India - Kanpur Urban Development Project

Docenut of The World Bank FOR OMCLAL USE ONLY Rqpwt Na. 8402 PROJECT COMPLETION REPORT INDIA KANPUR URBAN DEVELOPMENT PROJECT (CREDIT 1185-IN) FEBRUARY 23, 1990 Infrastructure Division Technical Department Asia Region Tbis doument bs a rsticted dibution and may be usd by reipient oidy in the perfomnnce of thdir offita due Its contents may mt odtrwi be dbikoed witout World Dank auh ariaton  ACRONYMS 001 Government of India GOUP Government of Uttar Pradesh PMC Project Monitoring Cell KDA Kanpur Development Authority XESA Kanpur Electricity Supply Administration KJS Kanpur Jal Sasthan (City water and sewerage authority) KNh Kanpur Nagar MahapaliUk (Municipal Authority) UPUDP Uttar Pradesh Urban Development Project KAVAL Five municipal towns (Kanpur. etc.) Country Exchange Rates (Yearly Averages) Currency and (Abbreviations) Rupee (Rp) Year Rupees/US$ 1978 8.19 1979 8.13 1980 7.86 1981 (Project Approved) 8.66 1982 (Project Agreement and Effective) 9.45 1983 10.10 1984 11.36 1985 12.37 1986 12.61 1987 (Closing Date) 12.96 1988 (Last Disbursement) 14.60 Government -f India Fiscal Year April 1 - March 31  THE WORlD BA F0R IFMCML US ONLY Washngton. D.C 20433 U.A. Olh tf Odt.ctrvG4~ Opswats Ivahitn February 23, 1990 MEMORANDUM TO THE EXECUTIMV DIKECTOR AND THE PRESIDENT SUBJECT: Project Completion Report on India - Kanpur Urban Development ProJect (Credit 1185-IN) Attached, for inmormation, is a copy of a report entitled 'Project Completion Report on India - Kanpur Urban Development Project (Credit 1185-IN)* prepared by the Asia Regional Office. No audit of this project has been made by the Operations Evaluation Department at this time. Yves Rovani by Ram K. Chopra Attachment This document has a restricted distribution and may be wed by recipients only In the petformance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  FOR OMCIL US ONLi INDIA KANPUR UtBAN DEVELOPMENT PROJECT (CREDIT 1185-IN) PROJECT COMPLETION REPORT TABLE OF CONTENTS Page No Preface ...................... ....... *. ....... ....... * ...... Evaluation Sw mary ........................................................... i PART Is A. Project Identity . ...... . ........... . 1 B. Background .................. . .......... ................. 1 C. Project Objectives and Description ......................... 2 D. Project Design and Organization ............................. 4 S. Project Sustainability ... .................................. . 7 F. Bank Performance . ... **....... 0*** . ..*...*.*..........* 7 G. Beneficiary Performance . .. .............. ................... 8 B. Project Relationships ... ........ .. ........ . ...... . ....... . 8 I. Consulting Services ......................................... 9 J. Project Documentation and Data .. ..................... PART II A. Bank's Performance . ...................................... . . 10 B. Beneficiary's Owu Performance ............................................... 10 PART TIl 1. Related Bank Loans and/or Credits ............ 00# ....... 15 2. Project Timetable ..................................................... 16 3. Disbursement ........... .......... ........ .......................... 17 4. Project Implementation . ............. ..... . ... ..... . .... 18 5. Project Costs and Financing . .... .. .. . ................. . 19 6. Project Results ..................................... * ........ * ...... 20 7. Status of Covenants . ...................... .... ........ ..... 22 8. Use of Bank Resources ................................. ..... 23 ANX Borrower's Comments ....................................... 24 This document has a restdc diibution and may be used by ripients only in t poformace of their official dutes. Its contents may not ntherwise be discosed wlthou; Vord Bak authozWon.  INDIA KANPUR URBAN DEVELOPMENT PROJECT - (CREDIT 1185-IN) PROJECT COMPLETION REPORT PREFACE This is the Project Completion Report (PCR) for the Kanpur Urban Develr;iuent Project in India, for which Credit 1185-IN in the amount of SDR 22,200,000 W"s approved on October 27, 1981. The Credit was closed on June 30, 1987, a year behind schedule. The last disbursement was made on April 25, 1988, and the undisbursed balance of SDR 2,956,813.02 was cancelled. The PCR was jointly prepared by the Borrower (Part II) and the Infrastructure Division, Technical Department, Asia Region (balance of report). Borrower's comments have been incorporated. Preparation of this PCR was begun in August 1988 and is based, among others, on the Staff Appraisal Report, the Credit and Project Agreements, supervision reports, correspondence between the Association and the Borrower, and internal Bank memoranda.  - ii - INDILA RANPUR URBAN DEVELOPMENT PROJECT (CREDIT 1185-IN) PROJECT COMPLETION REPORT EVALUATION SUMMARY Introduction 1. The project was the seventh urban development operation in India. The IDA Credit of SDR 22 million was approved on October 27, 1981 and closed on June 30, 1987, a year behind schedule. Compared with the first such operation in the state, the Uttar Pradesh Water Supply and Sewerage Project (1978-82), Bank involvement was narrowed geographically but broadened in terms of subsectors, and was focused more sharply on improvement of housing environment for the poor. The project approach proved effective, and was expanded to involve more cities under the Uttar Pradesh Urban Development Project (loan/credit equivalent of US$ 150 million) approved in 1987. Obiectives 2. The objectives -f the project were tot increase the supply of serviced land to the poor; relieve the worst enviaonmental conditions, mainly in the city center; and strengthen key urban management institutions - the municipal government, the development authority, and the water and sewerage board. =mplementation and Experience 3. Difficulties in land acquisition and in obtaining timely connection of electricity caused delays iD. sites-and-services and slum upgrading components (see Part 1, paras 13-15 ane 20). FinancLally, the delays and domestic inflation, much higher than projected at appraisal, resulted in a Rupee cost overrun of Rs. 138 million, 332 of the original cost estimate. However, due to an even faster devaluation of the Rupee, SDR 2.96 million out of the original Credit was cancelled. Results 4. The main thrusts of the project proved effective and the physical targets were generally met or exceeded. For example, 14,892 new serviced plots and 20,055 sewer connections were provided iis against the targets of 14,770 plots and 10,000 connections. Although land acquisition problems limited the slum upgrading benefits to about 10,400 households compared with the original target of 20,000 households, significant follow-up improvements were made by the benefitting households in the improved (see Part I, paras 17 and 20-23). The institutional development component resulted in the establishment of modern accounting systems, improved organizations in the  - titi - three project agencies, and effective coordination among thcm (see Part I, paras 18, 19). However, the water and sewerage board fell short of its targets to increase water tariff and water metering (see Part 1, pars 25 and Part II1, Table 8). Sustainability 5. The project's design and pricing strategies in shelter provision and improvement emphasized appropriate standards, beneficiary initiatives, and cost recovery to maximize and sustain the benefits. The institutional development programs were also aimed at ensuring proper maintenance and operation of municipal services. The project's successful demonstration of these benefits prompted the state government to adopt the strategies for wider application in the state (see Part I, paras 7 and 8). The failure to increase water metering and tariffs sufficiently, however, could lead to lack of proper maintenance and expansion of water supply and sewerage systems (see Part I, paras 24 and 25). Findings and Lessons 6. The project demonstrated the effectiveness of the sectorally and institutionally complex but integrated approach in tackling urban shelter and service problems. Success of this project, compared with other comprehensive urban projects elsewhere which proved difficult to manage, can be attributed to clear focus an shelter provision and Uiprovemeat au4 ciear daiinition of roles and responsibilities of the involved agencies. By the same token, relative weaknesses of the project were seen in the issue of the water supply tariff and metering, whose link with the central investment component was tenuous, and in the delay in electricity connections, for which the necessary institutional coordination (with the power authority) was not established beforehand (see Part I, paras 11 and 15). 7. The major implementation obstacle of the project turned out to be land acquisition. As virtually all urban projects require land as the major input, solution should be found both through careful preparation and design of projects, including adequate compensation, and through modification of legal procedures involved (see Part I, paras 13 and 20).  INDIA KANPUR URBAN DEvELOPMENT PROJECT (CREDIT 1185-IN) PROJECT COMPLETION REPORT PART I WORLD BANK CONPLETION REPORT A. PROJECT IDENTITY Project Name: Kanpur Urban Development Project Credit No. s 1185-IN RVP Unit s ASIVP (250-05) Country s INDIA Sector s Population, Human Resources, Urban and Water Operations Division Subsector I Urban Development 1. This project was well conceived and executed--its principal emphasis was on providing shelter, but there were infrastructural components as well. Even though the project started slowly, lessons were quickly learned and appliad, and most of its physical targets and institutional development objectives were achieved. The Beneficiary was willing to discuss problems with IDA and was responsive to suggestions for improvements. The project was a useful precursor to the much larger Uttar Pradesh Urban Development Project now in progress. B. BACKGROUND 2. Prior to this project, the Bank Group had assisted with six urban projects in India and, in the specific context of UPDUP, a water supply and sewerage project for five towns, including Kanpur and the rural sub-projects, as shown in the following table: Project Credit Title and Credit No. Period Amount USS Components First Calcutta Urban 1973/74 35.0 Infrastruztural works; Development Project -1978179 institutional and financial Cr. 427-IN reform. Second Calcutta Urban 1977/78 87.0 Infrastructural works; area Development Project -1981182 development; slum improve- Cr. 756-IN ment; primary education; health care; small scale enterprises  -2- First Madras Urban 1977/78 ' 24.0 Strengthening metropolitan Development Project -1981182 planning and capital pro- Cr. 687-IN granming; shelter and infrastructural works; urban transportation (buses); traffic engineering. Second Madras Urban 1980181 42 Shelter and infrastructural Development Project -1984/85 works; support for metro- Cr. 1982-IN politan planning. Urban transportation (buses); traffic engineering. Calcutta Urban 1980/81 56 Improveei bus and tram Transport Project -1983184 services; traffic Cr. 1033-IN engineering. Bombay Urban Transport 1977/78 25 Improved bus services; Project -1982183 traffic engineering. LI. 1335-IN U.P. Water Supply and 1977178 40 Urban supply and sewerage; Sewerage Project -1981182 rural water supply; in- Cr. 585-IN institutional and financial reform. 3. The Bank Group's strategy in the urban sector, as reflected in the design of these projects, has been to support CoI's and State government's recognition of the nead for: (a) the rapid expansion of service programs focusing mainly on improved efficiency of the urban economy and on the needs of urban low-income groups; and (b) the continued re-orientation of these programs toward low-cost replicable service systems. The strategy also focuses on strengthening local institutions by supporting their efforts to sustain and expand their programs. The urban poor were especially targeted under the shelter and infrastructure components. C. PROJECT OBJECTIVES AND DESCRIPTION Pro3ect Objectives 4. The main objective was to increase the supply of serviced land to the poor through the provision of low-cost, serviced residential and small business plots, and to address the worst environmental conditions prevailing in the privately-owned aehatas' and other slum areas in the central core of Kanpur. Transfer of land ownership to beneficiaries and the phased construction of dwellings were to be the cornerstone of this approach. The reduction and elimination of direct subsidies inherent in the on-going minimum needs, and other, shelter programs was to be pursued. Full cost-recovery of allocatable costs in the sites, services, and slum upgrading components was aimed at in order to enable replication of project features.  - 7i - 5. The second objective was to strengthen the key institutions of Kanpur involved in the management and financing of service delivery. 6. The third objective was to develop a strategy for state-wide urban development and management. (March 1981 Pric", US41 a m 5.0) A Shlter MIll lIlon Mi1llion X (I) 8Ites and Services: about 24,600 rsid.ntll plots core houal"g shelter loans, community faclittse, and 640 service small businesses plots at three site* totalling ao 200 ha and beeiting about 98,000 residnt 1U8.8 17.a 47 (ii) 8Iwjlu Upeding: upgrading ahatas and other slum 41*r comprisin about 20,000 house- holds on about 105 he, Including grants of tenure, lmproved Infrastructure servicn, bom Improvement and sanitary core loans, community faciIlties and smaIl bun snos support, bnfitting about 112,000 resident. 69.4 8.7 24 B Environen8t Sanitation. aintenonce and Traffic Manasoment (I Wter Sugnlv. Sewerage and uraionesoe mesures to mZxiOISi use of *xistiong truhk infratructure In esntral Kanpur, and extension to wutar supply, s*rnrage and drainage networks directly affecting proposed shelter componwents, and a sver eonnection loan pNgra. 58.5 6.7 13 (I1) ol0Id Watne Managaemnts Improved factIlties fror coT IIloian and iipo of refuse and night osll, and workshop and depot improve- ment. 10.4 1.8 8 (111) Mi"otAnance: equipment and tools for l-,oving cleaning, repairing and maintainls roads, aewrs, and drlans 8.1 1.0 8 (iv) Traffic t anasnMIM t Meauress low-cost measuresso improve trricflows In reas adjacent to proposed shelter cp t ond for enforcement of traffic regulations 7.8 0.9 2 C Technical Assistnce and Institutiona1 Strnutrhenino Consultant and advisory services and training for state and local-lovel *ancies. 80 1.0 8 se40 Costa 295.0 86.9 100 Physical Contingencies 20.1 2.6 Design, Supervision and Management 81.2 8.9 Price Contingencis 06.2 0.4 Total 418.6 $1.7 -  D. PROJECT DESIGN AND ORGANIZATION 7. The deaign of the project, and the priorities on which it was based, reveal a well conceived approach by KDA, KNM, XJS and the Bank Group toward addressing the problems in ganpur. Although not expressly stated in the SAR, there is a strong indicatiov that the pr#nject was looked upon as a pilot for a more ambitious project. This is evidenced by the development of the UPDUP with objectives that are similar to the original project, but with a widened scope that embraces eleven towns (including Kanpur). 8. The great emphasis of the project was on Shelter, but infrastructural components were not neglected and were developed on a sufficient scale so as to ensure easy replication elsewhere, paying due heed to lessons learned on this project. 9. Project preparation was very thorough giving all parties concerned a clear idea of the objectives and how they would be realized, i.e., the planning of the shelter components was advanced to the point where detailed drawings of the three sites had been completed. 10. Whether or not the timing of the project was appropriate is debatable. The project was certainly not started too early because, had it begun earlier, some of the excellence of preparation would have been sacrificed. Therefore, on balance the timing was appropriate. 11. Roles and responsibilities were established prior to appraisal and were -eIl enough understood by the principals XDA, ME and RJS, but what really ensured th&t all worked in concert was the formation of the Project -Monitoring Cell (PMC) and steering committee by GOUP. This group was staffed with experienced senior officers with strong motivation, a-nd should be credited with successfully maintaining balance and progress during project execution. 12. This has been a successful project. It has had its difficulties but they have been minimized by the careful design of the project and by the combined influence of PMC and visiting supervisory teams from the Bank Group. Only one problem (of which more later) was not resolved and that was a legal complication concerning the transfer of land ownership. Prolect Implementation 13. Implementation began on April 1, 1981, but took some time to develop momentum. By June 30, 1983, disbursements amounted to US$2.3 million compared to an appraisal target of US$ 8.2 million for that date. There were a number of reasons for the delay, but the foremost reason was the problem of not having enough staff to ensure that contracts were awarded expeditiously. KJS, at that time, should have had six divisions of engineers, but had only three. (There are now eight divisions; each headed by an executive engineer.) There were also difficulties over land acquisition. The project had three sites in the site-and-service components Barra, Pokharpur and Gujaini. Land lost at Pokharpur due to litigation was finally substituted by acquiring additional land at Barra but the process inevitably caused delay. Similar difficulties  - 5 - &rose in acquiring land In the asatas for alum upgrading where the process of acquisition was brought to a halt in a xmber of cases by court injunctions. 14. The SAR correctly identified those risks and identified land acquisitions in the ahatas as representing the main risk. The second set of identified risks related to the capacity of the various agencies to implement the project within the project period. The SAR pointed out that for KDA the project vould almost double annual expenditure from (the then) current levels. 15. Arrangements for two of the sites selected for the shelter program included a provision for sewage pumping stations for their sewerage discharges. The pumping stations are designed to discharge into oxidation ponds where the sewa,e is treated. The pumping stations are, therefore, critical links in the sewerage systems aad dependant on the supply of electricity. In both cases, there was a long delay before the Kanpur Electricity Supply Administration (RESA) installed t' -connection. This delay also affected putting the tube wells into service, thec,c - delaying the provision of water supply. Hence, an important factor in planning the execution of constructing a sewerage system is seeing that all elements needed to make the system function are taken into account. 16. Toward the end of the project there was some confusion about the term "final date for withdrawal applications". KDA was under the impression that the date was December 31, 1987; they were informed by the Department of Economic affairs, but not until March 17, 1988, that it was March 31, 1988; too late to take any advantage of the respite. The lesson has been learned in JPDUP, and should be borne in mind for projects elsewhere, that when the closing date approaches the Beneficiary should be reminded about the situation regarding acceptance of tenders and applications for credit withdrawals. 17. In terms of physical targets the project has been substantially completed. Serviced sites amount to 14,892 and have exceeded slightly the appraisal target of 14,777. Concerning slum up-grading in the ahatas an appraisal target of 20,000 benefitting households in 89 ahatas, reduced to 12,000 during the project as a consequence of acquisition difficulties. Work has been completed in 41 ahatas, to the great satisfaction of all concerned. The slums have been transformed by the provision of paved roads and paths, small public squares, lighting, drainage, and water supply. The ahata dwellers have responded by steadily improving their properties by adding upper floors to increase accommodation, and by painting and decorat.ing their homes. The improved ahatas are attractive enclaves for the people who live there and have created a great demand elsewhere in Kanpur for the improvement process to be extended. In a number of the ahatas work has not been completed so that the total number of benefitting households is currently only iO,419. All the physical targets for the other components have been achieved. 18. Bearing in mind that institutional strengthening is a continuing process, it can be said that the project has produced improvements in the organizational and financial arrangements of gNM and KJS.  19. Regarding KNK, marked improvements have been realized in the solid waste management sector. Senior staffing has been reinforced, though very slowly, and reorganization of solid waste collection and disposal arrangements has begun and is continuing to proceed. Even more satisfactory is the reduction in the number of households relying on night soil collection; where the system of night soil collection coutinues, the methods of collection (to collection depots) and disposal (to sewers and the sewage farm instead of dumping in watercourses) have improved. 20. The only major variation in planned and actual results is, as already mndicated, in the number of benefitcing households under the slum upgrading component. The reaso for this is that IDA was frustrated, in a number of cases, in its attempts to acquire the land within the ahatas' boundaries. The owners of the land on which the ahatas have developed would, if it could be managed, evict the people who live there and redevelop these valuable central Kanpur sites. The owners have little hope in this situation, and many remain unwilling to sell to KDA and obtaineu stay orders and court injunctions to prevent or delay acquisition. The above problems arose mainly from the weaknesses of the provisions of the Slum Improvement Act, which provided very low compensation for land acquisition Later, in June 1986, the Act was ameuded to speed up the litigation process. However, on the bright side, KDA has completed improvement of 41 ahatas and, additionally, an ahata owner has proposed an arrangement to the ahata occupants that part of the site be redeveloped coamercially and the remainder rearranged in order to accommodate the population of the ahata. 21. After a slow start, the sewer connection program developjed very successfully. It is an important program, not only because it brings the benefits of a water flushed toilet to the connected household, but because it also gets rid of an equal number of bucket latrines and the ensuing, very unhygienic, operation of collection and disposal. 22. The provision of community toilets and washing facilities in 16 locations around Kanpur has proved to be very popular and successful. Their popularity can be directly attributed to the fact that they are divided into male and female sections providing privacy, in clean surroundings, for a modest payment. The facilities are managed by a single private operator (Sulabh) who has had an operation and maintenance concession for 30 years, and since it is also res-ansible for cost recovery, the only cost to KNM is for water and electricity. KM4 proposes to extend this service further. The UNICEF-supported Community Development Project was invaluable in its assistance in the planning of public facilities and public health education. 23. The traffic management component has also been very successful despite the tremendous difficulties in catering to the variety of road users encountered in Kanpur: pedestrians, handcarts, bicycles, rickshaws, motorcycles, tempos, taxis, buses, and trucks--not to mention the large number of wandering cattle.  -7- E. PROJECT SUSTAINABILITY 24. Only in two components is there a risk that the project may not maintain an acceptable level of benefits throughout its economic life. One arises from weaknesses in the old sewerage system into which new sewers and house connections discharge. These weaknesses were identified at appraisal and relate mainly to blockages as a result of siltation from low levels of flow. However, the new discharges will help by increasing flows and thereby reducing the amount of sedimentation. In addition, new sewer cleaning equipment has been purchased and an ongoing program of sewer cleaning has been implemented. The risk mentioned at the beginning of this paragraph has been reduced to an acceptable level. 25. The second area of risk concerns the willingness of KJS to increase its tariffs consistent with costs and to collect on its bills. The tariff structure has been unchanged since 1985. Vhile general collection performance has improved greatly over the project period, KJS has not been able to collect arrears forcefully from nationalized industries; and in turn JS was withholding payment of Rs 615 to the power authority on account of a pending litigation. This lack of enforcement among public sector bodies suggests the need for GOUP to evaluate and clarify the inter-agency accountability. It will be a good use of the modern accounting and auditing systems established in MNM, KDA, and UJS during the project. F. BANK PERFOKMANCE 26. The efforts of Bank Staff made in Kanpur and GOUP were appreciated and the implementing agencies have recorded the value attached to the constructive criticism they provided. In particular, Bank staff helped by suggesting ways of streamlining the process of allocating sites in the shelter program. The Bank Group supervision missions visited Kanpur on nine occasions during the period from 1981-1987. These visits were evenly spaced, but the weight of effort was applied in 1983 (June/July) and 1984 (April) when about 552 of the staff time devoted to supervision was allocated, compared with about 372 for the first two years of project execution. This reflects the Bank's recognition of the slow progress made in the early phase of the project and the strength brought to bear to effect a successful correction. Additionally, project officers were frequently in India on other missions during the project period. It has been suggested that if IDA had been made aware of the project officers movements, arrangements could have been made to meet in Delhi or Bombay to discuss the current project problems. This may have been a guarded ind. ation that supervision missions should have been more frequent. However, had the3e meetings been possible, the short discussions could have provided a "second best' alternative. 27. The history of events suggests that the main supervision effort should have been made in the first two years rather than in the middle of the project. But this reflects the tendency to economize on supervision rather than on the staff involved.  28. Overall, the appraisal was well done, the project was carefully designed, and the risks were identified correctly. G. BENEFICIARY PERFORMANCE 29. The Beneficiary showed a willingness tot (a) discuss problems affecting all aspects of the project; and (b) identify solutions and act on them. There was an initial period of slow progress owing to land acquisition problems (shelter) and lack of staff (XJS) that caused the construction program to slip. 30. Reallocation of the workload brought improved performance: for example, in the first two years of the project, only 35 sewer connections had been made. RDA took over responsibility from the heavily commaitted KJS for this executive function, and in the following 18 months, 6,000 connections were made. By project completion, about 20,000 connections had been made against a target of 10,000. It took two years for KDA to reach the required operational pitch, but once momentum had been developed satisfactory progress followed. 31. A feature of providing serviced sites (and one not confined to Kanpur) is the practice of providing all the services for all sites before any buildings are started. Capital is thus tied up long before it is necessary to do so. In contrast, a phased development program would allow cost recovery on housing (and commercial property) to offset servicing costs progressively throughout the development of the whole site. 32. The main lessons to be learned from the Benefic':ary's experience ares (a) the need for accurate assessment of the staffing levels needed to complete detailed designs and to supervise execution of physical works; (b) the importance of streamlining the recruitment process so that staff vacancies, in particular those at senior level and newly created positions, may be filled expeditiously; (c) to try to determine at an early stage, that is not later than appraisal, the need for legislative action; and (d) to coordinate the activities of all the concerned agencies (for example, with the electricity authority so that power is available for new installations such as tube wells and sewage pumping stations). 33. Maintenance of the capital works provided under the project is variable. The highly visible traffic management works are generally in good repair. On the other hand, maintenance of the sewage pumping stations and the sewage treatment plants (where embankments to the tanks are suffering from settlement and erosion) is unsatisfactory. H. PROJECT RELATIONSHIPS 34. The relationship between the Bank, the executing agencies (KDA, KNM and RJS), the State and National governments were good throughout the project. There was a concerted effort by all concerned to make the project successful.  -9 I. CONSULTING SERVICES 35. Consultants were employed for the principal tasks of conducting studies for Resource Mobilization and for Institutional and Financial Strengthening. These studies were completed satisfactorily by 1982 and their recommendations had been substantially adopted and introduced by 1984/5. The few recomuendations that were not adopted were of lesser importance. As a result of these studies, there was a simplification of Octroi Tax procedures and amendmnents to property tax administration. In addition, accounting and management infonmation systems, project cost accounting, collection systems, and internal control for management were all put in place. J. PROJECT DOCUMENTATION ADD 'DATA 36. Thi legal documents were based on similar sectoral projects and posed no problems during project execution. The SAR is a well prepared and comprehensive document and has provided a useful framework for every component of the project. Data was readily available for the compilation of the PCR. It was, however, prepared on the basis of the previous PCR Guidelines and so a sifting process has been needed.  - 10 - PART II BENEFICIARY'S COCKETmS 1. Part I of the PCR has been reviewed by the Beneficiary; the comments were incorporated in the text and also attached as an Annex at the end of this PCR. 2. The Beneficiary reviewed Part III of the PCR and returned it; modifications were incorporated. A. BANK'S PERFORMANCE 3. The successful implementation of KUDP has been possible because of the coordinated efforts, financial support, technical guidance and encouragement the implementing agencies have been receiving all along from the Bank's mission members who have visited Kanpur during implementation. During these helpful visits, important discussions and decisions were made as recorded in the various Aide-Lemoires. 4. Under the guidance of World Bank missions, site allocation procedures were improved. People were called once for signing legal agreements for title of land/house. Possession was given at the same time along with Bank Pass Books for payment of installments. 5. A request was made for the Bank to grant two one-year extensions, but only one was granted. Due to complexity in acquiring slum ahatas, the component was moving slowly. We believe that the target of 12,000 households (BHHs) could have been achieved by granting another year's extension. 6. It was felt that the project was tightly framed and any major change could affect the project agreements. All the lengths, widths and numbers were recorded in the legal agreement and it was not possible to modify it according to actual requirement in the project. In the future, it is therefore suggested that a more flexible approach be adopted by making use of a program of works rather then closely defined items. This approach was adopted in the follow-up project of UPUDP IDA Credit 1780-IN. B. BENEFICIARY'S OWN PERFORMANCE Government of tUttar Pradesh 7. GOUP has extended full support to this project both in terms of providing financial support and by removing whatever difficulties were experienced during execution. Technical support was accorded whenever needed  - 11 - by the Town & Country Planning Department of GOUP; a project monitoring cell was created at Kanpur and was responsible for monitoring and evaluating the project. A senior officer from Town & Country Planning Department was available for guidance and for monitoring progress of the project. 8. Project status reports were prepared and submitted monthly and quarterly, and state-level monitoring was done quarterly. Kanpur Development Authority 9. RDA was the main agency for this project and was responsible for execution of the following: (a) sites and services; (b) slum upgrading; and (c) sewerage. 10. XDA's performance was quite satisfactory as is clear from the expenditure and achievement results. KDA was also responsible for coordinating, monitoring and extending guidance, where necessary, to other institutions implementing this project. For this, it created a project monitoring cell (with full-time project monitoring officers) to prepare reports, issue guidance to all concerned, and arrange meetings when necessary. 11. IDA substantially completed the project within the project period. It has carefully monitored and coordinated the activities of other implementing agencies and acted throughout as the directing agency. 12. KDA implemented the shelter component successfully. However, problems were faced in acquiring ahatas for slum upgrading components. For this reason, the size of the component was reduced from upgradation of 20,000 to 12,000 households. Even during the improvement of the ahatas, the stay orders from different courts were received which affected the progress of the component. In some ahatas, a stay order was received after the upgrade of the slum, thus adversely affecting cost recovery. 13. On the basis of 'pay and use,' the public toilets and bathing facilities were constructed with the help of Sulabh International by RDA and were finally handed over to KNM. This has improved the environment and was appreciated by the public. 14. IDA also executed work on the sewerage and sewer connection program on behalf of 1JS, and the drainage work on behalf of KNN. 15. IDA was also the intermediary for transferring funds and loans between the State Government and the executing agenciess Kanpur Nagar Mahapalika and Kanpur Jal Sansthan.  - 12 - lemur Jal Sanethan 16. RJS was entrusted with the task of providing water supply to upgraded slum areas. RJS also carried out a leak detection survey in the eity with the help of Indian Institute of Technology; the project also provided some sever cleaning equipment. Kanpur Nagar Mahapalika 17. MNM was responsible for implementing the following components of IUDPt (a) Solid Waste Management; (b) Maintenance; (c) Traffic Management Measures; and (d) Drainage. 18. The following paragraphs describe the institutional role with respect to each of the above: (a) Solid Waste Managementt City cleansing is one of the most difficult operations that a municipal corporation has to perform. The Solid Waste Management component helped the Institution systematize its operations considerably. On the recoamendations of the consultants, and at the instance of the World Bank, the City Cleansing Department was created to improve the collection and disposal of garbage and night soil with the help of an additional fleet of trucks, tippers and loaders, construction of pail depots, and conunity latrines. Painstaking efforts were made to introduce new techniques in primary collection system, such as the use of the tricycle rickshaws with bins etc. (b) Maintenances Maintenance of civic infrastructure is one of the primary responsibilities of XNM. Maintenance standards were improved immensely by switching from the traditional methods to the use of mehinized equipment such as the hot mix plant and paver finisher unit for road maintenance, hydraulic ladders for maintenance of street lights, and sewer jetting machines for cleaning the sewage system. This has resulted in operational ease and safety in maintenance works. It has made a visible impact on the civic life of the city and has helped KNM handle the oceanic task of maintenance. Institutional efficiency has stepped up considerably. (c) Traffic Management Measures: About 12 percent of the developed area has been allocated to roads in Kanpur. Insufficient road spaces and the tremendous growth in urban population have resulted in various types of traffic and transportation problems in the city, necessitating the need for a traffic engineering department. The timely  - 13 - introduction of the Traffic Engineering and Management Cell (TTMC) was created to address these problems exclusively. This department played a key role in identifying and redressing some of the most critical traffic problems by liaising with the various concerned departments to effect better inter-departmental coordination and create a new environment in traffic management and transportation planning in the city. Based on the success of TEMC in Kanpur, the World Bank strongly recommended it be made a permanent feature of MNE and also be replicated in the other million-plus cities of Uttar Pradesh. As of now, UPUDP has five TEMCs created in all the KAVAL towns and start-up funding has been done in UPUDP to begin traffic management work in each of them. (d) Drainages The city is crisscrossed with a number of major drains (Nalas) that carry surface run-off, domestic and industrial waste, and also sewage in some cases. This component dealt in desilting the Nalas, their remodelling, and laying of underground pipes to improve overall drainage facilities in the city. As a purely civil engineering work, it was supervised by the regular engineering staff of KNK and no separate division was created. However, the implementing agency was guided by the consultants' report on drainage in the planning and design of its works. Improved drainage facilities are reflected by the reduction of water-logged areas, flooding, and overflowing in Nalas. Conclusion 19. The experiment of an IDA-financed project in Kanpur may be said to be a successful venture on the part of all concerned. It has provided shelter to 25,000 families, benefitted more than 500,000 people in one way or the other, and has created employment equal to about 8 million man-days. This has paved the way for improving the quality of civic life in Kanpur and has, in fact, made a marked dent on the problems of cleanliness, traffic congestion, housing, and sewerage and drainage systems in the city on the whole and, in particular, in the areas where the project was designed to be of help.  - 14 - PART III STATSTICAL SiUAR  - 1s - Table 1x Related Bank Loans andlor Credits LoanlCredit Year of Title Purpose Approval Status Comments Uttar Pradesh Urban Development 1987 Ongoing Making Urban Development for 11 towns in Satisfactory Project UP (including Progress CR1780-IN Xmnpur) LN2797 -IN See also Part I, para2  - 16 - Table 2s Project Timetable Date Date Item Planned Revised Actual - Identification Sept 79 - July 9-19, 1979 (Executive Project Summary) - Preparation April 80 - Jan 12-21, 1980 May 12-24, 1980 Sept 8-20, 1980 - Appraisal Mission Oct 80 Dec 80 February 1981 - Credit Negotiations Feb 81 March 81 Aug./Sept 1981 - Board Approval April 81 June 81 Oct 27, 1981 - Credit Signature - - Feb 4, 1982 - Credit Effectiveness - - April 22, 1982 - Credit Closing June 86 June 30, 1987 - Credit Completion June 86 March 31, 1988  - 17 - Table 3a ianpur Urban Development Prolect (Credit 1185-IN) labursoar nt Actual as % Ftwsal YeurA ActUpl Of Appralil and Quartsr USJO MR UR000- Culiv SIR 00S " CumltlIve -Ebtimate 1982 UarS1/92 400 as5 ass - 0 0 Jun80/82 600 710 1,065 - 0 0 19883 SptbO/62 1,600 1,421 2,468 - 0 0 D 1/82 1,000 1,421 3890 - 0 O Macrl/US 1,600 1,869 5,606 1,513 1513 2? June 30/o8 2,000 1,770 7,21 595 2,108 29 1984 S tS0/43 2,000 1,776 9,067 100.7 3,116.7 34 OeSI/ea 2,000 1,770 10,623 792.4 8,009.1 36 MarS1/84 1,800 1,58 12,431 749.4 4,656.5 87 June 30f84 1,800 1,696 14,029 1,6743.6 0,682.1 4? 1065 S.pt30/84 1,700 1,510 15,639 526.2 7,067.3 45 oc31/84 1,600 1,421 18,960 902.9 7,900.2 47 Marcs/Os 1,0W 1,332 13,292 815.6 8,775.6 48 Jun. 30/85 1,400 1,248 19,585 38.9 9,411.7 48 086 SPt80/8/ 1,200 1,066 20,602 751.5 10,183.2 49 .c"31,86 1,000 68n 21,489 403.9 10,687.1 49 Mal8/so 600 710 22,200 984.6 11,561.6 52 Juno 80/68 804.3 11,855.9 58 1906 Spt3o/86 125.9 12,65.7 57 ic31/66 508.2 18,078.9 59 Mar31/? 816.0 18,390.5 60 Jun. 8Cj7 012.6 14,808.8 94 1966 Sop80/87 2,581.1 10,634.4 76 Deca1/67 2,00.68 18,922.2 86 mrarl/so 1,06.0 19,248.2 90 Sum,ar Oiasursmonte were oncludsd on April 25, 1986, after credit closing on J.un 80,197. Cstooory O"osilUlon SOR'S 1 Equipeant and Materlals 2,090,157.57 2 CivilI Works 13,062,606.62 8 Loan. for Construction 2,098,286.94 4 Technical Asslitance 1.101.982.65 Total Dloure 19i2i 410.98 Amhnt Cancelle 2,led,818.0 Totl Amount ot Creit 22,200,000.00  - 18 - Table 4i Proiect Implementation Appraisal Key Indicators Estimate Revieion Actual Slum Upgrading Slums Acquired 87 69 1/ Households Upgraded 20.000 12,000 10,419 Water Connections 13,000 6,000 4,729 Sewer Connections 13,000 6,000 3,688 Leases Issued 20,000 12,000 2,705 Sites and Services Plots developed 14,770 14,892 Leases issued 14,770 14,030 City-wide sewer connections 10,000 20,055 Knnpur Jal Sansthan Water Connections 80,500 50,659 (up to 7.31.86) Functional meters 2 90 by 10.1.83 70S Collection of Current Receivables Z 80 by 85/86 ND. Collection covering 0 & M and Debt Service Costs for Water Supply 2 100 BY 4.1.83 100 ND - not determinable (Government agencies owe RJS Rs 1,180 Lakhs In 87188 and KJS Owes Electricity Authority Rs 615.2 Lakhs). 1/ Out of these 69, 41 were developed under the project (paragraph 17).  - 19 - Table 5: Project Costs and Financing A Pro3ect Costs Appraisal Estimate Actual Ru2ees (millions) _ 1nees (millions) tureign Foreign Local Exchange Local Exchange Costs Costs Total Costs Costs Total Shelter Sites and Services 128.0 10.3 138.3 218.90 20.47 239.37 Slum Upgrading 65.0 4.4 69.4 47.48 Z.5 54.02 193.0 14.7 207.7 266.38 23.01 289.39 Environmental Sanitation Maintenance & Traffic MNatstement Water Supply 3.7 0.4 4.1 2.57 0.27 2.84 Sewerage 32.5 5.1 37.6 99.07 14.80 113.87 Drainage 10.6 1.2 11.8 39.85 4.18 44.03 Maintenance 6.9 1.2 8.1 18.60 3.28 21.88 Solid Waster Management 7.8 2.6 10.4 13.51 3.38 16.89 Traffic Management Measures 6.6 0.7 7.3 41.85 4.39 46.24 68.1 11.2 79.3 215.45 30.30 245.75 Technical Assistance & Institutional Strengthening Consultant and Advisory Services, Training, etc. 6.4 1.6 8.0 13.36 3.2 16.56 Total Base Costs 267.5 27.5 295.0 Physical Contingencies 17.8 2.3 20.1 Design Supervision, etc. 27.9 3.3 31.2 Price Contingencies 59.9 7.3 67.2 Total Project Costs 373.1 40.4 413.5 495.19 56.51 551.7 Gt=X..=  - 20 - B Project Financing Planned (Credit Agreement) Final Source Remillion Rsmillion IDA expenditure 200.00 268.41 Categories Domestic 213.5 283.29 Total 413.5 551.70 Table 6s Project Results A Direct Benefits Beneficiaries Appraisal Achieved Estimate Indicators Estimate At Closing Date at Full Development Sites and Services 83,000 55,000 84,000 Slum Upgrading 112,000 60,000 112,000 Infrastructure and Traffic Management Measures 800.000 800,000 1,000,000 B Economic Impact Economic Appraisal Actual (at _ate of Return Estimate Final Development Site and Services /a 182 24S Slum upgrading lb 262 30X la Derived from imputed rental values of similar serviced residential plots Costs include shelter loans and directly chargeable costs of land and on-site infrastructure and maintenance costs of 2 1/22; it excludes taxes and cost of community facilities. /b Based on Increase in imputed rental value created by infrastructure and service improvement Costs, net of taxes include all directly chargeable costs of land, on site infrastructure, home improvement loans and maintenance costs of 2 1122.  - 21 - C Financial Impact Preliminary Action Results Resource mobilization study RNM revised Octroi schedule Octroi based income increased from Rs 55.915,643 (1982-83) to Rs 135,225,722 (1987-88) Quinquennial Assessment Increase in General Demand Tax from Rs 27,580,674 (1986-87) to Rs 32,904,827 (1987-88) General improvement in application Increase in Total Receipts in KKK of fiscal policy from Rs 109,340,908 (1978-80) to Rs 337,537,660 (1987-88) Institutional and Financial Introduction of double entry system of accounting Recommendation by I.D.A. Internal audits - now made by private firm of Chartered Accountants D Studies Subiect of Study Status Impact of Study 1 Institutional and Financial Completed Adoption of double entry system of accounting, employment of full time Chartered Accountant; Internal audit by independent private C.A.; creation of new posts, e.g., Director of Solid Waste Management Services; Development of Billing Management Program. 2 Traffic Management Completed Establishment of Traffic Engineering and Management Cell. 3 Water Supply Completed Establishment of leak detection and waste prevention group with training abroad of engineers in charge. 4 Maintenance Completed Equipment purchases and maintenance program implemented.  - 22 - Table 7* Status of Covetants DeadlIno for Covenant Subject Coupi lance Status Prolect Asreement 2.02 T.Ato exocuting agoenie OK 8.0B Annual work program OK 8.08 Audits of KDA OK KNU OK KJS OK 8.06 Adequate sccounting systems for KJS 4.1.82 OK KDA 4.1.83 OK KNM 4.1.8S OK 8.07 Introduc waste prevention and leak detection program (KJS) 7.1.87 OK Dev lop action program to reduce OK (started water wastge and loekag (KJS) 8.81.88 In 2 Districts) Implement action program OK 8.06 KJS to achievo not loss than 60,S00 total M mtred water connectlon now iO .9 (N.I.Cbut Improving) KJS - Introduce quarterly meter reading and semi-annual billing 4.1.81 OK KJS - introduce quartorly billing 5.1.86 OK KJS develop metr ropair fac ilty o that 60X of InstallIed mters N.I.C. are functional 10.8J (only 70) Collection program to achieve 60X of curront receivables for 1986/OS N.I.C. ISnerate revenues to cover 1005 N.I.C(but maintenance and debt service for compliance water supply and sewerage by 4.1.84 expected during 1968/89) 8.09 Estblish traffic smnagemnt cell Implement low cost traf ic manage- ment scheme OK'd by IDA OK 8.10 KNI to mke orgpnizational end operational changes In Ite solid OK waste mnagement srvice 8.11 SOUP to agree with IDA on investmnts *rising out of maintenance study OK 8.12 KNII to Increase revenues baed on recommendation of resource mobiIlzation study OK OK - Covenant complied with N.lIC- Not In compliance  - 23 - Table 8s Use of Bank Resources A Staff Inputs Stage of Project Planning Field Comment Cycle HQ Field HQ Field Staff weeks Through Appraisal 14 lb 130 Le 63 Ic Appraisal Through 2 lb 2 le .8 Ic Board Approval Board Approval 4 lb 10 /e 4.9 Ic Through Effectiveness Supervision 70 Ia 68 Id 30.8 Ic Total 90 la 210 99.4 la From Sar. /b Allocated Ic From B.T.0 Reports /d From MIS after Deduction of time in field /e Pro-rate from Supervision figure A# /Npu0w,doc  - 24 - THE WORLD 8ANMINTERNATIONAL FINANCE CORPORATION OFFICE MEMORANDUM ANNEX BORROWER'S CONMENTS CAmr November 29, 1989 TO. Mr. Alexander Nowicki, Division Chief, OED FROM Mr. P. Bhide,EDS12 EKTENSFOKt 75403 SUsJECT: INDIA - Kanpur Urban Development Project (IDA CR Noll85-IN) We have received the following conmments from our authorities on draft Project Completion Report on Kanpur Urban Development Project for incorporation in the final PCRs- *(A) PCR refers to legal complication concerning transfer of land ownership under the Slum Upgradation program (para 12), related issue concerning weakiesses in the provisions of Slum Upgradation Act (para 20) and proceeds to recommend determination of the need for legislative action by appraisal (para 20). While some problems were faced in the enforcement of the Slum Upgradation Act, amendments were carried out to make redressal through litigation less time consuming (amendment in section 17(1) of Act date June 11, 1986 refers) w.th a view to more effective implementation of the slum upgradation program. (B) Para 25 of the PCR relates to the cost recovery concept increase in water tariff by RJS and reported non-compliance. A reference has also been made to outstanding dues from nationalized industries to KJS as also outstanding dues to v3S to the Power Authority which has been commented upon as "as lack of accountability among public sector* and has led to the suggestion for evaluation and clarificatioi of 'hidden and de facto subsidy system' by Government of U.P Implementation of tariff restructuring was delayed due to litigation. The tariff was revised from October 1, 1985 and recovery improved considerably thereafter KSJ had generated revenue to cover 100? maintenance and debt service by 1983-84. This has also been brought out in the SAR of UPUDP. As regards recovery from nationalized industries by UJS, there was no delay in the issue of recovery certificates by KJS to collect dues from the industries. However, since the actual implementation was delayed due to litigations this led to non-payment of dues by KJS to the UESA. Thus there was no question of any hidden subsidy of any sort. (C) Para 13 of PCR refers to inadequate staffing as responsible for delay in implementation Government of UPUDP reports that the six Divisions in RJS were always headed by Executive Engineers, three in the three different zones of the city and remaining three in charge of Plant, Civil Works and Establishment. Thus there was no problem of staff in KJS during any point of time.*