World Bank Document · PDF filebusiness processes and associated legislation and regulations,...

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Document of The World Bank FOR OFFICIAL USE ONLY Report No: 36450-PK PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 30.35 MILLION (USD 45.65 MILLION EQUIVALENT) TO THE ISLAMIC REPUBLIC OF PAKISTAN FOR A PUNJAB LAND RECORDS MANAGEMENT AND INFORMATION SYSTEMS PROJECT DECEMBER 2 1,2006 Sustainable Development Department South Asia Region This document has a restricted distribution and may be used b y recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized

Transcript of World Bank Document · PDF filebusiness processes and associated legislation and regulations,...

Page 1: World Bank Document · PDF filebusiness processes and associated legislation and regulations, ... Exacerbated disputes over rights and delays in courts ... Cases of land disputes are

Document o f The World Bank

FOR OFFICIAL USE ONLY

Report No: 36450-PK

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED CREDIT

IN THE AMOUNT OF SDR 30.35 MILLION (USD 45.65 MILLION EQUIVALENT)

TO THE

ISLAMIC REPUBLIC OF PAKISTAN

FOR A

PUNJAB LAND RECORDS MANAGEMENT AND INFORMATION SYSTEMS PROJECT

DECEMBER 2 1,2006

Sustainable Development Department South Asia Region

This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS

(Exchange Rate Effective December 14,2006)

ADB BOR BPR CAS DPMG EO1 ETD F I A S FMR GDP GOP GoPunj ab ICMA ICT IDA IEC IFC ITD LDA L R M I S MOU PITB P M U PPP PRSP RFP sc SIL T D C TORS

Currency Unit = Palustan Rupees PKR60.80 = U S S l

1 US$ = 0.665 SDR

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS Asian Development Bank Board o f Revenue Business Process Re-engineenng Country Assistance Strategy District Project Monitoring Group Expression o f Interest Excise and Taxation Department Foreign Investment Advisory Service Financial Management Report Gross Domestic Product Government o f Palustan Government o f Punjab Institute o f Certified Management Accountants Information and Communication Technology International Development Association Information, Education and Communication International Finance Corporation Information Technology Department Lahore Development Authority Land Records Management Information Systems Memorandum o f Understanding Punjab Information Technology Board Project Management Unit Public Private Partnership Poverty Reduction Strategy Paper Request for Proposals Service Center Specific Investment Loan Tehsil Data Center Terms of Reference

Vice President: Praful C. Pate1 Country ManagerAIirector: John W. Wall

Sector Manager: Adolfo Brizzi Task Team Leader: Edward Cook

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FOR OFFICIAL USE ONLY PAKISTAN

Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

CONTENTS

Page

A . STRATEGIC CONTEXT AND RATIONALE ................................................................. 1

1 . 2 . 3 .

Country and sector issues .................................................................................................... 1

Rationale for Bank involvement ......................................................................................... 4

Higher level objectives to which the project contributes .................................................... 4

B . 1 . 2 . 3 . 4 . 5 .

PROJECT DESCRIPTION ................................................................................................. 5 Lending instrument ............................................................................................................. 5

Program Objective and Phases ............................................................................................ 5

Project components ............................................................................................................. 5

Lessons learned and reflected in the project design ............................................................ 9

Alternatives considered and reasons for rejection ............................................................ 11

. .

C . IMPLEMENTATION ........................................................................................................ 11 1 . Partnership arrangements: ................................................................................................. 11

2 . Monitoring and evaluation o f outcomes/results ................................................................ 12

3 . Sustainability ..................................................................................................................... 13

4 . Critical r isks and possible controversial aspects ............................................................... 14

. . .

D . APPRAISAL SUMMARY ................................................................................................. 15

1 . Economic and financial analyses ...................................................................................... 15

2 . Technical ........................................................................................................................... 17

3 . Fiduciary ........................................................................................................................... 18

4 . Social ................................................................................................................................. 19

5 . Environment ...................................................................................................................... 20

6 . Safeguard policies ............................................................................................................. 20

7 . Policy Exceptions and Readiness ...................................................................................... 21

Annex 1: Country and Sector Background .............................................................................. 22

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ................. 28

This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties . I t s contents may not be otherwise disclosed without Wor ld Bank authorization .

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Annex 3: Results Framework and Monitoring ........................................................................ 30

Annex 4: Detailed Project Description ...................................................................................... 35

Annex 5: Project Costs ............................................................................................................... 46

Annex 6: Implementation Arrangements ................................................................................. 47

Annex 7: Financial Management and Disbursement Arrangements ..................................... 51

Annex 8: Procurement Arrangements ...................................................................................... 61

Annex 9: Economic and Financial Analysis ............................................................................. 68

Annex 10: Memorandum of Understanding ........................................................................... 75

Annex 11 : Summary o f the Social Assessment ......................................................................... 78

Annex 12: Safeguard Policy Issues ............................................................................................ 81

Annex 13: Project Preparation and Supervision ..................................................................... 84

Annex 14: Documents in the Project F i le ................................................................................. 86

Annex 15: Statement o f Loans and Credits .............................................................................. 87

Annex 16: Country at a Glance ................................................................................................. 89

Maps(s):

IBF2D No . 34575

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PAKISTAN

LAND RECORDS MANAGEMENT AND INFORMATION SYSTEMS PROJECT (LRMIS-P) PROVINCE OF PUNJAB

PROJECT APPR4ISAL DOCUMENT

SOUTH ASIA

SASSD

Date: December 20,2006 Country Director: John W. Wa l l Sector Managermirector: Adolfo Bnzz i

Team Leader: Edward C. Cook Sectors: General agnculture, fishing and forestry sector (100%) Themes: Land administration and management (P); Personal and property nghts ( S ) Environmental screening category: N o t Required

Project ID: PO90501

Lending Instrument: Specific Investment Loan

[ ] Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other:

For Loans/Credits/Others: Total Bank financing (US$m.): 45.65

Borrower: Planning & Development Dept., 8th Floor, LDA Plaza, Lahore, Punjab, Pakistan Tel: 042-9203931 Fax: 042-9203935 khalid@pmupuni ab.gov.pk

Responsible Agency: Project Management Unit, Board o f Revenue 5th Floor, LDA Plaza Edgerton Road, Lahore, Punjab P a l stan Tel: 92-42-6373252 arbhuttai$puniab.gov.pk

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FY I 2007 I 2008 I 2009 I 2010 I 2011 I 2012 Annual I 0.50 I 2.60 I 6.44 I 7.24 I 12.42 1 16.45 Cumulative 1 0.50 I 3.10 I 9.54 I 16.78 1 29.20 I 45.65 I 0.00 I 0.00 1 0.00 Project implementation penod: Start February 1,2007 End: December 3 1,20 1 1

0 0 0 0.00 I 0.00 I 0.00

Expected effectiveness date: March 3 1,200f Expected closing date: March 31,2012

[ ]Yes [XINO

[ ]Yes [XINO [ ]Yes [ IN0 [ ]Yes [XINO

[XIYes [ ] N o

[XIYes [ ] N o

Does the project depart f rom the CAS in content or other significant respects? Ref: PAD A. 3 Does the project require any exceptions f rom Bank policies? Ref: PAD D. 7

I s approval for any pol icy exception sought f rom the Board? Does the project include any cntical nsks rated “substantial” or “high”? Ref: PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Ref: PA^ n 7

Have these been approved by Bank management?

Project development objective Re$ PAD B.2, Technical Annex 3 T o improve the land records service delivery o f the Provlnce o f Punjab, contributing to long-lasting tenure secunty and more efficient operation o f land markets.

Project descriphon [one-sentence summary of each component] Ref: PAD B.3.a, Technical Annex 4 The Project will upgrade the land records management system for Punjab Province by revising current business processes and associated legislation and regulations, establishing Service Centers where land records will be maintained and available to the public in digital form, and establishing linkages between the land records system and the system for registration o f deeds. The project will have four components. The f i rs t component will address improvements in business processes and increased institutional capacity at the provincial, distnct, and lower administrative levels. The second component wil l be putting in place the automated land record system, including the applied software. The third component will focus o n improved service delivery to the population, and include a set o f public outreach activities. The fourth component will be deal with project management, monitoring and evaluation.

Which safeguard policies are tnggered, if any? Ref: PAD 0.6, Technical Annex 10 None.

Significant, non-standard conditions, if any, for: Re$ PAD C. 7 Board presentation: None.

Loadcredi t effectiveness: None.

Covenants applicable to project implementation: The BoR shall, pnor to the implementation o f the Project in a distnct: (i) ensure establishment o f a distnct project monitonng group consisting o f a district project manager and two project monitoring officers; and (ii) sign MOUs with the distnct government acceptable to IDA.

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A. STRATEGIC CONTEXT AND RATIONALE 1. Country and sector issues

1. (GOP) highlights the importance o f the rural economy for poverty reduction and sustained economic growth. Given that land is at the heart o f agriculture and the rural economy in Pakistan, particularly in Punjab Province, land ownership and administration issues are o f key importance. Inequalities o f land distribution, tenure insecurity and difficulties associated with the land administration and registration system are closely interrelated and continue to impose significant constraints on both rural and urban populations, particularly the poor. Land transactions are relatively high cost, and disputes about accuracy o f land rights are caused, among others, by the inefficient and dispersed land records system. As a result land markets are thin and land prices are in excess o f the discounted value o f potential agricultural earnings from land. The low mobil i ty o f land contributes to perpetuating the highly unequal distribution o f land and, thus, livelihood opportunities.

The Poverty Reduction Strategy Paper (December, 2003) o f the Government o f Pakistan

2. Pakistan i s therefore a priority concern, linked to the broader area o f governance and administration at both the central and local levels. In order to improve governance and initiate devolution, the GOP enacted on August 14,2001, new arrangements for transferring responsibility to district, tehsil and union council governments. The underlying rationale for this transformation is to create more efficient government structures that respond effectively to local needs. Alongside local government reforms, administrative and institutional changes, including those for land policy and administration, are to be planned and executed in the context o f the new devolved set-up.

Improving land administration and consequently the functioning o f land markets in

3. Punjab has a total area o f 205,345 square kilometers, and i s the most populated province o f Pakistan with 80.5 mi l l ion inhabitants (55.6% o f Pakistan’s total population). Nearly 70% o f the population lives in rural areas. Agriculture plays an important role in the Province’s economy. However, the overall dispersed and duplicative nature o f i t s land records makes land rights uncertain, negatively impacts economic development, and threatens the vulnerable and the poor whose rights remain virtually unprotected. Problematic features o f the current land revenue system, recognized by the Government, are the following (elaborated in more detail in Annex 1):

Obsolete and opaque procedures Irresponsive and inaccessible revenue machinery Exacerbated disputes over rights and delays in courts

Multiple institutions and dispersed responsibilities Weak institutional capacity to address and solve problems Lack ofpublic awareness of their land rights and related procedures

. fl . Increased tenure insecurity . .

4. In Punjab, high transaction costs and difficulties associated with the land registration system continue to impose significant harm on land owners and prospective land owners, (particularly the poor, who have small holdings and less access to information or resources), making them vulnerable to the predatory behavior o f middlemen, and lowering the liquidity o f

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family assets composed in whole or in part o f land. As land i s also a form o f capital, current obstacles for documenting and enforcing land rights have the effect o f lowering income from those assets through means such as rent, cultivation, sale, or access to other factors (e.g. credit). Well-defined land rights are key for productive development and factor market functioning. In addition, clear land rights have far-reaching implications for social cohesion and governance, acting as an important catalyst in stabilizing communities, empowering individuals and reducing social exclusion.

5. Pakistan has a land administration system inherited from the British, involving rules and regulations regarding sale, purchase and use o f land resources mainly linked to the collection o f land tax. The present land legislation - which is constituted mainly o f the Land Revenue Act (1967) and the Registration Act (1908) - does not profess to provide for a State certificate o f title to land under the aegis o f a public authority. The records o f rights and other documents based on the land records, by virtue o f provisions in land laws, are presumed to be accurate. However, these entries only provide presumptive status o f r ights under land laws. Many court rulings have also maintained that entries in the land records are contestable, that the revenue records are not documents o f title, and that i t i s permissible to challenge the entries for determining the title to land.

6. the poor, who cannot afford protracted land disputes. Numerous legal disputes are caused by contract enforcement o f land rental contracts, e.g. over illegal possession o f land, eviction o f tenants, and recovery o f rent. Cases o f land disputes are either heard in the Revenue Courts or Civil Courts. In general, smallholders and tenants tend to prefer to use the Revenue Courts, because they are cheaper, more accessible, and less time-consuming. However, there i s a widespread perception that decisions o f Revenue Courts are often biased in favor o f large and powerful landowners.

The ambiguity o f agrarian law regarding records o f land rights i s particularly harmful to

7. opaque, involving many different agencies. The main ones are the Board o f Revenue (BOR), the Excise and Taxation Department (ETD), and the development authorities, o f which the main one i s the Lahore Development Authority (LDA). However, there i s no single agency maintaining updated land records for al l o f Punjab, and the coordination in record keeping functions being carried out by the various agencies i s limited. Within this complicated institutional structure, the BOR is the most important agency for land administration. Nevertheless, i t is important to note that the B O R essentially is a body geared to collect land revenue for the Government. Over the years, the revenue collection role has become secondary to the BOR’s role o f being the custodian o f the records o f rights to land, but, inconsistently, the business processes o f the organization are st i l l directed to its traditional role.

The institutional set-up o f the land recording system in Punjab Province i s also very

8. involves several levels o f administration; the district, tehsil, kanungo circle, and patwar circle (see Annex 1). At the lowest administrative level o f the records system - the Patwar Circle - are the Patwaris. They are not only responsible for land record issues, but also for many social, political, and administrative tasks, including keeping weather records, collecting crop harvest information, reporting o f village crimes, and updating registers o f voters. In Pakistan, about

The BOR’s land record maintenance takes place through an intricate system, which

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14,000 Patwaris maintain around 190 mil l ion land records pertaining to 50 mil l ion land owners. The Patwaris keep their records in a cloth bag called a Basta. They are the custodians o f records pertaining to private as well as government lands. The transfer o f land i s initiated at the level o f the Patwari, but affected by his superiors at the kanungo and tehsil levels.

9. The overall supervisor o f the land revenue system at District level i s the District Officer Revenuehegistrar. At this level, the officer reports to a double hierarchy, the Board o f Revenue (Senior Member BOR) on one hand, and the District level government on the other (District Coordination Officer, namely the administrative head o f the District), himself reporting to the elected head (Nazim).

Government’s Strategy

10. Making land rights secure, reducing the potential for disputes and enabling an improved investment climate are urgent tasks for the BOR and have been prioritized at the highest levels o f the GoPunjab for the entire Province. Over the long-term the Government intends to move to a title-based system o f land registration which wil l be parcel based and link text and spatial data effectively. This wil l entail significant institutional, legal and policy changes, as well as investment in human resource development, information systems, and improvement in the available data bases on land. A s a key first step in this long-term program, the Government i s focusing on modernization o f the land records system. The Project wil l cover the most important parts o f the land records modernization - system design, business process re-engineering, institutional capacity building, and roll-out to roughly ha l f the districts in the Province. Roll-out to the remaining districts and movement to a title-based registration system would be covered by subsequent phases o f the long-term program. While the proposed program aims at having a rural-urban focus due to the nature o f the issues to be addressed, the development o f an urban component would be gradual due to the current complex and dispersed institutional setting’.

1 1. program, the focus needs to be squarely o n improved service delivery to the population, with computerization as a tool to that end, but neither a sufficient condition for achieving that end nor an end in itself. More important than the I C T elements wil l be the changes in business processes and associated changes in the legal and regulatory framework, human resource development o f staff responsible for service delivery, and public outreach programs to stakeholders and the general population.

While computerization will be an important technical element o f the strategy for the

12. in place a reliable, efficient, and transparent system for maintaining those records and providing access to those records for the population. Also during the f i rst phase, linkages wil l be tested and proven between the land records system and the system o f registration o f deeds, and pi lot ing o f digitization o f spatial records wil l be carried out. As such, the f i rst phase will introduce some key initial changes in the regulatory and institutional framework, and set the stage for the roll-out

The f i rst part o f the program wil l focus on the land records system o f the BOR by putting

In addition to the Registrar’s Office, urban property records are administered by independent agencies such as the Excise and Taxation Authority, Ci ty Development Authority, Defense House Authority and private societies. Urban -specific issues would be pnorit ized in coordination with, among others, the Punjab Munic ipa l Services Improvement Project and the Urban Services AAA.

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o f more substantial changes in the next phase. Two key features o f the Government’s strategy in the f i rst phase are (i) learning by doing before scaling up; and (ii) ensuring availability o f services at the Kanungo level, easing access to the population.

13. In urban areas - where the weaknesses in the registration o f land r igh ts are the result o f fragmented institutional responsibilities, poor reliability o f spatial data, l i t t le accountability and cumbersome processes - the GoPunjab i s also embarked in a number o f actions aimed at improving the existing structure o f property documentation, automation o f the deed system and simplification and standardization o f mortgage documents. The GoPunjab has agreed to the need to incorporate the ongoing modernization o f the deeds registration system (registries offices) with modernization o f the land revenue records system. The Government wil l pursue linkages between the Land Records Program and other initiatives with bearing on immovable property, such as the Punjab Municipal Services Delivery Project and the Administrative Barriers Study being carried out by FIAS.

2. Rationale f o r Bank involvement

14. investment climate (e.g. by unlocking the economic benefit o f clear land rights) - all in line with the Country Assistance Strategy (CAS) - is not in doubt. The issue o f the opaqueness and insecurity o f land records in Pakistan and its repercussions on market and non-market based transactions have been extensively noted in almost every study and AAA done in Pakistan by the Bank2 and other donors. In addition, land registration has also been identified by the PRSP as one o f the key constraints to effective services’ delivery.

The importance o f this program for institutional development, poverty reduction and

15. financial resources, but also to provide sound technical assistance and pol icy advice, using i t s international experience and specialized sk i l ls to address system-wide issues. I t i s expected that the Bank’s support would include assistance for legal and policy reforms that may be required.

Given the nature o f the proposed program, the Bank i s expected not only to mobilize

16. The proposed Project would build on the experience gained from the implementation o f the ongoing pi lot projects and from similar experiences in the Region (e.g. the computerization o f land records program in Karnataka and the Thailand Land Titling Program) as well as from other regions. Lessons learnt from such programs leave the Bank well-positioned to respond to GoPunjab’s request for support to a comprehensive program that ensures (a) technical and operational consistency, (b) improved and standardized policy, legal and operational frameworks; (c) capacity building at all levels; and (d) focus on providing quality services.

3. Higher level objectives to which the project contributes

17. 2003) a four-pronged approach to alleviating poverty: (i) achieving high and broad-based

The Government o f Pakistan sets out in its Poverty Reduction Strategy Paper (December,

2A housing finance system for Pakistan (WB, May 1,2002), Study for Establishng a Secondary Mortgage Enhty in Pakistan (IFC, September, 2004); Rural Factor Market Study (WB, November 8,2004), Adrmn Barriers Study (FIAS, 2005).

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economic growth focusing particularly on the rural economy, while maintaining macroeconomic stability; (ii) improving governance and consolidating devolution, both as a means o f delivering better development results and ensuring social and economic justice; (iii) investing in human capital with a renewed emphasis on effective delivery o f basic social services; and (iv) bringing the poor and vulnerable and backward regions into the mainstream o f development, and to make marked progress in reducing existing inequalities.

18. The Bank’s Country Assistance Strategies, FY03-06 and FY06-09, are closely aligned with the Government’s poverty reduction strategy described above and give high priority to rural growth, improving government effectiveness and strengthening the new devolved structures to improve accountability and transparency and reduce corruption. The new CAS goes a step further by aiming to develop and implement a comprehensive rural strategy for growth and poverty reduction. The proposed project, by working towards a new and more effective decentralized institutional set-up for land administration in the context o f the new devolved scenario, will help foster these objectives.

B. PROJECT DESCRIPTION 1. Lending instrument 19. standard IDA terms, with a 35 year maturity and a 10 year grace period.

The Government o f Pakistan wil l borrow an IDA Specific Investment Loan (SIL) o n

2. Program Objective and Phases 20. the Province o f Punjab, contributing to long-lasting tenure security. The outcomes, expected to result from the Project, are:

The higher level objective o f the Project is to improve the land records service delivery o f

(i)

(ii)

Increased access to land records at lower transaction cost for the beneficiary, through a client-responsive service. Increased level o f tenure security o f land-right holders.

21. Project success wil l be assessed by client satisfaction with the new system, in terms o f access to records and increased level o f tenure security, and by measures o f improvement in services (reduced time for issuance o f fards and completing mutations). Although the Project aims at benefiting the entire community o f landowners, a specific target wil l be the underprivileged and marginal groups that are penalized by the existing land recording system. Specific measures for participation by women and subsistence farmers wil l therefore be monitored.

3. Project components 22. The approach followed in the design o f the proposed PP-LRMIS encompasses four main actions: (i) setting the foundations o f a modernized, more accessible and conclusive land records system by generating and strengthening the capacity o f relevant entities to effectively manage and administer such a system; (ii) developing and deploying an accountability-prone land records system and al l other pre-service delivery tasks; (iii) providing cost-effective land records services at al l levels, including operations and maintenance o f the LRMIS, with the objective o f managing, operating, and making accessible timely land-related information; and (iv) monitoring the quality and efficiency o f the services provided, and assessing i t s impacts.

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23. 45.65 million. I t will be implemented in five years and wil l roll-out the automated L R M I S system to 18 districts, representing approximately ha l f o f the Province. The Project wil l be composed o f the following four components.

The total cost o f the Project i s U S D 51.26 mi l l ion o f which IDA financing wil l be U S D

Component 1: Business Process Improvement and Institution a1 Capacity En h an cent en t (Project cost $1.9 million, of which I D A Credit $1.9 million) 24. consistent with the Project’s development objective o f improved quality o f services and strengthen the capacity o f the entities involved to effectively manage and administer the modernized land records system. Subcomponents are:

This component would ensure introduction o f appropriate business process changes

Institutional Capacity Enhancement: This sub-component wil l provide training programs to staff involved in service delivery to the population and in other aspects o f project implementation. Training programs will focus on change management issues and cover the overall project rationale and design, business processes, the roles o f the respective administrative levels and organizations in project implementation, and more detailed background on roles and responsibilities for particular staff involved in project implementation. This sub-component wil l assess the organization and functioning o f the Board o f Revenue (BOR) through a review o f processes and human resource policies at the national level, and provide for actions to address identified capacity and operational weaknesses. Analysis o f the possible use o f private sector partners in provision o f services to the population wil l be undertaken. Business Process Improvement: Ini t ial basic business process changes necessary for reliable transition from the paper-based to the automated land records system were identified at pre-appraisal. This sub-component wil l finance work on hrther changes in business processes to be introduced during the l i fe o f the Project, and f ield work to assess successful change strategies. Under this sub-component, work will be undertaken on the legislative and regulatory/policy amendments to allow the business process improvements to be put into practice. Included here wil l be legal and pol icy changes required with respect to operation o f the Service Centers that will be established under Component 2, the possible use o f Public Private Partnerships (PPPs) to be explored under the Institutional Capacity Enhancement sub-component, the linkage o f the land records system with the registration o f deeds system to be carried out under Component 2, and the legal use o f digital data. A series o f empirical field studies wil l be carried out to provide more detailed information on possible business process re-engineering and to assess the financial sustainability plans for the automated systems.

Component 2: Development and Deployment of the L R M I S (Project cost $34.8 million, of which I D A Credit $34.8 million) 25. Systems to 18 districts. This component wil l be managed by the Punjab Information Technology Board (PITB). Activities to be financed are:

The Project wi l l roll-out o f the automated Land Records Management and Information

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Software Development and Testing: A competitive selection o f applied software has been initiated during Project preparation and will be conducted in the first year o f implementation. Four f i r m s will be selected to conduct pi lot use o f their software at the kanungo level in Kasur District. This sub-component will test operation o f the software, data entry procedures and costs, and connectivity options to a central data center. Based on criteria established in the RFP, the winning firm for provision o f applied software wil l be selected at the close o f the testing period. Software Deployment and Further Enhancement: This sub-component wil l finance the costs o f licensing, installation, training o f staff, and maintenance for the software. During project implementation, additional functionality wil l need to be built into the software. This wil l include linkage with the automated system o f deeds registration and integration o f digital spatial data.

0 Data Entry and Validation: A comprehensive data cleansing and data entry process wil l be carried out in al l districts included in the Project. Experienced Revenue staff at the local levels wil l be utilized for this work. After selection o f the L R M I S software, data entry work wil l be initiated in an additional four districts. Structured procedures and responsibilities for data movement, data entry, verification, correction, and validation wil l be laid down with proper quality control norms, drawing from international standards. The digital database will be certified by responsible Revenue Department staff at the kanungo level prior to authorization to open a Service Center in that location. Data Centers and Connectivity: LRMIS recognizes the primary objective o f providing efficient services at the level o f the Kanungo Service Center and the constraints o f available connectivity. The applied software wil l be specified as a hybrid technology with: (i) support for the base requirement o f stand-alone databases at the Kanungo Service Centers, replicating in batch mode by dial-up to the Tehsil Data Centers; and (ii) support for the on-line operation o f the Kanungo Service Centers to the Provincial Data Center where there i s suitable D S L or fiber-optic connectivity or where connectivity wil l be established by the Project. The Tehsil Data Centers wil l have on-line connection to the Provincial Data Center either through existing networks or through networks established by the Project. The Data Centers sub-component will finance the establishment o f the planned data centers while the Network and Connectivity sub-component wil l finance the costs o f linking the system together. Establishment of Service Centers for the Delivery of Land Record Services: This sub- component wil l finance the renovation o f premises, I C T and other office equipment, hrniture, and other investment costs o f the Service Centers to be established at the kanungo level. There wil l not necessarily be a one-to-one mapping o f kanungo and Service Centers. Establishment o f Service Centers wil l be driven by business demand for services (see Annex 4). For each district participating in the Project, an agreement between the BOR and the district government wil l be signed elaborating the plan for ro l l out o f this sub-component. Further analysis o f business models for the operation o f Service Centers and the possible utilization o f PPP models will be investigated. Web Development: Web access will be provided by the Provincial Data Center. This sub-component wil l finance the relatively minor costs associated with web site and web site content development.

0

0

0

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Pilot for Spatial Data: Under this sub-component, existing maps maintained at the local level by the patwari wil l be scanned and digitized and integrated with the LRMIS software on a pi lot basis. The database in the pi lot area wil l be used to investigate the relationship between the information on land rights in the text database o f the land records, and the information in the maps. In the process, the database wil l be used to investigate the issues involved in moving to a parcel-based land records s ys tem .

Component 3: Service Delivery and Information Campaigns. (Project cost $9.2 million, of which I D A Credit $4.2 million) 26. intended quality services, and on outreach to stakeholders and the population in general to provide the two-way f low o f information, including feedback to be used in W h e r development o f the land records system. Subcomponents are:

This component wil l focus on the effective operation o f the automated systems to provide

Service Delivery: The Project costs include financing o f the Service Centers to cover operating costs and maintenance. During the first 18 months o f operation for each these costs wil l be financed by the IDA Credit, after which they wil l be covered by budgetary allocations. This support wil l include maintenance o f c iv i l works and hardware, operating costs, and incremental staff costs, utilities, and supplies. Funding for operational support and incremental staff costs to the supervisory BOR offices at the district and tehsil levels is also included. Services on the web wil l include the ability to view the status o f land records, perform data mining, and facilitate value- added services for a range o f potential users (e.g. banks, fertilizer companies, financial institutions, etc.). These value-added services will be developed considering PPP and other provider alternatives. Stakeholder Consultation, Public Awareness and Information: The Project wil l undertake a series o f consultation workshops, focus groups, and targeted social surveys to interact with stakeholders identified in the Social Assessment for the Project. Particular emphasis wil l be given to the most vulnerable and typically marginalized segments o f the population. Feedback from stakeholders wil l be utilized in further elaboration o f business processes and overall evolution o f the Land Records Program. Under this sub-component, education and information campaigns wil l be conducted to raise awareness o f beneficiaries’ rights, benefits o f the system, and to ensure more active participation and feedback from stakeholders. These campaigns wil l mainly be local, designed for separate districts included in the Project with timing coinciding to implementation o f the LRMIS system, and wil l use decentralized means tailored to the area and targeted to different groups (i.e. accounting for literacy, location, preferred communication means, etc). The stakeholder consultation work and the public awareness and information campaigns wil l be combined in contracts tendered competitively to professional f i rms. The Project Management Unit (PMU) wil l be responsible for oversight and assessment o f the efficacy o f these programs.

Component 4: Project Management, Monitoring and Evaluation (Project cost $5.4 million, of which IDA Credit $4.8 million)

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27. operation activities o f the Punjab Information Technology Board (PITB), small project monitoring groups at the district level, and regular social assessmentshser surveys to monitor and assess project impacts. The sub-components are:

Project Management Unit: The PMU will work directly within the structure o f the BOR, with critical staff seconded from the BOR. It wil l be responsible for operational management o f project implementation. The PMU will include units for financial management, procurement, legal and pol icy issues, and project monitoring. I t wil l liaise with the PITB o n I C T related aspects o f the Project, with the Project Steering Committee, with district government, and with project monitoring groups at the district level. As needed, technical specialists wil l be hired on a consultant basis to assist on key issues during project implementation. Punjab Information Technology Board: The PITB wil l be responsible for implementation o f al l I C T aspects o f the Project. This sub-component wil l finance incremental staff and operational expenditures o f PITB associated with the Project. This wi l l include 3 professional staff at PITB headquarters, as wel l as district level I C T roll-out teams that wil l oversee system start-up and operation in the f i rs t year o f implementation in each participating district. District Project Monitoring Groups: In each district where implementation o f the Project i s underway, a small monitoring group o f 3 persons will be established, consisting o f a District Project Manager and 2 Project Monitoring Officers. I t wil l be the responsibility o f this group to track project implementation effectiveness both in terms o f the maintenance and operation o f the automated systems and in the overall effectiveness o f the Service Centers and the tehsi l level project offices in meeting the development objective o f improved quality o f services. District monitors wil l be required to travel on a steady basis to tehsils and kanungo where project activities are underway to review both quantitative and qualitative indicators. These wil l include technical, financial indicators, as well as quality o f business processes and degree o f adherence to agreed practices. The DPMGs wil l report to the Executive District Officer (Revenue) and coordinate their activities with the District Revenue Office. They wil l also interact on a regular basis with the P M U and submit quarterly project monitoring reports to the PMU. Project Evaluation and Impact Assessment: A series o f social assessmentshser surveys wil l be tendered. The purpose o f these assessments wil l be to provide independent and objective feedback on the impact that the Project i s having with respect to i t s development objective. It is intended that these surveys will provide additional project impact analysis by establishing baseline measures at the local level prior to authorizing the start o f the automated systems in a given district, and then tracking these indicators through project implementation.

This component wil l finance a Project Management Unit within the BOR, project

0

0

4. Lessons learned and reflected in the project design 28. Lessons learnt from pilots, as wel l as from international experience, have been incorporated into the Project design. An ini t ial attempt at computerization o f land records was attempted in Kasur district in 1999. That pi lot was poorly managed and failed to move forward. The overriding lesson learned was the need for close support and involvement o f the Revenue staff in the District. The pi lot overseen by the Lahore District Ci ty Government in 2001

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involved software development by the firm AOS and data entry, as wel l as issuance o f tit les (fards3), which in June 2005 were given legal validity. This pi lot has been implemented in Raiwind and i s a significant step in the computerization o f land records in Punjab. Though geographically limited, i t has tested the operation o f the service centers and identified important issues with respect to staffing and training needs o f the service centers, data entry procedures, and community outreach.

29. The main issues have been: (i) errors in the records; (ii) greater effort required in capacity-building for the local revenue staff, particularly the patwari; (iii) various administrative, technical and operational constraints; (iv) greater effort needed to educate the public; (v) resistance from existing staff; (vi) questions about the legality o f the computerized record; and (vii) sustained commitment from the district governments. Specific measures have been included to deal with each issue: a strong emphasis on business process re-engineering (BPR); human resource reform; organizational and legal changes; public awareness campaigns; the potential use o f public-private sector partnership; more intensive interaction between BOR and prospective district governments and district revenue staff on the rationale and objectives o f the Project; and elaboration o f financial sustainability scenarios to demonstrate long-run sustainability o f the systems.

30. more pi lot areas (Rahimyar Khan and Gujarat) with 6 additional Service Centers in total. Data entry work i s being carried out for the entirety o f these two districts. Further enhancements were introduced in the software. These new pilots were under the management o f the Information Technology Department (ITD). W h i l e providing additional useful information for the roll-out o f the Project, these pilots have suffered from inadequate specification o f technical requirements, and poor management. As a result, the GoPunjab has taken the decision to move responsibility for the pilots as wel l as for the ICT aspects o f the L R M I S Project to the PITB, which has a more successhl track record with project implementation. Lessons learned from these pilots are being incorporated into the design for the competitive selection o f applied software to be carried out in the initial phase o f the L R M I S Project.

Following on the Raiwind pilot, licenses for the software have been purchased by two

3 1. international expertise contracted to carry out a comprehensive BPR assessment during project preparation. In addition, relevant experiences o f land records improvement projects were analyzed, focusing on two main examples: the computerization o f land records and land registration in state o f Karnataka State in India, which has been visited by a number o f project staff; and the efficient, responsive land titling and registration service delivery in Thailand. Reports on the status o f land records modernization efforts in Karnataka and other Indian states, commissioned by the World Bank have been provided to our project counterparts. This has had an impact with respect to BPR and legal requirements in support o f such changes, phasing o f project interventions, and benchmarks for service standards. I t has also provided good background to the question o f access to services, change management, and system networking.

International experience has also been brought to bear on the design, ini t ial ly through

Th is i s an o f f i c ia l extract from the land records ref lect ing the record o f r igh ts o f ownership o f the land. I t i s n o t the 3

t i t le deed itself, but rather a n evidence o f tit le.

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5. Alternatives considered and reasons for rejection 32. preparation, the Bank recommended a more holistic and gradual approach, given that computerization and re-engineering o f processes in the land records system are just one part o f all that i s needed to establish a conclusive, secure, and transparent system to record rights. For this reason, the role and responsibility o f the BOR in project implementation were increased, work on business process improvement was added, as well as legal and institutional reforms; the interface with the deeds registration system, and a pi lot on spatial data and GIS functionality.

The initial Project design was focused on the computerization o f land records. During

33. There was also a proposal to have the ITD implement component 2, the ICT related aspects o f the Project. Consistent with the more holistic approach, the Bank recommended keeping responsibility for the Project squarely with the BOR. Reflecting, however, the limited capacity within the BOR to oversee I C T activities, and reflecting ITD’s record managing the pi lot projects, the decision was made to give PITB responsibility for I C T elements. The respective roles and responsibilities o f the BOR and the PITB with respect to the Project have been agreed and are reflected in a memorandum o f understanding between the two.

34. this intervention. Such an approach i s unrealistic given the five-year timeframe o f this Project, and the involved legal and institutional reforms that this wil l entail. Rather, agreement was reached to deal with these issues over a 10-15 year timeframe, with the Project devoted to critical f i rst steps in this direction.

Another rejected alternative was to merge al l existing land records in Punjab4 through

C. IMPLEMENTATION 1. Partnership arrangements: 35. The implementing agency for the Project will be the Board o f Revenue. Overall Project management i s vested in the PMU, placed directly under the Senior Member BOR. The Project Director heads the PMU, assisted by a Director o f Operations. The PMU has overall responsibility for Project management, coordination and performance. The PMU has staff to manage procurement and financial management issues, pol icy and legal issues, stakeholder consultation and information programs, and project monitoring.

36. plays a lead role in planning, coordinating and monitoring the activities that require the involvement o f District Revenue officials and staff. District Project Monitoring Groups will be established in each district participating in the Project. The DPMGs wil l consist o f a District Project Manager and 2 District Project Monitoring Officers (see monitoring section below) and wil l report to the Executive District Officer (Revenue). The District Governments, which are autonomous entities created under Local Government Ordinance in 200 1 , wil l be responsible for the long-term operation o f the Service Centers. Each district participating in the Project wil l sign a Memorandum o f Understanding (MOU) with the BOR which wil l lay out the project rationale, design and implementation plan, and the relative roles and responsibilities o f the Provincial and District governments. K e y features o f these M O U s wil l be the plan for establishment o f the Service Centers, the financialhusiness plan for their long-term sustainability, the staff training

Since the bulk o f the Project investments will be carried out in the districts, the PMU also

Including records o f the ETD, Development Authonty and Housing Societies.

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plan, and the plans for stakeholder consultation and public awarenesshformation. (The agreed draft o f the M O U i s attached as Annex 10.)

37. Centers as well as their operational costs for the f i rst 18 months o f their operation. Upon completing this initial phase o f operations, financing requirements for the Service Centers wil l be passed to the Budget. Targeted transfers wil l be made from the Provincial Budget to the participating districts sufficient to cover the operational and maintenance costs o f the Service Centers at the kanungo and tehsil levels.

The IDA Credit wil l finance al l investment and training costs associated with the Service

38. PITB will be responsible for design and decision making with respect to ICT elements. PITB wil l be responsible for development o f relevant RFPs and bidding documents for various procurements, wil l chair the evaluation committee for I C T procurements, and will be responsible for monitoring and control o f the implementation o f I C T contracts. PITB wil l oversee the recruitment and operation o f district I C T teams who wil l work in participating districts in the initial year o f start-up and operation o f the automated systems.

39. Officer (Revenue chief in the District) and comprised o f the Revenue heads at the Tehsils (Tehsildars), and the District Project Manager.

District Operations Committee will be established, chaired by the Executive District

40. At the Provincial level, two Committees wil l provide the oversight and inter-institutional coordination o f the Project: at the pol icv level, the Project Steering Committee, chaired by the Chairman o f the Planning and Development Board and comprising members o f the Planning and Development Board, the Secretariat o f Finance, the Secretariat o f Information Technology, the Secretariat Revenue Board o f Revenue; and at the operational level, the Project Review Committee, chaired by the Senior Member (Revenue) and comprising the heads o f departments directly involved in project implementation.

2. Monitoring and evaluation of outcomes/results 41. in Section B.2. A key indicator o f results wil l be the reduction in the time required to obtain a fard from the current standard o f weeks or months to just 30 minutes. Other indicators wil l be the population’s satisfaction with the quality o f services being provided by the automated records system and the level o f their tenure security. User surveys wil l be primary sources o f information for these indicators. Audits o f the automated data base will also provide feedback on the time required to issue a fard. The user surveys to be conducted after implementation o f the automated systems wil l be supplemented with baseline surveys to be carried out at the district level prior to roll-out o f the automated system.

The Project outcome indicators are consistent with the development objectives described

42. For supplemental information o n the outcome indicators, as wel l as primary information on the output indicators, a project reporting network will be established. This will be composed o f the District Project Monitoring Groups, the Project Monitoring staff o f the PMU and the reporting units at the kanungo, tehsil, and district levels involved in project implementation. The DPMGs wil l have 2 Project Monitors who wil l travel on a regular basis to the Service Centers to assess their operation. This wil l include the quality o f interaction with clients and adherence to

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agreed business procedures. They wil l monitor both the operation o f the automated systems as well as general office functioning. In addition, they wil l monitor the work done under the stakeholder consultation, public awareness and information campaigns. The DPMGs wil l be required to submit quarterly project monitoring reports to the PMU. The Project Monitoring staff o f the PMU will be responsible for oversight o f the District Project Monitors and for compilation o f information coming from the districts into the Quarterly Project Monitoring Reports to be provided to IDA. Statistical reporting wil l also come through the reporting units o f the Revenue system with regard to the number o f fards issued and mutations in the land records, and the financial status o f the Service Centers.

43. For assessment o f project impact, social assessmentshser surveys will be carried out in districts where implementation o f the Project i s underway or planned. This work will be tendered on a competitive basis in accordance with TORS agreed with IDA. These assessments will provide baseline measures that can be used to measure the impacts o f the Project. They wil l also provide independent input on the Project and wil l be a critical tool for getting feedback directly from Project beneficiaries in a systematic manner.

3. Sustainability 44. structure. The Project wil l substantially improve the quality o f services to the population by providing those services reliably and transparently. Analysis o f data from representative districts shows that with introduction o f incremental fees o f 200 Rs. for fard issuance and mutations and only a modest increase in the number o f mutations, the automated systems will be financially sustainable. One intention o f the Project i s that the Service Centers will evolve to provide a wider range o f public services to the population in a more efficient way than they are currently provided, as i s being demonstrated in other countries (e.g., India). This wil l prove a major positive aspect o f how the Project can contribute to economic development from the point o f view o f district and tehsi l level government. The Project wil l be testing approaches to the use o f PPPs with the goal o f exploring ways in which the private sector can bring greater efficiencies to service provision. The availability o f data from the land records system in a comprehensive and readily accessible form can be marketed to the private sector, and based on the experience with countries where such systems operate efficiently, can be a major additional source o f revenue. There i s also the possibility o f out-sourcing for a fee some o f the service provision at the kanungoi level. International experience shows that this can contribute positively to the attainment o f service standards. From the financial and economic points o f view, therefore, the sustainability prospects for the Project are good.

The land records system currently generates large net revenues based o n the existing fee

45. Sustainability will also depend on the quality o f human resources that are brought to bear in project implementation. The program o f training wil l be critical for building and maintaining necessary skil ls. Salary levels have also been set to ensure the labor market competitiveness o f the Service Centers and other units involved in project implementation. With positive net revenues, it i s anticipated that adequate funds wil l be available to maintain the required human resources over the longer term.

46. Ultimately, the biggest factors bearing on sustainability o f the Project are political and social. Continued solid ownership from the Provincial Government i s a must. Equally, if not

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more, important wil l be ownership fkom the district governments. Again, given the financial and economic advantages offered by the Project, and with phased introduction o f the Project relying on those districts that are a priori most supportive o f the project objectives, i t i s l ikely that this ownership wil l be secured. Salary supplements at the tehsil, kanungo, and patwari levels have been included. The Government o f Punjab has committed to providing budgetary resources to finance the operational and maintenance requirements o f the Service Centers.

4. Critical risks and possible controv Risks

Political changes may result in lack o f project ownership and slow project implementation.

Change in structure o f district government may upset agreed project implementation arrangements.

Institutional culture and interests generate strong resistance to change, including failure to maintain the automated system, continued operation o f a paper-based system beyond the transition penod, and rent-seeking behavior.

Excessive onentation o n computerization rather than o n improved service delivery.

Legislation needed to change business processes i s not passed or gets significantly delayed.

Population chooses not t o use the automated systems.

Complications o f implementing IT- oriented projects, including procurement planning, and project management

rsial aspects Risk Mitigation Measures

Engage a wide spectrum o f polit ical leadership and legislators in dialogue o n the Project.

Engage polit ical leadership at the Provincial level in dialogue on the Project.

Incentives and constructive organizational restructuring incorporated into project design. Public awareness campaign with the population. Regular monitonng o f project offices and use o f annual social assessmentshser surveys. Learning f rom the experience o f advanced states in India in this area. Selection o f districts o n the basis o f their willingness to support institutional change. Agreement o n monitoring indicators that emphasize service standards rather than system installation. Use o f staff training and information camDai ms. Agreement reached o n a l imited number o f key process changes at pre-appraisal to be implemented ahead o f system r o l l out. The Electronic Transactions Ordinance o f 2002 already provides admissibility o f computer generated revenue records. BOR has also issued amendments for electronically-based documentation. Stakeholder consultation and information campaigns. Transition period for elimination o f the paper-based system. Efficiencies in project design to keep service fees low. Use o f PITB to manage IT aspects. A l lowing for adequate time for testing o f methods in the t i l o t Droiects and for Drocurement o f

Risk Rating with

Mitigation Modest

Low

Substantial

Substantial

Modest

Modest

Substantial

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capacities in this area.

responsibility for long-term maintenance o f the Service Centers.

Frequent transfer o f top project management, including in the district and related offices, slowing down project implementation.

major contracts. Hinng o f individual consultants by PITB for assistance in preparation o f TORS for the software consultancy, i t s evaluation, as wel l as management. Exploring the use o f PPPs for service delivery. Program o f ICT training for staff in the Service Centers and at the tehsil level. Three mitigating measures are envisaged for this: (i) support to the G o f i n j a b and Districts in developing a business model that i s economically attractive; (ii) increased allocation o f project resources to support project maintenance; (iii) pnorit ization o f Distnct governments for roll-out will depend on ownership and commitment; and (iv) MOUs will be signed by participating districts with BOR. Document procedures for key management positions in the Operational Manual.

Modest

Substantial

Substantial I Overall risk rating

Risk)

Loadcredit conditions and covenants 47. monitoring apply to this Project. In addition i t i s also required that the BoR shall, prior to the implementation o f the Project in a district: (i) ensure establishment o f a district project monitoring group consisting o f a district project manager and two project monitoring officers; and (ii) s i g n MOUs with the district government acceptable to IDA.

Standard covenants, including those on financial management, project reporting and

D. APPRAISAL SUMMARY 1. Economic and financial analyses 48. Upgrading the land records system for Punjab Province, as laid out for this Project, represents a significant improvement in public infrastructure and wil l have widespread economic benefits. The most significant o f these are:

0 Reduced transactions costs for beneficiaries (fard issuance and mutations) Increased security o f tenure for land r ights holders

0 Improved efficiency o f land markets 0 Increased benefits o f improved access to information for land administration and other

public sector functions 0 Increased benefits o f improved access to information for the private sector, including

improved access to credit for land rights holders

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0 Increased benefits for the provision o f additional public services through the Service Centers.

49. Transactions costs for beneficiaries will be reduced by reducing the time and logistical costs o f locating the patwari and to initiate the transaction, reducing the unofficial payments to the patwari, and reducing the time to complete the transaction once i t i s initiated.

50. transparent, accessible, and reliable land records made possible by the Project. Enhanced incomes for land owners would result from increased access to credit and increased long term investments relating to the lands resulting from enhanced land security. This in turn would lead to higher incomes o f land r ights holders via increased investments.

Increased tenure security and more efficient land markets will result from the more

5 1. On-line availability o f the land records database wil l greatly reduce the costs o f accessing land records in comparison with the current situation that can be used for a wide variety o f public sector functions. Most importantly wil l be improved availability o f information for the purposes o f better land administration and land use planning. In addition, parts o f the automated land records database can be made available to the private sector such as financial institutions, input supply companies, and others to facilitate their economic activity.

52. the provision o f other Government services, particularly at the local level. During project preparation, the task team has included specialists involved in e-government initiatives in the region to ensure that potential synergies were clearly taken into consideration in the design o f the Project. In a number o f states in India, initiatives with ‘village kiosks’ that are available to provide a broad set o f public services, with land records being a core service, are now underway and are showing economic promise, as reflected by the interest o f the private sector to become involved in such service provision systems.

The automated infrastructure that the Project wil l put in place wil l be readily useable for

53. analysis for the Project focused solely on the reduced transactions costs to direct beneficiaries in association with fard issuance and mutations.

The nature o f many o f these benefits i s diffuse and diff icult to measure. The economic

54. The transactions costs included in the analysis were costs o f bribes and unofficial payments, transportation and other logistical costs in locating the patwaris, and the opportunity costs o f time involved in conducting a mutation or obtaining a fard. Other transactions costs in the ‘with’ and ‘without’ project scenarios were assumed to be constant. Field surveys were carried out in three districts in the Province; Rahim Yar Khan in the extreme south - the so called cotton belt area, Gujarat in the central Punjab with wheat and rice as the predominant cropping pattern and Attock in the extreme north. The former two districts are included in the pi lot phase o f the Project. For the opportunity cost estimate, time was valued at Rs. 15 per hour, except for those employed with an established wage rate, where that wage rate was,used.

55. fard issued, with the largest component being bribes and unofficial payments. In the with project scenario, these costs are estimated to fall to approximately $25 per transaction. Even under the

In the current situation, the total o f included transactions costs averaged over $140 per

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assumption that the ‘with project’ costs are $70 per transaction, with 700,000 land mutations per year in the land records, this i s equivalent to annual reductions in transactions costs o f $35 million.

Financial sustainability

56. Scenarios were developed for three representative districts - Rahim Yar Khan, Kasur, and Bahawalnager. Based on 2005 data on the number o f fards issued and o f mutations in the land records, assumptions were made with respect to increases in fard issuance and mutations, as well as incremental fees for these services. The analysis shows that the introduction o f incremental fees for service and some increase in the number o f mutations are the two critical factors that wil l determine financial sustainability o f the automated systems. The analysis, which i s presented in more detail in Annex 9, shows that incremental fees o f 200 Rs. and a modest 5 percent increase in the number o f mutations would result in positive net revenues from the automated systems.

57. A 200 Rs. fee equates to approximately $3.35 and compares with current district average fees for mutations that range from roughly $30 to $45 (fees are tied to the estimated value o f the land), and with the estimate o f other transactions costs o f $140 per mutation. Even with l o w case assumptions on the reduction o f transactions costs in the ‘with project’ scenario, these are easily sufficient to compensate for the estimated increase in mutation fees.

2. Technical

58. Presently there are three pi lot projects for computerization o f land records in the Province o f Punjab -the Raiwind area o f the Lahore District Ci ty Government, Gujrat and Rahim Yar Khan. In addition there i s a pi lot in the Districts o f Lahore and Sialkot to computerize the process to register deeds being managed by ITD. The experience from these pilots has been o f great value in scoping the current project, however the Government has taken the decision that further development work on the software and more careful measurement o f data entry costs could result in substantial savings in the project roll-out and has taken the decision to develop these further in the first phase o f implementation o f LRMIS.

59. developing and rol l ing out the applied software. The RFP reflects lessons learned in the pilots. This strategy will involve a number o f companies developing a full application and testing this application with the data entry in a full kanungo in Kasur District. At the end o f this pilot, a single turn-key application wil l be selected on the basis o f selection criteria specified in the RFP. The specification o f the LRMIS application recognizes the primary objective o f providing efficient services at the level o f the Kanungo Service Center and the constraints o f available connectivity. To reduce the technical r i s k with connectivity, the software will be specified as a hybrid technology with: (i) support for the base requirement o f stand-alone databases at the Kanungo Service Centers, replicating in batch mode by dial-up to Data Centers at the tehsil level; and (ii) support for the on-line operation o f the Kanungo Service Centers to the Provincial Data Center where there i s suitable DSL or fiber-optic connectivity. The close involvement o f PITB in the technical supervision o f the project wil l also reduce the technical risk.

The decision has been taken to conduct a competitive selection o f a consultancy firm for

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3. Fiduciary

60. smooth implementation o f the province-wide activities o f the project. The staff shall establish and maintain a financial information system in accordance with acceptable accounting, internal control and financial reporting policies and procedures. In this respect, the Project has already hired a professionally qualified accountant from the market as the Chief Accountant who shall head the project’s financial management unit. A part-qualified Accountant with qualifications equivalent to I C M A Intermediate or M.Com with 4-5 years experience has been recruited as part o f the FM team. In addition, three other accounting staff (one Assistant Accounts Officer from the office o f the Accountant General, Punjab, and two Accounting Assistants) have been deputed from the BOR to strengthen the financial management capacity o f the PMU.

The Project wil l be equipped with adequate financial management staff to ensure the

61. Designated (Special) Account under the administrative management o f the PMU wil l be established. The PMU will be responsible for putting in place the required financial management infrastructure with adequate staff to manage the Designated (Special) Account, and withdraw funds from the Credit through replenishment o f the Designated (Special) Account as well as through direct payments and reimbursements methods. The PMU will also be required to effectively discharge the accounting, internal control, financial reporting, and audit coordination responsibilities. With the FM staff in place, the FM arrangements for the Project would be adequate.

With the BOR as the key implementing and coordination agency for the Project, a single

62. wil l be no assignment account representing Government o f Punjab’s contribution to the project implementation activities at the provincial level. The Government o f Punjab’s contribution shall be directed only to District Governments. This wil l be through government’s own systems whereby h n d s are released, as ‘tied grants’ on a one-line basis, from the Provincial Account I to the respective District Governments’ Account IV, thus enabling the districts to meet their budgeted operational expenditures related to the project. The PITB, being one o f the key participating agencies in the implementing arrangements for the Project, will be allowed to operate and manage an imprest account against the IDA funds disbursed through the Designated (Special) Account. This would enable the Board to expediently finance their eligible operational expenditures o f the Project.

Apart from the single Designated (Special) Account to be managed by the PMU, there

63. The Interim Unaudited Financial Report-based disbursement method shall be applied for withdrawals from the IDA Credit. Withdrawals from the Credit will be based on 6 months’ estimate o f projected expenditures for each o f the applicable disbursement categories. Since the Project wi l l be benefiting from the outcome o f the agreed Country Financing Parameters for Pakistan, up to 100 percent Bank financing o f al l specified expenditure categories is permissible.

64. The Auditor General o f Pakistan shall be the external auditor o f the project and the audited financial statements o f the project wil l be submitted to IDA within six months o f the end o f a fiscal year (by December 3 1).

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65. Project procurements are grouped in IT related and non-IT related procurements. While the overall responsibility o f maintaining and updating the procurement plan lies with the implementing agency, i.e. BOR through the PMU, the PITB shall be the focal point for the IT- related procurements.

66. Director Operations. PITB does not have a procurement cell but the procurement functions o f various staff have been defined, with General Manager being the focal person for procurement matters. The General Manger and the Project Manager, with assistance o f a consultant, wil l prepare the bidding documents and RFPs, and the evaluation committee comprises, in addition to the general Manager and Project Manager, Chairman PITB, Project Director (PMU), two members o f BOR, and technical experts from the public sector.

A procurement cell has been formed in the PMU, with a procurement officer assisting the

67. some goods. At the ro l l out stage when the construction works for kiosks commence, the strength o f PMU’s procurement cell shall be reviewed to ensure adequate oversight. Staffing o f PITB, for carrying out their responsibilities o f procuring IT-related consultancy services, non-consulting services, and goods i s adequate. A close coordination between the PITB and PMU’s procurement cell is essential to ensure that the project planning and implementation i s efficiently dovetailed.

In the init ial stage, the PMU’s responsibilities include non-IT related consultancies, and

68. Details o f the procurement related aspects o f the project are given in Annex 8.

4. Social

69. particularly in the context o f significant social and economic inequities, and greater power to those with larger land holding leading among others to a lack o f access to information and documents related to land and land titles for smaller land holders and vulnerable populations including women.

The socio-cultural and political context o f the Punjab is one which presents challenges,

70. In the context o f the LRMIS, the major social issues center around: i) differential access to land records by different income and social groups; ii) tenure insecurity with high transaction costs (financial and in terms o f time) due to absence of, or inability to access information; iii) disputes regarding accuracy o f land records; and iv) absence o f a grievance redressal system that supports the small as well as large land holders. The efficacy and the functioning o f the present system is dependent on the role and power o f the Patwari and his ability to manipulate the system with scope for corrupt practices, due to a lack o f accountability and transparency o f the system. This is at the heart o f al l social problems.

71. Consultation, Focus Group Discussions and interviews with different categories o f stakeholder in the project areas. The summary o f the SA is provided in annex 16

The Social Assessment (SA) undertaken by the Project held a number o f Stakeholders’

72. envisaged and incentives would be required to encourage him to work for the new system; in

The major social risks are that the Patwaris may not be responsive to the changes

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addition, landholders may choose not to use the new system, due to a lack o f information / awareness about the benefits o f the new system and finally, the r i s k that the system may not be able to meet the requirements/expectations o f the different stakeholder. The L F W I S aims to address these risks through the different project components and envisions among others, a public awareness and outreach program to stakeholders; an I E C and a training program; and an M&E framework with social assessment/ survey/audit planned, to determine the projects performance and success in responding to the social issues.

5. Environment

73. classified as Category C requiring no further EA action. This classification i s the result o f the environmental screening based on consultations with the regional environment sector unit (SASES). In accordance with OP 4.01, the screening examined the type, location, sensitivity, and location o f the proposed program as well as the nature and magnitude o f i t s potential impacts.

Since the program i s expected to have minimal or n o adverse environmental impacts, it is

74. The screening found only minimal potential environmental impacts caused by the program which - on balance - are expected to be positive from an environmental standpoint. The program seeks to establish an improved land records service delivery system in order to reduce litigation and bring about lasting land tenure security. Hence, the proposed program does not directly affect the management o f natural resources. However, the improved tenure security would induce behavioral changes among landholders by providing increased incentives for sustainable management o f natural resources. Consequently, investments which improve the long-term productivity o f land would be stimulated; these would include soil and water conservation measures, agro-forestry, tree crops and other land uses with a relatively long pay- off. Such investments are almost always more environmentally friendly than those with short- term pay-offs such as annual crops with environmentally unfriendly application rates o f agrochemicals or pastures on deforested land. Assessments o f other Bank-supported land administration projects, e.g. Thailand, Indonesia, and Brazil, support the v iew that increased tenure security i s most likely to have positive environmental impacts. Nevertheless, the program’s M&E system, including the planned baseline survey, would carefully monitor environmental impacts and would inform immediate mitigation measures in collaboration with the relevant institutions.

6. Safeguard policies

Safeguard Policies Triggered by the Project Yes N o Environmental Assessment (OP/BP/GP 4.01) [I [ X I

Natural Habitats (OP/BP 4.04) [I [ X I

Pest Management (OP 4.09) [I [ X I Cultural Property (OPN 1 1.03, being revised as OP 4.1 1) [ X I

Involuntary Resettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OD 4.20, being revised as OP 4.10) [XI

Forests (OP/BP 4.36) [I [XI

Safety o f Dams (OP/BP 4.37) [I [XI

[I

[I

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Projects in Disputed Areas (OP/BP/GP 7.60)- [I [ X I Projects on International Waterways (OP/BP/GP 7.50) [I [ X I

75. however provided in Annex 10.

No safeguard policies are triggered by this Category C project. A full justification is

7. Policy Exceptions and Readiness

76. The GoPunjab has undertaken a number o f key steps to strengthen readiness for project implementation. The P M U has been established and i ts core positions have been staffed. The P M U joint ly with the BOR has demonstrated its ability to handle project related tasks and activities during the preparation phase o f the Project and wil l be able to transfer seamlessly into the implementation phase.

77. As concerns project processing benchmarks, agreement has been reached on the implementation plan and budget for the Project, with detailed steps for the f i rs t year o f implementation. Agreement has also been reached on the framework for outcomes monitoring and on institutional roles in implementation. The financial management and procurement assessments o f the Project have been completed.

78. was issued on September 19,2006, a pre-bid conference held on October 6,2006 and proposals due by October 2 1,2006. Evaluation and award o f contracts for software testing in Kasur District i s expected to be completed by the end o f December.

The procurement o f the applied software i s well underway. The Request for Proposals

* By supporting the proposedproject, the Bank does not intend to prqudice the f inal determination of the parties' claims on the disputed areas

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Annex 1: Country and Sector Background

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

Country Context Pakistan’s per capita growth rate o f GDP averaged 3 percent in the 1 9 8 0 ~ ~ but decreased to only 1.2 percent in the 1990s. These modest growth rates, in combination with drought and poor agricultural performance in the second ha l f o f the decade, led to an increase o f poverty levels in the 1990s. Whi le in 1990-91 about 26 percent o f the population l ived below the national poverty line, the ratio increased to more than 32 percent in 2000-01. However, prospects for economic growth and poverty reduction became brighter when a new government launched an ambitious and comprehensive program o f reforms (the I-PRSP) in 2000. In 2003, the Government completed its full PRSP, which provides a good framework to accelerate growth and economic development in Pakistan. The PRSP i s based on four pillars: (i) achieving sustained high and broad-based economic growth, focusing particular o n the rural economy, while maintaining macro-economic stability; (ii) improving governance and consolidating devolution, both as a means o f achieving better development results and ensuring social and economic justice; (iii) investing in human capital, with a renewed emphasis on delivery o f basic social services; and (iv) targeting the poor and vulnerable, to bring the marginalized sections o f the population into the mainstream o f development, and to make marked progress in reducing existing inequalities.

Poverty and Land

In order to achieve its primary objectives o f poverty reduction and sustained economic growth, the PRSP gives a central role to rural areas, where about 66 percent o f the population lives. The agricultural sector i s an important pillar o f the economy and s t i l l accounts for 24 percent o f the GDP. An assessment in 2002 indicated that 39 percent o f the rural population and 28 percent o f the urban population live below the poverty line. Hence, i t has been identified as a major priori ty to foster and sustain agricultural and rural growth, and to translate this growth into significant poverty reduction in rural areas.

Land is at the heart o f agriculture and the rural economy in Pakistan, particularly in Punjab Province. Punjab is the most populated province o f Pakistan, with 80.5 mi l l ion inhabitants (55.6% o f Pakistan’s total population). Punjab has a total area o f 205,345 square kilometers, and 69% o f the population lives in rural areas. The Province’s economy i s heavily agricultural. However, distribution o f land i s highly skewed and i s seen as a major factor o f rural poverty. According to the Agricultural Census 2000, only 37 percent o f rural households owned land in Pakistan, and 61 percent o f these land-owning households owned less than 5 acres. The Gini Coefficient for land ownership in Punjab Province is 0.62. For comparison, the Gini Coefficient for land ownership in Bangladesh i s 0.42, and Thailand 0.37.

Inequalities o f land distribution, tenure insecurity, and difficulties associated with the land records and land registration systems are closely interrelated and continue to impose significant harm on rural and urban populations, particularly the poor, who have both small holdings and less access to resources. Land market transactions are rare due to high transaction costs and disputes about accuracy o f land records, mainly caused by an inefficient land records system.

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The low frequency o f land transactions perpetuates the highly unequal distribution o f land, decreases labor mobility, and reduces returns to family labor. Land rentals in various forms (share-cropping, cash rentals) are more common. Twenty percent o f area cultivated in 2000 was under some form o f tenancy arrangement. Both economic theory and empirical evidence suggest that productivity o f land under tenancy arrangements i s less than productivity o f owned land. Thus, the absence o f a well-functioning land market results in lower overall output, while the skewed nature o f land ownership contributes to widespread rural poverty.

Inequitable land distribution, inefficiencies in land markets, and disputed land records, also limit the access to credit for many households, with a negative impact on the ability to invest in land. Empirical evidence indicates that in Pakistan - as in most other countries - productivity o f land on large farms i s less than that o f small farms. As the poor and other disadvantaged groups (including female-headed households), which might be the most productive ones, are not able to gain access to land through markets, this hinders an improvement in overall output and equity. The inability to transfer land out increases the cost to engage in off-farm activities and imposes constraints on the development o f a vibrant off-farm sector. Hence, improvements o f the land records system would be crucial in order to increase tenure security and enhance the efficiency o f land markets.

Land Administration in Pakistan and Punjab Province

Pakistan has a land administration system inherited from the British, involving rules and regulations regarding sale, purchase and use o f land resources mainly linked to the collection o f land tax. This system has deteriorated in certain respects, due to inadequate resource allocation for routine administration o f land rights, and the additional administrative burdens placed o n revenue officials after independence in 1947. In addition, the original primary intent o f agrarian laws was to facilitate such collection o f land taxes and not to provide conclusive t i t les to land. As a consequence, neither the agrarian laws for providing tit les to land nor the actual land records provide a firm foundation for efficient land markets or land tenure security. Instead, the ambiguity in laws has led to constant litigation and clogging o f the judicial system in the country. The present land legislation - which i s constituted mainly o f the Land Revenue Act (1967) and the Registration Act (1908) - does not profess to provide for a State certificate o f title to land under the aegis o f a public authority. The records o f r ights and other documents based o n the land records, by virtue o f provisions in land laws, are presumed to be accurate. However, these entries only provide presumptive status o f rights under land laws. Many court rulings have also maintained that entries in the land records are contestable, that the revenue records are not documents o f title, and that i t i s permissible to challenge the entries for determining the t i t le to land.

The ambiguity o f agrarian law regarding records o f land r ights i s particularly harmful to the poor, who cannot afford protracted land disputes. Numerous legal disputes are caused by contract enforcement o f land rental contracts, e.g. over illegal possession o f land, eviction o f tenants, and recovery o f rent. Cases o f land disputes are either heard in the Revenue Courts or C iv i l Courts. In general, smallholders and tenants tend to prefer to use the Revenue Courts, because they are cheaper, more accessible, and less time-consuming. However, there i s a

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widespread perception that decisions o f Revenue Courts are often biased in favor o f large and powerfbl landowners.

The institutional set-up o f the land recording system in Punjab Province i s also very opaque, involving many different agencies. The main ones are the Board o f Revenue (BOR), the Excise and Taxation Department (ETD), and the development authorities, o f which the main one i s the Lahore Development Authority (LDA). However, there i s no single agency maintaining updated land records for al l o f Punjab, and the coordination in record keeping functions being carried out by the various agencies i s limited. For example, ETD identifies and indexes land by a different identifier than that used by B O R and LDA. Within B O R itself, which i s responsible for registration o f deeds, the system o f recording under the Land Revenue Act i s very different to that under the Land Registration Act. Separate records are also kept by other entities such as Lahore Municipal Corporation, the cantonment boards and co-operatives.

Within this complicated institutional structure, the B O R i s the most important agency for land administration. Nevertheless, i t is important to note that the BOR essentially i s a body geared to collect land revenue for the Government. Over the years, the revenue collection role has become secondary to the BOR’s role o f being the custodian o f the records o f rights to land, but, inconsistently, the business processes o f the organization are s t i l l directed to i ts traditional role.

The BOR’s land record maintenance takes place through an intricate system, which involves several levels o f administration (Figure 1). There are 34 districts in Punjab, each district has between 2 and 6 Tehsils, and each Tehsil has between 5 and 20 Kanungo Circles. Each Kanungo Circle covers 2 to 10 Patwar Circles which in turn consist o f 2 to 8 Revenue Estates. One to three villages form a Revenue Estate. At the lowest administrative level o f the records system - the Putwar Circle - are the Patwaris. They are not only responsible for land record issues, but also for many social, political, and administrative tasks, including keeping weather records, collecting crop harvest information, reporting o f village crimes, and updating registers o f voters. In Pakistan, about 14,000 Patwaris maintain around 190 million land records pertaining to 50 mil l ion land owners. The Patwaris keep their records in a cloth bag called a Basta. They are the custodians o f records pertaining to private as well as government lands. The transfer o f land i s initiated at the level o f the Patwari, but affected by h i s superiors. Several Patwaris are under an inspection regime headed by a Girdawar and Kanungo (Kanungo Level). The Girdawar is responsible for authenticating and checking Patwari records related to records o f rights, and the Kanungo i s responsible for inspecting and checking Patwari records based o n crop harvest information. The records and changes o f records (e.g. mutations) have to be forwarded and checked by the next level in the hierarchical structure o f the land revenue system. Girdawar and Kanungo are supervised by a Tehsildur who is the overall administrative officer in charge at the Tehsil level. The Tehsildar assigns duties to the Deputy Tehsildar (Naib Tehsildar); including the responsibility for mutations for a number o f Kanungos.

The overall supervisor o f the land revenue system at District level is the District Officer Revenuehegistrar. At this level, the officer reports to a double hierarchy, the Board o f Revenue (Senior Member BOR) o n one hand, and the District level government on the other (District Coordination Officer, namely the administrative head o f the District), himself reporting to the elected head (Nazim). The geographic division o f the District government differs from that o f

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the BOR. While the lowest subdivision o f the B O R is the Kanungos and Patwar circles, that o f the District i s the Union Circle.

Figure 1 - Current Organizational Structure o f BOR.

I I

The land record system is around 500 years old and, with only few modifications, i t continues to maintain, transfer and access land revenue and other levies. The system has never been adapted or reformed according to new needs and challenges. Hence, many limitations and shortcomings have become obvious over time and point out the urgent need for reforms. The main featuredissues o f the current land revenue system, recognized by the Gopunjab, are the following:

Obsolete and opaque: Cumbersome processes and dependence on the Putwaris coupled with vulnerable practices have resulted in a very weak and inefficient land records system where illegal annotations are possible, making room for exploitation and bribery. According to the existing land records system, the person who pays land revenue or property tax i s presumed to be the owner. Besides, land records do not provide either conclusive proof o f ownership nor are they linked to spatial data to perfectly identify the

Irresponsive and inaccessible revenue machinery: A number o f officials intervene in a single transaction and yet - or because o f that, the backlog and delays are huge.5

plot.

Each mutation in land rights i s initiated only by the Patwari. I t is expected to be revised and veri f ied by the “Gardawar” and the Revenue Officer approves o r rejects it after visit ing the place in common assembly. On the other hand, mutations could also be registered in the Records o f Deeds through a more expensive procedure that lncludes the payment o f stamp duty and registration fees.

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Although the Putwuri i s supposed to visit villages frequently, physical and economic limitations restrict this considerably. The Patwari has no permanent office space. The average time span between Putwari visits i s two to three months. Additionally, by law, land records must travel with the Putwaris, thus making the records inaccessible to others in the meantime.

Increased disputes over rights and delays in courts: The inaccuracy and complex nature o f the current system exacerbates land-related disputes. Lack o f credible information generates considerable delays in resolving pending cases in courts. The Patwari i s obligated to appear in Court in al l land-related inquiries.

Increased tenure insecurity: Outdated records and lack o f updated land parcel surveys, coupled with the possibility o f unverifiedfurds, are some o f the roots for such insecurity. The expansion o f the Putwari ’s jurisdiction due to increasing subdivision o f holdings and population growth make the Revenue Record unmanageable. The records o f r ights in rural areas are to be updated every four years. They were originally established based on detailed field survey and included a map o f each village showing the position and boundary o f each parcel. This graphic information was intended to be updated every 25- 35 years. This has not been the case, but also, given the rates o f transactions in some areas, this pace would certainly not be enough. Therefore, introducing the spatial component into the modernization process will be critical for having land records that reflect the reality on the ground.

Multiple institutions and dispersed responsibilities: At present, a number o f different entities are responsible for recording and updating land rights in urban and rural settings. The system o f recording land r ights under the Land Revenue Act i s different from the one under the Land Registration Act. Thus separate records are kept and different rules followed. For instance, registration o f a subdivision in rural areas i s voluntary and can be done verbally whereas in urban properties, it i s mandatory and should be done in writing at land registries. In addition, any search by a buyer in the Revenue Record and the Registrar’s Office wil l not automatically provide the needed information o n actual transactions.

Weak institutional capacity to address and solve the problem: Government authorities at various levels (Provincial, District, Tehsil, and Union Council) lack the capacity to respond to the existing demand for secure and credible records o f land rights. Additionally, the Patwari’s j o b has become almost impossible due to existing volumes o f information and records in h i s jurisdiction.

Lack ofpublic awareness: Basic steps and rules for land transactions are not sufficiently known by the public, particularly procedures and fees. The public i s not aware o f whom to approach for an appeal or the roles and responsibilities at different levels o f the administrative machinery.

.

.

.

.

Aware o f these issues and their consequences, the improvements in land records - including complementary administrative, institutional, legal, and pol icy reforms - have been identified by the Government o f Punjab (GoPunjab) as an urgent task in order to achieve long-lasting tenure security and more efficient land markets, and thereby contribute to poverty reduction and economic growth in the long-run. In addition, and particularly in Pakistan, clear land r ights have

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far-reaching implications for social peace and governance, due to their potential impacts on empowerment, local development and for acting as an important catalyst in stabilizing communities and reducing social exclusion. The Federal and Provincial Governments have expressed a strong interest in improving the land records system in the Province and in changing vulnerable mechanisms/practices currently affecting mainly the poorer segments o f the population. There is a very keen political commitment to making customer-oriented land services available to the citizens and, at the same time, to diminish the scope for litigations and land- related disputes. The GoPunjab proposes to make land records accessible, reliable and efficient in order to effectively contribute to poverty reduction, institutional development, and an improved investment climate - al l important pillars o f the PRSP and in l ine with the Bank’s Country Assistance Strategy (CAS).

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Annex 2: Major Related Projects Financed by the Bank and/or other Agencies

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

Project

Bank Financed Punjab M u c i p a l Services Improvement Project

Tax Administration Reforms Project

Public Sector Capacity Building Project

Agricultural Credit Project

FIAS Review o f Admnistrat ive Barriers to Investment Cultural Heritage and Sustainable Development o f the Called City o f Lahore. (WCL)

Other Agencies Asian Development Bank Decentralizahon Support Program

Sector Issue

T o improve the fmancial and institutional capacity o f local governments to deliver urban infrastructure services, by: (i) developing an efficient mechamsm for allocating public resources for infrastructure, (ii) capacity building at the level o f the Provmcial Government, City Districts (CDs), TMAs and thelr constituents: and (iii) performance-related matchmg grants for infrastructure repair and renewal.

Fundamentally Reform the Central Board o f Revenue for a more efficient and effective revenue administration system Support GoP’s efforts in the implementation o f i ts on-going Economic Reform Program by: (i) enhancing the skills o f public sector officials through broad-based professional development; (ii) strengthening the capacity o f key ministriedagencies; (iii) strengthening the capacity o f independent regulatory mstitutions Expand credit delivery (in particular for women and small farmers), provide long- term finance for on-lending by banks, develop institutional capacity for loan supervision Th is study looks at the various barriers in Palustan. Lack o f a functioning and efficient land market i s sited and discussed as one o f these barners T h s study looks at threats to the cultural heritage o f the WCL and the ways to generate economic activities based o n its assets (evacuee t rus t buildings commonly owned by different government departments)

The program objective is improved local government representation, accountability, service delivery and poverty reduction through fiscal restructuring to support reforms in policy, legal, technical and fiscal domams.

Approval IPDO Ratlng DateIStatus

Pipeline

12/07/2004 Ongoing

05/20/2004 Ongoing

s/s

SIS

04/05/1990 U (outcome Closed ICR)

Completed

Ongomg

Ongoing

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Access to Justice Program

Punjab and Sin& - Devolved Social Services Program

Punjab Resource Management Program (TA loan and Project)

CIDA Democratic Governance Program

UN

Devolution Reform in Pakistan

support to

Government Islamabad Land Records Computerization Punjab Data Warehouse Project Punjab Portal

Ongoing To assist the Government to improve access to justice so as to: (i) provide security and ensure equal protection under the law to citizens, in particular the poor; (ii) secure and sustain entitlements and thereby reduce the poor's vulnerability; (iii) strengthen the legitimacy o f state institutions; and (iv) create conditions conducive to pro-poor growth, especially by fostering investor's confidence. Supporting critical reforms, mstitutional Ongoing strengthening, capacity building, and partnership building in devolved social services: health, education, and water supply and sanitation (WSS). The overarching goal o f the program i s to support poverty reduction through good governance including improved public sector resource management. The Registration System study was contracted under this.

Ongoing

Ths program supports Pakistan's transition to democracy, and in particular the processes leading to the devolution o f power, the decentralization o f a h s t r a t i o n , and the participation o f citizens in local governance, focusing on two pilot distncts in Punjab.

Strengthening institutions for devolution reform. Some work on land records in Loralai Balochistan was conducted under h s project

Computerization o f land records in the Islamabad District i s being envisioned under t h i s project Will serve as a central database for each government department District based access o f information. Data for each district w i l l be available online

Pipeline

Ongoing

Ongoing

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Annex 3: Results Framework and Monitoring

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

Results Framework

PDO To significantly improve the effectiveness of the land records system with respect to transparency, cost effectiveness, and user satisfaction with service delivery, contributing to long- lasting tenure security.

Component One:

Institutions involved have the technical, human organizational and financial capacity to effectively manage-by themselves or through PPPs-the modernized land records system; and the required policy and legal basis are in place.

Outcome Indicators 1. Issuance o f records o f rights (fards) o f less than 10 pages within 30 minutes.

2. Client satisfaction with land records services at CSC level o f 95%.

3. Increased level of tenure security o f land-right holders.

Component One:

1. Improved and legally valid processes in place

2. Busmess Mode l in place at the distnct level

Use of Outcome Information He lp to assess whether modernized land records service i s accessible, demand-driven accepted by the targeted clients, and identi fy bottlenecks to take t imely remedial measures.

Indicators o n tenure security wou ld help to assess whether the program i s contributing to a reduced number o f land disputes; an mcreased access to land rights related lnformation and land- based credit; and positive incidence in level o f investments.

Use of Results Monitoring

Component One:

Determine whether the current institutional setting, po l icy and legal frameworks have been adequately addressed and the identif ied bottlenecks and shortcomngs tackled appropriately (including legal amendments have been approved and implemented).

Assess the financial and technical needslcapacity o f Distr ict Governments to run the kiosks in a sustainable manner and ensure soundness o f cost- recovery strategy.

Ensure that BPR is an ongoing exercise to constantly update and adapt processes and procedures to facilitate an effective and

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Component Two:

Development and deployment of an accountability- prone LRMIS System to ensure that the required technological and infrastructural capacity is established.

Component Three:

Manage, preserve and make accessible for all right holders, land records information and related services at the Provincial level.

Component Four:

PMU and committees have efficiently coordinated, facilitated and monitored the overall implementation of the program.

Component Two :

1. L R M I S software functioning effectwely. 2. No. o f Districts under the project (data entry, service centers with connectivity established).

Component Three:

1. Automated service centers are operating effectively.

2. At least 80% o f land-right holders are aware o f new records system after service centers open, including at least 80% o f women.

Component Four:

1. K e y project issues arising during implementation are identif ied and addressed.

2. Stakeholder feedback captured and mcorporated in to project implementation.

efficient service delivery.

Component Two:

Determine whether the L R M I S has been successfully adapted to the identif ied challenges and constraints, and adjust the software accordingly.

Ensure that the Program Implementation Plan and roll-out respond to the needs o f the end- users.

Ensure that the institutional and administrative structure i s adequate for the provision o f cost-effective services.

Component Three:

Assess whether the provision o f services oriented to demand i s successfully happening.

Ensure that recording o f land rights is facilitated for the beneficiary, and electronic means coupled with reengineered processes are al lowing greater accessibility and transparency in handling land records.

Ensure that other clients (e.g. financial institutions) engage in the process and benefit f r o m the L R M I S for their transactions.

Component Four:

Evaluate whether PSC, PMU, and other program management committees are functioning and ensure efficiency and quality for program implementation.

Assess t imely and effective implementation o f Project key plans (e.g. Procurement, Training, Implementation, etc.) and take corrective measures.

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D e t e m n e effectiveness o f the PMU and take corrective action.

Ensure comprehensive program momtoring.

Ensure impartial, participatory and rigorous Impact Assessment.

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Annex 4: Detailed Project Description

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

Introduction The Government o f Punjab aims at improving access to land records for the population and to make the maintenance o f those land records more transparent. This wil l be accomplished through a redesign o f business processes accompanied by an automation o f the records and how they are managed. Land r ights holders would be able to access and veri fy their ownership and use rights; and alienate and acquire land rights in a transparent, easy and secure manner. Investors would be able to use land rights as collateral, thereby facilitating access to credit from financial institutions, and the latter would be in a better position to access mortgage and registration services on-line.

The Long-Term Vision The vision o f the Government o f Punjab for the next 10-15 years is for putting in place a title based registration system covering the entire Province. This wil l involve improvement in the land records system, linkage with the system or registration o f deeds, and integration o f current spatial data on land parcels (the land cadastre). On this basis, hll security o f tenure and the reliability o f information on rights as being conclusive can be assured. While computerization wil l be an important part o f the strategy for realizing this vision, the true objective i s to use the possibilities o f an automated system, along with key changes in business processes and institutional linkages, to better meet the needs o f those involved in land rights.

The LRMIS Project - First Phase of the Long-Term Program The core objective o f the Project, which will be implemented over a period o f f ive years, wil l be to improve the delivery o f land records services in 18 districts o f the Province o f Punjab (roughly ha l f o f the Province) by:

a) simplifying and re-engineering key procedures; b) simplifying legal and organizational constraints; c) computerizing part o f the existing land records (i.e. the text data); d) testing and proving a two-way interface with the deeds registration system; and e) implementing a pi lot for the integration o f digitized spatial data (GIS) with text data.

During the very f i rst stage o f implementation in each district, the LRMIS Project will support the conversion o f manual records into electronic data o f al l the lands in that district. Service Centers will then be authorized to begin operation o n the basis o f the digital data base. A short transition period wil l be observed for full transfer f i om the paper-based to the digital systems (see below). During the Project, a GIS layer to cover the geographical data wil l be developed on a pi lot basis in two kanungo, one in a district under the Kishatwar system o f settlement survey and one under the rectangular system o f settlement survey, to test the provision o f geographical references, digitized maps o f the revenue estates, and to generatehpdate the geographical representation o f the recorded land rights. The Project wil l also test and prove the linkage between the LRMIS software and the software being utilized for automation o f the deeds registration system.

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Three pilot projects have been initiated by the GoPunjab, to deploy the applied sofhvare and computerize land records in parts o f three districts -- Gujrat, Rahim Yar Khan and Lahore City (Raiwind). Data entry i s to be completed in the former two districts. The pilots have been useful for testing automation procedures, demonstrating that fards can be efficiently issued by the automated system, identifying training needs and stakeholder issues more clearly, and undertaking a sizeable amount o f data entry work. On the basis o f this experience, the Government has chosen to undertake a competitive tender for second generation software and more careful measurement o f per unit data entry costs. This work i s to be carried out in Kasur District in the init ial stage o f the Project. Following selection o f the second generation software, the Project wil l enter the roll-out stage.

Detailed Project Description

The approach followed in the design o f the proposed five-year Project encompasses four main actions: (i) setting the foundations with the objective o f generating and strengthening the capacity o f the entities to effectively manage and administer the modernized land records system; (ii) developing and deploying an automated land records system (LRMIS) and performing al l other pre-service delivery tasks; (iii) provision o f services to the population - with the objective o f managing, operating, making accessible land-related information - and incorporating feedback from stakeholders in further elaboration o f the system; and (iv) monitoring the quality and efficiency o f the services provided. The components identified and described below fol low this approach and sequencing:

Component 1 -- Business Process Improvement and Institutional Capacity Enhancement. The objective o f this component i s to ensure the introduction o f appropriate business process changes consistent with the Project’s development objective o f improved quality o f services to the population, and enhanced institutional capacity consistent with this goal.

1.1 Business Process Improvement

Manually maintained, the land revenue records are complex and scattered in different books, locations and registers. The long-term goal o f the land administration modernization effort in Punjab Province i s to have al l the information available and easily accessible as a single electronic database where:

J land-use right holders and land owners access their record easily J r ights to land are recorded efficiently J rights to land are transferred and mutated smoothly J rights to land are verified in a definitive and conclusive manner J changes in land r i gh ts are recorded and known J scope for fraud i s dramatically reduced J effective and easy monitoring o f activity i s in place.

The current Project represents the first phase in this program and wil l introduce important changes in the existing business processes. The BPR study carried out during project preparation reviewed existing procedures at two levels, with a view to the future changes. The f i rs t level is concerned with the re-engineering o f key existing procedures. The second is a broader level

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looking at issues that would involve the integration o f procedures and/or the development o f new procedures.

At the f i rs t level, two key changes were identified and agreed to at pre-appraisal:

i.

ii.

Issuance o f fards. Fards are to be issued solely at the Service Centers (kiosks). Issuance o f fards by patwaris would be discontinued. Mutations. Mutations wil l be initiated by application to the Service Centers. On this basis, patwaris will be authorized to conduct necessary field work. After going through existing clearance procedures ending with the approval o f the mutation by the Revenue Officer, the computer records would be updated

These changes wil l bring greater transparency to land records management and improve the quality o f services being provided to the population. I t was agreed at pre-appraisal that a transition period would be observed to allow the parties involved to adjust to these new procedures. From the time that a Service Center i s authorized to begin operation o f the digital data base, a transition period o f twelve months wil l be allowed for continued issuance o f fards by the patwaris. A transition period o f twelve months will be observed with respect to mutations, during which mutations may be initiated either by application to the Service Centers or directly with the patwaris. During the transition period, the patwaris wil l be responsible for updating the automated records for changes occurring in the paper-based system. Prior to full conversion to the automated system, the patwaris wil l be required to review and certify the digital records.

During project implementation, further changes in business processes wil l be introduced. These will deal with the process o f verification o f mutations (currently through the common assembly), the practice o f allowing oral mutations, dispute resolution mechanisms, and the extent and nature o f information collected by the land records system and how it i s managed.

Furthermore, the Project wil l be testing and demonstrating on a pi lot basis a direct linkage between the land records system and the system o f registration o f deeds, both o f which are under the responsibility o f the BOR. This wil l lay the basis for a Province-wide linkage o f the two systems during the second phase o f the Land Records Improvement Program. The Project will, in addition, be testing on a pilot basis the full integration o f spatial data in digital format linked with the text data in the automated land records system. This area o f work will be greatly expanded in the second phase o f the long-term program. The possibilities o f ut i l iz ing Public- Private Partnerships (PPPs) wil l be reviewed early in the Project. It i s anticipated that the Service Centers wil l evolve over time to provide a broader set o f public services to the population, which wil l both rationalize and improve service delivery and enhance the financial sustainability o f the Centers.

Under this sub-component, the Project will finance additional work in the area o f business process improvement, drawing upon experience with early implementation o f the Project and additional field work to assess successful change strategies. The Project wil l finance the preparation o f necessary legislative and regulatory amendments to allow the business process improvements to be put into practice, including any legal or pol icy changes required with respect to operation o f the Service Centers, the use o f PPPs as identified, the effective linkage o f the land

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records and deeds registration systems, and the legal use o f digital data. This sub-component wil l also finance a series o f empirical studies o f the financial sustainability o f the Service Centers in differing operational settings. This analysis wi l l identify appropriate changes in the fee structure, staffing levels, information flows, channeling o f revenue, and management arrangements. The P M U wil l be responsible for coordinating the work on elaboration o f the business model with both analysis o f further changes in business processes and monitoring o f the quality o f the work o f the Service Centers. Financial sustainability analysis for the automated systems was carried out during preparation and is described in Annex 9.

1.2 Institutional Capacity Enhancement

The Project wil l require a change in how institutions involved with the land records system function. This wil l be tied to: (i) the changes in procedures associated with land records; (ii) operation o f the B O R at the Provincial level; and (iii) elaboration o f the roles and relationships among the kanungo, tehsil, and district levels, as well as the working relations between the Provincial and district levels. This sub-component wil l finance elaboration o f the approaches to be followed in piloting the use o f PPPs and identifylng any pol icy or regulatory issues that would need to be addressed. At the time o f Appraisal i t was not possible to predict or plan for the extent to which the PPP approach would be utilized in project implementation. This is, however, a promising element o f the project design.

Vast international experience in similar projects shows resistance to change and institutional impediments to pursue objectives such as the ones posed by this operation. I t will be key to ensure that personnel o f the BOR and other institutions involved (e.g. District Government officials) receive training in the design and objectives o f the Project, and are technically skilled to carry out their roles in i t s implementation. Training wil l be provided on business processes and operation o f the Service Centers, roles o f the respective administrative levels in project implementation, and for relevant staff, aspects o f the I C T system. An initial program o f training wil l be offered in each district as it comes into the Project. This program wil l be described and agreed to as part o f the MOU to be signed by the district with the BOR.

Five master trainers wil l be hired by the Project. These master trainers will receive detailed training from the vendor for the second generation LRMIS software and then provide on-going training in the Project Districts. The following training program wil l be implemented:

A two-day Project Workshop in each district involving key stakeholders;

0 A four-day change management course in the district for Patwaris, Kanungos and other key Revenue Staff as the program is rolled through the Province;

Specialized LRMIS software training provided for staff in the Kanungo Service Centers. This training wil l be provided by the LRMIS software vendor with participation o f the project master trainers;

An initial 3-day LRMIS feedback course run by the master trainers about 6 months after a Kanungo Service Center has commenced operations;

A program o f LRMIS 2-day user conferences on an annual basis in each district where LRMIS has been installed. These conferences would be run by the master trainers.

0

0

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Component 2 Development, Establishment and Deployment of the LRMIS

Through this component, the Project will develop and maintain the applied software, hardware and communications infrastructure for the Land Records Management and Information Systems (LRMIS). Data centers wil l be established at tehsi l levels, and land records Service Centers (“kiosks”) wil l be established at the kanungo level. Data from the Tehsil Data Centers will be replicated to a Provincial Data Center in BOR. Web access will be established through the Provincial Data Center.

Punjab Province has formulated a plan to implement LRMIS in al l 35 districts in the Province. This project i s the first five-year phase in a longer-tern program and wil l cover 18 districts (the “project districts”), with the option o f applying for supplementary financing to cover more districts, if the implementation in the initial project districts progresses faster than anticipated. A roll out plan has been prepared for the project districts based on the ability o f the BOR and the PMU to scale up the activity. Districts will be selected o n the basis o f the status and volume o f existing records, the availability o f district IT personnel, and demonstrated commitment to begin implementation. For each district entering the Project, a Memorandum o f Understanding (MOU) wil l be signed between the BOR and district government outlining the responsibilities and contributions o f both to project implementation (see Annex lo). A detailed plan wil l be annexed to the MOU setting out the location o f Kanungo Service Centers and proposed connectivity solutions. As part o f the MOUs, district government will be required to provide state land for the Service Centers.

The B O R i s undertaking pi lot projects in two districts (Rahimyar Khan and Gujrat), with an additional pi lot being implemented by the Lahore City Government (Raiwind). All three locations are utilizing the same applied software. In the init ial phase o f the Project, a pi lot will be implemented in Kasur District. The primary objective o f the proposed pi lot activity in Kasur is the competitive development o f the second generation o f the L R M I S software.

The Project wil l implement a program to scan the Patwari map records: the village maps (Sharja Parcha); and supplementary field maps (Tatima Sharja). A pi lot will be undertaken in project year 4 to enhance the mapping component with GIS functionality for two kanungo, one in a district under the Kishatwar system o f settlement survey and one under the rectangular system o f settlement survey.

2.1 LRMIS Software Development and Testing

The development o f software to support land records management in Pakistan faces several challenges. Although the Land Records Manual sets out standard operating procedures (SOPs) there i s considerable variety in the manner in which these SOPs are implemented in practice. The SOPs cover a significant number o f mutation types (there are 25 types o f mutations, most o f which have several sub-types). Lastly, the implementation has to be developed in the Urdu language. The deployment o f the pilots in Rahimyar Khan and Gujrat has been on the basis o f sole-source from a private company. The Government has chosen to conduct a competitive tender for second generation software that wi l l involve contracting with four pre-qualified firms

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to conduct testing o f applied software at the kanungo level. This sub-component wil l also test data entry procedures and costs, and connectivity options to a central data center. At the end o f these four steps, the B O R wil l have a proven turn-key second generation L R M I S application that can be used for the roll-out throughout the province.

2.2 L M I S Software Deployment and Further Enhancement

This component wil l finance the site licenses, installation, staff training, and maintenance costs associated with deployment and operation o f the LRMIS software. The selected vender will be responsible for:

0 Provision o f distribution packs;

The init ial training o f BOR and Service Center staff (estimated at 2 weeks per course);

0 On-going product development and maintenance.

The project plans to develop a registration o f deeds module at the tehsil level as an early enhancement o f the second generation L R M I S software. This enhancement i s planned for project year 3. The implementation o f this module will require a detailed study o f the legal and institutional issues related to the integration o f the two systems and business process re- engineering. A decision will also need to be made on the requirements to enter data for previously registered deeds. This study would be undertaken by the BOR PMU. The software wil l also undergo hrther development to allow integration o f GIS data associated with the pi lot study for spatial data.

2.3 Data Entry and Validation

Data entry services are a large component o f the costs o f establishing the automated land records system. The time and cost for each entry and the validation o f the computer records have been calculated as part o f the project budget.

The process entails: 0 Data cleansing by Revenue staff o f the manual records; 0 Data entry: computerization o f the manual records which wil l be contracted out; 0 Data cleansing which will be contracted as part o f the data entry contract with Revenue

s t a . Revenue staff will verify the computerized records.

Mult iple contracts for the data entry in the f i rs t 4 districts using the second generation turn-key software wil l be awarded through competitive bidding, once the software i s rolled out. The specifications for data entry and data cleaning will be refined in the light o f project experience.

Structured procedures and responsibilities for data movement, data entry, verification, correction and validation wil l be laid down with proper quality control norms, and drawing from international standards (e.g. India). The process, carried out mainly by private vendors, wil l require the involvement and dedication o f selected Revenue staff. An appropriate compensation

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will be built into the project costs to cover this incremental work. Once validated, the manual records and the signed copy o f the computer records wil l be archived in the district office. The computer records wil l be deployed in the Service Centers as they are installed, with a hard-copy o f the computer records provided to the patwari for their records during the transition period.

Once a Service Center is authorized to begin operation, the computer system wil l capture mutations and produce fards. For the f i rst 12 months, users wil l have the option o f obtaining fards from either the Service Center or the patwari. For the f i rs t 12 months after the Service Center i s opened, the patwari wil l also be able to initiate mutation requests, but wil l record these requests at the Service Center. Once a mutation i s approved by the Revenue Officer, the mutation wil l be recorded in the Service Center. These transition periods will enable the Service Center and computer system to gain community confidence. Fol lowing the f i rs t 12 months o f the operation o f a Service Center, the patwaris in the administrative area served by the Center wil l review and certify the existing digital land records and maintenance o f the paper-based records wil l be archived and their further maintenance wil l be discontinued. After the transition periods have expired, fards will only be available from the Service Center and the mutation requests will be initiated at the Service Center with the Service Center passing the mutation to the patwari. The conversion to the issuance o f fards and initiation o f mutations only at the Service Centers wil l require changes in the legal framework (a change in the Land Revenue Rules to implement the change in the process o f issuing fards and an amendment to the Land Revenue Act to implement the change in the process o f handling mutations). BOR started preparing these changes in early 2006 and i t is anticipated that the changes wil l be implemented by early 2007.

2.4 Data Centers

Data center wil l be established in each tehsil, with al l Kanungo Service Centers connected over dial-up. Data from the Kanungo Service Centers will be replicated to the Tehsil Data Centers (TDCs). A Provincial Data Center wil l be established that will link al l the TDCs and make data available for WEB access. The TDCs wil l have on-line connection to the Provincial Data Center either through existing networks or through networks established by the Project. This sub- component wil l finance the goods and equipment required for the TDCs and the Provincial Data Center.

2.5 Establishment of Service Centers for the Delivery of Land Record Services

In land administration systems key determinants for success are accessibility and efficiency. These entail a decision on the level at which services wil l be provided and the required degree o f investment and variable costs. The lower the level at which services are provided, the more convenient i t is for users to access the system, but the higher the overall costs as more Service Centers will need to be established and supported. B O R has carefully reviewed this trade-off, and decided to establish the Service Centers at the kanungo level. The Finance Department has confirmed that the Province i s prepared to underwrite the additional cost o f operating Service Centers at the kanungo level. There are nearly 800 kanungo throughout Punjab Province. This sub-component wil l establish Service Centers (“kiosks”) and modernize the support and supervision levels o f the BOR at the kanungo level. (As the local kanungo at Tehsil

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headquarters wil l be serviced by the Tehsil office, there wil l in effect be a Service Center also at the Tehsil level). The establishment o f the Project Service Centers entails the construction or renovation o f offices, the procurement o f a standard set o f equipment (furniture and hardware). Other parts o f the Project wil l provide support to the Service Centers in the form o f deployment and installation o f LRMIS software and the computerized records, training o f staff, and comprehensive public awareness and education programs.

An important consideration wil l be the financial sustainability o f the Service Centers. A business model was developed for the Service Centers during Appraisal and, using information gathered by the P M U at the kanungo level on historical levels o f mutations and issuance o f fards, strategies wil l be developed during Project implementation to deploy the Service Centers.

Before deployment in any given district, an analysis wil l be carried out by the PMU and a strategy developed for the deployment o f Service Centers in that district. This strategy wil l include an assessment o f the business case for each proposed Kanungo Service Center (based on criteria such as the number o f computer records in the kanungo, the expected number o f mutation and fard requests in the kanungo, the distance that the public will have to travel and the expected revenue that might be collected). This agreed strategy wil l be included in the MOU to be signed by the district and the BOR. The cost o f the development by the project o f full Service Centers in each kanungo has been included in the project costing.

One strategy for the deployment o f Service Centers i s a PPP, perhaps based o n regional experience (for example, Maharashtra or Karnataka in India). I t is planned that a study into possible PPP models wil l be undertaken in project year 2.

2.6 Network and Connectivity

This sub-component will finance the costs o f connectivity between the kanungo Service Centers and the TDCs, as wel l as linkages between the TDCs and the Provincial Data Center.

2.7 Web Development

Web access to the computerized land records will be provided through the Provincial Data Center. This sub-component will finance the consultancy costs associated with web site development as wel l as web content development.

2.8 Pilot for Spatial Data

The Project wil l implement a program to scan the patwari map records: the village maps (Sharja Parcha); and supplementary field maps (Tatima Sharja). The L R M I S software wil l be modified to enable the storage o f the map records in the LRMIS database and the linkage o f the land records to the maps. A pilot will be undertaken in project year 4 to enhance the mapping component with GIS functionality for two kanungo, one in a district under the Kishatwar system o f settlement survey and one under the rectangular system o f settlement survey. High-resolution satellite imagery wil l be acquired over the two pi lot areas. This imagery will be geo-referenced

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and used as the spatial framework for the GIS pilot. The scanned maps wil l be vectorised and parcel polygons and topology formed. This data wil l be referenced to the imagery. The GIS parcel polygons wil l be linked to the LRMIS land record information. The database in the two kanungo wil l be used to investigate the relationship between the information in the land records for ownership (Khewat) and tenancy (Khatuni), and the information in the maps, which i s generally based on Khasra numbers. This pilot wil l investigate the issues involved in moving to a parcel-based land records system, including: the functional specifications and requirements; the procedures to maintain and update the parcel polygons; the procedures to maintain the linkage to the LRMIS land record information; the requirements for business process re-engineering; the requirement for supplementary field surveys; and the resource requirements to support a GIS hnctional i ty in a Kanungo Service Center, particularly the requirements for staff training.

Component 3 Service Delivery and Information Campaigns

Through this component, the Project wil l manage, preserve, and make accessible for a l l r ights holders and other beneficiaries information and related land recording services. These activities cover the operational phase o f land records service delivery (Le. after the Service Centers are physically established, the LRMIS deployed, data entry performed, and trained personnel are in place), as well as the information and publicity campaigns associated with building support for project objectives and activities among stakeholders and the general population.

3.1 Service Delivery

This sub-component will provide benefits to the users o f the land records system, and will therefore be central to the achievement o f the Project’s development objective. Direct financing o f the Service Centers at the kanungo and tehsi l levels wil l be provided from the IDA Credit for the f i rst 18 months o f operations. This wil l include utilities, office supplies and other operating costs; maintenance o f c iv i l works and hardware; and incremental salaries for project staff. This sub-component wil l also finance Project-related incremental operating costs at the district level. Fol lowing the f i rst 18 months, responsibility for meeting these costs wil l be passed to the budget. Incremental fees for the automated services to be provided by the Project wil l be introduced during the l i f e o f the Project and are expected to cover a major share o f operation and maintenance costs by the end o f the Project. I C T support teams, under the management o f the PITB, will be established in each district to oversee system start-up and h c t i o n i n g during the f i rs t year o f operation. Agreements on the relative roles o f the Project and district and local government in system operation and maintenance wil l be elaborated in the MOUs to be signed by participating districts and the BOR.

3.2 Stakeholder Consultation, Public Awareness and I n formation

Information dissemination and participatory processes are central to project design. According to the Social Assessment, key concerns o f potential users are related to lack o f information and accessibility, poor complaint handling, and high unofficial transaction costs. The Social Assessment also identified the range o f key stakeholders, some o f which have negative perspectives on the Project or interests that would be threatened by implementation.

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The Project wil l undertake a series o f consultation workshops, focus groups, and targeted social surveys. The stakeholder consultation programs to be held within each district participating in the Project wi l l be reflected in the M O U signed by the district with the BOR. To ensure that al l parties involved have the same access to information (prioritizing the most vulnerable), and are better able to use i t accordingly, the project envisages to conduct a vigorous education and information campaigns to raise awareness o f beneficiaries’ rights, benefits o f the system, and to ensure more active participation and feedback from stakeholders. These campaigns wil l mainly be local, tendered in separate districts included in the Project with timing coinciding to implementation o f the LRMIS system, and use decentralized means tailored to the area and targeted to different groups amongst the public (i.e. accounting for literacy, location, preferred communication means, etc). Special priority wil l be placed on reaching the poor and most vulnerable segments o f the population. Agreement on the information campaigns wil l be included in the M O U s to be signed by the districts and the BOR.

The PMU will conduct an evaluation o f the awareness and information campaigns to review its effectiveness in achieving established objectives.

Component 4. Project Management, Monitoring and Evaluation

This component wil l finance a Project Management Unit within the BOR, project operation activities o f the Punjab Information Technology Board (PITB), small project monitoring groups at the district level, and regular social assessmentshser surveys to monitor and assess project impacts .

4.1 Project Management Unit (PMU).

A PMU has been established within the BOR, composed o f core staff primarily seconded from the BOR, with the purpose o f preparing the Project and managing i t s implementation. The PMU will interact directly with BOR, the PITB, and the Steering and Operational Committees for the Project. It wil l be responsible for operational control o f project implementation, including management o f al l aspects o f the project implementation plan. The PMU will have a financial management unit with responsibility for accounting, disbursements, the operations o f the Designated (Special) Account, and the preparation of the project financial management reports. The PMU will also have a procurement unit with responsibility for preparing the overall procurement plan, i t ’s monitoring and drafting requests for proposals and bidding documents, and overseeing the procurement processes o f the non-IT related components under the Project. The PMU will have a central monitoring unit that wil l work with counterparts at the district level in implementing the Project Monitoring and Evaluation Plan.

4.2 Punjab Information Technology Board.

The Punjab Information Technology Board wil l have responsibility for advising the PMU on the procurement plan o f IT -related aspects o f the Project, procurement o f IT-related goods and consultancy services, non-consultancy services contracts, and managing implementation o f these elements o f the Project. The Project wil l finance the hiring o f incremental staff by the PITB for

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project management. This wil l include a Senior Project Manager, a Senior Network Manager, and a Senior Database Administrator. The Project will also finance incremental operating expenditures, including office space, stationary and supplies, and project related travel expenses for staff. Staff will be hired by PITB to manage the Kasur pi lot work, and to assist with first year o f implementation and operation o f the automated systems in each o f the participating districts.

4.3 District Project Monitoring Groups.

In each district where implementation o f the Project i s underway, a small monitoring group o f 2- 3 persons wil l be established, consisting o f a district Project Manager and 1-2 Project Monitoring Officers. I t wil l be the responsibility o f this group to track project the overall effectiveness o f the Service Centers and the tehsil level project offices in providing improved quality o f services to the population. District monitors wil l be required to travel on a steady basis to tehsils and kanungo where project activities are underway to review both quantitative and qualitative . indicators. These wil l include technical and financial indicators, as well as the quality o f business processes and degree o f adherence to agreed practices. The district monitors wil l be required to provide quarterly reports on project implementation effectiveness in agreed format to the PMU for summation in the overall quarterly project monitoring reports. (For more detail on the monitoring program, see Annex 6.) The DPMGs wil l be financed by the Project.

4.4 Project Evaluation and Impact Assessment.

A series o f social assessmentshser surveys will be financed by the IDA Credit and tendered competitively during the l i f e o f the project to allow for baseline measurement in the participating districts, mid-term review, and end-of-project data. The purpose o f these assessments will be to provide independent and objective feedback o n the impact that the Project is having with respect to its development objective o f providing higher quality services to the population. Annex 3, Table 2 lists which project indicators wil l be tracked by the annual social assessmentshser surveys. I t i s intended that these surveys wil l allow for additional project impact analysis by establishing baseline measures at the local level prior to authorizing the start o f the automated systems in a given district and providing information o n those indicators through project implementation.

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Annex 5: Project Costs

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

Local Foreign Total Project Cost By Component andor Activi ty us$ million us$ million us$ million

1. Institutional Capacity Enhancement and 1.498 0.264 1.762

2. Development and Deployment o f the 27.943 4.625 32.568

3. Service Delivery and Information 8.071 0.476 8.547

4. Project Management, Monitoring & 4.787 0.430 5.217

Business Program

L R M I S

Campaigns-BOR

Evaluation

Total Baseline Costs Physical Contingencies

42.299 5.795 48.094 0.305 0.080 0.385

Price Contingencies 2.242 0.540 2.782 Total Project Costs 44.846 6.415 51.261

Interest during construction Front-end Fee

Total Financing Required 44.846 6.415 51.261

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Annex 6: Implementation Arrangements

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

The implementing agency for the Project i s the Board o f Revenue (BOR), which wil l be responsible for overall project management and achieving the project outcomes.

Project Management

The BOR will utilize a Project Management Unit (PMU), placed directly under the Senior Member BOR, for managing project implementation. The Project Director (PD) heads the PMU, assisted by a Coordinator. Since the bulk o f the Project activities will be at the district level or lower, the P M U wil l need capacity to play a lead role in planning, coordinating and monitoring the activities that require the involvement o f District Revenue officials and staff. The PMU will be assisted in this by the District Project Monitoring Groups (see Annex 4, Component 4 for description).

I t i s proposed that the PMU will:

I. Coordinate among BOR and participating districts on a regular basis, including coordination with the District Project Monitoring Groups.

2. Monitor and ensure timely implementation o f the Project Implementation Plan. 3. Prepare, monitor and update the Procurement Plan, coordinating the various

procurements by PMU, PITB and the Districts. 4. Procure non-ICT related consultancies and goods for the project, co-ordinate with

PITB for procurement o f I C T related goods, consultancies, and non consultancy services, and closely supervises procurement o f works done through the Districts.

5. Monitor adherence to the M O U s between the BOR and each district. 6. Prepare/consolidate the annual work plan and budget for the entire Project. 7. Operate the Special and Assignment accounts. 8. Submit quarterly project reports in the agreed format to IDA for review. 9. Prepare disbursement applications and forward them to IDA. IO. Maintain consolidated Project accounts, and arrange for audits to be carried out

annually. 11. Consolidate yearly progress reports (FMRs), including information on financial

execution and progress (results indicators) as wel l as o n procurement.

To carry out i t s functions, the Unit will be organized in several offices, as listed below:

Management and Coordination: PD’s Office.

J PoZicyLegaZ Office: responsible for reviewing existing B O R procedures, identifying necessary legal and regulatory reforms associated with proposed business process re-engineering, and providing expertise on legally related issues.

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J Stakeholder consultation, public awareness and in formation: responsible for overseeing the effectiveness o f a l l outreach related activities under the Project.

J Financial Management and Procurement Units: strong financial management and procurement units to meet Project fiduciary requirements, as the PMU will be responsible for accounting, disbursements, the operations o f the Designated Account, the preparation o f financial reports, and management o f procurement activities.

J Project Monitoring: the monitoring office wil l develop the data collection and reporting formats, and compile data extracted from the system. I t wil l be responsible for tracking results indicators and preparing progress reports.

The PITB wil l be responsible for managing the implementation o f the I C T aspects o f the Project. Chart 6.1 provides information on responsibilities and roles for implementation o f the Project by sub-component. Chart 6.2 and the accompanying text describe the institutional roles associated with the I C T activities o f the Project and spells out the relationship o f the PITB to the BOR and the PMU. Incremental staff at PITB headquarters will be hired to manage the I C T aspects o f the Project. This will include a senior project manager, a senior network manager, and a senior database administrator. A team o f specialists wil l be hired by PITB to oversee the implementation o f the Kasur Pilot program. Lastly, PITB wil l hire district level I C T teams to support roll-out o f the automated system following successful completion o f the Kasur Pi lot program. These teams wil l consist o f a project manager, network manager, networkkystems engineer, data base administrator, and quality assurance analyst.

Project Steering Committee

The Project Steering Committee wil l provide the oversight and inter-institutional coordination o f the Project. I t wil l be chaired by the Chairman o f the Planning & Development Board. I ts members wil l include the Secretary o f Finance, the Secretary o f Information Technology, a Member Board o f Revenue, a Secretary (Revenue) Board o f Revenue and the Project Director o f the Project Management Unit (PMU). I t s role is to define the long-term vision; provide pol icy directions, set the overall implementation strategy, and make decisions over crucial matters o f policy, legal changes, institutional reforms and any other decision that require a commitment at the highest level. This Committee would also approve annual work programs and budgets, project performance reviews and, more generally, i t would ensure an effective coordination among government agencies at the highest level, and with IDA.

Project Review Committee

The Project Review Committee wil l be chaired by the Senior Member (Revenue) and made up o f members o f the Planning and Development Board, the Secretariat o f Finance, the Secretariat o f Information Technology, the Secretariat Revenue Board o f Revenue, the Director o f Land Records and the Project Director o f the PMU, and senior representatives o f the Districts where the Project i s being executed (Nazim, RDO). This committee i s responsible for overseeing execution, supervision and monitoring o f the Project. Among other tasks, i t reviews the annual

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work programs and budgets prepared by the PMU, and pass those on to the PSC for approval. I t s role is also to facilitate critical day-to-day decisions for the implementation o f various components and to approve district-based land record computerization and process reengineering plans.

Chart 6.1 - Institutional Implementation Responsibilities for the L R M I S Project

Project Component Responsibility Component 1. Institutional Development and Capacity Building.

1.1 Business Process Improvement 1.2 Institutional Capacity Enhancement

Component 2. Development and Deployment of LRMIS

2.1 Development o f Software for L R M I S and Deeds Interface 2.2 Data Entry and Validation

2.3 Data Centers, Connectivity and Web Access

2.4 Establishment o f SCs for the Delivery o f Land Record Services

2.5 Pilot for Spatial Data

Component 3. Service Delivery Operations and Maintenance

3.1 Service Delivery 3.2 Stakeholder Consultation, Public Awareness and Information

Component 4. Project Management

4.1 Project Management Unit 4.2 Distr ict Monitoring Groups 4.3 Project Evaluation and Impact Assessment

BOR through P M U

PITB in consultation wi th B O R and P M U

Jointly wi th Distncts

Jointly wi th Districts

BOR through PMU, joint ly with Districts

BOR through PMU

Jomtly wi th Districts

Criteria for selection of districts

The PMU has established three criteria for prioritizing districts for phased inclusion in the Project. These are: (i) the cleanliness and state in which the land records are maintained; (ii) the availability o f IT trained personnel; and (iii) the volume o f land records. The pre-appraisal mission emphasized the importance o f the level o f political support from district government in the development objectives and design o f the Project. I t was agreed at the t ime o f pre-appraisal that a Memorandum o f Understanding wil l be signed between the governments o f participating districts and the BOR clarifying support for the project development objectives and implementation plan, and elaborating the contributions and responsibilities o f the Provincial Government, the PMU, District Government, and subordinate administrative levels to implementation o f the Project and achievement o f the development objectives.

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Proposed phasing of Implementation

The Project is broken up into the following phases: (i) testing o f system software, connectivity and data entry in Kasur District; (ii) first phase roll-out to four districts; (ii) second phase roll-out to an additional six districts; and (iii) third phase roll-out to an additional eight districts.

I T Processes and Responsibility Matrix for L R M I S Project

Chart 6.2 below presents a mapping o f the set o f IT processes on the defined parties (enablers) in the LRMIS Project. Each process has one assigned party that i s responsible for accomplishing and delivering o f the defined tasks (development and delivery role), other parties that provide their support, regular reviews and inputs during the tasks implementation (consultancy and advisory role), and the parties that are authorized to do a final review and approve the deliverables (review and approval role). The processes listed are defined by IEEE 1074 Standard for Software L i fe Cycle Processes.

Chart 6.2 - IT Processes and Responsibilities Matr ix for L R M I S Project

Group IT Processes

Concept Exploration

Projects Initiation

Software Configuration Management

Operation and Support Maintenance Retirement

Legend: J Advisory & Consultancy Role A Development & Delivery Role @ Review & Approval

PMU PMU P&D PlTB Vendor BOR WB

J A @ @ J A @ J J A @ @

J A J @ @ J @ A J

J @ A

J @ A J @ A

J J A J @ @ @ A

J @ A

J d @ A J J J A

@ A J J A @ @ ~- --

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Annex 7: Financial Management and Disbursement Arrangements

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

Adequate financial management arrangements are required to be in place in order to maintain the smooth implementation o f the province-wide activities o f the project. Suitably qualified financial management personnel are therefore required to establish and manage a robust financial information system in accordance with acceptable accounting, internal control and financial reporting policies and procedures.

The PMU at the B O R shall be the principal implementing and coordination agency for the Project and a single Designated (Special) Account under the administrative management o f the P M U wil l therefore be established there. The PMU will be responsible for putting in place the required financial management infrastructure with adequate staff to manage the Designated (Special) Account, and withdraw funds from the Credit through replenishment o f the Account as well as through direct payments and reimbursements methods. The P M U wil l also be required to effectively discharge the accounting, internal control, financial reporting, and external audit coordination responsibilities for the entire project. In order to effectively and efficiently manage these responsibilities, the project FM function has been staffed with five officials (a Chief Accountant and an Accountant recruited from the market, an Assistant Accounts Officer deputed from the Punjab Accountant General’s Office, and two Accounting Assistants taken from the BOR. With this staffing strength in place, the FM arrangements o f the project are adequate. A specific condition o f appraisal provided for the recruitment o f the Chief Accountant who also has adequate public sector accounting experience, and this condition has already been met.

Apart from the Designated (Special) Account to be held and managed by the PMU, there will be no ‘assignment account’ representing Government o f Punjab’s contribution to the project implementation activities at the provincial level. The Government o f Punjab’s contribution shall be directed only to District Governments. This will be managed through government’s own financial management systems. The operational costs o f the project at the district level, excluding incremental staff costs for up to 18 months after the date o f district sites’ productivity, wil l be financed by tied grants from the Provincial Government. The Provincial government wil l release those districts’ tied grants, on a one-line basis, from the Provincial Account No. I to the respective District Governments’ Account IVY thus enabling the districts to meet their transitional budgeted operational expenditures related to the project. The Distr ict Governments, through a M O U to be signed with the Provincial government, will assume the overall cost o f the project’s sustainable operation, including the incremental staff that the PMU would have earlier financed out o f the Designated (Special) Account.

The Punjab Information Technology Board wil l serve as a key participating agency in the execution o f the project, particularly those activities related to component 2 o f the project. To this end, the Board shall be authorized to maintain and operate a revolving imprest account, sourcing funds from the Designated (Special) Account, to enable i t directly finance eligible day to day operational expenditures related to the project’s component. The Communications and Works Department shall also serve as participating agency for executing certain c iv i l works

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component o f the project. The direct operational costs o f the department may not necessarily be provided through an imprest account but would be payable through the Designated (Special) Account held by the PMU.

Risk

The PMU established in the BOR does not have any prior experience o f managing a Bank-financed project o f this size and does not have adequate FM capacity required for such

Project Description

Risk Risk Mit igation Measures Rating

S - Recruitment o f 2 FM professional staff fiom the market, coupled with three other staff deployed from BOR and AG Punjab.

Implementation, by the project FM team, o f the Financial Management

-

The project, costing US$ 51.968 million, has been designed to improve the records o f land r ights and to reduce litigation and bring about lasting land tenure security in the Province o f Punjab. I t entails the implementation o f the following 4 key components:

(i)

(ii)

(iii)

(iv)

Institutional Capacity Enhancement - setting the foundations o f a modernized, more accessible and conclusive land records system; Development and Deployment o f LRMIS - to promote accountability, and for maintenance o f land records and al l other pre-service delivery tasks; Service Delivery and Information Campaigns - providing cost-effective land records services at a l l levels; and Project Management, Monitoring, and Evaluation - monitoring the quality and efficiency o f the services provided, and assessing impacts.

Provincial Issues

Punjab i s the f i rs t province in Pakistan that offered itself for a performance measurement indicator-based Public Financial Management and Accountability Assessment. This assessment was finalized on M a y 3 1, 2005 and concluded that the reforms already underway are developing a strong trajectory for PFM improvement. Adoption o f medium-term budget framework with improved estimations, adoption o f PIFRA budget and accounting module, and effective cash f low and debt management, are some o f the reforms in their pre-maturity stage. The sustainability o f reforms would require a parallel strategy to develop a strong institutional capacity that i s duly augmented by induction o f high quality financial management personnel.

Risk Analysis

The inherent financial management risk o f the project i s nonetheless assessed as ‘substantial’. However, the responsible authorities adhered to the action plan and the r isks identified are being effectively mitigated over time. The following table presents the basis o f the risk assessment as well as the corresponding risk-mitigation measures identified:

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a project.

S

M

Complex implementation arrangements o f the project involving many agencies at the provincial and local level

Manual that has been prepared with the support o f the Bank

- Maintenance o f one Designated (Special) Account and one Revolving Imprest Account.

management authority and responsibilities to key participating agencies and documenting specific accountability provisions in the FM Manual.

- Invoking Country financing Parameters for 100% financing o f core project expenditures through the PMU.

- The GoPunjab’s own FM systems would be used to provide for the counterpart funding to meet project operational expenditures at the district government level, and GoPunjab’s pol icy o f front- loading tied grants i s effective.

- Assignment o f specific financial

Delay in the release o f the counterpart funds (tied grants) to meet the eligible expenditures o f the project at the District levels.

Strengths and Weaknesses

The GoPunjab’s commitment to the FM reforms i s apparent from the outcome o f the recent Provincial PFM assessment. There are substantial potentials for the province to embrace the opportunity to sustain its oversight capacities towards the accountable management o f public funds. Specifically for the LRMIS, a Financial Management Manual has been produced, cleared with the Bank, and shall constitute the primary reference document o f the FM team in implementing the financial management arrangements as designed. The FM Manual would help establish a sound financial management system right from the beginning o f the project and would also provide a basis for the accountable financial reporting.

With a single Designated (Special) Account to be established for the project, a fairly high proportion o f the project costs would be directly processed through the account by the PMU itself. Also, since the PMU will be endowed with qualified FM staff, an inherent strength will be established to ensure effective, efficient and accountable management o f the funds. A key weakness i s the lack o f prior experience in managing Bank-financed project o f a similar nature in the province. Orientation training for the FM staff has however helped to mitigate the impact o f this lack o f prior exposure.

Implementation and Institutional Arrangements

The PMU, housed in the BOR, would take the overall responsibility for the execution o f the project components under the oversight and inter-institutional coordination o f a Project Steering Committee, chaired by the Chairman, Planning and Development Board. A Project Review

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Committee wil l also be established to periodically supervise and evaluate the performance o f the project. The PMU would involve other relevant agencies in the implementation o f various project components, sub-components, and activities. K e y among these agencies are: Punjab Information Technology Board, and Communications and Works Department. A District Operations Committee shall be established, chaired by the District Coordination Officer, and comprising o f ED0 (R), DO (R), Revenue heads at the Tehsils in districts (Tehsildars), and Assistant District Project Managers (PMU staff). The committee will be mandated to steer the implementation o f service delivery component at the local level in a sustainable manner.

Staffing Arrangements

The Financial Management Unit, headed by a Chief Accountant who i s already in place, wil l be established in the PMU. The Chief Accountant i s assisted by 4 other accounting staff, one o f whom i s a part-qualified accountant recruited from the market having 4-5 years accounting experience. Two accounting assistants have already been assigned to the project by the BOR, and the Accountant General, Punjab has also deputed an Assistant Accounting Officer to the project. The recruitment and placement o f the Chief Accountant, a specific condition for the project’s appraisal, has since been met. The recruitment and placement o f the market-based Accountant with a qualification equivalent to I C M A Intermediate or M.Com, as we l l as the deputation o f an Assistant Accounts Officer by the Accountant General, Punjab, were specific conditions for the project’s negotiation.

Deploying permanent P F M c iv i l service personnel under the supervision o f project-based qualified professionals in Bank financed projects wil l not only build the long-term capacity o f the FM institutions o f the government for management o f subsequent development projects, but wil l also contribute to the sustainability o f intended reforms and support mainstreaming.

Since the required financial management personnel are on board with the PMU, the FM arrangements for the project will be considered satisfactory.

FM Organogram

The Bank has supported the drafting o f a Financial Management Manual for the project. The Project Steering Committee has formally approved the Manual after consultation with the Department o f Finance and the Accountant General o f Punjab. The Chief Accountant wil l be responsible for imparting the requisite orientation and training to the project FM staff o n an ongoing basis.

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Funds Flow Arrangements

There shall be established and maintained only one Designated (Special) Account for the project, in U S Dollars, that shall be managed and operated by the PMU and into which IDA Credit funds wil l be released. The IDA finds, as per government policy, wil l be first channeled through the SBP to the Designated (Special) Account o f the project with the NBP in Lahore. The GoP instructions (Dated November 25,2002 and updated June 6,2005) regarding the maintenance and operation o f revolving find accounts opened for IDA, IBRD and ADB CreditdLoans, issued by the Finance Division, and requiring, inter alia, the compilation o f the financial reports by fimction and object heads requirements, shall be observed by the Project Director.

Since the PITB wil l be a key participating agency for the execution o f this project, the need to establish a ‘revolving imprest account’ through advances to be made from the Designated (Special) Account has been well recognized. The PMU would advance to the Board i t s budgeted miscellaneous expenditures related to the project over a 90-day period, and replenish the account at the end o f each calendar month on a revolving basis. The expenditures o f the PITB that shall be considered eligible for payments from the imprest account shall include only those expenditures directly related to project delivery (e.g. electric plugs, cables, lamps, and direct transportation costs and per diem allowances), and these categories o f expenditures shall be defined in the FM Manual as well as in the official ‘notification’ to be issued by the Project Director. A simplified imprest account shall be maintained by the responsible official o f the PITB and rendered for replenishment, together with certified acquitances, to the PMU o n monthly basis. The PITB shall nominate an authorizing officer for the purpose o f approving expenditures from the imprest and shall equally identify an official o f the Board who shall serve as the imprest book-keeper.

The special role o f PITB in the execution o f the crucial component 2 o f the project includes the management o f the procurement activities related to that component. The FM Manual and the ‘notification’ to be issued by the Project Director wil l both include a ‘time limitation’ provision for the P M U to execute payment requests against contracts within 7 working days upon PITB’s certification o f satisfactory delivery. This has been necessitated by the need to avoid undue delay in project implementation due to unreasonable delays normally associated with making payments for goods or services rendered, especially where the contracting agent is not the same as the paying agent.

The following diagram best presents the schematic f low o f IDA and Government Counterpart funds for the project, as well as the basic reporting requirements o f the PMU, PITB, and DAOs, where applicable:

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,*,.*,.,,.,,.,, ...,..,............ l._ll..

The ~ c h c n i a ~ i ~ features o f the above funds flow a r r a ~ ~ e ~ ~ I ~ t s clearty indicate that, apart from thc

The ~ i i a ~ a ~ e ~ t ~ ~ r o u ~ ~ ~ ~ o ~ y e ~ ~ e ~ i t ~ s own systems. The funds ct ill bc released from the ~ r o ~ i ~ ~ i a l Account I to the respective District ~ o v e r r ~ ~ ~ ~ ~ t ~ ' Account I V to cnablc the d ~ s ~ ~ c t s meet tlicir b ~ ~ ~ ~ e t e ~ ~ ~ ~ ~ a ~ ~ ~ ~ a l ~ ~ p ~ ~ i d i t ~ r e ~ r e l ~ ~ ~ d to the proj cct. The rtltleascd funds would be ~ r o ~ ~ s i o ~ i e d as %ed-grants' on a one-line basis in the ~ o ~ ~ ~ ~ . ~ a b ' s PSDP budget. The approved ~ ~ c r t l t ~ e ~ ~ a l staff costs o f the districts for a period o f up to 18 months from start o f o ~ e r ~ t i o ~ a l ~ r o d u c t i ~ ~ i ~ ~ o f districts' sites, to get lie^ with the ~ ~ ~ ~ ~ t i o ~ i ~ l costs o f the PMU itself, shall be paid for by the PMU as part o f i ts eligible e ~ p e n ~ ~ i t u ~ e s from the ~ ~ s ~ ~ ~ ~ a t e ~ ~ ~ p e c i a l ~ Account hcld with it. P a ~ f ~ ~ e ~ ~ s from the Credit for a31 i ~ i c ~ e I n e r i t ~ ~ staff costs associated with the

t the districts" level shall t h ~ r e ~ o r e cease 18

ct ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ e ~ ~ t s ~ etle

cc the related cost

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productive, but not later than 18 months from date o f productivity o f sites. This will ensure that, with the passage o f time, the individual governments take on board al l the associated costs o f maintaining and operating their sites for reasons o f sustainability in accordance with the respective business plans finalized for each district, including the l ikely cost recovery schemes.

Accounting Policies & Procedures

The PMU shall establish the controls necessary in the preparation o f accounting records and the approval o f transactions, ensuring that al l transactions are correctly made and adequately explained. Adequate Chart o f Accounts wil l be developed to properly account for and report on the project activities according to the components, sub-components and disbursement categories. Adequate segregation o f duties among staff working in the PMU shall be in place in order to deter any abuse o f authority and to safeguard the assets o f the project. In addition, the PMU would adopt effective budgetary procedures and controls linked with the processing o f commitments and payments. Proper examination o f the variances from budget, both physical and financial, shall be ensured. These are al l issues which the FM Manual seeks to address for effective compliance during project implementation.

Financial Reporting Framework

The project shall be required to comply with the financial reporting requirements o f the Bank in al l respects and shall ensure that al l the supporting acquitances related to the transactions financed by the IDA h n d s are appropriately maintained.

Quarterly Interim Unaudited Financial Reports (commonly referred to as FMRs) should be prepared by the P M U and made available to the Bank within 45 days after each quarter end. The key constituents o f the FMRs are as follows: ‘Sources o f Funds and Uses o f Funds by Components, Sub-components, Activities and Categories’; ‘Summary o f Uses o f Funds by Disbursement Category’; ‘Physical Progress and Output Monitoring Report’; ‘Procurement Status Report’; ‘Cash Forecast Report’; and ‘Designated (Special) Account Activity Report’. The indicative formats o f these have been discussed but wil l be agreed and documented at negotiations.

The project shall adopt a cash basis o f financial reporting, based o n the IPSAS requirement. For the purposes o f providing additional comprehensiveness, the ‘notes’ to the annual audited financial statements to be submitted to the Bank should adequately disclose the commitments and obligations outstanding at the close o f the year.

The reporting requirements in respect o f the District Government expenditures funded from Account IV would, on the other hand, fol low the Government’s traditional monthly c iv i l accounts reporting framework. These latter accounts wil l be compiled by the District Accounts Officers and presented to the Accountant General and the Department o f Finance. I t would be mandatory that a copy o f the report pertaining to the project i s provided to the PMU for information and appropriate consolidation in the project-wide financial reports.

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For the purpose o f assuring the completeness o f the government’s c iv i l accounts in respect o f IDA funded expenditures o f the project, the P M U shall provide a comprehensive report o f the expenditures made from the Designated (Special) Account and also through direct payments and reimbursements to both the Accountant General, Punjab and to the Chief Inspector o f the Treasuries on a monthly basis by the 12th o f the fol lowing month. These expenditures, after reconciliation, wil l be aggregated with the overall provincial c iv i l accounts.

Implementing Agency PMU

The instructions (Dated November 25,2002 and updated June 6,2005) regarding the maintenance and operation o f revolving fund accounts opened for IDA, IBRD and ADB credits/ loans, issued by the Finance Division, shall be observed by the Project Director. These instructions require the project management to, among other procedural requirements, compile financial reports by function and object heads and submit to the relevant government authorities.

Audit Opinion D u e Date

Project Financial Statements December 3 1

External Audit

The Auditor General o f Pakistan will perform the external audit o f the project. The Project audited financial statements wil l be submitted to the IDA within six months (by December 3 1) after the end o f the Government’s fiscal year (June 30) or such other date as the IDA may agree. The auditing and certification o f the PMU financial statements does not, as per normal government auditing requirements, preclude the auditing o f district and provincial government transactions related to the project by the Auditor General.

Audit Reports: The following audit reports wil l be monitored:

Information Systems

The Financial Information Service (FIS) wil l have the capacity to ensure proper recording o f the project financial transactions, including the allocation o f the expenditures according to respective components, sub-components and disbursement categories. This FIS should also be able to produce, with ease, monthly, quarterly and annual financial and performance reports. The exact form o f the FIS would be decided in due course but a combination o f excel and off-the-shelf package i s being considered by the Chief Accountant.

Disbursement Arrangements

The proposed IDA Credit o f USD 45.65 mi l l ion i s expected to be disbursed over a period o f f ive years and would cover 90% o f the overall project cost. The Interim Unaudited Financial Report- based disbursement method shall be applied for withdrawals from the Credit. Withdrawals f rom the Credit wil l be based on 6 months’ estimate o f projected expenditures for each o f the applicable disbursement categories.

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Category IDA Expediture Catcljory Financing 1 No.

I I

I I 1 45.65 - 45 f on I I i

i

7 IW ’

GOP Financing Financing Total Yo I

(a) wtth respect to Service Centers at the district, K a ~ ~ i ~ ~ ~ ~ ~ and Tehsil levels, for the first I 8 n i ~ n ~ h ~ after thc e s ~ ~ b l ~ s ~ ~ i e ~ i ~ o f cadi Service Center, (1) salaries, allo\s.anccs and other e ~ o l u ~ ~ x i ~ s o f I n c r ~ ~ ~ ~ n ~ a ~ staff; (11) operation, m a ~ n ~ ~ n a n o e and rental o f office space and e ~ u i p m ~ n t ~ ( t i l } ~ 3 ~ e r a ~ i o n ~ m a i ~ ~ e n a i ~ c e , rental and Insurance of vehiolcs; (IV) ~ o m x ~ i u ~ i c a ~ i o n ~ hupplics and charpcs: (2 , )

a d ~ ~ ~ ~ ~ ~ e ~ ~ n ~ costs; (VI) bank t s a n ~ a ~ ~ i ~ ~ ~ charges: arid (w) domestic tsavet and per diem but excluding salaries ~ ~ o ~ ~ ~ ~ ~ a l s and staff o f the R c e ~ ~ i e ~ i ~ ‘ ~ cnvtl sew~ce.

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Action Plan

1. Agreed Action Responsibility Completion Date AppointmentDeputation o f P M U 1 Accountant (from the

2.

3 .

4.

Financial Covenants

remaining FM Staff in PMU market) and 1 Assistant Accounts Officer (from AG Punjab) (By Negotiations - done)

(By Board - done) Completion o f Induction training o f PMU the FM staff by the Chief Accountant Approval o f the Financial PMU (By Negotiations - done) Management Manual by Project Steering Committee Agreement on the format o f the FMRs

PMU (By Negotiations - done)

1. The GoPunjab shall ensure that the Project Director maintain a Financial Management System and suitable staff, with qualification and experience satisfactory to the Bank, to manage the financial and accounting aspects o f the project, throughout the duration o f the project.

2. The GoPunjab shall ensure that the Project Director submits quarterly Interim Unaudited Financial Reports to IDA within 45 days o f the end o f each calendar quarter.

3. The GoPunjab shall ensure that the Project Director submits to IDA, not later than December 3 1 , each year, the audited financial statements o f the project for the preceding fiscal year along with an action plan to address any audit issues.

Implementation Review Plan

The staffing adequacy for this project, in terms o f number and quality, will provide the requisite assurance that the project’s financial management arrangements are adequate. With this in mind, the Bank’s normal supervision procedures wil l suffice, although a closer and intensive supervision wil l be required in the f i rst year to ensure compliance with the agreed implementation FM arrangements.

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Annex 8: Procurement Arrangements

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

A. General

1. (LRMIS-P) wil l be carried out in accordance with the World Bank’s “Guidelines: Procurement Under IBRD Loans and IDA Credits” dated M a y 2004; and “Guidelines: Selection and Employment o f Consultants by World Bank Borrowers” dated May 2004, and the provisions stipulated in the Financial and Project agreements. The general description o f various items under different expenditure categories i s given in the succeeding paragraphs. For each contract to be financed by the Credit, the different procurement methods or consultant selection methods, the need for prequalification, estimated costs, prior review requirements, and time frame have been agreed between the Borrower and the Bank project team in the Procurement Plan, which was finalized at Negotiations. The Procurement Plan wil l be updated on a quarterly basis or as required to reflect the actual project implementation needs and improvements in institutional capacity. A Procurement Manual i s also prepared, which gives details o f the respective procurement responsibilities o f the Board o f Revenue’s Project Management Unit (PMU), as well as Punjab Information Technology Board (PITB). The overall project planning responsibility rests with the PMU, and PITB takes a lead in implementation o f the IT components o f the project. Implementation o f the non-IT components o f the project shall be the responsibility o f the PMU. The contracts processedprocured by PITB shall be signed and executed by PITB; contracts processedprocured by PMU shall be signed and executed by PMU. The General Procurement Notice (GPN) shall be published after negotiations.

Procurement for the Land Record Management Information System Project for Punjab

Procurement of Works:

2. Works procured under this project, would include small c iv i l works. C iv i l works will include construction /rehabilitation o f approximately 20-30 kiosks, in each o f the 18 districts, each kiosk i s estimated to cost about Rs. 1.1 mi l l ion ( U S $ 18,500). These kiosks will be contracted out in district-wise contract packages. AAer reviewing the market response to the f i rst four districts contracts, larger packages for multiple districts may also be prepared. A design and supervision consultancy firm shall be hired by the P M U for these works. The contracts shall be procured and signed by the respective districts, with assistance from the consultancy firm, and under very close procurement review o f the PMU. In case o f multiple district works contracts, PMU shall s i g n the contract. Works costing up to $ 50,000 shall be procured through Shopping procedures. Works costing up to U S $ 3 mi l l ion shall be procured through National Competitive Bidding (NCB), using the bidding documents for national competitive bidding agreed with (or satisfactory to) the Bank. Works costing more than US $ 3 mi l l ion shall be procured through International Competitive Bidding, using the Bank’s I C B documents.

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Procurement of Goods:

3. vehicles and office equipment & furniture. All IT goods procurement wil l be done by PITB, and al l non-IT goods procurements wil l be done by the PMU. Given the nature o f the Project, goods and commodities estimated to cost up to US$50,000 per package wil l be procured through Shopping procedures. Goods estimated to cost up to U S $300,000 wil l be procured through National Competitive Bidding (NCB) procedures. Goods estimated to cost more than U S $300,000 wil l be procured through International Competitive Bidding (ICB) procedures. The procurement wil l be done using Bank’s Standard Bidding Documents for I C B and bidding documents for national competitive bidding agreed with (or satisfactory to) the Bank.

Goods procured under this project would include computer hardware and software,

Improvement of Bidding Procedures under National Competitive Bidding

4. Goods and Works under National Competitive Bidding, in order to ensure economy, efficiency, transparency and broad consistency with the provisions o f Section 1 o f the Guidelines:

The following improvements in bidding procedures wil l apply to a l l procurement o f

Invitation to bid shall be advertised in at least one newspaper with nation- wide circulation, at least 30 days prior to the deadline for the submission o f the bid. Bid documents shall be made available, by mail or in person, to al l who are willing to pay the required fee; Foreign bidders shall not be precluded from bidding and no preference o f any kind shall be given to national bidders in the bidding process; Bidding shall not be restricted to pre-registered firms; Qualification criteria shall be stated in the bidding documents; Single bids wil l also be acceptable for evaluation. Bids shall be opened in public, immediately after the deadline for submission o f bids; Bids shall not be rejected merely on the basis o f a comparison with an off icial estimate without the prior concurrence o f the Bank; Before rejecting al l bids and soliciting new bids, the Bank’s prior concurrence shall be obtained; Bids shall be solicited and contracts shall be awarded on the basis o f unit prices and not on the basis o f a composite schedule o f rates; Cost estimates shall be prepared on the basis o f market rates. Contracts shall not be awarded on the basis o f nationally negotiated rates. Contracts shall be awarded to the lowest evaluated and qualified bidder; and Post-bid negotiations shall not be allowed with the lowest evaluated or any other bidders.

Procurement of Non-Consulting Services:

5. small works bidding documents for national competitive bidding as agreed between the borrower and the Bank. There shall be multiple contracts for data entry, at least one per district, which makes a minimum number o f 18 contracts, each estimated to cost U S $ 80,000 to 85,000.

The data entry contracts shall be awarded as non-consulting services contracts using the

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Packaging o f contracts wil l be done keeping in view the market conditions, which may involve multiple contracts within a district. Data entry contracts shall be procured by PITB.

Selection of Consultants:

6. All the IT related consultancy services shall be procured by PITB, while the non-IT related consultancy services shall be procured by PMU. Consultancy assignments ( f i rms) include the LRMIS software design, data warehousing, design and supervision consultancy, business process reengineering, legal improvements, pol icy formulations, trainings, and public awareness campaigns. Services o f f i r m s wil l be procured through Quality and Cost Based Selection (Section I1 o f the Consultants Guidelines), or through the selection methods given in Section I11 to the Consultants’ Guidelines (paragraphs 3.1 to 3.13). Short lists o f consultants for services estimated to cost less than $ 500,000 equivalent per contract may be composed entirely o f national consultants in accordance with the provisions o f paragraph 2.7 o f the Consultant Guidelines.

7. Procurement for consultancy for the L R M I S software design has already been commenced using QCBS and the SPN was duly published in UNDB on June 5,2006. This procurement i s being done through a single stage QCBS with an extended technical evaluation phase. After short listing, four firms wil l be competitively selected to run concurrent pilots in four different kanungos in Kasur having similar data size and complexity, and the technical score will be determined by evaluating the pi lot product. Procedure o f this extended QCBS process is :

Invitation for Expressions o f Interest (EOIs) and shortlisting o f f i rms; Issuance o f RFP to shortlisted firms. The RFP will have detailed evaluation criteria for selection o f four firms for the award o f the pilot, as wel l as the criteria for evaluation and selection o f the best pilot. The RFP will mention a fixed cost o f the pilots which shall be paid to the four selected f i r m s by PITB. A simple contract to be signed between PITB and the four f i r m s will also be given in the RFP. Receipt o f technical and financial proposals. Opening o f technical proposals and evaluation for selection o f top four f i r m s for preparing and running the pilots. Signing o f a simple contract with the four f i r m s to run the pilot, with delivery deadline o f 6-8 months. Evaluation o f pilots, and determining the technical score o f the four f i rms. Opening o f financial proposals and determination o f combined score o f the four f i rms. The financial weightage shall be 30% or more. Award o f the contract for software license, ro l l out in 18 districts and training to the best firm.

Services for Individual Consultants may be required for IT related services, legal improvements, and training, and shall be procured fol lowing the stipulations o f Section V o f the Guidelines.

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B. Assessment of the agency’s capacity to implement procurement

9. Specialist o f the task team in March 2006.

An assessment o f the capacity for the project has been carried out by Procurement

10. the project have been identified. These r isks along with the mitigation measures are:

Most o f the issues/ risks concerning the procurement component for implementation o f

1. PMU’s Capacity

for project implementation and management. The Project Director heads the PMU assisted by two directors i.e. Director (Operations) and Director (Policy) and a Chief Accounts Officer. PMU hired a procurement officer who assists Director (Operations) in procurement planning & management. This team o f two i s deemed to handle PMU’s component the project outlay for the f i rst 18 months o f the project. The capacity and workload shall be analyzed in the second year o f the project for a possible review. The district staff i s experience in procurement using local procedures, while their exposure to the Bank’s N C B procedures is limited. The Bank has held several sessions for procurement process information dissemination with the procurement staff o f PMU during various missions and visits. A formal training workshop on procurement wil l be held for the benefit o f the P M U as wel l as the f i rs t four districts staff, before their procurements commence. Later on training o f district staff shall be the responsibility o f the PMU. Services o f consultancy firm shall strengthen the works procurement capacity o f PMU as wel l as districts.

The PMU is a unit formed by Board o f Revenue directly under the Senior Member BOR

.. 11. PITB’s Capacity

The Chairman PITB is assisted by a General Manager and 5 senior technical staff. There i s no separate procurement section as the function o f PITB in the project can be more adequately described by defining it as an independent IT procurement wing o f PMU. Chairman and the General Manager have sufficient exposure o f the Bank’s procurement procedures and the General Manager wil l be responsible for procurement actions. PITB however hired two IT experts from the market in M a y 2006 to ensure that the bidding documents and the RFPs are realistic and relevant to the project’s requirements. The Bank has held several informal sessions for procurement o f consultancy services for PITB staff, and formal procurement training sessions shall be held after negotiations.

iii.

raise concerns for transparency and equal opportunity. The procurement process i s designed to take these concerns into account. As the project wi l l pay a fixed s u m (about U S $ 130, 000) to each o f the four firms to run the pilots, i t i s necessary that truly qualified f i r m s are shortlisted to compete, and the shortlisting process i s also very transparent. PITB prepared quite objective evaluation criteria at the EO1 stage and provided it to the participating firms. The RFP defined rather elaborate criteria for selection o f the four f i r m s for preparing and running the pilots as we l l as the criteria for evaluation o f the pilots and selection o f the winning firm. The PMU i s identifying four kanungos in Kasur with comparable data size and characteristics to ensure equal playing field for a l l the four competing f i rms. Within these selected kanungos, the firms are required to prepare their pi lot with a fixed number o f data entries, to ensure that the firms are at

Procurement o f LRMIS through extended QCBS The procurement o f LRMIS through a customized version o f QCBS has a potential to

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liberty to leave out any particularly complicated or difficult data entries at that stage. A s the f i r m s wil l be paid a fixed amount for preparing and running the pilots, the f i rs t installment o f this sum wil l be released against a guarantee, and further payments wil l be linked to deliverables/milestones. The final selection shall be based upon the technical evaluation o f the prepared pilots along with the technical proposals, combined with the financial proposals.

iv. Availability o f Data Entry Contractors Owing to their volume, data entry contracts comprise a major component o f this project.

While the ro l l out for various districts wil l be done, the available vendors in the country may be stretched to capacity, and i t i s neither feasible nor l ikely that international market could be explored for data entry contracts. This situation may lead towards a scenario where the quality o f date entry contracts wil l have an impact on the completion time o f these contracts. PITB shall prepare an action plan, in view o f the market response to the first four contracts, with proposals for quality assurance and r isk mitigation.

v. Transparency In order to ensure transparency in the project implementation, disclosure i s made

mandatory. PMU as well as PITB will maintain a website whereon al l the procurement related information wil l be displayed. This information wil l include procurement plan, notices o f invitation, summary o f bid evaluation and awards. Information regarding complaints and the action taken wil l also be posted on the website. PITB already actively posts al l procurement data on their web-site.

11. customized extended QCBS approach being used for the f i rst time, the overall project risk for procurement i s High.

12.

In view o f the pivotal importance o f the pilots in the project implementation, and the

An action plan for the above measures i s tabulated below:

Issue Capacity enhancement

Coordination Between P M U & PITB

Transparency

Action Appointment o f IT expert in PITB for preparation o f EO1 and W P for L R M I S

Procurement trainings for: PITB

PMU

Finalization o f the Procurement Manual

Finalization o f procurement plan Setting up o f a procurement website for PMU and PMDFC

Time Frame By June (done)

After negotiation (several informal sessions already held)

By negotiations (done)

Immediately (done) Immediately (done for PITB)

Responsibility PITB

World Bank

P M U

P M U P M U PITB

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Procurement Plan

13. The Project Management Unit has developed a procurement plan for the project implementation which provides the basis for the procurement methods. This plan shall be made available on the P M U and PITB websites as well as the Project’s database and on the Bank’s external website. The Procurement Plan shall be updated in agreement with the Project Team quarterly or as required to reflect the actual project implementation needs and improvements in institutional capacity.

C. Review of Procurement bv the Bank

14. Prior Review: a. b.

C.

d.

e.

f.

g*

h.

al l goods and works contracts procured on the basis o f ICB. the f i rst goods contract procured by PMU and PITB on the basis o f N C B as well as shopping regardless o f i t s value. the first works contract procured on the basis o f N C B as wel l as shopping regardless o f i t s value. the first consultancy services contract with a firm procured by PMU and PITB regardless o f i t s value. al l consultants’ services contracts with f i r m s procured by P M U and PITB estimated to cost US$ 200,000 equivalent per contract or more. the f i rs t individual consultant contract procured by PMU and PITB regardless o f i t s value. al l individual consultants’ contracts procured by PMU and PITB estimated to cost more than US$ 100,000 equivalent per contract. The first non-consultancy services contract procured by PITB regardless o f its value.

15. placed on ex-post procurement and end-use audits which wil l be carried out on a regular basis to verify that the activities financed under the project are procured in accordance with agreed procedures and are used for the intended purposes.

All other contracts will be subject to post review by the Bank and emphasis would be

Procurement Information and documentation

16. Procurement information wil l be recorded and reported as follows:

Complete procurement documentation for each contract, including bidding documents, advertisements, bids received, bid evaluations, letters o f acceptance, contract agreements, securities, related correspondence etc., wil l be maintained by the implementing agencies in an orderly manner so as to readily available for audit. Contract award information wil l be promptly recorded and contract rosters, in the agreed format, maintained by PMU and PITB. Comprehensive quarterly reports by PMU, indicating: revised cost estimates, where applicable, for each contract;

0

0

0

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0

e

D.

17.

1 2 3 4 5 6

Ref. No. Description of Estimated Selection Review Expected Assignment Cost Method by Bank Proposals

(Prior I Submission Post) Date

Development US $ 6 QCBS Prior September o f L R M I S mi l l ion 2006 Software

status o f on-going procurement, including a comparison o f originally planned and actual dates o f the procurement actions, including preparation o f bidding documents, advertising, bidding, evaluation, contract award and completion time for each contract; and updated procurement plans, including revised dates and cost estimates, where applicable, for the procurement actions.

7

Comments

Frequency of Procurement Supervision

In addition to the prior review supervision to be carried out from Bank offices, the capacity assessment o f the Implementing Agency has recommended six monthly supervision missions to visit the field to carry out post review o f procurement actions.

E. Details o f the Procurement Arrangements Involving International Competition

1. Goods, Works, and Non Consulting Services

1

Ref. No.

Package 8 o f Goods

2

Contract (Description)

Installation o f hybrid solutions

3

Estimated cost

U S $ 5 mil l ion

2. Consulting Services

A

Procure ment Method ICB

5

P-Q

Yes

6 17

eslno Prior I Post

8

Expected Bid-Opening Date Nov 2007

9

Comments

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Annex 9: Economic and Financial Analysis

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province o f Punjab

Upgrading the land records system for Punjab Province, as laid out for this Project, represents a significant improvement in public infrastructure and wil l have widespread economic benefits. The most significant o f these are:

Reduced transactions costs for beneficiaries (fard issuance and mutations) 0 Increased security o f tenure for land rights holders 0 Improved efficiency o f land markets 0 Increased benefits o f improved access to information for land administration and other

public sector functions 0 Increased benefits o f improved access to information for the private sector, including

improved access to credit for land rights holders 0 Increased benefits o f automated infrastructure for the provision o f additional public

services.

Transactions costs for beneficiaries will be reduced by reducing the time and logistical costs o f locating the patwari and to initiate the transaction, reducing the unofficial payments to the patwari, and reducing the time to complete the transaction once it i s initiated.

Increased tenure security and more efficient land markets wil l result from the more transparent, accessible, and reliable land records made possible by the Project. Enhanced incomes for land owners would result from increased access to credit and increased long term investments relating to the lands resulting from enhanced land security. This in turn would lead to higher incomes o f land rights holders v ia increased investments.

On-line availability o f the land records data base wil l greatly reduce the costs o f accessing land records in comparison with the current situation that can be used for a wide variety o f public sector functions. Most importantly will be improved availability o f information for the purposes o f better land administration and land use planning. In addition, parts o f the automated land records data base can be made available to the private sector such as financial institutions, input supply companies, and others to facilitate their economic activity.

The automated infrastructure that the Project will put in place wil l be readily useable for the provision o f other Government services, particularly at the local level. During project preparation, the task team has included specialists involved in e-government initiatives in the region to ensure that potential synergies were clearly taken into consideration in the design o f the Project. In a number o f states in India, initiatives with ‘village kiosks’ that are available to provide a broad set o f public services, with land records being a core service, are now underway and are showing economic promise, as reflected by the interest o f the private sector to become involved in such service provision systems.

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The nature o f many o f these benefits i s diffuse and difficult to measure. The economic analysis for the Project focused solely on the reduced transactions costs to direct beneficiaries in association with fard issuance and mutations.

Business process reengineering and computerization o f land records will bring benefits by reducing the transaction costs o f effective land ownership to the beneficiaries o f the land administration system. This means that due to the Project, the land owners would have an effective claim on a land parcel to be able to prove ownership and trade land parcels on the basis o f tit les in the computerized registry. Without such a computerization o f database and improvements in business processes, land owners have to incur heavy costs o f making effective ownership claims such as getting afurd. The improvedfurd after the implementation o f the Project would reduce the transaction cost o f the beneficiaries in eliminating the rent seeking costs o f the key service delivery agents in the land registry system, mainly the patwari who is currently the custodian o f the manual land registry.

Elements of transactions costs to the users of the land records system

Customer costs comprise o f three essential components: a) financial costs, b) direct transactions costs and c) opportunity costs

a) Financial costs are direct monetary costs such as Government fess o f carrying out the transaction. These fees vary depending on the nature o f land record such as an ownership certificate or mutation certificate. Currently this is in the form o f a nominal lump sum for ownership ‘fards’ and a percentage for the price o f land at which the ownership changes hands for mutations. For the purpose o f this economic analysis i t i s assumed that financial costs o f transactions remain unchanged under the Project.

b) Logistical costs are the costs incurred by the customer in order to access the land transaction document. Logistical costs consist o f the amount o f money that i s spent by the beneficiary to the land records bureaucracy such as direct and indirect bribes to patwaris and tehsildars and the transportation and related costs in locating the patwari.

1. Cost o f obtaining a fard i.e. documentation costs in direct and indirect bribes 2. Cost o f logistics and intermediaries including cost o f transportation, boarding and lodging

c) Opportunity Costs are the time costs in terms o f foregone income in order to utilize the loan product. Indicators o f opportunity costs are the following:

I 3. Foregone income for accessing the land record I 4. Time value o f monev in case o f land trading I

Opportunity costs are essentially the costs o f the alternative i.e. what ifthe beneficiary did not have to spend time and effort to obtain a fard or conduct a land mutation? H e would have most likely spent that time and opportunity doing productive work and exploiting productive opportunities. Opportunity costs can thus theoretically include a wide array o f foregone incomes

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and opportunities, such as lost business opportunities due to pursuance o f the land transaction. For example, if the beneficiary spends a month pursuing the land transaction and obtaining the fard, he has not only lost income earning opportunity for that particular time period but also he has lost the opportunity to trade his land and reap the cash. The lost opportunity i s thus the days and hours lost due to pursuing a fard and the lost opportunity o f income from trading.

The income from trading the land could be gainfully employed to earn market interest and thus to the extent that the trading income could not be captured due to the pursuance o f the land transaction, there is a loss in time value o f money. It must be pointed out that i t i s quite difficult to estimate such a cost except in cases where a complete survey i s carried out to find out about the uses o f the fard and intention to sell land and use the money for some productive purpose along with information on market prices etc. This opportunity cost was thus considered out o f the scope o f thus study as a conservative base estimate can be provided by foregone income measurable by the number o f days or the number o f hours spent by the beneficiary on pursuing the land transaction.

Field surveys were carried out in three districts in the Province; Rahim Yar Khan in the extreme south - the so called cotton belt area, Gujarat in the central Punjab with wheat rice as the predominant cropping pattern and Attock in the extreme north. The former two districts are included in the pi lot phase o f the Project. A stratified random sample was taken by randomly selecting 20 centers from five existing branches with 4 centers per branch. From each centre, 4 customers were randomly interviewed regarding items on a standardized set o f indicators o f transaction costs.

A suitable wage proxy was used to weigh the time opportunity cost for customers. The standard national wage rate o f Rs. 15 per hour has been used as the wage proxy for the target customers based on the minimum wage set according to Labor Laws in the country. The sample interviewees were asked about the time value o f their opportunity cost in terms o f standard wage rate prevalent in their location and the rate most relevant for them.6

The process o f obtaining a fard usually starts with the customer registering a request with the local Patwar khana where the patwari i s supposed to have office. In practice, i t i s rare to get ho ld o f the patwari and get the job done the same day and hour. Usually the customers have to pursue the patwari for a few days before getting a concrete promise o f allocation o f his time for the said request. In order to chase the patwari, a typical customer usually has to go to the local Patwar khana which may be 20-30 kilometers way and in certain cases, if the Patwari i s not found there, he could always be traced through the tehsildar’s office located in tehsil headquarters.

There are essentially three phases o f the process o f obtaining a land record in the current system:

It i s important to assess whether only the customer’s opportunity costs or that o f the entire household matter. I f the non-customer members o f household who pursue the transaction or contribute to the effort are incurring any opportunity cost in accessing the fard, t h i s needs to be incorporated into the total opportunity cost o f the customer household. However, due to the complexity it poses this has been ignored for the current analysis.

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1. Active Pursuance The effort to get hold o f the patwari and lodge a request certainly entails costs for the customer. H e has to spend on logistics, on food and accommodation for himself and sometimes for the accompanying friends and family.

2. Bargaining Then there i s the case o f direct and indirect bribes to the patwari. These are the monetary costs o f obtaining the fard which in economic terms are also the transaction costs.

These are strongly determined by: 1. Urgency o f customer need o f obtaining the fard which in economic term would be the

inelasticity o f demand for the fard 2. The bargaining process that involves the power and influence o f the customer vis-&vis

the patwari., If the customer i s a big landlord i t i s not unusual for the Patwari to come to his house to deliver the fard free o f charge. The relative political and economic power o f the customer does matter in determining the cost that a particular customer pays to the patwari.

3. Production of Fard The third and final source o f costs for the customer is the time allocation for the whole exercise.

Valuation of Time

The opportunity cost o f time i s valued according to whether the customer i s self-employed or is a domestic homemaker. If the customer i s employed, the wage rate provides the opportunity cost o f their time.

OCTs = T * CW Where OCTs i s the opportunity cost o f time on the basis o f customer’s wage rate, T i s the time devoted in hours and CW i s the customer wage rate per hour.

However, if the customer is not employed then a wage proxy for domestic homemaking activities can be utilised. The hourly wage rate proxy i s calculated o n the basis o f minimum wage that is set at Rs.120 per day according to Labour Laws in Pakistan. This i s equivalent to Rs. 15 per hour.

OCTm = T * M W Where OCTm is the opportunity cost o f time on the basis o f minimum wage rate, T i s the time devoted in hours and MW is the minimum labour market wage rate per hour.

Summary o f Changes in Transactions Costs

The table below summarizes the main findings about the transaction and opportunity costs on the basis o f sample data from the selected districts. I t shows the average cost per fard with and without project which highlights the significant drop in per fard transaction costs and a modest decline in the per fard opportunity costs to the customer. This could be interpreted as the project

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having a significant impact on the rent-seeking behavior prevalent in the current land records service delivery system.

Table 1: Average Per Fard Cost to the Customer

(Pak Rs.)

Without Project With Project Difference

Transaction Costs Opportunity Cost Total

7,427 181 1,144 8,571 64 1 32 84 1 1,514

Bribes Logistics

- 6,786 - 149 - 303 - 7,057

As the tremendous bargaining power and control over information which the functionaries especially the patwaris wield within the current system i s l ikely to be drastically reduced through computerization and electronic processing, i t will make it less likely for them to get involved in rent seeking behavior. Moreover, the bundling up o f various segments o f the service provision at one point o f service i.e. at a kiosk wil l significantly reduce the logistical and opportunity costs to the customers o f accessing a fard.

The estimated reduction in transactions costs with the project i s roughly $1 15, declining f rom $140 to $25.

Financial Sustainability

Analysis o f financial sustainability was conducted for three representative districts - Rahimyar Khan, Kasur, and Bahawalnagar. Four scenarios were developed for each. On the cost side, full estimated project costs within each district were included for a l l scenarios. On the revenue side, a number o f assumptions were used on incremental revenues and included levels o f fard issuance and number o f mutations, as wel l as the introduction o f incremental fees for fard issuance and mutations for services provided by the computerized system^.^ When al l 35 districts are on line, the base annual sustainability costs are estimated at 2 bln. Rs. The introduction o f incremental fees would substantially reduce the costs to the Government o f sustaining the automated systems. The basic scenarios are calculated on the assumption o f a Service Center in each kanungo. An alternate ‘economy’ version o f each scenario i s also provided which assumes one Service Center for every two kanungos.

With incremental fees o f 200 Rs. for both fard issuance and mutations, as we l l as a doubling in the number o f fards issued (Scenario 3), Bahawalnager i s more than able to cover the sustaining costs o f i t s systems, while Kasur is close to achieving the break even point. RYK, however, remains in deficit. With only a modest increase in the number o f mutations, along with the previously mentioned assumptions on fard issuance and fee increases (Scenario 4), incremental

Available information indicates that the unofficial costs for fard issuance can run as high as 20,000 Rs. 7

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revenue in al l districts i s sufficient to cover sustaining costs, Bahawalnagar i s running a good surplus, and Kasur i s running a substantial surplus.8

As the Project moves towards the roll-out phase, additional thought needs to be given to the options available to lessen the burden on Government to finance the long-run sustaining costs o f the Project. I t i s the mission’s view that incremental fees o f 200 Rs. would be reasonable to consider given the reduced time and other transactions costs that the Project will bring to the population. Even modest increases in mutations can be an important driver for putting incremental revenue flows above incremental costs.

Cost Recovery Scenario Analysis - RY Khan, Kasur, Bahawalnagar Current volume of transactions RY Khan Kasur Bahawalnagar Number o f fards issuedyear 36,000 40,692 57,144 Number o f mutations/year 43,685 66,485 33,848

Scenario 1: Assumptions:

1) Increase in fard volume(%) =

2) Increase in fard fee (Rs) = 3) Increase in mutation fee (Rs) = 4) Increase in turnover o f mutations (%) =

INCREMENTAL REVENUE Fard Issuance Mutations Tota l

Value 100

0 RY Khan Kasur Bahawalnagar

540,000 610,380 857,160

540,000 61 0,380 857,160

NET INCREMENTAL REVENUE - - 41,073,697 - 27,727,520 - 41,826,154 NET INCREMENTAL REVENUE -Economy - 24,944,102 - 17,701,015 - 25,696,559

Scenario 2: Assumptions: 1) Increase in fard volume(%) =

2) Increase in fard fee (Rs) =

3) Increase in mutation fee (Rs) =

4) Increase in turnover o f mutations (%) = INCREMENTAL REVENUE Fard issuance Mutations Total

Value 100 200

0 RY Khan Kasur Bahawalnagar 14,940,000 16,887,180 23,7 14,760

14,940,000 16,887,180 23,714,760

NET INCREMENTAL REVENUE - 26,673,697 - 11,450,720 - 18,968,554 NET INCREMENTAL REVENUE -Economy - 10,544,102 - 1,450,720 - 2,838,959

* T h ~ s assumes a l l revenue associated with increased mutations is used for sustaining systems costs, no t simply the incremental 200 Rs. fee charge.

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Scenario 3: Assumptions:

1) Increase 111 fard volume(%) = 2) Increase III fard fee (Rs) =

3) Increase in mutabon fee (Rs) = 4) Increase in turnover o f mutations (YO) =

INCREMENTAL REVENUE Fard Issuance Mutations Total

Value 100 200 200

0 RY Khan Kasur Bahawalnagar 14,940,000 12,512,790 23,714,760 8,737,000 13,297,000 6,769,600

23,677,000 25,809,790 30,484,360

NET INCREMENTAL REVENUE - 17,936,697 - 2,528,110 - 12,198,954 NET INCREMENTAL REVENUE - Economy - 1,807,102 7,498,395 3,930,641

Scenario 4: Assumptions: Value

1) Increase in fard volume( YO) = 2) Increase in fard fee (Rs) = 3) Increase III mutation fee (Rs) =

4) Increase in turnover o f mutations (YO) =

100 200 200

5 INCREMENTAL REVENUE RY Khan Fard Issuance 14,940,000 Mutations Total

Kasur Bahawalnagar 6,887,180 23,714,760

13,639,225 108,197,653 25,043,067 28,579,225 125,084,833 48,757,827

NET INCREMENTAL REVENUE - 13,034,472 96,746,932 6,074,5 14 NET INCREMENTAL REVENUE - Economy 3,095,123 106,773,437 22,204,109

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Annex 10: Draft Memorandum of Understanding

Pakistan: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

MEMORANDUM OF UNDERSTANDING (MOU) BETWEEN GOVERNMENT OF THE PUNJAB AND

THE DISTRICT GOVERNMENT FOR COMPUTERIZATION OF LAND RECORDS IN PUNJAB

Introduction

The Government o f Punjab has launched the project to digitize land revenue records to make

land records accessible to the land owners, simplify the processes and with the support o f robust

software and appropriate legal and institutional changes, improve delivery o f services to the

public. Landowners wil l be able to verify the ownership o f lands, alienate and acquire the rights

in the land in transparent, easy and secure manner

Obligations of the Provincial Government

1. at district, tehsi l and kanungo level.

The Provincial Government shall be responsible for recruitment and training o f officials

2. district.

The Provincial government shall launch public awareness / communication campaign in

3. The Provincial Government has established the Project Management Unit (PMU). The P.M.U shall be responsible for the management and coordination o f project activities, disbursement o f finds and monitoring and evaluation.

4. effectiveness

The Provincial Government shall conduct annual third party assessment o f the project

5. The Provincial Government shall develop and establish the technological and physical infrastructure for computerizing land records, including;

6. Capital Expenditures

o Software development and deployment o Data cleansing / data entry in collaboration with appropriately selected vendor(s). o Renovation / construction o f Service Center / Kiosk at the Kanungo level at an

approximate cost o f Rs. 1.1 mi l l ion per unit. o Procurement o f hardware and allied items for each computerized kiosks at an

approximate cost o f Rs. 375,000 per kiosk.

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o Establishment o f tehsil supervision centers at appropriate locations in tehsil headquarters at an approximate cost o f Rs. 1 million per Tehsil.

o Establishment o f district data centers at an approximate cost o f Rs. 4 mi l l ion per district data centre.

o Establishment o f network linkage between kanungo service centre and tehsil supervision centre at an approximate cost o f Rs. 400,000 per link and establishment o f a network link between tehsil supervision centre and the district data centre at an approximate cost o f Rs. 100,000 per link.

o The Provincial Government shall establish help desk(s) to support computerization o f revenue records.

7. Recurrent Expenditures (18 Months)

o The Provincial Government shall transfer the operational expenditures (minus the incremental staff costs) to the district government in its account N for use during the f i rst 18 months.

o Salaries o f the staff shall also be paid by the provincial government for 18 months after their appointment (approximately Rs. 36,000 per month per kiosk, Rs. 25,000 per month per tehsil and Rs. 105,000 per month per district).

o Payment o f other operational expenditures for the first 18 months (approximately Rs. 16,000 per month per kiosk, Rs. 40,000 per tehsil supervision centre and Rs. 170,000 per district data centre).

o Payment o f allowances to the project related revenue staff for the f i rs t 18 months (Rs. 1500 per month for each Patwari, Rs. 2000 per month for each Girdawar, Rs. 3000 per month for each Revenue Officer, Rs. 5000 per month for each DDO(R), Rs. 7000 for each DO(R) and Rs. 9000 per month for each EDO(R)).

8. Continuing Expenditures (After 18 months)

o The Provincial Government shall be responsible for Operations and Maintenance o f Provincial Data Centre.

o Training / refresher costs shall be borne by the Provincial Government. o Provincial Government shall continue to pay salaries o f District Project Manager

and Monitoring Officers.

9. After the lapse o f 18 months the provincial government shall provide the incremental operational expenditures for the project to the District Government through additionality to the Provincial Finance Commission share o f the district.

Obligations of the District Government

10. The District Government shall provide administrative and operational support to resolve issues and remove bottlenecks to ensure that project goals are achieved effectively and efficiently.

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1 1. The District Government shall extend cooperation and necessary administrative and operational support in organizing and conducting activities such as training, stakeholder’s consultation, public awareness campaign and collection and collation o f data etc.

12. Kanungo Service Center/ Kiosk at a centrally located and accessible location.

The District Government shall provide state land for the construction / renovation o f the

13. centers in tehsi l and data centers at the district headquarters.

The Distr ict Government shall provide premises for the establishment o f supervision

14. The District Government shall ensure that adequate funds are allocated for the operations and maintenance o f service centers / kiosks, supervision centers and data centers after period o f eighteen months in accordance with the funds provided by the Provincial Government in the f i rs t 18 months.

15. service standards evolved for service centers / kiosks and supervision centers.

The District Government shall strictly enforce and monitor the implementation o f new

16. The District Government shall make suitable arrangement to ensure that photocopies o f relevant land records are provided for the digitization in timely manner. Funds for this purpose wil l be provided through the project.

17. The District Government shall ensure that the concerned revenue officials validate digitized data in accordance with the laid down operational procedures and the given time schedule.

18. The District Government shall take appropriate tangible measures to ensure that al l funds received f i om the Provincial Government are utilized for the project specific activities. I t shall create separate account heads for the allocation o f project funds for kanungo, tehsil and district service and supervision centers respectively.

19. to audit as per existing laws and rules.

The funds transferred to the District Government for the project activities shall be subject

In WITNESS WHEREOF the parties hereto, acting through their duly authorized representatives, have caused this MEMORANDUM OF UNDERSTANDING to be signed in their respective names and to be delivered in as o f the day and year first above written.

For and on behalf o f For and on behalf o f Province o f Punjab

By : Authorized Representative

The District

By: Authorized Representative

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Annex 11: Summary of the Social Assessment

Pakistan: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

The socio-cultural and political canvas o f the Punjab i s one which presents challenges, including poverty, particular in rural areas; significant social and economic inequities, including those relating to gender; and the need for improved governance and accountability in the public sector. However, opportunities also exist through a government with a stated commitment to poverty reduction, social stability and decentralization o f reformed services closer to the user.

In the project preparation phase, the Social Assessment undertook consultations with key stakeholders, in order to enable consideration o f their interests and influences, and identification o f critical social issues. This has been undertaken through stakeholders’meetings/workshops, Focus Group Discussions with relevant actors, across the public, private and civi l society sectors, and field-based interview/ research with potential beneficiary groups..

Stakeholders include direct or primary stakeholders and indirect or secondary stakeholders. The former include landowners-large, medium and small; owners o f urban property, landless farmers, peasants without titles o f ownership; tenants and leaseholder; female landowners; minorities and collective owners; while other stakeholders include Revenue / other Administrative and government departments; real estate agents, banks and financial institutions, law professionals, NGOs, elected representatives and land developers.

K e y findings o f the Social Assessment indicate that the main social issues around land records to

Lack o f access to land titles, particularly for the small landholders, and women; lack o f tenurial securities, high transaction cost, both in terms o f finances and time ( making i t unaffordable to the lower income groups and women), inaccurate entries in the records and a lack o f knowledge regarding these due to the non transparent nature o f the system; multiplicity o f regulations affecting the land records, the role and power o f the Patwari-a l ow ly employee o f the Board o f Revenue, who by his multifarious roles can manipulate the system leading to fraudulent practices with scope for corruption. This also reveals a lack o f accountability and transparency in the hnctioning o f the system., and a legal system that i s not equally accessible or sensitive to the small landholders when they are in conflict with large landholders.

The Assessment indicates thefurd to be the most commonly used document for land related matters. This i s used among other, as a guarantee for furnishing bai l in court cases; as a proof o f residence, as an attachment to pass book for obtaining agricultural credit; as proof o f changed ownership; and for undertaking mutation o f land. Whi le the official fee for obtaining afurd is nominal but the rent sought by the Patwari ranges between Rs. 200 to Rs.20,000 depending upon the intensity o f the need for thefurd. I t was also reported that for affecting a land mutation through sale, while the state levies a tax o f about 5 percent on the price, at least an equal amount

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has to be spent to grease the palms o f the officials, and between 7 to 20 days’ hassle o f fol lowing the elusivepatwari i s also involved’. The elusiveness o f the Patwari (who i s entrusted with a multiplicity o f official and para-official duties) makes access to the fard a costly business often leading to cancellation o f the business requiring thefard. Besides, in the absence o f payment for para-official duties undertaken by the Patwari, these costs are transferred to the landowners requiring a fard. They thus felt the lack o f transparency or any public accountability mechanisms in the system to support opportunities for official graft with n o outlets for consumer feedback or redress

During consultations/discussions, the SA made an attempt to obtain feed back on the proposed Project and perceptions about it. All the landowners, large and small, male and female, expressed hope that the LRMIS would help reduce the unofficial transaction costs they face in dealing with the Patwari, that would thus lead to more efficient land-related transactions and also possibly, to long-term investments in land. Female landowners (few though they are), stated that affirmative actions such as allocation o f separate service counters and waiting areas or specific timings would hrther facilitate their access. Many females, despite a legal right to land and inheritance, are barred from claiming such rights owing to entrenched patriarchal practices that leave land transactions in the hands o f their elder/male relatives. Unresponsive services reinforce such a position. They hoped the project would address these issues.

Furthermore, the current system facilitates abuse o f the powerless, by the powerful, acting in connivance with officials, to increase their own landholdings by fraudulent transfers. The expected reduction o f this corruption and unofficial transaction costs, coupled with easy access to land-related information, were ranked as the most significant benefit o f L R M I S in al l the consultations.

The revenue officials consulted were apprehensive about the usefulness o f the proposed Project. They further justified their earlier performance by stating that para official duties and political interference in their work are factors responsible for difficulties faced by landowners. They W h e r felt that on-ground verification o f claims o n land, bi-annual crop inspection and consolidation o f land cannot be computerized.

Other stakeholders including law professionals, land developers were positive about the proposed project and expected it to impact positively on their work.

Stakeholders hoped that the computerized system would be easier to maintain and correct. This would increase the reliability o f entries, thus leading to better resolutions o f land related disputes. The level o f trust o f the stakeholders in the existing institutions was abysmally l o w and there were apprehensions that the proposed Project might not be able to deliver the expected benefits in an optimal manner without major reforms in the Revenue Department.

’ The Patwari, or village accountant, is an off icial o f Revenue Department and i s the custodian o f revenue record. H e is the lowest ranking but the most powerfu l member o f the Revenue hierarchy. The Patwari also carries out crop assessment (twice a year for levying government taxes) and tenancy survey.

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Stakeholders also pointed to some r isks and apprehensions related to a successful implementation o f the LRMIS. These include apprehensions about: erroneous entries in the current record; a non-responsive complaint handling system; the absence o f legal value o f computerizedfurd; l ow professional capacity and attitudinal problems o f the Revenue Department staff; absence o f political wil l behind the initiative, and a lack o f ownership by the lower ranks o f the Revenue Department at the central and district levels.

A critical pre-requisite identified i s the formulation o f a proper Information, Education and Communication (IEC) Campaign to make people aware o f their rights in general, and the facilities made available through the project in particular. Given the general lack o f public trust in state institutions, coupled with the overall gaps in generic and legal literacy among the people, and varied local languages, the I E C component will have to be designed and run on professional basis, employing both formal and informal channels. This would mean using not only print and electronic media but also public gatherings and messages through c iv i l society actors. Furthermore, the I E C should not only target users, but also providers, creating awareness about the rights o f beneficiaries in the new system along with access procedures, and assuaging off icial apprehension about changes, which may affect vested interests, by highlighting the other incentives for performance in the public interest (e.g. compensation reform and the wider BRP process) and the fact that service delivery and performance will be monitored.

Communication should not be a one-way process, but should also include the institutionalization o f feedback channels, from the public, as one way o f monitoring service provision and introducing downward accountability mechanisms. This would feed into a wider M&E system that would also track the impact o f the project on different social groups, including the landless, who, as some o f the most marginalized with no political voice, have been largely bypassed, despite legislation that they should be provided housing title (on human settlement lands). Land records are clearly critical for security o f tenure, but other informal factors are important, including social networks, capital and power relationships, and the influence o f these socio- cultural aspects should also be monitored, alongside the formal changes, to allow analysis and . understanding o f any resulting bottlenecks, and identification o f appropriate solutions.

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Annex 12: Safeguard Policy Issues

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

Environmental Assessment (OP 4.01’)

Since the program i s expected to have minimal or no adverse environmental impacts i t i s classified as Category C requiring no hr ther EA action. This classification i s the result o f the environmental screening based on consultations with the regional environment sector unit (SASES). In accordance with OP 4.01, the screening examined the type, location, sensitivity, and location o f the proposed program as well as the nature and magnitude o f its potential impacts.

The screening found only minimal potential environmental impacts caused by the program which - on balance - are expected to be positive from an environmental standpoint. The program seeks to establish an improved land records service delivery system in order to reduce litigation and bring about lasting land tenure security. Hence, the proposed program does not directly affect the management o f natural resources. However, the improved tenure security would induce behavioral changes among landholders by providing increased incentives for sustainable management o f natural resources. Consequently, investments which improve the long-term productivity o f land would be stimulated; these would include soil and water conservation measures, agro-forestry, tree crops and other land uses with a relatively long pay-off. Such investments are almost always more environmentally friendly than those with short-term pay- offs such as annual crops with environmentally unfriendly application rates o f agrochemicals or pastures on deforested land. Assessments o f other Bank-supported land administration projects, e.g. Thailand, Indonesia, and Brazil, support the view that increased tenure security i s most likely to have positive environmental impacts. Nevertheless, the program’s M&E system, including the planned baseline survey, would carehl ly monitor environmental impacts and would inform immediate mitigation measures in collaboration with the relevant institutions.

Natural Habitats (OP 4.04)

The Natural Habitats safeguard pol icy is not triggered because there wil l be no significant conversion (loss) or degradation o f natural habitats either directly or indirectly. The program will not operate in any areas which would be classified as Natural Habitats.

Forests (OP 4.36) The Forests safeguards policy i s not triggered because the program will not operate in the forest sector. The program i s not l ikely to contribute to deforestation o f natural forests because it will only computerize existing records and not issue fards for encroached land. Improving the access o f smallholders or landless to land through more dynamic land markets would also reduce the pressure on marginal land and forests. Natural forest land i s not eligible for receivingfards and farm forestry should be encouraged as sustainable land management would become more attractive in general (see also section on Environmental Assessment). In addition, the incentives for landowners would be reduced to clear forest land in order to demonstrate possession and avoid encroachment by others.

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Pest Management (OP 4.09) The Pest Management pol icy i s not triggered because the program is not focusing on pest management issues. I t i s not likely that activities or outcomes o f the program would affect the farmers’ pest management practices and therefore i t cannot be expected that the program would lead to substantially greater pesticide use. However, improved tenure security would provide incentives for sustainable land management with long-term pay-offs and it would discourage unsustainable practices with short-term pay-offs, such as application rates o f pesticides that would damage the environment.

Social Safeguard Policies

N o social safeguard policies have been triggered by the proposed project, and al l relevant issues were explored through a Social Assessment undertaken during project preparation. The following conclusions were drawn:

Indigenous Peoples OP 4.10

0 The World Bank recommends that any investment project that affects Indigenous People should prepare an Indigenous Peoples’ Development Plan (IPDP) consistent with i t s Policy, OP 4.10. The Project i s not expected to affect any indigenous group in the project area. However, should any Indigenous People get identified during project implementation, the project will prepare an Indigenous Peoples’ Development Plan in compliance with World Bank Policy OP 4.10 as given in the Wor ld Bank’s pol icy guidelines and cleared by IDA

Management o f Cultural Property OPN 1 1.03

0 Physical culture includes monuments, structures works o f art or sites o f “outstanding universal value’’ fkom the historical. aesthetic, scientific, ethnological or anthropological points o f view, including unrecorded graveyards, burial sites and unique natural environmental features l ike canyons, and waterfalls. Within this broader definition, cultural property is defined as sites and structures having archeological, paleontological, historical, architectural or religious significance, and natural sites with cultural values. OPN 1 1.03 aims to assist in their preservation, and seeks to avoid their elimination. The project is unlikely to affect any Cultural Property sites. However, in case o f any likely impacts related to Cultural Property, the Project wil l ensure their preservation in compliance with the related pol icy (OPN 1 1.03). Should any Chance Finds or Artifacts get identified the Project wil l immediately inform the government department responsible for Cultural Property.

Involuntary Resettlement (OP 4.12)

OP 4.12 is not triggered because land acquisition i s not envisaged and involuntary resettlement would not take place under the program. Furthermore, the Project plans to use government owned land. However, during implementation should the Project require to purchase land, it wil l use the following options:

firstly, land may be purchased on the basis o f willing seller and willing buyer using market price with consensus from both parties;

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secondly, in case o f involuntary land acquisition, the Land Acquisition Act (1 894) wil l be applied, and section 17.2 (b) “emergency/urgency “clause wil l not be used in the absence o f such a condition. For any loss o f livelihood o f title and non-title holders, an entitlement framework wil l be evolved. In such a situation, a grievance redressal mechanism wil l need to be developed and Project Affected Persons/stakeholders consulted at different stages o f the project cycle; in al l cases, the land wil l be free o f encumbrances and interests.

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Annex 13: Project Preparation and Supervision

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

Planned Actual PCN review December 13,2004 December 13,2004 Initial PID to PIC Initial ISDS to PIC Appraisal Negotiations December 14,2006 BoarcURVP approval January 25,2007 Planned date o f effectiveness March 31,2007 Planned date o f mid-term review Planned closing date March 31,2012

Key institutions responsible for preparation o f the project: Government o f Punjab: Board o f Revenue; I T Department

Bank staff and consultants who worked on the project included:

Name Title Unit Edward Cook Senior Land Specialist SASAR Isabel Lavadenz-Paccieri Senior Land Policy Specialist SASAR Tekola Dejene Lead Operations Officer SASAR Deepak T. Bhatia Manager ISGIF Zia Aljalaly Social Development Specialist SASES

Isfandyar Zaman Khan Research Analyst SASFP Ambreen Iqbal Malik ET Consultant SASAR Ismaila B. Ceesay Senior Financial Management SARFM

Kareem Aziz ICT Policy Specialist CITST Johannes Woelcke Young Professional SASAR Seda Pahlavooni Information Analyst ISGIS Rim Mahmood Finance Analyst SACPK Furqan Ahmad Saleem Financial Management SARFM

Specialist Tony Burns Consultant Igor Popiv Consultant Sergey Lizenko Consultant Altaf Iqbal Consultant Isabelle Girardot-Berg Consultant

Uzma Sadaf Procurement Specialist SARPS

Specialist

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Bank funds expended to date on project preparation: 1. Bank resources: 2. Trust funds: 3. Total:

Estimated Approval and Supervision costs: 1. Remaining costs to approval: 2. Estimated annual supervision cost:

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Annex 14: Documents in the Project File

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

PP-LRMIS Business Process Re-Engineering Study, Volume 1 , December 2005, Land Equity International and International Land Systems

PP-LRMIS Business Process Re-Engineering Study, Volume 2 (Information, Communications, and Technology), November 2005, Land Equity International and International Land Systems

Social Assessment - Land Records Management and Information System (LRMIS) Program, September 2005

Computerization o f Land Revenue Records in Puniab, PMU-BOR (prepared for the Pre- Appraisal Mission November 10-1 7,2005)

Proiect Concept - Computerization o f Land Revenue Records in Puniab, PMU-BOR

L R M I S Assessment Report, PMU-P&D, August 2005

Preparation mission Aide Memoires

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00 52 87 72 46 18

1.IQ

61 27

0 1 015

267 57 30 28

35 S I

6B 61

76 63

38 I 6

1 i bB

23 38 2 it‘>

G.89

7*72

~ T ~ T E ~ E N T OF IFC‘s

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Annex 16: Country at a Glance

PAKISTAN: Land Records Management and Information Systems Project (LRMIS-P) Province of Punjab

POVERTY and SOCIAL

2005 Population. mid-year (millions) GNI per capita (Atlas method, US$) GNI (Atlas method, US$ billions)

Average annual growth. 199945

Population (%) Labor force (%)

Most recent estimate (latest year available, 199945)

Poverty (% of population below national poverty line) Urban population (% of total population) Life expectancy at birth (years) Infant mortality (per 1,000 live births) Child malnutriition (% of children under 5) Access to an improved water source (% of population) Literacy (% ofpopulation age 15+) Gross pnmary enrollment (% of schod-age population)

Male Female

KEY ECONOMiC RATIOS and LONG-TERM TRENDS

GDP (US$ billions) Gross capital formationiGDP Exports Of goods and ServicedGDP Gross domestic savings/GDP Gross national savingsiGDP

Current account balance/GDP Interest paymenWGDP Total debt/GDP Total debt servicekxports Present value of debt/GDP Present value of debffexports

(average annual growth) GDP GDP per capita Exports of goods and services

1985

31.1 18.3 10.4 5.9

22.7

-4.1 1.7

43.2 24.5

1985-95 199545

5.2 3.7 2.6 1.2 9.8 6.5

Pakistan

155.8 690

107.3

2.4 3.0

33 34 64 74 35 90 47 68 80 57

1995

60 6 18 5 16 7 158 21 0

-40 2 0

49 9 27 6

2004

6 4 3 9

-1 5

south Asia

1.447 590 859

1.7 2.1

29 63 66 49 84 61

103 108 97

2004

96.1 17.3 16.0 18.4 23.0

2.0 0.8

37.1 22.3 29.8

149.3

2005

7.8 5.2 7.6

Low- income

2,343 510

1,188

I 9 2 2

31 58 79 43 75 61

100 105 94

2005

1107 16 8 15 3 122 18 0

-1 3 0 7

31 8 12 3

200549

6 5 4 6

15 5

Development diamond.

Life expectancy

T GN I Gross

capita enrollment per primary

1 Access to improved water source

Pakistan - __ Lowincome group

Economic ratios'

Trade

Domestic Capital savings formation

Indebtedness

Pakistan - ~ Lowincome arouD I

STRUCTURE of the ECONOMY

(% of GDP) Agnculture Industry

Services

Household final consumption expenditure General gov? final consumption expenditure imports of goods and services

Manufacturing

(average annual growth) Agnculture Industry

Services

Household final consumption expenditure General gov't final consumption expenditure Gross capital formation Imports of goods and services

Manufacturing

I985 1995

28.5 26.1 22.5 23.8 15.9 16.3 49.0 50.1

82.0 72.4 12.1 11.7 22.8 19.4

1985-95 199545

4.1 2.7 6.3 4.4 5.7 5.9 5.2 4.3

4.3 3.5 3.9 2.4 4.3 0.8 3.4 1.4

2004

22.3 24.9 17.6 52.7

73.3 8.4

14.9

2004

2.2 12.0 14.1 6.0

8.2 2.1

-3.2 -8.6

2005

21.6 25.1 18.2 53.3

80.0 7.8

19.9

2005

7.5 10.2 12.5 7.9

16.8 2.3 1.7

44.1

Growth of capital and GDP (X) 10 5 0

5 -10

Growth of exports and imports (X)

T I 40

20

0

-20

Note: 2005 data are preliminary estimates. Group data are to 2004

* The diamonds show four key indicators in the country (in bold) compared with its incomegroup average. ifdata are missing. the diamond will be incomplete.

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Pakistan

PRICES and GOVERNMENT FINANCE

Domestic prices (% change) Consumer pnces implicit GDP deflator

Government finance (% of GDP, includes current grants) Current revenue Current budget balance Overall surDlus/deficit

TRADE

(US$ millions) Total exports (fob)

Cotton Rice Manufactures

Total imports (cif) Food Fuel and energy Capital goods

Export pnce index (2000=100) Import pnce index (2000=100) Terms of trade (2000=100)

BALANCE of PAYMENTS

(US$ millions) Exports of goods and services Imports of goods and services Resource balance

Net income Net current transfers

Current account balance

Financing items (net) Changes in net reserves

Memo: Reserves including gold (US$ millions) Conversion rate (DEC, locaVUS$)

EXTERNAL DEBT and RESOURCE FLOWS

(US$ millions) Total debt outstanding and disbursed

IBRD IDA

Total debt service IBRD IDA

Official grants Official creditors Private creditors Foreign direct investment (net inflows) Portfolio equity (net inflows)

World Bank program Commitments Disbursements Pnncipai repayments Net flows interest payments Net transfers

Composition of net resource flows

1985

4.5

16.4 -1.3 -7.8

1985

2,460 279 222

1,922 6,009

1.398

1985

3,247 7,106

-3.859

-506 3,090

-1.275

227 1,048

1,190 15.2

1985

13,465 352

1,312

1,435 58 19

257 443

-169 131

0

678 152 37

115 40 75

1995

13.0 13.9

17.1 -2.5 -6.7

1995

7.759 62

454 4.627

10,296 1,627 1,722

117 107 110

1995

9.628 13,023 -3,396

-1,729 2,709

-2,416

2,647 -231

3,534 30.8

1995

30,229 3,581 3,340

3,216 413 55

312 932 318 442

1,280

706 691 235 456 233 222

2004

4.6 7.8

15.1 1.1

-1.8

2004

12,395 48

634 7.568

13,607 659

3,066

115 118 98

2004

15,123 17,714 -2,591

-2,207 6,684

1.886

-809 -1,077

11,395 57.6

2004

35,687 2,601 6,020

4,285 386 141

574 -685 152 752 156

781 304 385 -81 143

-224

2005

9.3 9.8

14.3 4.1 -3.0

2005

14,371 111 933

8,268 18,724

706 4,534

124 131 94

2005

17,725 25,557 -7,832

-2,394 8,819

-1,407

2,019 -612

10,722 59.1

2005

35,208 2,464 6,651

2,736 400 161

379 905

-389 1,162

465

847 984 431 554 130 424

Inflation (%)

30 T

00 01 02 03 04 05

-GDP deflator " O ' C P I

Export and import levels (US$ mill.) 1 120.0w 7 I

Current account balance to GDP ( O h ) I

Cornposition of 2005 debt (US$ mill.)

I G 1.245 A2 .464

A - IBRD B ~ IDA D ~ Other multilateral F - Rivate C-IMF G - Short-term

E - Bilateral

Development Economics 4/4/06

90

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MAP SECTION

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Page 99: World Bank Document · PDF filebusiness processes and associated legislation and regulations, ... Exacerbated disputes over rights and delays in courts ... Cases of land disputes are

••

•••

••

•••

••••

••

• •••••• ••• • • • • • • ••

Approx. Lineof ControlJAMMU

ANDKASHMIR

Islamabad

Arabian Sea

TAJIKISTAN CHINA

I N D I A

A F G H A N I S TA N

ISLAMICREP. OF

IRAN

TURKMENISTAN

UZBEK.TAJIK.

BALOCHISTAN

SINDH

PUNJAB

N.W.F.P.

This map was produced by the Map Design Unit of The World Bank.The boundaries, colors,denominations and anyother information shownon this map do not imply, on the part of The World Bank Group, anyjudgment on the legal status of any territory, or any endorsement oracceptance of such boundaries.

70° 75°

35°

30°

75°

25°

70°65°60°

DEC

EMBER 2006

25°

30°

35°

60° 65°

GilgitChitral

Mardan

PeshawarKahat

Rawalpindi

Bannu

Mianwali Khushab

ISLAMABAD

Jhelum

Sargodha

GujratSialkot

Gujranwala

Bhakkar

JhanaLahore

KasurFaisalabad

Sahiwal

MultanD.G.Khan

Bahawalpur

Bahawalnagar

Rahimyar Khan

RohriSukkur

Larkana

Dokri

Nawabshah

Hyderabad

Thatta BadinKarachi

Bela

Gwadar

Panjgur

Kalat

Khuzdar

Quetta

Sibi

D.I.Khan

Jhel

um

R.

R.

Ravi

Sutlej

R.

Indus

R.

Nar

aC

anal

Nal

R.

Mouths ofthe Indus

IndusR.

Kuna

r

R.

TAJ IK ISTAN

C H I N A

AFGHANISTAN

N.W.F.P.

PUNJAB

JAMMUand KASHMIR

ApproximateLine of Control

B A L O C H I S T A N

Zhob R.

S I N D H

A R A B I A N S E A

I S L A M I C R E P.

O F I R A N

I N D I A

PROJECT PROVINCE

SELECTED CITIES

NATIONAL CAPITAL

MAIN ROADS

RAILROADS

RIVERS

PROVINCE BOUNDARIES

INTERNATIONAL BOUNDARIES

IBRD 34575

PAKISTAN

LAND RECORDS MANAGEMENT ANDINFORMATION SYSTEMS PROJECT

PUNJAB PROVINCE

PAKISTAN

0 100 200 300 KILOMETERS

0 50 100 150 200 MILES

30°

35°

75°

35°

30°

25°

75°70°65°

25°

70°65°