Turkey - Cukurova Urban Development Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15252 IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TURKEY CuKUROVA URBAN DEVELOPMENT PROJECT (LOAN No. 2819-TU) DECEMBER 31, 1995 Infrastructure Operations Division Country Department I Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (June 30, 1995) Currency Unit - Turkish Lira 1987 (average) - TL 857 US$ 1.00 1988 (average) - TL 1,422 = US$ 1.00 1989 (average) - TL 2,127 = US$ 1.00 1990 (average) - TL 2,608 = US$ 1.00 1991 (average) - TL 4,171 = US$ 1.00 1992 (average) - TL 6,872 = US$ 1.00 1993 (average) - TL 10,984 = US$ 1.00 1994 (average) - TL 29,608 = US$ 1.00 June 30, 1995 - TL 43,888 = US$ 1.00 WEIGHTS AND MEASURES Metric System US System I hectare (10,000 square meters) - 2.47 acres 1 meter - 39.37 inches I square meter - 10.76 square feet I cubic meter - 264 US gallons FISCAL YEAR OF BORROWER January Ist to December 31st ABBREVIATIONS AND ACRONYMS CUEP - Cukurova Region Urban Engineering Project CUDP - Cukurova Region Urban Development Project HUDC - Housing and Urban Development Companies ICR - Implementation Completion Report MESKI - Mersin Metropolitan Municipality Water & Sanitation Directorate PCU - Project Coordination Unit (for CUEP Project) PRIMU - Project Review. Implementation and Management Unit SAR - Staff Appraisal Report SPO - State Planning Organization UEA - Urban Expansion Area FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TURKEY CUKUROVA URBAN DEVELOPMENT PROJECT (Loan No. 2819-TU) CONTENTS P reface . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i Evaluation Sum m ary .........................................................ii PART I. Project Implementation Assessment ......................................1 A Objectives and Project Description - Evaluation of Objectives .............. 1 B. Achievement ofObjectives ........................................ 2 C. Major Factors Affecting the Project ..................................4 D . Sustainability ...................................................6 E. Bank Perform ance ...............................................6 F. Borrower Perform ance ............................................7 G . Assessment ofOutcome ...........................................8 H . Future O peration ................................................8 I. Key Lessons Learned .............................................9 PA RT II. Statistical Tables ................................................... 10 Table 1: Summary of Assessments ........................................ 11 Table 2: Related Bank Loans ............................................ 12 Table 3: Project Tim etable ............................................. 14 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual .......... 14 Table 5: Key Indicators for Project Implementation ........................... 15 Table 6: Key Indicators for Project Operation ............................... 16 Table 7: Studies Included in Project ....................................... 17 Table 8A : Project Costs .................................................. 18 Table 8B: Project Financing .......................................... 19 Table 9A: Economic Rate of Return - Water and Sanitation ...................... 20 Table 9B: Economic Rate of Return - Urban Extension Areas .................... 21 Table 10: Status of Legal Covenants ........................................ 22 Table 11: Compliance with Operational Manual Statements ...................... 26 Table 12: Bank Resources: Staff Inputs ..................................... 27 Table 13: Bank Resources: M issions ....................................... 28 Appendices: A. Mission's Aide-Memoire B. Borrower's Contribution to the ICR C. Statement of Loan Account by Disbursement Department D. Map This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed wiihout World Bank authorization. G e . I IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TURKEY CUKUROVA URBAN DEVELOPMENT PROJECT (Loan No. 2819-TU) Preface This is the Implementation Completion Report (ICR) for the Cukurova Urban Development Project in Turkey, for which Loan No. 2819-TU in the amount of US$120.0 million equivalent was approved on June 12, 1987 and made effective on January 28, 1988. The loan was amended on August 9, 1991 and reduced from US$120.0 million to US$28.5 million. The amended loan was closed on June 30, 1995, after two extensions of the closing date. It was fully disbursed, and the last disbursement took place on May 11, 1995. The Special Account for the loan was closed on June 6, 1995. The ICR was prepared by Pascal Douard (Infrastructure Operations Division of Country Department I, Europe and Central Asia Region) and reviewed by Ricardo Halperin, Division Chief and by George Zaidan, Project Adviser (EC 1). The Borrower provided comments that are included as appendices to the ICR. Preparation of this ICR was begun during the Bank's final supervision/completion mission, April 3 to April 6 and April 16 to April 19, 1995. It is based on material in the project file. The Borrower contributed to preparation of the ICR by contributing views reflected in the mission's Aide-Memoire, and by preparing its own evaluation of the project's execution and initial preparation. (ii) IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TURKEY CUKUROVA URBAN DEVELOPMENT PROJECT (Loan No. 2819-TU) Evaluation Summary Introduction 1. The Cukurova Urban Development Project (CUDP) was designed to help the Government of Turkey meet the urban growth challenge in the south region of Cukurova by devolving responsibilities for muncipal services to the municipalities of Adana, Ceyhan, Iskenderun, Mersin, and Tarsus. CUDP had been prepared from 1985 to 1987 under the Cukurova Urban Engineering Project (CUEP), a US$13.2 million Bank project, which attempted to set up the infrastructure and institutional arrangements necessary to efficiently manage land development and provide municipal services in the area. The Government's 1984 policy objectives which CUEP and CUDP supported were to decentralize responsibilities for urban planning and provision of services to municipalities, improve local administration, provide adequate infrastructure and services, and reduce housing shortages. 2. By 1987, the Bank had tried two different approaches to urban investment and institutional reform in Turkey, the sector approach and the integrated approach. The sector approach had concentrated on water and sanitation projects, through a water supply project (1972) and a sewerage project (1982) in Istanbul, and a water and sanitation project (1987) in Izmir. The Istanbul projects had been reasonably successful and led to institutional innovations subsequently duplicated in other towns of Turkey. The integrated approach, tried in Istanbul in 1972, had not led to any major investment. It was however a comprehensive approach, and therefore an appealing one, and both the Bank and the Government of Turkey hoped to avoid a similar failure in CUDP through intensive preparation financed under CUEP. Project Objectives 3. According to the Staff Appraisal Report (SAR), the project objectives were to: (a) assist the municipalities to overcome service deficiencies and manage urban growth by financing urban infrastructure; (b) introduce municipal policies and institutional arrangements which would be suitable for replication in other Turkish cities for investment planning and implementation, cost recovery, financial management, and staff development; and (c) build up a capacity in Iller Bank to appraise and monitor municipal infrastructure projects and investments programs. 4. The US$389 million base cost infrastructure program (US$467 million with contingencies, technical assistance, and national components) consisted of eight components of which US$162 million were for urban development related investments, and USS227 million for citywide infrastructure, mainly water and sanitation. Cost recovery obligations and counterpart financing availability were specified in the covenants of the project, which also asked for the implementation of a new municipal cost accounting system. In 1991, four years after Board approval, in response to an unsuccessful project implementation experience, the project was restructured and the loan downsized from US$120 million to US$28.5 million, and the objectives narrowed to the completion (iii) of thirty six on-going contracts. 5. Although the objectives of the project were sound, they were too ambitious and not fully endorsed by the municipalities or by Iller Bank. The project was developed by the State Planning Organization (SPO) without adequate participation by the beneficiary municipalities or by the municipal development bank (Iller Bank), which then played a major role in financing urban infrastructure. Municipalities were unable to assimilate such an ambitious program in the time frame that was considered. In addition, Iller Bank's top management did not want to change the role of Iller Bank as envisioned under the project, and did not want municipalities to be responsible for implementing their infrastructure programs either. On these two important aspects, this ICR concludes that the risks of the project had been identified, but not properly appraised. The restructuring of the project was therefore necessary to transform it into an operation with much more limited objectives. Implementation Experience and Results 6. The project achieved only very partially its original objectives. After restructuring, the project cost decreased from US$467 million to US$69 million. Iskenderun, Mersin and Tarsus remained involved in the project, whereas Adana remained involved only to a very limited extent and Ceyhan withdrew from the project. National regulations and lack of political commitment to change them hampered the envisaged municipality strengthening, limited the hiring of high level staff and delayed the implementation of a new accounting system. Iller Bank remained devoted to its traditional role and did not transform itself into a development bank. Infrastructure financed under the loan was mainly urban infrastructure, especially water and sanitation. The housing component was hardly implemented, except for two urban extension areas in Mersin and Tarsus. 7. The project did achieve most of the much more modest objectives agreed upon during restructuring. Municipalities gained valuable experience in project management through its implementation. The final cost of the project was US$62 million, compared to a forecast of US$69 million (including US$5 million of contingencies). Municipalities and Iller Bank fulfilled their financing comnitments. Before restructuring, the project had been running behind schedule and had come to a virtual standstill. After restructuring, the pace accelerated. However it was still completed two years later than originally expected, because of custom clearance delays, adverse weather conditions for the construction of the sea outfall, and time needed to obtain approval for municipal investments by SPO. 8. The unsuccessful implementation of the original project was due to several reasons: (a) The ownership of and the support to the project were very weak: SPO strongly supported the project and developed it with the assistance of consultants but it then handed it over to the municipalities and the project management unit who had not been deeply involved in the preparation. In 1989, municipal elections resulted in a local leadership that had campaigned against the project; (b) The Government of Turkey did not approve rapidly the key reforms necessary for project success, including authorization to the municipalities to follow the Bank's procurement rules, to implement new accounting practices, or to hire professional staff at market salaries; (c) filer Bank's top management was opposed to the project, and therefore the Project Review, Implementation and Management Unit (PRIMU) within the bank was not motivated to efficiently manage it. In addition, PRIMU did not have adequate authority to coordinate the various investment projects of the municipalities, and therefore could not prevent the implementation of projects which were incompatible with CUDP; and (iv) (d) The scope of the project had nearly doubled during project preparation and some of the project designs and documents were not completed or approved when the loan was signed. 9. The Bank and the Borrower's performance were unsatisfactory in preparing, appraising, and implementing the project. The Bank and the Borrower prepared the project with the view that it would help to transform municipal finance. Such a reform would have yielded huge benefits. The Bank, however, was too optimistic in its appraisal of risks. It should have waited for key institutional actions before approving the project, and should have given more careful consideration to the risks of designing a very complex operation, diluting the core of the project. The issue of lack of ownership failed to be identified. The management unit of the project in its early years was too weak to achieve a rapid start-up. After these shortcomings became apparent, the Bank and the Borrower took the right decision in restructuring a highly problematic project to transform it into a project with limited success. After restructuring, the municipalities and PRIMU became more involved in the project, and their performance was satisfactory. The Resident Mission's involvement helped to provide a quick response to meet client needs. 10. The outcome of the project is unsatisfactory compared to its initial objectives, because major objectives were dropped during its implementation, such as the housing component, the participation of Adana and Ceyhan, or the transformation of Iller Bank. However, the restructured project met its more modest goals. Summary of Findings, Future Operations, and Key Lessons Learned 11. The outcome of this project stresses the need for strong local ownership and of realistic implementation schedules. To launch an innovative operation, the ownership of the project may be limited at the national level to some key people or institutions; however, the ownership of the local government in charge of its implementation is a prerequisite for its success. Ensuring the realism of key institutional arrangements before loan signature, involving the project management units in project preparation, and ensuring ownership of different tiers of administration are necessary prerequisites for success. This project also shows that restructuring an unsatisfactory project can help secure some worthwhile, albeit more limited, objectives. 12. Infrastructure built under the loan will be operated by the municipal departments or, for water and sewerage infrastructure built in Mersin, by the water and sanitation metropolitan authorities (MESKI). Successful operation and maintenance requires adequate financial resources, and in the current inflationary environment this in turn requires frequent tariff adjustments. Revenues are today hampered by a high percentage of unaccounted for water, which could be decreased in the future through leakage repair programs and improved collection of bills. However the extent to which the municipal authorities influence decision making at the utility level is high, and is sometimes motivated by short term political concerns. For these reasons, the sustainability of the project's achievements remains an open question. 13. Bank support for urban development is certainly appropriate in Turkey in view of a large backlog of unmet needs and a high growth rate of population, particularly in medium-size cities. Three key components for the success of such operations are: (i) political commitment to implement those reforms necessary for efficiency and sustainability; (ii) local ownership; and (iii) focused objectives and simplicity of project design. w IMPLEMENTATION COMPLETION REPORT REPUBLIC OF TURKEY CUKUROVA URBAN DEVELOPMENT PROJECT (Loan No. 2819-TU) PART I. PROJECT IMPLEMENTATION ASSESSMENT A. Objectives and Project Description - Evaluation of Objectives 1. The Cukurova Urban Development Project (CUDP) was primarily designed to help the Government of Turkey to meet the urban growth challenge in the south region of Cukurova by devolving responsibilities for municipal investments to local governments. A prior operation, the Cukurova Urban Engineering Project (CUEP), approved in 1985, had resulted in the preparation of infrastructure and urban areas expansion designs. It had also included proposals for strengthening local government's capabilities and for introducing changes in the functions of local governments vis-a-vis those of central government institutions. Two years later, CUEP developed into CUDP which was to implement CUEP proposals in five municipalities of the Cukurova region: Adana, Ceyhan, Iskenderun, Mersin and Tarsus. Land development and infrastructure would be financed by the loan, with a strong involvement of local authorities. 2. According to the Staff Appraisal Report (SAR), dated April 17, 1987, the project objectives were to: (a) assist the municipalities of Adana, Mersin, Tarsus, Iskenderun, and Ceyhan to overcome service deficiencies and manage urban growth through the financing of urban infrastructure; (b) introduce municipal policies and institutional arrangements which would be suitable for replication in other Turkish cities, for investment planning and implementation, cost recovery, financial management, and staff development; and (c) build up a capacity in Iller Bank to appraise and monitor municipal infrastructure projects and investments programs. At that time, Iller Bank designed and implemented projects on behalf on municipalities, financing them with resources derived from the municipal share of national revenues. Under these arrangements local ownership was low, and the incentives were to overdesign projects. CUEP sought to transform Iller Bank into a development bank that would appraise the financial and economic viability of projects but would not design or implement them. CUDP was to finance the technical assistance and the computer system needed by Iller Bank to transform itself. The SAR also provided a detailed description of the US$467 million infrastructure program to be financed under the project. This program was broken up into eight components: urban expansion areas (UEA), housing management areas, gecekondul upgrading, water supply, sanitation, drainage, 1 Spontaneous and uncontrolled housing development 2 solid waste management and transportation. Construction of this infrastructure appeared in the Loan Agreement as an explicit objective of the project. 3. However, two years after loan signature, only two work contracts had been signed and the project was rated highly unsatisfactory. Therefore, in 1991, the Government and the Bank agreed that the only viable course was to set more limited objectives for the project and to drastically reduce and restructure its physical components. The loan was downsized from US$120 million to US$28.5 million by focusing on the civil works which had already been started. Restated objectives, as described in the amendment to the loan agreement dated August 9, 1991, were to: (a) assist the municipalities to overcome service deficiencies and to manage urban growth; and (b) finance certain specific municipal investments under appropriate institutional arrangements for planning and implementation, cost recovery and financial management. 4. Although the original objectives were sound, they were overly ambitious and had not been adequately discussed with, nor endorsed by, the municipalities and Iller Bank. Municipalities lacked experience in planning and implementing their own investments. They were unable to assimilate such an ambitious, complex, and multisectoral institutional reform program in the time frame that was allocated. The proposed institutional schemes required close and effective coordination to overcome the fragmentation of authority on the issues expected to be addressed. Because the investment program was double the size recommended at an earlier stage in CUEP (US$ 211 million), designs were incomplete at the beginning of the project (e.g. gecekondu upgrading areas), and the program exceeded the financial capacity of the municipalities. Moreover, Adana and Ceyhan were not convinced that their interest was to be part of the project for good reasons: until then, municipal works had been largely constructed by Iller Bank, using tax participation revenues, and had not imposed a debt-servicing burden on the municipalities; so the notion of borrowing on market terms was very new and its advantages debatable. Finally, Iller Bank did not agree upon its new proposed role of financial intermediary. Until today, Iller Bank has kept its dual role of both designing works and contracting them out, handing over to municipalities a "finished product", and intermediating in a mandatory fashion tax participation revenues. Iller Bank wished to retain its control over public works engineering and implementation, while keeping the municipalities dependent on it. Iller Bank being the implementing agency, it should have been expected that the project would run into difficulties. 5. After project restructuring, the revised objectives were achievable but too modest to provide the necessary infrastructure for cities experiencing rates of growth of 6% per year. The new loan objectives had the advantage of being realistic and to transform the Cukurova Urban Development Project into a partial success. They, however, were an incomplete answer to the challenge of urban growth. B. Achievement of Objectives 6. The project achieved only partially its original objectives. National regulations and lack of a political consensus to change them constrained municipal administration strengthening (see para.7). Iller Bank remained focused on implementing civil works, rather than appraising projects. Many investments originally planned were not completed under the project. The degree of achievement varied, depending on the municipalities and the sector involved. Investments 3 implemented by Tarsus represent 40% of the initial figure of the SAR, whereas Ceyhan did not stay within the project. Water and sanitation primary infrastructure investments were built to a great extent in the municipalities that remained part of the project, whereas gecekondu upgrading was not carried out. The restructured project was implemented as agreed, except the road component in Mersin, which was a relatively minor component 7. Sector Policies - Negligible Achievement. The project sought to increase the role of local governments in the provision and financing of local infrastructure. This goal has been supported by the Ministry of Interior for the last ten years. However, its achievement is still constrained by a number of regulations: municipal investments have to be approved by SPO; the municipalities are not free to hire high level staff who could be responsible for planning and implementing infrastructure at market salaries; cost recovery policies are limited by regulations and pricing decisions are influenced by short-term political concerns; finally, the amount of financing that the municipalities can borrow to finance local infrastructure is severely constrained. 8. Financial Objectives - PartialAchievement. Municipalities subscribed to the concept of cost recovery, but failed to fully adopt it: revenues raised through water and sanitation tariffs and local contribution to investments remain insufficient to finance the infrastructure investments needed. Major financial objectives were for the municipalities to be able to (i) mobilize enough funds from different sources to finance land development and infrastructure, (ii) finance their share of investments through surpluses of the recurrent budget and the existing revenue-sharing programs, with loans from Iller Bank remaining at the same per capita level, (iii) appraise the projects and elaborate three year investment programs, and (iv) implement sound cost recovery policies. Mobilizing financing was never the major constraint of the project, except for land acquisition. There was no lack of funds, either from Iller Bank, or from the municipalities to finance their part of the project. The other aims were much more difficult to achieve. The first years of project implementation demonstrated that, without appropriate accounting system, it was nearly impossible to appraise projects financially and to implement cost recovery policies. Moreover, municipalities and PRIMU were not familiar with these concepts. Housing Urban Development Companies (HUDCs), which were in charge of developing infrastructure for urban expansion areas on a self- financing basis, largely ignored them. During restructuring, the objective of an annual increase of water tariffs of 10% above inflation was covenanted, which made financial targets easier to monitor. Mersin and Iskenderun satisfied this requirement, whereas Tarsus, which had the highest tariffs, did not. 9. Institutional Development - Negligible Achievement. Municipalities gained valuable experience through project implementation, but municipal strengthening was not conducteL to the extent expected under the project. Law No 2560 has established independent water and sanitation departments in Mersin and Adana, whereas elsewhere they were reintegrated within other municipal services. The project recommended to recruit about 200 high level staff for the five municipalities, but existing regulations constraining the number and the salaries of high level staff made it impossible. Therefore, the key function of planning and budgeting investments is still not adequately staffed. The project also recommended a new accounting system. After long discussions, the Ministry of Interior finally implemented its own new system. The municipalities were not pleased with the training financed under the project, arguing that the consultants had not tailored it to their needs. However, implementing the Cukurova Urban Loan Development project gave to the municipalities some practical knowledge of project management, procurement and supervision ail this will be a positive outcome of the project. 10. The project did not transform Iller Bank into a development bank. Staff and managenwnrt 4 of Iller Bank, most of them engineers, whose career are linked to its traditional operations, did not understand and were generally hostile to such a concept. CUEP suggestions were never discussed during the project implementation and this objective was dropped during the restructuring phase. Presently, Iller Bank management is exploring some changes to its role and functions, to align it closer to those of a development bank, and recently the Bank has restarted its dialogue with Iller Bank on the subject, though no new lending through them is planned. 11 Physical Objectives - Partial Achievement. Physical objectives were partially achieved. Investments were financed in Mersin (US$27 million instead of $109 million forecasted in the SAR), Iskenderun (US$14 million instead of $62 million), and Tarsus (US$16 million instead of $51 million). Investments were not financed in Ceyhan and Adana although in the SAR both municipalities had appeared with a significant share of the project (US$172 million). The investments were mainly used for urban expansion areas (235 ha developed in Mersin and Tarsus at a cost of US$10 million instead of 445 ha at a cost of US$54 million planned in Mersin, Tarsus and Iskenderun), water and sanitation (US$35 million instead of $64 million, comprising a stabilization pond in Tarsus, a sea outfall in Mersin, and 104 km of main sewers and pumping stations), solid waste management, drainage and roads (US$9 million instead of $45 million, comprising solid waste equipment and a bridge in Tarsus). Some of the infrastructure planned was built outside CUDP financing between 1988 and 1991. Urban expansion areas in Mersin and Iskenderun were developed with Mass Housing Fund subsidies and financing; the high density blocks built did not match the low income people affordability criteria of the SAR. Iller Bank built a sewerage network in Ceyhan and Adana, outside the project, incompatible with CUEP designs. 12. Economic Rates of Return. Economic rates of return (ERR) had been calculated in the SAR for water and sanitation, urban expansion areas, and transportation components. For water and sanitation, benefits were estimated as the marginal value of incremental water consumed, plus access benefits paid in the form of connection fees. Ex post evaluation in the case of Mersin shows an internal rate of return of 7.15%, versus an initial estimation of 8.9%. This ex post evaluation following the SAR methodology is meaningless in the case of Tarsus and Iskenderun, where, due to constraints on water resources, water sales with the project are lower than estimated water sales without the project. For urban expansion areas, ERR represented 15.6% in Mersin and 9.4% in Tarsus, and were calculated by comparing the value of the equipped and non equipped land (rentals values giving a proxy for land values). Ex post evaluation for Mersin suggests ERR of 22%, but part of it is probably due to a general increase in the value of land. Ex post evaluation for Tarsus could not be calculated for lack of precise data. ERR for transportation investments, originally 28% on average, have not been recalculated ex post in the absence of traffic data. ERR for the other components of the project were not estimated in the SAR. By and large, the view of the municipal authorities and the available information are consistent with the view that the physical components that were implemented were economically justified. C. Maior Factors Affecting the Project 13. Project Restructuring. At the end of 1989, the project was rated highly unsatisfactory. Disbursements from the special account only amounted to less than US$1 million in June 1989, more than two years after project approval. The poor record in project implementation had several origins: (a) The ownership and support for the project were weak: SPO strongly supported the project. SPO had however employed consultants to prepare the project and then handed it over to the municipalities and the Project Management Unit who had not 5 been deeply involved in the preparation. In 1989, elections resulted in local leadership who had been campaigning against the project and had not a good knowledge of the project. In summary, there was a total lack of ownership by the supposed beneficiaries; (b) The Government of Turkey did not approve key reforms necessary for the project's success, such as the possibility for the municipalities to adopt the Bank's procurement rules (allowing exceptions to Turkish Law 2886), to implement new accounting practices and to hire high level staff at market salaries, and did not press Iller Bank to reform itself. Controls remained over local decisions on finance, investments, procurement, and staff employment; (c) Iller Bank was expected to play a key role in project implementation, largely acting as an apex institution to which the Bank would delegate some of its supervision responsibilities. However, Iller Bank's top management was opposed to the project, and did not adequately staff and organize PRIMU at the beginning of implementation. Iller Bank added to the existing constraints in project funding by deducting the cost of project management from the share of government revenues to be given to municipalities, or by offering to municipalities less favorable onlending conditions than those they could obtain for Iller Bank implemented projects. PRIMU was never in a position to coordinate the various investment projects of the municipalities, and to prevent the implementation of projects which were incompatible with CUDP. PRIMU did not prevent Adana and Ceyhan from choosing solutions for sewage which were not compatible with the project design. The Mass Housing Fund financed a number of high density development in Mersin in contradiction with the project guidelines. Project management difficulties were exacerbated by conflicts between PRIMU and the consultants it had hired for the municipal projects at the beginning of the implementation phase. PRIMU confined the consultants to report writing and often duplicated their work; and (d) The size of the project had nearly doubled during project preparation and some of the designs and documents were not completed or had not yet been approved when the loan was signed. Gecekondu upgrading areas designs had not yet been available. Land acquisition had been expected to be done in three months, while experience worldwide shows that it is generally a long and difficult process. The Bank must be faulted for allowing this, since it should have been evident that it would result in implementation problems and delays. 14. In 1990, the World Bank and the Borrower considered options to improve performance and decided not to cancel the project but to drastically restructure and downsize it. They agreed that the investment program would concentrate on on-going contracts and high priority items at an advanced stage of preparation. The loan amount was reduced from US$120 million to US$28.5 million. Ceyhan municipality then withdrew from the project. The "area-based urban development" components were dropped, except 235 ha of urban expansion for which contracts had been signed before restructuring. After restructuring, the project was satisfactorily implemented, although with some delays. The total cost of the project is slightly lower than expected (US$62 million versus US$69 million), because some civil works contracts (Mersin roads and secondary sewerage network) were not financed under the loan. On the other hand, the goods purchased under the loan (US$13.7 million) represent a higher share than originally forecasted (US$7.6 million plus contingencies). The restructuring advanced the original closing date from June 30, 1995 to June 30, 6 1993, but lengthy custom clearances and bad weather conditions delayed implementation of the Mersin sea outfall. As a result, two one-year extensions of the closing date were subsequently necessary. D. Sustainability 15. Uncertain. Due to the effective participation of the municipalities in the operation of the investments financed under the loan', unless unforeseen financial constraints arise, it seems likely that the project would maintain its achievements, which as noted earlier are modest. The equipment financed under the loan is performing adequately, except the leaking detection equipment. The civil works are also working well, in spite of some minor flaws (the sewage system in Mersin is not totally separated and would require a grit chamber; the diluted effluent arriving at Tarsus pond shows groundwater intrusion into the sewers). However, the ability of the municipalities to cover cost of operation and maintenance and to finance the remaining investments (especially the secondary sewerage collection network at a cost of US$50 million in each city) remains an open question and will be a key issue to ensure future sustainability of the project; due to the high pace of inflation and the influence of short term political considerations in pricing decisions, the risk of an erosion of utility revenues in real terms remains a permanent concern. 16. There is no sewerage treatment plant in Iskenderun and Mersin (the sewerage is discharged into the sea through an outfall in Mersin, without outfall in Iskenderun). Both municipalities envisage constructing a treatment plant in the future. Mersin has earmarked and reserved the land necessary for the construction of this plant. Tarsus, Mersin and Iskenderun have also projects to create landfills (at a cost of US$25 million). In the coming years, Mersin's composting plant and current landfill will be surrounded by housing units. Mersin has planned to create a common landfill with Tarsus, which has none. The urban development areas financed under the project are currently constructed and there is no problem of integration with the other parts of Tarsus and Mersin. E. Bank Performance 17. Project Identification: Satisfactory. The Bank correctly diagnosed and identified the critical need to address deficiencies in municipal infrastructure and management, as well as some of the policy issues affecting the efficiency of investments in municipal infrastructure, at a time when there was high level political support for decentralization. The Borrower strongly supported the project and saw this as the way to totally transform municipal finance. The project had the potential to yield large benefits. 18. Project Preparation:Deficient. During preparation, the Bank did not identify the key issues that needed to be addressed to achieve project success. The Bank should have conditioned its approval of CUDP to implementation of key institutional reforms, including reform of Iller Bank. In addition, municipal reorganization plans and municipal accounting changes should have been required early on, and procurement issues should have been resolved before Board presentation. Although this was considered, it was felt at the time that such a delay would risk losing the interest of the municipalities. However, the interest of the municipalities was already uncertain, given the time spent (3 years) in the preparation of the project, and their lack of direct involvement in project design. The size of the project doubled during its preparation, from US$211 million to US$420 million, without adequate consideration of the added complexity and ensuing risks this caused, resulting in several components remaining at an early stage of preparation. The Bank did not involve Iller Bank, the future executive agency for CUDP, in the preparation of the project, and this 7 resulted in lack of ownership once the project was approved. 19. Project Appraisal: Deficient. During appraisal the Bank did not take into account the various risks that could affect the project, and as a result did not suggest measures to contain or mitigate them. The Bank was overly optimistic about the pace at which the project could be implemented, including the Government's ability to promote institutional objectives such as municipal reorganization, new accounting systems, and reform of Iller Bank. The Bank also overestimated the capacity of all the agencies involved, and in particular of the municipalities to implement such a complex project. The Bank should have adjusted the objectives and the scope of CUDP and its administrative arrangements to reflect the high risks it identified before and during CUEP. The SAR noted the difficulty of making simultaneous improvements in several fields in five municipalities, the risk that the project management unit staffed by Iller Bank would not be able to fulfill its key role, the political risks relating to the municipalities' commitment to project objectives and the Central Government commitment to decentralization. In reviewing CUDP, the Loan Committee felt that the project design developed under CUEP was too ambitious and that fewer components could still provide the desired municipal focus but the project was not substantially reshaped. While these institutional and managerial risks were recognized, it was felt that reducing the number of components or the size of the project would compromise the operation's urban identity, the scale of the Bank loan, or the need for a highly visible operation to increase the probability of replication. Deleting the UEA component might have jeopardized some mayors' interest in CUDP given their strong interest in housing investments. 20. Supervision: Satisfactory. The Bank identified early the difficulties of the project and adequately chose with the Borrower to restructure it. Bank supervision missions adequately warned management that the project was not being implemented as expected. Implementation problems such as the lack of commitment of Ceyhan and Adana to the project, or the tense relationship between Iller Bank and its consultant were adequately reported. The supervision missions, however, did not succeed in speeding up project implementation but it would not be reasonable to fault them for this, as it probably was not possible. Restructuring the project was the right decision, as shown by the difference in the course of the implementation before and after the restructuring took place. Since the project was restructured, relationship with the implementing agency improved, disbursements followed plans although with a slight delay, and the smaller project was successfully implemented. The Resident Mission contributed to the success of this restructured project by assisting the five successive task managers at Headquarters to supervise the implementation and to review procurement matters. No significant deviations from the Bank rules regarding procurement or disbursements occurred during the life of the project. F. Borrower Performance 21. Preparation of the Project: Deficient. The Project Coordination Unit (PCU) in charge of project preparation failed to build a consensus and a stakeholder commitment around CUDP. Although it was under the responsibility of the State Planning Organization, it was entirely staffed with consultants who did not manage to operate through the steering committee which had been established to control CUEP. The PCU did not manage to obtain either Government's approval of municipal reorganization plans, new accounting standards developed during CUEP, or a reform plan for Iller Bank, thus compromising key institutional objectives. However, the decision to demobilize the PCU and transfer the full responsibility to Iller Bank was premature, particularly in the absence of an agreed reform program or oversight for Iller Bank itself. 22. Project Implementation before Restructuring: Deficient. The Project Management Unit and 8 the municipalities were not able to get the project off the ground. PRIMU was staffed with Iller Bank's personnel who had not been involved in the preparation of the project and whose management was not committed to the success of the operation and resented the programmed transformation of Iller Bank role. In the meantime, the municipalities had difficulties in transforming themselves by recruiting adequate staff, reorganizing their administration, adopting new accounting principles, and creating housing and water and sanitation entities. Adana and Ceyhan had to be convinced to participate in the project. PRIMU maintained poor relationships with the municipalities, which were making Iller Bank responsible for the slow implementation of the project. Iller Bank also had conflicts with the consultants it had hired and terminated their contract at the end of June 1990 in a very abrupt way. 23. Project Implementation after Restructuring: Satisfactory. Since the restructuring, local municipal coordinators and new people in the Project Management Unit succeeded in implementing the project in a satisfactory way. Contractors' and consultants' work was satisfactory. Counterpart funding was provided in due time. The Government provided audits of the accounts. PRIMU has played its role of coordinating, accounting and supervising the project. However, a geographical relocation of PRIMU to Adana and a redefinition of PRIMU's tasks after restructuring would have helped to better monitor the performance of the project. G. Assessment of Outcome 24. Overall Rating: Unsatisfactory. Rated according to its original objectives, and in spite of partial achievements under the restructured loan, the Cukurova Urban Development Project results are unsatisfactory. It failed to achieve major objectives, i.e.,development of a replicable model for urban development and provision of services financed by local resources, the transformation of Iller Bank into a development bank, and the participation of Adana and Ceyhan municipalities in the project. H. Future Operation 25. Operation Plan. The operational plan focuses on water and sanitation, which is where most of the funds under the restructured project were invested. The following matters will remain a source of concern: (a) Independence of water and sanitation departments: in Mersin, MESKI has been created under Law 3030, providing an autonomous organization for water and sanitation services. In Tarsus and Iskenderun, the water and sanitation departments are part of the municipal services. However, in the three cities, the concern refers to possible political interference in day to day decisions; (b) Efficiency of water supply and sewerage department: the number of staff per 1,000 connections is around 3 in Mersin, and 4.4 in Tarsus and Iskenderun. Such figures and other performance indicators should be monitored regularly and compared to other municipalities. Antalya and Mersin will provide comparisons of private sector achievements; (c) Preparation of budgets and tariff adjustments: budgets for the coming years, should be carefully prepared (capacity to do this is weak), and tariff adjustments calculated to finance operating costs, maintenance costs and debt services. Due to the high pace of inflation, frequent adjustments will be necessary; 9 (d) Network management: network mapping is a necessity, and measurements of flows and concentration in the sewerage network would provide useful indications regarding the performance of the network, possible leakages of sewerage outside the network, or intrusion of clean water within the sewerage network; (e) Consumer register updating and billing collection: in order not to loose revenues, it is necessary to update periodically the consumer register and to check the accuracy of meters; and (f) Reduction of losses: given the figure of unaccounted for water (around 50%) in the three cities, a leakage detection and repair program is probably economically well justified. 26. Follow-up by the Bank. No follow-up operation is planned by the Bank in Mersin, Tarsus, and Iskenderun, whereas Adana is one of the cities selected for a low income housing project under preparation. Monitoring further the limited outcomes of the Cukurova Urban Development Project does not appear to be a priority. I. Key Lessons Learned 27. Ensure Local Project Ownership. In the case of projects involving local governments, the Bank should make sure of their ownership of the project. For this purpose, the local governments should be involved in the preparation of the project, and they should benefit from their participation in the project. The implementation agency should also strongly be committed to the success of the project. 28. Appraise the Risks, and Seek to Contain and Mitigate Them. Appraising the risks that may affect a project should not be limited to identifying them, but also requires assessing the likelihood of their occurrence. If the risks are too high, the project design must be adjusted to reduce them. One way of reducing risks is to require that important actions involving legal or institutional changes be made before the project is presented to the Board, or to divide the projects into several successive projects, each one focused on more limited specific issues. 29. Strive for Simplicity. This project demonstrates that simple projects have much better chances of success than complicated ones. Trying to change everything at once, as, to a large extent, the original CUDP sought, proved to be unattainable. The original project was complicated because it was multisectoral (main utilities, urban development, and transportation), dealt with five cities, and sought to implement reforms at two tiers of administration (national level, where Iller Bank was specially concerned, and municipal level). The current approach of single sector projects is more effective, although it does not address all the diagnosed problems at once. 30. Do not Hesitate to Restructure an Unsatisfactory Project. Rather than sticking with the original overambitious goals, that were highly unlikely to be achieved, the downsizing of the project enabled the Borrower and the Bank to achieve partial goals. Preparing an action plan for unsatisfactory projects is a first step to implement this policy. 10 PART II. STATISTICAL TABLES Table 1: Summary of Assessments Table 2: Related Bank Loans/Credits Table 3: Project Timetable Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual Table 5: Key Indicators for Project Implementation Table 6: Key Indicators for Project Operation Table 7: Studies Included in Project Table 8A: Project Costs Table 8B: Project Financing Table 9: Economic Costs and Benefits Table 10: Status of Legal Covenants Table 11: Compliance with Operational Manual Statements Table 12: Bank Resources: Staff Inputs Table 13: Bank Resources: Missions 11 Table 1: Summary of Assessments A. Achievement of objectives Substantial Partial Negligible Not Applicable Macro policies EO O O Sector policies O O LI Financial objectives O LI O Institutional development l l L Physical objectives OI LI l Poverty reduction l 0I 0 Gender issues nI 0I Other social objectives Environmental objectives l PI O Public sector management 0 0 0I Private sector development 0 0 0 Other (specify) L EI EI B. Project sustainability Likely Unlikely Uncertain l 0I nx C. Bank Performance Highly Satisfactory Sitisfactory Deficient Identification 0 L O Preparation assistance O OI nx Appraisal l L l Supervision LI 19 O D. Borrower performance Highly Satisfactory Salisfactory Deficient Preparation E] l F Implementation l FRI Covenant compliance 0 LI E. Assessment of outcome Highly Satisfactory Satisfactory UnsatisfactoryHighly Unsatisfactory L 0 -O 12 Table 2: Related Bank Loans Year of Loan Title Purpose Approva [ Status Preceding Operations Istanbul Sewerage I To expand and improve sewage collection in 1982 Closed. (LN. 2159-TU) Istanbul; to reduce water pollution in the Golden Horn and the Sea of Marmara; and to strengthen the institutional framework of ISKI. Cukurova Region Urban To identify and design investments for five 1985 Closed. Engineering Project municipalities in the Cukurova Region; to (LN. 2537-TU) develop complementary policies and national, rei,ional and local institutional mechanisms to support decentralization, achieve integrated regional and urban planning and improve urban efficiency. Izmir Water Supply and Sewerage To assist in establishing an autonomous water 1987 Active. (LN. 2818-TU) and sewerage authority for Izmir; to encourage appropriate cost recovery policies; to correct deficiencies in and expand the capacity of Izmir's water and sewerage systems; and to bring about environmental improvements and reduced health hazards by eliminating open flows and untreated sewage in the city and the discharge of untreated sewage to Iziir Bay. Subsequent Operations Istanbul Water Supply and To improve and extend sewerage service to 70% 1987 Sewerage of the population of Istanbul by the end of 1994; (LN. 2888-TU) to provide for appropriate treatment and disposal of sewage, to protect the water and shoreliness of the sea of Marmara and the Bosphorus; to reduce unaccounted for water; and to strengthen ISKI's operation and maintenance and industrial waste management capabilities. Ankara Sewage To eliminate the discharge of untreated sewage 1989 Active. LN. 3151-TU) to the Ankara River and its tributaries flowing through Ankara; to extend sewerage to approximately 850,000 unserved persons; to reduce flooding during heavy rainstorms; and to improve ASKI's operations and maintenance. 13 Table 2: Related Bank Loans (cont'd) Year of Loan Title Purpose Approval Status Earthquake Rehabilitation and To reconstruct essential housing, infrastructure 1992 Active. Reconstruction and other facilities to restore economic activity (LN. 3611-TU) in the affected areas. Bursa Water and Sanitation To improve environment conditions and reduce 1993 Active. (LN. 3565-TU and health hazards in the Great Bursa; to improve LN. 3566-TU) the management of municipal water supply, sewer services, and of domestic, industrial and clinical solid waste; to meet the demand for water supply, sewerage, flood protection, and solid waste services including the demand of the poor living in the fringes of the city; to postpone the need to develop new water resources by increasing the efficiency of water usage by and reducing the volume of non-revenue water; and to implement appropriate cost recovery policies. Antalya Water Supply and To meet at least cost the demand for water 1995 Active. Sanitation supply, sewerage and stormwater drainage; to (LN. 3893-TU) develop new institutional arrangements for management of water supply sewerage and stormwater drainage and to introduce private sector participation in the operation of the services; to implement appropriate cost recovery policies; to postpone the need to develop costly new water resources; and to improve environmental conditions. 14 Table 3: Project Timetable Date Date actual/ I. Steps in Project Circle Planned latest estimate Identification (Executive Project Summary) 03/84 03/84 Preparation 84- 86 84 - 86 Appraisal 10/86 10/86 Negotiations 04/87 04/87 Board presentation 05/87 05/87 Signing 06/87 06/87 Effectiveness 09/87 01/88 Restructuring - 08/91 Project completion 06/94' 06/95 Loan closing 06/952 06/95 Table 4: Loan/Credit Disbursements: Cumulative Estimated and Actual (US$ thousands) Appraisal Actual As IBRD Fiscal Year Estimate Actual Percentage of (US$ thousands) Estimate 1988 14.0 10.16 73 1989 33.5 10.16 30 1990 55.5 11.84 21 1991 78.0 11.84 15 1992 96.5 19.16 20 1993 109.5 23.82 22 1994 118.0 27.50 23 1995 120.0 28.50 24 Date of Final Disbursement: May 11,1995 12/92 after restructuring 2 06/93 after restructuring 15 Table 5: Key Indicators for Project Implementation Estimated Actual Original After Restructuring 1. Key Implementation Indicators in SAR Not precisely defined. The SAR mentions: 1. Project costs (US$ 467 69 62 million) 2. Outputs e.g. Mer: 82%; Tar: 83%; N.A. Mer: 83%; Tar: 98%; population Isk: 98% Isk: 100% connected to water (%) Population connected Mer: 34%; Tar: 14%; N.A. Mer: 89%; Tar: NA; sewerage (%) Isk: 34% Isk: 15%' km primary water supply 125 N.A. 25 network km primary sewerage 115 N.A. 104 network 3. Number of contracts 475 41 39 signed 4. Number of Ha. of urban expansion 471 235 235 areas Iskenderum sewerage network was redesigned completely. The percentages of people connected to the network are not comparable. 16 Table 6: Key Indicators for Project Operation Estimated Actual I. Key operating indicators in SAR No key indicators were established at the time of appraisal. II. Modified indicators (f applicable) 1. Water tariffs (domestic 2nd bloc)' Mersin: US$0.24 Mersin: US$ 0.63 Tarsus: US$ 0.26 Tarsus: US$ 0.38 Iskenderun: US$ 0.27 Iskenderun: US$ 0.28 IlI. fodifted indicators for furure operation (if applicable) 1. Water production' Mersin: 40,000,000 m3 Tarsus: 11,442,000 m3 Iskenderun: 10,000,000m3 2. Water Sales' Mersin: 23,600,000 m3 Mersin: 18,600,000 m3 Tarsus: 8,530,000 m3 Tarsus: 4,970,000 m3 Iskenderun: 10,610,000 m3 Iskenderun 6,200,000 m3 3. Unaccounted for water (%)7 Mersin: 42% Mersin: 53% Tarsus: 31% Tarsus: 52 % Iskenderun: 27% Iskenderun: 45% 4. Water and Sewerage Operating Mersin: 681,000 (1995 US$) and Maintenance Costs Tarsus: 392,000 Iskenderun : NA 4 US$1995 value 5 1994 figures 6 Estimated figures are those of the economic analysis (1986); actual figures are 1994 figures. 7 Idem 17 Table 7: Studies Included in Project Purpose as defined at Study appraisal/redefined Status Impact of study 1. Oceanic Survey (Iskenderun) Improve outfall location Completed Assessment of outfall impact 2. Oceanic Survey (Mersin) Improve outfall location Completed Assessment of outfall impact 3. Hydrologeological Survey Find water resources Not (Iskenderun) Completed 4. Hydrogeological Survey Find water resources Completed Improved water (Iskenderun) supply 5. Hydrogeological Sur\ey (Adana) Find water resources Not Completed 6. Hydrogeological Survey (Mersin) Find water resources Not Completed Table 8A: Project Costs Appraisal estimate after Appraisal estimate restructuring Actual/latest estimates (US$ million) (US$ million) (US$ million) Item Local Foreign Local Foreign Local Foreign Costs Costs Total Costs Costs Total Costs Costs Total 1. Area-Based Infrastructure 125.7 37.0 162.8 6.8 3.3 10.1 7.2 3.4 10.6 2. Citywide Infrastructure 149.9 76.4 226.2 27.6 21.1 48.7 23.0 22.9 45.9 3. Iller Bank, Technical Assistance Project 5.3 3.8 9.1 2.5 1.8 4.3 2.5 1.8 4.3 Management 4. Training 1.2 0.9 2.1 0.3 0.4 0.7 0.6 0.4 1.0 5. Contingencies 44.0 16.8 60.8 4.0 1.9 5.9 Tol 3 Total 329.8 137.6 467.4 41.2 28.5 69.7 33.3 28.5 61.8 19 Table 8B: Project Financing Appraisal estimate Actual/latest estimates (US$ million) (US$ million) Source Local Foreign Local Foreign costs costs Total costs costs Total 1. IBRD 0.0 120.0 120.0 0.0 28.5 28.5 2. Electricity and Telecommunication 42.5 8.0 50.5 Authorities 3. Government 37.4 9.6 47.0 4. Development Support Fund 11.5 0.0 11.5 5. Iller Bank 104.6 0.0 104.6 18.2 0.0 18.2 6. Beneficiaries 47.8 0.0 47.8 7. Internal cash Generation 11.2 0.0 11.2 8. Municipalities 74.7 0.0 74.7 15.1 0.0 15.1 Total 329.8 137.6 467.4 33.3 28.5 61.8 '1'яЬ1с 9А: Econonlic Rate c►f Кс(игп �Valcr апд Sanitatiun - Mcrsin WATER AND 5AN1TAT10N - MEFSIN ECONOMIC RARE OF RETURN Sa1es 5а1вв Teriff Dilterence О eretin О eretin Diffsreпce Diflerencs lnvsetm. Other Tote1 Connsction Bsneffc Withouc With in Совt Совt О eretiп О eretionel finenced lnveetm. lnvstt fees lоввев Рго'ect Рго'ect Sв1ев (С1 With Without Coвts lпсоте ипдег (т3/ eer) 1т3/ ввr) (USi) Рго'ect Рго'ect (USt) Рго'ect 19В7 12,В00,000 1988 12,480,000 1989 72 788,Оо0 14 219,091 0.11 225,820 177,000 151,488 25,532 200,088 32,000 23В,000 288,000 52,000 -15,912 199о 11,вез,еоо 1а,sез,ео7 о.11 эsz 5б1 zзs,ooo 1ее,ое7 ае,sзз эоз,бzе о э5о,ооо эsо,ооо 15е,ооо 1о9 е2е 1991 11,587,205 13 7Э2,291 0.28 554,282 420,000 353 781 88,219 488,043 1,992,000 2,485,000 4 477,000 220,000 -3,7ВВ,957 1992 11,278 025 15 09е,аа2 о.г7 1,оза,�91 аа2,ооо эзо,гоз 111,797 s22,9s4 з 7se,ooo 7,ase,ooo 1 t,252 000 21а,ооо .1o,11s,ooe 1993 10,998,074 15,498,024 0.48 2,180,93б 580,000 Э97,328 182,б72 1,998,284 11,824,000 17,б15,о00 29,239,000 233,000 -27,007,73б N � t9sa 1о,721,172 1е,еlе,аоэ о.ао з,1sе,892 ееl,ооо зs2,las zee,e5s 2,е7о,оз7 5 s�з,ооо а,5lа,ооо 1а,ов7,ооо 221,ооо -1o,ss5,seз 1995 10,453,143 18 989,603 0.50 4,302,370 694 577 382 342 312 238 3,990,140 1 825,000 799 000 2 б24,о00 О 1,збб,140 199е 10,191,81В 19 360,803 0.50 4 б21 170 708,155 з72,783 335 371 4,285,799 0 0 0 4,285,799 1997 9,937,019 19 732,003 0.50 4,93б,б72 721,732 Э83,484 358,2б8 4,57В,403 0 0 0 4,578,403 1ss8 9,eaв,ssa го 1оз 2о2 о.5о s zae,seз �з5,з09 з5а,з77 зе0,9зz а,8ее,озl о а о а,еев,озl 1999 9,448,379 20,474,402 0.50 5,55В,124 748,880 345,517 403,389 5,154,755 0 0 0 5,154,755 2000 9,210,219 20,845,802 0.50 5,В84,23Э 782,4б4 338,ВВО 425,584 5,43В,б49 0 0 О 5,4Э8,б49 2оо1 e,97s,9ea 21,21б,ео2 о.5о е,1б7,эее 77е,оа1 зzе,а5е а47,sез 5,719,7вэ s,71s,7вз 2002 8,755,4б5 21,5ВВ,002 0.50 б,4б7 599 789,б1В 320,248 489,Э72 5,998,227 5,99В,227 2003 8 538,578 21,959,202 0.50 8,785,002 803,195 312,240 490,955 8,274,047 8,274,047 2оо4 8,э2э 1е4 22,ээоаоl о.5о �,os9,eaa 81е,77э эоа,аза s12,ээ9 e,sa�,эos е,547,эо9 2005 8,115,085 22,701,801 0.50 7,351,б04 830,350 299,823 5ЭЗ,527 8,В1В,078 б,В18,078 2008 7,912,207 23,072,801 0.50 7,840,939 843,927 289,403 554,525 7,0В8,414 7,088,414 2007 7,714,402 23,444,001 0.50 7,927,718 857,505 282,187 575,337 7,352,3В1 7,352,381 2оое 7,521 542 гз е15,2о1 o.so е,гlг,ооа е71,ое2 27s,113 5s5,9ee 7,вlе,озs 7,еlе,оэs 2009 7 333,504 24,188,401 0.50 8,493,880 884,859 288,2Э5 б18,424 7,877,438 7,877,438 2о1о 7,1so,lae 2а,557,боо о.5о е,7�з,за7 еsе,2зе 2вl,sзо езв,7о7 а,lзе,бао е 1зе,вао 2о11 e,s71,a12 2а,92е,воо о.5о s,o50,52a 911,81а 254,s91 б5е,е22 е,эsз,701 е зsз,7о1 2o1z е,797 127 25,зоо,ооо о.5о 9,зzs,aa8 s25,зs1 2ае,в17 б7е,77а в,ва8,в7а е,вае,б7а tvгibгг�iv�.. д�:ё. :; tiittk: � � :::: � :: �:�:;�::;;:>:::;::: �;::>;>:::;;:; ..:1 � 21 Table 9B: Economic Rate of Return Urban Extension Areas - Mersin URBAN EXTENSION AREAS - MERSIN ECONOMIC RATE OF RETURN Value of Value of Benef it/ Year Investments Unserviced Serviced Loss (1995 US$) Land -Land 1 (1995 US$) (1995 US$) 1989 1,424,000 1069000 0 -2493000 1990 2,332,000 0 0 -2332000 1991 1,846,000 0 0-1846000 1992 821,000 0 11000000 10179000 ..... .. ... [Ec: cAdta 2%1 22 Table 10: Status of Legal Covenants Original Revised Agree- Covenant Fulfilment Fulfilment Description of ment Section Type Status Date Date Covenant Comments LA 2.02 Accounts C 06/12/87 Special Account in Central Bank LA 3.01 Project CP 06/12/87 Borrower to cause Borrower has Implemen- Iller Bank and the limited powers to tation Municipalities to enforce tariff perform their increases obligations LA 3.02 Procurement C 06/12/87 Procurement of Waiver of goods, works, Procurement Law and services in 2886 was done, but accordance with delayed Schedule 1 of implementation Project Agreement PA Schedule 2 Project C 06/12/87 PRIMU to Sect. Al Implemen- administer funds, tation review progress, review procurement and prepare PCR PA Schedule 2 Project C 06/12/87 Each municipality Sect. A3 Implemen- to designate a tation Project Coordinator PA Schedule 2 Project C 06/12/87 PRIMU to ensure Sect. A4 Implemen- that implementation tation and supervison arrangements are adequate PA Schedule 2 Monitoring C 06/12/87 PRIMU to prepare Sect. CI and review semi-annual progress reports for the Bank 23 Status Original Revised Description of Comments Agree- Covenant Fulfilment Fulfilment Covenant ment Section Type Date Date PA Schedule 2 Cost CP 08/09/91 Municipalities of Tariff increases Sect. 4.01 recovery/ Mersin, Tarus were not always pricing and Iskenderun sufficient to cover to increase water inflation + 10% tariffs by 10% above inflation LA 3.01 Financial C 06/12/87 Borrower to cause Covenant deleted funds to be made during restructuring available for social, electricity, telecommunication and training LA 3.01 Accounts NC 06/12/87 Borrower to take Ministry of Interior action to require asked municipalities municipalities to to implement its adopt cost and own system management accounting systems LA 3.01 Subloan C 06/12/87 Borrower shall procedure make proceeds of the Loan available to Iller Bank, repaid according to subsidiary loan agreement, except for CMTA LA 3.01 Project CD 06/12/87 Borrower shall There were serious Implemen- cause entities to delays at the tation carry out the beginning of the program in implementation accordance with the implemen- tation program (Schedule 2) 24 Agree- Section Covenant Type Status Original Revised Description of Comments ment Fulfilment Fulfilment Covenant Date Date LA 3.04 Reviews C End 1990 Assessment shall Led to be made of restructuring implementation progress with GOT, Iller Bank and municipalities LA 4.01 Accounts C Borrower shall cause project entities to maintain sound accounts to reflect their resources and accounts LA 4.01 Audits CD Project accounts to be audited LA 2.06 06/12/87 Municipalities to Deleted due to loan obtain Bank's restructuring clearance on change of HUDC capital structure LA 4.02 06/12/87 HUDC's equity Deleted due to loan to he maintained restructuring at least 2/3 of debt with a ratio of current liabili- ties of not less than 2/3 LA 4.03 Cost recovery 06/12/87 Sale price of land Deleted due to loan to cover cost of restructuring/ land, overheads, difficult to monitor on-site infrastruc- ture and not less than 1/3 of off-site infrastructure 25 Agree- Section Covenant Type Status Original Revised Description of Comments ment Fulfilment Fulfilment Covenant Date Date LA 4.04 Cost recovery Water revenues to Deleted due to loan also cover 20% of restructuring/difficu annual capital It to monitor expenditure PA Schedule 2 Financial CP PRIMU to review Cities were unable investment programs to prepare three with municipalities year programs PA Schedule 2 Financial CP 06/12/87 PRIMU to ensure Accounting systems that fees and and legal limitation connection charges of investment will cover cost of recovery made cost upgrading and that recovery inadequate water and sewerage financial targets are met PA Schedule 2 Project C Iller Bank to provide Implementation adequate staffing in PRIMU PA Schedule 2 Project CP PRIMU to prepare Implementation the Project Completion Report Covenant type: Present Status o Accounts/audits o Monitoring/review C = covenant complied with o Cofinancing 0 Procurement CD = complied with after delay a Consultation 0 Project implementation arrangements CP = complied with partially o Cost recovery/pricing (including project coordination units) NC = not complied with o Counterpart funding 0 Remedies o Dam safety o Resettlement o Disbursement definitions/conditions o Sector policy conditionality: (including special accounts) administrative change o Engineering a Sector policy conditionality: o Environmental budgetary/allocative change o Facilities maintenance 0 Sector policy conditionality: o Financial regulatory change o General conditions (Section 1.01 of a Sector policy conditionality: other the Loan or Credit Agreement) o Studies/technical assistance 0 Institutional (involving other than 0 Subproject/subloan criteria and project coordination units) procedures 0 Subsidiary agreements 26 Table 11: Compliance with Operational Manual Statements There was no lack of compliance with an applicable Bank Operational Manual Statement. 27 Table 12: Bank Resources: Staff Inputs Planned Actual Stage of project cycle Weeks Weeks Through appraisal 145 Appraisal - Board 55 approval Board approval - 7 Effectiveness Supervision 145 141 Completion 6 Total 28 Table 13: Bank Resources: Missions Performance No. oDays in Rating 2 Types of Stage of project cycle Month/Year Persons Field Specialization ' Implementation Development Problems status objectives Through appraisal' Appraisal - Board approval 10/86 8 40 E+2F+3E+D Board approval - Effectivenes 06/87 5 20 2N+2E+F Board approval - Effectivenes 09/87 3 18 2N+E Supervision 04/88 3 14 2N+E 2 F,T,M Supervision 07/88 3 12 N+E+F 2 T,M Supervision 11/88 3 16 2N+E 3 T,M Supervision 06/89 4 11 2N +2E 3 F,T,M Supervision 02/90 5 16 3N+E+F 3 F,T,M Supervision 04/88 3 14 2N+E 2 F,T,M Supervision 07/88 3 12 N+E+F 2 T,M Supervision 11/88 3 16 2N+E 3 T,M Supervision 06/89 4 11 2N+2E 3 F,T,M Supervision 02190 5 16 3N+E+F 3 F,T,M Supervision 06/90 1 4 E 3 F,T,M Supervision 05/91 2 14 F+N 2 Supervision 12/91 2 12 F+N 2 Supervision 10/93 1 7 N 2 Supervision 09/94 1 5 N 2 Supervision 04/95 1 5 N Completion 04/95 1 5 N Total I - Specialization 2 - Performance Rating 3 - Types of Problems A = Agriculturalist I = Minor problems F = Financial E = Economist 2 = Moderate Problems T = Technical D = Education Specialist 3 = Major Problems M = Managerial F = Financial Analyst H = Horticulturist L = Livestock Specialist M = Marketing Specialist N = Engineer R Forester Prepared through CUEP (Cukorova Region Urban Engineering Project) 29 APPENDIX A REPUBLIC OF TURKEY World Bank Supervision Mission (April 03 to April 05, 1995 April 16 to April 19, 1995) Cukurova Urban Development Proiect(Loan 2819-TU) AIDE-MEMOIRE 1. This Aide Memoire covers the findings of a World Bank mission by Pascal Douard who visited the Republic of Turkey to supervise the Cukurova Urban Development Project (Loan 2819-TU) and prepare its implementation completion report (ICR) during the period April 03 to April 05 and April 16 to April 19, 1995. The Aide Memoire comprises five parts: A) Main Conclusions of the Mission; B) Project Implementation Supervision; C) Preparation of the Implementation Completion Report; D) Preparation of the Operation Plan; E) Next Steps for the Completion of the Project. As usual, the Bank will send confirmation of this Aide Memoire shortly after the mission's return to headquarters. 2. The mission met with officials and staff of the Treasury, Iller Bank comprising the Project Management Unit (PRIMU), State Planning Organization, Ministry of Interior, and the Mersin, Tarsus, and Iskenderun Municipalities; the mission would like to thank all of them for their help and warm hospitality. A. Main Conclusions of the Mission 3. The mission noticed that: (a) The implementation of the project is nearly finished, and will be terminated before the closing date (June 30, 1995). The loan will be fully disbursed. (b) In January, the Municipalities increased their water and sewerage tariffs to protect their revenues against inflation, in compliance with the loan covenant. Due to the pace of inflation, municipalities may want to consider more frequent than yearly adjustments. Adequate revenues are essential to finance further investments. (c) The Municipalities consider that the Cukurova Urban Development Project, although restructured and therefore unable to finance all the infrastructure needed, was a useful operation. They regard the implementation of the project and the PRIMU action since the restructuring of the project as being satisfactory. They feel that the involvement of local governments in the provision and financing of local infrastructure is an appropriate policy that they learned to implement to a certain extent. They share the central administration views regarding the disappointing results of the early implementation years. They provided useful guidance for future projects. 30 (d) In spite of this positive evaluations, the mission considers that the overall rating of the project is unsatisfactory, due to the fact that many of the original objectives were not achieved. The municipalities are today struggling to finance their infrastructure needs under external foreign financing, because local revenue generation remains insufficient to provide enough financial resources. (e) During the mission, the preparation of the project's operation plan was discussed, and the main areas to be covered in the plan were identified (see Annex 1).The mission recommends that the borrower describe in detail with the participation of the municipalities the corresponding action plan. B. Project Implementation Supervision 4. Loan Disbursement. The loan is almost completely disbursed. The last disbursement of around US$ 15,000, paid directly to the municipality of Mersin, is to be expected soon. The PRIMU experienced difficulties in determining the exact value of the loan still available because of different exchange rates used in the Central Bank in Ankara and the World Bank in Washington. 5. Protection of the Sea Shore in Mersin. The length of the sea shore protection (and rehabilitation) has been extended from 400 to 800 meters, due to the financing of the dredging component of the civil works by the Ministry of Public Works. More than 90% of the works are now completed and the area surrounding the central pumping station is significantly improved. The PRIMU will send to the Bank the modification to the original contract, and the revised financing plan of this investment. The Bank's financing applied only partially to this US$ 500,000 investment, for the remaining amount of the loan. 6. Computer equipment in Tarsus. The equipment has been purchased and is meeting the municipality's expectations. 7. Water and Sewerage Tariffs. The mission reviewed the tariff increases decided by the municipalities. From 1994 to 1995, these increases generally respect the loan covenant asking for increases of 10% above inflation. However, in dollar terms used as a proxy for a real value indicator, these tariffs are slightly lower in 1995 than in 1992, due to previous years insufficient tariff increases. The mission recommends frequent adjustments (two to four times a year) to cope with the current inflation rate in Turkey. Some municipalities (e.g. Mersin) are still unable to meet their expenditure and debt services with their revenues. 8. Project Annual Report and Audits. The Project Management Unit produced the 1994 annual report, which was found satisfactory by the mission. The mission reminded the PRIMU to organize the production and the translation of the 1994 audits before June, 30, 1995. 31 C. Preparation of the Implementation Completion Report 9. The PRIMU had before the mission answered a questionnaire related to the physical outcomes of the operation and its financial aspects, prepared a draft implementation completion report, and drafted the outline of an operation plan. The PRIMU will update the figures provided if necessary. 10. Administration and municipalities met during this mission unanimously consider the original objectives of the project as sound objectives: the implication of local government in the provision and the financing of infrastructure is the only solution to deal with the infrastructure required by an urban growth of more than 5% per year. Cost recovery policies are essential to generate local financing. Decentralization policies require new rules of appraisal and control. 11. The mission examined why the project had not been successfully implemented between 1987, date of its approval, and 1991, date of its restructuring and downsizing. The main reasons are: a) lack of ownership of the project. The project was prepared by consultants working for by the State Planning Organization. However, for the implementation phase, the project was handed over to the municipalities and to Iller Bank, which was to be the implementation agency. At the beginning of 1987, the municipalities were largely uninformed about the project. Iller Bank had not been involved either in the preparation of the project. In 1989, municipal elections brought to power municipal leadership who had been campaigning against the project. Therefore, during the first years of the project implementation, nobody felt responsible for the project or supported it. (b) insufficient preparation of the project for some aspects: the original design of the civil works generated a lot of discussions between Iller Bank, the municipalities, and the consultants. The scope of the project had been increased during the preparation of the project, and when the loan was signed, some designs were not ready or had not been approved by all parties involved.(e.g. outfall location in Iskenderun). Time schedules were unrealistic (three month estimated for land acquisition, whereas Iskenderun municipality required more than two years to acquire this land). Financial projections suffered from the same flaw (no other investment taken into account during an election year than those included in the project). (d) difficulties to implement institutional changes: Although a decentralization policy was in place and was maintained by central government, reforms such as new accounting framework, waiver of some procurement rules, and flexibility 32 for hiring high level staff could not be implemented rapidly in the national administrative framework. The choice of Iller Bank as an implementing agency could not provide the political power to speed up these changes. Iller Bank's top management was not in favor of a project which devolved procurement of local infrastructure to local government and recommended to transform Iller Bank into a financial institution. The key institutional changes required for the project success should have been decided before loan signature. 12. The municipalities underlined that they still had big investment needs, and that the restructured loan had been unable to meet the financing of the infrastructure required by population growth of about 6% per year, due to migration. Mersin has projects of sewage collection, roads, and solid waste disposal but has not yet found the financing of these investments. Tarsus has been discussing with various bilateral export agencies to find the financing of sewage collection (US$50 million). It also wants to improve the solid waste disposal by creating a landfill (an US$ 25 million investment). Iskenderun wants to complete its sewerage network (US$ 50 million) and has a landfill investment project. 13. For future operations, the following supplementary ideas were suggested: (a) concentrate on a small number of sectors if there are financial constraints; (b) for cost recovery purposes, promote participation of the beneficiaries in the financing of the investments and avoid pursuing cost recovery solely through tariffs. People in Tarsus are willing to purchase pipe materials, but are reluctant to approve tariffs increases. The limits set up by the law for participation in investment expenditures are considered too low by some municipalities.(2% of the property tax) D. Preparation of the Operation Plan 14. The mission underlined the necessity to prepare an operation plan, and discussed this issue with PRIMU and the municipalities. The Municipalities prepared contributions to the operation plan. 15. The main issues discussed for this operation plan, focused on water and sanitation, were: (a) Independence of water and sanitation departments: in all three cities, the water and sanitation department has an independent budget. Mersin water and sanitation operation is now performed under law 2560 by MESKI under the control of 33 Mersin metropolitan municipality (a decree has to officially approve this creation). (b) Comparison of operational practices between different cities: comparisons of efficiencies and quality of services between cities contracting with the private sector (Antalya, Mersin), and other cities will be useful. (c) Budget preparation: in order to create the resources for operation, maintenance, and future investments, the municipalities should prepare and execute budgets in which the revenues balance the expenditures and the debt service. Municipalities need to undertake this financial planning also for the coming years in order to forecast any major change. Due to the inflation, it may be necessary to prepare restated accounts. (d) Network management: mapping is a necessity to manage the networks. Periodic measurements of flows and concentrations in the sewage network helps to detect any major dysfunction. (e) Billing collection and updating of the consumer register: it is a necessity to assess the quantity of water supplied and collect as many revenues as possible. (f) Leakage detection and repair: as figures are around 50%, and although the consumption per capita is rather low, an action to reduce leakage makes sense. 16. Iller Bank will determine in the coming months what it needs to follow the capacity of the municipalities to repay their loans. Iller Bank agreed to consider monitoring some data of the municipal water and sewage department for this purpose. E. Next Steps for the Completion of the Project 17. The Bank will provide within three months a draft version of the ICR to the Borrower for comment. 18. The Borrower will within this same three months complete its evaluation of the project and of the operation plan and transmit it to the Bank. It will also send the audits reports of the project for the year 1994 before the end of June 1995. 19. The PRIMU will send to the Bank the modification of the contract and the updated financing plan for the Mersin protection of the sea shore. It will organize the last payment for the project. It will work on the completion of the operation plan with the municipalities. It will decide the indicators to be monitored in the future to assess the creditworthiness of the water and sewage municipal departments. 34 20. The mission met with the following people: Undersecretariat of Treasury and Foreign Trade, The Prime Ministry, Republic of Turkey, Ankara * Mrs. A. Berrin Aydin, Division Chief for Infrastructure Municipality of Mersin * Mr. H. Okan Merzeci, Lord Mayor of Mersin Greater Municipality * Mr. Ilhan Sayan Municipality of Tarsus * Mr. Burhanettin Kocamaz, Mayor of Tarsus * Mr. Mahmut Tat, Deputy Mayor * Mr. Sadik Gungor, Project Coordinator * Mrs.Esin Sener Municipality of Iskenderun * Mr. Mete Aslan, Mayor of Iskenderun * Mr. Adnan Kilincoglu, Project Coordinator * Mr. Kemal Sen * Mr. Musa Sokmen State Planning organization * Mrs Belma Ustunisik * Mr Hasan Oskidik * Mr. Sedat Cetik Ministry of Interior * Mr. Enis Yeter Iller Bank/PRIMU * Mr. Onal Suer, Chairman and General Manager * Mr. Nihat Sayinalp, Director of the PRIMU * Mr. Ayhan Atli 35 ANNEX 1 PROJECT OPERATION PLAN The Borrower must prepare a Project Operation Plan covering the continued operation of the Project. The plan, which may be prepared in a table form if desired, should focus on those measures which will be taken to ensure the sustainibility and the development objectives beyond closing date of the World Bank loan. It should also establish monitoring criteria and procedures for the achievement of the plan. In the case of the restructured Cukurova Urban Development Project, the operation plan should pay special attention, also not be limited to, the following topics: (a) independence of water and sanitation departments (b) efficiency of water supply and sewerage, measured by the number of staff per 1,000 connections, and other operating costs; (c) budgeting aspects and other financial projections, ensuring through adequate tariffs that revenues balance expenditures and debt services; (d) network management through mapping, measurements, connections control (e) billing collection and consumer register updating (f) reduction of leakages. This project Operation Plan should be described in sufficient detail, describing the actions envisaged, the responsibilities, and the monitoring criteria used to assess results. The following data could be used to monitor the results - water produced - water billed - estimation of losses - water connections - sewage connections - service coverage water - service coverage sewage - employees/1000 water connection - operating costs - maintenance costs - debt service - revenues - average water and sewerage tariffs File name: m:\pd\tur\cuk\mis.apr APPENDIX B 36 IMPLEMENTATION COMPLETION REPORT TURKIYE CUKUROVA URBAN DEVELOPMENT PROJECT LOAN NO.: 2819-TU DATE: 15-FEB-1995 GENERAL DIRECTORATE OF ILLER BANKASI DIRECTORATE OF PRIMU 37 ABBREVIATIONS CUDP = Cukurova Urban Development Project PRIMU = Project Review Implementation and Management Unit SPO = State Planning Organization 3017 38 TABLE OF CONTENTS PREFACE PART I IMPLEMENTATION ASSESSMENT A. Statement/Evaluation of Objectives B. Achievement of Objectives C. Major Factors Affecting the Project D. Project Sustainability E. Bank Performance F. Borrower Performance G. Assessment of Outcome H. Future Operation I. Key Lessons Learned PART II STATISTICAL ANNEXES Table 1: Summary of Assessment Table 2: Related Bank Loans Table 3: Project Timetable Table 4: Loan Disbursements: Cumulative Estimated and Actual Table 5: Key Indicators for Project Implementation Table 6: Key Indicators for Project Operation Table 7: Studies Included in Project Table 8A: Project Costs Table BB: Project Financing Table 9: Economic Costs and Benefits Table 10: Status of Legal Covenants Table 12: Bank Resources: Staff Inputs Table 13: Bank Resources: Missions Appendix: Map 3017 39 IMPLEMENTATION COMPLETION REPORT TURKIYE CUKUROVA URBAN DEVELOPMENT PROJECT LOAN NO.: 2819-TU PREFACE This is the Implementation Completion report (ICR) for the Cukurova Urban Development Project in Turkiye, for which loan in the amount of US$ 120 million equivalent was approved on 12-June-1987 and made effective on 31-Aug- 1987. The loan was closed on 30-June-1995. 1(Original Closing Date : 30-June-1995). Final disbursement took place on............. at which time a balance of US$ 91,500,000 was cancelled. Cofinancing for the project was provided by Iller Bankasi and Municipalities. 1 Closing date according to restructuring was 30-June-1993 3017 40 PART I A. STATEMENT OF OBJECTIVES a) To assist municipalities to overcome service deficiencies and to manage urban growth; b) To establish in Iller Bankasi a capacity for appraisal and monitoring municipal investment progress; c) To finance certain municipal investments under appropriate institutional arrangements for planning and implementation,cost recovery,financial management,and staff development. Scope of CUDP : - Urban Expansion Areas - Informal Housing Upgrading and Management - Municipal Services (Water Supply, Sanitation, Drainage, Solid Waste Management: - Municipal Finance and Management - Training - Iller Bankasi The provision of technical assistance and equipment to Iller Bankasi to assist in improving its organization and management and in the staffing and operation of PRIMU. The scope of the project was truncated substantially based on the agreement upon "Restructuring" reached in USA between March 4-8, 1991. 1 3017 41 B. ACHIEVEMENT OF-OBJECTIVES - Physical objectives of the original project contain Total length of Water pipes = 875 km. Total length of Sewerage pipes = 975 km. ( + 3 ponds) Total length of Storm water pipes = 150 km. Total length of Road = 40 km. Solid waste = 1 disposal site, 50 vehicles, 10,000 containers However at the end of implementation the realization figures in relevant sectors are approximately Total length of Water pipes = 25 km. Total length of Sewerage pipes = 104 km. ( + 3 ponds) Total length of Storm water pipes = 11 km. Total length of Road = 20 km. Solid waste = 1 disposal site. Also, procurement of 175 various equipments, computer equipments and 5200 containers was realized. Comparing realization with original project objectives reflects the fact that the extent of achievement of objectives is quite little. However, the objectives truncated by restructuring were fulfilled to a great extent with some delay. (In restructuring, while the completion date was 31-Dec-1992 and closing date 30-June- 1993, the closing date was extended first to 30-June-1994 and later on to 30-June-1995.) 2 3017 42 C. .AJOR FACTORS AFFECTING THE PROJECT - Unit (PRIMU) which would manage the project was not established in a way suitable to the scope and extent of the project in terms of quality, quantity, location and time . - Studies allowing the implementation of World Bank bidding procedures in stead of law no.2886 which were to be settled before commencing the implementation period was not carried out during the preparation period of the project . - As a result of the use of preferential rights of new administrations for the existing works following the municipal elections in 1989 and , their approach to the project was not positive. - Matters on financial system and staffing of municipalities were not allowed to progress. - Setting up the scope of the project as too big, though CUDP is a pilot project, increased the negative effects of the risk factor. - Iller Bankasi which took place in implementation period of the project must have been included also in the project period in coordination with State Planning Organization. However, since this was not secured, there happened lack of coordination 3 3017 43 D) PROJECT SUSTAINABILITY The points that-characterize the original project as pilot project are : - the measures against illegal housing due to immigration, and against resulting environmental problems by means of project packages as urban expansion areas, informal housing upgrading and management; - objectives to create healthy settlements and to protect environment by means of project packages related to infrastructure and solid waste; - objectives for institutional improvements by means of activities as training, etc. in iller Bankasi and relevant municipalities. - However, because integrity of the project was disappeared as a result of giving up the objectives of original project by means of truncating the project packages in restructuring process in 1991, sustainability of the project concerning the original project objectives might be appraised as "uncertain". E. BANK PERFORMANCE - The scope of the project should have been required not to be determined that much big taking into account the significance of risk factor of a pilot project. - Involvement of Iller Bankasi in the project preparation period should have been definitely secured taking into account that an establishment (Iller Bankasi) which does not take place in project preparation period cannot be productive enough. 4 3017 44 - Enough importance should have been given to the settlement of the studies on the modifications of Bidding Law before the implementation period. - Staffing of both municipalities and PRIMU having the task of coordination in suitable quality, quantity, time and location should have been considered the condition to be realized in order to implement the project. It appears that World Bank as a credit providing establishment has become "inefficient" in the above mentioned matters . F. BORROWER PERFORMANCE - Among the project entities, municipalities as employers created the necessity for restructuring by making the project inapplicable by their inefficient performances. - Problems faced in staffing should have been anticipated and measures had to be taken by Treasury in the name of borrower during project period. Negative effects of municipal elections should have been anticipated too. - The ways should have been searched by State Planning Organization as project executer to work jointly with Iller Bankasi experienced on the above issues - Iller Bankasi as project coordinator should have foreseen the significance of the quality, quantity, time and location factors in staffing of PRIMU. 5 3017 45 G. ASSESSMENT OF OUTCOME It appears that. project is not satisfactory since it was deviated from the original project objectives due to restructuring. N. KEY LESSONS LEARNED - Since the original project was not implemented, it is not possible to asses the project benefits as planned at the beginning , therefore no data were obtained to be used for working on future operation. I, KEY LESSONS LEARNED Though the basic reason for the implementation of the project of such a scope characterized as being a pilot project is to search and determine well beforehand deficiencies and insufficiencies that would jeopardize the project, and to give them enough significance and to phase them by placing them properly in a realistic timetable in order to find solutions , it appears that such problems were left untouched. 6 3017 46 APPENDIX C TURKEY: Cukurova Urban Development Project (Loan 2819-TU) Final Disbursement Status for the Loan 1. The Special Account was fully recovered and the above subject loan closed. This loan was fully disbursed on May 11, 1995 with the payment of Application 32. 2. Below is the final disbursement status for the loan: CATEGORY AMOUNT DISBURSED (USD) (1) Works 10,462,278.08 (2) Goods 13,710,830.94 (3) Experts Services 4,179,982.45 (4) Training and Fellowships 0.00 Special Account 146,908.53 Total 28,500,000.00 Amount Previously Canceled 91,500,000.00 Loan Amount 120,000,000.00 3. These figures represent the amounts charged to the loan. They represent the cost for providing the money to the Borrower in the currency he requires, from the currencies available in the Bank treasury. These amounts are therefore slightly different from the amounts actually paid to the contractors, which, according to PRIMU, are: CATEGORY AMOUNT DISBURSED (USD) (1) Works 10,459,473.26 (2) Goods 13,710,269.36 (3) Experts Services 4,180,196.84 (4) Training and Fellowships 0.00 Special Account 149,960.54 Total 28,500,000.00 4. 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Gг.Ч а %/ .ввд FкюИ 5.п,пвп- - Оигггу � \^п ��iв� �г.стоп � .па в•п,л / - � \ Cr�с�,1 f •в ' � \` �С/П`�I1Y /�,� ныг.т ` / - _ �VumuПalik Рауа! \ / л�ипа.а rn..'r..a. тп,. �� / I _ ,пп ,т цм и,и г ме.п, .,,� �цц( магтi _, I4I . ас.^•,ю м ., е.,.и Tuzia/ � sиw.F .са .,л а.ми« 5оЬ � � GeSmeb Теге Pt5 . � каrдiо�паГ, Pi.S� _ \ �.SKEr:�ERUN М ahJ 5Пе1еп - \ ГОтU � ArpaciDan5i0 � � - � � Егдетl, 5JN�1�EP I Ка0ага5 � косаnаsамi \ Limoпlu ' \�-, \ - - � ��%ом' ,.... и ..,. . м..- �. .�г �. .....� ы., ...� DEi.`лМЕР 1�95 IMAGING Report No: 15252 Type: ICR