Report and Recommendation of the President to the Board of Directors

Project Number: 40559 October 2008

Proposed Loan People’s Republic of Bangladesh: Second Urban Governance and Infrastructure Improvement (Sector) Project

CURRENCY EQUIVALENTS (as of 30 September 2008)

Currency Unit – taka (Tk)

Tk1.00 = $0.01460

$1.00 = Tk68.49

ABBREVIATIONS ADB – Asian Development Bank BME – benefit monitoring and evaluation CBO – community-based organization FIRR – financial internal rate of return GAP – gender action plan GICD – governance improvement and capacity development GPD – governance program development GRC – grievance redress committee GTZ – Gesellschaft für Technische Zusammenarbeit (German Agency

for Technical Cooperation) IEE – initial environmental examination IES – international environment specialist IRS – international resettlement specialist KfW – Kreditanstalt für Wiederaufbau (Reconstruction Credit Institute) LGD – Local Government Division LGED – Local Government Engineering Department MDS – management, design, and supervision MPRC – municipal performance review committee NCB – national competitive bidding NES – national environment specialist NGO – nongovernment organization NRS – national resettlement specialist O&M – operation and maintenance PDP – pourashava development plan PIU – project implementation unit PME – performance monitoring and evaluation PMO – project management office PPMS – project performance management system PRAP – poverty reduction action plan PS – pourashavas RES – regional environment specialist RRS – regional resettlement specialist SGIA – second-generation imprest account SIC – slum improvement committee TGIA – third-generation imprest account TLCC – town-level coordination committee UGIAP – Urban Governance Improvement Action Program UGIIP-1 – Urban Governance and Infrastructure Improvement (Sector)

Project UMSU – Urban Management Support Unit WACC – weighted average cost of capital WLCC – ward-level coordination committee

GLOSSARY pourashava – secondary town

NOTES (i) The fiscal year of the Government and its agencies ends on 30 June. FY before

a calendar year denotes the year in which the fiscal year ends, e.g., FY2008 ends on 30 June 2008.

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

Vice-President X. Zhao, Operations 1 Director General K. Senga, South Asia Department (SARD) Director H. Kim, Urban Development Division, SARD Team leader M. Tachiiri, Urban Economist, SARD Team members R. Barba, Safeguards Specialist, SARD F.S. Begum, Social Development Officer, SARD Md. R. Islam, Project Implementation Officer, SARD M. Thiruchelvam, Project Implementation Officer, SARD C. Vandenabeele, Senior Counsel, Office of the General Counsel

CONTENTS Page

LOAN AND PROJECT SUMMARY i MAP I. THE PROPOSAL 1 II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 1

A. Performance Indicators and Analysis 1 B. Analysis of Key Problems and Opportunities 2

III. THE PROPOSED PROJECT 4 A. Impact and Outcome 4 B. Outputs 4 C. Special Features 7 D. Project Investment Plan 8 E. Financing Plan 9 F. Implementation Arrangements 10

IV. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS 14 A. Economic and Financial Analyses 14 B. Poverty Reduction and Social Development 15 C. Environmental and Social Safeguards 16 D. Major Risks and Assumptions 17

V. ASSURANCES 17 VI. RECOMMENDATION 19 APPENDIXES 1. Design and Monitoring Framework 20 2. Urban Sector Analysis 24 3. External Assistance to the Urban Sector 27 4. Summary of Lessons from the Urban Governance and Infrastructure Improvement

(Sector) Project 28 5. Criteria for Subproject Selection 29 6. Fund Allocation Mechanism and the Urban Governance Improvement Action Program 31 7. Detailed Cost Estimates 34 8. Implementation Arrangements 36 9. Implementation Schedule 37 10. Summary Procurement Plan 38 11. Outline of Terms of Reference for Consultants 40 12. Summary Poverty Reduction and Social Strategy 43 13. Summary Gender Action Plan 47 14. Summary Initial Environmental Examination 48 15. Summary Resettlement Framework 53

SUPPLEMENTARY APPENDIXES (available on request) A. Pourashava Development Plans for Cox’s Bazar, Bhanga, and Rangpur B Lessons from Urban Governance and Infrastructure Improvement (Sector) Project C. Institutional Assessment D. Financial Analysis E. Economic Analysis F. Financial Management Assessment G. Financial Management and Disbursement Arrangements H. Selection of Target Pourashavas I. Guidelines for Pourashava Development Plans J. Procurement Plan K. Subproject Initial Environmental Examination L. Summary Sectoral Environmental Examination M. Environmental Assessment and Review Procedure N. Indigenous Peoples Development Framework O. Resettlement Framework P. Short Resettlement Plans Q. Gender Action Plan R. Project Readiness Assessment

LOAN AND PROJECT SUMMARY Borrower People’s Republic of Bangladesh Classification Targeting classification: Targeted intervention (TI-M)

Sectors: Multisector (transport and communications; and water supply, sanitation, and waste management) Subsectors: Multimodal transport and sector development, water supply and sanitation, and waste management Themes: Governance, capacity development, gender and development Subthemes: Civil society participation, institutional development, gender equity in capabilities

Environment Assessment

Category B: Initial environmental examinations (IEEs) for six sample subprojects and a sector IEE were undertaken. An environmental assessment review procedure and subproject environmental selection guidelines have been formulated to guide the implementation of future subprojects.

Project Description The Second Urban Governance and Infrastructure Improvement

(Sector) Project (the Project) supports the improvement of urban governance and of infrastructure and service delivery in pourashavas (secondary towns). The Project adopts the performance-based allocation of investment funds as an incentive mechanism for governance reform. Performance criteria are defined in six key areas of urban governance: (i) citizen awareness and participation, (ii) urban planning, (iii) women’s participation, (iv) integration of the urban poor, (v) financial accountability and sustainability, and (vi) administrative transparency. Investment funds will be utilized to improve municipal transport, drainage, solid waste management, water supply, sanitation, municipal facilities, and basic services in slums. The project design is based on the lessons from the ongoing Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP-1).

Rationale Unplanned and rapid urbanization creates large unmet demand

for urban infrastructure and services. Pourashavas have not managed to meet this challenge because of weak governance, limited financial and human resources, and a lack of proper planning. The Asian Development Bank (ADB) has supported urban development with a series of projects. The most important lesson, in particular from the ongoing UGIIP-1, is that the improvement of urban infrastructure and service delivery can be achieved more effectively by linking it with governance reforms and creating a proper incentive mechanism. The performance-based allocation of investment funds creates a strong incentive for pourashavas to reform their governance, and the improved governance ensures the effectiveness and sustainability of the capital investments.

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Impact and Outcome The impact of the Project is sustained improvement in the urban

environment and quality of life in target pourashavas. The outcome of the Project is improved urban governance and expanded access to urban infrastructure and services in target pourashavas.

Project Investment Plan The investment cost of the Project is estimated at $167.5 million,

including taxes and duties of $10.7 million. Financing Plan ADB will provide SDR 55,445,000 ($87 million equivalent),

covering 51.9% of the project cost. German development assistance will cofinance the Project with €3 million ($4.7 million equivalent) from GTZ and €23 million ($36.1 million equivalent) from KfW. The Government of Bangladesh will finance the equivalent of $31.7 million, covering 18.9% of the project cost. Pourashavas will finance the equivalent of $7.3 million and beneficiaries $0.7 million.

Source Amount ($ million)

Share (%)

Asian Development Bank (ADF) 87.0 51.9 GTZ 4.7 2.8 KfW 36.1 21.6

Government of Bangladesh 31.7 18.9

Pourashavas 7.3 4.4

Beneficiaries 0.7 0.4

Total 167.5 100.0 ADF = Asian Development Fund, GTZ = Gesellschaft für Technische Zusammenarbeit, KfW = Kreditanstalt für Wiederaufbau. Sources: Government of Bangladesh and Asian Development Bank estimates.

The ADB loan from Special Funds resources will have a 32-year term, including a grace period of 8 years, and an interest charge of 1% per annum during the grace period and 1.5% per annum thereafter.

Allocation and Relending Terms

For subprojects that generate cash revenues, 50% of project cost for class A pourashavas and 30% of project cost for Class B pourashavas will be relent with an amortization period of 20 years, including a 5-year grace period and an interest charge of 4% per annum. The remaining project costs will be funded as a grant. For subprojects that do not generate cash revenues, 100% of the project cost will be funded as a grant.

Period of Utilization June 2015 Estimated Project Completion Date

31 December 2014

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Implementation Arrangements

A project management office will be established within the Local Government Engineering Department (LGED) and responsible for overall project management. In each target pourashava, a project implementation unit will be established.

Executing Agency Local Government Engineering Department Procurement Procurement of goods and services under the Project will be

carried out in accordance with the ADB’s Procurement Guidelines (2007, as amended from time to time), and the Government’s Public Procurement Rules (2008), as acceptable to ADB. National competitive bidding procedures will be applied for works contracted for less than $2.0 million and will be the major mode for civil works contracts, as the subprojects are small. Equipment and materials will be procured under international competitive bidding when the estimated cost is more than $500,000 equivalent.

Consulting Services Consulting services will be provided to support project

implementation and strengthen the institutional capacity of the pourashavas and LGED. Major packages are package 1: governance improvement and capacity development, and package 2: management, design, and supervision. Consultants will be selected and engaged in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time), and the Government’s Public Procurement Rules (2008), as acceptable to ADB. The firms will be selected using the quality- and cost-based selection method.

Project Benefits and Beneficiaries

An estimated 3.8 million citizens of the target pourashavas will benefit from improved governance, infrastructure, and service delivery. Citizens, in particular women and the poor, will have enhanced representation in urban management. The poor in slums will directly benefit from the provision of basic services in slums selected in each pourashavas.

Risks and Assumptions A major assumption of the Project is that the performance-based

allocation of investment funds will generate sufficient incentive for pourashavas to carry out governance reforms. Also assumed is that citizens are willing to participate in decision making, and that elected leaders and pourashava officials will listen and respond to citizens’ voices. The successful experience of UGIIP-1 indicates that the performance-based allocation mechanism creates sufficiently strong incentives for governance improvement. It is unlikely that pourashavas will find significant alternative funding sources, which could undermine the leverage of performance-based allocation. Further, enhanced citizen participation is assumed to establish sustainable incentives for elected leaders to improve urban management and services.

B a y o f B e n g a l

Ganges R.

Madhum

ati R.

Padma R.

Meghna R.

Brahmaputra R.

Jamuna R

.

Teesta R.

Har

ingh

ala

R.

Pus

sur

R.

Kushiyara R.

DHAKA

Dinajpur

Gaibandha

Thakurgaon

Rangpur

Kurigram

Jamalpur

Sheepur

Sreemangal

Brahmanbaria

Golapganj

Rajshahi Natore

Nachol

Sirajganj

Mymensingh

Tangail

Mirzapur

Jhenaidah

Faridpur

Narail

Benapole

Bhanga

Munshiganj

Kolapara

Ghorashal

Chittagong

Bhola

Noakhali

Chawmohoni

Cox's Bazar

Barguna

St. Martin's Island

Khulna

Bagerhat

Jhalakati

Satkhira

Chandpur

Comilla

Parshuram

Barisal

SylhetSunamganj

D H A K A

K H U L N A

CHITTAGONG

S Y L H E T

R A J S H A H I

BARISAL

I N D I A

I N D I A

I N D I A

MYANMAR

National Capital

Divisional Headquarters

District Headquarters

National Highway

River

Divisional Boundary

International Boundary

Boundaries are not necessarily authoritative.

BANGLADESH

SECOND URBAN GOVERNANCE ANDINFRASTRUCTURE IMPROVEMENT

(SECTOR) PROJECT

Kilometers

0 25 50 75

N

08-1310 HR

89 00'Eo

89 00'Eo

91 45'Eo

91 45'Eo

22 00'No 22 00'No

25 30'No25 30'No

I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on a proposed loan to the People’s Republic of Bangladesh for the Second Urban Governance and Infrastructure Improvement (Sector) Project (the Project). The design and monitoring framework is in Appendix 1.

II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES

A. Performance Indicators and Analysis

2. Urbanization. Bangladesh has experienced increased urbanization since independence in 1972. An estimated 38 million people lived in urban areas, or 27% of the total population, in 2005.1 Though this level of urbanization is still relatively low, population growth in urban areas has been high at 6% per annum since independence, compared with total population growth at 2% per annum.2 With existing growth rates, the country’s urban population will double by 2035 to reach 74 million, or 40% of the total population.3 The contribution of urban areas to the national gross domestic product grew from 26% in 1973 to 42% in 1999. Rapid urbanization has created growing demand for urban infrastructure and services. 3. Urban Infrastructure and Services. The development of urban infrastructure has not kept pace with rapid urbanization, causing an acute shortage in every urban service. Piped water is available in only one third of pourashavas (secondary towns), typically only for 2–4 hours per day.4 Water quality is poor in many pourashavas, with high iron content or arsenic contamination. No urban areas have sewerage, with the exception of a very limited system in Dhaka. An estimated 40% of households resort to open defecation or use unsanitary hanging latrines.5 Only 20% of solid waste is collected, and households dump their solid waste directly into streets, public spaces, and drains. Drainage is underdeveloped and poorly maintained. During monsoon rains, roads and pathways become flooded, causing severe traffic congestion and risks to public health. As roads and bridges have insufficient capacity to meet growing traffic volume, traffic jams in city centers limit access to economic opportunities and social services. 4. Urban Poverty. Despite significant progress, a large portion of the urban population still lives below the poverty line. Bangladesh achieved a significant reduction in the national poverty rate, which fell from 59% in 1991 to 42% in 2005 (footnote 3). The poverty rate in urban areas declined from 45% to 37% in the 1990s.6 Economic opportunities in urban areas attract large numbers of migrants from rural areas. New migrants, as well as second-generation migrants, tend to live in slum areas without decent housing or basic services. Inequality among households is acute in urban areas, with the rich in central business districts and the poor in urban slums. 5. Urban Governance. Urban governance is weak and lacks effective citizen participation, accountability, or financial management. Pourashavas are governed by an elected mayor and

1 Asian Development Bank (ADB). 2006. Urbanization and Sustainability in Asia, Case Studies of Good Practices.

Manila. 2 World Bank. 2007. Strategy for Sustained Growth. Bangladesh Development Series Paper No. 18. Washington,

DC. 3 Bangladesh Bureau of Statistics. 2005. Dhaka. 4 Bangladesh has six large cities and about 300 pourashavas. 5 Government of Bangladesh. 2005. National Sanitation Strategy. Dhaka. 6 ADB and World Bank. 2002. Poverty in Bangladesh, Building on Progress. Dhaka.

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councilors. The mayor tends to dominate decision making on every aspect of pourashava management, with little responsiveness and accountability to the public. Citizens, in particular the poor and women, do not have effective avenues to influence decision making. Pourashavas do not have the capacity to generate sufficient revenues and depend on budgetary transfers from the central Government of Bangladesh (the Government), which account for more than half of the total revenues for most pourashavas. The collection efficiency of local taxes is very low. Between 2000 and 2002, only 29% of smaller pourashavas collected more than half of their estimated holding tax, which is their most important own revenue source.7 Human resources are limited, with many untrained staff and vacant approved posts. 6. Urban Planning. Most pourashavas do not have a plan for land use or developing infrastructure. This, combined with weak governance, means that investments tend to be made in an unplanned and discretionary manner. Class A pourashavas have an urban planner in the approved organizational chart, but the position is often long vacant.8 The lack of proper urban planning leads to the inefficient allocation of available funds, further stressing limited resources. B. Analysis of Key Problems and Opportunities

7. Key Issues. Unplanned and rapid urbanization creates large unmet demand for urban infrastructure and services. Pourashavas have not managed to meet this challenge because of weak governance, limited financial and human resources, and a lack of proper planning, which are interlinked. Under the weak governance structure, elected leaders and pourashava officials lack incentives to respond to citizens’ needs and demands. Pourashavas do not generate sufficient financial resources for investment or staffing, and they do not have strong incentives to improve. Without an urban planner, no proper urban planning is carried out, which causes the inefficient use of the limited resources available. 8. Well-planned urbanization can significantly reduce poverty. The National Strategy for Accelerated Poverty Reduction 9 emphasizes that urbanization has so far been a factor contributing to poverty reduction, and that urban poverty and growing disparities within urban areas is an important policy issue. According to the strategy, effective poverty reduction is closely linked to effective urbanization strategies. Furthermore, good governance is recognized as a critical factor encouraging economic growth and poverty reduction. The strategy includes public administration reforms, anti-corruption measures, decentralization, and strengthening accountability and participation. The detailed urban sector analysis is in Appendix 2. 9. Experiences and Lessons. The strategic thrust of assistance of the Asian Development Bank (ADB) for the urban sector in Bangladesh has been poverty reduction through shared growth, social development, and good governance. ADB has been a leading agency in urban development and has supported a series of projects. The most important lessons, in particular from the ongoing Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP-1), indicate that the improvement of urban infrastructure and service delivery can be achieved more effectively by linking it with governance reforms and creating a proper incentive mechanism. The following are the specific lessons:

7 World Bank. 2007. Strategy for Sustained Growth. Bangladesh Development Series Paper No. 18. Washington,

DC. 8 Pourashavas are classified into classes A, B, and C, depending of population size and other factors. 9 General Economics Division, Planning Commission, Government of Bangladesh. 2005. Unlocking the Potential.

National Strategy for Accelerated Poverty Reduction. Dhaka.

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(i) The performance-based allocation of investment funds is a mechanism proven effective at creating incentives for pourashavas to improve their governance and management.

(ii) Citizens’ participation in urban governance improves the responsiveness and accountability of elected leaders and pourashava officials.

(iii) Proper urban planning is essential for the efficient use of available resources. (iv) Pourashavas’ financial sustainability can be substantially improved through

effective tax collection. 10. These lessons have been reflected in the design of the Project. In particular, the Project will continue the performance-based allocation of investment funds with defined performance criteria for governance improvement. The performance criteria emphasize citizen participation, urban planning, and financial management as key areas for improvement. Past external assistance to urban areas is listed Appendix 3, and a summary of lessons from the UGIIP-1 is in Appendix 4. 11. National Reforms. Support for urban development in Bangladesh presents a significant opportunity at this time. In addition to the ongoing local governance reforms supported by the UGIIP-1, the Government recently initiated a set of national reforms. The Government approved the new Pourashava Ordinance (2008), City Corporations Ordinance (2008), and Local Government Commission Ordinance in May 2008. The new Pourashava Ordinance (2008) replaces the old Pourashava Ordinance (1977) and strengthens citizen participation and accountability in pourashavas. The Local Government Commission is the country’s first permanent institution dedicated to policy guidance for local governments. 12. ADB has supported the national reforms. The new Pourashava Ordinance is one of the recommendations made by the committee for urban local government, which was supported by technical assistance funded by ADB.10 The recommendations were based on the experiences in governance reform under the UGIIP-1. For example, each pourashava formed committees with representation of broad citizen groups under the UGIIP-1, namely the town-level coordination committee (TLCC) and ward-level coordination committees (WLCCs). The TLCC and WLCCs are forums to discuss various issues in the pourashava and ensure the participation of diverse social strata in decision making. Recognizing the effectiveness of TLCCs and WLCCs, the Government made committees with citizen representatives a statutory requirement under the new Pourashava Ordinance (2008), and they have been utilized in other projects.11 13. Further, nationwide institutional frameworks are emerging for urban development. The Local Government Engineering Department (LGED), which traditionally supports infrastructure development in rural areas, is strengthening its urban management wing with a newly created post of additional chief engineer to manage projects in urban areas. Under the urban management wing, the Urban Management Support Unit (UMSU) was created by consolidating capacity development programs supported by various projects.12 The municipal performance

10 The technical assistance for Supporting Urban Governance Reform, approved on 28 November 2002, is attached

to ADB. 2002. Report and Recommendation of the President on a Proposed Loan and Technical Assistance Grant to the People’s Republic of Bangladesh for the Urban Governance and Infrastructure Improvement (Sector) Project. Manila. The studies carried out under the technical assistance focused on the national urban sector policy, the holding tax system, financial management, and the amendment of the Pourashava Ordinance (1977).

11 One example is the Urban Partnerships for Poverty Reduction Project funded by the United Nations Development Programme and the Department for International Development of the United Kingdom.

12 UMSU originally provided assistance in pourashavas under ADB financing. UMSU is merging with the Municipal Support Unit financed by the World Bank, which provides similar capacity development.

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review committee (MPRC) was established to review and monitor the performance of all pourashavas supported by different projects.13

III. THE PROPOSED PROJECT

A. Impact and Outcome

14. The impact of the Project is sustained improvement in the urban environment and quality of life. The outcome of the Project is improved urban governance and expanded access to infrastructure and services in target pourashavas.14 B. Outputs

15. The Project consists of three components: (i) A: urban infrastructure and service delivery, (ii) B: urban governance improvement and capacity development, and (iii) C: project management and implementation support.

1. Component A: Urban Infrastructure and Service Delivery

16. The output of component A is developed infrastructure and improved service delivery, including municipal transport, drainage, solid waste management, water supply, sanitation, and municipal facilities. The criteria for subproject selection are in Appendix 5. The subprojects in each pourashava will be identified through participatory urban planning. The amount of investment funds allocated to each pourashava depends on the progress of its governance reforms. 17. Municipal Transport. Subprojects in municipal transport aim to reduce traffic congestion and improve access to economic opportunities and social services. Investments include the (i) repair, rehabilitation, and expansion of pourashava roads, traffic junctions, and foot paths; (ii) rehabilitation and expansion of bridges and culverts; (iii) development of riverboat landing stations; (iv) procurement of equipment for routine maintenance; and (v) procurement of equipment for traffic management and road safety. 18. Drainage. Subprojects for drainage aim to mitigate water stoppages and inundation to improve the urban environment and protect public health. Investments include the (i) repair, rehabilitation, and expansion of the existing drains; (ii) construction of new drains; and (iii) procurement of equipment for maintenance. 19. Solid Waste Management. Subprojects in solid waste management aim to introduce or improve systems to collect, segregate, and dispose of solid waste for a clean urban environment and protecting public health. Funds will be utilized for the (i) procurement of collection and storage equipment; (ii) construction of storage, treatment, and sanitary disposal facilities; and (iii) support of community-based organizations (CBOs) doing house-to-house refuse collection. The Project will examine the potential of subprojects’ registering with the Clean Development Mechanism.

13 The pourashava performance review committee, which was utilized under UGIIP-1, was merged with the MPRC. 14 Thirty-five pourashavas have been identified as the original targets of the Project. They do not include pourashavas

covered under UGIIP-1 and have been selected based on the weighted scoring of various factors, including demography, economic growth potential, infrastructure deficiency, investment funds received in recent years, incidence of poverty, and regional balance. An additional 15 or so pourashavas will enter the Project during implementation. Please refer to section D. Project Investment Plan, below.

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20. Water Supply. Subprojects in water supply aim to expand service areas and improve service quality for better access to safe drinking water. Investments include the (i) rehabilitation and expansion of distribution networks; (ii) introduction of nonrevenue water reduction programs; (iii) construction of tube wells; (iv) procurement of equipment for metering and operation and maintenance (O&M); and (v) construction of iron- and arsenic-removal facilities.15 21. Sanitation. Subprojects in sanitation aim to improve access to hygienic sanitation for public health. Funds are utilized for (i) public and community sanitation facilities;16 (ii) procuring equipment for the maintenance of, and sludge removal from, facilities; (iii) constructing sludge disposal facilities; and (iv) an awareness campaign for better hygiene. 22. Municipal Facilities. Subprojects in municipal facilities aim to enhance economic potential and improve urban amenities. Investments include the development, rehabilitation and expansion of (i) bus and truck terminals, (ii) parking areas, (iii) kitchen markets and slaughterhouses, (iv) municipal parks and water bodies, (v) street lighting, (vi) urban landscaping, and (vii) community centers. 23. Basic Services in Slums. Subprojects described above may be located in slum and non-slum areas. Subprojects in slums will be identified through the development of poverty reduction action plans (PRAPs) 17 and provide basic services to slum dwellers. Slum improvement committees (SICs) will be established to be responsible for O&M. To ensure financial resources, a minimum of 5% of the investment funds allocated to each pourashava will be earmarked for subprojects in slums.18 24. Operation and Maintenance. Physical assets will be operated and maintained by pourashavas, SICs, and CBOs.19 An O&M plan for physical assets will be prepared by each pourashava, with support from the project management office (PMO) and consultants. The PMO and consultants will provide manuals and training to relevant pourashava staff and citizen groups.

2. Component B: Governance Improvement and Capacity Development

25. The output of component B is improved governance and developed capacity in pourashavas. Pourashavas will carry out series of reform activities in six key areas defined in the Urban Governance Improvement Action Program (UGIAP): (i) citizen awareness and participation, (ii) urban planning, (iii) women’s participation, (iv) integration of the urban poor, (v) financial accountability and sustainability, and (vi) administrative transparency. The UGIAP is used in UGIIP-1, and the Project adopts a refined version based on experiences and lessons. The activities will be supported by training and facilitation. The performance of pourashavas will be intensively monitored and assessed to determine the amount of investment funds allocated to them. The detailed fund-allocation mechanism and the UGIAP are in Appendix 6.

15 Major works, including source augmentation and the expansion of trunk mains, will be considered only in

exceptional cases and designed and implemented in coordination with the Department of Public Health Engineering.

16 The Project will not finance individual household latrines. 17 If a pourashava is implementing a major project funded by the Government or development partners in a slum, in

principle, the Project will not cover subprojects in that slum. 18 The subprojects outside of slums may not utilize the earmarked budget, even if the major beneficiaries are poor

households. 19 SICs focus on activities in slum areas, while CBOs work outside slums to manage community infrastructure.

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26. Citizen Awareness and Participation. Each pourashava will form a TLCC, and each ward will form a WLCC with broad representation of citizen groups.20 The TLCC and WLCCs will be forums for discussing various issues in the pourashava and to ensure the participation of diverse social strata in decision making. To ensure effective participation, the selection of members will follow a bottom-up approach to the extent possible. The accountability of pourashavas will be enhanced by establishing a citizen charter, introducing a citizen report card,21 and open discussions on budget proposals at TLCCs and WLCCs. 27. Urban Planning. Each pourashava will formulate a pourashava development plan (PDP), including its vision, situation assessment, and priority investments and activities for improving governance. The UGIAP specifically requires pourashavas to recruit an urban planner,22 and the Project will provide adequate capacity development for him or her. The Project also supports internships for university students to strengthen urban planning capacity. A land-use plan will be prepared for long-term planning. An inventory list of the existing infrastructure and an O&M plan will be prepared to ensure the efficient and effective utilization of physical assets. 28. Women’s Participation. A gender committee headed by a female ward councilor will be established, and a gender action plan (GAP) will be developed as part of the PDP in each pourashava. The GAP will be developed with identified budget requirements and implemented under the supervision of the gender committee as part of UGIAP performance criteria. TLCCs and WLCCs will have sufficient female representation to ensure female participation in pourashava governance. 29. Integration of the Urban Poor. An SIC will be formed in each target slum, and a PRAP will be developed as part of the PDP. The SICs will be responsible for managing community infrastructure identified in the PRAP. Outside of slums, CBOs will be formed to manage community infrastructure focusing on low-income groups. TLCCs and WLCCs will have sufficient and fair representation of low-income groups to ensure their participation in pourashava governance. Representatives of the poor will be nominated from among themselves and include the chairperson of the SIC. 30. Financial Accountability and Sustainability. Pourashavas will computerize their accounting and tax records to enhance the efficiency and transparency of financial management. An interim assessment of the holding tax will be carried out annually to ensure a fair tax base, and collection efficiency will be improved to enhance financial resources. The improvement of tax collection is one area in which substantial improvement was achieved under the UGIIP-1. 31. Administrative Transparency. Elected leaders, pourashava officials, and citizen groups will participate in various training programs for administrative transparency and effective implementation of the UGIAP. A management information system will be introduced, and information disclosure will be strengthened for transparency in administration. 20 Each pourashava is typically composed of several wards. 21 Introducing a citizen report card is one of the policies supported under ADB. 2007. Report and Recommendation of

the President to the Board of Directors on a Proposed Loan and Technical Assistance Grant to the People’s Republic of Bangladesh for the Good Governance Program. Manila (Loan 2362-BAN, approved on 30 October).

22 Applicable to class A pourashavas only. For classes B and C, the assistant engineer serves as the urban planner, with the support of consultants and facilitators.

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32. Support for National Reform. The Project supports national reforms with a focus on the UMSU, MPRC, and Local Government Commission. UMSU provides standard training modules to pourashavas, which are covered mostly under ADB or World Bank projects. The Project supports UMSU’s expansion of the types of training offered and the coverage of pourashavas beyond specific projects. The Government has started taking the MPRC’s review of pourashavas’ performance into consideration in allocating the national budget. However, the indicators reviewed are limited and the linkage between observed performance and budget allocation is rather weak, with substantial discretionary factors. The Project supports the MPRC’s enhancement of its capacity to monitor and review the performance of pourashavas and strengthen the linkage between performance and budget allocation. The Project also supports the Local Government Commission’s finalizing of national policy frameworks, including the Urban Sector Policy and its implementing guidelines.

3. Component C: Project Management and Implementation Support

33. The PMO in LGED and a project implementation unit (PIU) in each pourashava will be established under component C of the Project. The PMO will manage overall project implementation, and the PIUs will implement activities for governance improvement and physical infrastructure development with the support of consultants and facilitators. C. Special Features

34. Performance-Based Allocation. The Project adopts the performance-based allocation of investment funds, as this has been proven to be an effective incentive mechanism during the implementation of UGIIP-1. The amount of investment funds to be allocated to each pourashava depends on its performance in improving governance as defined in the UGIAP. In phase 1, pourashavas start governance improvement by developing a PDP and formulating essential institutions such as the TLCC, WLCCs, and CBOs. Only after successfully completing phase 1 will the pourashava proceed to phase 2 and receive funds for investment. Pourashavas will enter phase 3 and receive additional funding if they meet the performance criteria required in phase 2. The amount to be received varies depending on the level of performance. 35. Participatory Urban Planning. The Project introduces participatory urban planning to pourashavas through the development of PDPs. Broad citizen groups, including women and the poor, will be represented in the TLCCs and WLCCs, and a series of consultations will be carried out to formulate the PDP. Participatory urban planning makes elected leaders and pourashava officials more accountable to the public and increases transparency in the use of resources and their performance. 36. Pro-poor Urban Development. Each PDP will include a PRAP to identify and formulate specific actions for poverty reduction in the pourashava. An SIC will be established in each target slum to operationalize the PRAP. The TLCC and WLCCs will have sufficient representation of low-income group to ensure their participation in pourashava governance. To ensure an adequate budget to implement the PRAP, a minimum 5% of investment funds will be earmarked to finance basic services in slums. 37. Private Sector Participation. The Project promotes private sector participation in the management of urban infrastructure. For example, the operation and routine maintenance of bus and truck terminals will be outsourced to the private sector through competitive bidding. Private sector participation in solid waste management will be examined to formulate feasible mechanisms.

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D. Project Investment Plan

38. The project investment cost is estimated at $167.5 million, including taxes and duties of $10.7 million. Detailed cost estimates are in Appendix 7.

Table 1: Project Investment Plan ($ million)

Category Total Cost A. Base Costsa, b 1. Basic Urban Infrastructure and Service Delivery 127.2 2. Governance Improvement and Capacity Development 10.3 3. Project Management and Implementation Support 15.3 Subtotal (A) 152.8 B. Contingencies 1. Physical Contingenciesc 7.8 2. Price Contingenciesd 4.0 Subtotal (B) 11.8 C. Financing Charges During Implementatione 2.9 Total 167.5

a An exchange rate of Tk68.57 = $1 has been used. b Base costs are as of January 2008. c Physical contingencies are estimated at 5%–10%. d Price contingencies are estimated at 0.5%–1.4% for foreign costs and at 7%–8% for local costs over the

project implementation period, using ADB price escalation factors. e Financing charges are estimated assuming a 1% interest rate on the Asian Development Fund loan during

project implementation. Source: Asian Development Bank estimates.

39. Fund Allocation Among Pourashavas. Investment funds will be allocated among pourashavas based on their performance in governance improvement as defined in the UGIAP. The maximum amount to be allocated to each pourashava (the investment ceiling) is Tk250 million for class A pourashavas, Tk200 million for class B pourashavas and Tk100 million for class C pourashavas, excluding in-kind contributions by pourashavas and beneficiaries. 40. Pourashavas that successfully achieve all of the UGIAP performance criteria of phase 1 will proceed to phase 2 and be entitled to utilize at most 50% of the investment ceiling. While it is expected that the standard period of phase 1 will be 1.5 years, pourashavas can enter into phase 2 earlier after meeting all phase 1 performance criteria. The MPRC’s assessment of pourashavas’ performance against phase 1 criteria will be carried out semiannually. Pourashavas that fail to meet phase 1 performance criteria within 2 years of loan effectiveness will lose entitlement for fund allocation. 41. At the end of phase 2, which is expected to be in June 2012, pourashavas’ performance will be rated by the MPRC. The rating will be “fully satisfactory” if the pourashava meets all phase 2 performance criteria to a fully satisfactory level, “satisfactory” if the pourashava meets all minimum requirements of phase 2 performance criteria, or “unsatisfactory” if the pourashava fails to meet all minimum requirements. The fully satisfactory pourashavas will receive at most 50% of the investment ceiling, the satisfactory pourashavas will receive at most 25%, and unsatisfactory pourashavas will receive no additional funding.

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42. All class A and B pourashavas that are not included under the Project will be informed and encouraged to carry out UGIAP activities. New pourashavas that apply for funding will be ranked by the MPRC based on their level of achievement of UGIAP performance criteria. Approximately 15 pourashavas with the highest ranking will be entitled to receive at most 50% of the investment ceiling. In the middle of phase 2, the overall fund utilization will be assessed, and the candidate pourashavas will be identified. At the end of phase 2, the new pourashavas will be determined by the interministerial steering committee subject to fund availability. E. Financing Plan

43. The Government has requested a loan of $87 million equivalent from ADB’s Special Funds resources to help finance the Project. The loan will have a 32-year term, including a grace period of 8 years, and an interest charge of 1% per annum during the grace period and 1.5% per annum thereafter. The ADB loan will cover 51.9 % of the total project cost. ADB will cover approximately 70% of the pourashavas and finance 90% of their civil works23 and 100% of their equipment purchases. In addition, ADB will finance 100% of consulting services and 20% of incremental recurrent cost.

Table 2: Financing Plan ($ million)

Source Amount Percent Asian Development Bank 87.0 51.9 GTZ 4.7 2.8 KfW 36.1 21.6 Government of Bangladesh 31.7 18.9 Pourashava 7.3 4.4 Beneficiaries 0.7 0.4

Total 167.5 100.0 GTZ = Gesellschaft für Technische Zusammenarbeit, KfW = Kreditanstalt für Wiederaufbau. Source: Asian Development Bank estimates.

44. German development assistance will cofinance the Project with a grant of €3 million ($4.7 million equivalent) from GTZ and €23 million ($36.1 million equivalent) from KfW. KfW will cover approximately 30% of pourashavas and finance 90% of their civil works (footnote 23) and 100% of their equipment purchases. GTZ will support part of the capacity development program under the Project. The funds of GTZ and KfW will be provided on parallel bases and self administered. 45. The Government of Bangladesh (the Government) will provide local funds equivalent to $31.7 million, covering 18.9% of the project cost by financing 10% of the civil works, 100% of land acquisition and resettlement, 100% of taxes and duties, and 80% of incremental recurrent cost. Pourashavas will finance the equivalent of $7.3 million and beneficiaries $0.7 million. Pourashavas will contribute land, resettlement costs, and salvage materials for civil works. Project beneficiaries will contribute labor for the development of community infrastructure. 46. Part of the funds provided by the Government, ADB, and KfW will be relent to the target pourashavas. Civil works and equipment for revenue-generating subprojects, including water supply, bus terminals, and truck terminals, will be financed 50% as a grant and 50% as a loan for class A pourashavas, and 70% as a grant and 30% as a loan for class B

23 Excluding in-kind contributions by pourashavas and beneficiaries.

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pourashavas. The loan will have an interest charge of 4% for 20 years, including a 5-year grace period, and will be denominated in local currency.24 The Government will bear the foreign exchange risk in repayment to ADB. All other types of subprojects will be funded 100% as a grant. F. Implementation Arrangements

1. Project Management

47. The Executing Agency of the Project will be LGED, under the supervision of the Local Government Division (LGD) of the Ministry of Local Government, Rural Development and Cooperatives. The PMO will be established in the urban management wing of LGED. Each target pourashava will establish a PIU. The diagram of implementation arrangements is shown in Appendix 8. 48. Interministerial Steering Committee. The existing interministerial steering committee of UGIIP-1 will be expanded to include the Department of Environment and be responsible for the Project. The interministerial steering committee will be chaired by the secretary of LGD and convene whenever necessary but not less than at least once every 3 months. 49. MPRC. The transparent and fair assessment of performance is critical for the successful implementation of performance-based fund allocation. The MPRC will be responsible for rating pourashavas. It will be chaired by the secretary of LGD and carry out its assessment and rating duties independently of the PMO. 50. PMO. The PMO will be established for the overall management of the Project. It will be headed by a full-time project director,25 supported by two full-time deputy project directors, one in charge of infrastructure and service delivery improvement and the other in charge of governance improvement and capacity development. The PMO will be responsible for (i) planning overall project implementation by consolidating plans at the pourashava level; (ii) assisting pourashavas in implementing the UGIAP and physical works; (iii) procuring, managing, and supervising consultants hired under the Project; (iv) monitoring and supervising project implementation; (v) ensuring compliance with assurances, including safeguards; and (vi) preparing and submitting reports, including progress reports and the completion report. 51. UMSU. The UMSU will provide standard training modules to pourashavas in close coordination with the PMO. Training includes four standard modules: (i) computerization of tax records, (ii) computerization of accounting, (iii) inventory and mapping of infrastructure assets, and (iv) community mobilization. The UMSU will also function as the secretariat of the MPRC in assessing the performance of pourashavas. The superintending engineer in the urban management wing of LGED will act as director of the UMSU, and the additional chief engineer (urban management) will coordinate activities between the UMSU and the PMO.

24 ADB. 2002. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the

People’s Republic of Bangladesh for the Urban Governance and Infrastructure Improvement Project. Manila (Loan 1947-BAN [SF], for $60 million [ADF], approved on 28 November); and ADB. 2006. Report and Recommendation of the President to the Board of Directors on a Proposed Loan to the People’s Republic of Bangladesh for the Secondary Towns Water Supply and Sanitation Sector Project. Manila (Loan 2265-BAN [SF], for $41 million [ADF], approved on 16 October).

25 The project director will be a senior engineer with the rank of at least executive engineer.

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52. PIU. A PIU will be established in each pourashava to implement the UGIAP and physical works. The PIU will be headed by the pourashava mayor, who will be assisted by the chief executive officer. Each PIU includes three sections, the (i) infrastructure improvement section, headed by the executive engineer;26 (ii) urban governance improvement section, headed by the secretary; and (iii) environmental, sanitation, and slum improvement section, headed by the health officer. The PIU will be responsible for (i) implementing governance improvement activities defined in the UGIAP; (ii) implementing physical works, including preparing bid documents, procuring and supervising contractors, and ensuring safeguard compliance; and (iii) preparing the detailed annual work plan and progress reports to the PMO.

2. Subproject Agreements and Subsidiary Loan Agreements

53. Each pourashava will enter into a subproject agreement with LGED prior to investment, once it meets the UGIAP performance criteria and becomes entitled to receive investment funds. The subproject agreement will define the scope of the subproject and the roles and responsibilities of the pourashava and LGED. Pourashavas that identify revenue-generating subprojects and thereby qualify to receive loan funds from the Government will enter into a subsidiary loan agreement with the Ministry of Finance prior to investment. The subsidiary loan agreement will define the financial obligations of the pourashava, including repayment terms.

3. Implementation Period

54. The Project will be implemented over 6 years from 2009 to 2014, with phase 1 from January 2009 to June 2010, phase 2 from July 2010 to June 2012, and phase 3 from July 2012 to December 2014. Pourashavas may—and are encouraged to—proceed to phase 2 before July 2010. The assessment of pourashavas against the phase 1 performance criteria of the UGIAP will be carried out semiannually. Pourashavas may enter into phase 3 only after July 2012, as phase 2 performance criteria will be assessed over the fiscal years ending in June 2011 and June 2012. The LGED organized a workshop in September 2008 to announce the UGIAP to the target pourashavas and request them to start advance activities. The detailed implementation schedule is in Appendix 9.

4. Procurement

55. Procurement of goods and services under the Project will be carried out in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time) and the Government’s Public Procurement Rules (2008), as acceptable to ADB. National competitive bidding (NCB) procedures will be applied for works contracts below $2.0 million. NCB will be the major mode for civil works contracts, as subprojects are small. Equipment and materials will be procured under international competitive bidding when the estimated cost is more than $500,000 equivalent. Shopping procedures will be used for contracts with an estimated cost between $10,000 and $100,000. Minor items costing less than $10,000 equivalent may be purchased through direct contracting. Bidding for NCB contracts estimated at $500,000 or more for goods and related services, or $1 million or more for civil works, will be advertised on the ADB website. The summary procurement plan is in Appendix 10. 56. To expedite implementation of the Project, ADB and KfW approved advance action to recruit consultants and procure goods and services. The advanced engagement of consultants

26 Assistant engineer for class B and C pourashavas.

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is expected to reach the stage of technical proposal evaluation. The Government was informed that approval of advance action does not commit ADB or KfW to finance the Project.

5. Consulting Services

57. Consulting services are provided to support project implementation and strengthen the institutional capacities of the pourashavas and LGED. The consulting services will include 96 person-months of international consultancy and 4,878 person-months of national. Major packages are package 1: governance improvement and capacity development (GICD) and package 2: management, design, and supervision (MDS). The outline of terms of reference for consultants are in Appendix 11. 58. The GICD package will require 876 person-months of national consultancy. GICD consultants will support the PIUs in implementing the UGIAP by providing capacity development and facilitation for urban planning, municipal finance, and community mobilization. The MDS package will require 96 person-months of international consultancy and 3,318 person-months of national. MDS consultants will support the PIU in engineering design, bid management, and supervising physical works. MDS consultants will also support environmental and social safeguard measures. The consultants will provide intensive capacity building and other support in the initial phase of the Project that will subsequently be phased out. 59. Consultants will be selected and engaged in accordance with the ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time) and the Governments’ Public Procurement Rules (2008), as acceptable of ADB. The firms will be selected using the quality-and cost-based selection method.27

6. Anticorruption Policy

60. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the Government. Consistent with its commitment to good governance, accountability, and transparency, ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB’s Anticorruption Policy are included in the loan regulations and the bidding documents for the Project. In particular, all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of LGED and all contractors, suppliers, consultants, and other service providers as they relate to the Project. 61. The proposed Project incorporates several other measures, in addition to the standard ADB requirements, to deter corruption and increase transparency. LGED will create a project webpage to disclose information about various project matters, including procurement. With regard to procurement, the website will include information on, among other things, the list of participating bidders, name of the winning bidder, basic details on the bidding procedures adopted, the amount of contract awarded, and the goods and/or services procured. As part of the UGIAP, each pourashava will form a TLCC with broad citizen representation to discuss various issues of pourashava governance. Detailed information on procurements in their respective pourashavas will be provided in the TLCC to supplement the web-based disclosure.

27 The weight for technical quality will be 80% and for cost 20%.

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7. Disbursement Arrangements

62. Loan disbursements will be made in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time) and detailed arrangements between the Government and ADB. For larger contracts, direct payment and commitment letter procedures will be used. For other activities, an imprest account will be established at the Bangladesh Bank, which will fund a second-generation imprest account (SGIA)28 at a commercial bank selected in accordance with the Borrower’s procedures and acceptable to ADB.29 The imprest account and the SGIA will be operated by LGED. The initial amount to be deposited into these imprest accounts shall not exceed the equivalent of 6 months’ estimated expenditures to be financed from imprest account, or 10% of the loan, whichever is less. 63. A third-generation imprest account (TGIA)30 will be established by each pourashava at a commercial bank selected in accordance with the Borrower’s procedures and acceptable to ADB and will be operated by the pourashavas. The Government shall assure ADB that all ADB disbursements for imprest advance and/or replenishment for payment by PIUs will be passed on to TGIAs within 30 calendar days of the receipt. The initial amount to be deposited into each TGIA shall not exceed the equivalent of 6 months’ estimated expenditures to be financed from that account. The aggregate of the TGIAs shall not exceed the equivalent of ten (10) percent of the Loan amount. The TGIAs are necessary as project implementation will be at the pourashava level. 64. The imprest account, SGIA, and TGIAs will be established, managed, replenished, and liquidated in accordance with the ADB’s Loan Disbursement Handbook and detailed arrangements between the Government and ADB. Statement of expenditure procedures may be used to reimburse eligible expenditures and to liquidate advances made into the imprest account, SGIA, and TGIAs in accordance with the ADB’s Loan Disbursement Handbook and detailed arrangements between the Government and ADB. Any individual payment to be reimbursed or liquidated under statement of expenditure procedures will not exceed the equivalent of $100,000. 65. LGED has the proven capacity to manage the financial transactions, evidenced by the successful implementation of the UGIIP-1. Pourashavas will be capable of managing the financial transactions with capacity development and support from the PMO. The PMO will be responsible for monitoring accounts, including monthly reconciliation of the accounts and the preparation of the withdrawal applications for liquidation or replenishment of the imprest account. The disbursement of KfW funds will be managed with equivalent procedures. Supplementary Appendix G describes detailed financial management and disbursement arrangements.

8. Accounting, Auditing, and Reporting

66. The PMO will maintain records and accounts to identify all goods and services financed by the proceeds. Each PIU will maintain similar records and submit annual accounts and financial statements to the PMO for further submission to ADB. The PMO and PIUs will be staffed with an adequate number of suitably qualified accounting personnel. Additionally, the PIUs will be assisted by an account assistant deputed by LGED and consultants in establishing and managing accounting and recording procedures. 28 SGIA is referred as project operating account in Bangladesh, 29 The Government requires the PMO to open the first generation imprest account in the Bangladesh Bank, which is

the country’s central bank, but an account in a commercial bank is needed for day-by-day transactions. 30 TGIA is referred as project account in Bangladesh.

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67. The Government will ensure that accounts and financial statements are audited annually in accordance with sound accounting principles by independent auditors acceptable to ADB. LGED will provide to ADB, not later than 6 months after the close of each fiscal year, certified copies of audited accounts and financial statements and the report of the auditor of them. The imprest account and statement of expenditure records will be audited annually, and a separate audit opinion will be provided for each. 68. The PIU will prepare quarterly progress reports and submit them to the PMO within 15 days of the end of the applicable period. The PMO will compile them and prepare quarterly progress reports and submit them to ADB and LGD within 30 days of the end of the applicable period. The reports to ADB will be prepared in a format acceptable to ADB and include the following: (i) project progress in each pourashava regarding both physical works and governance improvement, (ii) any delays or problems encountered and the actions to be taken to resolve them, (iii) compliance with loan covenants, and (iv) the progress expected during the next 6 months. Within 6 months of the Project’s physical completion, the Government will prepare and submit to ADB a project completion report.

9. Project Performance Monitoring and Evaluation

69. The PMO will ensure that a project performance monitoring system, which will operate throughout the implementation period in a manner acceptable to the ADB. The system will assess the progress and performance of physical works and governance-improvement activities in each pourashava with defined reporting procedures from the PIU to the PMO. A set of indicators will be developed at the initial stage of the Project by the PMO, based on the experiences of the UGIIP-1. The PMO, with the support of consultants, will compile information including socioeconomic, gender and poverty indicators through surveys, reports, and statistical publications. The PMO will conduct on-site monitoring to observe activities and receive direct feedback from stakeholders. The PMO will conduct initial baseline physical and socioeconomic surveys and submit a detailed implementation plan for monitoring performance and benchmark indicators for ADB’s review and concurrence within 9 months from loan effectiveness.

10. Project Review

70. The Government, ADB, GTZ, and KfW will jointly review the Project’s progress at least twice a year. In addition to the regular reviews, the Government, ADB, GTZ, and KfW will undertake a comprehensive midterm review within 3 years from loan effectiveness. These reviews will include a detailed evaluation of the project scope, implementation arrangements, financing plan, achievement of scheduled targets on both physical and governance improvement, fund allocation mechanism, UGIAP performance targets, and performance of committees, consultants and LGED. The midterm review will be carried out at the end of phase 2 of the Project, and the overall progress of the UGIAP and fund utilization will be assessed to determine the exact number of new pourashavas to enter the Project.

IV. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS

A. Economic and Financial Analyses

71. Economic Analysis. Since the Project is formulated as sector lending, the economic analysis focuses on the rationale for government involvement, government plan and approach, economic policies, and government capacity. The Project has a clear rationale for government

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involvement. The infrastructure to be developed under the Project is to meet the basic needs of citizens in target pourashavas. The goals and Government’s approach are sound. Bangladesh has experienced rapid urbanization, which has caused acute shortages of basic infrastructure and social services in urban areas. The target pourashavas were selected through a transparent scoring of various factors. The subprojects will be selected by developing the PDP with broad participation to ensure a balanced distribution of benefits. The government’s policy to improve the governance of pourashavas, including better urban planning and financial management, will be supported by the Project. The LGED has been successfully implementing the UGIIP-1, demonstrating sufficient capacity to implement the Project. 72. The economic analysis of subprojects is conducted for the six subprojects in pilot pourashavas. The estimates of the economic internal rates of return (EIRR) of the sample subprojects range from 17% to 44%, indicating sufficiently high economic return. The result is robust against downside risks, including increased capital cost, increased O&M cost, decreased benefits, and delay in project completion. These results are most likely underestimated, since the projects have benefits that are not easily quantifiable and not accounted for in the analysis. 73. Financial Analysis. Most subprojects to be developed under the Project do not generate cash revenues, while others, including water supply and bus terminals, generate cash revenues through user charges. For revenue-generating subprojects, financial analysis is conducted by estimating the incremental costs and the revenues over the project life. Financial internal rates of return (FIRRs) are estimated at 5.9% for the water supply subproject in Rangpur and 7.1% for the bus terminal subproject in Bhanga, which compared favorably with the weighted average cost of capital (WACC), estimated at 3.3%. Sensitivity analysis with respect to changes in cost and revenue assumptions confirmed the robustness of financial viability against these downside risks. 74. For nonrevenue-generating subprojects, the analysis focuses on the pourashavas’ financial capacity to meet the recurrent costs of the subprojects to operate and maintain the developed physical assets in a sustainable manner. The overall financial position of each pilot pourashava is projected, reflecting the incremental capital, O&M expenditures, revenue through user charges, and debt service. The projected financial position confirmed their financial capacity to meet O&M costs and other requirements to sustain infrastructure and service delivery supported under the Project. B. Poverty Reduction and Social Development

75. Citizen Participation. The main social issues identified in pourashavas are (i) weak participation and representation of citizens, particularly the poor and women, in pourashava governance; and (ii) a lack of access to basic urban services for the poor. The Project strengthens citizens’ participation through the formation of TLCCs and WLCCs with broad representation. All subprojects to be funded under the Project will be selected in a participatory manner to ensure that benefits are shared by a broad range of socioeconomic groups. 76. Urban Poor. The Project includes specific supports for the urban poor. Each pourashava is required to utilize at least 5% of allocated funds to improve basic services in slums. An SIC will be established in each target slum to develop and implement a PRAP that identifies and formulates the specific infrastructure and activities for poverty reduction. TLCCs and WLCCs will have sufficient representation of low-income groups to ensure their participation in decision making. The summary poverty reduction and social strategy is in Appendix 12.

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77. Gender. The Project contributes to gender mainstreaming through the development and implementation of a GAP in each pourashava. TLCCs and WLCCs will have sufficient female representation to ensure women’s participation in pourashava governance. Certain infrastructure to be developed under the Project will directly benefit women. For example, developing water supply and sanitation will reduce the burden on women, who traditionally collect water and manage sanitation. The summary gender action plan is in Appendix 13. C. Environmental and Social Safeguards

78. Environment Safeguards. LGED has prepared initial environmental examinations (IEEs) for six sample subprojects, a sector IEE, and an environment assessment and review procedure following ADB’s Environment Policy (2002) and Environmental Assessment Guidelines (2003). The IEEs show that benefits are positive and large, with infrastructure subprojects: (i) improving the environment in pourashavas by reducing people’s exposure to pollutants through improved water supply, sanitation, solid waste management, drainage, and municipal transport; (ii) improving aesthetics with drainage and solid waste management; (iii) reducing flooding through drainage improvement; and (iv) other social benefits from subprojects for the poor that use an integrated approach and provide such basic urban services as community water supply and sanitation. The Project will improve biological systems that rely on healthy aquatic environments through the improved protection of surface water and groundwater quality. 79. Any adverse environmental impact can be addressed through properly locating, planning, and design proposed subprojects; controlling construction activity; properly maintaining systems following commissioning; and other mitigation measures. The principal cumulative, regional, and long-term environmental impacts are expected to be beneficial. The IEEs conclude that no further assessment of environmental impacts is required for sample subprojects. To ensure compliance with the Government’s and ADB’s environmental guidelines and requirements, an environmental assessment review procedure and subproject environmental selection guidelines to guide the implementation of future subprojects have been formulated.31 A summary IEE is in Appendix 14. 80. Social Safeguards. To ensure compliance with the Government’s and ADB’s policy and requirements on involuntary resettlement, a resettlement framework to guide the implementation of subprojects has been formulated by LGED. A summary of the resettlement framework is in Appendix 15. LGED prepared draft resettlement plans for three sample subprojects following the Government’s Acquisition and Requisition of Immovable Property Ordinance (1982, amended in 1993 and 1994), ADB’s Involuntary Resettlement Policy (1995), and the resettlement framework for the Project. 81. The Project is designed to minimize land acquisition and resettlement impacts. Pourashavas will (i) utilize existing lands for rehabilitating existing water supply, drainage, and municipal facilities, and for basic urban services to the urban poor; (ii) utilize vacant pourashava or community land and ensure community consensus in siting public and community toilets and deep tube wells; (iii) align roads and bridges to avoid impacts on structures; and (iv) utilize vacant pourashava land for solid waste management that will not pose health hazards to 31 The environmental assessment review procedure documents procedures for the environmental assessment of

subprojects, including categorization, preparing environmental assessments, requirements for environmental management plans, and procedures for public consultation. The section specifies that, should a subproject unexpectedly be classified as A, an environmental impact assessment would be required. Public disclosure requirements for category A, including the 120-day requirement, are in the procedure.

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settlements. Impacts are to be further minimized through careful subproject siting and alignment during detailed design and subproject implementation. In the three sample subprojects, permanent land acquisition required for road improvement is 0.024 hectares, affecting five households. Impacts from road improvements and the construction of a bus terminal will be temporary and minimal, as the work will be undertaken on road shoulders and pourashava and other government land. 82. Screening for impact on indigenous peoples shows that the sample subprojects have no impact on them. By design, as reflected in the subproject selection criteria, a subproject will not be eligible if it adversely affects indigenous communities. An indigenous peoples development framework has been formulated to ensure that appropriate indigenous peoples development plans or specific actions are formulated, enabling equal sharing of project benefits should a future subproject have impacts on indigenous peoples. D. Major Risks and Assumptions

83. The major assumption of the Project is that performance-based allocation of investment funds will generate sufficient incentive for pourashavas to carry out a series of activities for governance reform as defined in the UGIAP. Also assumed is that citizens are willing to participate in decision making through TLCCs and WLCCs, and that elected leaders and pourashava officials will listen and respond to their voices. The successful experience in the UGIIP-1 indicates that performance-based allocation will create sufficiently strong incentives for governance improvement. Given limited fund availability, it is unlikely that pourashavas will find significant alternative funding sources, which could undermine the incentive mechanism of performance-based allocation. Further, it is assumed that enhanced citizen participation in and monitoring of the MPRC will establish a sustainable incentive mechanism for elected leaders to respond to citizens’ demands for better urban management and services. 84. Other assumptions include the acceptability of a water tariff and the timely placement of an urban planner in each PIU. The risk of these factors having significant impacts on the Project is assessed to be limited. Water supply is a minor component of the Project, and the tariff will be proposed at an acceptable level considering the income level and practices in other pourashavas. The placement of urban planner is included in the UGIAP performance criteria and the assurances of the loan agreement, so that governments have a sufficient incentive to ensure timely placement.

V. ASSURANCES

85. In addition to the standard assurances, the Government has given the following assurances, which will be incorporated in the legal documents:

(i) The Government will provide all required and agreed counterpart funds for project implementation on time.

(ii) LGED will ensure that all subprojects are selected and implemented in accordance with the subproject selection criteria agreed between ADB and LGED and set out in Appendix 5.

(iii) The Government will ensure that all investment funds will be allocated among pourashavas in accordance with the guidelines set out in Appendix 6.

(iv) LGED will ensure that at least 5% of the investment funds allocated to a particular pourashava will be earmarked for and spent on basic services in slums.

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(v) LGED will ensure that there will be no overlap of activities or program between ADB-funded subprojects and projects funded by other development partners.

(vi) The guidelines concerning pourashava development plans will include specific provisions for the representation of women and the urban poor in the TLCC and WLCCs in each pourashava. Each TLCC will have at least seven representatives of the urban poor, and each WLCC at least two; they will be appointed by the respective chairperson but will be nominated by the urban poor themselves and will include the SIC chairperson where an SIC exists, as well as representatives from CBOs. In addition, there will be at least seventeen female TLCC members and four female WLCC members in each pourashava.

(vii) Within 9 months of loan effectiveness, the PMO will conduct initial baseline physical and socioeconomic surveys and submit a detailed implementation-monitoring plan for ADB’s review and concurrence. Within 9 months of loan effectiveness, the PMO and each PIU will establish a gender-segregated project performance management system.

(viii) Within 6 months of loan effectiveness, each PIU of a class A pourashava will have an urban planner in place. LGD will ensure that this position remains filled throughout project implementation.

(ix) LGD will take all appropriate and necessary measures to ensure that, at all times during project implementation, the PIUs have at least 80% of all their positions filled.

(x) The Government will take all appropriate and necessary measures, including through bonding arrangements in line with the Government’s policy and guidelines, to ensure that pourashava officials who receive training under the Project will not be transferred out of the pourashavas under the Project.

(xi) The Government will ensure that, within 1 year of loan effectiveness, the Urban Sector Policy will have been approved. Within 6 months of approval of the policy, the Government will have approved its implementing rules.

(xii) The Government will ensure that sufficient funds to cover the costs of land acquisition and involuntary resettlement are made available in a timely manner. All land and right-of-way required will be made available in a timely manner, and compensation at replacement value and other entitlements will be paid to affected people prior to the award of any civil works contract. Any involuntary resettlement or land or asset acquisition will be in compliance with the resettlement framework agreed between LGED and ADB, and the resettlement plan for the subproject. Pourashavas will publicly disclose the draft resettlement plan in places and using language accessible to all affected people, prior to submitting to ADB the resettlement plans for review and approval and disclosure on ADB’s website. External monitoring reports will be submitted to ADB and disclosed on ADB’s website.

(xiii) LGED will ensure compliance with ADB’s Environment Policy (2002) and relevant national and local environmental laws and regulations. All mitigation and monitoring mechanisms set out in the IEEs, as well as all environmental assessment and review procedures, will be complied with throughout Project implementation. LGED will ensure environmental requirements are incorporated in bidding documents and civil work contracts.

(xiv) LGED will ensure that subprojects are prepared and implemented in accordance with ADB’s Policy on Indigenous Peoples (1998) and the Indigenous Peoples Development Framework for the Project.

(xv) The Government will ensure that civil works contractors comply with all applicable labor laws, do not employ child labor for construction or maintenance

19

activities, and do not differentiate wages between men and women for work of equal value.

(xvi) The Government will ensure that the birth registration requirements of the 2004 Birth and Death Registration Act and its implementing rules will not be impediments to obtaining urban services, in particular utility connections.

(xvii) LGED will ensure that gender issues are duly considered in project implementation in accordance with the Project’s gender action plan and that sufficient resources will be allocated for its implementation.

VI. RECOMMENDATION

86. I am satisfied that the proposed loan would comply with the Articles of Agreement of the Asian Development Bank (ADB) and recommend that the Board approve the loan in various currencies equivalent to fifty-five million four hundred forty-five thousand Special Drawing Rights (SDR 55,445,000) to the People’s Republic of Bangladesh for the Second Urban Governance and Infrastructure Improvement (Sector) Project from ADB’s Special Funds resources with an interest charge at the rate of 1.0% per annum during the grace period and 1.5% per annum thereafter; a term of 32 years, including a grace period of 8 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft Loan Agreement presented to the Board.

Haruhiko Kuroda President

6 October 2008

20 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets and/or Indicators

Data Sources and/or Reporting Mechanisms

Assumptions and Risks

Impact Sustained improvement in urban environment and quality of life

• Improved citizens’ perception of urban

environment, municipal services and quality of life in all target PS by 2015

• Increased income, employment, and land value in all target PS by 2015

• National statistics • Reports of MPRC • Results of citizen

report card • Minutes of TLCC

and WLCC • PME reports • Project completion

report • Socioeconomic

studies

Assumption • Citizen participation

and MPRC’s monitoring establish sustained incentive mechanism for good urban management

Risks • Change of political

environment • Economic crisis

Outcome Expanded access to and usage of urban infrastructure and services, and improvement in urban governance

Municipal Transport • Traffic congestion decreased and

access to economic opportunities and social services improved in 30 PS by 2015 (measures include traffic volume)

Drainage • Drainage well maintained and

functioning in 30 PS by 2015 (measures include number of houses affected by flood)

Solid Waste Management • Solid waste well managed in 20 PS by

2015 (measures include area coverage and collection efficiency)

Water Supply • Access to water improved in 15 PS by

2015 (measures include area coverage, number of connections, and hours of supply)

Sanitation • Access to safe sanitation improved in

15 PS by 2015 (measures include area coverage)

Municipal Facilities • Availability of municipal facilities

(markets, bus terminals, and parks) improved in 25 PS by 2015 (measures include number of users)

Basic Services in Slums • 60% of residents in target slums have

access to improved basic services in all target PS by 2015.

Governance Improvement • 35 PS clear UGIAP phase 1

performance criteria by August 2010 • 20 PS assessed as “fully satisfactory”

in UGIAP phase 2 performance criteria in August 2012

• 10 PS assessed as “satisfactory” in UGIAP phase 2 performance criteria in August 2012

• 15 new PS clear UGIAP phase 1 performance criteria by August 2012

• Reports of MPRC • Minutes of TLCCs

and WLCCs • Results of citizen

report card • Socioeconomic

studies • Quarterly progress

reports by PIUs • Quarterly progress

reports by PMO • PME reports • BME reports • ADB mission reports • Project completion

report

Assumptions • Sustained and

sufficient revenue is generated

• Proper O&M system is established

• Demand for infrastructure and services does not significantly change from the design stage.

• Elected leaders and pourashava officials respond to citizens’ needs and demands.

Risks • Alternative funding

sources become available and undermine incentive mechanism of performance- based allocation

• Tariff and charges required for O&M are not affordable or socially acceptable.

Appendix 1

21

Design Summary

Performance Targets and/or Indicators

Data Sources and/or Reporting Mechanisms

Assumptions and Risks

Outputs Component A: Urban Infrastructure and Service Delivery Developed infrastructure and improved service delivery

Municipal Transport • Road and other transport

infrastructure developed in 30 PS (measures include length of road)

• O&M and traffic management equipment procured in 15 PS

Drainage • Drainage master plans prepared in 30

PS • Existing drains rehabilitated in 15 PS

(measures include length of drains) • New drains constructed in 15 PS Solid Waste Management • A system established to collect and

dispose of solid waste in 20 PS Water Supply • Distribution system rehabilitated and

extended in 15 PS (measures include length of pipes)

• Leak management programs introduced in 10 PS

• Tube wells constructed in 10 PS (measures include number of wells)

Sanitation • Public or community sanitary latrines

constructed or repaired in 20 PS (measures include number of latrines)

• Public awareness campaign conducted in 20 PS

Municipal Facilities • Municipal facilities, including, bus or

truck terminals (5 PS), street lighting (10 PS), and parks (10 PS) constructed or rehabilitated

Basic Services in Slums • Basic infrastructure, including water,

sanitation, drainage, solid waste management, footpaths, and street lighting, constructed or rehabilitated in all target slums of all target PS

• Reports of MPRC • Minutes of TLCCs

and WLCC • Quarterly progress

reports by PIUs • Quarterly progress

reports by PMO • PME reports • BME reports • ADB mission reports • Project completion

report

Assumption • Capacity of PIUs is

sufficiently enhanced to execute the works.

Risks • Cost overruns due to

unexpectedly high inflation

• Delays due to slow progress of land acquisition

Component B: Governance Improvement and Capacity Development Enhanced citizen awareness and participation

• TLCCs and WLCCs formed in all

target PS by 2010 • Citizen report cards introduced and

implemented in all target PS by 2012 • Grievance-redress cell established

and operational by 2010

• Reports of MPRC • Minutes of TLCCs

and WLCCs • Results of citizen

report card • PDPs, including

GAPs and PRAPs • Socioeconomic

studies

Assumptions • Appropriate citizen

representatives are identified, and they are willing to participate in various committees.

Improved urban planning

• Urban planner recruited in all class A target PS by 2010

• PDP, including base map and land-use plan, prepared in all target PS by 2012

22 Appendix 1

Design Summary

Performance Targets and/or Indicators

Data Sources and/or Reporting Mechanisms

Assumptions and Risks

• Annual O&M plan prepared and implementation in all target PS by 2012

• Quarterly progress reports by PIUs

• Quarterly progress reports by PMO

• ADB mission reports

• Elected leaders and pourashava officials are willing to listen to the citizens.

Risks Enhanced women’s participation

• TLCCs and WLCCs established with adequate representation of women in all target PS by June 2010

• Gender action plan, including identified budget, prepared and implemented in all target PS by June 2012

• Gender committee established in all target PS by June 2010

• PME reports • BME reports • Project completion

report

• Post of urban planner is left vacant.

• Local tax codes and other regulations change significantly.

Enhanced participation of the urban poor

• TLCCs and WLCCs established with adequate representation of the poor in all target PS by June 2010

• PRAP, including identified budget, prepared and implemented in all target PS by June 2012

• SICs established in all target PS by June 2012

Improved accountability and sustainability of pourashava finance

• Interim assessment of holding tax carried out in all target PS by June 2010

• Computerized tax records and accounting system introduced and operational in all target PS by June 2012

• Holding tax increased at least by 10% each year in 30 PS

• Debts are fully repaid every year throughout the project period in all target PS.

Improved administrative transparency and efficiency

• Organizational development plans prepared in all target PS by June 2012

• Quarterly progress report prepared on time by PIUs in all target PS throughout the project

Component C: Project Management and Implementation Support Effective and operational project management system

• PMO established in LGED and

operational by October 2008 • PIUs established and operational by

March 2009 in all target PS

• ADB mission reports • PMO quarterly

progress reports

Risks • PS are not willing to

fill the vacant posts. • Ministry of Local

Government, Rural Development, and Cooperatives does not approve recruitment.

Appendix 1

23

Activities with Milestones Phase 1 1.1 PMO established and fully staffed by October 2008 1.2. PIU established and adequately staffed in each PS by March 2009 1.3 Consultants fielded by April 2009 1.4. TLCCs and WLCCs established by December 2009 1.5. PDP prepared for all target PS by June 2010 1.6 Phase 1 performance evaluated by August 2010 Phase 2 2.1. Subproject agreements and SLAs for phase 2 signed by December 2010 2.2. Physical works started by April 2011 2.3. Phase 2 performance evaluated by August 2012. Phase 3 3.1. Subproject agreements and SLAs for phase 3 signed by December 2012 3.2. Physical works of subprojects covered under phase 3 started by April 2013 3.3. Project completed by December 2014

Inputs • ADB: $87.0 million • Cofinancing: GTZ

Fund $4.7 million • Cofinancing: KfW

Fund $36.1 million • Government of

Bangladesh: $31.7 million

• Pourashavas: $7.3 million

• Beneficiaries: $0.7 million

ADB = Asian Development Bank, BME = benefit monitoring and evaluation, GAP = gender action plan, LGED = Local Government Engineering Department, GTZ = Gesellschaft für Technische Zusammenarbeit, KfW = Kreditanstalt für Wiederaufbau, MPRC = municipal performance review committee, O&M = operation and maintenance, PDP = pourashava development plan, PIU = project implementation unit, PME = performance monitoring and evaluation, PMO = project management office, PRAP = poverty reduction action plan, PS = pourashavas, SIC = slum improvement committee, SLA = subsidiary loan agreement, TLCC = town-level coordination committee, UGIAP = Urban Governance Improvement Action Program, UMSU = Urban Management Support Unit, WLCC = ward-level coordination committee. Note: Quantified targets and indicators are indicative, as the type and design of infrastructure will be determined through participatory urban planning during implementation, using pourashava development plans.

24 Appendix 2

URBAN SECTOR ANALYSIS A. Urbanization 1. Bangladesh had a population of 152 million in 2005, of which 38 million (27%) lived in urban areas.1 Though this level of urbanization is still relatively low, the urban population has grown rapidly at an annual average rate of 6% since independence, while national population growth was 2%.2 With current growth rates, the country’s urban population will be 74 million, or 40% of the population, by 2035.3 Rapid urbanization has occurred because of (i) a high natural increase in urban population, (ii) territorial expansion of urban areas, and (iii) rural-to-urban migration.4 2. The contribution of urban areas to the national gross domestic product increased to 42% in 1999 from 26% in 1973. The share is almost 50% at present, which underlines the importance of urban centers in achieving economic growth and poverty reduction. Despite their importance, urban areas have not traditionally received sufficient attention toward developing policies and funding capital investments. The result is unplanned and uncontrolled urban growth, which has caused acute shortages of infrastructure, including poor housing and transport, inadequate drinking water, and a lack of drainage and sewerage. B. Urban Infrastructure and Services 3. Urban residents, in particular low-income groups, suffer a lack of basic urban infrastructure and services. Though 95% of the population has access to water supply, only 30% of urban households drink tap water and fewer than 20% have their own house connections. The water quality is very poor, with arsenic and bacteriological contamination common. There are virtually no water treatment facilities, and even where treated water is available it is often contaminated at consumer points due to the poor condition of pipes and intermittent water flow. 4. Most households use septic tanks and pit latrines without proper sludge removal programs. Wastewater tends to flow into low-lying areas and open drains without treatment, causing significant health risks. During monsoon rains, roads and pathways that lack drains become flooded, impeding access to houses and posing health risks to residents. Solid waste disposal is another major problem in urban areas, particularly in slums and other densely populated areas. Only around 20% of urban households are covered by a solid waste collection system. 5. Only 25% of urban households live in permanent structures (footnote 1), and the rest live in temporary kutcha structures in illegal settlements with uncertain tenure and no access to basic urban services. Surveys of the urban poor have shown that access to piped water is very limited. In Rangpur, for example, piped water reaches only 25% of the population, with the provision of merely 20 liters per capita per day, and 48% of the population gets water only from hand-pumped tube wells. 6. According to the National Sanitation Strategy5 about 40% of households resort to open defecation or use unsanitary hanging latrines. Most slum dwellers rarely use community toilets because they are poorly maintained. Slum areas rarely have solid waste-management systems,

1 Asian Development Bank (ADB). 2006. Urbanization and Sustainability in Asia, Case Studies of Good Practices.

Manila 2 World Bank. 2007. Strategy for Sustained Growth. Bangladesh Development Series Paper No. 18. Washington,

DC. 3 Bangladesh Bureau of Statistics. 2005. Dhaka. 4 Migration has been the dominant component of urban population growth, contributing 40% of national urban

population change. 5 Government of Bangladesh, Local Government Division, Ministry of Local Government, Rural Development, and

Cooperatives. 2005. National Sanitation Strategy. Dhaka.

Appendix 2

25

leaving households to dispose of their wastes directly into streets, public spaces, or drains. Air and water pollution is common in most urban areas. C. Urban Poverty 7. Bangladesh has made steady progress toward achieving the Millennium Development Goals, though the challenges remain daunting. Between 1992 and 2005, Bangladesh reported a significant reduction in people living below the poverty line, from 59% to 42%, one of the fastest declines in the world (footnote 3). The urban population living below the poverty line declined from 45% to 37% during the 1990s.6 Later estimates have indicated that urban poverty has been reduced further to 30%. Bangladesh’s National Strategy for Accelerated Poverty Reduction7 addresses other urban issues as well, recognizing the potential of urbanization to reduce poverty and emphasizing the need for a holistic perspective on urban poverty. 8. Economic opportunities in urban areas attract large numbers of migrants from rural areas. New migrants, as well as second-generation migrants, tend to live in slum areas with substandard housing and no basic services. Inequality among households is acute in urban areas, contrasting the rich in central business districts and the poor in urban slums. D. Institutional Settings of Municipalities 9. The structure of local urban governments has remained unchanged for a long time. It is a two-tier structure with city corporations for the largest six cities and pourashavas for the remaining 300 or so smaller cities. Local urban governments are formed through a democratic election process, with the mayor and councilors elected by direct vote of citizens. However, local urban governments do not enjoy political, administrative, or financial autonomy. For example, they cannot themselves employ high-level staff, as these are recruited and appointed by the Local Government Division (LGD) under the Ministry of Local Government, Rural Development, and Cooperatives. Within local urban government, administrative authority is concentrated in the mayor. 10. Municipalities are mandated to provide urban services, including (i) maintaining roads, drainage, and parks; (ii) operating water supply systems, community toilets, markets, solid waste management, and slaughterhouses; (iii) delivering public health and other basic services for the urban poor; and (iv) development and building control. In practice, however, municipalities lack the institutional capacity to provide these services. Municipalities have approved organizational charts, but many posts are long left vacant. 11. Insufficient financial resources are another reason why municipalities cannot provide adequate infrastructure and services. Municipalities depend on the national Government for much of their financial sources, and their own financial resources are limited by a small tax base and low collection efficiency. Between 2000 and 2002, only 29% of smaller pourashavas collected more than half of their estimated holding tax, which is the most important source of own revenue (footnote 2). Consequently, there is a chronic shortage of funds for capital expenditure as well as for operation and maintenance. E. National Policies for the Urban Sector 12. Although the Government has long been aware of the rapid pace of urbanization and the associated physical, economic, and social problems, it has not yet managed to formulate a comprehensive urban policy. Efforts have been made over the past 2 decades to develop policies for specific areas like housing, planning, and urban services. The National Housing Policy (1993), Bangladesh Urban and Shelter Review (1993), Bangladesh Urban Sector National Program Document (1994), Bangladesh National Habitat II Report (1996), and

6 ADB and World Bank. 2002. Poverty in Bangladesh, Building on Progress. Dhaka. 7 Government of Bangladesh. 2005. Bangladesh’s National Strategy for Accelerated Poverty Reduction, 2005.

Dhaka.

26 Appendix 2

Bangladesh National Habitat II Istanbul +5 Report (2001) have all underscored the importance of proper urbanization in national development. The Urban Management Policy Statements (1994 and 1999) prepared by the LGD emphasized that all pourashavas should have adequate personnel and financial strength, provide and maintain basic infrastructure facilities, prepare and implement land-use plans, address poverty, ensure participation, and involve the private sector. These policy statements, however, were never approved by the Government. 13. With the support of the Asian Development Bank (ADB),8 the committee for urban local governments was formed to examine national policy issues including amendments to the Pourashava Ordinance (1977) and the draft Urban Sector Policy. Based on the recommendations of the committee, a new Pourashava Ordinance (2008) was approved on 14 March 2008 by the Government. The new ordinance redefines urban areas; constitutes standing committees; and enhances citizens’ participation through committees with representatives from professional groups, citizens groups, and the urban poor. The recommendations were formulated based on experiences in governance reform under the Urban Governance and Infrastructure Improvement (Sector) Project (UGIIP-1). For example, under UGIIP-1, each pourashava formed committees representing broad citizens’ groups, namely the town-level coordination committee (TLCC) and ward-level coordination committees (WLCCs). The TLCC and WLCCs are forums to discuss various issues of pourashava management and ensure the participation of diverse social strata in decision making. The new Pourashava Ordinance (2008) has made committees with citizen representatives a statutory requirement for pourashavas.9 14. The Government approved on 12 March 2008 an ordinance to establish the Local Government Commission as the first permanent institution to oversee the policy development of local governments. The Local Government Commission is expected to review and finalize the Urban Sector Policy. 15. The committee for urban local governments developed a draft Urban Sector Policy, which is yet to be approved. The Government prioritized the approval of the new ordinance for pourashavas and city corporations to prepare for local government elections. The draft policy takes a comprehensive approach to addressing urban issues, recognizing the importance of capacity development and good governance in municipalities. While the approval of the Urban Sector Policy improves the environment for pourashava governance, the Second Urban Governance and Infrastructure Improvement (Sector) Project (the Project), in particular governance reform under Urban Governance Improvement Action Program (UGIAP), can be well implemented even without the national policy, as evidenced by UGIIP-1. 16. The Government has been gradually formulating a nationwide institutional framework for urban development by consolidating initiatives supported by various projects. The Local Government Engineering Department (LGED) is strengthening its urban management wing by appointing a senior engineer dedicated to urban development. The Urban Management Support Unit (UMSU) was created in LGED by consolidating capacity-development programs supported by various projects. A municipal performance review committee (MPRC) was also established to review and monitor the performance of pourashavas. The MPRC, chaired by the secretary of LGD, covers all pourashavas supported by different projects, and UMSU supports the MPRC as its secretariat.

8 The technical assistance for Supporting Urban Governance Reform, approved on 28 November 2002 is attached to

ADB. 2002. Report and Recommendation of the President on a Proposed Loan and Technical Assistance Grant to the People’s Republic of Bangladesh for the Urban Governance and Infrastructure Improvement (Sector) Project. Manila.

9 The new ordinance requires pourashavas to establish a committee with 50 members at most to cover the whole pourashava and a committee with 10 members at most in each ward. These are equivalent to TLCCs and WLCCs.

Appendix 3

27

EXTERNAL ASSISTANCE TO THE URBAN SECTOR (1996–2008)

Name of Project Executing Agency Amount ($ million)

Implementation Period

A. Asian Development Bank (ADB) 1. Dhaka Integrated Flood Protection Project DWASA, BWDB 91.5 1991–1997 2. Second Water Supply and Sanitation Project DPHE 31.0 1993–1996 3. Secondary Towns Integrated Flood Protection Project. BWDB 55.0 1992–1998 4. Secondary Town Infrastructure Development Project (Phase II)

LGED

65.0

1995–2001

5. Flood-damage Rehabilitation Project BWDB 104.0 1998–2001 6. Urban Governance and Infrastructure Improvement (Sector) Project

LGED

60.0

2002–2009

7. Secondary Towns Integrated Flood Protection Project – Phase II

LGED

80.0

2004–2009

8. Emergency Flood Damage Rehabilitation Project BWDB, LGED, BR, RHD

152.3

2005–2007

9. Secondary Towns Water Supply and Sanitation Sector Project

DPHE

41.0

2006–2013

10. Dhaka Water Supply Sector Development Program Project DWASA 150.0 2007–2014 11. Dhaka Water Supply Sector Development Program LGD, MOF 50.0 2007–2014 B. World Bank 1. Bangladesh Arsenic Mitigation Water Supply Project DPHE 32.4 1998–2006 2. Dhaka Urban Transport Project MoC 177.0 1999–2005 3. Municipal Services Project LGED 138.6 1999–2007 4. Social Investment Program Project SDF 18.2 2003–2007 5. Bangladesh Water Supply Program Project DPHE 40.0 2004–2010 6. Dhaka Chittagong Sewerage and Drainage Project DWASA,

CWASA 1.4 2005–2007

7. Social Investment Program Project LGED 8.0 2007–2009 8. Social Investment Program Project Additional Financing SDF 25.0 2008–2011 9. Municipal Services Project Additional Financing LGED 25.0 2008–2011 C. JBIC 1. Karnaphuli Water Supply Project(Chittagong) 100.0 2006–2010 D. JICA 1. Crash Program for Procurement of 100 generators. DWASA 2.0 1999–2000 2. Study on Groundwater Development of Deep Aquifers for safe Drinking Water Supply to Arsenic Affected Areas in Western Bangladesh

DPHE

3.8

2000–2001 3. Establishment of DPHE Central Laboratory for Strengthening Water Supply Examination System

DPHE

4.2

2004–2006

E. UNICEF 1. Environmental Sanitation, Hygiene and Water Supply project in slum areas.

DPHE

2.4

1997–2005

2. Action Research on Community Based arsenic Mitigation in 15 Upazila Projects

DPHE

2.1

2001–2005

3. WS Rehabilitation Project for the Flood Affected People DPHE 5.9 2005–2006 F. UNDP 1. Urban Poverty Alleviation through Local Participation Project LGED 21.0 1999–2006 G. DFID 1. Urban Partnership for Poverty Reduction LGED 117.6 2007–2014 2. Sanitation, Hygiene Education and Water Supply in Bangladesh

DPHE

62.8

2007–2011

3. WaterAid: Advancing Sustainable Environmental Health DPHE 15.5 2004–2009 H. DANIDA 1. Water Supply and Sanitation Sector Programme Support DWASA 12.6 2006–2010

ADB = Asian Development Bank, BR = Bangladesh Railway, BWBD = Bangladesh Water Development Board, CWASA = Chittagong Water Supply and Sewerage Authority, DFID = Department for International Development, DPHE = Department of Public Health Engineering, DWASA = Dhaka Water Supply and Sewerage Authority, LGD = Local Government Division, LGED = Local Government Engineering Department, Rural Development and Cooperatives; MoC = Ministry of Communications, MoF = Ministry of Finance, RHD = Road and Highway Department, SDF = Social Development Fund, UNDP = United Nations Development Programme, UNICEF = United Nations Children’s Fund. Source: Asian Development Bank.

28 Appendix 4

SUMMARY OF LESSONS FROM THE URBAN GOVERNANCE AND INFRASTRUCTURE IMPROVEMENT (SECTOR) PROJECT

Experiences and Lessons Incorporation in Project Design Overall Project Design Performance-based allocation of investment funds generated strong incentive for pourashavas to carry out governance reforms.

The Second Urban Governance and Infrastructure Improvement (Sector) Project (the Project) keeps the performance-based allocation of investment funds as a major feature of its design.

Performance evaluation of pourashavas, and hence activities, concentrated at the end of each phase of UGIAP.

Progress of reform will be monitored more intensively, on a quarterly basis, throughout the Project.

Linkage between infrastructure development and governance improvement was not strong enough.

Governance improvement and infrastructure development will be planned and implemented in a more integrated manner through the development of PDPs.

For the original target pourashavas, there were no minimum requirements of governance improvement, including participatory planning, to receive the first allocation of funds. Participatory planning was not always strong for the first allocation of funds.

Even for the first allocation of funds, all pourashavas need to meet the minimum criteria of governance improvement, including participatory planning through the formulation of a PDP.

Relatively large and competent pourashavas entered the program and receive funds.

Six class C pourashavas are included in the Project on pilot basis.

UGIAP Pourashavas were not familiar with the UGIAP in the initial phase of the project, causing delays in implementation.

The UGIAP will be explained to target pourashavas well in advance of the Project. Detail task lists and guidelines to implement the UGIAP will be developed before the Project starts.

Pourashavas tended to focus on activities, rather than on the resulting governance improvement through those activities.

The Project introduces the citizen report card to examine citizens’ perception of governance improvement.

Some mayors influenced the selection of representatives in the TLCC and WLCCs, particularly for low-income groups.

The representative for low-income groups will be nominated among themselves and include leaders of SICs and CBOs.

The involvement and support of the pourashava mayor was critical for smooth and effective implementation.

The Project will seek the support of mayors from an early stage and provide specific programs for their capacity development and familiarization with the UGIAP.

There was no mechanism to keep pourashavas from borrowing excessively.

The UGIAP includes debt indicators and a requirement of full repayment of debts due.

The lengthy budgetary process slowed the implementation of the poverty reduction and gender action plans (PRAPs and GAPs).

PRAPs and GAPs will indentify clear budget requirements to be included in the PDP.

Implementation Arrangement for Staffing The early establishment of the project management office (PMO) and project implementation units (PIU) was essential for the smooth launch of the project.

The coordinator of project preparatory technical assistance is designated as project director before the Project starts and is working full time. Target pourashavas will be informed on the requirement of a PIU well in advance of the Project.

Recruiting key staff in pourashavas, in particular urban planners, was critical for effectively implementing the project.

Asian Development Bank (ADB) engaged in discussions with the ministry concerned regarding prompt recruitment. The recruitment of staff is included in the assurances of ADB loan agreement.

The arrangement of having UGIAP facilitators covering multiple pourashavas did not work well because mayors tried to hold facilitators in their own town and transport was not readily available.

Under the Project, UGIAP facilitators will be kept in one pourashava rather than cover multiple pourashavas. The types of facilitators will be reduced to limit total inputs.

Staff trained under the project moved out of the pourashavas, undermining continuity and momentum.

The Project has explicit assurances in the ADB loan agreement about keeping the trained staff in project areas.

Physical works The slow fielding of consultants delayed project implementation.

Advance action was approved and the core staffers of the PMO were assigned to procuring the consultant.

Interventions in slum areas were limited. All pourashavas will spend at least 5% of the allocated funds on basic services in urban slums.

Requiring an O&M budget as a fixed share of total budget did not always match actual requirements.

The UGIAP will require the formulation of O&M plan and budgets determined on the basis of the plan.

In some cases, roads were designed without adequate attention to drainage.

For road subprojects, more attention will be paid to drainage design. The development of a master plan will be required for drainage projects.

CBO = community-based organization, O&M = operation and maintenance, PDP = pourashava development plan, PMO = project management office, SIC = slum improvement committee, TLCC = town level coordination committee, UGIAP = Urban Governance Improvement Action Program, WLCC = ward level coordination committee. Source: Asian Development Bank.

Appendix 5

29

CRITERIA FOR SUBPROJECT SELECTION A. Eligible Subprojects 1. The following types of subprojects will be eligible for financing under the Second Urban Governance and Infrastructure Improvement (Sector) Project (the Project):

(i) Municipal transport. (a) Repair, rehabilitation, and expansion of pourashava roads, traffic junctions, and foot paths; (b) rehabilitation and expansion of bridges and culverts; (c) development of riverboat landing stations (jetties); (d) procurement of equipment for routine maintenance; and (e) procurement of equipment for traffic management and road safety.

(ii) Drainage. (a) Repair, rehabilitation, and expansion of existing drainage systems; (b) construction of new drains; and (c) procurement of equipment for maintenance.

(iii) Solid waste management. (a) Procurement of collection and storage equipment; (b) construction of storage, treatment, and sanitary disposal facilities; and (c) support to community-based organizations for house-to-house collection.

(iv) Water supply. (a) Rehabilitation of piped water supply systems; (b) introduction of nonrevenue-earning water programs; (c) construction of tube wells; (d) procurement of equipment for metering, operation, and maintenance; (e) expansion of distribution networks; and (f) construction of iron- and arsenic-removal facilities. Major works including source augmentation and expansion of trunk mains will be considered only in exceptional cases.1

(v) Sanitation. (a) Public and community sanitation facilities,2 (b) procurement of equipment for maintenance of facilities and sludge disposal, (c) construction of sludge disposal facilities, and (d) awareness campaign for better hygiene.

(vi) Municipal facilities. (a) Bus and truck terminals, (b) parking areas, (c) kitchen markets and slaughterhouses, (d) municipal parks, (e) street lighting, (f) urban landscaping, (g) construction of community centers, and (h) water bodies.

(vii) Basic Services in Slums. Physical improvements to slums. (viii) General. Surveys and studies.

B. General Criteria 2. The following are the general criteria for all subprojects:

(i) The subproject has been identified and designed in a participatory manner through the preparation of a pourashava development plan (PDP) prepared in accordance with the PDP guidelines.

(ii) A demand survey has been conducted and has confirmed the need for the subproject. (iii) The design of the subproject ensures the least-cost of capital and of operation and

maintenance (O&M) expenditures in achieving its objectives. (iv) An O&M plan for the subproject, including an identified budget, has been prepared and

approved. Public-private partnerships for O&M will be included if appropriate. (v) The subproject avoids and minimizes involuntary resettlement. It does not (a)

permanently displace 200 people and more or affect 10% or more of their productive assets; (b) adversely affect indigenous communities; (c) result in labor retrenchment or encourage child labor; or (d) directly or indirectly contribute to the spread of HIV/AIDS, human trafficking, or the displacement of girls and women.

(vi) The subproject will meet the environmental subproject selection criteria and have prepared environmental assessments including environmental monitoring plans in accordance with the environmental assessment and review procedure of the Project.

(vii) The subproject will prepare an indigenous peoples development plan, if required. (viii) Any investment for slums or informal settlements on government-owned land will be

taken up only after a resolution by the pourashava council neither to evict nor relocate the residents for a period of at least 15 years. In the case of private lands, the pourashava council will confirm with the landowner that there will be no eviction or relocation for at least 15 years.

C. Sector Specific Criteria 3. Municipal roads. The following are the criteria for municipal road subprojects:

(i) A basic traffic survey has been carried out, and the subproject is designed in line with the survey results and estimated future traffic.

1 Major works will be designed and implemented in coordination with the Department of Public Health Engineering. 2 The Project will not finance individual household latrines.

30 Appendix 5

(ii) The subproject has an economic internal rate of return (EIRR) of 12% or higher.

4. Drainage. The following are the criteria for drainage subprojects: (i) In the case of pourashava-wide development of drainage, a comprehensive master plan

has been prepared. (ii) A survey has been conducted and confirms the need for the subproject, based on

frequency of flooding and waterlogging as well as the estimated damage to roads and property.

5. Solid Waste Management. The following are the criteria for solid waste management subprojects:

(i) A user charge will be set and charged for house-to-house collection. An ability-to-pay survey confirms that the charge is affordable for most users.

(ii) In the case of a composting plant, a study has confirmed the marketability of the compost produced.

6. Water Supply. The following are the criteria for water supply subprojects:

(i) The pourashava has submitted to the Local Government Division a proposal to set the revised tariff at a level to cover O&M costs. An ability-to-pay survey has confirmed that the tariff is affordable for most users.

(ii) The subproject has a financial internal rate of return (FIRR) at the proposed tariff higher than the weighted average cost of capital (WACC).

(iii) The design of the facilities, in particular tube wells, is strictly in line with the relevant Government guidelines and standards.

(iv) The pourashava has established a separate account for water revenues and expenditures.

(v) The required quantity of raw water that meets standards for safe drinking water has been confirmed to be available.

(vi) The subproject has an EIRR of 12% or higher.

7. Sanitation. The following are the criteria for sanitation subprojects: (i) A written confirmation has been provided that beneficiaries are willing and able to

provide labor and other in-kind support to construct and manage the facilities. (ii) At least one community-based organization has been formed and trained for O&M. (iii) The subproject includes a hygiene education and awareness campaign. (iv) The design of the facilities suits the requirements of women, children, and the disabled.

8. Municipal Facilities. The following are the criteria for municipal facility subprojects: (i) Truck and bus terminals. (a) A basic traffic survey has been carried out, and the

subproject is in line with the survey results and estimated future traffic. (b) The subproject has a FIRR higher than the WACC. (c) The subproject has an EIRR of 12% or higher.

(ii) Public markets. (a) A survey has confirmed the need for the subproject based on the estimated number of stalls, their size, and the rents to be charged. (b) A plot allocation plan has been prepared, defining the price or lease terms for the sites and the process for allocating plots. (c) The subproject has a FIRR higher than the WACC. (d) The subproject has an EIRR of 12% or higher.

9. Basic Services in Slums. The following are the criteria for subprojects providing basic services in slums:

(i) Physical surveys of the site and social surveys of the resident population have been completed.

(ii) Components of the subproject have been identified in the poverty reduction action plan or equivalent plans.

(iii) A slum improvement committee has been established and is active in facilitating community participation in the design, implementation, and maintenance of the facilities.

(iv) A written certification that the proposed land use for the slum has the full approval of the pourashava and the local community.

(v) Beneficiaries have committed to make in-kind and financial contributions to meet the cost of O&M.

Appendix 6

31

FUND ALLOCATION MECHANISM AND THE URBAN GOVERNANCE IMPROVEMENT ACTION PROGRAM

A. Fund Allocation Mechanism 1. Investment Ceiling. The maximum amount of funds to be allocated to each pourashava (the investment ceiling) is Tk250 million for class A pourahsavas, Tk200 million for class B pourahsavas, and Tk100 million for class C pourahsavas. The investment ceiling does not include in-kind contributions by pourashavas and beneficiaries. 2. Financing Pattern. Civil works and equipment for revenue-generating subprojects, including water supply, bus terminals, and truck terminals, will be financed 50% by grant and 50% by loan for class A pourashava and 70% by grant and 30% by loan for class B pourashava. The loan will have an interest rate of 4% for 20 years, including a 5-year grace period, and will be denominated in the local currency. All other types of subprojects will be funded 100% by grant. 3. Entry to Phase 2. Pourashavas that successfully achieve all performance criteria of phase 1 of the Urban Governance Improvement Action Program (UGIAP) will proceed to phase 2 and be entitled to utilize a maximum of 50% of the investment ceiling. While the expected average period of phase 1 is 1.5 years, pourashavas can enter into phase 2 immediately after the compliance of all phase 1 performance criteria. The assessment of pourashavas’ performance by the municipal performance review committee (MPRC) will be carried out semiannually. Pourashavas that do not meet any of the phase 1 performance criteria within 2 years from the beginning of phase 1 will lose all entitlement for fund allocation. 4. Entry to Phase 3. At the end of phase 2, which is expected to be in June 2012, pourashavas’ performance will be rated by the MPRC. The rating will be “fully satisfactory” if the pourashava meets all of the phase 2 performance criteria of the UGIAP to a fully satisfactory level, “satisfactory” if the pourashava meets all of the minimum requirements of the phase 2 performance criteria, or “unsatisfactory” if the pourashava does not meet all of the minimum requirements. The additional entitlement in phase 3 is 50% of the investment ceiling for pourashavas with a fully satisfactory rating, 25% of the investment ceiling for pourashavas with a satisfactory rating, and nothing for pourashavas with an unsatisfactory rating. 5. New Entry. Within 1 year after the end of phase 1, all class A and B pourashavas that are not included under the Second Urban Governance and Infrastructure Improvement (Sector) Project (the Project) will be informed and encouraged to implement the UGIAP. The MPRC will rank those pourashsavas that apply for fund allocations under the Project according to the performance criteria of the UGIAP. Pourashavas with a high ranking will be entitled to utilize a maximum of 50% of their investment ceiling. In the middle of phase 2, the overall fund utilization will be assessed, and the candidate pourashavas will be identified. At the end of phase 2, the new pourashavas will be determined by the interministerial steering committee subject to fund availability. B. Urban Governance Improvement Action Program

Table A6.1: Phase 1 Performance Criteria Activities Performance Criteria 1. Town-level coordination committee (TLCC) established and

operating according to the guidelines At least three meetings held and the minutes prepared

2. Ward-level coordination committees (WLCCs) established and operating according to the guidelines

At least two meetings held and the minutes prepared at all WLCCs of the pourashava

3. Community-based organizations (CBOs) established At least two meetings held and the minutes prepared 4. Formation of a gender committee headed by female ward

commissioners At least two meetings held and the minutes prepared

5. Planning unit established in pourashava Planning unit established, and recruitment of a full-time urban planner started for class A pourashavas, including request to Local Government Division (LGD)

6. Pourashava development plan prepared, including poverty reduction action plan and gender action plan

Complied with

7. Interim assessment of holding tax carried out Complied with Source: Asian Development Bank.

32 Appendix 6

Table A6.2: Phase 2 Performance Criteria

Performance Criteria Activities Fully Satisfactory Minimum Requirements A. Citizen awareness and participation 1. Citizen charter approved by town-level coordination committee (TLCC) and displayed at the pourashava office

Citizen charter prepared and approved by TLCC

Citizen charter prepared and approved by TLCC

2. Citizens report cards prepared, approved and implemented by TLCC

Citizens report cards prepared and approved by TLCC. The card is distributed and the result is compiled and disclosed at least twice.

Citizen report cards prepared and approved by TLCC. The card is distributed and the result is compiled and disclosed at least once.

3. Grievance-redress cell established with clear terms of reference and functional

Complied with Complied with

4. TLCC and ward-level coordination committee (WLCC) meetings held on a regular basis

Quarterly meetings held and minutes prepared

Quarterly meetings held and minutes prepared

5. Budget proposal is compared with the budget and actual outlays in the previous year, displayed at the pourashava office, and discussed at TLCC

Complied with Complied with

6. Mass-communication cell established and campaign plan developed and implemented as planned

Complied with Complied with

B. Urban planning 1. Base map verified and updated land-use plan prepared

Complied with Complied with

2. Annual operation and maintenance (O&M) plan, including budget requirement, prepared and approved as part of pourashava development plan (PDP)

O&M plan approved and the budget increased by 5% annually up to the required budget

O&M plan approved and the budget increased

3. A full-time pourashava urban planner recruited (class A purashavas only)

Complied with Complied with

C. Women’s participation 1. Gender action plan (GAP) prepared and included in the PDPa

GAP prepared and endorsed by TLCC and is fully implemented, quarterly reports prepared

GAP prepared and endorsed by TLCC, with implementation commenced and the first progress report presented to TLCC

2. Budget to implement GAP identified and approved.

Complied with Complied with

D. Integration of the urban poor 1. Slum improvement committees (SICs) established in targeted slumsa

Complied with Complied with

2. Poverty reduction action plan (PRAP) prepared and included in the PDPa

PRAP prepared and endorsed by TLCC and is fully implemented and quarterly reports prepared

PRAP prepared and endorsed by TLCC, with implementation commenced and the first progress report prepared

3. Budget allocation for PRAP Budget to implement PRAP identified and approved

Budget to implement PRAP identified and approved

Appendix 6

33

Performance Criteria Activities Fully Satisfactory Minimum Requirements E. Financial accountability and sustainability 1. Computerized accounting system introduced and computer-generated accounting reports produced

Complied with Complied with

2. Computerized tax record system introduced and computer-generated bills produced

Complied with Complied with

3. Financial statements prepared and account and audit standing committee carry out audit within 3 months after the closure of fiscal year

Complied with Complied with

4. Interim tax assessment carried out annually and collection increased

Interim tax assessment carried out and collection increased by more than 10% annually (up to 80% collection efficiency)

Annual tax reassessment carried out and collection increased by more than 5% annually (up to 80% collection efficiency)

5. Non-tax own revenue source increased at least by inflation rate

Complied with Complied with

6. All debts due to Government of Bangladesh and other entities fully repaid according the schedule, and the ratio of debt servicing to annual revenue receipts remains less than 25%

Complied with Complied with

7. All outstanding bills older than 3 months, including electricity and telephone, paid in full

Complied with Complied with

F. Administrative transparency 1. Development of adequate staff structure (according to size and needs) with detailed job descriptions to enable the pourashava to effectively undertake its current and future obligations

Complied with Complied with

2. Elected representatives, pourashava officials, and concerned citizens actively participate in training programs

Complied with Complied with

3. Progress report on Urban Governance Improvement Action Program implementation and other activities submitted on time to project management office

Complied with Complied with

4. Standing committees established and/or activated

Complied with Complied with

5. Ensuring evaluation and monitoring by regional Local Government Engineering Department on progress and quality of physical works

Complied with Complied with

6. Activities for e-governance initiated Complied with Complied with a If a pourashava already has developed plans equivalent to a PRAP or GAP, or established a committee equivalent to a SIC, the municipal performance review committee may assess that portion of the criteria as complied with without the preparation of new plans or committees to avoid redundancy.

Source: Asian Development Bank.

DETAILED COST ESTIMATES

Table A7.1: Detailed Cost Estimates: Cost Estimates by Expenditure Category

Item $ Million Tk Million % of Base Cost

A. Base Costa, b 1. Urban Infrastructure and Service Delivery Civil Work 99.0 6,789 64.8 Equipment and Vehicles 12.4 848 8.1 Land Acquisition and Resettlement 6.3 435 4.2 Subtotal (A1) 117.7 8,072 77.0 2. Governance Improvement and Capacity Development Consultancy 3.3 226 2.2 Capacity Development, Workshops, and Campaigns 5.8 398 3.8 Incremental Recurrent Costs 0.8 55 0.5 Subtotal (A2) 9.9 679 6.5 3. Project Management and Implementation Support Equipment and Vehicles 1.2 83 0.8 Consulting Services 6.5 448 4.3 Incremental Recurrent Costs 6.7 462 4.4 Subtotal (A3) 14.5 993 9.5 Subtotal (A1–3) 142.1 9,744 93.0 4. Tax and Duties 10.7 734 7.0 Subtotal (A1–4) 152.8 10,478 100.0 B. Contingencies Physical Contingenciesc 7.8 534 5.1 Price Contingenciesd 4.0 274 2.6 C. Financing Charges During Implementatione 2.9 200 1.9 Total 167.5 11,485 109.6

a Exchange rate of Tk68.57 = $1 has been used. b Base costs are as of January 2008. c Physical contingencies are estimated at 5–10%. d Price contingencies are estimated at 0.5–1.4% for foreign cost and at 7–8% for local cost over the project implementation period (using Asian

Development Bank price escalation factors). e Financing charges are estimated, assuming 1% interest rate on ADF loan during the project period. Source: Asian Development Bank estimates.

34 Appendix 7

Table A7.2: Detailed Cost Estimates: Cost Estimates by Financier ($’000)

Total

ADB

GTZ

KfW Government of

Bangladesh

Pourashavas Beneficiaries

Item

$ $ % $ % $ % $ % $ % $ % A. Base Costa, b 1. Infrastructure and Service Delivery Civil Work 99,010 55,072 55.6 0 0.0 28,637 28.9 9,301 9.4 5,300 5.4 700 0.7 Equipment and Vehicles 12,367 8,136 65.8 0 0.0 4,231 34.2 0 0.0 0 0.0 0 0.0 Land Acquisition and Resettlement 6,343 0 0.0 0 0.0 0 0.0 4,343 68.5 2,000 31.5 0 0.0 Subtotal (A1) 117,720 63,208 53.7 0 0.0 32,868 27.9 13,644 11.6 7,300 6.2 700 0.6 2. Governance Improvement and

Capacity Development

Consultancy 3,292 3,292 100.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 Capacity Development, Workshops,

and Campaigns 5,808 1,302 22.4 4,506 77.6 0 0.0 0 0.0 0 0.0 0 0.0

Incremental Recurrent Costs 802 160 20.0 0 0.0 0 0.0 642 80.0 0 0.0 0 0.0 Subtotal (A2) 9,902 4,754 48.0 4,506 45.5 0 0.0 642 6.5 0 0.0 0 0.0 3. Project Management and

Implementation Support

Equipment and Vehicles 1,213 1,056 87.0 158 13.0 0 0.0 0 0.0 0 0.0 0 0.0 Consultancy 6,535 6,535 100.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 Incremental Recurrent Costs 6,738 1,348 20.0 0 0.0 0 0.0 5,391 80.0 0 0.0 0 0.0 Subtotal (A3) 14,486 8,938 61.7 158 1.1 0 0.0 5,391 37.2 0 0.0 0 0.0 Subtotal (A1–3) 142,109 76,900 54.1 4,664 3.3 32,868 23.1 19,676 13.8 7,300 5.1 700 0.5 4. Tax and Duties 10,700 0 0.0 0 0.0 0 0.0 10,700 100.0 0 0.0 0 0.0 Subtotal (A1–4) 152,809 76,900 50.3 4,664 3.1 32,868 21.5 30,376 19.9 7,300 4.8 700 0.5 B. Contingencies Physical Contingenciesc 7,781 4,755 61.1 0 0.0 2,206 28.4 819 10.5 0 0.0 0 0.0 Price Contingenciesd 3,999 2,432 60.8 0 0.0 1,036 25.9 531 13.3 0 0.0 0 0.0 C. Financing Charges During Implementatione 2,912 2,912 100.0 0 0.0 0 0.0 0 0.0 0 0.0 0 0.0 Total 167,500 87,000 51.9 4,664 2.8 36,110 21.6 31,726 18.9 7,300 4.4 700 0.4 ADB = Asian Development Bank, GTZ = Geselschaft für Technische Zusammenarbeit, KfW = Kreditanstalt für Wiederaufbau. a Exchange rate of Tk68.57 = $1 has been used. b Base costs are as of January 2008. c Physical contingencies are estimated at 5–10%. d Price contingencies are estimated at 0.5–1.4% for foreign cost and at 7–8% for local cost over the project implementation period (using Asian Development Bank price escalation factors). e Financing charges are estimated, assuming 1% interest rate on ADF loan during the project period. Source: ADB estimates.

Appendix 7 35

36 Appendix 8

IMPLEMENTATION ARRANGEMENTS

BME = benefit monitoring and evaluation; DPD = deputy project director; ESSIS = environment sanitation and slum improvement section; GICD = governance improvement and capacity development; GPD = governance program development; IIS = infrastructure improvement section; ISDI = infrastructure and service delivery improvement; LGD = Local Government Division; LGED = Local Government Engineering Department; MDS = management, design, and supervision; PIU = project implementation unit; PME = performance monitoring and evaluation; PMO = project management office; UGIS = urban governance improvement section; UMSU = Urban Management Support Unit. Notes: 1. PMO will be headed by project director, two deputy project directors in charge of (i) infrastructure and service delivery improvement, and (ii) governance improvement and capacity development respectively. 2. PIU will be headed by the pourashava mayor assisted by the chief executing officer and other officials, and composed of (i) infrastructure improvement section headed by executive engineer (assistant engineer for class B and C pourashavas); (ii) governance and capacity development section headed by secretary of pourashava; and (iii) an environmental, sanitation, and slum improvement section headed by health officer. Source: Asian Development Bank.

Consultants: MDS, GICD, GPD, BME

LGD Secretary

LGED Chief Engineer

Urban Management Wing Additional Chief Engineer Superintending Engineer

Interministerial Steering Committee

Municipal Performance Review Committee

PMO Project Director

DPD (ISDI), DPD (GICD)

PIUs (Pourashavas) IIS, UGIS, ESSIS

UMSU in Dhaka

UMSU in regions

Consultants: PME

UMSU works as secretariat

Standardized trainings

IMPLEMENTATION SCHEDULE

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Loan PreparationLoan Effectiveness ▼Recruitment of Consultants (Advance Action)Assignment of Project Staff (PMO and PIU)Announcement of UGIAP to Pourashava ▼Phase 1Implementation of UGIAP Phase 1Preparation of PDP Performance Evaluation of UGIAP Phase1 ▼ ▼ ▼Land Acquisition for Phase 2 Physical InvestmentsPhase 2a

Implementation of UGIAP Phase 2Detailed Design and Bid Preparation Conclusion of Subproject Agreement and Subsidiary Loan Agreement ▼Tendering and Contract AwardingImplementation and Supervision of Physical WorksPerformance Evaluation for UGIAP Phase 2 ▼Land Acquisition for Phase 3 Physical InvestmentsPhase 3Implementation of UGIAP Phase 3Detailed Design and Bid Preparation Conclusion of Subproject Agreement and Subsidiary Loan Agreement ▼Tendering and Contract AwardingImplementation and Supervision of Physical WorksReview and MonitoringQuarterly Progress Report from PIU to PMO, and from PMO to DPs ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼DPs' Review Missions ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼ ▼Midterm Review ▼DP = development partner, PDP = pourashava development plan, PIU = project implementation unit, PMO = project managent office, UGIAP = Urban Governance Improvement Action Program.a The table shows a standard schedule for pourashava which enter into the phase 2 in July 2010. Pourashava may and are encouraged to enter into phase 2 eariler than July 2010 upon compliance of UGIAP phase 1 performance criteria.Source: Asian Development Bank estimates.

2011 2012

Phase 1 Phase 2 Phase 3

2013Description 2008 2009 2010 2014

Appendix 9 37

38 Appendix 10

SUMMARY PROCUREMENT PLAN

Project Name: Second Urban Governance and Infrastructure Improvement (Sector) Project

Loan Number: to be determined

Loan Amount $: 87million Executing Agency: Local Government Engineering Department

Date of First Procurement Plan: June 2008 Date of this Procurement Plan: June 2008

A. Project Procurement Thresholds

1. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to the procurement of goods and works.

Method Threshold National competitive bidding for works Equivalent to $2,000,000 or less National competitive bidding for goods Equivalent to $500,000 or less Shopping for works Between $10,000 and $100,000 Shopping for goods Equivalent to $100,000 or less Direct contracting Equivalent to $10,000 or less Community participation in procurement Community facilities in slums and low-income

areas are procured by the community. Each community facility should not cost more than $10,000.

Source: Asian Development Bank. B. Indicative List of Packages Required Under the Project 2. The following table provides an indicative list of all procurement (goods, works, and consulting services) over the life of the Project. General Description

Estimated Value

(cumulative) ($ million)

Estimated Number of Contracts

Procurement Method

Domestic

Preference Applicable

Approval/ Comments

Goods Equipment and vehicles for Operation and maintenance

12.4 Multiple Limited International

Bidding

Not applicable Prior approval

Office equipment 0.5 Multiple Shopping Not applicable Prior approval for all contracts above $50,000

Vehicles for PMO and PIU

0.8 Multiple Limited International Bidding

Not applicable Prior approval

Works Municipal infrastructure

101.0 Multiple National competitive bidding &

community contracts

Not applicable Prior approval for all contracts above $50,000. Average contract size <$1million

Appendix 10 39

Consulting Services

Type of Proposal

Governance improvement and capacity development (firm)

3.5

1 Quality- and cost-based selection

Full technical proposal

Prior approval

Estimated Value

(cumulative) ($ million)

Estimated Number of Contracts

Procurement Method

Type of

Proposal

Approval/ Comments

Management, design, and supervision (firm)

5.2 1 Quality- and cost-based selection

Full technical proposal

Prior Approval

Individuals 1.1 Multiple Individual Bio data Prior approval

C. National Competitive Bidding Annex 3. General. The procedures to be followed for national competitive bidding shall be those set for the national open tendering method in the Government’s Public Procurement Regulations (2008), with the clarifications and modifications described in the following paragraphs as required for compliance with the provisions of ADB’s Procurement Guidelines (2007, as amended from time to time). 4. Advertising. National competitive bidding contracts estimated at $500,000 or more for goods-related services, or for $1 million or more for civil works, shall be advertised concurrently with the general procurement notices on ADB’s website. 5. Anticorruption. Definitions of corrupt, fraudulent, collusive, and coercive practices shall reflect the latest Board-approved definitions of these terms in ADB’s Anticorruption Policy (1998, as amended to date) and related additional provisions, such as conflict of interest, obstructive practices, etc. 6. Location of Bid Submission. Advertisements and bidding documents shall specify only one location for delivering bids. The submission of bids to “primary” and “secondary” locations, or “multiple droppings” of bids, shall not be required or allowed. 7. Rejection of All Bids and Rebidding. Bids shall not all be rejected, and new bids solicited, without ADB’s prior concurrence. 8. Member Country Restrictions. Bidders must be nationals of member countries of ADB, and offered goods must be produced in member countries of ADB. 9. Number of Short-listed Consultants. The number of shortlisted consultant shall be six, whenever possible, according to ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time), rather than four to seven as allowed in the Government’s Public Procurement Regulations (2008).

40 Appendix 11

OUTLINE TERMS OF REFERENCE FOR CONSULTANTS 1. Consulting services are provided to the Second Urban Governance and Infrastructure Improvement (Sector) Project (the Project) to support implementation and strengthen the institutional, administrative, and financial capacities of the pourashava and the Local Government Engineering Department. The consulting services include in total 96 person-months of international consultancy and 4,878 person-months of national. The major packages are 1: governance improvement and capacity development (GICD); and 2: management, design, and supervision (MDS). GTZ will provide experts to support governance program development (GPD). In addition, individual consultants will be engaged by the project management office (PMO). A. Package 1: Governance Improvement and Capacity Development

2. The GICD package will require 876 person-months of national consultancy. GICD consultants will support project implementing units (PIUs) in implementing the Urban Governance Improvement Action Program (UGIAP) by providing capacity development and facilitation of urban planning, municipal finance, and community mobilization. The consulting team will be headed by a team leader supported by a deputy team leader. Each of the six regions has three regional coordinators in charge of urban planning, municipal finance, and community mobilization. The package will include engaging and managing UGIAP facilitators. Each pourashava under the Project will be supported by three facilitators in charge of urban planning, municipal finance, and community mobilization. 3. The scope of work is to provide capacity development and other support to the PMO and PIUs in implementing the UGIAP, including (i) preparing the pourashava development plan (PDP), including the land-use plan, poverty reduction action plan (PRAP), and gender action plan (GAP); (ii) training pourashavas’ urban planners and other staff on urban planning; (iii) introducing a modern, computerized accounting system; (iv) introducing a computerized tax record system; (v) training accounting and financial management; (vi) improving holding tax assessment and collection; (vii) rationalizing user charges and tariff setting; (viii) establishing town-level coordination committees (TLCCs), ward-level coordination committees (WLCCs), community-based organizations (CBOs), and slum improvement committees (SICs); (ix) introducing and implementing the citizen report card; (x) implementing a communication campaign; and (xi) introducing e-governance, such as web-based information management and disclosure.

Table A11.1: Composition of GICD Person-Month Position International National Number

Senior urban governance specialist (team leader) 0 60 1Urban governance specialist (deputy team leader) 0 60 1Urban planner (regional coordinator) 0 216 6Municipal finance specialist (regional coordinator) 0 216 6Community mobilization specialist (regional coordinator) 0 216 6IT/MIS specialist 0 108 3 Total 0 876 23ADB = Asian Development Bank, GICD = governance improvement and capacity development, IT = information technology, MIS = management information system. Source: ADB estimates.

B. Package 2: Management, Design, and Supervision

4. The MDS package will require 96 person-months of international consultancy and 3,318 person-months of national. MDS consultants will support PIUs in engineering design, bid management, and supervising physical works. The consultants will also be responsible for overseeing safeguard measures for the environment and resettlement. The consulting team will be headed by an international team leader supported by two national deputy team leaders.

Appendix 11 41

5. The scope of the work is to provide support to the PMO and PIUs in (i) conducting physical surveys; (ii) identifying and prioritizing subprojects; (iii) conducting technical, economic, financial, and social assessments of subprojects; (iv) preparing detailed design and bid documents; (v) evaluating bids; (vi) supervising and managing contractors; (vii) ensuring environmental and social safeguard compliance according to guidelines of the Government of Bangladesh (the Government) and the Asian Development Bank (ADB); (viii) preparing and introducing operation and maintenance plans; and (ix) providing training to implement operation and maintenance plans.

Table A11.2: Composition of MDS Person-Month Position International National Number

Senior municipal engineer (team leader) 48 0 1Municipal engineer (deputy team leader) 0 96 2Water and sanitation engineer 0 36 2Environmental engineer 0 36 1Architect 0 18 1Structural and design engineer 0 18 1Transport engineer 18 1Municipal engineer 0 2100 35Resettlement specialist 24 0 1Environment specialist 24 0 1Resettlement specialist 0 420 7Environment specialist 0 420 7Auto CAD and computer expert 0 120 2Procurement and contract management specialist 0 36 1 Total 96 3318 63

CAD = computer aided design; MDS = management, design, and supervision. Source: Asian Development Bank estimates.

C. GTZ Experts

6. GTZ will provide in-kind contributions to engage experts for GPD, which is a part of capacity development in the Project. The GPD expert will assist the Urban Management Support Unit (UMSU) and the PMO in (i) refining training modules currently utilized by UMSU and the PMO under the Urban Management and Infrastructure Improvement (Sector) Project (UGIIP-1), (ii) expanding the types of training modules to be provided by UMSU, and (iii) assessing training needs of the pourashavas. D. Individual Consultants

7. Benefit Monitoring and Evaluation. Three individual consultants will be engaged and work as a team. The scope of work is to assist the PMO in establishing a result-based monitoring and evaluating system for the Project, including (i) identifying appropriate indicators and targets, (ii) establishing a system to collect and compile data, (iii) ensuring the quality of data collection and compilation, (iv) assessing and analyzing the collected data, and (v) producing periodic reports.

Table A11.3: Composition of Benefit Monitoring and Evaluation Person-Month Position International National Number

Urban governance specialist (team leader) 0 72 1Social and safeguard monitoring specialist 0 36 1Benefit indicators specialist 0 48 1 Total 0 156 3Source: Asian Development Bank estimates.

42 Appendix 11

8. Performance Monitoring and Evaluation. A senior national consultant will be engaged to support UMSU in monitoring, evaluating, and rating the performance of pourashavas according to the UGIAP. The consultants will support the LGD, Local Government Engineering Department, and municipal performance review committee (MPRC) in strengthening performance monitoring by the MPRC, reviewing national budgetary process for pourashavas, and other urban policy issues. The consultant will examine how to utilize MPRC monitoring to sustain governance reform in pourashavas under the UGIIP-1 after project completion. 9. Support for UMSU. Five consultants will be engaged in each of four regional offices of UMSU. The scope of work is to support UMSU in implementing standard training modules for pourashavas. Standard modules will include (i) computerization of tax records, (ii) computerization of accounting, (iii) inventory and mapping of infrastructure, and (iv) community mobilization. With support from the expert to be engaged by GTZ, the consultants will gradually expand the types of training modules.

Table A11.4: Composition of UMSU Support Person-Month Position International National Number

Urban governance specialist (team leader) 0 72 4IT/MIS specialist 0 72 4Municipal finance specialist 0 72 4Urban planner 0 72 4Community mobilization specialist 0 72 4 Total 0 360 20IT = information technology, MIS = management information system, UMSU = Urban Management Support Unit. Source: Asian Development Bank estimates.

10. Publicity Campaign. A consultant will be engaged to support the PMO in planning and implementing publicity campaigns on local governance reforms under the Project. The consultant will produce printed and other materials for the campaigns. 11. Equipment Procurement Support. A consultant will be engaged to support the PMO in procuring equipment and vehicles, including the preparation of specifications and bid documents, the management of tender evaluation, and quality assurance. 12. Accounting Support. A consultant will be engaged to support the PMO and PIUs in strengthening accounting and internal control procedures. The consultants will support the PMO and PIUs in reporting and responding to the independent auditor.

Appendix 12 43

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

Country/Project Title: Bangladesh/Second Urban Governance and Infrastructure Improvement (Sector) Project Lending/Financing Modality: Sector Project Loan Department/

Division: South Asia Department/ Urban Development Division

I. POVERTY ANALYSIS AND STRATEGY

A. Linkages to the National Poverty Reduction Strategy and Country Partnership Strategy Poverty incidence in urban areas of Bangladesh is currently estimated at 32.6% (Poverty Monitoring Survey, 2004). With a population growth rate of almost 6%, or three times the national average, expanding urban areas have a growing number of urban poor. Urban poverty is associated with poor-quality housing, often in overcrowded, unsanitary slum settlements. The urban poor have limited access to urban services such as water supply, sanitation, drainage, flood protection, local roads, public transport, street lighting, etc. The proposed Second Urban Governance and Infrastructure Improvement (Sector) Project (the Project) is closely linked to the National Strategy for Accelerated Poverty Reduction (2005), which recognizes that growing disparities in living standards in the cities is emerging as an important policy concern. Unplanned city growth, illegal encroachments on public land, poor urban governance, and a lack of policy attention to the needs of the informal sector are some of the key factors identified in the strategy as exacerbating the problem of urban poverty. According to the strategy, critical policy entry points include mitigating public health risks by improving access to water, sanitation, and adequate solid waste management; addressing the service needs of both transient settlements and more stable poor neighborhoods; strong and effective policy support to the informal sector; and better utilization of public urban land for community purposes and the needs of the poor. The proposed Project has been designed to address these issues in particular by focusing on support to low-income areas, including slum areas, in terms of improved access to basic urban services. The proposed Project is designed to empower poor people, ensuring that they have access to the urban decision-making process and can be involved in planning, implementing, and monitoring urban infrastructure in their communities. The project focuses on ADB’s continuing role in providing support for social development. It aims to facilitate access for the poor, women, and excluded groups; improve infrastructure in urban slums; and improve the delivery of water supply and sanitation services in a financially sustainable manner in urban areas. Furthermore, the country strategy and program focuses on good governance through support for improved local governance; decentralizing and strengthening local government; improving local resource mobilization, planning, and management capacity; and supporting the involvement of communities and the private sector in planning and delivering local services. B. Poverty Analysis Targeting Classification: General intervention 1. Key Issues

Bangladesh has a total area of 147,000 square kilometers and a population of 140 million. At 950 people per square kilometer, it has one of the world’s highest population densities. The country is vulnerable to a variety of natural disasters that bring hardship to its people, nearly 42% of whom live below the poverty line. In the past 3 decades, Bangladesh has experienced high urban population growth at 2.5% per annum, owing to rural landlessness, employment opportunities in the cities, and the stagnating economy in the countryside. About 35 million people live in the country’s six cities, 308 pourashavas, and 208 smaller urban settlements. Safe drinking water is inaccessible to 6 million urban people; 40% of urban households resort to open defecation or use unsanitary hanging latrines; and only 25% of the urban households live in permanent structures. Local governments are responsible for addressing these issues, but lack of capacity, constrained financial resources due to poor tax collection, and the lack of institutional incentives or accountability to citizens prevent improvement. Meanwhile, the continuing rise in urban population means that, by 2015, an estimated 51 million of the country’s projected population of 167 million will live in urban areas. This poses considerable demand for housing, infrastructure, and social services in pourashavas.

In Bhanga, Rangpur, and Cox’s Bazar, half of the people living in slum settlements are extremely poor. More than half are functionally illiterate, and the main occupations are day labor and small trade. Around 35% of the slum dwellers do not have electricity, and almost 32% do not have access to safe drinking water. Sanitation facilities and solid waste collection are inadequate. In Rangpur, the sanitation situation is very poor, with no solid waste collection. Unsafe water and unhygienic conditions contribute to a high prevalence of waterborne diseases, with the poor, women, and children most at risk. High rates of morbidity and mortality derive from the use of shallow hand-pumped tube wells, which can be contaminated with arsenic; open wells and ponds, which can be contaminated with arsenic and bacteria. In the three pourashavas, the most common diseases are diarrhea, dysentery, parastic worms, and skin disorders. The proposed Project targets the poor in particular in terms of improving access to urban infrastructure and services, including

44 Appendix 12

improved water supply and sanitation facilities; the construction of drainage facilities; and the establishment of solid waste management systems. A poverty reduction action plan will be prepared, outlining the infrastructure to be supported and the needed capacity development. The proposed Project will empower poor groups by ensuring that they are involved in urban decision-making processes and participate in town and ward coordination committees. The urban poor will be involved in planning and prioritizing urban infrastructure in pourashavas through the preparation of pourashava development plans. The Project will indirectly support the urban poor by building the capacity of pourashavas to conduct pro-poor planning and by creating employment opportunities for the poor.

2. Design Features. Not applicable

II. SOCIAL ANALYSIS AND STRATEGY A. Findings of Social Analysis Household surveys conducted during the preparation of the proposed Project reveal that the numbers of slums and clusters of poor people is significant in all three pourashavas covered. Housing conditions in slums and cluster areas are very poor, and access to services is limited. None of the slum dwellers has access to piped water. The main problems related to access to water, as reported by slum dwellers, are long distances to water points, inadequate supply, and poor quality. In spite of the poor quality, the vast majority of slum dwellers do not treat drinking water, and this increases the incidence of waterborne diseases in these areas. Though most of the slum dwellers reported that they have access to latrines, most of them are hanging latrines, which do not provide sanitary conditions. More than half of slum areas in Cox’s Bazar do not have covered drains, creating breeding grounds for mosquitoes. The drains are rarely cleaned, which results in blockage and overflow. All respondents reported that no garbage bins or solid waste management system exist. Many are forced to bury their garbage or dump it on streets or into drains or rivers. The main occupations of poor men are rickshaw pulling, fishing, and day labor. Most women are engaged in domestic work. The rate of illiteracy in high among adults. School attendance is as low as 30% in Cox’s Bazar, where the dropout rate before completing primary school is as high as 90%. The reasons for the high dropout rate are the long distance to school, especially for slum dwellers, and low family income, which requires children to start work at an early age. As there are no health services in or near the slum areas, child birth routinely takes place in the home, creating risks to mothers and newborns. Female-headed households account for 10% of all households in Cox’s Bazar. The household survey included citizens’ perception of the services provided by the pourashavas. Almost all of them were dissatisfied, and they emphasized that they were not involved in decision-making regarding urban services. Little or no communication exists between pourashava officials and citizens regarding poor service delivery. Most roads in slum areas are extremely poor, with no cleaning or maintenance. The poor road conditions cause problems getting patients to the health center and more general problems during natural disasters and the rainy season. In Bhanga, one of the pourashavas to be included in the proposed Project has no slum, but it does have clusters of poor people. Most of the people living in these clusters do no have access to piped water, 83% of poor people do not have their own latrines, and 17% use open space for defecation. There is no door-to-door collection of solid waste, and almost all respondents reported that streets were not swept daily. Half of the poor people are functionally illiterate. Their main occupations are small trading or day labor. In the cluster areas, 35% do not have electricity.

B. Consultation and Participation

Workshops were held in three pourashavas as part the Project mission-visioning activities for preparing pourashava development plans (PDPs). Consultations were carried out on 1 November 2007 in Bhanga, 6 November 2007 in Cox Bazar, and 9 November 2007 in Rangpur. The workshops were attended by elected and appointed officials of the pourashavas, community-based organizations, businessmen, women, and poor urban residents. During the workshops, the stakeholders identified slum areas in their respective pourashavas, the main issues in regard to basic urban services, and priority areas for subprojects to be financed under the Project. Subsequent public consultations were carried out on 25 November in Bhanga, 17 December in Cox’s Bazar, and 27 December in Rangpur to confirm the proposed subprojects. The involvement of stakeholders in identifying the main issues and priority areas for improved urban services has created strong ownership of the Project among all groups.

Appendix 12 45

2. What level of consultation and participation (C&P) is envisaged during the project implementation and monitoring? Information sharing Consultation Collaborative decision making Empowerment

3. Was a C&P plan prepared? Yes No

The preparation of the PDP is participatory. The PDP is a town-wide plan prepared by the pourashavas to identify development priorities supported by technical and financial feasibility studies. The PDP has both a long-term vision and a short- to medium-term development plan.

C. Gender and Development 1. Key Issues. Primary and secondary data have been analyzed to assess the status of women in the three pourashavas. Socially prescribed roles limit women’s access to economic resources such as capital, skills, and marketing know-how. These same social norms limit women’s participation in political and other forms of decision making that affect their lives. Gender disparities are still marked in many aspects of the labor market. The gap in wage rates between men and women is significant. Women’s employment is concentrated in sectors with low returns on labor and is often temporary. Key social development indicators demonstrate gaps between male and female members of the same household. Maternal mortality rates remain high, and food consumption patterns that favor boys create gender gaps in malnutrition. The survey conducted during the preparation of the proposed Project shows that the average annual income of households headed by women is 70% less than of households headed by men. Female illiteracy is 5 percentage points higher than male illiteracy. Parallel to this disparity, access to piped water supply and sanitary latrines is lower among female-headed households. Drinking water is largely sourced from hand-pumped tube wells, open wells, and ponds, putting female-headed households at higher risk of arsenic contamination and other waterborne diseases. Moreover, household and community water collection and water and sanitation management are traditionally female roles. Thus, women are vulnerable to health risks from deficiencies in water, hygiene, and sanitation in the households and the community. Their access to latrines and sanitation facilities is often reduced by gender insensitivity in their construction and management. Though the law provides 25% quotas for women’s election into local governments, women’s participation and decision-making roles in community, ward, and pourashava affairs are very limited. 2. Key Actions. Measures included in the design to promote gender equality and women’s empowerment—access to and use of relevant services, resources, assets, or opportunities and participation in decision-making process:

Gender plan Other actions/measures No action/measure A gender action plan has been prepared. The gender action plan includes the following strategies to ensure that women benefit from the proposed Project, and that they are empowered to participate in urban decision-making processes: (i) the formation of pourashava gender committees providing guidance on how to mainstream gender aspects in urban development plans and of community-based organizations with extensive involvement of women; (ii) equal representation of women in sector working groups; (iii) the design of gender sensitization programs for pourashava staff; (iv) the development of clear terms of reference on the roles and responsibilities of female ward commissioners;a and (v) the provision of training as needed. The Project will develop disaggregated indicators monitoring implementation. Contractors will be required to ensure equal pay for men and women. Women will be trained in operating and maintaining community infrastructure.

III. SOCIAL SAFEGUARD ISSUES AND OTHER SOCIAL RISKS

Issue

Significant/Limited/ No Impact

Strategy to Address Issue

Plan or Other Measures Included in Design

Involuntary Resettlement

Limited impact

The subprojects are not anticipated to result in significant land acquisition or resettlement. A project resettlement framework has been prepared to guide the preparation and implementation of short resettlement plans. Three short resettlement plans have been prepared for six sample subprojects. Proposed subprojects that involve significant involuntary resettlement will be rejected.

Full Resettlement Plan Short Resettlement Plan Resettlement Framework No Action

46 Appendix 12

Issue

Significant/Limited/ No Impact

Strategy to Address Issue

Plan or Other Measures Included in Design

Indigenous Peoples

Limited impact

It is not yet known whether indigenous peoples or communities of ethnic minorities will be affected by any of the subprojects, positively or otherwise. An indigenous peoples development framework has been prepared and includes the project (a) background, (b) objectives, (c) strategy to ensure the participation of indigenous peoples, (d) strategy to ensure project benefits for indigenous peoples and mitigation measures for adverse impacts, (e) institutional arrangements, (f) budget for formulating and implementing an indigenous people’s development framework, and (g) programs for monitoring and evaluation.

Plan Other Action Indigenous Peoples

Development Framework No Action

Labor Employment opportunities

Labor retrenchment Core labor

standards

Significant impact

The subprojects will create significant employment opportunities in the pourashavas as their construction is labor intensive. Employment will be available for both men and women, who shall receive equal minimum wage rates for similar work.

Plan Other Action No Action

Affordability No Impact There is limited affordability issue in the Project. Action No Action

Other Risks and/or Vulnerabilities

HIV/AIDS Human

trafficking Others

(conflict, political instability, etc), please specify

No Impact

No other risks or vulnerabilities are identified.

Plan Other Action No Action

IV. MONITORING AND EVALUATION

Are social indicators included in the design and monitoring framework to facilitate monitoring of social development activities and/or social impacts during project implementation? Yes No

a Government of Bangladesh circular of 2003.

Appendix 13 47

SUMMARY GENDER ACTION PLAN Area of Focus Activitya Urban infrastructure civil construction, including those at the central level

(i) Ensure women and men participate equally in the prioritization of plans and decision-making. (ii) Ensure that all infrastructure designs address women’s needs, be they for toilets or water supply,

waiting rooms and ticket counters in terminals, or market stalls. (iii) Include a clause in the schedule of the bidding documents for the Second Urban Governance and

Infrastructure Improvement (Sector) Project (the Project) requiring contractors to ensure the provision of core labor standards, including equal wages for women and men for work of equal value.

(iv) Orient contractors at the time of issuing work orders on the implementation of the clause elaborating actions related to gender and core labor standards, such as (a) ensuring occupational safety and security, including personal security, during construction

and (b) ensuring separate drinking water and toilet facilities for women.

(v) Train women on the use, operation, and maintenance of community infrastructure. (vi) Establish a monitoring system that can track and report the impact of the Project on women and

the implementation of the core labor standards. Urban service delivery

(i) Include women equally in the planning phase. (ii) Ensure that all service delivery mechanisms have the participation of women, consider their

needs, and involve them in delivery and maintenance. (iii) Involve women in planning, implementing, and managing basic services for the urban poor under

the PRAP. (iv) Conduct awareness-raising programs for target women and involve women as catalysts.

Governance improvement and capacity building

(i) Form a pourashava gender committee led by one of the female ward commissioners. (ii) Form WLCCs and TLCCs with the participation of women and the poor or marginalized and

ensuring at least statutory requirement .b (iii) Ensure equitable representation of women and marginalized groups in sector working groups. (iv) Design and deliver gender-sensitization programs for pourashava functionaries. (v) Ensure orientation for pourashava councilors for clarity on the roles and responsibilities of female

ward commissioners as per the Government of Bangladeshc and assign responsibilities to them accordingly.

(vi) Develop gender-disaggregated indicators (e.g., on health benefits, reduced burden on women, and employment opportunities) and ensure data collection by PIUs with consultant support.

(vii) Develop pourashava gender action plans considering infrastructure and governance, allocate budgets, and implement them.

(viii) Involve women in the implementation of the UGIAP regarding taxes, solid waste, disaster preparedness, health, etc.

(ix) Involve women citizens equally in different forums, ward meetings, and courtyard meetings. (x) Ensure appropriate office space for female staff at all levels with relevant facilities. (xi) Introduce gender planning and budgeting through pourashava gender action plans.

Project management and implementation support

(i) Recruit women as staff in the PMO, UMSU, and pourashavas and as consultants and facilitators, ensuring minimum provision as per Government rules and Local Government Engineering Department guidelines.

(ii) Ensure a congenial work environment for women staff in terms of accommodation, water, transport, etc.

(iii) Develop a training plan and materials that integrate gender. (iv) Implement a gender-awareness program for PMO staff, pourashava staff, and councilors,

ensuring the participation of all female staff and female ward commissioners in relevant training. (v) Establish a monitoring system that can track and report the impact of the subprojects on women in

pourashavas and project wise and ensure management decisions are made accordingly. PDP = pourashava development plan, PMO = project management office, PRAP = poverty reduction action plan, TLCC = town-level coordination committee, UGIAP = Urban Governance Improvement Action Program, UMSU = Urban Management Support Unit, WLCC = ward-level coordination committee. a The summary gender action plan is indicative, based on components of the Project, and includes actions to be taken by the project

management office and the project implementation units. Specific pourashava-level gender action plans will be prepared based on specific activities. Targets for activities will be set considering government circulars, quota provisions, and the local situation. Additional need-based activities may be incorporated in pourashavas or project wide. Consultants will be engaged to support the implementation of the gender action plan.

b Pourashava Ordinance (2008). c Circular of September 2002.

Source: Asian Development Bank.

Appendix 14

48

SUMMARY INITIAL ENVIRONMENTAL EXAMINATION

A. Introduction, Description of the Project, and Description of the Environment 1. The Second Urban Governance and Infrastructure Improvement (Sector) Project (the Project) will promote human development and good urban governance in 35 selected secondary towns (pourashavas) by providing investments consistent with pourashava development plans (PDPs), attention to the operation and maintenance of facilities, and greater fiscal responsibility for the participating local governments. The Project has three components: (i) basic urban infrastructure and service delivery (water supply, sanitation, solid waste management, drainage, municipal transport and communications, municipal facilities, and basic urban services to the urban poor), (ii) governance improvement and capacity development, and (iii) project management and implementation support. Initial environmental examinations (IEEs) for sample subprojects1 and a sector IEE were prepared (Supplementary Appendixes K and L). The IEEs were based on a review of investment proposals; field visits, secondary data, and geographic information system imagery to characterize the environment and identify potential impacts; and interviews and discussions with stakeholders. Salient points from the IEEs are summarized below. 2. Bangladesh has a subtropical monsoon climate characterized by wide seasonal variations in rainfall, moderately warm temperatures, and high humidity. There are about 700 rivers, groundwater is abundant, and aquifers are highly productive. Alluvial soils of varying but relatively young age, dating from the Holocene and Pleistocene, predominate throughout the country. Bangladesh falls within the tropical and subtropical moist forest biome of the Indo-Malayan bio-geographic realm. Wetlands throughout the country are a great source of biodiversity for Bangladesh. Both marine and freshwater artisanal fisheries are prominent. Bangladesh is ethnically homogeneous, with the Bengali ethnic and linguistic group comprising 98% of the population. The current population is between 150 and 160 million, and the population growth rate is 2.1%, having slowed from around 6% in the 1960s. The United Nations Economic and Social Commission for Asia and the Pacific reports strong growth in the economy, sustained by buoyant private consumption and continual increase in private investment. B. Environmental Impact Forecasting and Mitigation 3. The Project is designed to maximize environmental and public health benefits. Benefits are positive and large, with infrastructure subprojects (i) improving the environment in pourashavas by reducing residents’ exposure to pollutants through improved water supply sanitation, solid waste management, drainage, and municipal transport; (ii) improving aesthetics with better drainage and solid waste management; and (iii) and reducing flooding through drainage improvement. Other social benefits will derive from subprojects for the urban poor, implemented using an integrated approach, that provide such basic urban services as community water supply and sanitation. The Project will improve biological systems that rely on healthy aquatic environments through improved protection of surface water and groundwater quality. 4. The Project provides a significant mechanism for enhancing the environment. Potential adverse environmental impacts are primarily associated with unrealized benefits, which may occur due to failures in implementing the Project in accordance with good engineering practice. Another potential negative impact is related to construction, where failure to follow environmental subproject selection guidelines may adversely affect surrounding communities, though with limited intensity and short duration. Some potential adverse impacts have been identified with regard to the serviceability of infrastructure during operation. All identified adverse impacts can be mitigated. Measures include properly locating, planning, and designing proposed subprojects; controlling construction activity; and properly maintaining systems following commissioning. No irreversible environmental impacts are associated with the Project.

1 The sample subprojects are for a bus terminal, roads improvement, and water supply in Bhanga; road

improvement in Cox’s Bazar; and drainage, solid waste management, and water supply and sanitation in Rangpur.

Appendix 14 49

5. The analysis indicates that likely negative impacts are insignificant in terms of overall impacts and the absolute amount of resources affected; that amount relative to existing stocks of resources; the intensity, timing and duration of works; and the probability of negative impacts, if environmental subproject selection guidelines are complied with and mitigation measures are incorporated in project development. The guidelines aim to minimize negative impacts related to improper locating or planning. Subproject IEEs provide mitigation measures for impacts related to construction, operation, and maintenance. Potential negative impacts and mitigation measures are summarized in Table A14.

Table A14: Potential Adverse Environmental Impacts and Mitigation Measures

Potential Negative Impacts Sig Du Mitigation Activities and Method WSS

DR SWM

UT MF

Planning, Location, and Design Lack of sufficient planning to assure functionality of system and distribution of benefits among population

S1 P Assure components of the system are properly integrated into an overall expansion plan and that the poor community benefits from the increase in facilities and services.

X X X X X

Inadequate attention to water quality causes wells to be unsafe for human consumption

S1 P Sampling and analysis protocol to assure that well water is safe for use. A chlorination system should be installed and chlorine residual maintained in the system.

X

Detailed design fails to incorporate good practice, causing poor performance and high O&M costs

S2 P Hydraulic analysis, attention to design of proposed facilities, means for disposal of waste byproducts, integration of facilities, such as drainage alongside roadways, water points near community latrines

X X X X X

Potential for introducing arsenic contamination into deep aquifer from poorly constructed wells

S1 P Consider alternatives for supply, probability of leakage from upper aquifer, minimize number of wells

X

Inadequate coverage by sanitation facilities provides people with no other option than open defecation, with impact on public health

S2 P Consult with local community for placement of community toilets and wash stands.

X

Damage to underground aquifers from surface contamination S2 P Correct siting and facility design; stipulation

of operational requirements from the outset X

Construction Impact on air quality and noise levels; congestion in public space due to construction activity

S2 T Use of labor-intensive methods and reduced use of heavy equipment. Construction during daylight hours only. Application of water to suppress dust where needed. Prompt removal of spoil materials; provision of construction detours; backfill and seal trenches promptly.

X X X X X

Impacts from quarters for workers in the proximity of worksites, and equipment/material yards

S3 T No need for workers quarters, equipment yard or onsite repair facility due to small subproject size.

X X X X X

Trenching nearby buildings, walls and existing buried piping damages these structures

S2 P Avoid trenching in these locations. If required, provide shoring and backfill with sand and cement admixture to assure no subsidence occurs.

X X

Traffic and human movement may be disrupted by trucks carrying waste soil

S3 T Plan routes to avoid congested areas and narrow roads. Schedule transportation to avoid peak traffic periods.

X X X X X

Vibrations from trucks could damage adjacent buildings along haul routes

S3 T Plan haul routes to avoid narrow roadways where such damage could occur.

X X X X

Lack of planning during construction fails to properly sequence activities and minimize disturbance and cost

S2 T Plan construction to avoid repeated excavation of roads and easements.

X X X X

Damage to archaeological and historical monuments

S2 P Local authorities to identify archaeological and historical sites prior to commencement of work; select alternative locations for infrastructure and for movement of goods and materials; contractor to avoid damage to sites.

X X X X

Social or cultural sites (schools, mosques, hospitals, temples, tourism

S2 T Increase work force to complete construction quickly in affected areas.

X X X X

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50

Potential Negative Impacts Sig Du Mitigation Activities and Method WSS

DR SWM

UT MF

sites) may be disturbed by noise, dust, vibration, and impeded access

Practice good housekeeping to minimize dust and avoid impeding pedestrians and vehicles.

Potential for benefit from employment for local people not realized

S2 T Contractor should be required to employ locals in labor force as specified in construction contract tender documents.

X X X X

Trees may be removed along routes for pipelines, drains, roadways, etc.

S2 P Avoid removing trees wherever possible. If required, replant as part of the subproject.

X X X X

Some land may need to be acquired where routing diverges from public right of way

S2 P Land acquisition and involuntary resettlement in accordance with the resettlement framework

X X X X

Inconvenience and health risk if existing water supply system is shut down for long period

S2 T Plan work to minimize duration of shutdown. Limit shutdown to less than 4 hours. Notify public in advance and advise storage of water as necessary.

X

Potential for accident and injury for construction workers and public in construction zone

S2 T Contractor to implement a safety and health plan for workers. Workers are required to wear personal protective gear suitable for the type of work being performed. Workers to be trained in safe working procedures. Contractor maintains a record of accidents that are reported to the supervising engineer. Public is barred from construction areas, and excavations are barricaded and marked.

X X X X

Operation and Maintenance Well pumps may fail and suction screens clog due to poor maintenance.

S2 P Wells to be maintained in an operable state. Pumps to be regularly serviced and well screens cleaned.

X

Locations around boreholes may become waterlogged and introduce contamination.

S2 P Water quality to be periodically tested and assured safe from bacteriological contamination. Chlorine residual to be maintained in the system and periodically monitored at system extremities.

X

Systems will not function properly without proper operation and maintenance.

S2 P Permanent qualified operators to be hired, or operations outsourced to the private sector. Systems to be regularly maintained and equipment serviced.

X X X

Water treatment sludge is not disposed of properly, affecting environmental health.

S2 P Sludge to be disposed of according to approved means. Records to be kept of quantities. Site to be properly monitored and closure done in a way to minimize risk.

X

System is not maintained, and excess water losses occur.

S2 P Undertake a program to reduce unaccounted-for water. Record system flows and identify losses. Undertake repair of the system.

X

Community toilets are not maintained and fall into disuse.

S2 P Provide personnel to maintain community latrines. Educate users on maintenance of household units.

X

Septic tank sludge is not disposed of properly and affects surface water quality and spreads disease.

S1 P Provide for proper disposal of sludge. Maintain records. Limit access, control drainage, and close cells in keeping with risk.

X

Ineffective operations sacrifice the benefit of waste management, as rats and other vermin increase and other unsanitary conditions emerge.

S1 P An organizational structure and management group of an appropriate size to be established to address day-to-day operation and maintenance responsibilities.

X X

DR = drainage; Du = duration of impact without mitigation (T = temporary, P = permanent); MF = municipal facilities; O&M = operation and maintenance; Sig = significance of impact (S3 = insignificant, negligible impact; S2 = moderate, reversible impact that is site-specific and easily contained and mitigated; S1 = significant, potentially irreversible impact requiring complex mitigation); SWM = solid waste management; WSS = water supply and sanitation. Sources: Project preparatory technical assistance consultants’ reports.

6. A sector analysis has been undertaken through descriptions of sample subprojects and future subprojects, descriptions of the greater environment in which the infrastructure subprojects will take place, and analysis of sector-wide impacts due to cumulative effects, with

Appendix 14 51

consideration for timing, scale, and intensity of impacts. As the 35 pourashavas that have been selected for the Project are distributed approximately equally throughout the country, the Project area is national in its domain. Evaluation of cumulative, regional, and long-term impact scenarios show that such impacts are unlikely to occur. The principal cumulative, regional, and long-term impact is expected to be beneficial: the overall improvement of social, public sector infrastructure in pourashavas. This is best assessed through project monitoring and evaluation. C. Institutional Requirements and Environmental Monitoring Plan 7. The Local Government Engineering Department (LGED) is the Executing Agency. A project management office (PMO) will be established within LGED. The PMO’s responsibilities include ensuring the implementation of IEEs and the environmental assessment and review procedure (EARP). Project implementing units (PIUs) will be established in each pourashava. The PIUs will oversee environmental concerns related to subproject implementation, and their responsibilities include preparing and updating IEEs consistent with the EARP. 8. Design, supervision, and management (DMS) consultants will be recruited by the PMO to provide assistance to the PMO and PIUs. The DMS consultants include an international environment specialist (IES) and a national environment specialist (NES) based in the PMO. There will also be six regional environment specialists (RESs).2 The IES and NES will provide technical support to the Environmental and Social Unit (ESU), including reviewing and updating the EARP and guidelines for specific types of subprojects and assisting in preparing terms of reference for environmental assessment. The RESs will support environmental management functions including updating subproject IEEs in respect to environmental management plans, assisting in preparing IEEs, and assisting in monitoring impacts and mitigation measures associated with subprojects. 9. Environmental review of subprojects will consist of screening in the pourashava by the PIU and the preparation of the IEE through the RESs. The DMS consultant will assist PIUs in subproject preparation and implementation. Review will be conducted at the divisional level of the Department of Environment, in conjunction with a review panel set up by the pourashavas. This will involve the formation of a committee made up of the pourashava chairman (as committee chairman), the project director, a deputy director of Department of Environment serving as a divisional director, and other appointees from relevant district offices. The PIU will, working with the RESs, assist in preparing the IEE and environmental impact assessment, capacity building and training, preparing guidelines and procedures, and subproject-specific guidance. Environmental monitoring will be undertaken by the PIU supported by the RESs, IES, and NES. 10. The RESs will be required to include mitigation measures in designs, where appropriate, and to specify other measures in construction contracts. Contractors will be required by their contracts to implement all specified mitigation, monitoring, and reporting obligations to them in subproject IEEs. D. Public Consultation and Disclosure 11. The Project takes a participatory approach with parallel activities: stakeholder consultations, socioeconomic surveys, and initiation of pourashava development plans by means of open, facilitated sessions for ward and pourashava visioning or planning. A wide range of stakeholders have had the opportunity to make substantive contributions concerning existing conditions and preferences. Within a given community, about 1,200 people have been exposed to the concept of the Project by their direct involvement, and through citizen’s groups and ward committees.

2 Environment specialists will have tasks in capacity building that are included in their terms of reference, which is

attached to the EARP as an appendix. Capacity building will take various forms, including formal training in environmental assessment procedures and methodology, the implementation and monitoring of environmental management plans, and on-the job training directly related to implementing subprojects during the loan period.

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52

12. Public consultations on environmental safeguards were held in each of the pourashavas for phase 1 of the Project.3 A project brief was prepared for each pourashava that provided an overview of potential environmental impacts and explained proposed mitigation measures. Participants came from the communities directly affected by the subprojects, members of ward committees, representatives of local nongovernment organizations, and representatives of local government agencies. No significant issues were raised during public consultations that have not been addressed in the IEEs, nor were there issues that pose a significant constraint in the implementation of proposed subprojects. A proposal has been described in IEEs for continuing the process of public consultation during construction that includes a mechanism for redress of grievances that arise then. All IEEs and other relevant documents will be made available at public locations in the towns and will be disclosed to a wider audience via the ADB website. E. Environmental Selection Guidelines and Environmental Review Framework 13. To ensure compliance with the environmental guidelines and requirements of the Government of Bangladesh and ADB’s Environment Policy (2002), environmental subproject selection guidelines and an EARP have been developed to guide the implementation of future subprojects. The EARP details the (i) government environmental assessment and review procedures, (ii) responsibilities and authorities involved in environmental assessment and review, (iii) compliance with ADB’s environmental guidelines, (iv) staffing requirements and budgets, and (v) subproject environmental selection guidelines. It also documents procedures for the environmental assessment of subprojects, including categorization, the preparation of environmental assessment, requirements for environmental management plans, and procedures for public consultation. The section specifies that, should a subproject unexpectedly be classified as A, an environmental impact assessment is required. Public disclosure requirements for category A, including the 120-day requirement, are in the EARP. F. Findings, Recommendations, and Conclusion 14. The IEEs show that the sample subprojects will bring large net environmental benefits and that any adverse environmental impact can be addressed through properly locating, planning, and designing proposed subprojects; controlling construction activity; properly maintaining systems following their commissioning; and other mitigation measures. The principal cumulative, regional, and long-term environmental impacts are expected to be beneficial: the overall improvement of social, public sector infrastructure in the urban environments of pourashavas. Environmental subproject selection guidelines and the EARP have been developed to ensure the implementation of future subprojects complies with environmental guidelines and the requirements of the Government of Bangladesh and ADB. No further assessment of environmental impact is required for the sample subprojects.

3 On 25 November 2008 in Bhanga with 40 participants, 17 December 2007 in Cox’s Bazar with 50 participants, and

30 December 2008 in Rangpur with 29 participants.

Appendix 15 53

SUMMARY RESETTLEMENT FRAMEWORK

A. Introduction 1. The Second Urban Governance and Infrastructure Improvement (Sector) Project (the Project) will promote human development and good urban governance in 35 selected secondary towns (pourashavas) by providing investments consistent with pourashava development plans (PDPs), attention to the operation and maintenance of facilities, and greater fiscal responsibility for the participating local governments. The Project has three components: (i) basic urban infrastructure and service delivery (water supply, sanitation, solid waste management, drainage, municipal roads and communications, municipal facilities, and basic urban services to the urban poor), (ii) governance improvement and capacity development, and (iii) project management and pourashava support. 2. The project investment program is designed to minimize land acquisition and resettlement impacts. Pourashavas will (i) utilize existing lands for rehabilitating existing water supply, drainage, and municipal facilities, as well as for providing basic urban services to the urban poor; (ii) utilize vacant pourashava or community land and ensure community consensus in the siting of public and community toilets and deep tube wells; (iii) align roads and bridges to avoid impacts on structures; and (iv) utilize vacant pourashava land for solid waste management that will not pose health hazards to settlements. Impacts are to be further minimized through careful subproject siting and alignment during detailed subproject design and implementation. Short resettlement plans were prepared for sample subprojects with resettlement impacts in two pourashavas.1 B. Resettlement Framework and Policy 3. This summary provides highlights of the resettlement framework. The framework outlines the objectives, policy principles, and procedures for land acquisition (if required), compensation, and other assistance measures for affected people. It is based on the national law Acquisition and Requisition of Immovable Property Ordinance (1982) and the Involuntary Resettlement Policy (1995) of the Asian Development Bank (ADB). The framework provides a comparison of these documents and addresses gaps. 4. The core principles of involuntary resettlement for the Project are as follows:

(i) The acquisition of land, in particular land under disputes over ownership, and the resettlement of people will be avoided as much as possible.

(ii) Local stakeholders will be systematically informed and properly consulted to identify possible alternative subproject engineering and operational solutions to avoid or minimize the adverse impacts of land acquisition. Disclosure to the public regarding the preparation of resettlement plans, the eligibility of affected people, compensation, entitlements, and special assistance measures to vulnerable groups will be undertaken.

(iii) All affected people will be properly identified and recorded in a census instrument, in which the cut-off date for their eligibility is the last day of the survey in the subproject area, and will be notified in advance when land for the subproject will be acquired. Lack of formal legal rights to the assets lost will not prevent affected people from receiving compensation, entitlement, and rehabilitation measures.

(iv) Where resettlement cannot be avoided, relocation site(s), whether permanent or temporary, should be free of environmental risks and with access to drinking water and sanitation. Social services and all other services accessible in the previous location will be provided prior to relocation, in consultation with affected people and their hosts.

(v) Relocated affected people will be provided with assistance to maintain, or improve their pre-subproject living standards, income earning capacity, and production levels.

1 The sample subprojects are for a bus terminal and road improvement in Bhanga Pourashava and road improvement

in Cox’s Bazar.

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54

(vi) Special assistance will be incorporated into the resettlement implementation process to protect any socially or economically vulnerable groups that are affected.2

(vii) An effective mechanism for arbitration of complaints and grievances will be provided during resettlement implementation.

(viii) Institutional arrangements and human resources will be in place for consultation, liaison, land acquisition, resettlement and monitoring to ensure effective resettlement implementation prior to the commencement of the subproject.

(ix) Payment of compensation must be provided prior to displacement, and other resettlement assistance must be initiated prior to award of civil works contracts.

The entitlement matrix for the Project, based on these, is given in Table A15.1 (see page 57).

5. Compensation for the loss of land, structures, assets, trees, and crops will be at replacement cost. Independent land appraisers will determine land prices. Structures and other assets will be assessed by contracted implementing nongovernment organizations (NGOs) through a survey of construction materials. Trees and crops will be assessed by NGOs according to a survey of market prices and in consultation with agriculture and/or horticulture experts. NGOs will also consult with affected people on replacement costs. Vulnerable households will be provided additional assistance in the form of land-for-land replacement options, prioritized project employment, and an additional allowance for land and structure losses. Income losses are anticipated to be minimal and temporary. Income restoration activities include the provision of short-term allowances and restoration of access to livelihood activities. C. Procedure for Preparing Resettlement Plans 6. Resettlement plans for subprojects will be prepared in the following manner. The project management office (PMO) will, with guidance from the design, monitoring, and supervision (DMS) consultant, undertake socioeconomic surveys for each subproject based on its preliminary technical design. If impacts are found to be significant, full resettlement plans will be prepared for the subproject. 3 If impacts are insignificant, short resettlement plans will be required in subproject preparation. Resettlement plans will include measures to ensure that socioeconomic conditions, needs, and the priorities of vulnerable groups are identified and that the process of land acquisition and resettlement does not disadvantage vulnerable groups. DMS will have one international consultant and seven national consultants familiar with ADB policy and procedures for the preparation of subproject resettlement plans. The plans will comply with Government polices, ADB’s Involuntary Resettlement Policy, other social safeguard guidelines, and the resettlement framework. The resettlement plan for sample subprojects will be used as models for the preparation and implementation of other subproject plans. Approval of subproject resettlement plans by ADB, and compensation prior to displacement, will be conditions for civil works contracts. 7. As the Executing Agency, the Local Government Engineering Department (LGED) will, through the PMO, ensure that the resettlement framework is closely followed when a resettlement plan is formulated for a subproject. LGED will further ensure that adequate resettlement budgets are delivered on time to the PMO and project implementation units (PIUs) and that NGOs are involved for timely implementation of resettlement plans. D. Institutional Arrangements 8. A PMO will be established within LGED. The PMO responsibilities include ensuring the implementation of resettlement framework and plans. PIUs will be established In each pourashava and will oversee resettlement concerns related to subproject implementation, with its

2 These can include ethnic minorities, indigenous peoples, households headed by women or the elderly, and people

living below the poverty line. 3 Resettlement is significant if 200 or more people experience major “impacts,” defined as affected people being

physically displaced from housing and/or losing 10% or more of their productive, income-generating assets.

Appendix 15 55

responsibilities including the preparation and updating of resettlement plans consistent with the resettlement framework. 9. Two fulltime staffers will be recruited in the PMO, one of them to oversee and manage social issues and social safeguards. 10. DMS consultants will be recruited by the PMO to provide assistance to the PMO and PIUs. The DMS consultants include an international resettlement specialist (IRS) and a national resettlement specialist (NRS) based in the PMO. There will also be six regional resettlement specialists (RRSs). The IRS and NRS will provide technical support to the Environmental and Social Unit (ESU), including the review and updating of the resettlement framework and guidelines for specific types of subprojects, and assist in preparing terms of reference for resettlement plan preparation. The RRSs will support resettlement planning functions, including updating subproject resettlement plans, assisting in preparing resettlement plans, and assisting in monitoring subprojects. 11. Resettlement issues will be coordinated by the IRS and NRS, who will ensure that all subprojects comply with involuntary resettlement safeguards. The RRSs will work with the PIUs to update resettlement plans in the detailed design stage and to prepare resettlement plans for new subprojects, where required to comply with Government and ADB policies. NGOs will be appointed to implement resettlement plans. Further details on the agencies responsible for resettlement activities are in Table A15.2.

Table A15.2: Institutional Roles and Responsibilities Activities Action Approval Preparation of Resettlement Plans Recruitment of IRS, NRS, and RRS PMO project director Screening and categorization of subprojects RRS IRS/NRS/PMO Preparation of project information documents for disclosure to stakeholders and affected people

RRS IRS/NRS/PMO

Establish collaboration with Office of the District Commissioner PIU RRS Disclosure, focus group discussion, and identifying stakeholders INGO RRS Consultations with women INGO RRS Census of 100% affected people and socioeconomic survey RRS/ INGO IRS/NRS/PMO Survey on unit prices for computing replacement costs INGO RRS Screening of vulnerable affected people RRS/ INGO IRS/NRS/PMO Calculation of compensation and entitlements RRS IRS/NRS/PMO Update of subproject resettlement plans and writing new ones RRS IRS/NRS/PMO Consultations on resettlement plans and entitlements with affected people

RRS/ INGO IRS/NRS/PMO

Incorporating comments and suggestions to resettlement plans RRS IRS/NRS/PMO Finalizing resettlement plans and submitting them to ADB IRS/NRS/PMO LGED ADB website disclosure ADB Implementation of Resettlement Plans Budget allocation and approval IRS/NRS/PMO LGED Disbursement of funds, preparation of checks, compensation, and entitlement forms and vouchers

PMO LGED

Advance notice to affected people concerning land acquisition PIU PMO Internal monitoring PMO IRS/NRS/PMO Resolution of complaints and grievances PIU/GRCs PMO Communication of outcome of grievance request cases PMO/PIU PMO

ADB = Asian Development Bank, GRC = grievance redress committee, INGO = implementing nongovernment organization, IRS = international resettlement specialist, LGED = executing agency, NRS = national resettlement specialist, PIU = project implementation unit, PMO = project management office, RRS = regional resettlement specialist. Source: Project preparatory technical assistance consultants’ reports.

Appendix 15

56

E. Consultation, Disclosure, and Grievance Redress 12. The Project applies a participatory approach with parallel activities: stakeholder consultations, socioeconomic surveys, and initiation of PDPs by means of open, facilitated sessions for ward and pourashava visioning or planning. A wide range of stakeholders had the opportunity to make substantive contributions concerning existing conditions and preferences. Within a given community, about 1,200 people have been exposed to the concept of the Project by their direct involvement and through citizen’s groups and ward committees. Public consultations on social safeguards were held in each of the pourashavas for phase 1 of the Project.4 A project brief was prepared for each pourashava that provided an overview of potential resettlement impacts and explained proposed entitlement for affected people. Participants came from the communities directly affected by the projects, members of ward committees, representatives of local NGOs, and representatives of local government agencies. No significant issues were raised during public consultations that have not been addressed in the resettlement plans, nor were there issues that pose a significant constraint on the implementation of proposed subprojects. A framework for consultations and community participation has been described in the resettlement framework for continuing the process during implementation. All resettlement plans and other relevant documents will be made available at public locations in the towns and will be disclosed to a wider audience via the ADB website. 13. Grievances of affected people will first be brought to the attention of the implementing NGO or RRS. Grievances not redressed by the NGO or RRS will be brought to the grievance redress committee (GRC). Constituted for each ward, the GRC will comprise representatives from the PIU, implementing NGO, office of the chairman of the pourashava, affected people, and a female elected member of the Pourashava council. The GRC will meet every month, determine the merit of each grievance, and resolve grievances within 15 days of receiving the complaint. The GRC procedure includes an appeals procedure for the affected person, who can, if not satisfied with the GRC decision, attend the next meeting for reconsideration. Grievances not redressed by the GRC will be addressed by the project steering committee or, for grievances related to land acquisition, by the Office of the District Commissioner. Further grievances will be referred by affected people to the appropriate courts of law. Records will be kept of all grievances received, including the contact details of complainant, date that the complaint was received, nature of grievance, agreed corrective actions, date these were effected, and final outcome. F. Monitoring and Evaluation 14. Resettlement plan implementation will be closely monitored to provide the PMO with an effective basis for assessing resettlement progress and identifying potential difficulties and problems. Internal monitoring will be undertaken by the PMO with assistance from consultants. Internal monitoring will involve monitoring of indicators for (i) budget and time frame; (ii) delivery of entitlements; (iii) consultation, grievance, and special issues; and (iv) benefit monitoring. An independent external evaluator will monitor resettlement implementation. G. Resettlement Budget 15. The PMO will prepare detailed budget estimates for involuntary resettlement for each resettlement plan, for inclusion in the overall subproject estimate. The budget will include (i) detailed costs of land acquisition, relocation, and livelihood and income restoration or improvement; (ii) the source of funding; (iii) arrangements for approval; and (iv) the flow of funds and contingency arrangements. Overall costs are estimated at $1.5 million. All land acquisition funds will be provided by LGED. Land acquisition, compensation, relocation, and rehabilitation of income and livelihood will be considered as an integral component of Project costs.

4 These were held on 25 November 2008 in Bhanga with 40 participants, 17 December 2007 at Cox’s Bazar with 50

participants, and 30 December 2008 in Rangpur with 29 participants. Revised safeguards documents with summaries in the local language were disclosed in consultations on 1 April in Bhanga with 38 participants, 3 April 2008 in Rangpur with 39 participants, and 6 April 2008 in Cox’s Bazar with 43 participants.

Table A15.1: Entitlement Matrix

Type of

Loss

Application Entitled Peoplea

Compensation Policy

Implementation Issues

Responsible Agency

1a Loss of land Homestead land, agricultural land, or vacant plot

Owners with legal title

• Land-for-land arrangements of equal productive capacity satisfactory to affected person

• affected person option for cash compensation equivalent to replacement cost

• Provision of stamp duty, land registration fee, capital gains tax, and value-added tax incurred for replacement land

• Option to be compensated if remaining land is no longer viable

• Provision of access to equivalent common property resources previously accessed

• Additional compensation for vulnerable households (item 5)

• If land-for-land is offered, title will be to both husband and wife.

• Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan

• Verification of affected people by regional resettlement specialists

• Pourashava to provide replacement land

• Land appraiser to determine replacement value

• Implementing NGO to consult with affected people on compensation

• LGED to provide budget and release cash compensation payments

• Pourashava, with regional resettlement specialists’ assistance, to determine viability of remaining land

1b Loss of land Homestead land, agricultural land, or vacant plot

Tenants and leaseholders

• Compensation equivalent to 3 months of rental

• Additional compensation for vulnerable households (item 5)

• Landowners will reimburse tenants and leaseholders land rental deposit or unexpired lease.

• Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan

• Verification of affected people by regional resettlement specialists

• Pourashava, with implementing NGO, will confirm land rental and ensure tenants and leaseholders receive reimbursement for land rental deposit or unexpired lease.

1c Loss of land Homestead land, agricultural land, or vacant plot

Sharecroppers • 60 days advance notice to harvest standing seasonal crops. If harvest is not possible, compensation for share of crops (item 4)

• Additional compensation for vulnerable households (item 5)

• Work schedule to allow harvesting prior to acquisition and avoid harvest season

• Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan

• Verification of affected people by regional resettlement specialists

1d Loss of land Homestead Affected people • 60 days advance notice to shift from • Vulnerable • Verification of affected people by

Appendix 15 57

Type of Loss

Application

Entitled Peoplea

Compensation Policy

Implementation Issues

Responsible Agency

land, agricultural land, or vacant plot

without legal title, such as squatters and encroachers

occupied land • Additional compensation for vulnerable

households (item 5)

households to be identified during detailed measurement surveys conducted as part of the resettlement plan

regional resettlement specialists

2a Loss of structure

Residential/ commercial structure and other assets (e.g., fences, gates, posts)

Owners with legal title

• Cash compensation equivalent to replacement value of structure or part thereof

• Option to be compensated for entire structure if remaining structure is no longer viable

• Rights to salvage materials from structure • Provision of all taxes, registration costs, and

other fees incurred for replacement structure

• Transfer and subsistence allowance of Tk4,000

• Additional compensation for vulnerable households (item 5)

• Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan

• Verification of affected people by regional resettlement specialists

• Implementing NGO to determine replacement value in consultation with affected people

• Pourashava, with regional resettlement specialists’ assistance, to determine viability of remaining structure

• Regional resettlement specialists to review allowances and verify all charges

2b Loss of structure

Residential/ commercial structure and other assets (e.g., fences, gates, posts)

Tenants and leaseholders

• Cash compensation equivalent to replacement value of structure or part thereof constructed by the affected person

• Rights to salvage materials from structure • Provision of all taxes, registration costs, and

other fees incurred for replacement structure

• Transfer and subsistence allowance of Tk4,000

• Additional compensation for vulnerable households (item 5)

• Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan

• Structure owners will reimburse tenants’ and leaseholders’ rental deposit or unexpired lease.

• Verification of affected people by regional resettlement specialists

• Implementing NGO to determine replacement value in consultation with affected people

• Pourashava, with regional resettlement specialists’ assistance, to determine viability of remaining structure

• Regional resettlement specialists to review allowances and verify all charges

• Pourashava to ensure tenants and leaseholders receive reimbursement for rental deposit or unexpired lease

2c Loss of structure

Residential/ commercial structure and other

Encroachers and squatters

• Cash compensation equivalent to replacement value of structure or part thereof constructed by the affected person

• Rights to salvage materials from structure

• Vulnerable households to be identified during detailed measurement

• Verification of affected people by regional resettlement specialists

• Implementing NGO to determine replacement value in consultation

58 Appendix 15

Type of Loss

Application

Entitled Peoplea

Compensation Policy

Implementation Issues

Responsible Agency

assets (e.g., fences, gates, posts)

• Provision of all taxes, registration costs, and other fees incurred for replacement structure

• Transfer and subsistence allowance of Tk4,000

• Additional compensation for vulnerable households (item 5)

surveys conducted as part of the resettlement plan

with affected people • Pourashava, with regional

resettlement specialists’ assistance, to determine viability of remaining structure

• Regional resettlement specialists to review allowances and verify all charges

3 Loss of livelihood

Livelihood or source of income

Business owners, tenants, leaseholders, employees, agricultural workers, hawkers, vendors

• Assistance for lost income based on 3 months’ income or minimum wage rates

• Additional compensation for vulnerable households (item 5)

• Vulnerable households to be identified during detailed measurement surveys conducted as part of the resettlement plan

• Verification of affected people by regional resettlement specialists

• Implementing NGO to determine income loss or minimum wage during detailed socioeconomic surveys conducted as part of the resettlement plan

4

Loss of crops and trees

Standing crops and trees

Owners with legal title, tenants, leaseholders, sharecroppers, encroachers, squatters

• 60 days’ advance notice to harvest standing seasonal crops. If harvest is not possible, cash compensation for crops (or share of crops) equivalent to prevailing market price

• Cash compensation for perennial crops and fruit-bearing trees based on annual net product market value multiplied by remaining productive years

• Cash compensation equivalent to prevailing market price of timber for non-fruit trees

• Work schedule to allow harvesting prior to acquisition and avoid harvest season

• Market value to be determined

• Verification of affected people by regional resettlement specialists

• Implementing NGO to determine market values with assistance from agriculture and/or horticulture expert

5 Impacts on vulnerable affected people

All impacts Vulnerable affected peopleb

• Land-for-land option will be a guaranteed option for vulnerable affected people

• Additional allowance equivalent to Tk3,000 for loss of land or structure

• Vulnerable households will be prioritized in any employment required for the Project

• Vulnerable households to be identified during detailed measurement surveys conducted as part of the plan

• Land title will be to both husband and wife.

• Verification of affected people by regional resettlement specialists

6 Temporary loss of land

Land temporarily acquired for the Project

Owners with legal title, tenants, leaseholders, sharecroppers,

• 60 days’ advance notice • Provision of land rental value during the

duration of temporary acquisition • Restoration of affected land

• Verification of affected people by regional resettlement specialists

• Pourashava, with regional resettlement specialists, to determine rental values in

Appendix 15 59

Type of Loss

Application

Entitled Peoplea

Compensation Policy

Implementation Issues

Responsible Agency

encroachers, squatters

consultation with affected people • Restoration as part of contractors

contract 7 Temporary

loss of access

Temporary loss of access to land, structure, utilities, common property resource

Owners with legal title, tenants, leaseholders, sharecroppers, encroachers, squatters

• 60 days’ advance notice • Provision of temporary access (e.g., planks

across pipe trench) where possible • Restoration or enhancement of affected

land, structure, utilities, common property resource

• Verification of affected people by implementing NGO

• PMO to ensure restoration as part of contractors contract

7 Temporary loss of livelihood

Temporary loss of livelihood or source of income

Business owners, tenants, leaseholders, employees, agricultural workers, hawkers, vendors

• 60 days’ advance notice • Provision of temporary access (e.g., planks

across pipe trench) where possible • Provision of alternative sites for continued

economic activity • Where provision of alternative sites is not

feasible, compensation for lost income • Compensation for agricultural losses (item

4) • Restoration of affected land, structure,

utilities, common property resource

• Verification of affected people by regional resettlement specialists

• Implementing NGO to determine income loss or minimum wage during detailed socioeconomic surveys conducted as part of the resettlement plan

• PMO to ensure restoration as part of contractors contract

8 Any other loss not identified

Unanticipated involuntary impacts shall be documented and mitigated based on the principles provided in ADB’s Involuntary Resettlement Policy (1995)

ADB = Asian Development Bank, LGED = Local Government Engineering Department, NGO = nongovernment organization, PMO = project management office. a Identified during cut-off date. b Vulnerable affected people may include households headed by females, disabled people, and indigenous people or living below the poverty line.

Source: Asian Development Bank.

60 Appendix 15