Document of The World Bankdocuments.worldbank.org/curated/en/234761468044084979/pdf/ICR… · Proposal to establish the Water Council is under Finance Department review. The Urban

Document of

The World Bank

Report No: ICR00001950

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IBRD-47300)

ON A

LOAN IN THE AMOUNT OF US$ 39.5 MILLION

TO THE

GOVERNMENT OF INDIA

FOR THE

Karnataka Urban Water Sector Improvement Project

November 30, 2011

Sustainable Development Department

Urban, Water and Disaster Risk Management Unit,

India Country Management Unit

South Asia Region

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i

CURRENCY EQUIVALENTS

(Exchange Rate Effective October 31, 2011)

Currency Unit = Indian Rupees (INR)

US$ 1.00 =INR 48.87

FISCAL YEAR

ABBREVIATIONS AND ACRONYMS

DBO Design, Build, Operate KUIDFC Karnataka Urban Infrastructure

Development Finance Corporation

DEA Department of Economic Affairs M&E Monitoring and Evaluation

DIP Draft Investment Program MTR Mid Term Review

EA Environmental Assessment MLD Million litres per day

ERR Economic Rate of Return NGO Non Government Organization

EMP Environmental Management Plan O&M Operations and Maintenance

FGD Focused Group Discussions PAD Project Appraisal Document

FIP Final Investment Program PDO Project Development Objective

FMR Financial Monitoring Report PIU Project Implementing Unit

GO Government Order PMU Project Management Unit

GoI Government of India PPP Public Private Partnership

GoK Government of Karnataka PSP Private Sector Participation

HH Household/s QAG Quality Assurance Group

IBRD International Bank of

Reconstruction Development

RAP Resettlement Action Plans

ICRR Implementation Completion Results

Report

TF Trust Fund

IEC Information, Education and

Communication

UDD Urban Development Department

JNNURM Jawahar Lal Nehru National Urban

Renewal Mission

ULBs Urban Local Bodies

KTP Karnataka Transparency Act UWS Urban Water Supply

KUIDFC Karnataka Urban Infrastructure

Development Finance Corporation

UWSS Urban Water Supply Sanitation

KUWASIP Karnataka Urban Water Sector

Improvement Project

WASIS Water and Sanitation Information

System

KUWS&DB Karnataka Urban Water Supply and

Drainage Board

WSP Water Sanitation Program

KUWSDP Karnataka Urban Water and

Sanitation Development Program

KSUWSC Karnataka State Urban Water

Supply Council

Vice President: Isabel M. Guerrero

Country Director: Roberto Zagha

Sector Manager: Ming Zhang

Project Team Leader: Raghava Neti

ICR Team Leader: Srinivasa Rao Podipireddy

ii

India

Karnataka Urban Water Sector Improvement Project

CONTENTS

Data Sheet

A. Basic Information

B. Key Dates

C. Ratings Summary

D. Sector and Theme Codes

E. Bank Staff

F. Results Framework Analysis

G. Ratings of Project Performance in ISRs

H. Restructuring

I. Disbursement Graph

1. Project Context, Development Objectives and Design ............................................... 1

2. Key Factors Affecting Implementation and Outcomes .............................................. 4

3. Assessment of Outcomes ............................................................................................ 8

4. Assessment of Risk to Development Outcome ......................................................... 15

5. Assessment of Bank and Borrower Performance ..................................................... 15

6. Lessons Learned ....................................................................................................... 18

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 19

Annex 1. Project Costs and Financing .......................................................................... 20

Annex 2. Outputs by Component ................................................................................. 21

Annex 3. Economic and Financial Analysis ................................................................. 29

Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 36

Annex 5. Beneficiary Survey Results ........................................................................... 38

Annex 6. Stakeholder Workshop Report and Results ................................................... 39

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 41

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 47

Annex 9. Performance Indicators ................................................................................. 50

Annex 10. List of Supporting Documents .................................................................... 53

MAP

IBRD32942

iii

DATA SHEET

A. Basic Information

Country: India Project Name:

Karnataka Urban Water

Sector Improvement

Project

Project ID: P082510 L/C/TF Number(s): IBRD-47300

ICR Date: 12/02/2011 ICR Type: Core ICR

Lending Instrument: SIL Borrower: GOVERNMENT OF

INDIA

Original Total

Commitment: USD 39.50M Disbursed Amount: USD 36.49M

Revised Amount: USD 36.49M

Environmental Category: B

Implementing Agencies:

Karnataka Urban Infrastructure Development & Finance Corporation (KUIDFC)

Cofinanciers and Other External Partners:

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 02/13/2003 Effectiveness: 05/18/2005 05/18/2005

Appraisal: 10/13/2003 Restructuring(s):

Approval: 04/08/2004 Mid-term Review: 03/21/2007 06/07/2007

Closing: 12/31/2008 03/31/2011

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Satisfactory

Borrower Performance: Satisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Satisfactory

Quality of Supervision: Satisfactory Implementing

Agency/Agencies: Satisfactory

Overall Bank

Performance: Satisfactory

Overall Borrower

Performance: Satisfactory

iv

C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments

(if any) Rating

Potential Problem Project

at any time (Yes/No): Yes

Quality at Entry

(QEA): None

Problem Project at any

time (Yes/No): Yes

Quality of

Supervision (QSA): None

DO rating before

Closing/Inactive status: Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Sub-national government administration 5 5

Water supply 95 95

Theme Code (as % of total Bank financing)

Administrative and civil service reform 14 14

Decentralization 14 14

Other urban development 29 29

Pollution management and environmental health 14 14

Urban services and housing for the poor 29 29

E. Bank Staff

Positions At ICR At Approval

Vice President: Isabel M. Guerrero Praful C. Patel

Country Director: Roberto Zagha Michael F. Carter

Sector Manager: Ming Zhang Sonia Hammam

Project Team Leader: Raghava Neti Oscar E. Alvarado

ICR Team Leader: Srinivasa Rao Podipireddy

ICR Primary Author: Srinivasa Rao Podipireddy

v

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The objectives of the project are to; (i) launch Government of Karnataka's urban water

sector reform process based on the "Urban Drinking Water and Sanitation Policy

Statement of GOK", and (ii) improve urban water supply services in the participating

urban local bodies (Hubli-Dharwad, Belgaum, and Gulbarga) and demonstrate that

sustainable, efficient, and commercially-oriented service provision can be achieved.

Revised Project Development Objectives (as approved by original approving authority)

The PDO was not revised.

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : 1.1 The reform base is established and initial reform activities are carried out

Value

quantitative or

Qualitative)

Water Council

established and

reform studies are

completed and

implementation

commenced.

Proposal to

establish the Water

Council is under

Finance

Department review.

The Urban

Technical Cell is

active in its place

as required.

Five out of six

studies were

completed and

implementation is

ongoing.

Date achieved 12/31/2008 03/31/2011

Comments

(incl. %

achievement)

Indicator 2 : 1.2 The ground for private sector participation is prepared as a realistic option for

water and sanitation provision

Value

quantitative or

Qualitative)

Project

demonstrated the

need for PPPs in

the sector.

Project exceeded

target. Both urban

and rural water

sectors are using

PPPs extensively in

several programs,

vi

building on the

experience gained

under this project.

Date achieved 12/31/2008 03/31/2011

Comments

(incl. %

achievement)

Indicator 3 : 1.3 Enabling legal, regulatory and financing frameworks are established for the

sector

Value

quantitative or

Qualitative)

Legal, regulatory

and financing

frameworks are

established.

Financing

framework was

established.

Work continues on

establishing legal

and regulatory

frameworks

Date achieved 12/31/2008 03/31/2011

Comments

(incl. %

achievement)

Indicator 4 : 2.1 Feasibility of Continuous water supply is demonstrated

Value

quantitative or

Qualitative)

One to two hours every

two days in Belgaum and

Gulbarga, and one to two

hours supply every three

to five days in Hubli-

Dharwad

24X7 water supply

demonstrated

24X7water is fully

achieved and

proved sustainable

and commercially

viable.

Date achieved 04/08/2004 12/31/2008 03/31/2011

Comments

(incl. %

achievement)

Indicator 5 : 2.2 Priority bottlenecks to improve quantity of water supply are solved

Value

quantitative or

Qualitative)

Improve bulk

water in the three

ULBs: Belgaum

10 MLD;

Gulbarga 22

MLD; Hubli-

Dharwar 11 MLD

Increase in the bulk

supply in Belgaum

27 MLD; Gulbarga

30 MLD and Hubli-

Dharwar 11MLD

24X7supplies in

demonstration

zones.

Date achieved 12/31/2008 03/31/2011

Comments

(incl. %

achievement)

Indicator 6 : 2.3 Increased consumer awareness, commitment, and ownership for reform are

attained

Value Awareness in Consumers are

vii

quantitative or

Qualitative)

consumers created

and consumers are

committed; have

ownership on

reforms

fully aware of

reforms

implemented (based

on the 2010

consumer survey),

and are paying bills

regularly, and

conserving water

Date achieved 12/31/2008 03/31/2011

Comments

(incl. %

achievement)

Indicator 7 : 2.4 Capacity, Institutional structures, and accountability for water and sanitation

operations of the participating ULBs are improved

Value

quantitative or

Qualitative)

Capacity,

institutional

structure,

accountability for

water supply

operations

demonstrated in

the three ULBs

ULBs appointed an

operator,

introduced

volumetric tariffs,

and are supporting

scaling up of

operations. ULBs,

through the

operator, are

accountable for

water supply

service.

Date achieved 12/31/2008 03/31/2011

Comments

(incl. %

achievement)

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : State Urban Water Council proposal ready for presentation to cabinet

Value

(quantitative

or Qualitative)

No policy/ regulation

body for urban water in

the state. Proposal for

creation of State Urban

Water Council to be

presented for adoption to

competent authorities

Council

established and

operational

covenant complied

with when note is

presented to

cabinet

Proposal to

establish the State

Urban Water

Council presented

to the Government.

Date achieved 04/08/2004 12/31/2008 03/31/2011

Comments

(incl. %

achievement)

viii

Indicator 2 : Demonstration zones in the three participating ULBs achieve proposed service

standards

Value

(quantitative

or Qualitative)

Deficient water service

indicators; water provided

for a few hours every 2 -5

days; no tariffs

In demonstration

zones, there are 8

water supply

service indicators

with weights.

Weighted average

should exceed

75%. Volumetric

tariffs to be

adopted

All the service

indicators achieved

and weighted

average almost

100%. Volumetric

tariffs adopted.

Date achieved 04/08/2004 12/31/2008 03/31/2011

Comments

(incl. %

achievement)

G. Ratings of Project Performance in ISRs

No. Date ISR

Archived DO IP

Actual

Disbursements

(USD millions)

1 06/29/2004 Satisfactory Satisfactory 0.00


3 06/23/2005 Moderately Satisfactory Satisfactory 0.00







10 12/23/2008 Moderately Satisfactory Moderately Satisfactory 30.35





H. Restructuring (if any)

Not Applicable

ix

I. Disbursement Profile

1

1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1.1.1 The state of Karnataka encompasses 27 districts and has a population of

52,850,562 (2001 census). The state includes 218 Urban Local Bodies (ULBs) in

addition to Bangalore city, the capital. The total urban population is 17.96 million (34%).

At the time of appraisal, the quality of water supply services in most of Karnataka‟s

urban areas was poor, characterized by intermittent supplies. A large portion of the

population relied on public stand posts for their water. Most towns in northern Karnataka

provided their residents with water for between 2 hours every two days to 2 hours once a

week.

1.1.2 Both the Borrower and the Bank acknowledged that any reforms in the water

sector would need to address six interrelated factors which accounted for this low level of

service. They included: (a) diffused sector responsibility; (b) lack of accountability; (c)

user charges that did not cover operational costs, stemming from the prevailing view that

water should be a free good; (d) chronic lack of sector investment; (e) a non-transparent

and complicated system of subsidies; and (f) lack of a regulatory framework.

1.1.3 On the basis of the above factors, the Borrower with Bank assistance designed a

project that blended the needed sector reforms with complementary investments to

improve water service levels in three ULBs in Northern Karnataka: Hubli Dharwad,

Belgaum, and Gulbarga. It was also decided to demonstrate the feasibility of providing a

continuous water supply (24X7) to consumers, which would be the first time such a

service level would be provided to any town in India. To that end, the GoK selected five

zones in the three project towns to pilot the 24X7 urban water supply (UWS). To sustain

this level of service, the project also would aim to deliver broader water sector

improvements. Thus, while upgrading service levels in the five zones (hereafter referred

to as demonstration or demo zones), the project would address the chronically low levels

of cost recovery by introducing better commercial practices. In a Government Order

dated May 3, 2003, the GoK announced its decision to support the Karnataka Urban

Water Sector Improvement Project (KUWASIP).

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)

1.2.1 The original project development objectives (PDO) were to: (a) launch

Government of Karnataka's urban water sector reform process based on the “Urban

Drinking Water and Sanitation Policy Statement of GoK," and (b) improve urban water

supply services in the participating urban local bodies (Hubli-Dharwad, Belgaum, and

Gulbarga) and demonstrate that sustainable, efficient, and commercially-oriented service

provision can be achieved. As defined in the PAD, the original seven key outcome

indicators included:

The reform base is established and initial reform activities are carried out.

The ground for private sector participation is prepared as a realistic option for water

and sanitation provision.

Enabling legal, regulatory, and financing frameworks are established for the sector.

Possibility of continuous water supply is demonstrated.

Priority bottlenecks to improving quantity of water supply are solved.

2

Increased consumer awareness, commitment, and ownership for reform are attained.

Capacity, institutional structures, and accountability for water and sanitation

operations of the participating ULBs are improved.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators,

and reasons/justification

The PDOs and key indicators were not revised.

1.4 Main Beneficiaries

1.4.1 The main beneficiaries of the sector reforms (Component A) would be the general

urban population throughout the state of Karnataka totaling approximately 16.8 million

(about 33% of the total population). The project‟s support for the sector reform program

also would benefit the institutions involved in UWS delivery such as Karnataka Urban

Water Supply and Drainage Board (KUWS&DB), Karnataka Urban Infrastructure

Development Finance Corporation (KUIDFC), and Urban Local Bodies (ULBs).

1.4.2 The investments in improved water supply services (Component B) were

expected to benefit all water consumers in the 3 participating ULBs, totaling 1.8 million

(2001 census). They included 940,000 people in Hubli-Dharwad, 425,000 in Belgaum,

and 430,000 in Gulbarga. Among them, 7 to 14 percent or about 230,000 people living

the in the 5 demonstration zones would benefit from the investment in the 24X7 water

supply.

1.5 Original Components

1.5.1 The project had three main components (see Annex 2 for more details).

1.5.2 Component A: Sector Development and Technical Assistance. The objectives

of this component were to: (a) assist GoK in finalizing its policy reform agenda and to

carry out initial implementation of staged sector reforms; and (b) prepare a business

model and PSP process for service provision in the three participating ULBs and other

cities in Karnataka. The component included two main sub-components:

Al. Policy Implementation and State Level Institutional Strengthening (US$0.89 million).

This subcomponent would initiate implementation of the "Urban Drinking Water and

Sanitation Policy Statement of GoK," and involve: (a) establishing and operationalizing

the Karnataka State Urban Water and Sanitation Council (KSUWSC), (b) strengthening

service delivery in ULBs, (c) developing the state water and sanitation information

system (WASIS), (d) establishing water and sanitation sector investment and tariff

frameworks, (e) reviewing and establishing legal and regulatory frameworks, and (f)

preparing UWS Legislation.

A2. Strengthening of Service Delivery and Preparation of Follow-on Project in the Three

Participating ULBs (US$ 1.66 million). This subcomponent would finance: (a) city-

wide engineering feasibility studies, (b) transition plans, (c) other studies related to PPP

preparation, and (d) a strategy to scale up this project to other cities in Karnataka.

1.5.3 Component B: Physical Investments. This component aimed to: (a) improve

service provision and attain continuous water supply service in selected demonstration

zones in three participating ULBs; (b) generate credibility in the overall program and

learn lessons on the challenges faced in the demonstration zones for scaling up

3

continuous service provision in the entire ULBs; and (c) simultaneously improve the

efficiency of bulk supply operations and distribution networks and attain initial

improvements in water service provision to all the residents of the ULBs.

B1. Priority Investments (US$27.63 million): This subcomponent would finance priority

investments to increase the bulk water supply to the ULBs.

B2. Works in the City Distribution Networks in all three ULBs (US$5.78 million): This

subcomponent would finance short term improvements for most water-stressed users in

each ULB.

B3. Demonstration Projects (US$13.79 million): This subcomponent would demonstrate

that a 24-hour continuous supply of water is achievable, and that this level of service has

health, technical, operational, and commercial benefits.

1.5.4 Component C: Project Implementation (US$1.39 million). This component

would finance incremental operational costs and studies related to project management

and implementation, including short-term consultants for KUIDFC, preparation and

establishment of a monitoring and evaluation system, financial management, PMU staff

training, and project supervision.

1.6 Revised Components

1.6.1 The components were not revised.

1.7 Other significant changes

1.7.1 At the end of the project period, there was a reallocation of funds (US$6.3

million) from the “works” category to the “goods,” “consultant services,” and “operating

costs” categories. The funds for the works were not needed because there were

substantial cost savings achieved as a result of: (a) the delivery of the required service

improvements without the need for any additional expenditures, and (b) the operator

using cost effective HDPE pipes in the demo zones instead of the conventional more

expensive pipes (combination of cast iron and PVC). In addition, unspent funds from the

“consultant services category 3(b)” (US$150,000) and the front end fee (US$197,500)

were reallocated to the “operating costs” category to cover the additional expenditures

resulting from the loan extension.

1.7.2 The project closing date was extended 3 times due largely to the initial 13-month

delay in effectiveness caused by delays in obtaining clearances, creating a special account,

and meeting other start-up requirements, and the 17 month delay implementing the works

in the demonstration zones. Table 1 summarizes the length and reasons for extension in

each case. In addition, the grace period for claims of eligible expenses was extended

from July 31, 2011 to September 30, 2011.

4

Table 1: Extensions of Closing Date and Reasons

Description Time Period Reasons cited for extension

Project Extension

Request 1

Loan closing date extended 6

months - from December 31,

2008 to June 30, 2009.

Bank agreed to extend to

December 2009 if legal

covenants were met during

this period.

To meet both legal covenants

To compensate for loss of time due to delayed

effectiveness (13 months)

To compensate for 17 month delay implementing

demo zone works

To allow operator to manage the demo zones for

the full 2-year period of operations in accordance

with the performance- based contract

To complete construction of a pipeline needed to

improve the water supply in Gulbarga.

Project Extension

Request 2


months - from June 30, 2009

to March 31, 2010.

To implement legal covenants related to

establishment of Water Council and tariff frame

work

To complete civil works cited in the earlier request

for extension and procurement and installation of

bulk meters

To scale up plans in the three towns

Project Extension

Request 3


year - from March 31, 2010

to March 31, 2011

To complete scaling up proposals/plans

To implement WASIS; tariff framework; etc

To complete Gulbarga pipe line work and bulk

meters purchase and installation

To complete additional two small works in

Belgaum (feeder pipeline and dedicated power

line)

Grace period

Extension

Request

Two month extension of

grace period from July 31,

2011 to September 30, 2011

To complete payments for eligible expenses

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

2.1.1 Strong Commitment. From the start of project preparation, there was strong

political commitment to the project. Both the GoK and the institutions involved

proceeded with a project design that would demonstrate the feasibility of a dramatic

change in the water supply service, from an intermittent to continuous (24X7) supply.

This level of service had never been tried before in India in a systematic manner.

2.1.2 Project Development Objective and Key Project Indicators. Although the wording

of the PDO could have been better articulated, it had the correct focus on outcomes. The

intention to „launch‟ the sector reform process was appropriate because it reflects

moderate expectations for achieving sector reform. The focus on improving water supply

services and demonstrating the commercial viability of providing a 24X7 water supply

service also was appropriate because this level of service represented an innovative and

much needed approach for India. However, some outcome indicators were not realistic

(for example, establishing a new legal and regulatory framework).

2.1.3 Project Components. The project components were well designed and aligned

with the objectives. The institutional studies in component A, to be carried out in parallel

with the investment implementation, covered the main reform issues in the State.

Component B and its sub components were well planned, although the detailed means by

5

which the utility would switch from an intermittent to continuous water supply were not

fully clarified by project appraisal.

2.1.4 Quality at Entry. The World Bank and KUIDFC designed this innovative project

in consultation with all key stakeholders, including the ULBs and KUWS&DB. The

project also employed high quality consultants to investigate the main strategic

investment interventions that would be required for a continuous water supply in the

demonstration zones. The design, which included city wide bulk water supply

improvement programs, gave the local decision makers and communities the needed

initial confidence in the project. Community consultation and social mediation was

another important factor paving the way for ensuring public ownership and acceptance of

new tariff requirements to ensure the successful implementation of Component B

investments. The main weaknesses in the project design relate to use of key outcome

indicators that were not realistic for measuring progress in meeting the first PDO.

2.1.5 Institutional Arrangements. The responsibility for project implementation was

assigned to the KUIFDC which had extensive experience implementing externally

financed urban projects. Other important state institutions such as KUWS&DB and the

ULBs were also involved.

2.1.6 Safeguards and Project Risks. The project design was consistent with the Bank‟s

safeguard policies. In terms of environmental impact, the project was classified as

Category B (Partial Assessment). The project also triggered the policy on involuntary

resettlement because some minor land acquisition was likely given the nature of the

investment. The risk assessment at appraisal was highly relevant. The appropriate

mitigation measures were put in place to address the high probability risks relating to

sustainability, cost recovery, procurement difficulties, project ownership, and acceptance

of a private operator.

2.2 Implementation

2.2.1 Overall Project Implementation. The US$39.5 million loan for the KUWASIP

was approved by the World Bank Board on April 4, 2004 and became effective on May

18, 2005. The project closed on March 31, 2011 with disbursement of US$36.49 million

or 92%. Although it took almost a year for the GoI to meet all conditions for project

effectiveness, the PMU in KUIDFC was fully prepared after project approval to start

project implementatio and completed the procurement of consultants for Component A

and an operator for Component B (demo zone). Overall, the implementation

arrangements matched the project management needs and there were no major issues

either in funding or procurement.

2.2.2 The infrastructure investments and measures to ensure sustainable operations were

implemented as planned; all parties and heads of state remained committed to a 24X7

water supply. However, as is the case in many countries, sector reform is complex, and

producing the multiple outputs from Component A was constrained by political

instability in the state of Karnataka. During the project period, the Chief Minister (head

of the state) changed five times and there were three different ruling parties. The

Secretaries of the Urban and Finance ministries also changed. This was the most

important factor responsible for delays in moving forward with reforms, and by the end

of the project; the State had not authorized the KSUWSC or adopted the proposed legal

and regulatory framework. Nonetheless, the team of experts on the ground, which

6

substituted for the KSUWSC, was successful in: (a) implementing the most urgently

needed reforms such as the new tariffs and financing framework, and (b) engaging with

the World Bank-supported Water and Sanitation Program India (WSP – World Bank) in

drafting a comprehensive road map for the sector reform building on the studies carried

out under this project.

2.2.3 Under Component B, implementation of priority infrastructure did not face any

challenges except procurement and routine construction related problems resulting in the

delayed commissioning of continuous water supply in five demo-zones (the reason for

seeking the project first extension). However, achieving the 24X7 water supplies under

Component B3 (Demonstration Projects) faced several challenges:

Enhanced bulk supply to improve water supply in towns and demo-zones was

essential to demonstrate service level improvements, but delays in completing

priority infrastructure works caused serious concerns.

The complete distribution network in demo-zones needed to be replaced because

the old pipes could not withstand the high pressures, and the operator initially

faced resistance from KUWS&DB in accepting HDPE pipes for network.

Due to public concerns relating to tariffs, especially in the demonstration zones,

the ULBs delayed adopting volumetric tariffs endorsed by the state government.

Volumetric billing and use of water meters caused tensions for the public and

politicians. To respond, the ULBs used flat tariffs for six months while producing

dummy volumetric billing so that the consumer can moderate their consumption,

thus demonstrating that they are not insensitive to the poor.

Regularizing unauthorized connections, issuing new connections to every slum

dweller based on states‟ pro-poor policy, and removing redundant public stand

posts required extensive efforts to generate local political support.

Social intermediation and communication had to be deployed strategically to

drive the right messages at the right time.

2.2.4 Finally, with strong primary stakeholders and ULB participation, the project

demonstrated the commercial viability of operations using a private operator. Also as

result of the project, a new model for drawing on the skills of the private operators has

been accepted as a necessary condition for all subsequent 24X7 projects in the state as

well as the rest of the country, thus marking a major policy shift for the water supply

sector.

2.2.5 Mid-Term Review. The mid-term review was carried out through several

missions covering the period April to June 2007. The review noted the delays in

commissioning the 24X7 water supply systems in four zones due to water shortages

during the summer months. The review also highlighted that the Urban Development

Department (UDD) still needed to meet important legal covenants to the adopt the

investment framework and tariff policy as well as present a proposal to the state cabinet

to establish the Water Council. However, at the time of the MTR, tariff plans had been

finalized for the demo-zones and the State had announced its pro-poor policies in support

of this project. The M&E system also had been designed and was about to be launched.

7

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

2.3.1 The M&E framework was developed at appraisal, but the indicators were largely

qualitative and not easily monitored. Moreover, the M&E system was delayed; at the

time of the MTR, the system still had not been launched. Eventually, the M&E system

was used to monitor performance of the contracts and to report results from the demo

zones. However, the system proved to be redundant. The operator that managed the

demo-zones was responsible for reporting on results/performance indicators established

for Component B3 because he was paid against the targets established. These results also

were monitored and certified by an independent third party auditor who was responsible

for certifying payments for investment programs and the operator‟s fee.

2.4 Safeguard and Fiduciary Compliance

2.4.1 Procurement. Supervision missions routinely monitored fiduciary compliance.

Throughout the project period, the PIU did not report any complaints. Day to day issues

were resolved amicably and expeditiously by the project authorities. This was likely due

to the training provided to the staff responsible for procurement. Thus, overall

procurement was rated satisfactory throughout the project period.

2.4.2 Financial Management. The project accounting system was set up and maintained

throughout the project implementation period. The system worked well because it

became part of the overall entity accounting system. The internal audit practice was set

up for KUIFDC during the life of the project. In addition, project accounts were brought

under the purview of the internal audit system and were reviewed on a timely basis.

Nonetheless, late audit report submissions were a constant issue. The PMU submitted the

FMRs and audit reports after the due dates; in some cases, they required recertification.

2.4.3 The lack of qualified accounting staff was another major concern. In one instance,

for example, the accounting staff did not submit some of the rejected claims due to

missing documentation, even though such approvals and documentation were

subsequently obtained. In addition, the project carried out overdraws in two categories

by more than 20%, but did not apply for reallocation until the last month of the project

period. The PMU could have responded to this issue by requesting reallocations of loan

proceeds in a timely manner. These issues could have been addressed by the client

during the life of the project by establishing an effective and dedicated team for

accounting and reporting. Such a team also could have made a significant contribution

toward streamlining the reporting requirements and other financial functions. Overall,

however, the PMU was able to meet the Bank‟s financial management requirements, and

project performance in terms of financial management was rated Moderately Satisfactory.

2.4.4 Environmental Safeguards. Environmental safeguard management was carried

out according to the project‟s Environmental Management Plan (EMP) prepared on the

basis of a Limited Environmental Assessment (LEA) study carried out by independent

consultants. In addition to the LEA and EMP, an Environmental Code of Practice

(ECoP) was developed through the project for water supply projects in the state. The

EMP was implemented by the Operator hired under Component B and was supervised by

the KUIDFC‟s environmental engineers. In addition, the Bank‟s task team closely

monitored overall environmental safeguard management performance, and the

performance ratings were generally satisfactory over the entire project period.

8

2.4.5 Social Safeguards. OP 4.12 (Involuntary Resettlement) was triggered because the

project required land acquisition in two project towns. The Government prepared a land

acquisition and resettlement policy framework satisfactory to the Bank, and resettlement

action plans (RAPs) were prepared for Hubli-Dharwar and Gulbarga. Later, the Gulbarga

RAP was modified because of a decision was made to reroute the pipe lines on

unencumbered Government land, thus bringing down the number of affected families.

The total land acquisition for the project involved 8.41 hectares affecting 215 families,

primarily at Hubli-Dharwar and Gulberga. The RAPs were satisfactorily implemented

and there were no complaints recorded.

2.5 Post-completion Operation/Next Phase

2.5.1 Although the GoK did not establish the KSUWSC as planned, the Urban

Development Department (UDD) of GoK is continuing to advance the proposed UWS

reform agenda since project closure. Although the citywide engineering feasibility

studies and transition plans had a delayed start, the draft reports were available in

October 2011. They are now being financed by the state government and are expected to

provide a solid foundation for follow up investments in the water sector. In addition, the

KUWS&DB, which implemented the project‟s priority investments, is continuing to

operate these assets which are now integrated in the town water systems; not only in the

demonstration zones.

2.5.2 Studies are in progress for scaling up the private sector model in several cities in

Karnataka. KUIDFC also appointed an operator at the end of the initial two year

operations period for the pilot zones in order to sustain the continuous water supply

operations. The operator fee is being paid by the ULBs from the revenues generated

from selling water in the demo zones, thus demonstrating the sustainability and

commercial viability of the 24X7 operations. The ULBs are fully involved in the

schemes in all of the zones, and KUIDFC is helping to manage the operator‟s contract.

Thus, institutional arrangements are in place to sustain the 24X7 operations.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

3.1.1 The PDOs were and continue to be relevant to the country context as suggested by

its consistency with the Bank‟s current India country strategy. Specifically, the project

supports: institutional clarity, fiscal and financial viability (strengthened capacity of

ULBs and viable models for O&M), and services for the poor (reforms and investments

that lead to systematic improvements in the access by poor households to services and

assets). The PDOs are also aligned with the Jawaharlal Nehru National Urban Renewal

Mission (JNNURM), the central government‟s flagship urban program.

3.1.2 The project design is path breaking not only for the state of Karnataka but for

India as a whole. The project results set a new benchmark to which other states and

ULBs now aspire. The project preparation studies were appropriate and guided the

direction in which urban water sector reforms would be directed. The findings of these

studies highlighted: the need for the specific investments and a transparent tariff

framework; the importance of financial and operational sustainability; and opportunities

9

for the ULBs to involve the private sector. The design and implementation methodology

to be used in transitioning to 24X7 water supplies was the first in India. This approach

remains relevant and is being followed by numerous initiatives across the country.

3.1.3 Project implementation demonstrated a paradigm shift in UWS delivery because it

demonstrated that 24X7 water supplies could be a reality in India. The project also

highlighted the importance of good governance in the urban water sector by applying

volumetric tariffs, water meters for all connections, monthly billing, water auditing; and

the need for pro-poor policies by providing access house connections to all residents, and

introducing affordable tariffs that promote water conservation.

3.1.4 Although it was envisaged during project design that the state would lead the

reforms in UWS, decentralization put the onus on ULBs. In this regard, both the GoI and

Bank are now supporting this agenda by strengthening ULBs, as reflected in the Bank‟s

country strategy. Thus, while the original reform agenda continues to be relevant, it is

now expected to be led by the ULBs and supported by the state.

3.2 Achievement of Project Development Objectives

3.2.1 The project achieved it PDOs to (a) launch the GoK‟s urban water sector reform

process based on the “Urban Drinking Water and Sanitation Policy Statement of GoK,

and (b) improve urban water supply services in the participating urban local bodies

(Hubli-Dharwad, Belgaum, and Gulbarga) and demonstrate that sustainable, efficient,

and commercially-oriented service provision can be achieved. The achievement of the

PDOs is based on the project meeting or exceeding most of the seven outcome indicators.

3.2.2 The reform base is established and initial reform activities are carried out

((Indicator 1.1). The state implemented the three most important water supply sector

reform activities: (a) establishing a tariff framework for the state, (b) defining the roles

and framework for setting up the KSUWSC, and (c) establishing a water and sanitation

information system (WASIS). Although the state did not put into operation the

KSUWSC, in accordance with the financing agreement, an ad-hoc Committee was

established and is fully functional in carrying out its role. The state is also implementing

the next phase of reforms based on the WSP‟s review of the five technical studies

supported by the project under Component A. These achievements mark the completion

of the first stage of reforms and thus the objective of launching the state‟s urban water

sector reform process is considered fully achieved.

3.2.3 The ground for private sector participation is prepared as a realistic option for

water and sanitation provision (Indicator 1.2). The original target for this indicator was

exceeded. Not only was the groundwork established for introducing private sector

participation, but a private operator model was successfully implemented, and has

become the standard practice for all 24X7 efforts in the state of Karnataka and across the

country. In Karnataka only, for example, the state invited bids from private agencies to

develop bulk water for both urban and rural areas in Bijapur and Chitradura districts on a

design, build, operate (DBO) model, and several multi-village water supply schemes are

now involving the private sector.

3.2.4 Enabling legal, regulatory, and financing frameworks are established for the

sector (Indicator 1.3). A government order established the financing and tariff

frameworks for the water supply sector in all ULBs. However, the decentralization

agenda delayed finalization of the legal and regulatory frameworks. Although the

10

establishment of the regulatory and legal frameworks proved to be overly ambitious, the

government is currently moving forward on this agenda through a program called

“Karnataka Urban Water and Sanitation Development Program (KUWSDP).” Within the

project period, therefore, this outcome was almost but not fully achieved.

3.2.5 Feasibility of continuous water supply is demonstrated (Indicator 2.1). This

indicator was fully achieved and exceeded. The investments in the demonstration zones

showed that it was possible to achieve a sustainable and commercially viable 24X7 water

supply in India. This was demonstrated by:

• The successful installation of 238 kms of water distribution network including house

connections and repair of customers‟ water meters in all 5 demo-zones covering more

than 25,640 new house connections.

• Continuous (24X7) water supply with good pressure in all 5 demo zones;

• Contracts completed for demo-zone network strengthening (necessary for 24X7) and

the initial two-year period of operation (4/3/2008 to 3/31/2010). The second O&M

contract for two additional years was awarded for the period 4/1/2010 to 3/31/2012.

• Billing based on a volumetric tariff introduced in all 5 demo zones, with a cost

recovery rate of over 70% by the project end, taking into account the costs for bulk

water delivery, O&M, operator remuneration, technical auditor fee, and debt service.

The cost recovery rate was 100% if bulk water delivery and O&M alone are

considered. Therefore, this can be considered as more than fully achieved.

3.2.6 Priority bottlenecks to improve quantity of water supply are solved (Indicator 2.2).

The aim of the Priority Investments subcomponent was to increase the bulk water supply.

As such, KUWS&DB implemented about 11 bulk water investments resulting in

significant improvements in water supply delivery in the 3 participating ULBs, all of

which had experienced severe water scarcity for many years. As a result of the project,

the total water supply available in the 3 towns improved substantially: 27 MLD in

Belgaum, 30 MLD in Gulbarga, and 11 MLD in Hubli-Dharwad. The investments were

not designed to add additional production capacity but to be rolled out in a series of

efficiency measures including reduced leakages, and rehabilitation or improvement of

water production, transmission, and storage systems. The priority water works also

resulted in energy savings and charges (for example, in Hubli, about Rs. 10 million per

annum by changing the supply arrangement).

3.2.7 Under the City Distribution Improvements sub-component, two investments in

water supply were completed in Hubli-Dharwad. These works helped to provide a more

equitable supply across the towns, and in that process, guaranteed supplies to the demo-

zones. The other two towns were found not to need these investments (Gulbarga‟s

distribution network had been remodeled by KUWS&DB and Belgaum has a more recent

network still in good condition). This outcome is therefore fully achieved.

3.2.8 Increased consumer awareness, commitment, and ownership for reform are

attained (Indicator 2.3). Due to the project‟s dramatic success in providing the 24X7

water supplies, the population in other parts of the project towns is now demanding the

same level of service, as reported in the local and national media. In addition, there is

strong political support for this initiative, which in turn, places pressure on the state

government to scale up the 24X7 water supply service. In addition, the population in the

11

demo-zones showed their awareness of the 24X7 water supply service, commitment, and

ownership by paying their water bills promptly. As shown in Table 2, moreover, the low

consumption consumers (less than 15 KL a month), which represent the poorer sections

in the demo-zones, pay water bills more promptly than those in the high water

consumption and higher income categories. Payments exceeding 100% mean that the

poor also are paying the backlog/ arrears accrued under intermittent supply regime. Thus,

this outcome was fully achieved.

3.2.9 Capacity, institutional structures, and accountability for water and sanitation

operations of the participating ULBs are improved (Indicator 2.4). In the project areas,

the ULBs are now fully responsible for UWS provision, and have appointed an operator

to continue to manage water supply in the demo-zones when the initial contract period

ends. In consultation with KUIDFC, the ULBs contracted out the operations for a second

two year term, and are closely working with KUIDFC in preparing scaled up proposals.

The ULBs are also collecting the water tariffs and paying the operator. They are now

more accountable for services, maintaining the 24X7 supplies in the demo-zones, and are

striving to secure funds to scale up the operations. The state agencies also gained

capacity from these operations. Table 3 summarizes some of the key changes as a result

of the ULB‟s improved capacity in water supply operations. More detailed performance

indicators are presented in Annex 9.

Table 3 Performance Improvements

Indicators Outputs from

previous

intermittent

supply

Outputs from

24X7 supply

Outcomes

Water Supply service

level

2 hours in 3

days

Continuous

water supply

Water supplied through network at all

times

Quantity of water

supplied in demo zones

22.14 MLD 18.40 MLD Broke the myth that continuous water

supply needs more bulk water supply.

Reduction in leakages and water

conservation led to reduced demand under

the 24X7 regime.

Average pressure in

the network

Less than 0.5

m head

17.7 m head Water is now delivered to the overhead

tank in the second floor of a house directly.

Table 2. Revenue Collection Efficiency (Demo-Zones):

Consumption

slab

(in KL per

month)

Hubli Dharwad Belgaum

(South)

Belgaum

(North) Gulbarga

0-8 141% 85% 144% 106% 75%

8-15 111% 93% 120% 97% 85%

15-25 78% 78% 105% 95% 88%

25-40 58% 72% 102% 92% 79%

>40 44% 49% 84% 86% 94%

Overall

efficiency

62% 71% 94% 88% 88%

(Source: Analysis of Revenues, Operator Report, Sept 2010)

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No need to pump water, thus saving energy

charges at the household level.

Number of public

fountains in demo-

zones

433 0 All households in the demo zones now

have water connections. No more

drudgery in collection of water; or loss of

employment due to long waiting hours at

stand posts.

Loss of water (non

Revenue Water)

About 50% About 7% Efficient delivery of water – more revenue

water meant increased water available for

the consumer thus reducing the need to

treat more water. This is a climate change

friendly outcome.

Customer service Non-existent 24X7 customer

care center and

ongoing public

awareness

program

established

Operator provides dependable water

services and responds to customers‟

requests and concerns

(Source: Operator‟s Progress Report)

3.2.10 In addition to the investments and efforts on the part of the operator to optimize

hardware systems, social mediation through intensive communications, IEC activities,

use of pro-poor policies, and customer satisfaction surveys was a significant factor

contributing to commercially viable operations. This was unheard of before in the

country.

3.2.11 The project also had a major influence on the way UWS is viewed by the

population in India, thus creating demand for a 24X7 supply across all urban areas in the

nation. This is visible by the sheer number of teams visiting the demo-zones from various

states consisting of elected representatives like Mayors, civil society representatives,

engineers, NGOs, and donors. This is regarded as an outstanding achievement, paving

the way for an effective Private Sector Participation in UWS sector for operators. Further,

there has been a notable change in the way government agencies are currently performing,

as seen in their more professional and consumer oriented approach to UWS service

delivery.

3.3 Efficiency

3.3.1 The Economic Rate of Return (ERR) for the project investments (Component B1

and B3) estimated at project completion is higher than the estimate at appraisal (29%

compared to 16%, respectively), indicating that the economic benefits of the project

investments are higher than initially expected. The main economic benefits from Priority

Investments (Component B1) are the increase in the bulk supply of water and power

savings. At completion, the estimated ERR for the Priority Investments is 30% is

substantially higher than the ERR estimated at appraisal (18%) because the investments

resulted in a larger increase in bulk water supply than estimated at appraisal. The main

economic benefit from the introduction of the 24X7 supply (Component B3) is the

reduction in coping costs associated with intermittent water supply. At completion the

ERR for 24X7 water supply in the demonstration zones is 28% compared to 14% at

appraisal because the coping costs associated with intermittent water supply were found

to be substantially higher than those estimated at appraisal (see Annex 3).

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3.3.2 A financial analysis was carried out on the basis of data provided in the Operator‟s

Progress Report. The analysis shows that the project‟s objectives in terms of sustainable

operation of the water supply defined at appraisal have been achieved. Due to the new

volumetric tariff framework adopted in the ULBs, the average price of water billed is Rs.

11.7/m3. The average billing efficiency is 87% and collection efficiency reaches 95%,

implying that 83% of the water distributed is actually bringing revenues to the utility.

This is well above the objective of 70% set at appraisal and leads to an average revenue

per cubic meter distributed of 9.67 Rs./m3. Based on the estimated unit cost of water

distributed of 8.1 Rs./m3, the level of O&M cost recovery is estimated at 119%, also well

above the target of 80% set at appraisal.

3.4 Justification of Overall Outcome Rating

Rating: Satisfactory

3.4.1 The overall outcome rating is “Satisfactory” on the basis of the following:

The PDOs continue to be highly relevant in the country context and their impact,

in terms of influencing the UWS sector policy at the national level far exceeded

expectations from the standpoint of tariff policy, the involvement of the private

sector, and expansion of the 24X7 supply approach to other parts of Karnataka.

The main outcomes of the project were fully achieved and continue to be

relevant.

The ERR and the IRR exceeded expectations at project appraisal.

The project not only influenced state policy on water supply, but influenced

national policies on the importance and feasibility of 24X7 water supply

services, the involvement of the private sector in water supply delivery, and

tariff policies designed to ensure financial sustainability of the water supply

service.

The poor now have greater access to water supply services due to the project

and their satisfaction is reflected in their willingness to pay the tariff on a timely

basis.

As a result of the project, private operators are now accepted in UWS delivery

in Karnataka, and in other parts of India, thus far exceeding expectations at

appraisal.

The institutional systems worked in harmony; there was high degree of

coordination among the public and private agencies involved in the project.

The project design proved to be optimal for the conditions prevailing in the

project ULBs, particularly the approach adopted to upgrade from an intermittent

to a 24X7 supply.

3.4.2 Although the project did not succeed to operationalize the Water Council or

implementing the new legal and regulatory frameworks for the water supply sector, these

shortcomings did not affect achievement of the PDO, and are considered minor compared

to the significant impact this project has had on water sector reform at the national level.

14

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

3.5.1 Based on the interactions with the primary stakeholders, especially the slum

dwellers in the demo-zones, the following impacts were observed.

Due to the project, the poor now have direct access to a water supply. Every

household has a water connection on their premises. There is no more waiting for

water for days because it is now available round the clock, thus allowing the time

saved to be used for gainful employment.

The poor benefitted the most from the continuous water supply. This population is

highly satisfied with the new service level as evidenced by the large number of

households making timely water tariff payments.

The poor benefited more than the higher income groups because they are solely

dependent on public water systems; the others have alternate sources such as deep

tube wells.

The beneficiaries of the improved water supplies perceive a significant reduction in

water borne diseases due to the availability of good quality water. Women and

children appear to have benefitted the most in this regard.

Women historically walk long distances to obtain water for their families. In the

demo zones, this is no longer the case. The marked reduction in the drudgery

associated with fetching water is a major gain for women who now have more time

for their family.

There is increased social interaction and social cohesion due to reduced poverty and

health related problems.

(b) Institutional Change/Strengthening:

3.5.2 Public Private Partnerships. The private operator played a pivotal role in

delivering a 24X7 water supply in the demo-zones, thus providing an alternative to the

state agencies in management. Based on the success of the project, several of the new

24X7 initiatives across India are relying on the newly found private “operators” instead

of their state agencies. The operators are employed on a performance based DBO

contract (bonus paid for achieving results) which is unique in India.

3.5.3 Strengthening State Institutions. By observing the work of the operator,

KUWS&DB strengthened its own internal systems and capacity, and is expecting to

establish 24X7 water supplies in selected small towns. This will help improve

KUWS&DB‟s performance in the towns for which it continues to be responsible for

water supply. Recently, a proposal to provide 24X7 water supplies in 17 towns (for

example, Shimoga, Bijapur, and Mandaya) was submitted by KUWS&DB to the

government for approval.

3.5.4 Recognition of Prerequisites for Improved UWS. Through the project-financed

institutional strengthening, the state now recognizes the importance of making provider

agencies accountable, placing stress on achieving sustainability in operations, and

implementing supportive capacity building measures as prerequisites for improved UWS

service delivery. The GoI‟s Planning Commission also recognized the importance of

these measures and is likely to reflect this in the country‟s 12th plan.

15

(c) Other Unintended Outcomes and Impacts (positive or negative)

3.5.5 As an unintended outcome of the project, there is now reduced dependency on

state agencies, which are deemed to be inefficient to deliver services. ULBs are gearing

up to hire operators independently to improve UWS services. State agencies remain as

facilitators but with diminishing role as providers. Another positive outcome is the

increased use of water meters even in ULBs that cannot yet dream about a 24X7 supply.

This is likely to promote the use of volumetric billing and thus water conservation and

financial sustainability.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

3.6.1 A full beneficiary assessment was not carried out. However, an independent

survey was carried out in 2010 confirmed that the project has had important benefits,

particularly in the demonstration zones, where the population reported a reduction in

coping costs, increase in water consumption, and time-savings. Annex 5 presents a more

detailed summary of the survey findings. Annex 6 summarizes the results of stakeholder

meetings carried out in September 2011.

4. Assessment of Risk to Development Outcome

Rating: Moderate.

4.1 The state water supply authorities and ULBs consider the project to be a major

success. They endorse the use of a private operator and the delivery of 24X7 supplies.

Many are planning improvements according to the principles established through the

project. The project processes are already institutionalized in several national programs

(for example, JNNURM) and state governments. There are no remaining perceived risks,

and there is no expectation of any future risks from external factors such as changes in

political or policy environments.

4.2 Nonetheless, some project specific risks remain. The reform processes “launched”

still need to be fully implemented; the project only supported initial measures such as

technical assistance studies. Similarly, demonstration of the 24X7 water supply was

limited to the demo-zones, which are relatively small in scale. Thus, there is an urgent

need to demonstrate commercial viability at the town level or the initial high visibility

created around 24X7 may start to dissipate.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory

5.1.1 The Bank‟s performance in ensuring quality at entry is rated Satisfactory,

considering all aspects of quality at entry as shown in Table 4.

16

Table 4. Matrix on Bank’s Performance in Quality at Entry

Strategic

relevance and

approach

Project PDOs are highly relevant both at the time of entry and exit. The Bank

proceeded with the investment on the basis of the Government‟s assigning priority

to urban water sector reforms and demonstrating its commitment through a policy

statement. The resulting project design was a bold yet risky move to demonstrate a

24X7 water supply for the first time in India, thus opening the door for a dramatic

change in the way these services are delivered. Another step was to introduce private

sector participation in the area previously monopolized by the public sector.

Technical,

financial and

macro-economic

aspects

At a time when no one understood how to switch to 24X7 in India, the Bank hired

high quality consultants to show how to accomplish this. The investments

recommended a technical approach designed to turn around the water supply with a

high degree of precision, well adapted to the prevailing conditions. Priority was

given to cost recovery and financial sustainability. This was a first attempt to show

that water operations can be commercially viable and attract private finance.

Poverty, gender,

and social

development

aspects

The Bank ensured that the focus was on the poor and that women in particular would

gain from the improved services because they have the main responsibility for

obtaining the household‟s water. In this context, the project incorporated pro-poor

policies and build in the necessary social intermediation programs.

Environmental

aspects

Because the project largely depended on an increased bulk water supply; instead of

creating a new treatment facility that would use more raw water, the team was

justified in focusing on improving efficiency to prevent water losses. From the

supply side, this was a highly environmental friendly approach. However, the

project did not assign any priority to ensuring adequate wastewater management.

Fiduciary Aspects Adequate arrangements were established for project implementation.

Policy and

Institutional

aspects

The Bank was justified in supporting the use of existing institutional structures for

project implementation, taking into account a role for all stakeholders in this

program. With few exceptions, the Bank demonstrated a realistic approach to the

reform agenda.

Implementation

Aspects

KUIDFC was given key responsibility for implementing Component B, while

Component A was expected to be driven by the Government through the Water

Council that was expected to be created under this project. However, the Water

Council was not established during the project period which may have been due to

the failure of the project to include financial support for its operational costs. This

risk was not recognized during the design of the project.

Monitoring and

Evaluation

Arrangements

The Bank could have ensured that the M&E system was functional prior to or at

least soon after implementation started. The indicators for measuring outcome also

could have been more appropriate for monitoring changes during the course of

project implementation. However, the project did use third party auditing and the

operator‟s contract was “performance based” which meant that the operator was

expected to report on project achievements.

Risk Assessment The Bank realistically assessed most project risks and ensured that appropriate

mitigation measures were put in place. However, the Bank was too optimistic in

expecting more dramatic reforms related to the establishment of the Water Council

(see below) and new legal and regulatory framework.

(b) Quality of Supervision


5.1.2 Bank supported the project extensively through regular supervision missions

involving multidisciplinary teams including international consultants. The Bank team

took timely actions as needed to resolve any issues that arose and provided sound

supervision support. Close support on the following critical areas after project

effectiveness helped to establish a strong foundation for success: selection of demo

zones and citywide investments, competitive selection of the operator, and intense social

interaction and communications campaign. In addition, the Bank‟s close supervision

17

helped to ensure that the project did not face any fiduciary or safeguards problems.

Proactive engagement with the client agencies led to timely identification of challenges

and identification of suitable actions to mitigate them.

(c) Justification of Rating for Overall Bank Performance


5.2 Borrower Performance

(a) Government Performance


5.2.1 The rating is based on its strong ownership of the project from its initial issuance

of a policy statement in support of the project and throughout project implementation. Its

continued commitment is also reflected in its accepting and acting on study findings in

support of reforms. The latter included its decision to implement volumetric tariffs in

demo zones and a state wide tariff framework for urban water supply in general. In the

case of using the private operators, the government‟s support is not limited to this project;

it is now using private operators liberally in delivering other public services, including

rural water supply. In addition, the government‟s performance in the fiduciary aspects

and in the coordination between agencies and timely resolution of project issues was

satisfactory. The government also was proactive in formulating pro-poor policies in

UWS delivery. In this regard, the GoK targeted the urban poor by giving them

incentives to pursue house connections with a meter (with 100% subsidy on house

connection fee, but charging for meters in installments), which eliminated the need for

public stand posts entirely in the demo zones. This allowed every poor household to own

a tap at home. Nonetheless, due to the fluid state of politics during the implementation

period, decisions on reforms were delayed. The Water Council was not operationalized

as planned and other reforms progressed only up to the point envisaged in the project.

(b) Implementing Agency or Agencies Performance


5.2.2 KUIDFC, the implementing agency, remained highly committed to achieving the

PDOs and sustained throughout the project period its broader focus on outcomes,

including replication in several other interested ULBs. The central office in Bangalore

and its regional office are all highly focused and assigned utmost importance to getting

timely outputs from KUWS&DB and from the operator through close monitoring.

(c) Justification of Rating for Overall Borrower Performance


Both the government and the implementing agencies played key roles in the success of

this project. The performance of both is rated Satisfactory, and the combined rating is

Satisfactory.

18

6. Lessons Learned

24X7 for Policy Makers

A continuous water supply (24X7) is achievable in India. However, this requires strong

commitment at both local and state levels and should be accompanied by strong pro-poor

policies (see below) and reform measures.

A continuous water supply does not require more treated bulk water supply. The project

proved that a 24X7 supply is achievable even at reduced rates of supply. Consumption in

the demo-zones with a 24X7 supply is 18.4 MLD as opposed to 22.14 MLD with

intermittent water supplies.

Good governance measures are vital for sustainability. Introducing new water meter

connections and affordable volumetric tariffs that promote water conservation proved

essential for ensuring the sustainability of the 24X7 supplies.

24X7/and Pro-Poor Pricing/Social Mediation

Individual household water supply connections increase consumer satisfaction and cost

recovery and conserve water. Public stand posts not only limit accessibility but result in

water wastage. Barriers to securing household connections for all households, regardless

of income, should be addressed through pro-poor pricing policies.

The poor benefit more from the 24X7 water supply than the higher income groups. They

seldom have alternate potable water sources and perceive that continuous water gives

them significant socio-economic and health benefits. The project also proved that the

poor are good customers and pay bills more promptly than the higher income customers.

Social intermediation is critical to secure the support of the beneficiary population. The

project incorporated a robust communication strategy during both the preparation and

implementation phases of the project. The strategy involved door-to-door distribution of

regularly updated FAQs, establishing public information centers in the demo zones to

ensure transparent access to information for all citizens, ward level meetings, media tours,

information sharing with media on a regular basis, and paid advertisements to place

factual information in the public domain. NGOs played a key role in the door to door

communications to ensure that the local communities had a clear understanding of the

project approach, project progress, billing and tariff arrangements, grievance redress

arrangements, and user responsibilities in a 24X7 water supply system. These measures

ensured consumer ownership and willingness to pay for the improved water supply.

PPPs in 24X7 Water Supply

PPPs are critical for introducing efficiency into water operations. The private sector is

willing to enter the water market and will bring technical and managerial skills if the

contracts are well designed with accountability clearly defined, risks evenly allocated,

and transparent procurement processes incorporated.

Building flexibility into the procurement process, where possible, will help to expedite

project implementation. The operator was dependent on purchaser approval for petty

purchases which led to some delays in completing the contract. Building flexibility into

petty purchases by building appropriate checks, balances, and a robust internal control

mechanism can help expedite timely completion of works.

19

Monitoring and Evaluation

In designing similar projects, it would be helpful to carry out comprehensive benefit

monitoring and evaluation. The evaluation would focus on aspects such as (a)

improvements in the water quality, (b) reduction in instances of water logging, (c)

avoidance of cross contamination, (d) reduction in wastage of water at house hold level,

(e) change in storage of water and other coping strategies by the consumer, (f) impacts on

soil quality, (g) specific health improvements, (h) changes in habits of personal hygiene,

and (i) changes in wastewater generation, before and after the project. The resulting data

for these parameters could be used as a baseline for project M&E and thus demonstrate

the full impact of the project and highlight areas for improving project performance.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies KUIDFC‟s comments on the project identified many positive lessons from the project,

including: the need to ensure adequate bulk water supply; the need for ULBs to authorize

the operator to issue house connections and adopt pro-poor polices; the need to ensure an

uninterrupted power supply; the advantage of using HDPE pipes; the importance of a

communication strategy to support reform implementation; and the advantages of using a

strategic approach to roll out volumetric tariffs, and delinking collection of arrears

accumulated under the previous flat rate regime. With regard to procurement, KUIDFC

noted their negative experience with two procurement delays. However, these delays

occurred through the application of the Bank‟s normal procedures. They also contributed

useful suggestions related to future contracting arrangements, particularly in regard to

operator pre-qualification requirements and performance payments.

(b) Cofinanciers

(c) Other partners and stakeholders (e.g. NGOs/private sector/civil society)

The operator provided a small list of challenges it faced during project implementation

and made a few suggestions on the way forward for future projects which are reflected in

the lessons learned section.

20

Annex 1. Project Costs and Financing

Project Cost by Component (in USD Million equivalent)

Components

Appraisal

Estimate (USD

millions)

Actual/Latest

Estimate (USD

millions)

Percentage of

Appraisal

Component A

Component B

Component C

2.55

40.95

1.39

0.84

43.11

1.16

33%

105%

83%

Total Baseline Cost 44.89 45.11 100.50%

Physical Contingencies

1.73

0.00

0.00

Price Contingencies

4.51

0.00

0.00

Total Project Costs 51.13 45.11 88%

Front-end fee PPF 0.00 0.00 0.00

Front-end fee IBRD 0.40 0.20 50%

Total Financing Required 51.53 45.31 88%

(b) Financing

Source of Funds Type of

Cofinancing

Appraisal

Estimate

(USD

millions)

Actual/Late

st Estimate

(USD

millions)

Percentage

of Appraisal

Borrower 12.03 9.00 75%

International Bank for

Reconstruction and

Development

39.50 36.31 92%

21

Annex 2. Outputs by Component

1. Outputs of Component A1 & A2 Activity Status Action taken

TA Studies to Support State Level Reform

Karnataka state urban water supply

council (KSUWSC)

Study completed;

recommendation

sent to

government

Proposal to set up KSUWSC is

pending with the government

Strengthening service delivery in ULBs Draft

recommendations

provided

State government not convinced

of the draft recommendations

and their feasibility; the draft

recommendations were studied

again under a broader a WSP

funded study

Development of Water and Sanitation

Information System (WASIS)

Completed Established and being used

Water and Sanitation Sector investment

and tariff framework

Completed State government issued

government order and a circular

–investment pattern and tariffs

are implemented all over the

state

Establishment of legal and regulatory

framework

Draft

recommendations

provided

State government not convinced

of the draft recommendations

and their feasibility; the draft

recommendations were studied

again under a broader WSP

funded study.

Preparation of UWS legislation Not carried out Legislative changes are not

required as it is largely governed

by 74 CAA – decentralization

agenda.

Strengthening Service Delivery and Preparation of Follow-on project

Preparation of citywide engineering

feasibility studies

Delayed start as

results from demo

zone took time –

the study work

envisaged

preparation of a

proposal

TATA consulting engineers are

working on this

This was financed by the project

till its closure and thereafter GoK

is financing.

Transition plans

Other studies related to the PPP

preparation

Strategy to scale up in other cities No study is required; already

initiated in cities like Mysore

22

2. Outputs of Component B1: Priority Investments

2.1 Water Supply Improvements in Belgaum City:

Sl.

No

. Details of Works

WB

R N

o.

Na

me

of

the

Co

ntr

act

or

Co

ntr

act

Va

lue

Act

ua

l

Ex

pen

dit

ure

(Rs

in ‘

00

000

)

Sti

pu

late

d

Per

iod

fo

r

com

ple

tio

n

Du

e D

ate

fo

r

com

ple

tio

n

Act

ua

l D

ate

fo

r

com

ple

tio

n Major reasons for delay

1 BGW01

a) Providing 1100 mm dia(8 Kg/cm2) PSC Gravity Main (14900 Rmtr) from Rakkaskop to Hindalga

b) 1000 mm dia K-9 Class DI Transmission main (3210 Rmtr) from Hindalga to Laxmitek in Belgaum.

c) Repairs and Reconditioning of Existing service road from Rakkaskop to Hindalga and Hindalga to Laxmitek.

d) Construction of RCC Intake tower cum Control room on U/s Side of Rakaskoppa Dam with allied works.

e) Construction of RCC Foot Bridge to Intake Tower cum control room on U/s Side of Rakaskoppa Dam with

allied works.

3

7-4-2005

M/s

. T

aher

Ali

Indust

ries

& P

roje

cts

(P)

Ltd

.,

Hyder

abad

1330.3

3

1383.7

5

18 m

onth

s

31

-08-2

006

14

-5-2

008

Permission from PWD

Authorities for road

cutting, Laying of pipeline

was not taken in paddy

fields and muddy roads in

rainy season .Floods in

river, Shifting of Electric

power line.

2 BGW02

a) Providing 508 mm dia 6.40 mm thick (1620 Rmtr) MS Transmission Main from Hindawadi to Anagol

b) Providing 1168 mm dia 9.50 mm thick (10000 Rmtr) MS Transmission main from Kundargi to

Tummaraguddi

c) Construction of 55 Lakh Liters capacity RCC GLSR at Laxmitek, Belgaum.

4

7-4-2005

M/s

. IV

RC

L I

nfr

astr

uct

ure

s

& P

roje

cts

Ltd

.,

Hy

der

abad

17

88

.95

17

64

.54

18

mo

nth

s

07-0

9-2

00

6

01

.06

.20

09

KEB pole Shifting,

Flooded area, Delayed

shutdown for linking,

Delay from various

agencies for permission of

laying pipelines (Military,

PWD, KEB, National

Highway, Railway) and

Extra Items and variation.

Additional Works under Package BGWO2 a) Providing Water Supply arrangement to 2nd stage Ranichamnamma Nagar, Belgaum - 200mm dia DI

pipeline 1400M in length.

b) Construction of 15 lakh liters capacity RCC Shaft type OHT on 15 m staging at TB Ward, Civil Hospital,

Belgaum.

c) Construction of Sump cum pump house at TB Ward, Belgaum, Supply, Erection and Commissioning of 2

Nos. 40 HP pumping machineries at TB Ward pump house.

d) Removing and relaying of 525/ 500mm dia CI/DI pipeline from Laxmitek to Gumatmal, CI-2700m, DI-

2600m in length

23

M/s.

IVRCL

Infrastr

uctures

&

Project

s Ltd.,

Hydera

bad

289

.19

234.6

4

6

month

s for

all

works

and 9

month

s for

OHT.

04.0

1.20

07

04.0

4.20

07

for

OH

T

1.6.

200

9

3 Installment of suitable capacity pumps at pump House 1 (PH1): HBGO1 Providing Centrifugal pump sets at Amminbhavi in Hubli-Dharwad and at Hindalga in Belgaum

At Hubli-Dharwad : 3 No of Pumps are commissioned in July 2007.

At Belgaum : 3 No of Pumps are commissioned in May 2007.

19

20-7-2006 M

/s. A

run

Engin

eeri

ng

Pro

ject

s

Pvt.

Ltd

., B

angal

ore

375.7

8

329.1

2

6 m

onth

s

27

-10-2

006

17

-11-2

007

Non-clearance of site due

to existing running pump

sets and execution of

additional items and delay

in clearance from the

electrical inspectorate.

4 Capacity expansion of feeder mains to some of the reservoirs within the system BGWO4

Providing 200 mm dia DI pipeline from Parsi Grave Yard to Kalmeshawar NAGAR CROSS Ward No.44 to

provide water supply to non Demo Zone area adjoining Belgaum(North) Demo Zone

M/s

Mal

oo

Const

ruct

io

ns

Ban

gal

ore

84.4

2

85.1

6

6 m

onth

s

3/1

1/2

010

4.2

.2011

24

2.2 Water Supply Improvements in Hubli-Dharwad City

S

l.

N

o

.

Details of Works

WB

R N

o.

Na

me

of

the

Co

ntr

act

or

Co

ntr

act

Va

lue

Act

ua

l

Ex

pen

dit

ure

(R

s

in ‘

00

000

)

Sti

pu

late

d P

erio

d

for

com

ple

tio

n

Du

e D

ate

fo

r

com

ple

tio

n

Act

ua

l D

ate

fo

r

com

ple

tio

n

Ma

jor

rea

son

s fo

r

del

ay

5 HDW01 Providing 1168 mm

dia 9.50 mm thick MS

Transmission Main

(23000 Rmtr) from

Amminbhavi

to Nrupathungabetta at

Hubli-Dharwad.

8

30

-6-2

005

M/s

. P

rati

bh

a In

du

stri

es L

td.,

Mu

mb

ai

31

83

.24

31

36

.36

18

mon

ths

18

-10

-200

6

31

-07

-200

7 1.Delay in land acquisition.

2.Delay due to prolonged & heavy

monsoon in the year 2005 and

2006 . Hence lining and gunitting

works are not taken up.Also,

resulting excavation trenches were

completely collapsed and partially

submerged.

Pumps installed at Ameenbhavi

6 HBGO1 Providing Centrifugal

pump sets at

Amminbhavi in Hubli-

Dharwad and at

Hindalga in Belgaum

19

20

-7-2

00

6

M/s

. A

run

En

gin

eeri

ng

Pro

ject

s P

vt.

Ltd

., B

ang

lore

3

75

.78

32

9.1

2

6 m

on

ths

27

-10

-200

6

17

-11

-200

7 Non-clearance of site due to

existing running pump sets and

execution of additional items and

delay in clearance from the


25

2.3 Water Supply Improvements in Gulbarga City S

l. N

o. Details of Works

WB

R N

o.

Na

me

of

the

Co

ntr

act

or

Co

ntr

act

Va

lue

Act

ua

l E

xp

end

itu

re

(Rs

in ‘

00

000

)

Sti

pu

late

d P

erio

d

for

com

ple

tio

n

Du

e D

ate

fo

r

com

ple

tio

n

Act

ua

l D

ate

fo

r

com

ple

tio

n

Ma

jor

reaso

ns

for

del

ay

Rehabilitation of only Transmission Main

7 GBW01 Providing 1118 mm

dia 10 mm thick MS

Transmission Main

(19200 Rmtr) from

Head works to IPS at

Kotnoor in

Gulbarga.

__

_ 9

__

_

30-6

-20

05

M/s

.Bho

ora

thno

m

Const

ruct

ion

Co.(

P)

Lim

ited

,

Sec

un

der

abad

28

76

.24

27

46

.47

18

mo

nth

s

17

-10-2

00

6

22

-04-2

00

7 1) Land acquisition

2) Shifting of Electrical poles

on the alignment of the

transmission main,

8 GBW02

a) Providing 914mm

dia 7.9 mm thick MS

Transmission Main

(7900 Rmtr) from

Kotnoor to

Shorgumbaz and

b) Removing and

relaying of 600mm

dia CI Transmission

main(10500 Rmtr)

from Bennithora to

BP Tank in

Gulbarga.

10

30-6

-2005

M/s

. P

rati

bha

Indust

ries

Ltd

., M

um

bai

1130.2

6

851.2

4

15 m

onth

s

17

-07-2

006

22

-04-2

007 1) Railway crossing work

2) Handing over of land by

KRDCL

9 Package GBWO4 Removing of

existing 600 mm

dia CI Pipes &

replacing the same

with 610 mm dia

(OD) M.S

Transmission Main

from Bennithora

Head works to BP

Tank in Gulbarga

23

3-9-

2010

M/s

Meg

ha

En

gig

& I

nfr

astr

uct

ure

s L

td.

Hy

der

abad

73

1.9

8

34

9.6

9

12

mo

nth

s

30-0

5-2

011

Nea

rly

com

ple

ted

(b

y e

nd o

f A

ugust

20

11) Shifting of poles

Construction of additional filter beds at Shor Gumbaz

26

1

0 GBW03 Providing 15 MLD

capacity Water

Treatment Plant at

Shorgumbaz in

Gulbarga.

1

1

30-6

-20

05

M/s

.Goel

Pro

ject

s P

vt.

Ltd

.,

His

sar,

Har

ayan

a

12

9.9

0

12

9.9

0

12

mo

nth

s

11-0

4-2

00

6

19-0

1-2

00

7 Completion of Rising Main and

Pumping Machinery

Upgrade the Pumping Station at the Head Works

1

1 GBGO1 Providing Deep

well Turbine Pump

sets at Saradagi and

Centrifugal pump

sets at Kotnoor in

Gulbarga

1

4

20

-7-2

00

6

M/s

. A

run

Engin

eeri

ng

Pro

ject

s

Pvt.

Ltd

., B

angal

ore

40

2.0

1

37

9.6

7

8 m

onth

s

27

-12-2

00

6

22

-04-2

00

7 1) Approval of drawings, issue

of PIA certificate.

2) Renovation of existing pump

house 3)Clearance from


27

3. Outputs of Component B2:

1. Distribution Network Improvements

S

l.

N

o

Details of Works

WB

R N

o.

Na

me

of

the

Co

ntr

act

or

Co

ntr

act

Va

lue

Act

ua

l E

xp

end

itu

re

(Rs

in ‘

00

00

0)

Sti

pu

late

d P

erio

d

for

com

ple

tio

n

Du

e D

ate

fo

r

com

ple

tio

n

Act

ua

l D

ate

fo

r

com

ple

tio

n

Ma

jor

rea

son

s fo

r

del

ay

1

2 HBQFXW01 Strengthening and

Extension of

Distribution Mains in

Hubli City ( DI Pipe

length 16230 m of

Diameter ranging from

150mm to 300mm)

5

7-2

-20

06

M/s

. S

ub

has

h P

roje

cts

& M

ark

etin

g L

td.,

Ban

gal

ore

33

8.0

9

32

1.9

7

8 m

on

ths

18

-06

-200

6

11

/7/2

00

8 National Highway authorities

have stopped the work for

want of written permission

from higher authorities, Delay

due to existing, telephone

cables, 11 KV UG cable all

along the pipeline trench and

also due to small and narrow

road.

DWQFXW01 Strengthening and

Extension of

Distribution Mains in

Dharwad City ( DI

Pipe length 9185 m of

Diameter ranging from

150mm to 400mm)

M/s

. S

het

h &

Su

ra

En

gin

eers

Pv

t. L

td.,

Pu

ne

15

3.0

1

15

1.5

9

6 m

on

ths

19

-04

-200

6

31

-07

-200

6 Delay due to National

Highway authorities and

PWD authorities have not

allowed to carry out the

pipeline work

In Gulbarga, Remodeling of Distribution network system to Gulbarga City has been taken up by Board. In

Belgaum there is already existing distribution system

Other Miscellaneous work

1

3 HBGGO1-B Manufacture, supply,

assembly, erection, testing, and

commissioning of Woltman

Helical Type Bulk Flow Water

Meters at various locations in

Belgaum, Hubli-Dharwad and

Gulbarga cities. M/s

. C

het

as C

on

tro

l

Sy

stem

Pv

t L

td,

Pu

ne

10

9.0

0

46

.20

4 m

on

ths

20

-09

-200

7 Work rescinded since the

agency has not completed the

work.

1

4

Rehabilitation works at Gulbarga

GBWO5 a) Repairs to 8.0 Lakh Gallons

Capacity GLSR at Old Filter

Bed

Sri

S.Y

Pat

il,

Gu

lbar

ga

36

.51

25

.92

4 m

on

ths

31

-01

-

20

09

15

-01

-

20

10 1) Handing over of Reservoir

site by the Corporation

Authorities

2) Change in structural

designs

b) Overhauling of Filters Beds

at old filter bed in Gulbarga

city.

---- Sri

M.N

.

Ram

akri

sh na,

Dh

arw

ad

22

.03

21

.18

4 M

on

ths

9/7

/20

10

28

-06

-

20

10

28

c) Supply and Installation of

Laboratory Equipments at Old

Filter Bed in Gulbarga city

---- M/s

Rav

i

Sci

nti

fic

Inst

rum

ent

s C

o.

Hu

bli

. 5

.86

3.4

6

2 M

on

ths

9/5

/20

10

29

-12

-

20

10 Change in laboratory

installation site

d) Overhauling of 7.5 HP,

9.0HP, 50 HP and 60 HP Pump

sets and accessories

M/s

Pu

nee

t

Ele

ctri

cals

,

Hu

bli

13

.27

16

.13

2 m

on

ths

30

-11

-

20

08

11

-03

-

20

10 Handing over of site by the

Dept. for 600mm dia MS

pipeline which is under

progress

e) Supply, Erection,

Electrification and

Commissioning of 60H.P

Centrifugal Pump set

f) Supply, Erection,

Electrification and

Commissioning of 50 H.P

Centrifugal Pump set

M/s

Ch

agi

Ele

ctri

cals

,

Gu

lbar

ga

18

.64

18

.9

3 m

on

ths

30

-12

-200

8

04

-07

-200

9 1) Handing over of site by the

Dept. for 600mm dia MS

pipeline which is under

progress

2) Third party inspection

4. Outputs of Component B3

Sl

No. Component

Sub-Contractor /Agency

through which executed Quantity

Expenditure

(in millions Rs)

1. Pipe line works and

House Service

Connections (HSCs)

M/s. Jain Irrigation Systems

Jalagaon

WBR No.: 1259170 - 1A

237.77 kms of

pipeline &

25383 no. of

connections

(HSCs)

181.43

2. Procurement of

customer water meters

and test benches

M/s. Actaris Industries Ltd.,

WBR No.: 1259137- 1B

22450 nos. of

customers water

meters & 3 nos.

of test benches (as

per contract)

25553 at the end

of contract

26.53

3. Road Restoration City Corporations of

Belgaum, Gulbarga and

Hubli-Dharwad

25.67

4. Billing and Collection

and Customer Support

Software

M/s. Debind Business

Solutions / National

Informatics Centre Bangalore

4.39

1.26

5. Hardware and Software

and other peripherals

for Billing and

Collection System

On quotation basis 4.57

6. Water quality analysis M/s. Jalvahini Management

Services Pvt., Ltd., 0.84

7. Operation and

Maintenance

On quotation basis 33.97

8. Training 1.40

Total 280.06

29

Annex 3. Economic and Financial Analysis

1. The ERR for the project investments (Component B1 and B3) estimated at project

completion is higher than the estimate at appraisal (29% compared to 16%, respectively),

indicating that the economic benefits of the project are higher than initially expected.

(See Table 3). The following compares the ERR at completion with the ERR at appraisal

for Priority Investments (Component B1) and 24X7 water supply investments

(Component B.3). The main data inputs and assumptions used for the analysis are listed

in Table 4.

2. Priority Investments. The main economic benefits from Priority Investments

(Component B1) are the increase in the bulk supply of water and power savings. At

completion, the estimated ERR for the Priority Investments is 30%, which is higher than

the ERR estimated at appraisal (18%) (see Table 3). The ERRs at project appraisal were

13% for Belgaum, 16% for Gulbarga, and 21% for Hubli-Dharwar. The higher economic

returns of the component is due to the higher than expected benefits of the project

investments; overall, the investments resulted in a larger increase in bulk water supply

than the estimates at appraisal (see Table 1). For example, in Belgaum, the increase in

water supply is more than twice the estimate at appraisal (27 MLD compared to 10

MLD). A significant part of the increase in the bulk water supply has been attained

through leakage reduction, rather than capital investments.

Table 1: Priority Investments - Increase in Bulk Water Supply (MLD)

ULBs Appraisal(1)

Completion

Belgaum 10 27

Gulbarga 22 30

Hubli-Dharwar 11 11

Total 43 68 Note: (1) Project Appraisal Document.

3. 24X7 water supply demonstration zones. The main economic benefit from

continuous water supply in the demonstration zones (Component B3) is the reduction in

the coping costs associated with intermittent water supply. For households with piped-

connections, coping costs encompass those for investment in water-related equipment

and those related to the need to supplement water consumption with more expensive

water-sources. For households that rely on public-taps, coping costs include the value of

time spent in fetching water. Eighty focus group discussions (FGDs) were carried out to

estimate the coping costs at completion in the demonstration zones. The FGDs indicate

that all of the households that relied on water-fountains received a private connection,

thus eliminating the need for queuing for water. Moreover, the water supply service level

increased from 2 hours in 3 days to a 24X7 (continuous) water supply, thus reducing the

need to supplement water consumption with expensive water from tankers or other

vendors for those households who could not afford private water storage.

30

4. The results of the FGDs show that the coping costs associated with intermittent

water supply are significantly higher than the estimates at appraisal. At appraisal, coping

costs were estimated to be on average Rs 350/HH/month in 2010 prices1 (equivalent to

the cost of supplementing piped water supply with additional water sources and the loss

of productive time to cope with securing adequate water on a daily basis). The FGDs

indicate that coping costs are on the order of Rs 1,500/HH/month, with significant

variation across users, and on average almost five times the estimates at appraisal (see

Table 2). At appraisal, the assumption was made that coping costs would be reduced to 0

after the project. The FGDs revealed however that even after the 24X7 water supply was

achieved, households still invested a smaller share of their income in containers, water

tanks, and the like. Part of these expenditures can be considered “insurance costs” in the

event that the water system breaks down. Over the long-run, as household gain

confidence in the system, it is possible that these expenditures may be reduced as well.

The average insurance costs at completion are Rs 744 Rs/HH/months. Even with the so

called insurance costs, the net economic benefits associated with continuous water supply

(771 Rs/HH/month) are considerably higher at completion than the estimate at appraisal

(350 Rs/HH/month) in 2010 prices. Thus, the ERR for the 24X7 water supply in the

demonstration zones at completion (28%) is substantially higher than the estimate at

appraisal (14%). See Table 3.

Table 2: Demonstration Zones – Coping Costs (Rs/HH/month)

Appraisal(1)

Completion(2)

Before

project

After

Project

Chang

e

Before

project

After

Project

Chang

e

Hubli-Dharwad

General Households na na na 750 300 450

Slum households (without prior

connection) na na na 1596 0 1596

Slum households (with prior

connection) na na 1. na 1376 0 1376

Belgaum and Gulbarga

General Households na na na 2250 1350 900

Slum households (without prior

connection) na na 2. na 2496 900 1596

Slum households (with prior

connection) na na na 2276 900 1376

Overall

All ULBs 350 0 350 1,516 744 771 Source: (1) Project Appraisal Document; (2) 80 Focus Group Discussions.

5. The FGDs indicate that the economic benefits from the 24X7 water supply are

substantial, and go beyond the reduction in monetary coping costs. Additional socio-

economic benefits from 24X7 water supply projects include: (a) a reduction in health

risks and costs resulting from the ingress of contaminated groundwater and raw sewerage

into the water system (such as lost productive time while sick); (b) improved quality of

1 Equivalent to 250/HH/month, 2004 prices.

31

service and less customer inconvenience; (c) increase in property values; and (d) social

benefits associated with the ability to access water whenever it is needed. For example,

the Voluntary Health Association of India estimates that the country loses 73 million

working-person days because of illnesses caused by water-borne diseases.2 Continuous

water supply also improves the functioning and overall efficiency of the water system by

allowing leakage detection and more efficient demand and supply management.

Table 3: Economic Benefits, by Component

Component ERR - Appraisal1

ERR - Completion2

Priority

Investments(1)

18% 30%

Belgaum 13% 81%

Gulbarga 16% 24%

Hubli-Dharwar 21% 21%

Demonstration

zones 14% 28%

Total 16% 29% Notes: (1) The overall ERR for Priority investments is calculated as the weighted average of the ERR for

individual components.

Source: (1) Project Appraisal Document; (2) 80 Focus Group Discussions as well as project data.

Financial Analysis

6. The financial analysis included in the PAD presents an analysis of the ULBs financial

situation, and highlights the fact that, at project appraisal, none of the ULBs covered even

half of their O&M costs through tariff revenues. The financial analysis then describes

how the project was designed to support the long term objective set out by GoK to

“establish an appropriate cost recovery mechanism through adequate tariffs to ensure

that revenues cover O&M costs, debt service, plus a reasonable return on capital”. The

proposed contributions are outlined at the State, ULB, and Demonstration Zones levels.

7. At the state level, the project would assist GoK in carrying out the state sector

development strategy/action plan, including detailed fiscal allocation of state resources.

At the ULB level, the project would assist the ULBs through studies and capacity

building on: (i) ring fencing the water supply and sanitation operations and recording of

separate accounts; (ii) improvement in billing and collection; and (iii) definition of a

water tariff structure. As reported in Section 3.2. of the present report (“Achievement of

Project Development Objectives”), all relevant studies have been successfully delivered

under the project. These include the following specific studies:

“Establishment and Operationalization of Karnataka State Urban Water Supply

Council” carried out by a consortium including Tahal, TERI, and CRISIL

“Study on Tariff and Investment Framework” carried out by A.F. Ferguson & Co.

Development of Water and Sanitation Information System, including components

related to billing and collection.

2 Patil, Ashik, K.V. Somasundaram and R. C. Goyal (2002). “Current Health Scenario in Rural India”.

Aust. Journal of Rural Health.

32

8. At the Demonstration Zones level, the Project would support the development and

pilot implementation of a volumetric tariff system, using the following methodology and

principles:

Careful transition to volumetric pricing by using both flat rate and volumetric

billing in parallel for a few months, accompanied with social intermediation and

communication activities.

Volumetric rate of at least Rs. 10/m3.

Examination of a policy for connection subsidies

Initial target for tariffs to cover no less than 50% of O&M costs and progressively

increase to no less than 80% of O&M cost by the end of the project.

9. The principles regarding the transition to volumetric pricing and the policy for

connection subsidies were applied successfully during project implementation. The

ULBs used flat tariffs for six months while producing dummy volumetric billing, prior to

the actual application of the volumetric tariffs. A pro-poor policy for connections was

devised, consisting of a waiver of the connection deposits for households residing in a

dwelling with an area under 600 sq.ft., which allowed most of the poor to have individual

house connections, thus paving the way for the removal of public stand posts.

10. An analysis of the Operator‟s progress report on operation of water supply in the

Demo Zones has been carried out to verify whether the following financial sustainability

objectives outlined in the PAD have been achieved:

Volumetric rate of at least Rs. 10/m3

Billing and Collection Rate to exceed 70%3

80% Cost Recovery of O&M cost by the end of the project

Application of Volumetric Tariffs

11. Based on the tariff framework study supported by the Project4, the GoK developed a

general increasing block tariff structure. In accordance with this general framework, a

tariff structure was developed to be applied specifically to each demonstration zone. The

following table presents the volumetric tariffs in use in the three demonstration zones by

project completion.

3 This objective was included as one of the key output indicators in the PAD results framework.

4 Study on Tariff and Investment Framework in the Water and Sanitation Sector

33

Consumer

Category

Hubli-Dharwad Belgaum Gulbarga

Tariff

Slab

Tariff Monthly

min

charges

Tariff

Slab

Tariff Monthly

min

charges

Tariff

Slab

Tariff Monthly

min

charges (in KL) (in

Rs.)

(KL) (Rs.) (KL) ( Rs.)

Domestic

0 - 8 6 Rs.48 0 - 8 6 Rs.48 0 - 8 6 Rs.48

8 - 25 8 8 - 25 8 8 - 15 8

25 - 40 12 25 -

40

12 15 - 25 10

>40 20 >40 20 >25 12

Non-Domestic

0 - 25 16 Rs. 128 0 - 25 16 Rs. 128 0 - 15 16 Rs. 128

25 - 40 24 25 -

40

24 15 - 25 20

>40 40 >40 40 >25 24

Commercial /

Industrial

8 - 25 32 Rs. 256 8 - 25 32 Rs. 256 8 - 15 32 Rs. 256

25 - 40 48 25 -

40

48 15 - 25 40

>40 80 >40 80 >25 48

12. The analysis of the operator‟s Progress Report shows that the average price of water

billed is around Rs. 11.7/KL. This average price was calculated as the ratio between the

amounts billed (in Rs.) and the volumes billed (in KL). The main data are presented in the

table below.

Demo Zones

Supplied

Volume

(cum)

Billed

Volume

(cum)

Current

Demand

( Rs.)

Collection

(Rs.)

Billing

Effi-

ciency

Average

Price

Colle-

ction

Effic-

iency

Revenue

per KL

supplied

Hubli 207,757 176,923 2,062,705 1,980,537 85% 11.66 96% 9.53

Dharward 130,977 103,652 1,063,278 1,008,062 79% 10.26 95% 7.70

Belgaum S 113,674 109,318 1,221,597 1,187,793 96% 11.17 97% 10.45

Belgaum N 151,256 127,229 1,636,955 1,581,065 84% 12.87 97% 10.45

Gulbarga 73,149 69,338 871,190 787,009 95% 12.56 90% 10.76

Average 676,812 586,460 6,855,724 6,544,466 87% 11.69 95% 9.67

Billing and Collection Rates

13. Data submitted by the operator on billing show an average billing efficiency of 87%,

with a variation of this ratio between 79% (Dharward) and 95% Gulbarga).

14. Data available on collection did not allow calculating exactly the collection

efficiency ratio, as the data provided combines the amounts collected on a given month

both on the account of current bills and on the account of arrears payable (arrears accrued

during flat tariff regime). However, data show that the amounts collected on a given

month are at 95% on average. The global billing and collection efficiency is therefore

87% x 95% = 83%, which is significantly above the objective of 70% defined as one of

the output indicators in the results framework at appraisal stage. As discussed in Section

3.2. of the main report, this high level of collection efficiency represents a significant

achievement that can be attributed to the careful design and implementation of a robust

communication program to ensure that the local communities had a clear understanding

34

of the project approach, project progress, billing and tariff arrangements, grievance

redress arrangements, and user responsibilities in a 24X7 water supply system.

Cost Recovery

15. The following table presents the average unit cost of operation and maintenance at

the Demo Zone level:

Component Unit Cost (Rs./m

3)

Cost of Bulk Water 5.2

Operator remuneration 1.9

Technical auditor fee 0.7

Other O&M Charges 0.3

Total 8.1

16. Based on the average price of water billed, as well as the billing and collection

efficiency ratio, the O&M cost recovery ratio is presented below. Thus, the level of cost

recovery achieved (119%) is well above the objective of 80% defined at appraisal.

# Component Comment Value (Unit)

A Average price of water billed Cf. § 8 11.7 Rs./m3

B Billing efficiency Cf. § 9 87 %

C Average amount billed per m3 produced = A x B 10.2 Rs./m

3

D Average Collection efficiency Cf. § 10 95 %

E Average amount collected per m3 produced = C x D 9.7 Rs./m

3

F Unit Cost of O&M per m3 produced Cf. § 11 8.1 Rs./m

3

G O&M Cost Recovery Ratio = E/F 119 %

Benchmarking

17. The Ministry of Urban Development (MoUD) of the Government of India developed

a standardized framework for performance monitoring with respect to water supply,

sewerage, solid waste management services, and storm water drainage5. In 2010, the

MoUD released the first Service Level Benchmarking Data Book, including data on the

level of service-related performance indicators in a sample set of 28 cities from 14 states.

Data provided on metering, non revenue water, collection efficiency, and cost recovery

allows benchmarking the demo zones with the 28 sample cities.

18. As far as metering is concerned, no city in the sample has 100% water connections

metered. The non revenue water represented in average 44.1% of the volumes produced,

and only five cities in the sample had NRW lower than 25 per cent amongst which

Dharamshala (6 per cent) was the only one with NRW levels comparable to the one

achieved in the Demo Zones.

5 MoUD, 2010, Handbook Service Level Benchmarking, Ministry of Urban Development,

Government of India, New Delhi.

35

19. Six ULBs show collection efficiencies higher than 90 per cent, led by Dharamshala

(97.8 per cent); Bengaluru (97.1 per cent); Kolhapur (95.6 per cent); Bhubaneswar and

Surat, both with 93.9 per cent; and Nashik (92.4 per cent). The average collection

efficiency of 19 ULBs is about 60 per cent, with two cities having an efficiency of less

than 40 percent. In terms of collection efficiency, the KUWASIP demo zones also ranks

among the top performers.

20. In terms of cost recovery, the results achieved in the demo zones are also well above

the sample average of 67.2%. Only 5 of the 28 sample ULBs were able to cover their

operation and maintenance (O&M) costs through tariff collection, while 16 ULBs

recovered less than 65% of the O&M.

36

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Lending

Oscar E. Alvarado Sr. Water and Sanitation

Specialist LCSUW

Raghava Neti Sr. Infrastructure Specialist SASDU

Christophe E. Bosch Sector Leader AFTUW

Sushil Kumar Bahl Sr. Procurement Specialist SARPS

Paula E. Reed Procurement Specialist SARPS

Santhanam Krishnan Procurement Consultant SARPS

R. R. Mohan Sr. Social Development Specialist SASDI

K. Mukudan Sr. Urban Specialist SASEI

Smita Misra Sr. Economist SASDU

Sanjay Srivasatava Regional Safeguards Adviser SARDE

Renganaden Soopramanien Lead Counsel LEGAF

Vivek Srivastava Sr. Public Sector Specialist PRMPS

Sumir Lal Manager EXTOC

Midori Makino Lead Evaluation Officer IEGPS

Robert Maurer Lead Urban Sector Specialist MNSUR

Priya Goel Sr. Financial Management

Specialist SARFM

David Hanrahan Lead Environmental Specialist SASES

Stephen D Myers Sr. Consultant SASEI

Javier Jarquin Environmental Specialist WBIEN

Sanjay Rastogi Financial Management Specialist SARFM

Lilian Mc Arthur Program Assistant SASDU

Monica Fernandes Program Assistant GEF

Supervision/

Raghava Neti Sr. Infrastructure Specialist SASDU

Oscar E. Alvarado Sr. Water and Sanitation Specialist LCSUW

Srinivasa Rao Podipireddy Sr. Water and Sanitation Specialist SASDU

Elisa Muzzini Economist SASDU

Priti Jain Sr. Procurement Specialist SARPS

Ashish Bhateja Sr. Procurement Specialist OPCPR

Yash Gupta Procurement Specialist SARPS

Kumaraswamy

Sankaravadivelu Procurement Specialist SARPS

Santhanam Krishnan Procurement Consultant SARPS

Shivendra Kumar Procurement Consultant MNAPR

S. Krishnamurthy Sr. Financial Management

Specialist SARFM

Priya Goel Sr. Financial Management

Specialist SARFM

37

Amandeep Trana Sr. Financial Management

Specialist SARFM

Manoj Jain Sr. Financial Management

Specialist SARFM

Supriti Gupta Financial Analyst SARFM

Midori Makino Lead Evaluation Officer IEGPS

Smita Misra Sr. Economist SASDU

Suryanarayan Satish Sr. Social Development Specialist SASDS

A S Harinath Environmental Specialist SASDI

A. Sita Ramakrishna Environmental Specialist SASDI

Sanjay Srivastava Regional Safeguards Adviser SARDE

Chritophe E. Bosch Sector Leader AFTUW

R. R. Mohan Sr. Social Development Specialist SASDS

Stephen D Myers Sr. Consultant SASDU

Mariapa Kullappa State Coordinator WSP

Anup Wadhawan Country Team Leader WSP

Ritu Thomas Senior Program Assistant DECOS

Lilian Mc Arthur Program Assistant SASDU

Sunita Singh Program Assistant SASDU

ICR

Srinivasa Rao Podipireddy Sr. Water and Sanitation Specialist SASDU Primary Author

William D. Kingdom Lead Water and Sanitation

Specialist SASDU Peer Reviewer

Philippe Marin Sr. Water and Sanitation Specialist MNSWA Peer Reviewer

David Michaud Sr. Water and Sanitation Specialist LCSUW Peer Reviewer

Augustin Pierre Maria Urban Specialist SASDU Financial Analysis

Janis D. Bernstein Sr. Environmental Specialist SASDU Peer Reviewer

Elisa Muzzini Economist SASDU Economic Analysis

(b) Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including

travel and consultant costs)

Lending

FY03 180.14

FY04 78.89

FY05 21.43

Total: 280.46

Supervision/ICR

FY06 37.96

FY07 25.40 136.49

FY08 19.56 100.56

FY09 18 91.77

FY10 21.64 108.16

FY11 11.95 40.70

Total: 96.55 515.64

38

Annex 5. Beneficiary Survey Results

1. A full beneficiary assessment was not carried out. However, an independent survey

was carried out in 2010 to determine the extent to which the project was achieving its

objectives. The survey involved both qualitative and quantitative methods: focus group

discussions with the three municipal corporations, user groups, and operator; and

interviews with users. The survey revealed that the main benefits of the project included

reduction in coping costs, increase in water consumption, and time-savings. More

detailed findings are the following:

The project achieved 100% metered house service connections in the demonstration

zones with illegal connections reduced to near zero. All customers responded that

they are happy with the metering although some of these households (56%) had

opposed metering earlier.

The main benefit is the increase in income of the consumers in real terms. The

incremental increase in net income is on the order of Rs. 90 to Rs. 200 per week in

Hubli-Dharwad, Rs. 300 to Rs. 700 per week in Belgaum, and Rs. 50 to Rs. 300 per

week in Gulbarga.

About 20% of the customers in Hubli and Belgaum, 24% in Dharwad, and 21% in

Gulbarga, are paying less than Rs. 50 per month as water tariff. This is a large

reduction from the tariff they were paying. Presently, they are paying less while

receiving continuous water supply in their houses.

The project resulted in a substantial reduction in water borne diseases. The

information collected from the medical centers reveal that, when compared to 2006

disease prevalence levels, ameobiasis was reduced by 73.5%, dysentery by 64.1%,

and jaundice by 88.6%.

Attendance in schools in the demonstration zones improved in comparison with 2006

levels; in Hubli, it went from 82% to 96%, in Dharwad, from 85% to 98%, in

Belgaum, 75% to 92%, and in Gulbarga, 81% to 97%. In general, there was a

reduction in the girl child drop-out rate from schools in these areas as they no longer

spent their time in collection of water..

Because there is no more storage and pumping to overhead tanks at household level,

there are considerable energy savings to the consumers: 20 to 50 units (KWH) in

Hubli-Dharwad, 15 to 145 in Belgaum, and 15 to 40 in Gulbarga. This energy savings

also has additional environmental benefits.

Discussions with the municipal corporations reveal that their water tariff collection

increased to nearly 80 to 98% which enhanced ULB revenues.

There is an increased sense of pride among the beneficiaries because many teams,

both national and international, visit them frequently. Enquiries and interactions with

stakeholders reveal that more than a dozen teams visited the demonstration zones and

interacted with beneficiaries. All of these teams expressed appreciation for the project

and its outcomes.

There is an increased awareness on reforms among the consumers.

The morale of the water works staff has increased considerably.

39

Annex 6. Stakeholder Workshop Report and Results

Stakeholder Meeting in Gulbarga town – Meeting with Primary Stakeholders in

their neighborhood (of a Slum) in Ward 44 on 11 Sept 2011

1. The meeting was organized on a Sunday evening in the temple premises. About 30

men and women gathered for the meeting. The other participants include Mrs. Chandrika

Alandikar (Elected member of Municipal Corporation), Mr. Desphande (KUIFDC

official), Mr. Prakash (Operator representative), Mr. Prakash Honde (KUWS&DB

Engineer), a representative of third party auditor and Mr Vishwanath Swamiji, Head of

Vishwa Seva Mission, the NGO that facilitated IEC campaign for the project. The

discussions were centered on three project phases, that is, the situation prevailing before

the project (24x7) was implemented, during its implementation, and post project.

In the Intermittent Water Supply regime

The women said that mostly they depended on public stand posts for water which

were „a few‟ in number for a large population. The taps were under deep pits as

pressure was low and so drainage water used to seep into the pits making water

highly polluted. People stand in queue for hours and days for water as there was no

fixed time of supply. This erratic supply system put lot of mental tension and women

had to stay at home worrying for water all the time.

Often, disorder in queue resulted in quarrels with neighbors making life in the

neighborhood very unpleasant. Yet, the water collected was barely meeting the

requirements.

If water was released in the morning time, children used to miss schools as they too

stand in the queue for another pot of water and had to carry from a far off distance to

home.

The water supply engineer confirmed that main water supply lines; more importantly

the transmission line used to leak a lot requiring repairs and so no fixed times were

followed for water supply. Water availability was also for a very small period (upto

one hour) as production of treated water was less.

During Construction Time

Monthly meetings were organized by the NGO. People used to be provided with lot

of information about the program in a questions and answers format (FAQs).

Poor and middle class used to be concerned over tariffs. There was delay in finalizing

tariffs by the ULBs (a committee of three ULBs representatives took a decision on the

tariffs based on the GoK policy and actual costs). Middle class whosoever own a tap

used to pay flat tariff of Rs 40.

The communities informed that the construction program did not cause any serious

inconvenience.

Operator said that although removing public taps is not part of the project, it was

found necessary as each and every household are now provided with an individual tap.

The public taps were redundant.

40

Continuous Water Supply regime:

The men and women of the neighborhood univocally said that it was a big change in

their lives. The amount of convenience and peace they have now is unexpected. They

are completely satisfied with the services now (a very low rate of complaints at the

service centre is an indicator).

Initially, consumers were asked to pay (old) flat tariff while serving dummy bills

based on volumetric tariffs to make them understand the real variation. This strategy

has worked.

Individually, each poor family is paying less than Rs 100 including capital cost of

water meter (deducted @ Rs 30 a month). A local leader made a request to reduce

the tariff further for the poor. However, all the poor are promptly paying the monthly

bills.

The drainage board official said that there is overall improvement in the water supply

all over the town due to bulk water improvements (increased from 50 lpcd to 105

lpcd).

The NGO representative suggested that a small body of consumers/ local

representatives of the demo-zone should have been formed into a committee to

monitor 24X7 water supply.

2. In the closing remarks, the elected member and other officials concluded that there is

a huge change in the quality of life; and socio-economic conditions in this poor

community after switching over to 24X7 water supply – now the neighborhood is clean;

people take regular bath and wear clean clothes; there is good social bonding; and

apparently reduced poverty although there are no clear direct linkages.

Stakeholder Meeting on 12 September 2011, Gulbarga

3. The meeting was held with Elected Members of the Municipal Corporation: Mr.

Saibgouda Patil (Ward 23), Mr. Hanumanthu Gauda (Ward 43); Mr. Udaya Kumar

(Ward 34), Mr S.N. Sirkar (Ward 9) and Mr. Ramesh Kannakeler (Ward 35). This

meeting was also joined by the officials and NGO representatives.

4. It did not go like a conventional meeting discussing issue after an issue – collectively

the elected members pleaded for the Bank support to scale up of 24X7 in the entire town.

They promised sustainability (further increase in tariff if required) and said this is

important for the town. Some of the ward members whose wards partly receive 24X7

water do face problems convincing the people served by intermittent water supply.

41

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

Comments of KUIDFC (Implementing Agency)

1. The Karnataka Urban Water Sector Improvement Project (KUWASIP) is a project for

reforms in water and sanitation sector and service improvements in water sector. The

project is proposed to be implemented in a phased manner. The Government of

Karnataka implemented the first phase of the project (estimated cost: US $ 51.53 million

or Rs.237.04 crores) with World Bank assistance. Karnataka Urban Infrastructure

Development and Finance Corporation (KUIDFC) was the nodal agency for

implementing the project.

2. The three cities selected for investments in the first phase were Belgaum, Gulbarga,

and Hubli-Dharwad. The project was successfully implemented and the primary

objective of demonstrating feasibility of continuous (24x7) pressured water supply was

achieved. The experience and lessons learnt from the above project are summarized

below:

Sector Development and Technical Assistance:

3. While the studies carried out under the above component were quite useful in tariff

structuring and other aspects relating to reforms in water sector, they did not help in

preparation of guidelines or any model documents for 24x7 water supply system. It

would have been quite useful if the project developed “guidelines/ procedures for

preparing project reports for the conversion of an intermittent water supply into 24x7

water supply covering technical and financial aspects,” “Manual on O&M of 24x7 water

supply,” and “model bidding document for performance based management contract for

O&M of 24x7 water supply system” etc.

Priority Investments - Procurement Issues:

4. Procurement of 610 mm dia Transmission Main Work in Gulbarga (Package No.

GBW-04): The time taken for procurement of the above work was one year (23.3.2009 to

1.4.2010). The process of clearance to the draft bid documents by the World Bank itself

took 5 months (23.3.2009 to 21.8.2009). This was due to the fact that comments were

raised by the World Bank in a piece meal manner.

5. Procurement of Electromagnetic Bulk Flow Meters (package No. HBGG01-A):

The procurement process in respect of the above goods was started on 27.11.2008. But,

the same did not materialize even after 11 months. The contract could not be awarded, as

the World Bank communicated its inability to finance the contract due to internal legal

issues with the principal company (M/s. SIEMENS Ltd.,) on 23.10.2009, after expiry of

validity period of the bid. The details are as under:

The World Bank gave permission to go for re-tendering on 21.10.2008.

Accordingly, the tenders were invited and bid evaluations were sent to the Bank

on 15.06.2009.

On 22.06.2009 the World Bank sought clarifications, which were furnished on

03.08.2009, in which the only issue regarding Siemens that was raised was as to

how the authorized agent could quote less than the manufacturer itself. After this,

one more clarification was furnished on 24.08.2009, as desired by the Bank.

42

It was never informed by the Bank that there was any problem in procuring

Siemens meters.

The Bank did not provide any document as to how voluntary settlement between

the World Bank and Siemens would affect the bids called by the borrower.

When the project is rated on performance and delays are examined, the onus will

otherwise to be on the borrower. Obviously, these delays are beyond the control

of the borrower.

The related issue is commitment charges that the State Government has to bear on

account of the delays.

6. It would be appreciated if the World Bank takes appropriate steps to avoid delays in

procurements and keeping the borrower informed about changes in policy/legal issues etc.

that may affect procurements.

Demonstration Project – Selection of Operators:

7. While the very high pre-qualification criteria adopted for selection of the Operator for

the Demonstration Project (viz., experience in management of 24x7 water supply

covering 100,000 connections as against the requirement 25,000 connections under the

Demonstration Project), no doubt helped in procuring services of a good Operator and

lead to the success of the Pilot Project, the Operator remuneration (Rs.22.40 crores with a

provision for bonus for higher performance at maximum 25% of the Operator

remuneration, totalling to Rs.28.00 crores) was exorbitant considering the estimated

capital investment of Rs.42.00 crores. The Operator remuneration works out to 53%

(excluding bonus) and 66% (including bonus) of the capital investment. Hiring services

of Operators at such high costs is not viable.

8. Lesson: While the Demonstration Project has established technical feasibility of 24x7

water supply project, it is necessary to adopt appropriate experience criteria for selection

of Operator for future projects based on the size and complex cities involved, so as to

have good competition and to procure services of Operators at reasonable fee.

Operator Contract:

9. As per the Operator contract, the Operator is to be paid a bonus on achieving higher

performance better than the mandatory performance targets in improving the service

provision. Savings in total expenditure (as a percentage of estimated investments of Rs.

420 million) is one of the components to decide the bonus.

10. On detailed examination of the savings claimed by the Operator the following 2

categories of savings are observed:

(a) Category 1: The following 4 items under the Investment Programme were not

executed / operated by the Operator:

(i) Public Fountains

(ii) Public awareness programme

(iii) Paper advertising and pretender expenses and

(iv) Provision of medical facilities

11. “Public fountains” was not operated because all the consumers in the Demo Zones

opted for individual house service connections. “Public Awareness Programme” was very

43

effectively carried out by KUIDFC, which was one of the main factors for the success of

the Demonstration Project and hence no public awareness programme was needed to be

done by the Operator. Similarly, the other two items were not operated as there was no

need for the same.

12. The bonus is meant for over and above the normal performance. The items not

executed on account of lack of need and not arising out of any superior performance on

the part of the Operator cannot be considered as savings for the purpose of determining

performance bonus.

(b) Category 2: There were a few items which were not primarily related to managing

O&M and which were included in the Investment Programme as “Lump Sum”. These

items had expenditure which was considerably lower than the estimated cost in the

Investment Programme. The details are as under:

(Rs. in lakhs)

Item Estimated cost Expenditure incurred

Training and seminars 80.00 13.98

Insurance 40.00 0.51

Contingencies 261.77 0.00

Taxes 443.11 282.00

13. The Investment Programme was prepared by the Operator himself in which he had

estimated these items as lump sum, which turned out to be far above the actual

expenditure incurred. Since items like tax and insurance are regulatory requirements and

what is legally due has to be paid anyway, such savings cannot be considered for

performance related bonus. It is possible that the original lump sum estimates on these

items which were done by the Operator himself may have been unrealistic when

compared to norms.

14. Similarly, savings in respect of training and seminar cannot be treated as effect of O

& M performance as it was based on client‟s requirement.

15. Thus, the clauses relating to “Bonus for higher performance” were not very clear in

the “Operator Contract.”

16. Lesson: The clauses in the contract document for assessing performance of the

operator need to be quite clear and precise without any ambiguity. In addition, rigorous

procedures need to be stipulated for scrutinizing the project cost with reference to the

relative physical components.

Bulk Water Supply:

17. One of the main reasons for extension of the Operator Contract by 17 months was

due to delay in completion of priority investment works which were crucial to provide

bulk water to the Demonstration Zones.

18. Lesson: In providing 24x7 water supply system in a city, availability of adequate

bulk water to all parts of the city has to be ensured.

44

House Service Connections:

19. Another main reason for extension of the Operator Contract by 17 months was due

to delay in authorization of House Service Connections by ULBs to the Operator.

However, one of the main factors for success of the Demonstration Project was that

provision of house service connections was part of the Operator Contract.

20. Lesson: House service connections should be included in the scope of Operator

Contract. Authorization of house service connections by ULB takes considerable time.

Hence, while converting intermittent water supply into 24x7 water supply system in a

city, the ULB has to properly plan and authorize house service connections to the

Operator well in advance.

Adoption of Policies by ULBs:

21. One of the important factors for success of the Demonstration Project was adoption

of pro-poor policy and a policy for house service connections by the city corporations of

Belgaum, Gulbarga and Hubli-Dharwad apart from tariff policy.

22. Lesson: For smooth implementation of 24x7 water supply project in a city, the ULB

has to adopt relevant policies such as pro-poor policy, house service connection policy

etc., apart from tariff policy well before selection of an Operator.

Power Supply:

23. During the O&M of continuous (24x7) pressured water supply in the Demonstration

Zones, it was observed that supply of bulk water to the Demo Zones was affected due to

interruptions in power supply. In order to overcome the problem of frequent interruptions

in power supply at 100 KVA HT installations in Belgaum (North) Demo Zone, which

was crucial for water supply, an additional work (express feeder main) was carried out.

24. Lesson: Availability of continuous power supply is to be ensured for implementing

24x7 water supply system.

Use of HDPE Pipes:

25. HDPE pipes of PE 100, PN 10 of smaller dia meter (63 mm) were used by the

Operator for distribution network in the Demonstration Project, which resulted not only

in significant savings but also in better performance due to flexible nature of the pipes

and seamless joints. The system is functioning satisfactorily.

26. Lesson: HDPE pipes of smaller diameter of appropriate class may be used for

distribution system in water supply projects, as per the design requirement.

Customer Water Meters:

27. Multi-jet customer water meters class “B” (25000 nos.) conforming to IS779/ISO

4064-1 and compliant with IP68 and capable of operating in ambient temperatures up to

500C were procured and installed by the Operator in the Demonstration Zones. But, a

considerable number of customer water meters developed “Dial not Visible” defect,

during the O&M period of two years. The supplier, after detailed inspection of meters

reported that the defect was not to condensation but due to vaporization of silicon oil

applied on the surface of rubber rings. It was also reported that the meters were

functioning well in European countries and did not have any such problem. Action was

taken to get all the customer water meters repaired / replaced by the supplier to ensure

that the meters functioned properly.

45

28. Lesson: Additional conditions such as (i) the meter shall be free from “Dial not

visible” defect due to vaporization of any chemical or oil used for gaskets or any parts of

the meters (ii) in case the meter develops “Dial not visible” or condensation defects, the

supplier shall replace the total lot / batch of such meters within 30 days etc., are to be

incorporated in the bidding documents for future procurements.

Social Intermediation and Communication Activities:

29. “Social Intermediation and Communication Strategy" (SICS) was an important

component of the project and its effective implementation helped in (i) creating

awareness among all category of stake holders and convincing them that the project was

to their benefit (ii) dispelling their notions that improvement in water supply meant

abnormally high tariff (iii) overcoming initial resistance for implementation of the project

with private sector participation (iv) convincing the poor on the pro-poor dimension of

the project and (v) inculcating habit of paying monthly water charges based on quantity

of water consumed. This was achieved through use of clear and consistent messages

through pamphlets/posters, personal communication with stakeholders and dissemination

of the pro-poor policy which contained tariff reforms /reliefs for this segment of

stakeholders.

30. Lesson: Communication strategy and awareness generation is essential for

implementing reform oriented projects and the same needs to be a component of the

project.

Implementation of tariff for 24X7 water supply:

Allowing sufficient time to consumers to switch over to the new system:

31. Continuous (24x7) pressured water supply was operationalized in Hubli Demo Zone

on 1.12.2007. The Hubli-Dharwad Municipal Corporation (HDMC) directed the Operator

to raise bills in Hubli Demo Zone based on the approved volumetric tariff for 24x7 water

supply w.e.f 1.l.2008. Accordingly, the Operator issued bills to the consumers in

February 2008 for the water consumed during January 2008. There was agitation from

678 consumers on the ground that they had not actually consumed such high quantity of

water. A detailed analysis was carried out which indicated that 77% of the water billed

was actually consumed and the remaining 23% was on account of leakage inside

consumer premises, leakage into old network etc. It took several months to resolve the

issue. The agitation was not only a setback for Hubli Demo Zone but it sent wrong

signals to Dharwad and Belgaum Demo Zones, consequent to which implementation of

the tariff for 24x7 water supply was delayed in the said Demo Zones. Also, it lead to

downward revision in the tariff for 24x7 water supply in the Demo Zones of Hubli-

Dharwad and Belgaum cities. This was due to the hasty decision of HDMC in

implementing the volumetric tariff for 24x7 water supply, without allowing sufficient

time to the consumers to switch over to the new system and to rectify any leaks or

wastages within the customer premises.

32. Whereas, the volumetric tariff for 24x7 water supply was implemented smoothly in

the Demonstration Zone of Gulbarga, as the City Corporation took the consumers in to

confidence by allowing sufficient time to switch over to the new system.

33. Lesson: When an intermittent water supply system is converted into 24x7 water

supply system, the tariff for 24x7 water supply has to be implemented after allowing

sufficient time (say about 6-9 months) to the consumers (i) to get confidence about

46

reliability of 24x7 supply (ii) to get an idea about monthly water charges (iii) to control

consumption and to undertake any repairs in internal plumbing of the consumer. During

this period, the consumers are to be charged at the ULB‟s prevailing water tariff and

dummy bills based on the volumetric tariff for 24x7 water supply are to be issued to the

consumers, so as to give an idea about the monthly charges.

De-linking Arrears:

34. Smooth implementation of volumetric tariff for 24x7 water supply in Gulbarga

Demo Zone was also due to the fact that the City Corporation of Gulbarga delinked the

arrears and started fresh billing system. This was whole heartedly accepted by the

community. Whereas, in-case of Belgaum and Hubli-Dharwad Demo Zones, the bills

raised included arrears and the same was disputed by certain consumers. Based on the

experience of smooth implementation of the billing system in Gulbarga, it was suggested

to the City Corporations of Belgaum and Hubli-Dharwad to delink the arrears.

35. Lesson: When an intermittent water supply is converted in to 24x7 water supply,

delinking arrears relating to intermittent water supply and starting a fresh billing system

not only facilitates easy accounting but also in taking stringent action against defaulters,

as there is general satisfaction amongst the consumers about improved services and

reasonableness of the tariff.

47

Annex 8. Comments of Co-financiers and Other Partners/Stakeholders

Comments from the Operator

Execution of KUWASIP Project

1. The Project was divided into Three Phases. During the first phase of Preparatory

Period-A, the Operator carried out the initial assessment of the existing dilapidated

system, underground and above, in order to evaluate the usability of the existing pipelines

and equipments. A customer survey was carried out to know the actual number of people

who will be beneficiaries of the project based on which the quantum of water to be

supplied by the KUWS&DB in order to maintain the 24x7 water supply in the

demonstration area on the basis of 135 lpcd per capita consumption was to be agreed. A

topographic survey was undertaken to understand the levels of the terrain in order to

decide on the pressure control system to be deployed. Soil investigation was carried out

to understand the details of the earth strata where the pipelines were to be laid and the

nature of the pipe laying technology to be deployed. Based on all the above information,

a hydraulic modeling of the network was carried out to cater not only to the present but

also to the future requirements.

2. Consequently the Operator prepared a Draft Investment Program (DIP) which

detailed various options to convert the existing system to a fully pressurized 24X7

continuous water supply system and recommended the optimum option. Based on this

option, a BoQ was prepared which became part of the DIP. This DIP was discussed

extensively with all the stake holders and changes wherever necessary were incorporated

in the Final Investment Program (FIP) which was subsequently approved by KUIDFC.

3. During the second phase of Preparatory Period-B, the Operator implemented the

technical solutions identified in the agreed FIP by procuring the goods and works as per

the procurement guidelines of The World Bank and achieved all the Performance

Targets set in the Contract. During this time, the Operator prepared an O&M Plan which

was discussed and agreed by the stake holders and subsequently approved by KUIDFC.

4. During the third phase of O&M Period covering two years, the Operator maintained

continuous and pressurized water supply in all Demo Zones and providing round the

clock customer service management through the service centers in each of the Demo

Zones, During this time, the Operator carried out monthly meter readings, bills

generation and distribution, fulfilling service connection requests, providing new pipeline

extensions within the Demo Zones and carrying out routine maintenance works etc.

Challenges

The Operator was to transform the existing intermittent water supply system to a

full-fledged 24X7 pressurized water supply system.

Non-acceptance of this new concept by some stake holders as they considered

entry of Private Operators into their domain as a threat to the organizations they

work for. Managing this was a matter of expertise required in dealing with the

existing system and the personnel who manages the system.

Reluctance of the beneficiaries and nodal agencies to adhere to the new set of

conditions with respect to procurement and the payment mechanism stipulated in

the contract. The issue for them was that the conditions in the contract were not

48

in line with that of Karnataka Transparency Act (KTP). The Operator was hence

forced to adhere to KTP act as well as the World Bank‟s procurement guidelines.

This delayed the procurement process as well as the project. For the same reasons,

payments were delayed well beyond the period mentioned in the contract. This

put serious pressure on fund management by the Operator and also eroded the

margins of the Operator.

Since this sort of time bound and technology oriented project was not very

common in water utility management in India. The Technical Auditor, mainly

consisting of Indian personnel, did not have adequate knowledge and exposure to

the materials and methodologies used by the Operator. This caused delays for

project implementation.

Further, there was an apprehension within the population whether they will ever

be able to enjoy the benefit of 24X7 in the near future because this project was

been talked about for a long time without any tangible result. They were also

apprehensive that the project may lead them to cough up more money towards

their basic needs of life, that is, water.

Lessons Learnt

The question whether to refurbish or replace depends on the condition of the asset,

performance targets to be achieved, and the time set in the contract. In this

project, the majority of the assets have been replaced considering the above.

It is proved that non-availability of water is not the main issue, but managing the

available water effectively is the solution.

By having an effective billing system, it is possible to have an effective

management of water demand.

Consumers are willing to accept reasonable water charges provided services are

efficient and quality is maintained.

An effective communication program is essential for success.

Way forward

Based on the success of this Project, similar projects should be implemented in

other cities in order to conserve the precious resource “water.”

Move from demo zones to full cities as a couple of pilot projects are successfully

implemented in the country; demo zones are a little expensive

While implementing similar projects in future, care shall be taken on following

core principles:

Appropriate prequalification of the bidders to ensure a level playing field; the

core competence required for this type of projects is “experience in O&M”

and hence the lead bidders shall always be an Operator only.

Structured and balance the contract - the contract should distribute the risks

and rewards in an even manner among the parties to the contract; it should not

be a one sided contract.

Set pragmatic targets – the performance targets to be achieved should be

commensurate to the capital investment available and feasible for the project.

The time period to achieve the performance targets or completing the capital

expenditure program shall be practically feasible.

49

Communications program – the Client should ensure a healthy social/ political

environment for project implementation through a meticulously designed

communication program which should commence well before Operator can

start his on-ground work. It is important to create a real and clear perception

of the project in the minds of people well in advance before mis-perceptions

are spread by unscrupulous players.

50

Annex 9. Performance Indicators

1. Performance Indicators of Component A

At the State Level:

Establishment and operationalization of the Karnataka State

Urban Water Supply Council (KSUWSC);

Recommended to GoK ;

proposal under active

consideration at the

finance ministry and is

expected to be established

with some modifications

Implementation of capacity strengthening activities to

support the ULB level reform;

Studies completed;

progress is based on

WSPs‟ study

Development of the State Water and Sanitation Information

System (WASIS);

WASIS established

Establishment of urban WSS sector investments and tariff

frameworks;

Implemented across the

state

Establishment of legal and regulatory framework and

Preparation of WSS legislation.

Likely when reforms

reach next stage (may be

during scale up) At the ULB Level:

Completion of city-wide engineering feasibility studies;

Implementation of transition plans, including ring-fencing of

WSS accounts and improvements in billing and collection

system;

Definition of the scope and scale of follow-on Private Sector

Participation (PSP) and

Completed - draft report

received from Consultants

on October 2011.

Scaling-up in other ULBs Done in Mysore; more

cities to follow

2. Performance Indicators for Component B:

At the ULB Level:

Improved overall water supply availability and quality

resulting from priority investments for bulk water supplies

and distribution network improvements; and

Fully achieved in all the three

ULBs

Implementation of the social awareness and

communication strategy.

Implemented in three ULBs

and found very effective

For each demonstration zone:

Volumetric tariff adopted according to agreed principles in

order to recover no less than 50 percent of Operation and

Maintenance (O&M) costs at initial stage and no less than

80 percent by the end of the Project and

% on Bulk + O&M

Hubli 120%

Dharwas 117%

Belgaum(S) 160%

Belgaum (N) 195%

Gulberga 245%

Weighted average of 75 percent or higher achieved for

eight indicators (see Table B below)

As reflected in the

performance targets set for

the Operator with minor

modifications – See table B

below

51

Table B. Performance Targets as per Clause 5 of Operator Contract

Performance

Target Hubli Dharwad

Belgaum

South

Belgaum

North Gulbarga

(a) Continuous

pressured water

supply to every

connected property

Complied6 Complied

1 Complied

1 Complied

1 Complied

1

(b) Emergency

stoppages shall not

exceed 12 hours

Complied:

no stoppages

Complied:

no stoppages

Complied:

no stoppages

Complied:

no stoppages

Complied:

no

stoppages

(c) 100% of all

connections

metered & records

maintained

Complied:

Oct 10: 7765

Nov 10:

7782

Dec 10: 7800

Complied:

Oct 10: 5892

Nov 10:

5899

Dec 10: 5909

Complied:

Oct 10: 4518

Nov 10:

4533

Dec 10: 4538

Complied:

Oct 10: 4248

Nov 10:

4275

Dec 10: 4280

Complied:

Oct 10:

3316

Nov 10:

3313

Dec 10:

3310

(d) 100% of

customer meters

read every month

and a bill issued

Complied:

Oct 10: 7765

Nov 10:

7782

Dec 10: 7800

Complied:

Oct 10: 5892

Nov 10:

5899

Dec 10: 5909

Complied:

Oct 10: 4518

Nov 10:

4533

Dec 10: 4538

Complied:

Oct 10: 4248

Nov 10:

4275

Dec 10: 4280

Complied:

Oct 10:

3316

Nov 10:

3313

Dec 10:

3310

(e) Physical losses

in the distribution

network <

23l/c/d/m

Complied:

Oct 10: 4.63

Nov 10: 4.96

Dec 10: 4.43

Complied:

Oct 10: 3.47

Nov 10: 2.73

Dec 10: 3.76

Complied:

Oct 10: 5.13

Nov 10: 5.64

Dec 10: 5.39

Complied:

Oct 10: 9.48

Nov 10: 11.0

Dec 10:

12.41

Complied:

Oct 10: 0.96

Nov 10:

1.14

Dec 10:

1.09

(f) System

connection

requests must be

fulfilled within 7

days

Complied:

Oct 10:

17/17

Nov 10:

18/18

Dec 10:

24/24

Complied:

Oct 10: 7/7

Nov 10:

10/10

Dec 10:

13/13

Complied:

Oct 10:

15/15

Nov 10: 6/6

Dec 10:

15/15

Complied:

Oct 10:

28/28

Nov 10: 7/7

Dec 10:

19/19

Complied:

Oct 10: 5/5

Nov 10:4/4

Dec 10: 8/8

(g) 24 hours

working customer

service centre

Complied:

24hrs CSC

Complied:

24hrs CSC

Complied:

24hrs CSC

Complied:

24hrs CSC

Complied:

24hrs CSC

6 Continuous water supply provided and maintained at minimum 6m pressure at critical zonal point at all times except

during the period when there is no minimum required water tank levels in the tank or when there is no electricity supply at booster pumping station

52

(h) Customer

queries and

complaints to be

responded within

stipulated time

Complied;

Received

and

Resolved

Oct 10: 29

Nov 10: 26

Dec 10: 28

Complied;

Received

and

Resolved

Oct 10: 122

Nov 10: 71

Dec 10: 78

Complied;

Received

and

Resolved

Oct 10: 61

Nov 10: 15

Dec 10: 44

Complied;

Received and

Resolved

Oct 10: 49

Nov 10: 51

Dec 10: 95

Complied;

Received

and

Resolved

Oct 10: 87

Nov 10: 78

Dec 10: 91

(i) Leaks

appearing at the

surface must be

repaired within 24

hours of

notification/

observance.

Complied:

Complied:

Complied:

Complied:

Complied:

(Source: Certified Progress Report of the Operator for March 2011)]]

As can be seen above, all the above performance indicators were fully achieved. It is

notable that the Operator earned a bonus on the basis of achieving the sub indicators in

Table B (which were included in the contract with some modification).

53

Annex 10. List of Supporting Documents

1. Project Grant and Financing Agreements

2. Project Appraisal Document

3. Supervision Mission Reports (Aide Memoires, Implementation Status Reports)

4. Management Letter and correspondence with Department of Economic Affairs

(DEA)

5. Operator‟s contract and progress report (more importantly the report of March 2010)

6. Presentations made by KUIDFC (Implementing agency) at various workshops,

seminars etc

7. Sector Studies conducted under component 1

8. Rapid Social Assessment and Communication Strategy, Samaj Vikas Development

Support Organization, Feb 2004

9. Documentation Study of Demonstration Project for providing continuous water

(24X7) pressurized water services in three ULBs in Karnataka state, Final Report,

WSP, April 2009

10. Karnataka Urban Water and Sanitation Program, KUIDFC, WSP, Main Volume

11. World Bank. India Country Assistance Strategy

54

MAP SECTION

Pandavapura

Belur

Tarikere

Shimoga

Hiriyur

Hospet

Sindhnur

Krishna

Lingsugur

Sagar

BagalkotKaladgi

Sankeshwar

NargundSanndatti

Khanapur

Kumbharwad

Londa

Mudgal

Kolar

BANGALORE

Chitradurga

Tumkur

Mandya

Mysore

Hassan

Mangalore

Chikkamangalore

Madikeri

Bellary

Hubli-Dharward

Karwar

Belgaum

Raichur

Bijapur

Gulbarga

Bidar

ChikBallapur

Gadag

Haveri

Koppal

Davangere

Udupi

Chamrajnagar

BhadraR.

Vedava R

.

Cauveri R.

Vard

a

R.

Tungabhadra

R.

Krishna R.

Bhima

R.

Arabian

Sea

7674

12

14

16 16

18

74 76 78

18

14

12

78

This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other informationshown on this map do not imply, on the part of The World BankGroup, any judgment on the legal status of any territory, or anyendorsement or acceptance of such boundaries.

PARTICIPATING ULBs

SELECTED CITIES

DISTRICT CAPITALS

STATE CAPITAL

DISTRICT BOUNDARIES

STATE BOUNDARIES

0 50 100KILOMETERS

0 25 50MILES

IBRD 32942

MARCH 2004

INDIA

STATE OF KARNATAKA

KARNATAKA URBAN WATERSECTOR IMPROVEMENT PROJECT