure-budget-details

http://www.publicfinance.in/userpanel/viewfiles?isdesired=0&reporttype=2206

28 Appendix 2

PROJECT COST AT APPRAISAL AND ACTUAL Table 2.1: Project Cost at Appraisal and Actual

($’000)

Item

At Appraisal

Actual

Foreign Exchange Local Currency Total

Foreign Exchange Local Currency Total

A. Civil Work 63,878 81,016 144,894 43,681 55,400 99,081

B. Equipment, Materials and Furniture 2,241 5,320 7,561 1,391 3,303 4,694

C. Vehicles 1,710 1,399 3,109 637 521 1,159

D. Local Training and Workshop 128 1,149 1,277 1,472 13,211 14,683

E. Studies, Research and Development 57 512 569 0 0 0

F. Livelihood Services 0 12,500 12,500 0 2,204 2,204

G. Local Government Infrastructure Development 0 54,129 54,129 0 0 0

H. Consulting Services 1,941 8,324 10,265 3,036 13,018 16,053

I. Counterpart Staff 0 2,333 2,333 0 7,852 7,852

J. Land Acquisition and Resettlement 0 1,451 1,451 0 398 398

K. Incremental Administration Cost 0 2,000 2,000 0 209 209

Total 69,954 170,133 240,087 42,637 103,697 146,334

L. Contingencies 8,529 17,207 25,736 0 0 0

M. Tax and Duties 0 21,023 21,023 0 0 0

N. Interest and Charges 29,259 0 29,259 11,694 0 11,694

Grand Total 107,742 208,363 316,105 53,863 104,165 158,028

Percentage 34.1% 65.9% 100.0% 34.1% 65.9% 100.0%

Source: Asian Development Bank and Government of Kerala.

Appendix 2 29

Table 2.2: Actual Project Costs by Project City ($’000)

Item Kochi

Corporation Kollam

Corporation Kozhikode

Corporation Thiruvananthapuram

Corporation Thrissur

Corporation

GOK and

Others Total

Component A: Urban Infrastructure Improvement

Water Supply Scheme 5,138 1,964 12,369 19,471

Sewerage and Sanitation 8,608 6,093 3,407 17,166 35,274

Urban Drainage 2,733 3,023 3,806 2,405 2,971 14,937

Solid Waste Management 1,076 1,819 1,587 861 5,343

Road and Transport 6,193 5,327 7,882 4,538 5,969 29,908

Land Acquisition and Resettlement 398 398

Subtotal (A) 23,749 18,226 16,682 24,109 22,169 398 105,331

Component B: Urban Community Upgrading

Community Infrastructure & Services 2,887 2,251 3,179 3,454 2,911 14,683

Livelihood Promotion 612 645 295 322 331 2,204

Subtotal (B) 3,499 2,896 3,474 3,776 3,242 16,887

Component C: Local Government Infrastructure Development

Subprojects

Project Development

Subtotal (C)

Component D: Support for Capacity Building and Project Implementation

Capacity Building 16,053 16,053

Project Implementation 8,062 8,062

Subtotal (D) 24,115 24,115

Contingency

Tax and Duties

Interest and Charges 11,694 11,694

Grand Total 27,248 21,122 20,156 27,885 25,411 36,207 158,028


30 Appendix 3

PROJECT FINANCING AT APPRAISAL AND AT COMPLETION Table 3.1: Project Financing at Appraisal and at Completion

($’000)

Item

At Appraisal

At Completion

ADB Financing

% of Cost Category

GOK Financing

% of Cost Category Total

ADB Financing

% of Cost Category

GOK. Financing

% of Cost Category Total

A. Civil Work 128,558 88.7% 16,336 11.3% 144,894 78,140 78.9% 20,942 21.1% 99,081

B. Equipment, Materials and Furniture 6,671 88.2% 890 11.8% 7,561 1,759 37.5% 2,935 62.5% 4,694

C. Vehicles 2,978 95.8% 131 4.2% 3,109 785 67.8% 374 32.2% 1,159

D. Local Training and Workshop 1,053 82.5% 224 17.5% 1,277 4,073 27.7% 10,610 72.3% 14,683

E. Studies, Research and Development

470 82.6% 99 17.4% 569 0 0 0 0 0

F. Livelihood Services 9,800 78.4% 2,700 21.6% 12,500 1,168 53.0% 1,037 47.0% 2,204

G. Local Government Infrastructure Development

15,000 27.7% 39,129 72.3% 54,129 0 0 0 0 0

H. Consulting Services 10,265 100.0% 0 0 10,265 16,053 100.0% 0 0

I. Counterpart Staff 0 0 2,333 100.0% 2,333 0 0 7,852 100.0% 7,852

J. Land Acquisition and Resettlement 0 0 1,451 100.0% 1,451 0 0 398 100.0% 398

K. Incremental Administration Cost 2,000 100.0% 0 0 2,000 209 100.0% 0 0 209

Total 176,796 73.6% 63,293 26.4% 240,087 102,187 69.8% 44,147 30.2% 146,334

L. Contingencies 15,205 59.1% 10,531 40.9% 25,736 0 0 0 0 0

M. Tax and Duties 0 0 21,023 100.0% 21,023 0 0 0 0 0

N. Interest and Charges 29,259 100.0% 0 0 29,259 11,694 100.0% 11,694

Grand Total 221,260 70.0% 94,847 30.0% 316,105 113,881 72.1% 44,147 27.9% 158,028


Appendix 3 31

Table 3.2: Cost Category Variance in Absolute Terms ($ million)

Cat Code Category

Original Allocation

Revised Allocation1 (Sep 2012)

Revised Allocation2 (Aug 2013)

Revised Allocation3 (May 2014)

Revised Allocation4 (May 2016)

Revised Allocation5 (Aug 2016)

01 Civil works 128.60 153.40 143.40 132.60 87.60 86.39

02A Equipment, materials, Vehicles and Furniture 9.60 3.00 3.00 3.00 3.00 2.55

02B Local training, workshops, surveys and studies 1.50 0.60 0.60 0.60 0.60 0.45

03 Livelihood Promotion Programs 9.80 2.00 2.00 2.00 2.00 1.21

04 Local Government Infrastructure 15.00 15.00 0.00 0.00 0.00 0.00

05 Consulting services and incremental administration 12.20 17.90 17.90 17.90 17.90 20.50

06 Interest during construction 29.30 29.30 29.30 12.30 12.30 12.30

07 Unallocated 15.20 0.00 0.00 0.00 0.00 0.00

Total 221.20 221.20 196.20 168.40 123.40 123.40

Source: Asian Development Bank, Loan Financial Information System.

1 1st reallocation of 6 September 2012 2 1st partial loan cancellation of 6 August 2013 3 2nd partial loan cancellation of 16 May 2014 4 3rd partial loan cancellation of 18 May 2016 5 2nd reallocation of 24 August 2016

32 Appendix 4

DISBURSEMENT OF ADB LOAN PROCEEDS

Table 4.1: Annual and Cumulative Disbursement of ADB Loan Proceeds ($ million)

Year Annual Projections Annual Disbursement Cumulative Disbursement

Amount % of Total Amount % of Total Amount % of Total

2007 4.00 3.5% 1.76 1.6% 1.76 1.5%

2008 7.30 6.4% 5.81 5.1% 7.58 6.7%

2009 10.00 8.8% 15.27 13.4% 22.85 20.1%

2010 30.00 26.3% 18.09 15.9% 40.94 36.0%

2011 22.00 19.3% 13.70 12.0% 54.63 48.0%

2012 21.36 18.8% 16.88 14.8% 71.51 62.8%

2013 39.50 34.7% 17.20 15.1% 88.71 77.9%

2014 16.50 14.5% 13.83 12.1% 102.54 90.0%

2015 13.81 12.1% 9.12 8.0% 111.66 98.0%

2016 0.00 0.0% 2.23 2.0% 113.88 100.0%

Total 113.88 100.0%

Source: Asian Development Bank.

Figure 4.1: Projection and Cumulative Disbursement of ADB Loan Proceeds

($ million)


-

20.0

40.0

60.0

80.0

100.0

120.0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Projected disbursements Annual disbursements Cumulative disbursements

Appendix 5 33

TECHNICAL ASSISTANCE COMPLETION REPORT

TA No., Country and Name

TA 4518-IND: Capacity Building for Kerala Sustainable Urban Development

Amount Approved: $500,000

Revised Amount:

Executing Agency:

Local Self Government Department

Source of Funding:

Japan Special Fund

Amount Undisbursed:

$48,676.94

Amount Utilized:

$451,323.06

TA Approval Date:

20 Dec 2004

TA Signing Date:

07 Nov 2005

Fielding of First Consultant:

01 Feb 2006

TA Completion Date Original:

31 Dec 2005

Actual:

31 Mar 2007 Account Closing Date

Original:

31 Dec 2005

Actual:

19 Nov 2007

Description. The TA aimed to assist the state and urban local bodies (ULBs) of Kerala to efficiently manage,

coordinate, and monitor the urban infrastructure and governance improvement initiatives of the Government of Kerala (GoK). Its initiative materialized as a form of an investment project, the Kerala Sustainable Urban Development Project36 (the Project), financed by the Asian Development Bank (ADB) loan. In view of the lessons learned from other ADB-assisted urban projects in India, particular emphasis was given to up-front capacity building of the Project’s executing and implementing agencies in the following key areas: (i) to develop an efficient project management system within the Executing Agency (EA), the Local Self Government Department (LSGD), to monitor and supervise all activities under the Project; (ii) to train key project stakeholders on implementation arrangements, ADB policies and procedures, and urban sector issues in Kerala; and (iii) to provide public consultations and a participation program to involve project beneficiaries in subproject identification and development; and (iv) to operationalize the proposed financial intermediary (FI), the Kerala Local Government Development Fund (KLGDF).

Expected Impact, Outcome and Outputs. The TA’s impact was to successfully implement the Project on time. Its

outcome was enhanced capability of the project management unit (PMU), KLGDF, and the project implementation units (PIUs) to implement the Project as planned. The final TA outputs would be (i) establishment of a modern project financial management system, (ii) establishment of a procurement management system (including assistance to preparation of various standard bid documents [SBD]), (iii) assistance to recruitment of consultants under the advance actions provision of the loan, (iv) development of training manuals, (v) organization of participatory workshops, and (vi) assistance to preparation of business plan and operational manual for the proposed FI.

Delivery of Inputs and Conduct of Activities. Commencement of the TA was delayed by one year, due to GoK’s

late signing of the TA letter in spite of ADB mission’s numerous follow-ups. GoK had to delay its decision to accept the TA, as there were vocal public debates about needs for external borrowing. The TA would become meaningful only when GoK takes the ADB loan. As a result, substantive activities started after the loan negotiations of the loan.

The objectives and terms of reference were adequate, relevant and in alignment with (i) ADB’s Country Strategy Program (2003–2006) and its updates, (ii) Government’s priorities, and (iii) findings reported by review missions. The design of the TA initially envisaged the recruitment of 2 person-months of international and 32 person-months national individual consultants. Through mutual discussions with the EA, however, international consultants became unnecessary; and the input was revised to 65 person-months national individual consultants, due to extended assignment period and increase in input of engineers for supporting capacity building in detailed engineering design. It was not possible to provide support for operationalizing KLGDF, as GoK was not able to establish KLGDF under the Project during implementation of the TA. GoK prepared a draft legislative document on establishment of KLGDF, but could not seek approval from the state assembly during the TA implementation period due to lack of political consensus. GoK will obtain support using its own fund once the Act is issued.

ADB conducted 5 review missions during TA implementation in December 2005, September 2006, November 2006, March 2007 and July 2007.

Evaluation of Outputs and Achievement of Outcome. The TA produced the following outputs:

(i) Project financial management manual and related trainings and workshops; (ii) Procurement management manual and related trainings and workshops; (iii) Trainings and workshops on ADB’s environmental and social safeguards;

36 The objective of the Project is to improve urban environment, economy and living conditions for people living in the

Project cities and urban local bodies under the Project through investment into improvement and expansion of urban infrastructure and services. The Loan for $221.2 million was approved by ADB on 20 December 2005. The Loan and Project Agreements were signed on 8 December 2006 and the Loan became effective on 19 March 2007.

34 Appendix 5

(iv) Assistance to preparation of the request for proposal (RFP), and assistance to proposal evaluation for recruitment of technical support consultants (TSC) and design and supervision consultants (DSC), in accordance with the ADB procedure through on-the-job training (OJT);

(v) Base map for geographic information system (GIS) prepared for the project cities; (vi) Assistance to preparation of various types of SBD for national competitive bidding (NCB) through OJT; (vii) Assistance to preparation of the detailed project reports (DPRs) as per GoK’s requirements, and detailed

engineering reports to prepare individual bid documents through on-the-job training (OJT).

The Government of India (GoI) and GoK signed the loan and Project Agreements in December 2006, and made the loan effective in 19 March 2007. Before the loan effectiveness, the PMU and the PIUs were established. The project staff developed project management skills through OJT and a series of workshops by the time of loan effectiveness. As a result of the TA, the loan project achieved remarkable progress.

Achievement Date Months passed since loan effectiveness

Consultant Recruitments

RFP for DSC issued 11 September 2006 6 months before loan effectiveness

Contract award for DSC 3 March 2007 1 month before loan effectiveness

RFP for TSC issued 9 February 2007 1 month before loan effectiveness

Contract award for TSC 6 July 2007 4 months after loan effectiveness

Procurement

SBD approved by ADB 4 September 2006 6 month before loan effectiveness

1st procurement notification 5 July 2007 4 months after loan effectiveness

1st contract award 18 September 2007 6 months after loan effectiveness

There was good financial progress that the EA awarded $13 million worth of contracts on 31 December 2007. The EA’s initial expectation was at a higher financial figure, but due to the delay in the state government’s technical sanction, only few contracts were awarded in year 2007.

Overall Assessment and Rating. Based on the above evaluation, the TA is considered successful bordering on highly

successful. Despite a delay in implementation, the outputs significantly contributed to up-front capacity building of the EA. Based on the above the final rating is ‘successful’.

Major Lessons.

(i) A bridging assistance between loan approval and loan effectiveness for up-front capacity building, namely a bridging TA, minimizes start-up delay in project implementation, and therefore, is an effective tool for project implementation.

(ii) Recruitment of individual consultants is more appropriate than recruitment of consulting firms. This is because (a) a lengthy firm recruitment process adds further delay in up-front capacity building, and jeopardizes the purpose of the TA; and (b) the needs of the EA are likely to change by the time the TA paper is drafted, and a flexible and quick recruitment process is important to meet these needs.

(iii) The EA will need assistance in preparing technical parts of the DPRs which is a basis of project approval by the municipal corporation’s councils, and technical sanction by the state government. A provision for recruitment of engineers under a bridging TA is necessary.

(iv) Engineers require a series of field survey with the assistant/junior engineers under their supervision. To finance the cost of such surveys, items for “studies, surveys and reports” and “assistant/junior engineers inclusive of all expenses” should be included as a part of out-of-pocket expenses in their contracts.

(v) The consultants must complete preparation and issuance of specific bid documents, and must not hand over unfinished tasks to DSCs, to maintain engineering consistency.

(vi) Preparation of a GIS base map is extremely beneficial for subsequent project activities. If GIS images are available in the state, a bridging TA should include provision for preparation of a GIS base map.

(vii) Disbursement training needs to be incorporated in the scope of TA, in collaboration with the resident mission staff in charge of disbursement.

Recommendations and Follow-Up Actions

1. The loan project is ongoing and the functions of the TA have been taken over by the various project consultants. ADB will continue to monitor and support the Project, routine reviews and reporting will be carried out regularly.

2. There is no need for further follow-up of this TA, as its objective has been achieved.

Prepared by: _______Hiroyuki Ikemoto______________ Designation: _____Urban Economist, SAUD__________ 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.

Appendix 6 35

CONTRACT AWARDS OF ADB LOAN PROCEEDS

Table 5.1: Annual and Cumulative Contract Awards of ADB Loan Proceeds ($ million)

Year Annual Projections Annual Contract Awards Cumulative Contract Awards

Amount % of Total Amount % of Total Amount % of Total

2007 25.00 24.5% 14.14 13.8% 14.14 13.8%

2008 23.00 22.5% 20.49 20.1% 34.63 33.9%

2009 29.00 28.4% 25.94 25.4% 60.57 59.3%

2010 49.50 48.4% 2.19 2.1% 62.76 61.4%

2011 24.00 23.5% 7.73 7.6% 70.49 69.0%

2012 22.02 21.6% 17.75 17.4% 88.24 86.4%

2013 41.98 41.1% 11.10 10.9% 99.34 97.2%

2014 4.70 4.6% 1.37 1.3% 100.71 98.6%

2015 3.91 3.8% 1.43 1.4% 102.14 100.0%

2016 - 0.0% 0.03 0.0% 102.17 100.0%

Total 102.17 100.0%


Figure 5.1: Projection and Cumulative Contract Awards of ADB Loan Proceeds

($ million)


-

20.00

40.00

60.00

80.00

100.00

120.00

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Projected contract awards Annual contract awards Cumulative contract awards

36 Appendix 7

SUMMARY OF CONTRACT DETAILS

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed

($) Contract Package Contract Description Contractor

Contract Award

Actual Completion

Urban Infra Improvement-Civil Works

Water Supply

0065 6,623,508 6,780,631 6,780,631 TSR-WS-01 Water supply improvement works-rehabilitation of 36 mld water treatment plant at Peechi

IVRCL Infrastructures & Projects Limited

11-Mar-09 30-Jun-12

0097 2,137,589 1,359,098 1,359,098 KCH WS 01 Improvement to intake, water treatment plant and transmission main, Kochi

Sriram EPC Limited 20-Jan-11 21-Nov-16

0102 1,542,469 675,008 675,008 KCH-WS-02 A Strengthening of distribution network in Kochi, contract

M.V. Viswanathan 25-Mar-11 28-Dec-15

0107 835,257 713,729 713,729 KLM WS 01 Rehabilitation and strengthening of existing Kollam water supply scheme - existing WTP at Sasthamcota

Navin Construction Corporation

6-Dec-11 31-Mar-16

0114 797,106 697,483 697,483 KCH WS 02B Water supply improvements to Vennala and Elamankara, Kochi

Premier Plastic Industries

8-Dec-11 23-Mar-13

0115 550,356 162,820 162,820 KCH WS 03 Rehabilitation of distribution and service connections in SA road

Premier Plastic Industries

8-Dec-11 30-Jul-15

0124 775,234 559,968 559,968 KLM WS 02 Rehabilitation of distribution network and house service connection in the existing Kollam water sup

S Sivaprasad, Contractor, Kollam in JV

22-Jun-12 22-Feb-14

0125 534,957 431,090 431,090 KCH WS 01A Automation of KWA treatment Plant 1 and Plant 2 at Aluva

Mel System and Services Limited

30-Jul-12 31-Aug-14

0126 3,535,369 2,604,144 2,604,144 TSR WS 02 Rehabilitation of water distribution network at Thrissur corporation

Abhiram Infra Projects Private Limited

23-Aug-12 28-Feb-15

0127 378,232 312,268 312,268 KCH WS 02C Strengthening of distribution network in Kochi

Paulson Chacko in JV with V.P. Shamsuddin

27-Aug-12 31-Mar-14

Sewerage and Sanitation

0066 10,802,578 8,262,980 8,262,980 TVM-SS-03 107 mld capacity STP adopting activated sludge at Thiruvananthapuram

UEM India Ltd 27-Mar-09 30-Sep-13

0101 630,387 358,887 358,887 KCH SS 04A Land filling works for sewage treatment plant at Mundenveli of west Kochi

Deems Construction 20-Apr-11 31-Jan-12

Appendix 7 37

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed


Contract Award

Actual Completion

0105 5,388,792 805,066 805,066 KZD SS 02A Construction of sewerage networks, wet wells, pumping stations and pumping mains for Kozhikode sewer

Sriram EPC Limited 19-Oct-11 4-Nov-16

0106 4,121,285 840,484 840,484 KZD SS 02B Construction of sewerage networks, wet wells, pumping stations and pumping mains for Kozhikode sewer

Sriram EPC Limited 19-Oct-11 4-Nov-16

0121 1,112,458 21,648 21,648 KZD SS 03A Construction of approach road and site development for STP near Karimbanappalam

Selmec Engineering Construction

7-Jun-12 22-Jan-16

0122 3,576,036 1,643,528 1,643,528 KLM SS 01 Rehabilitation of existing sewerage system and extension of sewerage system to zone A1 – Part 1

Tomco Engineering Private Limited in JV

20-Jun-12 8-Nov-16

0123 5,413,593 2,159,374 2,159,374 KLM SS 02 Rehabilitation of existing sewerage system and extension of sewerage system to zone A1 – Part 2

Tomco Engineering Private Limited

20-Jun-12 21-Nov-16

0128 1,870,529 279,205 279,205 TVM SS 01 Rehabilitation of existing sewerage system C Block and extension of sewerage system in uncovered areas

Abhiram Infra Projects (P) Limited

11-Dec-12 17-Dec-15

0129 7,789,634 977,215 977,215 TVM SS 02 Extension of sewerage system in southern part of coastal area, Thiruvananthapuram


11-Dec-12 28-Dec-15

0134 8,579,156 1,444,018 1,444,018 KCH SS 02 Sewerage sub component of Kochi Corporation - laying of sewer networks of Zones 4, 6 and 7


22-Nov-13 24-Apr-15

0135 2,446,016 449,287 449,287 KCH SS 02A Sewerage sub component of Kochi corporation - construction of wetwells 4&6 and laying of pumping mains


22-Nov-13 23-Dec-14

0136 3,936,779 1,546,985 1,546,985 KCH SS 03A Sewerage sub component of Kochi corporation - construction of wetwells 3, 7&8 and laying of pumping

Mary Matha, Ernakulam in JV

22-Nov-13 2-Dec-15

0137 9,642,001 1,639,158 1,639,158 KCH SS 03 Sewerage sub component of Kochi corporation - laying of sewer networks of zones 3, 8 and 9


29-Nov-13 24-Apr-15

0142 4,331,608 554,952 554,952 KZD SS 03B Design, supply, engineering, procurement, construction, erection, testing and commissioning and main

UEM India Pvt. Ltd. 27-Mar-15 22-Jun-16

38 Appendix 7

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed


Contract Award

Actual Completion

Low Cost Sanitation

0030 14,894 12,550 12,550 KSUDP-LCS-TVM/08-09

CIF works for low cost sanitation units (toilets) for BPL households

Various 22-Apr-08 21-Nov-16

0031 36,162 24,507 24,507 KSUDP-LCS-KLM/08-09


Various 22-Apr-08 15-Apr-09

0032 14,894 5,941 5,941 KSUDP-LCS-KCH/08-09



0033 14,955 6,291 6,291 KSUDP-LCS-TSR/08-09



0034 20,106 19,441 19,441 KSUDP-LCS-KZD/08-09



0063 77,935 70,386 70,386 KSUDP-LCS-KLM-02

CIF works for low cost sanitation units (toilets) for BPL households in Kollam (phase 2)

Various 18-Feb-09 31-Jul-10

0064 52,128 34,532 34,532 KSUDP-LCS-KLM-03

CIF works for low cost sanitation units (toilets) for BPL households in Kollam (phase 3)

Various 18-Feb-09 30-Jun-16

Community Infrastructure

0027 15,417 4,715 4,715 KZD-CIF-01 Community infrastructure works at Karuthazham slum

P.I. Nalinakshan 25-Mar-08 30-Jul-10

0035 815,233 709,400 709,400 CIF-KSUDP-TVM



0036 859,814 881,406 881,406 CIF-KSUDP-KLM



0037 676,309 701,393 701,393 CIF-KSUDP-KCH



0038 593,411 573,002 573,002 CIF-KSUDP-TSR



0039 443,387 442,565 442,565 CIF-KSUDP-KZD



0109 1,453,789 1,607,942 1,607,942 TVM-CIF Community infrastructure works in various slums at Thiruvananthapuram

Various 19-Mar-07 30-Jun-16

Appendix 7 39

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed


Contract Award

Actual Completion

0110 1,414,901 711,286 711,286 KLM-CIF Community infrastructure works in various slums at Kollam


0111 1,714,264 1,346,574 1,346,574 KCH-CIF Community infrastructure works in various slums at Kochi


0112 1,845,499 1,394,953 1,394,953 TSR-CIF Community infrastructure works in various slums at Thrissur


0113 1,967,457 1,843,383 1,843,383 KZD-CIF Community infrastructure works in various slums at Kozhikode


Drainage

0068 493,818 559,134 559,134 KLM-DR-01-A Improvement of storm water drains in Kollam Phase I

Nizamudeen, Thoppil Constructions

19-Jan-09 31-May-10

0069 1,065,487 1,160,499 1,160,499 KLM-DR-01-B Improvement of storm water drains in Kollam

Nizamudeen, Thoppil Constructions

6-Jul-09 31-Dec-11

0100 1,711,837 1,958,717 1,958,717 KCH DR 01A Urban drainage improvement works of drains, Kochi

Nizamudeen Thoppil Constructions

16-Feb-11 30-Sep-15

0104 873,645 701,242 701,242 KZD DR 01A Urban drainage improvement works (Phase I) in Kozhikode

Selmec Engineering Construction

12-Oct-11 31-Mar-13

0120 1,384,321 1,493,493 1,493,493 TVM DR 01 Improvements to Pazhavangadi Thodu and Tampanoor area – Phase I

Nizamuddin A, Thoppil Construction (India) Ltd

7-Jun-12 30-Nov-15

0130 2,423,776 1,171,292 1,171,292 TSR DR 01A Storm water drainage improvement works at Thrissur corporation


3-Jun-13 30-Apr-16

0131 1,109,333 669,048 669,048 TSR DR 01B Storm water drainage improvement works at Thrissur corporation


26-Jun-13 31-Jan-16

0133 2,103,133 1,751,009 1,751,009 KZD DR 01B Urban drainage improvement works of Kozhikode corporation (Phase II)

Sharhul Hameed V in JV with P.P. Abbas

21-Oct-13 31-Mar-16

0140 1,250,542 607,068 607,068 KLM DR 01C Improvements to existing storm water drainage, Phase III, Kollam

Nizamudeen A, Thoppil Constructions

13-Feb-14 29-Feb-16

Solid Waste Management

0024 774,560 46,411 46,411 TSR-SW-01 Solid waste management works Ramky Environment Engineers Limited

6-Mar-08 26-Jun-15

0050 763,280 –20,947 –20,947 KLM-SW-01-A Solid waste management works - compost plant – Kollam

Jamshedpur Utilities & Services Company Ltd

29-Jul-08 26-Sep-13

40 Appendix 7

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed


Contract Award

Actual Completion

0051 322,798 8,326 8,326 KLM-SW-01-B Solid waste management works-landfill - Kollam

Jamshedpur Utilities & Services Company Ltd

29-Jul-08 29-Mar-12

0052 460,484 –7,047 –7,047 KLM-SW-01-C Solid waste management works- Infrastructure - Kollam

N.K. Construction 11-Jul-08 26-Sep-13

0054 576,594 461,181 461,181 KZD-SW-01 Solid waste management works- Kozhikode

Ramky Enviro Engineers Ltd

27-Jun-08 8-Nov-16

0145 110,489 34,183 34,183 KZD-SW-01 (Terminated)

Design, supply, construction, erection, testing and commissioning and operation and maintenance

Ionex Envirotech Pvt. Ltd.

11-Jan-16 30-Jun-16

Roads and Transport

0023 6,492,190 6,599,708 6,599,708 KZD-RT-01 Road improvement works Uralungal Labor Contract Cooperative Society

4-Mar-08 24-May-10

0026 5,015,557 4,898,994 4,898,994 TSR-RT-01 Road improvement works G.H. Vijapura & Co & EKK & Co (JV)

25-Mar-08 30-Nov-10

0049 619,637 655,821 655,821 KCH-RT-01-C Construction of new bridge at Saroad - Kochi

Mary Matha Construction Company

18-Jun-08 30-Nov-11

0056 1,831,974 1,727,405 1,727,405 TVM-RT-01-B Road improvement works for Thiruvananthapuram Part II (1) Rd from Poojappura round to Thirumala (2)

Ebuild Private Limited-TK Rajan (JV)

7-Nov-08 31-Mar-13

0058 2,452,446 793,284 793,284 KLM-RT-01-A Road upgradation & junction improvement works parti along with URT agreement

L. Satheek, K. Lekshmanan & Co. Akkavilla

19-Nov-08 31-Jul-11

0059 670,465 986,223 986,223 KLM-RT-01-C Construction of underpass at Chinnakada, Kollam

L. Satheek, K. Lekshmanan & Co. Akkavilla

29-Nov-08 31-Aug-15

0061 1,625,739 1,478,962 1,478,962 KCH-RT-01-A Improvement of road up-gradation of SA road and junction in Kochi

K.V. Joseph & Sons 26-Feb-09 30-Jun-12

0062 3,042,994 2,855,765 2,855,765 KCH-RT-01-B Improvement of road up-gradation of Edapally High Court road in Kochi

K.V. Joseph & Sons 26-Feb-09 15-Nov-11

0076 1,831,755 1,711,060 1,711,060 TVM-RT-01-A1 Thiruvananthapuram road improvement works-Part 1

Webuild Private Ltd-TK Rajan (JV)

15-Jul-09 31-Aug-15

Appendix 7 41

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed


Contract Award

Actual Completion

0078 212,111 169,393 169,393 KLM-RT-01D Road development - street lighting at Kollam

United Electrical Industries Ltd.

30-Sep-09 29-Mar-11

02A – Equipment, Materials, Vehicle and Furniture

0020 269,613 103,021 103,021 GIS-KSUDP-01 Procurement of GIS-based property tax maps.

3i Infotech Ltd. with Limtex Infotech Ltd.

19-Oct-07 29-Jul-11

0021 274,477 88,119 88,119 GIS-KSUDP-02 Procurement of GIS-based property tax maps

3i Infotech Limited 19-Oct-07 29-Jul-11

0040 259,544 246,021 246,021 KCH-SW-P1-E1 Procurement of primary storage equipment for solid waste management-Kochi

Kerala State Industrial Enterprises Ltd.

30-Apr-08 30-Sep-08

0041 225,984 230,156 230,156 KCH-SW-P1-E2 Procurement of primary collection equipment for solid waste management-Kochi

SML Motors 6-May-08 30-Nov 08

0042 154,766 167,120 167,120 KCH-SW-P1-E3 Procurement of secondary storage & transportation equipment for solid waste management-Kochi

Popular Mega Motors (India) Limited

30-Apr-08 31-Oct-08

0055 73,649 79,653 79,653 KZD-SW-P1-E2 Procurement of primary collection vehicles & equipment for solid waste management, Kozhikode

KVR Motors 14-Oct-08 13-Jan-09

0057 184,925 177,653 177,653 KLM-SW-P1-E2 Procurement of primary collection vehicles for solid waste management-Kollam

Sarathy Motors 2-Jul-08 2-Jan-09

0060 28,334 30,626 30,626 KZD-SW-P1-E1 Primary storage/street sweeping equipment for solid waste management-Kozhikode

Kerala State Industrial Enterprise Ltd

14-Nov-08 13 Feb 09

0070 20,329 18,072 18,072 KLM-SW-02-C Supply, installation & maintenance of community biogas equipment Atmoonamkutty market

Mr. Ajesh JM, Saravana

5-Jun-09 23-Mar-10

0071 20,337 17,284 17,284 KLM-SW-02-D Supply, installation & maintenance of community biogas equipment at Thevally market

Ajesh JM, Saravana 5-Jun-09 4-Jan-10

0072 20,337 13,380 13,380 KLM-SW-02-E Construction of 35 m3 biogas plant and O&M at Pallimukku market -

Kerala Agro Industries Corp

5-Jun-09 15-Jun-12

0073 19,319 16,524 16,524 KLM-SW-02-F Construction of 35 m3 biogas plant and O&M at Eravipuram market

Kerala Agro Industries Corporation

5-Jun-09 12-Apr-10

0077 139,511 115,649 115,649 TSR-SW-P1-E2 Thrissur - procurement of primary collection vehicles and equipment

BRD Motors Ltd 21-Jul-09 31-Jul-10

42 Appendix 7

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed


Contract Award

Actual Completion

0079 145,983 167,045 167,045 TSR-SW-P1-E1 Procurement of primary storage and street sweeping tools and equipment

Kerala State Industrial Enterprises Ltd.

14-Oct-09 30-Nov-10

0080 71,861 86,199 86,199 TSR-SW-P1-E3A

Procurement of secondary storage & transportation vehicles & equipment

Super Automotive and Engineering Works

4-Feb-10 30-Sep-10

0081 57,223 69,165 69,165 TSR-SW-P1-E3B

Procurement of transportation vehicles Super Automotive and Engineering Works

4-Feb-10 30-Sep-10

0082 198,542 233,284 233,284 KCH-SW-P2-E4 Procurement of storage bins for solid waste management in Kochi

Bhupendra International

15-Jul-09 22-Apr-10

0093 57,621 55,780 55,780 KZD-SW-P1-E3, LOT 1

Secondary storage and transport equipment for SWM- Kozhikode

Industrial Plants & Waste Treatment Corporation

9-Apr-10 8-Aug-11

0094 145,694 145,569 145,569 KZD-SW-P1-E3, LOT 2

Secondary storage & transportation equipment for SWM- Kozhikode

Industrial Plants & Waste Treatment Corporation

9-Apr-10 22-Mar-13

0095 31,849 25,566 25,566 KZD-SW-P1-E3, LOT 3

Secondary storage & transport equipment for SWM - Kozhikode

Super Automotive and Engineering Works

14-May-10 15-Nov-10

0096 7,153 5,368 5,368 KZD-SW-P1-E3, LOT 6

Secondary storage and transport equipment for SWM Kozhikode

S V Rangaswamy & Company (Pvt) Ltd.

24-Apr-10 23-Aug-10

0098 77,325 68,598 68,598 KLM-SW-P2-E6, LOT 2

Procurement of secondary storage and transportation (phase ii) in Kollam

India Techs Limited 10-Feb-11 9-Aug-11

0099 342,325 336,182 336,182 KZD-SW-P2-E5 Procurement of primary collection vehicles and equipments for solid waste management - Kozhikode

Classic Motors 31-Mar-11 30-Sep-11

0116 29,219 18,652 18,652 KLM SW 02B Construction of 35 cum biogas plant at Kadappakkada market

J M Ajeesh, Ajesh Renewable Energy Solutions

16-May-12 1-Sep-12

0117 17,635 11,530 11,530 KLM SW 02G Construction of 15 cum biogas plant at corporation town hall


9-May-12 15-Oct-12

0118 20,660 12,141 12,141 KLM SW 02H Construction of 15 cum biogas plant at QSS Karithas colony


16-May-12 15-Nov-12

0119 13,360 5,796 5,796 KLM SW 02A Construction of 15 cum biogas plant at collectorate compound

Rajesh S Greentech 16-May-12 1-Nov-12

Appendix 7 43

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed


Contract Award

Actual Completion

02B – Local Training, Workshops, Surveys and Studies

0001 85,980 113,967 113,967 RETRO SURVEY#1

Surveys - preparation of city base maps Center for Earth Science Studies

24-Mar-06 24-Jun-15

0002 639 747 747 RETRO SURVEY#4

Surveys - topographic surveys, landfill site in Thrissur, Kerala.

Ruby Soft Tech 18-Apr-06 24-Jun-15

0003 1,980 1,499 1,499 RETRO SURVEY#5

Topographic surveys - project cities, Kerala state

Meridien Surveys 19-Apr-06 24-Jun-15

0004 31,788 28,218 28,218 RETRO SURVEY#7

Solid waste quantification and characterization surveys in Kerala project cities

Vimta Labs Limited 20-Apr-06 24-Jun-15

0005 2,080 1,744 1,744 RETRO SURVEY#8

Road inventory surveys in project cities of Kerala

National Transportation Planning

26-Apr-06 24-Jun-15

0006 2,152 2,559 2,559 RETRO SURVEY#9

Survey to conduct Benkelman beam deflection for roads in project cities under KSUDP


26-Apr-06 24-Jun-15

0007 16,993 4,733 4,733 RETRO SURVEY#11

Topographic surveys for roads in project cities under KSUDP


26-Apr-06 24-Jun-15

0008 8,104 9,193 9,193 RETRO SURVEY#12

Traffic surveys in project cities under KSUDP


26-Apr-06 24-Jun-15

0009 3,951 3,151 3,151 RETRO SURVEY#13

Pavement investigation (trial pits) surveys in project cities under KSUDP


26-Apr-06 24-Jun-15

0010 6,745 9,359 9,359 RETRO SURVEY#14

Geo technical investigation surveys under KSUDP

Vax Consultants Pvt Ltd

27-Apr-06 24-Jun-15

0013 3,111 1,022 1,022 RETRO SURVEY 15

Hydrological investigations at landfill sites in project cities.

India Geoconsultancy Services

18-Apr-06 24-Jun-15

0014 7,603 4,207 4,207 RETRO SURVEY 16

Geotechnical and soil investigation at landfill sites surveys

Geo Foundations & Structures Pvt Ltd

18-Apr-06 24-Jun-15

0015 3,309 2,275 2,275 RETRO SURVEY 17

Baseline environmental monitoring at landfill sites in project cities

Envirochem Laboratories Pvt. Ltd.

19-Apr-06 24-Jun-15

44 Appendix 7

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed


Contract Award

Actual Completion

0016 9,982 2,781 2,781 RETRO SURVEY 18

Topographic surveys for junctions in project cities.


26-Apr-06 24-Jun-15

0017 3,025 2,266 2,266 RETRO SURVEY 19

Collection of primary data on property Centre for Development Framework (CDF)

15-Mar-07 24-Jun-15

0029 128,394 118,864 118,864 TRNG/08-09 Local training & IEC components for April 2008 to March 2009

KSUDP 15-Apr-08 24-Jun-15

0067 157,138 137,173 137,173 KSUDP-BPS-01 Procurement of software with customization, installation& training of bldg. permission

Softtech Engineers Private Limited

26-Mar-09 24-Jun-15

03 – Livelihood Promotion Programs

0043 201,707 81,070 81,070 KSUDP-PSF-TVM

Poverty social fund component of Thiruvananthapuram for the period 1 Apr 2007


0044 398,200 204,665 204,665 KSUDP-PSF-KLM

Poverty social fund component of Kollam for the period 1 Apr 2007 to 1 March 2009


0045 133,016 106,860 106,860 KSUDP-PSF-KLM

Poverty social fund component of Kochi for the period 1 Apr 2007 to 1 March 2009


0046 181,974 77,410 77,410 KSUDP-PSF-KLM

Poverty social fund component of Thrissur for the period 1 Apr 2007 to 1 March 2009


0047 269,526 136,516 136,516 KSUDP-PSF-KZD

Poverty social fund component of Kozhikode for the period 1 Apr 2007 to 1 March 2009


0083 154,597 90,321 90,321 TVM-LH FY2010-11

Livelihood promotion program in Thiruvananthapuram for the period of 1 April 2010 to 31 March 2011

Various 14-Jul-10 30-Jun-16

0084 150,742 90,315 90,315 KLM-LH- FY2010-11

Livelihood promotion program in Kollam for the period of 1 April 2010 to 31 March 2011


0085 177,235 239,743 239,743 KCH-LH FY2010-11

Livelihood promotion program in Kochi for the period of 1 April 2010 to 31 March 2011


0086 147,448 107,903 107,903 TSR-LH FY2010-11

Livelihood promotion program in Thrissur for the period of 1 April 2010 to 31 March 2011


Appendix 7 45

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed


Contract Award

Actual Completion

0087 164,637 33,000 33,000 KZD-LH FY2010-11

Livelihood promotion program in Kozhikode for the period of 1 April 2010 to 31 March 2011


05 – Consulting Services and Incremental Administration

0011 2,591,520 3848206 3848206 DSC-1 Package 1: Design & Supervision Consultants (DSC-1)

Consulting Engineering Services (India) Pvt. Ltd.

3-May-07 30-Jun-13

0012 3,518,788 5331,253 5331253 DSC-2 Package 2: Design & Supervision Consultants (DSC-2)

Water & Power Consultancy Services (I) Ltd.

3-May-07 30-Jun-13

0018 1,280,882 4174,259 4174259 CONSULT - TSU

Consulting services - technical support unit (TSU) Assignment

CDM Smith Inc. 6-Jul-07 30-Jun-16

0019 129,739 180,770 180770 Various Incremental administration costs incurred by the project during retroactive financing period of the loan.

Various 8-Dec-05 18-Mar-07

0022 228,366 236,283 236283 001/P Others: incremental admin cost under SOE; period covered: 19-Mar-07 to 30-Sep-07.

Various 19-Mar-07 30-Sep-07

0025 785,209 1082,448 1082448 002/P Others: incremental admin cost under SOE; period covered 19-Mar-07 to 31-Mar-09.

Various 1-Feb-08 31-Mar-09

0048 2,106 2,126 2126 EBID01 E-tendering facility in KSUDP (Tenderwizard)

Karnataka State Electronics Development Corporation Ltd.

21-Jun-07 26-Mar-09

0053 18,232 29,894 29894 EBID01-A Additional funds for E-tendering facility in KSUDP (Tenderwizard)

Karnataka State Electronics Development Corporation Ltd.

21-Jun-07 16-Oct-14

0074 1,041,447 731,517 731517 Various Incremental admin cost under SOE; period covered 1-Apr 2009 to 31-Mar-2010

Various 6-Aug-09 31-Mar-10

0075 17,069 15451 15451 KSUDP-KLM-DOE-01

Kollam compost plant - validation agency (designated operation entities)

DNV Bangalore 9-Jul-09 4-Dec-13

0092 982,181 828942 828942 Various Incremental admin cost under SOE; period covered 1-Apr-2010 to 31-Mar-2011

Various 13-Sep-10 31-Mar-11

0103 669,999 629,364 629,364 Various Incremental admin cost for a period of 1-Apr-2011 to 31-Mar-2012

Various 1-Apr-11 31-Mar-12

46 Appendix 7

PCSS No.

Contract Amount

($)

ADB Financing

($) Disbursed


Contract Award

Actual Completion

0132 1,205,175 1,156,515 1,156,515 Various Incremental admin for a period of 1-Apr-2012 to 31-Mar-2014


0138 17,264 16,872 16,872 DD-EMP-02 Environmental due diligence study of completed subprojects

Ernst & Young LLP, India

2-Sep-13 24-Jun-15

0141 712,077 754,604 754,604 Various Incremental admin cost for the financial year 2014-15


0143 738,894 868,368 868,368 Various Incremental admin for the period between 1-Apr-2015 to 1-Jun-2016

Various 8-Dec-06 30-Jun-16

0144 10,148 5,074 5,074 M&E-SRP-01 (REBID)

Monitoring and evaluation of implementation of resettlement plans

Dr. Manoshi Mitra Das 26-Nov-15 31-Dec-16

Appendix 8 47

IMPLEMENTATION OF GENDER ACTION PLAN A. Introduction 1. The Kerala Sustainable Urban Development Project was categorized as effective gender mainstreamed and included a gender action plan (GAP). Community and gender specific elements were mainstreamed across all project components, with a focus on urban community upgradation, wherein most activities were concentrated. The design, relevance, implementation effectiveness, sustainability and impacts of GAP were assessed, as below. B. Gap Design and Relevance 2. Project Preparatory Phase.1 The project preparatory phase included social, poverty and gender analysis to design the GAP. A socio-economic survey, with gender specific parameters, was conducted for 5,470 sample households in the five project cities, and the baseline data from primary and secondary sources were collected and collated. 2 Specific vulnerabilities of disadvantaged groups, such as ‘women headed household, presence of a widow, divorcee, abandoned lady, unwed mother’, was accounted for in the survey. Participatory approaches such as focus group discussions and key informant interviews were also carried out.3 The gender impact analysis emphasized the following gender issues and anticipated project related benefits:

Water supply. Women have the primary responsibility for water collection and management. Improved water supply will alleviate their burden, reduce time poverty and associated opportunity costs. Improved health of family members, including their own, will result in multiplier benefits.

Sewerage and drainage. Gaps in sanitation facilities, result in ill-health and increased health care burden. In the focus group discussions and participatory rapid appraisals, women prioritized toilets and improved sewerage over other infrastructure options. Safety, security, health and time poverty related aspects were highlighted by women.

Solid waste management (SWM) and road infrastructure. Inefficient and inadequate SWM and road infrastructure differentially impact women, children and elderly. Improved facilities will result in health benefits, access to economic opportunities, better accessibility, faster and safer mobility, especially for elderly, women and girls.

3. Based on the analysis of social and gender issues relevant to each project subcomponent, community involvement was incorporated in the design, planning, implementation and monitoring of urban infrastructure and services, and ‘women’ were identified as the primary focus of poverty reduction initiatives. The project formulated a comprehensive GAP covering all aspects of gender mainstreaming across planned project interventions. The project defined implementation modalities, partnerships and monitoring mechanisms and human resource necessary for implementation of GAP and poverty alleviation plan. The ‘strategy to maximize impacts on women’ was incorporated in the ‘Summary Poverty Reduction and Social Strategy’, which envisaged

1 ADB. 2005. Technical Assistance Consultants’ Report, for Kerala Sustainable Urban Development Project –

Volume 3–Social and Poverty Analysis. Manila. 2 Thematic focus of the socio-economic survey included household profile; employment; income and expenditure; land

and housing; health; education; social capital; access to urban infrastructure; and perceptions and priorities for service improvement.

3 In all, 24 key informant interviews (with government, corporation officials and with non-governmental representatives) and focus group discussions (with urban residents) in the five project cities were conducted. Participatory rapid appraisal exercises in selected wards and slums of each city were also undertaken.

48 Appendix 8

practical and strategic gender benefits by reducing women’s time poverty, improved health, safe mobility and increased livelihood opportunities. 4. Gender action plan. Overall, the gender strategy employs a multipronged approach to promote (i) human capital development by creating awareness and opportunities for participation; (ii) economic empowerment by creating livelihood opportunities; (iii) voice and rights through affirmative actions to ensure women’s representation at every level of decision-making fora in project planning and implementation under ‘urban community upgradation’; and (iv) gender capacity building of all stakeholders. GAP consisted of ten activities spread across five objectives and three focus areas:

Focus Area 1–Urban Infrastructure: Objective 1: Women’s awareness programs and involvement in project implementation and benefits; Objective 2: Women empowered to influence design and location of new infrastructure under the community infrastructure fund (CIF); and Objective 3: Women gain benefits from construction process.

Focus Area 2–Urban Management: Objective 4: Promote collaboration between corporation officials, neighborhood groups (NHGs), area development societies (ADS) community development societies (CDS), women representative in municipal corporations and other related programs, non-government organizations (NGOs) and elected representatives in municipal corporations.

Focus Area 3–Monitoring & Evaluation: Objective 5: Ensure that project benefits positively impact women and those benefits are equitable.

5. Gender issues assessed in the preparatory phase for each project subcomponent informed the project design and were addressed through actions listed in the GAP. However, GAP activities were not synchronized with the design and monitoring framework output indicators. Also, GAP could have uniformly extended the scope of activities across all project components, rather than concentrating it on Part B: Urban Community Upgrading of the project. C. Implementation Effectiveness and Achievements 6. GAP activities contributed significantly to the successful implementation of the Part B of the project. Based on monitoring and reporting of GAP implementation, all ten activities (100%) under GAP were assessed to be successfully implemented. Sex disaggregated data was compiled and maintained for all beneficiary related parameters. Activity wise data was systematically maintained and periodically reported, alongside other relevant details, in quarterly GAP reports. Table 1, provides the quantitative achievements for GAP activities.

Appendix 8 49

Table 1 – GAP Achievement Matrix

Activity, Indicator & Targets Achievements

Implementation Status

FOCUS AREA- URBAN INFRASTRUCTURE

Objective 1: Women’s awareness programs and involvement in project implementation and benefits

Activity 1 – Conduct

project awareness campaign with specific targeting of women.

Indicator & Target (1):

45% of women interviewed in project cities are aware of project and its benefits.

62 project awareness campaigns were conducted across all five urban local bodies (ULBs).

3,310 participants, of which 1,917 (58%) were women, benefited from these campaigns. Records of participants was maintained ULB wise.

The project awareness campaigns included topics related to the project components, specially community infrastructure fund (CIF) and poverty social fund (PSF). The campaign also included information on role of community development societies (CDS), neighbourhood groups (NHGs), non-government organisations (NGOs) and elected representatives. The campaigns also help assess community needs and shared information regarding leadership roles.

The topics included- water, sanitation, solid waste management, hygiene, gender, priority infrastructure needs assessment, CIF and PSF implementation mechanism, role of community in identify priority infrastructure etc.

Rapid surveys were organised by the project performance monitoring system consultants to be able to gather information regarding project impacts. The survey included relevant questions to assess community awareness related to project benefits.

Rapid survey indicates that 54.6% women were aware of project benefits.

Completed. Target achieved (54.6% women).

Activity 2 – Conduct

campaigns pertaining to health and hygiene, SWM, water management with specific focus on women.

114 sanitation awareness campaigns were organised across all five ULBs. Community participation details were maintained.

11,706 community members of which 8,700 women (74%) participated in these campaigns.

The awareness campaigns covered topics related to importance of low cost sanitation, Health, hygiene and HIV and AIDS awareness, water management, the importance of solid waste management and information on bio gas plants.

The topics were strategically planned considering the CIF and low-cost sanitation (LCS) components. Creating awareness facilitated the community members in making informed choices and assisted in smooth implementation.

Completed.

Objective 2: Women empowered to influence design and location of new infrastructure, under the Community Infrastructure Fund

Activity 3 – Awareness

campaign targeting women.

Awareness campaigns were organised in each program ULB with specific targeting of women (refer Activity 1). 58% women community members participated in these campaigns.

This activity overlaps refer Activity 1. The community awareness campaigns created awareness regarding CIF and PSF including scope of community participation in identifying priority infrastructure.

These campaigns integrated capacity building initiatives- targeting women community members- to be able to identify suitable projects.

Completed.

50 Appendix 8



Activity 4 – Participatory

planning at project sites.

Indicator & Target (2)- At

least 30% women’s participation in planning meetings.

333 participatory planning meeting were held across all five ULBs.

6,753 community members including 4,259 women (63%) participated in these meetings. This exercise provided women an opportunity to decide priority infrastructure, thus ensuring that their needs were integrated in such plans.

The participatory planning meetings were organised through Kudumbashree and involved CDS members. 4

The planning meeting included a needs assessment to identify and prioritise type of infrastructure. A high representation of women ensured that their priorities were integrated in the plans as is evident from the number and types of community infrastructure created under CIF (refer achievements under Activity 5 for types of CIF infrastructure created).

Completed. Target achieved (63% participation).

Activity 5 – Support

Community Infrastructure Fund planning and implementation with full involvement of women.

465 CIF proposals were approved and implemented. All CIF works are complete.

Awareness creation and capacity building of community members on CIF selection was key to ensuring participative planning and decision making with 63% participation of women community members.

The CIF works ranged from water and sanitation related works (drains, toilets, septic tanks, water harvesting and supply etc) to social (anganwadi, health care centres, library, reading room, community halls, parks etc) and economic (Kudumbashree shops, work sheds, and fish landing centres) infrastructure

investments. 5

Several CIF interventions such as day care centres, health clinics, work sheds, reading rooms, library, parks, geriatric physiotherapy centres were children, gender and senior citizen focused.

306,093 community members, predominantly slum population, benefited from these interventions. Considering a sex ratio of 1.084 in Kerala, approximately 52% are women beneficiaries.

Completed.

Objective 3: Women gain benefits from construction process

Activity 6 – Female labour

engaged by contractors to have least possible difference in wages with male labour for equal work.

Indicator:

Contract document with suitable clauses for equal wages.

Women employed at equal wages for equal work

All 74 civil work contracts contain necessary clauses pertaining to implementation of all statutory provisions on labor, including equal pay for equal work, health, safety, welfare, sanitation and working conditions.

There is 100% compliance with regards to core labour standards.

The project involved 1,825 daily wagers of which 167 (9.1%) were women workers.

6 orientation workshops, related to core labour standards including clauses relevant to child and women labour, were organized for contractors.

Completed.

4 Kudumbashree is the poverty eradication and women empowerment program implemented by the State Poverty

Eradication Mission (SPEM) of Government of Kerala. Its members are women community representatives. As on January 2017, the network includes 4,306,976 members, 277,175 NHGs, 19,854 ADS and 1,073 CDS.

5 Anganwadi centers established under the Integrated Child Development Services program of Ministry of Women and

Child Development, Government of India provides day care, food, preschool education and primary healthcare to children under 6 years of age, including nutrition and health care to expectant mothers.

Appendix 8 51



FOCUS AREA- URBAN MANAGEMENT

Objective 4: Promote collaboration between Corporation Officials, NHGs, ADS, CDS, women representative in MCs and other related programs, NGOs and elected representatives in Municipal Corporation

Activity 7 – Strengthen

capacity of community representatives, especially women to access, influence and work with city officials and councillors.

107 training programs were imparted across five ULBs for capacity building of community and elected representatives.

3,947 members participated in these training programs. Of this 3,522 (89%) were women.

These trainings endeavoured to strengthen capacities of community representatives (NHG, ADS and CDS members) and elected representatives.

Broadly the topic included urban management, skill development, gender empowerment and Information Education and Communation on health and hygeine.

The same network of community represntatives continue to be part of the Kudumbashree network responsible for implementing several povery alleviation programs. The capacity building interventions therefore help build the institutional capacities of the network.

Completed.

Activity 8 – Strengthen

capacity of State-level staff involved in poverty alleviation and SPEM District Mission Coordinators.

119 training programmes were organised for state level staff involved in poverty alleviation and for State Poverty Eradication Mission (SPEM) district mission coordinators.

3,272 participated of which 2,949 (90%) were women.

Project Induction Trainings were imparted for state level staff including Kudumbashree representatives. The participants were oriented in using analytical methods to identify poverty and deprivation and to understand the need for participatory planning.

Records of these workshops were maintained and reported.

Completed.

Activity 9 – Develop

Participatory Plans for Poverty Reduction for each city

Indicator & Target (3):

Participatory workshops to include 30% women.

83 workshops were organized for developing participatory plans for poverty reduction in the 5 project cities.

2,823 community members including 2,397 (84%) women participated.

Strategic planning workshops were organised to identify factors of poverty using analytic hierarchy process for each ULB based on which slums were identified for CIF and PSF interventions. These workshops also identify pockets of vulnerable and disadvantaged population.

The workshops also discussed implementation challenges and sustainability issues. The strategic planning workshop reports were published and included all process details and selection criterion.

5 Civil society organisations were also constituted to assist in building consensus on the urban community upgrading sub-components. The civil society organisations comprised of 44 members with 46% women representation.

Completed. Target achieved (84% women participation).

52 Appendix 8



FOCUS AREA - MONITORING & EVALUATION

Objective 5: Ensure that project benefits positively impact women and those benefits are equitable.

Activity 10 – Establish a

monitoring & evaluation system, which can report impact of the project on women.

Indicator: Progress

reports, reviews and impact assessments are able to report gender impact of project.

GAP quarterly updates and Internal Monitoring by PIU through social development officers and Kudumbashree workers.

PSF and CIF activities were routinely updated PIU wise on the

project website.6

Progress reports and assessments include gender impacts and sex disaggregated data.

Gender equality results case study to showcase PSF

interventions and impacts was published in 2015. 7

Completed.

7. The deputy project director and community development officer, project management unit, Thiruvananthapuram were responsible for overall GAP oversight and supervision. Though no gender specialists were appointed, the social development officers in the five project implementation units were responsible for GAP implementation, monitoring, data collation and reporting. Quarterly updates were routinely provided and updated on the project website. The project provided opportunities for gender capacity building of various stakeholders. Six orientation workshops for contractors and two GAP trainings for staff were organized. Gender capacity building resulted in improved implementation and reporting of GAP including maintaining of data in a sex disaggregated manner. D. Gender Equality Results, Sustainability and Impacts 8. Quantitative achievements were ascertained from the periodic reporting, which included compilation of sex disaggregated data for all beneficiary related parameters. As against the GAP targets, 31,811 community members (74.6% women); NHGs, CDS, ADS members and elected representatives participated in various workshops, meetings, awareness generation, training and capacity building programs. Approximately, 306,093 people in slums (52% women) benefited through 465 CIF interventions. 9. The project also achieved several successes that were beyond the scope of GAP, and therefore not reported (para.5). These included (i) convergence initiatives with other agencies, like the Kerala State Co-operative Federation for Fisheries Development Ltd., also known as Matsyafed, (ii) 141 individual and group microenterprises, benefiting 698 women entrepreneurs by creating access to economic opportunities, funded under poverty social fund (PSF), 8 (iii) targeted interventions for rehabilitation of the destitute (mostly women), promoting social inclusion, implemented under the Ashraya9 project of Kudumbashree, partly funded under PSF, (iv) 2,245 household toilets constructed in slums, under the low-cost sanitation (LCS) subcomponent, which accrued considerable gender-based advantages through improved

6 Government of Kerala, Kerala Sustainable Urban Development Project. http://www.ksudp.org/index.php/

implementation-ksudp. 7 ADB, 2015. Gender Mainstreaming Case Study, Kerala Sustainable Urban Development Project. Manila. 8 Poverty social fund (PSF) includes a package of pro poor and gender responsive interventions under four broad

categories, viz. general training and capacity building of PSF works; skill development training; microenterprise projects and other special programs. All activities under PSF were planned and implemented by Kudumbashree.

9 The Ashraya program, introduced in 2003, through Kudumbashree, includes identification and rehabilitation of

destitute through a comprehensive package of socio-economic benefits, and caters to the unreachable poorest of poor. In 2013, the Ashraya program was renamed as Agathirahithakeralam (Destitute Free Kerala).

http://www.ksudp.org/index.php/%20implementation-ksudp

http://www.ksudp.org/index.php/%20implementation-ksudp

Appendix 8 53

sanitation, especially for the most disadvantaged, and (v) 888 members of Kudumbashree self-help groups (SHGs), who were supplied with collection equipment and three-wheelers as well as driving training, which enhanced door-to-door solid waste collection efficiencies, saved time, alleviated drudgery and provided a sense of confidence to them. 10. Qualitative methods such as focus group discussions and in-depth interviews of CIF, PSF and LCS interventions through random selection were used during the project completion review (PCR) mission to assess sustainability and impacts of GAP activities.10. It was assessed that sustainability of the capacity building initiatives had been ensured, as the same Kudumbashree community network which was leveraged for project interventions continued to work towards planning, prioritization and implementation of poverty alleviation programs. Sustainability of the CIF and PSF interventions in the five project cities was confirmed through site visits, though quality of infrastructure maintenance and degree of success of entrepreneurial ventures differ. These interventions resulted in strategic benefits that point towards (i) economic empowerment, increased access to incomes and enhanced confidence; (ii) increased voice in community decision making, participation and leadership and (iii) improved health, hygiene and reduced time poverty. The evidence to strategic benefits are supported through testimonials (Table 2) and gender mainstreaming case study report (footnote 7).

Table 2 - Testimonials of Beneficiaries

REFLECTIONS OF A PSF BENEFICIARY

‘We started the tailoring shop after receiving funds through the project. It’s been ten years now and our venture has progressed very well. We have also employed two staff to assist us. I am the only bread winner in the family and feel proud of the fact that I can afford a good life and education for my daughter. We are awaiting an opportunity to access a loan so that we can expand our business.”

– Ms. Geeta Vinod, SHG member, Trends Fashion, Calicut

TRANSPORTATION MAKES LIFE EASY FOR PRIMARY COLLECTORS

“We collect waste from the households. The driving training and three-wheeler provided to our group under the project has transformed our life in multiple ways. It’s much easier and convenient now. We also save time. We feel proud that we can now drive. It will be better if the maintenance cost of the vehicle is borne by the corporation as we end up spending our earnings towards maintenance costs.”

– Ms. Usha Biji, SHG member (waste collector), Sri Krishna Dhanakshmi Group, Calicut

BENEFITS FOR THE ELDERLY AND STUDENTS

“The project funded community hall, library and

recreation centre has help the community at large, but senior citizens and students have benefited the most. Senior citizens frequent the library and the community hall is used for the Kerala Public Service Commission coaching once every week. I was married young and had lost all hope to compete in any exam as it is difficult for me to travel far for coaching with a small baby at home. Now that the classes are conducted in the community hall and library, aspirants like me benefit the most. I am now preparing for the state service exam as I have this facility”.

– Ms. Regi (25 Yrs), PSC aspirant, Elthurutu, Thrissur

LOW COST SANITATION (LCS) TRANSFORMS LIFE IN SLUM

The financial assistance to build LCS units for the slum dwellers in Kammattipadam has changed their life for better. In the absence of latrines, they had no option but to defecate in the open. The practice not only brought indignity, specially to the women and girls, but also affected their health. The slum is situated in a low-lying area and is prone to frequent flooding. In such situations, the water logging would contaminate the ground water with faecal material affecting their health.

Focus group discussions with beneficiaries, Kammattipadam slum, Division No. 63, Kochi.

10 Six in-depth interviews and seven focus group discussions across thirteen PSF, CIF and one LCS interventions in

the five project towns.

54 Appendix 8

E. CONCLUSIONS AND LESSONS LEARNED 11. Overall, the GAP activities have enabled, and sustained women’s access to economic opportunities, created spaces for their participation in planning, decision-making, and increased awareness of project benefits. The enhanced capacities of Kudumbashree community network and elected representatives in poverty mapping, participative planning and need assessments are areas wherein the project has contributed towards long term capacity development. Though the design of GAP addressed gender mainstreaming objectives relevant to some subcomponents, it did not include activities taken up under other subcomponents of the project, which significantly contributed towards gender equity (paras.5 and 9). Dedicated implementation structure and human resources ensured systematic planning, implementation and monitoring of GAP activities. 12. Of the various project components, urban community upgrading is a unique design feature that lent itself to participatory decision-making and yielded a multitude of benefits for the community, especially women and girls. The process of need-based selection and implementation, by leveraging the local governance system, contributed to efficient and successful implementation. Systematic mapping of poor and vulnerable households, participative planning and need assessments ensured prioritization of infrastructure and services, besides generating ownership of the program and assets created, thus ensuring sustainability. Though the LCS, CIF and PSF subcomponents constituted only 10.6% of the total project expenditure ($12.3 million equivalent), it directly benefitted over 0.4 million people, mostly women. 13. It was strategic to develop convergence and partner with other agencies, including Kudumbashree, for trainings, awareness generation, capacity building and other subcomponents of the PSF, especially those related to livelihood promotion. 14. Community activities such as awareness generation, capacity building, need assessments and monitoring, were centered around urban community upgrading. The success of CIF, PSF and LCS subcomponents proved the importance of stakeholder awareness and women’s participation.

Appendix 9 55

SAFEGUARDS ASSESSMENT 1. Safeguards implementation arrangements. The project management unit (PMU) with support of technical support unit was responsible for overall safeguard management and the project implementation units (PIUs) at the city level duly supported by two design and supervision consultants implemented the safeguard measures. A land acquisition officer, a community development officer and an environmental officer at PMU level were supported by two social safeguard specialists (one part-time and one full-time) and one full-time environmental specialist under the technical support unit. Both design and supervision consultants had one social specialist and one environmental specialist, to support the PIU’s social development officer and environmental officer responsible for safeguard implementation at the city level. ADB conducted safeguard capacity building programs for the staff of PMU, PIUs, consultants and contractors. Two external consultants for assessing social and environmental safeguard implementation were also engaged. The overall institutional arrangements for safeguards management are assessed as satisfactory. 2. Social safeguards. The resettlement management followed ADB’s social safeguards requirements for the project. ADB approved the resettlement framework and one short resettlement plan (SRP), based on which five SRPs were prepared during implementation. SRP of road subproject in Kochi required land acquisition from 4 households, while SRPs of road and drainage subprojects in Thiruvananthapuram and underpass subproject in Kollam had temporary livelihood impacts on 73 households. Shopkeepers who had temporary livelihood impacts during construction of underpass in Kollam and wanted alternate shops to continue their livelihood activities were suitably accommodated. KMK road in Kollam was not financed by ADB as one affected person refused compensation and sought judicial intervention, resulting in non-implementation of SRP. The SRP for sewerage subprojects in Kozhikode was not implemented as the contract had to be terminated due to slow progress. Compensation amounting to ₹18.2 million ($0.3 million) was paid for implementing the four SRPs. Affected persons and other stakeholders perceived improved economic activities, better living conditions and quality of life after project implementation. 3. The extent of public consultations and outreach activities was inadequate throughout the design and implementation stages, as it could not assuage entrenched “not-in-my-backyard” syndrome of the public resulting in protests against some environmental sanitation subprojects. For example, the sewage treatment plant in Kollam could not be implemented, despite meeting statutory requirements in terms of siting criteria and public consultations involving highest authorities in the administration and elected representatives. Most of the sewage pumping stations (21 of 32) could not be taken up due to GOK’s preference with negotiated price purchase process (despite land owners’ “not-in-my-backyard” syndrome) rather than initiate land acquisition process. 4. Indigenous Peoples. No Indigenous Peoples were impacted by any component of the project. None of the 4 households whose land were acquired or 73 households that had temporary livelihood impacts belonged to the schedule caste or schedule tribe category. Hence, no additional Indigenous Peoples safeguards documents such as Indigenous Peoples’ Plan was prepared or implemented. However, original project category “A” per the Indigenous Peoples Policy, 1998 was not re-categorized accordingly to category “C”. 5. Environmental safeguards. Environmental assessments were undertaken for all identified subprojects in each project town. Five initial environmental examination reports, including environmental management plans (EMP) and environmental monitoring plans, were

56 Appendix 9

prepared and disclosed on project website. An environmental assessment and review framework was specifically developed for the Part C: Local Government Infrastructure Development component, but the component was later deleted from the scope. The initial environmental examination reports, including EMPs, were updated as required and found to be adequate. EMPs were included in contractors’ agreements. However, the renewals of consents to operate for water and sewage treatment plants was pending post loan closure. ADB did not finance a solid waste management subproject in Kollam due to regulatory non-compliance, as the landfill location was adjacent to a Ramsar site and partly fell within the prohibited coastal regulation zone per Indian environmental laws and the public protested against the operationalizing the compost plant. In case of a drainage subproject in Kochi, complaints on environmental concerns received by ADB were resolved thorough extensive consultations with the complainants, and by adopting a revised drainage layout and use of pipes in select stretches, to avoid tree cutting and probable flooding. The project interventions have (i) reduced flooding; (ii) increased availability of potable water; and (iii) improved riding quality of urban roads with less traffic congestion and fuel consumption, thus contributing to improved urban environment and quality of life. 6. Reporting. Periodic submission of safeguard monitoring reports was not stipulated in the project documents. However, the quarterly progress reports adequately captured the status of safeguard implementation and were duly disclosed on project website. External monitoring of social safeguard implementation and third party due diligence of environmental safeguard implementation were also undertaken. Based on the findings of missions, ADB developed time-bound safeguards corrective action plans and ensured their implementation. 7. Overall environmental, involuntary resettlement and Indigenous Peoples safeguard compliance was assessed to be satisfactory. The project has no outstanding safeguard issues, barring renewal of consents to operate for water and sewage treatment plants. However, the safeguard compliance management was assessed to be less that effective. 8. Lessons learnt. These include (i) early deployment of safeguard experts by ADB, PMU, PIUs, consultants and contractors; (ii) project categorization should be based on facts/evidences and if there are impact changes during implementation the project should be recategorized; (iii) early planning of land acquisition and rehabilitation activities and its completion before contract award; (iv) better coordination with regulatory agencies and other government departments; (v) well-planned public awareness campaigns and outreach events about proposed interventions, its benefits and anticipated impacts, with feedback mechanisms for the actions taken on concerns raised; (vi) robust, easily accessible and responsive grievance redress systems.

Appendix 10 57

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant

Reference in Loan or Project

Agreement Status of

Compliance

Execution and Committees

The State shall establish the State Level Empowered Committee (EC) and the City-Level Steering Committee (SC), with a first meeting held in these, no later than three months following Effective Date.

LA, Schedule 6, para. 5(a)

Complied with.

The EC shall comprise the State Chief Secretary, the secretaries of Local

Self Government (Urban) Department (LSGUD), Finance, Planning, Water Resources, Minor Irrigation, and Public Works, the Executive Director of Kudumbashree, mayors of the MCs, and the Project director of the PMU as member secretary.

LA, Schedule 6, para. 5(b)

Complied with.

The SC shall comprise the Mayor, Corporation Secretary, District Collector, representatives of State-level departments in the MC (such as Public Works Department, Electricity Board, KWA, and State Pollution Control Board), Standing Committee chairpersons of Health, Welfare, Works, and Finance, and representatives of community- based organizations.

LA, Schedule 6, para. 5(c)

Complied with.

Implementation

The State through the LSGUD shall be responsible for execution of the Project.


Complied with.

The State shall continue to delegate LSGUD with sufficient administrative and financial authority for expeditious implementation of the Project.


Complied with.

Without limiting the generality of Section 4.02 of this Loan Agreement, the Borrower shall ensure that the State provides sufficient and timely budgetary allocations, counterpart funds (including additional funds as may be required on account of detailed designs) staff, and administrative clearances, to LSGUD for effective and timely implementation of the Project.


Complied with.

The State also ensure that the MCs allocate, counterpart funds from their annual budget in order to meet the counterpart funding requirements of the Project. The State shall also ensure that each MC will make available all necessary land, staffing and facilities as required for timely completion of subprojects


Complied with.

Except as ADB may otherwise agree, all goods and services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 and Schedule 5 to this Loan Agreement. ADB may refuse to finance a contract where goods or services have not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB.

LA, para. 3.03 Complied with.

PMU

The State shall establish a state-level PMU, led by a full time Project director, that will be responsible for overall Project implementation, monitoring and supervision, and will report directly to the Secretary, LSGUD. The Project director shall be assisted by three deputy Project directors for technical, social and institutional development and finance matters. The PMU shall be staffed with experts in urban planning, water, and wastewater engineering, urban roads and municipal engineering, procurement, environment, finance and accounting, social and community development, institutional development and law.


Complied with.

The PMU shall be responsible for (i) appointing the TSU, two DSCs, one for Thiruvananthapuram and Kollam, and another for Kozhikode, Kochi and Thrissur, PPMS consultants, and NGOs; (ii) approving the design of


Complied with.

58 Appendix 10

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the investment components prepared by the PIUs; (iii) selection of subprojects of ULBs, obtaining ADB’s approvals for the subproject finance, assisting and monitoring the implementation of subprojects; (iv) pre-qualifying contractors; (v) preparing standard bid documents to comply with ADB guidelines; (vi) monitoring the tendering process and reviewing the bid evaluation and preparing bid evaluation reports for approval by ADB; (vii) procuring equipment and services at the State-level; (viii) reviewing CAPPs; (ix) ensuring Project compliance with loan covenants; (x) coordinating with ADB on matters related to disbursements; (xi) undertaking the institutional development assistance and capacity building programs; and (xii) maintaining Project documents and submitting timely reports to ADB and the State, including audit reports

PIUs and ULBs

The Project shall be implemented by the relevant MCs in each of the Project cities. With regard to Part C the LSGUD shall be responsible to provide assistance directly to the ULBs who shall be responsible to implement Part C.


Complied with.

Each PIU shall be guided by the relevant SC and shall be headed by a Project manager, supported by specialists in water supply, sewerage, civil engineering, solid waste management, urban planning, procurement, environment, finance and accounting, and social and community development. A staff deputed into the PIU from the Revenue Department of the State shall handle all land acquisition and resettlement and rehabilitation issues, including coordination with different line agencies in shifting of utility lines, if necessary. Each PIU shall comprise staff with required specialist fields for the subproject (approximately seven professional staff) and required support staff. The PIU will be assisted by the two DSCs


Complied with.

Each PIU shall be responsible for (i) carrying out detailed surveys, investigations and engineering designs of investment components; (ii) tendering, evaluating bids and awarding works, contract administration, supervision and quality control; (iii) measuring works carried out by the contractors and certifying payments; (iv) conducting public awareness campaigns and participation programs; (v) carrying out the PPMS surveys; (vi) carrying out environmental assessments; (vii) ensuring respective MCs’ compliance with ADB’s loan covenants; and (viii) preparing monthly reports. For the water supply component of the Project, each PIU will be responsible to prepare detailed designs of the subproject with assistance from DSC, and will obtain clearance/no objection from the KWA before tendering the works as in the case of Capital City Development Project funded by the State

LA, Schedule 6, para. 4(c)

Complied with.

Each PIUs shall also be responsible for detailed engineering, procurement, construction supervision and quality control for the community infrastructure and livelihood promotion activities under Part B. A committee will be formed in each MC comprising of representatives from the MC, NGOs, and Kudumbashree to facilitate establishment of consensus on the proposed community upgrading subcomponents and submission to the PIU for further approval of related SC for implementation

LA, Schedule 6, para. 4(d)

Complied with.

Revenue

By mid-term review of the Project, the State shall develop a road map on the role of KWA and relevant statutory authorities/ULBs for water supply in the area covered by the Project, to ensure empowering these with related services and cost recovery in accordance with the Kerala

LA, Schedule 6, para. 6

Complied with.

Appendix 10 59

Covenant


Agreement Status of

Compliance

Municipalities Act, 1994 and Decentralization of Powers Act, 2000.

The State shall ensure that the plinth-area based tax and increase in tax base as recommended by the Second Finance Commission of the Borrower, is implemented starting from fiscal year 2006/07.


Partially Complied. Orders were issued for implementation but was later withdrawn due to public protests. GOK is planning to take it up again.

By not later than March 2007, the State shall formulate a policy on conversion of stand-posts to individual metered house service connections, and/or metering the stand-posts, for the purpose of efficient demand side management and reduction of non-revenue water.


Partially complied. Some stand-posts converted to individual metered house service connections, while remaining stand-posts are not yet metered.

The State shall ensure that all the MCs pass a resolution by March 2008 to introduce service tax and/or other revenue mobilization measures in each MC to meet shortfall of revenues needed to fund O&M of the expanded water supply.


Complied with.

The State shall ensure that all the MCs will prepare and implement a Financial Improvement Action Plan to (a) introduce a sewerage charge, (b) introduce a solid waste management charge, and (c) improve collection efficiency, by no later than one year after related subproject completion.


Complied with.

The State shall ensure that MCs adopt ADB’s approved standard bidding documents, evaluation criteria and procedures for awarding contracts for all procurement contracts being undertaken under the Project.


Complied with.

The State shall ensure that Part C of the Project shall be implemented by the ULBs under close guidance of the LSGUD and is undertaken in accordance with the detailed criteria and approval procedure for local government infrastructure development attached as Supplementary Appendix S to the RRP.


Not Complied. Component deleted.

Safeguards

The State shall ensure that if, during design of Project components (including during detailed designs), involuntary resettlement arises from land acquisition or temporary disruption of income generation, a RP will be prepared and implemented in accordance with Borrower/State laws and procedures, ADB’s policy on Involuntary Resettlement, 1995 and the Project’s agreed-upon RF. ADB’s approval of any RP or the short resettlement plan for Kollam Project city (including any revision to such RP or plan if any on account of detailed/finalized design of a Subproject component) shall be a condition for the award of related civil works contracts.


Complied with.

Without limiting the generality of clause (a) of this paragraph and its applicability to all Project cities including Kollam, the following shall be complied in particular for Kollam Project city. The State shall ensure that the short resettlement plan for Kollam, attached as Supplementary Appendix K to the RRP shall be utilized for Part A in relation to the roads and transportation subcomponent in Kollam; and in relation to the proposed sewerage treatment plant site under Part A in Kollam, the MC of Kollam shall (1) ensure that its PIU monitors the affected people as


Complied with.

60 Appendix 10

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part of Project monitoring, and provides them with opportunities to participate in any livelihood initiatives, with particular attention paid to the vulnerable households if any; and (2) shall complete in full, the payment of compensation due to all people affected by land acquisition and/or resettlement. Full payment of such compensation as specified herein shall be a condition for withdrawal of Loan proceeds for the Kollam sewerage treatment plant.

The State shall ensure (a) compliance with the existing environmental laws and regulations of the Borrower/State, the ADB’s Policy on Environment, 2002, and the agreed upon EARF, particularly regarding the environmental due diligence and compliance for subprojects proposed under the Project, (b) updating and revision of IEEs and EMPs for the MCs during detailed Project design and compliance with all monitoring and mitigation measures indicated in the IEE and provided for under the EMPs for the Project, and (c) consultation with local communities on environmental issues.


Partially complied. Timely renewal of consent to operate the treatment plants not obtained, after project closure.

The State shall ensure that the MCs assume a proactive role in environmental planning, management and monitoring, and that State Pollution Control Board clearance will be obtained for all applicable Project components before starting work on those components.


Complied with.

The State shall ensure (i) compliance with applicable Borrower/State laws and ADB’s policy on Indigenous Peoples, 1998, and (ii) preparation of IPDP or specific actions to address any impacts in accordance with measures and/or specific actions as set forth in the IPDF.


Complied with.

Social Matters

The State shall ensure that civil works contracts under the Project incorporate provisions to the effect that contractors (i) shall carry out HIV/AIDs awareness and prevention programs for labor, (ii) shall not employ or use children as labor; (iii) 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 (iv) follow and implement all statutory provisions on labor (including equal pay for equal work), health, safety, welfare, sanitation, and working conditions. The civil works contracts shall also provide for termination of the contract by the State in case of breach of any of the stated provisions by the contractors.


Complied with.

The State shall ensure that the Gender Action Plan as set out in Supplementary Appendix O to the RRP is implemented in a timely manner.


Complied with.

PPMS

Within six months of the Effective Date, the State shall through the PMU, establish the PPMS to track Project implementation activities, with corresponding target dates, expected outcomes, and assigned responsibilities under a monitoring mechanism formulated, discussed and agreed between ADB, the State and the MCs.


Complied with.

Project Review

Notwithstanding the generality of Section 2.08 of the Project Agreement, the Project shall be under regular review as follows: (i) the PMU shall conduct monthly reviews based on performance reports prepared by the DSC for each Project city. The monthly Project performance, major policy issues, and necessary actions required or taken by the respective authorities will be reviewed and results circulated to ADB, LSGUD, and the relevant SC; (ii) the EC shall review the Project progress on a quarterly basis based on the monthly review by the PMU with results


Complied with.

Appendix 10 61

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similarly circulated to ADB, LSGUD, and the relevant SC; and (iii) the third level review shall be conducted by ADB once every six months throughout the Project implementation period.

A comprehensive mid-term review of the Project shall be carried out 24 months after the Effective Date to identify problems or weaknesses in implementation arrangements, and to agree on any corrective measures.


Complied with.

Others

The State shall ensure that the PMU will closely monitor the utilization of funds for community upgrading and livelihood promotion on an annual basis and identifies corrective actions to ensure proper utilization of the funds earmarked for these activities.


Complied with.

The State shall on-lend the Loan proceeds to the related MCs or ULBs under the Project Parts through appropriate written financing arrangements between the State and each ULB.


Complied with.

In the event that the State changes the KUDFC into a financial intermediary, subject to further review and assessment of such new entity, the State through the Borrower may request the implementation of Part C through such financial intermediary. ADB’s assistance and acceptance of such arrangement shall however be subject to its due diligence and acceptability by ADB.


Not Complied. Component deleted.

Financial Management

Except as ADB may otherwise agree, the Borrower shall establish immediately after the Effective Date, an imprest account at the Reserve Bank of India. The imprest account shall be established, managed, replenished and liquidated in accordance with ADB's Loan Disbursement Handbook dated January 2001, and the Interim Guidelines for Disbursement Operations for LIBOR-Based Loan Products dated July 2002, both as amended from time to time, and detailed arrangements agreed upon between the Borrower and ADB. The initial amount to be deposited and thereafter to be maintained in the imprest account shall not exceed the equivalent of $22,120,000 (i.e., 10% of the Loan) or the estimated expenditures for the next six months, whichever is lower.

LA. Schedule 3, para. 5 (a)

Complied with.

Except as ADB may otherwise agree, the Borrower may cause the State to establish immediately after the Effective Date, a Second Generation Imprest Account (SGIA) in a non-interest bearing commercial bank account. The Borrower shall pass on the Rupee equivalent of ADB’s imprest advance as provided in clause (a) of this paragraph. The SGIA shall also be established, managed, replenished and liquidated in accordance with ADB's Loan Disbursement Handbook dated January 2001, and the Interim Guidelines for Disbursement Operations for LIBOR-Based Loan Products dated July 2002, both as amended from time to time, and detailed arrangements agreed upon between the Borrower and ADB. The initial amount to be deposited and thereafter to be maintained in the SGIA shall not exceed the equivalent of $22,120,000 (i.e., 10% of the Loan) or the estimated expenditures for the next six months, whichever is lower.

LA. Schedule 3, para. 5 (b)

Complied with. SGIA not availed.

The statement of expenditures (SOE) procedure may be used for reimbursement of eligible expenditures for the Project and to liquidate advances provided into the imprest account, in accordance with ADB's "Loan Disbursement Handbook" dated January 2001, as amended from time to time and detailed arrangements agreed upon between the Borrower and ADB. Any individual payment to be reimbursed or liquidated under the SOE procedure shall not exceed the equivalent of $100,000.

LA. Schedule 3, para. 5 (c)

Complied with.

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Particular Covenants in Loan Agreement

The Borrower shall cause the State to carry out the Project with due diligence and efficiency and in conformity with sound administrative, financial, engineering, environmental and urban development practices.

LA, Section IV, para 4.01(a)

Complied with.

In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 6 to this Loan Agreement.

LA, Section IV, para 4.01(b)

Complied with.

The Borrower shall make available to the State, promptly as needed and on terms and conditions acceptable to ADB, the funds, facilities, services, and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project.

LA, Section IV, para 4.02

Complied with.

The Borrower shall cause the State to ensure that the activities of its departments and agencies with respect to the carrying out of the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures.


Complied with.

The Borrower shall take all action which shall be necessary on its part to enable the State to perform its obligations under the Project Agreement and shall not take or permit any action which would interfere with the performance of such obligations.


Complied with.

The Borrower shall exercise its rights pursuant to making the Loan proceeds available in such a manner as to protect the interests of the Borrower and ADB and to accomplish the purposes of the Loan.

LA, Section IV, para 4.05(a)

Complied with.

No rights or obligations under the financing arrangements shall be assigned, amended, abrogated or waived without the prior concurrence of ADB.

LA, Section IV, para 4.05(b)

Complied with.

Particular Covenants in Project Agreement

The State shall carry out the Project with due diligence and efficiency, and in conformity with sound administrative, financial, engineering, environmental and urban development practices.

PA, Section 2.01(a) Complied with.

In the carrying out of the Project and operation of the Project facilities, the State shall perform all obligations set forth in the Loan Agreement to the extent that they are applicable to the State.

PA, Section 2.01(b) Complied with.

The State shall make available, promptly as needed, the funds, facilities, services, equipment, land and other resources which are required, in addition to the proceeds of the Loan, for the carrying out of the Project.

PA, Section 2.02 Complied with.

In the carrying out of the Project, the State shall employ competent and qualified consultants and contractors, acceptable to ADB, to an extent and upon terms and conditions satisfactory to ADB.


Except as ADB may otherwise agree, all goods and services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 and Schedule 5 to the Loan Agreement. ADB may refuse to finance a contract where goods or services have not been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB.


The State shall carry out the Project in accordance with plans, design standards, specifications, work schedules and construction methods acceptable to ADB. The State shall furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as ADB shall reasonably request.


Appendix 10 63

Covenant


Agreement Status of

Compliance

The State shall take out and maintain with responsible insurers, or make other arrangements satisfactory to ADB for, insurance of Project facilities to such extent and against such risks and in such amounts as shall be consistent with sound practice.


Without limiting the generality of the foregoing, the State undertakes to insure, or cause to be insured, the goods to be imported for the Project and to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods.


The State shall maintain, or cause to be maintained, records and accounts adequate to identify the goods and services and other items of expenditure financed out of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, its operations and financial condition.


ADB and the State shall cooperate fully to ensure that the purposes of the Loan will be accomplished.

PA, Section 2.07 (a) Complied with.

The State shall promptly inform ADB of any condition which interferes with, or threatens to interfere with, the progress of the Project, the performance of its obligations under this Project Agreement, or the accomplishment of the purposes of the Loan.

PA, Section 2.07 (b) Complied with.

ADB and the State shall from time to time, at the request of either party, exchange views through their representatives with regard to any matters relating to the Project, the State, and the Loan.

PA, Section 2.07 (c) Complied with.

The State shall furnish to ADB all such reports and information as ADB shall reasonably request concerning (i) the Loan and the expenditure of the proceeds thereof; (ii) the goods and services and other items of expenditure financed out of such proceeds; (iii) the Project; (iv) the administration, operations and financial condition of the State; and (v) any other matters relating to the purposes of the Loan.

PA, Section 2.08 (a) Complied with.

Without limiting the generality of the foregoing, the State shall furnish to ADB quarterly reports on the execution of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such details within 45 days of the end of each quarter, and shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following quarter.


Promptly after physical completion of the Project, but in any event not later than three (3) months thereafter or such later date as ADB may agree for this purpose, the State shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance by the State of its obligations under this Project Agreement and the accomplishment of the purposes of the Loan.

PA, Section 2.08 (c) Complied with.

The State through LSGD, shall (i) maintain separate accounts for the Project; (ii) have such accounts and related financial statements (balance sheet, statement of income and expenses, and related statements) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iii) furnish to ADB, promptly after their preparation but in any event not later than six (6) months after the close of the fiscal year to which they

PA, Section 2.09 (a) Complied with. Audited project

financial

statements for FY 2017 is pending submission.

64 Appendix 10

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relate, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors’ opinion on the use of the Loan proceeds and compliance with the covenants of the Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language.

In so far as it relates to the Project, the State shall enable ADB, upon ADB's request, to discuss the State’s financial statements and its financial affairs from time to time with the auditors appointed by the State pursuant to Section 2.09(a) hereinabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the State unless the State shall otherwise agree.


The State shall enable ADB's representatives to visit and verify, the Project, the goods financed out of the proceeds of the Loan, all other plants, sites, works, properties and equipment of the State as these relate to the Project, and any relevant records and documents.


The State shall, promptly as required, take all action within its powers to maintain its corporate existence, to carry on its operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are necessary in the carrying out of the Project or in the conduct of its business.


The State shall at all times conduct its business in accordance with sound administrative, financial, environmental and urban development practices, and under the supervision of competent and experienced management and personnel.


The State shall at all times operate and maintain its plants, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound administrative, financial, engineering, environmental, urban development, and maintenance and operational practices

PA, Section 2.11(c) Complied with.

Except as ADB may otherwise agree, the State shall not sell, lease or otherwise dispose of any of its assets which shall be required for the efficient carrying on of its operations or the disposal of which may prejudice its ability to perform satisfactorily any of its obligations under this Project Agreement.


Except as ADB may otherwise agree, the State shall apply the proceeds of the Loan to the financing of expenditures on the Project in accordance with the provisions of the Loan Agreement and this Project Agreement and shall ensure that all goods and services financed out of such proceeds are used exclusively in the carrying out of the Project.


Except as ADB may otherwise agree, the State shall duly perform all its obligations under the Loan Agreement, and shall not take, or concur in, any action which would have the effect of assigning, amending, abrogating or waiving any rights or obligations of the parties under the Loan Agreement.


The State shall promptly notify ADB of any proposal that seeks to alter its status under the Constitution of India.


Appendix 11 65

ECONOMIC AND FINANCIAL REEVALUATION ECONOMIC REEVALUATION 1. The economic evaluation carried out at appraisal for the major subcomponents of (i) water supply, (ii) sanitation improvement, and (iii) road and transport, indicated the economic internal rate of return (EIRR) in the range of 19%–35%. Economic reevaluation was carried out in accordance with ADB’s Guidelines for the Economic Analysis of Project, 2017 at completion, using similar methodology as that at appraisal, based on updated project data, including actual investment costs and operation and maintenance (O&M) costs. Economic benefits were estimated by comparing “with-project” and “without-project” scenarios. The EIRRs were calculated for the whole project, and for three major subcomponents. Sensitivities of the EIRR were also tested accordingly. A. Project Costs 2. The changes in project scope during implementation, led to significant reductions in total project costs, though costs of some contracts under infrastructure improvement component experienced cost overruns, due to prolonged construction period, price escalation, and quantity increase in civil works. At project completion, the total project cost was ₹7,559.4 million ($158.0 million equivalent), which was about 50% lower than that at appraisal. Table 1 provides the annual contract costs by subcomponents, which were used in the economic reevaluations.

Table 1: Annual Investment Costs by Major Subcomponents

(₹ million)

Year Water Supply Sewerage Urban

Drainage Solid Waste Road and Transport Total

2008 60.21 132.13 192.34

2009 126.70 102.01 34.81 43.75 461.74 667.00

2010 183.64 15.18 49.28 165.70 392.28 790.90

2011 97.22 279.17 65.38 -55.85 280.98 387.73

2012 160.73 275.47 93.52 49.23 86.24 389.71

2013 186.26 466.45 93.98 6.51 88.90 375.66

2014 104.35 404.14 170.54 1.64 51.11 327.65

2015 59.19 111.58 163.01 -9.15 52.95 1,679.58

2016 13.33 33.35 44.00 3.57 -115.64 219.06

Total 931.42 1,687.36 714.53 265.60 1,430.70 5,029.61

Note: Costs of land acquisition and resettlement, consulting services, and project administration are not included.


3. Operation and maintenance cost. The O&M costs were analyzed and average unit costs were applied to the ADB financed portions in the economic reevaluation. It was assumed that O&M costs would increase 1–5% per year along with production increase and deterioration of project assets. It was also assumed that cost of periodic maintenance in terms of capital costs would be 50% for water supply after 10 years, 50% for sewerage systems after 10 years, 30% for drainage system after 10 years, 50% for solid waste management (SWM) after 8 years, and 50% for urban roads after 8 years. O&M costs were estimated at 2017 price.

66 Appendix 11

4. All project costs were converted to economic costs by applying a conversion factor of 0.91, as adopted at appraisal. All costs were valued using the domestic price numeraire to enable easier comparison with the information used to measure benefits, B. Economic Benefits 5. Water Supply. About 1.04 million people (211,497 households) benefitted under the water supply component of the project. Benefits considered for analysis include:

a) Health benefits: Increasing access to safe drinking water has significantly reduced the then prevalent incidence of water-borne diseases in project cities, with about ₹315 annual savings per person in healthcare costs and savings in time and logistics (estimated at 12% reduction in the average direct healthcare cost assessed at ₹2,625 per person per year [2% of per capita income]), which increases by about 5% every year.1

b) Cost of alternate source: The project increased water supply by about 106.5 mld. It was estimated that at least 50% of the incremental water was used by newly connected households, while the remaining water enhanced the supply from 89 lpcd at appraisal to 92-145 lpcd at completion. The savings from using public utility as opposed to tankers and other sources was estimated at about ₹29.9 million in 2017. Such benefit would increase by 3% every year with increase in the water supply. This will also result in time savings for water collection thereby increasing productivity of the labor force and access to economic opportunities for the vulnerable households.

c) Resource cost savings: The systemic improvements under the project has reduced water leakage by at least 10%, which is about 10.6 mld. Applying a shadow price of ₹0.01 per liter, the saving of water resource was estimated at about ₹38.8 million in 2017. Such benefit would increase by 1% per year, along with conservation in water resources in the country.

6. Sewerage, Solid Waste Management and Drainage. About 1.1 million people benefited in the five project cities from environmental sanitation component. Benefits considered for analysis include:

a) Health benefits due to sanitation: About ₹131 annual savings per person in healthcare costs due to less prevalence of related diseases, including logistics and related opportunity costs by improved sanitation (estimated as 5% reduction in the average direct healthcare cost assessed at ₹2,625 per person per year [2% of per capita income]), which increases by about 5% every year.

b) Land prices due to improved drainage: The 7,523 hectares catchment areas that benefitted from improved drainage developed under the project witnessed about 20% increase in land prices (₹432 million per hectare), of which 20% increase (in real terms) is attributed to the project. Such benefit would be realized by 10% each year and only 5% of the catchment area would witness transactions at such improved prices.

7. Road and Transport. The major economic benefits of road and transport projects comprises savings in (i) commuting time of all road traffic with improved speeds, and (ii) vehicle operating cost with improved road surface and carrying capacity. Benefits considered for analysis include:

1 The average per capita income of the districts comprising the five municipal corporations was ₹124,962 in 2015/16.

Appendix 11 67

a) Savings in commuting time. Project related improvements has reduced commuting time, with time saving of at least 30 minutes per trip on total project road length of about 50 km and 0.2 minutes on the improved 21 road junctions. The average passenger time cost was estimated at ₹54.67 per person-hour, which was based on the average per capita income. Considering average vehicle load of 5.9 passengers and an average daily traffic of 7,000 vehicles on project roads, savings in commuting time was estimated at about ₹406.5 million in 2017. It was assumed that the passenger time cost would increase by 3% each year considering economic growth and income increase.

b) Vehicle operating cost: The project is estimated to have increased vehicular speeds by an average 5 km per hour (20 kmph to 25 kmph), with consequent reductions in vehicle operating costs by at least ₹2.50 per vehicle-km. Savings in vehicle operating costs was estimated at about ₹315.1 million in 2017. It was assumed that such benefit would increase by 2% per year along with traffic growth in the project areas.

C. Economic Internal Rate of Return 8. Based on above assumptions and parameters, the EIRRs were calculated for a period of 30 years (2007–2036), including 10 years for project implementation and 21 years for operation (with 1 year overlap of construction and operation). Economic opportunity cost of capital (EOCC) of 12% was used for recalculating EIRR, as assumed at appraisal and recommended by ADB’s Guidelines for the Economic Analysis of Project, 1997. The recalculated EIRRs are much lower than that estimated at appraisal (Table 2), which were mainly caused by:

a) higher unit capital cost;

b) prolonged implementation period and time over run; and

c) reduced project outputs and benefits.

Table 2. Economic Reevaluation Results

Sub-components

Economic Internal Rate of Return (EIRR)

At appraisal At completion

Water supply 21.0% 14.2%

Sanitation (sewerage, drainage, and SWM) 22.0% 9.9%

Road and transport 34.0% 19.1%

Project 14.9%

9. The recalculated EIRRs are above the recommended discount rate of current 9% as well as 12% at appraisal, except for the sanitation subcomponents. The project is therefore considered to be economically viable. 10. The EIRR was subjected to sensitivity analysis to test different scenarios of O&M costs and benefits. The sensitivity analysis results indicated that the project continued to be economically viable for most tested scenarios. If a 20% maintenance cost increase would be combined with a 20% benefit reduction, the EIRR would be still 10.8% for the whole project. The sensitivity analysis also showed that the EIRR was more sensitive to changes in economic benefits. Therefore, the state government and the municipal corporations need to pay more attention to the socioeconomic development of the project area, properly maintain the project facilities in good condition, and increase incomes for the local residents. The summarized results of economic reevaluation for the whole project are in Table 3.

68 Appendix 11

Table 3. Economic Reevaluation Results and Sensitivity Test

Tests EIRR (%)

@12%

ENPV

@9% (₹ million)

ENPV

@12% (₹ million) Case O&M Cost Benefits

Base Case

14.9% 7,399.9 3,424.3

Changes (+/-) 10%

14.5% 6,819.5 2,944.0

20%

14.1% 6,239.0 2,463.6

10% 16.2% 9,589.5 5,267.3

20% 17.4% 11,779.0 7,110.3

-10% 13.4% 5,210.4 1,581.3

-20% 11.8% 3,020.9 -261.7

10% -10% 13.0% 4,630.0 1,101.0

20% -20% 10.8% 1,860.0 -1,222.4

Switching Point 72%

12.0%

-19% 12.0%

EIRR = economic internal rate of return, ENPV = economic net present value, O&M = operation and maintenance


FINANCIAL REEVALUATION 11. GOK’s policy mandates support of urban infrastructure in the state through budgetary allocations and revenues from taxes and tariffs and has consistently been implemented by the state. As the project was not designed for capital cost recovery, operating ratios were calculated at completion for assessing financial viability of project assets. Upon operation, only two of the project subcomponents generate revenues – water supply and sewerage. The revenue to O&M cost ratio for water supply subcomponent in nominal terms for the period of 2016–2025 averaged at 1.13:1, while that for the sewerage subcomponent was 0.34:1. The water supply tariffs are maintained at levels adequate to cover O&M costs. However, the 10% sewerage surcharge on water bill is insufficient to cover the sewerage O&M costs necessitating government subsidy for both routine O&M and future large rehabilitations. Operating ratio was not calculated for SWM subcomponent, as revenues from SWM user fee do not accrue to respective municipal corporations. As collection and primary transportation responsibilities of SWM are managed by Kudumbashree, ULBs’ expenditure for SWM is only about ₹3.06 million, which is adequately met from GOK’s budgetary allocations.2 12. The financial internal rates of return (FIRR) for water supply and sewerage subcomponents were recalculated and financial sustainability was assessed in accordance with ADB’s Framework for the Economic and Financial Appraisal for Urban Development Sector Projects, 1994 and Financial Management and Analysis of Projects, 2005. The FIRRs were recalculated using actual capital costs, average O&M costs, potential usage and revenues generated. A. Initial Operation and Revenue 13. Water Supply. In the state, water treatment and distribution are fully the responsibility of Kerala Water Authority (KWA). KWA has regional offices in all major cities of the state for O&M

2 Kudumbashree is a poverty eradication and women empowerment program of GOK, implemented by the State

Poverty Eradication Mission (SPEM).

mailto:ENPV@9%25%20(Rs.million)

mailto:ENPV@9%25%20(Rs.million)

Appendix 11 69

of the water supply facilities. KWA generates revenues mainly through collecting water usage charges, and is also supported by budgetary allocations from the state government. Differential tariffs are charged for domestic, non-domestic, industrial, public hydrant, and government body/ community consumers with a combination of fixed and variable component. Most domestic and non-domestic water users are metered, and billed on usage based on applicable tariff slab.3 Collection efficiency is average 84.3%. The KWA also generate some revenue through new water connections at the price of ₹585 per connect (free of charge to poor families). KWA’s revenue from water charges, including domestic, commercial and industrial connections, in FY 2015-16 was ₹3,642 million ($56 million equivalent), while operating costs of project assets was about ₹200 million ($3.1 million equivalent) for the year 2017. Unaccounted-for-water (UFW) in the project cities is estimated to have reduced from 55%–60% of total water production at project appraisal, to about 40% at completion, increasing operational efficiency and revenue potential of KWA. 14. Sewerage collection and treatment. KWA is also responsible for the sewerage systems in the state. The 2014 tariff mandates sewerage charges of 10% of water bill to be collected for households connected to the network, and KWA charges ₹10,000 per new connection. However, demand is low as the sewerage network coverage in Kerala are low. Under the project, a new 107.0 mld STP was constructed in Thiruvananthanpuram, presently serving about 50,000 households, while STPs in Kozhikode and Kollam are likely to be completed and operational by 2021. KWA’s costs for operating sewerage assets under the project was about ₹60 million ($0.9 million equivalent) for the year 2017. It is planned that the treated water will be sold in near future for industrial usage at the price of ₹4 per kiloliter (kl). B. Basic Assumptions in the Financial Reevaluation 15. The following assumption and parameters are used in FIRR recalculation:

a) The capital cost includes all capital expenditures related to civil works, equipment, consulting services, and project management, but excludes ADB financing charges. Large-scale periodical maintenance (rehabilitation) expenditure was estimated at 50% of the capital cost; these were treated as capital costs of the project and scheduled every 10 years for water supply and 5 years for sewerage system.

b) Actual average O&M costs for water supply and sewerage treatment, collected during the PCR mission, were used as the basic costs for estimating the incremental O&M costs for the project subcomponents. The O&M costs were kept at 2017 constant prices with a 3% annual increase to account for production increases and asset deterioration. For water and sewerage subcomponents that were operationalized before 2017, 50% of O&M cost was applied to 2016. Different levels of the subsidies were applied for O&M and major rehabilitations to test the financial viability for water supply and sewerage systems.

c) Average tariff and charges for new connections for water supply and sewerage collection, with a 3% revenue increase were considered to calculate the revenues for the ADB financed portion. The revenue estimations also considered (i) the potential capacities for water supply and sewerage systems (2020 for water supply and 2021 for sewerage treatment), (ii) the average revenue generation efficiencies (60%–70% for water supply

3 Minimal fixed fee of ₹20 and variable fee of ₹4/kiloliter (kl) for consumption upto 5 kl, with increasing slabs upto ₹14/kl

for consumption upto 50 kl, beyond which consumption is charged at ₹40/kl. Public hydrants are charged a fixed annual rate ranging between ₹5,250-₹7,884, while communities and government bodies are charged ₹6/kl and tankers are charged ₹60/kl.

70 Appendix 11

and 80% for wastewater treated), and (iii) the revenues for selling tanker water and treated water in future.

d) The FIRR calculations cover 30 years including 10 years for construction and 21 years for operation (with one year overlapping of construction and operation). No residual cost was considered. The weighted average cost of capital (WACC) of 4.0% at appraisal was used to assess the project financial viability.

C. Financial Internal Rate of Returns and Operating Ratios 16. Based on above estimates and assumptions, the FIRRs for water supply and wastewater management subcomponents were recalculated at 3.6%, and 3.7% against appraisal estimate of 5.9% and 13.1%, respectively. By testing different scenarios, it was assessed that: 17. Water supply. The revenue to O&M cost ratio for water supply subcomponent in nominal terms was average 1.13:1 in the period of 2016–2025. If the O&M cost could be reduced by 10% or the revenue could be increased by 10%, the FIRR would exceed the WACC (4%). Therefore, the government and KWA should enforce the water revenue generation by (i) adjusting water tariff to sustainable levels, (ii) reducing UFW, and (iii) increasing bill collection efficiency. Meanwhile, the KWA should improve its working efficiency and reduce the O&M cost. 18. Sewerage. The revenue to O&M cost ratio of sewerage subcomponent in nominal terms was average 0.34:1 in the period of 2016–2025. Large amount of government subsidy would be required for both routine O&M and future large rehabilitations, which were considered during FIRR recalculation. However, if reducing the O&M cost by 20% and increasing the revenue by 20%, the financial situation could be significantly improved. The subsidy for routine O&M might reduce to 53%, instead of the current 75%. Further, in case of non-completion of eight sewerage contracts currently being completed by GOK, the project faces a potential risk of non-achievement of planned outcome targets of improved sanitation to 1.4 million people. Therefore, the government and KWA should enforce the revenue generation by (i) adjusting sewerage collection tariff to sustainable levels, (ii) increasing bill collection efficiency, and (iii) expanding sewerage collection for fully using the capacity. Meanwhile, the KWA should increase it working efficiency by reducing the O&M cost. D. Urban Infrastructure Development and Financial Sustainability 19. Kerala has six municipal corporations and 87 municipalities. Urbanization, as measured by the share of urban population, has shown a sharp increase from 25.96% in 2001 to 47.22% in 2011. The state finances urban infrastructure development and operations through budgetary allocations, particularly for large urban infrastructure projects. KWA is responsible for constructing and operating water supply and sewerage facilities all over the state, including project cities. For the other urban infrastructures and services, like drainage, SWM, and urban transport, the ULBs take major responsibilities for construction, and O&M, supported by internal revenue generation and budgetary allocations. 20. The key economic indicators for the state of Kerala is provided in Table 5 below. Along with fast economic development, the revenue receipts of the state government recorded an increase of 87% from FY2011 to FY2015, with ₹579 billion total revenue collected in FY2015. The revenue receipts of the state in proportion to GSDP increased marginally from 11.66% in FY2015 to 11.79% in FY2016. The growth rate of revenue receipts also showed an upward trend of 19.12% in FY2016 against 17.84% in FY2015. Government capital expenditure has also been steadily

Appendix 11 71

increasing in recent years from ₹33 billion in FY2011 to ₹42 billion in FY2015, of which public works accounted for 34.72%. The development funds for local governments increased from ₹32 billion in FY2013 to ₹55 billion in FY2017. The total budget allocations of grant-in-aid to the municipal corporations was ₹48 billion in FY2016 and ₹50 billion in FY2017. Such fast growth in the revenue receipts and capital outlay has well supported the urban infrastructure development in the state.

Table 5. Economic Development of Kerala State

Income (₹ million) Annual Growth Rate (%)

2013/14 2014/15 2015/16 2014/15 2015/16

Gross State Domestic Product

a) At Constant (2011/12) prices 40,278,13.3 43,223,67.4 46,724,31.3 7.31 8.10

b) At Current prices 46,504,12.1 52,600,23.0 58,833,65.9 13.11 11.85

Net State Domestic Product

a) At Constant (2011/12) prices 36,470,67.7 39,370,15.5 42,613,17.3 7.95 8.24

b) At Current prices 41,726,49.7 47,304,46.6 53,112,60.6 13.37 12.28

Per Capita GSDP (₹)

a) At Constant (2011/12) Prices 119,10.5 127,18.7 136,81.1 6.79 7.57

b) At Current Prices 137,51.5 154,77.8 172,26.8 12.55 11.30

Per Capita NSDP (₹)

a) At Constant (2011/12) Prices 107,84.6 115,84.8 124,77.3 7.42 7.70

b) At Current Prices 123,38.8 139,19.5 155,51.6 12.81 11.73

GSDP = gross state domestic product, NSDP = net state domestic product.

Source: Economic Review 2016, State Planning Board, Government of Kerala.

21. The government balances water supply tariffs at levels adequate to cover O&M costs of the existing infrastructure and new investments, and for sewerage services to cover the O&M costs of new infrastructure. However, revenue generation efficiency can be further improved. Present tariff levels for water supply covers the O&M cost, but not the capital cost. Revenue generation for sewerage system is very small due to low tariff and limited coverage with 75% O&M cost supported by subsidies, while there is no revenue for other urban infrastructure, like drainage, SWM, and urban roads which are fully supported by GOK’s budgetary allocations. 22. GOK and the ULBs need to continue with their initiatives to enhance operational efficiency, by UFW reduction, sewerage network expansion, regular tariff revision and improve collection, all of which will contribute to the sustainability of the urban infrastructure, including those created under the project.

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