Uzbekistan - Tashkent Solid Waste Management Project

Document of The World Bank Report No. 17640-UZ PROJECT APPRAISAL DOCUMENT ONA PROPOSED LOAN IN THE AMOUNT OF US$24.0 MILLION TO THE REPUBLIC OF UZBEKISTAN FOR THE TASHKENT SOLID WASTE MANAGEMENT PROJECT April 6, 1998 Rural Development and Environment Unit Europe and Central Asia Region  CURRENCY EQUIVALENTS Currency Unit = Sum 1 Sum = US$0.012 US$1 = 81 Sum (as of February 1998) AVERAGE EXCHANGE RATES Sum per US$1 (end of year) 1994 25.1 1995 35.5 1996 55.0 1997 76.0 UZBEKISTAN - FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS BOO - Build-Own-Operate CAS - Country Assistance Strategy EBRD - European Bank for Reconstruction and Development GoU - Government of Uzbekistan IBRD - International Bank for Reconstruction and Development (World Bank) ICB - International Competitive Bidding IERR - Internal Economic Rate of Return JEKs - Multi-story Housing Authorities MSWM- Municipal Solid Waste Management System NGO - Non-Governmental Organization PIU - Project Implementation Unit Vice President Johannes Linn, ECA Country Director Ishrat Husain, ECCO I Sector Director Kevin Cleaver, ECSRE Sector Leader Michele de Nevers Project Team Leader Roger Batstone, ECSRE  UZBEKISTAN TASHKENT SOLID WASTE MANAGEMENT PROJECT TABLE OF CONTENTS Project Financing Data ............................................................1 Block 1: Project Description .............................................................2 1. Project development objectives ............................................................2 2. Project components ............................................................2 3. Benefits and target population ............................................................3 4. Institutional and implementation arrangements ............................................................3 Block 2: Project Rationale ................... .4 5. CAS objective(s) supported by the project .............................................................4 6. Main sector issues and Government strategy .............................................................4 7. Sector issues to be addressed by the project and strategic choices ...........................................5 8. Project alternatives considered and reasons for rejection .........................................................6 9. Major related projects financed by the Bank and/or other development agencies ...................6 10. Lessons learned and reflected in proposed project design ......................................................7 11. Indications of borrower commitment and ownership ............................................................7 12. Value added of Bank support ............................................................8 Block 3: Summary Project Assessments ............................................................8 13. Economic Assessment ............................................................8 14. Financial Assessment ............................................................8 15. Technical Assessment ............................................................8 16. Institutional Assessment ............................................................9 17. Social Assessment ............................................................9 18. Environmental Assessment ............................................................ 10 19. Participatory Approach ........................................................... 10 20. Sustainability ........................................................... 10 21. Critical Risks ........................................................... 10 22. Possible Controversial Aspects ............................................................11 Block 4: Main Loan Conditions ........................................................... I 1 23. Conditionality ........................................................... 11 Block 5: Compliance with Bank Policies ........................................................... 12 ANNEXES 1. Project Design Summary ............................................................ 13 2. Detailed Project Description ............................................................ 21 3. Estimated Project Costs ........................................................... 25 4. Economic Analysis ........................................................... 28 5. Financial Analysis ........................................................... 30 6. Procurement and Disbursement Arrangements ............................................................ 37 7. Project Processing Budget and Schedule ............................................................ 40 8. Documents in the Project File ........................................................... 41 9. Statement of Loans and Credits ........................................................... 42 10.Uzbekistan at a Glance ........................................................... 44  INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION Europe and Central Asia ECSRE Project Appraisal Document Uzbekistan Tashkent Solid Waste Management Project Date: March 6, 1998 [ I Draft [x] Final Project Team Leader: Roger Batstone Country Director: Ishrat Husain Project ID: UZ-PE-49582 Sector: Environment Sector Leader: Michele de Nevers Lending Instrument: Specific Investment Loan PTI: [x] Yes [ ] No POC: Environmentally Sustainable Development Project Financing Data [x] Loan [ ] Credit [] Guarantee [ ] Other [Specify] For Loans/Credits/Others: Amount (US$): 24 million Proposed Terms: [ Multi-currency [xJ Single currency, US Dollar Grace period (years): 5 [ Standard Variable [ Fixed [x] LIBOR-based Years to maturity: 20 Commitment fee: 0.75 % Service charge: 0 % Financing Plan and Estimated Disbursements (US$ million): Source Local Foreign Total % Disbursement (Bank FY) 1999 2000 2001 2002 2003 Government of Uzbekistan 11.0 11.0 20 EBRD -- 21.0 21.0 38 Annual 2.9 6.7 7.2 6.0 1.2 IBRD -- 24.0 24.0 43 Cumulative 2.9 9.6 16.8 22.8 24.0 Total 11.0 45.0 56.0 100 Borrower-: Governmnent of Uzbekistan Guarantor: NA Responsible agencies: the Ministry of Macroeconomics (Central Government) and the Municipality of Tashkent For Guarantees: [xl None [ Partial Credit Partial Risk Proposed coverage: Project sponsor: Nature of underlying financing: Terms of financing: Principal amount (US$m) Final maturity Amortization profile Financing available without guarantee: [ ] Yes [ ] No Estimated financing cost or maturity with guarantee: Expected Effectiveness Date: June 30, 1998 Closing Date: December 31, 2003  Page 2 Project Appraisal Document Tashkent Solid Waste Management Project Uzbekistan Block 1: Project Description 1. Project development objectives (see Annex I for key performance indicators): The Government of Uzbekistan, the Municipality of Tashkent (a.k.a. Hokimiyat), the Word- Bank, and the European Bank for Reconstruction and Development (EBRD) are cooperating on an investment project to restore Tashkent's municipal solid waste management (MSWM) system. The project's overall objectives are to: (a) return the existing MSWM collection and disposal system to a satisfactory level of service; and (b) improve the technical, financial and institutional basis for its future operation and development. The project's specific objectives are to: (a) ensure that adequate collection infrastructure in the form of collection bins and vehicles exist to provide basic MSWM services to the residential, commercial, institutional and industrial sectors; (b) improve the access and sanitation at public and residential collection points; (c) upgrade infrastructure at the city's long-term landfill including landfill practices and operations to improve efficiency and reduce environmental impact; (d) provide for the closure of two existing landfills within the city; (e) develop four transfer stations to optimize long-term use of the remaining landfill facility; (f) provide interim capability for the safe handling of biomedical waste; (g) initiate actions to place the system on a stable financial footing in terms of cost recovery and the ability to finance on-going operations and equipment replacement; (h) upgrade institutional capacity to manage the system as an independent, self-financing utility suitable for privatization in the medium term; (i) develop a strategic plan for the system's future development, including identification of major capital facility requirements and business structure options for the system's financing and operation; and (j) provide for comprehensive public consultation in developing and operating the system. 2. Project components (see Annex 2 for project background and detailed description): Costs are in US$ millions and include physical and price contingencies. Indicative % of Component Category Costs Total (a) Investment Component (93 percent of total project cost): Physical Investment (i) Collection Vehicles and Support Equipment Goods and 15.0 26.7 * Buy compactor trucks, roll-off container trucks, dump trucks, Equipment tractors, vacuum trucks, service vehicles and spares. (ii) Collection Infrastructure Civil Works, Goods 15.4 27.5 * Increase number of collection bins and collection points. and Equipment (iii) Landfill Modernization Civil Works, Goods 4.5 8.0 * Buy bulldozers, compactors, excavators, dump trucks, service and Equipment vehicles, and environmental monitoring equipment; and construct maintenance and service buildings and utilities, and upgrade access, barrier improvements, and surface closure. (iv) Vehicle Park Development Civil Works, Goods 3.1 5.6 * Buy automotive machine tools, hand tools, materials handling and Equipment equipment; upgrade the existing service park; and construct a central maintenance center. (v) Landfill Closure Civil Works, Goods 1.3 2.2 * Buy bulldozers, excavators, dump trucks, and environmental and Equipment monitoring equipment; and complete civil restoration works. (vi) Transfer Stations Civil Works, Goods * Design, procurement and construction of four transfer stations, and Equipment 6.0 10.7 including civil works, compacting and materials handling equipment, and containers. (vii) Transfer Station Vehicles Goods and * Buy flat bed trucks and trailers for container transport from Equipment  Project Appraisal Document Page 3 Uzbekistan Tashkent Solid Waste Management Project transfer stations to landfill. 5.5 9.8 (viii) Biomedical Waste Facilities Civil Works, Goods Buy collection vehicles and specialized containers; and civil and Equipment 0.4 0.7 works for a segregated disposal cell at the landfill. (ix) Operations Computer Equipment Goods and * Buy computer equipment for collection system, transfer station Equipment and landfill operation, and hardware and software for the solid 0.8 1.5 waste financial management system. (b) Institutional Support (7 percent of total project cost): Technical Assistance (i) Project Management Support (PIU equipment, staffing, training and Consulting Services advisory support) 4.0 7.2 (ii) Strategic Plan (commercialization options, waste processing options, hazardous waste management, waste minimization and recycling) (iii) Corporatization Assistance (iv) Financial Management System Development and Implementation (v) Tariff Study (vi) Collection Optimization Studies (vii) Landfill Operations Training (viii) Landfill Closure Design and Training (ix) Landfill Expansion Design Assistance (x) Public Participation and Education Assistance Total 56.0 100 3. Benefits and target population: Benefits. The main benefits of the project would be: (a) restoration of an environmentally acceptable, sustainable and cost-effective level of MSWM collection service to the Municipality of Tashkent; and (b) positioning the Municipality for further development of its MSWM system to incorporate modem solid waste reduction, resource recovery, and waste disposal technologies. The specific benefits would be: (a) collection points meeting reasonable standards of accessibility and sanitation; (b) timely collection; (c) improved environmental performance and efficiency of future landfill operations; (d) environmentally sound closure of older landfills and return of urban land to appropriate land use; (e) improved handling of biomedical waste; (f) increased cost effectiveness of the current system; (g) enhanced system financial viability in terms of cost recovery and collection of revenues; (h) upgraded operational and financial management capacity in the system's operation; (i) orderly planning of future development of the MSWM system based on current technology, affordability and environmental protection; () a high level of public support and acceptance. Target Population. The project would have an immediate impact on the overall population of Tashkent (2.2 million) through improved service. The project would specifically target: (a) residents in high-density housing where current waste collection practice represents significant sanitary and aesthetic issues; (b) women and children who normally assume household responsibility for waste disposal; and (c) populations living in the vicinity of landfill facilities. 4. Institutional and implementation arrangements: Implementation period: 5 years. Executing agency: Municipality of Tashkent. Project coordination: Municipal Project Implementation Unit with the assistance of the Project Management Consultant. Project oversight (policy guidance, etc.): Tashkent Solid Waste Working Group comprising a member from each of ten interested government authorities. Accounting, financial reporting and auditing arrangements: Central Project Implementation Unit in the Ministry of Macroeconomics. Monitoring and evaluation arrangements: Central Project Implementation Unit.  Page 4 Project Appraisal Document Tashkent Solid Waste Management Project Uzbekistan Two Project Implementation Units (PIU) would be used to reduce overhead costs and improve overall management of project implementation. The Central PIU would be located in the Central Government's Ministry of Macroeconomics and Statistics. This PIU has been operational for over two years under another Bank-financed project and would be expanded slightly to handle the additional work load of the proposed project. This PIU has already demonstrated that they have the financial management capacity to handle all aspects of Bank-financed projects. Trained personnel in the PIU include accounting, procurement, disbursements and auditing specialists. This Central PIU would be responsible for supervising project procurement and have primary responsibility for -project financial management including disbursements, the special account, and project auditing. It was originally set up for the Uzbekistan Water Supply, Sanitation and Health Project and would be expanded to handle the additional workload. The proposed project would thus benefit from cross support and the experienced personnel in the central PIU for common services related to the Bank loans. A Municipal PIU would be in the Municipality of Tashkent under the recently created Tashkent Solid Waste Management Department. This PIU, comprising two staff members, would be responsible for the technical aspects of project detailed design and implementation and for drafting progress reports acceptable to the IBRD and EBRD. It would be responsible for technical project implementation and would be assisted by a project management consultant. It would also be responsible for supervising the technical assistance portion of the project. Initial PIU staff training and assistance in bid document preparation would be provided using funds from a Danish Consultant Trust Fund under a contract with a Danish consulting firm. The two PlUs would be assisted by the existing Tashkent Solid Waste Project Working Group comprising members from all the central and municipal authorities interested in the project and is under the chairmanship of the Deputy Minister of Macroeconomics. The Working Group would appoint ad hoc bid evaluation teams made up of representatives from the central and municipal authorities. The central PIU would supervise the procurement process and ensure that it follows the guidelines of the two Banks. The present MSWM system is owned and operated by the Municipality of Tashkent. Within the municipal administration, the Tashkent Solid Waste Management Department provides direct supervision to the system's operation as well as supporting it with administrative and financial services. The physical operation of the system is provided by a Municipality-owned enterprise (Spetstrans) and four district colllection enterprises who are supervised operationally and financially by Spetstrans (District Spetstrans). The Chief of the Tashkent Solid Waste Management Department would provide overall direction to the project. Block 2: Project Rationale 5. CAS objective(s) supported by the project:. Document Number and date of latest CAS discussion: No. 17376, 03/10/98 The proposed project is consistent with, and part of, the Bank's Country Assistance Strategy (CAS) for Uzbekistan. The current strategy is aimed at: (a) liberalizing the trade and exchange regime and minimizing distortions in the financial sector; (b) improving incentives for increased output and employment in productive sectors; (c) removing the inefficiencies in resource utilization in municipal services and infrastructure; and (d) addressing the environmental damage resulting from the mismanagement of natural resources in the Aral Sea Basin. Because most Uzbek municipal services and infrastructure facilities are provided either free of charge or at highly subsidized rates, improving the efficiency of public sector management and introducing cost recovery are key challenges in the short to medium term to support sustainable, broad-based development in Uzbekistan. The proposed project would support the rehabilitation and reorganization of the solid waste management sector of Uzbekistan's largest city and as such would increase the sector's cost recovery, operational efficiency, and financial sustainability in a visible and demonstrative manner. 6. Main sector issues and Government strategy: Potentialfor MSWMSystem Collapse. The present system, while functional, has declined to the point of a major reduction in service capacity. This has caused increasing negative health and environmental impacts associated with unorganized waste collection and disposal. The priority attached by ithe Government and the Municipality to restoring an appropriate level of service reflects their recognition of this need. Public Concern RegardingMSWMManagement. As reflected in the social assessment, the population of Tashkent place a high priority on obtaining adequate MSWM services to which they were previously accustomed. The current levels of service are creating highly visible, environmental, sanitary and quality of life impacts. This in turn is leading to discontent and disillusionment with the Government's and Municipality's ability to maintain previously accepted standards. The Govemment is aware of this public concern and is responding with this proposed project to address MSWM issues. Declining Public Services Spending. The deterioration of the Tashkent MSWM system is symptomatic of the general decline in the resources that the Government is able to allocate directly for urban public services. Government strategies are now turning to  Project Appraisal Document Page 5 Uzbekistan Tashkent Solid Waste Management Project considerationof more market-orientedapproachesto financing such services and greater involvementofthe private sector. User Paymentfor Services. The high level of accounts receivable in the solid waste sector indicates the inadequacy of tariff collection mechanisms. Recent initiativesby the Municipality to raise residential tariffs and dedicate user-orientedtaxes represent overdue actions for putting the system on a more secure financial basis. Institutional Structure for Delivery of MSWM Services. The current structure for the financing, management and operation of the MSWM system is recognized as being deficient, and the Government strategy is for the sector to evolve into an independent, self- financing utility with medium-term potential for privatization. The ability to complete this would depend on the restoration of service capacity and the creation of financial stability. Appropriate Technologies. Government strategy respecting technology selection has reflected a gap in thinking between the political and operational level in two critical areas: waste processing technology and waste bins. On one hand, strong political interests, supported by representatives of foreign equipment suppliers, favor the development of high technology (and high cost) waste processing facilities as well as the use of locally produced plastic bins. On the other hand, the Municipality administration recognizes that a high-tech waste processing facility is unaffordable in the near term, is not needed as long as adequate landfill disposal capacity is available and can be developed, and would not be effective in the absence of a functional collection system. In support of the latter position, previous worldwide experience with high-tech waste processing facilities such as incinerators indicates that in the absence of a strong financial base, such facilities are not sustainable. Similarly, the use of plastic bins for the majority of communal applications is recognized as not being sustainable from either a cost or durability perspective. With respect to waste processing facilities, Government strategies have recently shifted to supporting the rehabilitationapproach as a required initial step. Further, the Government has agreed to the Bank's fundamental condition that any commitment to a waste processing facility must be implemented independently of the current waste utility structure and only on a contracted "build, own and operate" concession arrangement that must be competitive with conventional waste disposal as provided for under the project. With respect to waste bins, the Government has agreed that plastic bins would not be appropriatewithin the project scope except in small sizes (less than 300 liters) suitable for individual residential service. 7. Sector issues to be addressed by the project and strategic choices: Potentialfor MSWMSystem Collapse. The primary object of the project is to prevent the system's collapse and to restore it to the basic level of service that it was designed to provide. The strategic choice involved is the selection of a system rehabilitation approach and preparing the system for orderly development in the future, as opposed to its complete reconstruction with different technologies and equipment designs. Public Concern Regarding MSWMManagement. The project has been designed to respond directly to the expressed priority the public attaches to improved MSWM service as reflected in the social assessment. The project focuses on the public's primary environmental and health concerns, namely improved waste collection service. Furthermore, it incorporates public input into the upgrading of collection point infrastructure and service modalities. Finally, it provides resources for continued public input and consultation during the project and as part of the rehabilitated system's operation. Inclusion of a strong social and public participatory element into the project's design represents a strategic choice to pursue a proactive rather than a reactive approach to MSWM development. Declining Public Services Spending, User Payment for Services, Institutional Structure for Delivery of MSWM Services. These issues are addressed collectively by the provision of technical assistance that would support the evolution of the existing system to a self- financing utility over the project period and its orderly development into the future. This would specifically involve upgrading financial and operational management capacity, examination of strategic options for institutional structure change, and support for corporatization initiatives. The recent tariff increase for domestic users reestablished a balance in the different charges imposed on the different user groups (domestic, industrial, commercial and institutional). The choice has also been made to support an evolutionary approach to institutional change as opposed to forcing immediate changes toward a single privatized utility. Appropriate Technologies. The project is primarily focused on the basic elements of the MSWM system and the application of established technologies. This approach ensures the restoration of the fundamental element of the system and maximizes its present strengths, namely the high level of operational capacity and the existence of adequate landfill disposal capacity in the immediate future. It represents a deliberate decision not to invest in sophisticated and costly high-technology waste processing options in the near term. Such options, even in developed countries, are constrained by their high costs as well as technical, operational and environmental issues. As such, their viability in Tashkent remains to be proven. However, the project does recognize a longer-term need for future modernization, both in the form of facility additions and in introducing approaches related to waste reduction and recycling.  Page 6 Project Appraisal Document Tashkent Solid Waste Management Project Uzbekistan 8. Project alternatives considered and reasons for rejection: Low Technology Versus High Technology. The project has elected to focus on the basic MSWM collection and disposal technologies that are well established and with which the beneficiary is already familiar. The option of investments by the Municipality in large-scale waste processing facilities such as incineration was considered, and it was agreed that the feasibility could best be assessed under a build-own-operate (BOO) contract, which would be drafted under the project. It should be noted that Tashkent has direct experience with such facilities, having developed and operated a large waste processing facility in the 1980s which has been abandoned after proving technically inadequate and very expensive to operate. Least-Cost Option. The project components were selected after analyzing investment and operating costs to determine the least-cost scope of the proposed investments. Simple, low-cost equipment of well proven and robust designs were selected and are suitable for the conditions in Tashkent. With the accelerated closure of the in-city landfills, it was necessary to develop solid waste transfer stations to reduce haulage costs to the remaining outer-city landfill. City-Wide Versus District. The option of focusing the project on a single high-density residential district of the city was initially considered. However, a city-wide project addressing relatively simple investments in well-established operations represents minimal risk, obtains the benefits of economies of scale, and maximizes impact. It is also recognized that the project would extend over a five-year period and detailed planning would consider its incremental implementation district by district. Selection of Executing Agency. Consideration was given to selection of the operational enterprise (Spetstrans) as the executing agency. This would serve to concentrate management of the system and its rehabilitation in a single organization that is potentially farther removed from the traditional municipal administrative structure and associated political influence, and represents a consolidated vehicle for corporatization and potential privatization. While consistent with the longer-term objective of having the system operated independently, this option was rejected in favor of a more evolutionary approach that utilizes the superior administrative and financial management capacity within the Municipality as the executing agency. The project would support the evolution of these institutional arrangements to the self-financing independent structure that is required to sustain the system from a regulatory and operational perspective. Introduction of Waste Recovery and Recycling Options. The potential to introduce immediate waste recovery and recycling options was considered, based on the high level of public interest and potential to capture significant volumes of compostable waste. However, it was determined that markets are limited for conventional materials such as metals, glass, paper and plastic, and a significant portion of bulk organic material is already diverted as animal feed. On this basis, it was elected not to adopt these options until adequate analysis could be done as part of the strategic waste management plan and markets identified for recyclable materials to the point of supporting organized initiatives. Parallel Rehabilitation and Long-Term Planning Versus Initial Strategic Plan. A number of other solid waste initiatives by the Bank and municipal governments have involved the preparation of strategic waste management plans as prerequisites to proceeding with investment in MSWM infrastructure. In this instance, a choice has been made to include the long-term planning as a separate initiative undertaken in parallel with the preparation of the rehabilitation project. While the MSWM systems in many other cities of the former Soviet Union have collapsed, Tashkent has retained its basic operating capacity and, perhaps most importantly, has a number of years of adequate landfill disposal capacity available. In this instance, time is available to reestablish the normal level of service capacity, stabilize the operation financially, and use this as a basis for longer-term developments. In addition, the practical experience gained with this project would serve as useful input for the further development of the strategic waste management plan. 9. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned). Sector issue Project Ratings (ARPP97) Bank-financed Implementation Development Solid Waste Management Poland: Solid Waste Project planned Antigua and Barbuda: Solid Waste Management Project planned Lebanon: Solid Waste/ Environmental Management Project satisfactory satisfactory Mexico: Second Solid Waste Project satisfactory satisfactory China: Liaoning Environmental Project unsatisfactory unsatisfactory China: Shanghai Environmental Project satisfactory satisfactory Ghana: Urban Environment and Sanitation satisfactory satisfactory Other development agencies None currently known  Project Appraisal Document Page 7 Uzbekistan Tashkent Solid Waste Management Project 10. Lessons learned and reflected in proposed project design: This project would be the third lending operation in support of Uzbekistan's infrastructure. The first of these operations is the Pilot Water Supply Engineering Project (Ln. 4090-UZ), which became effective in February 1997. The second is the Water Supply, Sanitation and Health Project (Ln. 421 6-UZ), which became effective in September 1997. Both of these projects are on schedule and rated as satisfactory. Another Bank-financed investment project in the country is the Cotton Sub-Sector Improvement Project (Ln. 3894-UZ). This project was slow in starting and several key components were rated as unsatisfactory. The project is now progressing satisfactorily and the lessons learned are that setting up a PIU early in a project cycle is critical and that a lack of familiarity with the requirementsof internationallyfinanced projects by local counterpartscan cause significantdelays. Lessons highlighted in the Bank's Europe and Central Asia Department Reports on Portfolio Performance in Russia and Central Asia focus on: (a) the challenge of identifying a consistent counterpart team with sufficient authority to move the project forward; (b) the difficulty of coordinating key government agencies on critical issues; (c) the importance of setting up project implementation capacity early in the project cycle and training their staff in Bank procurementand disbursementprocedures; and (d) the importance of involving local institutes in project design and preparation. A review of lessons learned from World Bank MSWM projects worldwide also shows that due largely to inadequacies in project design (for example, inadequate attention to building institutional capacity, lack of strategic planning, failure to provide for safe landfill disposal facilities), the execution of many of the investments encountered extensive delays and failed to achieve long-term improvement in solid waste management in terms of both efficiency and environmental protection. Specific implementation problems included unclear institutional structure and responsibilities, insufficient technical and managerial expertise, inappropriate vehicle specifications, complicated procurement procedures, failure to maintain vehicles in operating condition, and inadequate cost recovery due in large part to the lack of participation of users in the decision-makingprocess. To the extent possible, this project incorporates the lessons learned from both the Bank's general experience in Russia and Central Asia and its worldwide experience with solid waste investments. The Tashkent Solid Waste Management Department is well placed within the Municipality to coordinate involvement of other Government agencies and has clear authority for project implementation. Project implementation capacity in the areas of procurement and disbursement has already been established in the existing central PIU. The scope of project preparation was expanded to include drafting of all long lead-time procurement bidding documents by negotiations. Professional advisory assistance for project implementation would be provided as part of the Institutional Strengthening Component. Project design also includes a significant input from the local communities which resulted in a new design for waste collection facilities in these communities. In additional to the technical expertise of Spetstrans, local hydrogeological and social assessment experts have contributedto project design, the latter having been particularly important in ensuring public concerns are addressed in the rehabilitation of the collection system and closure of the in-city landfills. The key issue of the MSWM system's financial sustainability is being addressed by requiring action on tariff increases and revenue transfers prior to the start of the project. In addition, the project's technical assistance component would provide support for institutional reform, improved financial management capacity, and development of a self-fmancingutility structure. The project itselfwould minimize technical risks by limiting investmentto conventionaltechnology with which the beneficiary is familiar. At the same time, the evolutionary development of the system would be provided for through development of a strategic waste managementplan. 11. Indications of borrower commitment and ownership: The President of Uzbekistan initiated the Bank's participation in this project during Vice President Johannes Linn's visit to Tashkent in October 1996. Subsequently, the assistance of the World Bank and the European Bank for Reconstruction and Development (EBRD) in upgrading Tashkent's MSWM infrastructure was requested by the Municipality of Tashkent. During the joint IBRD/EBRD identification mission in January 1997, the Municipality fully supported the approach developed for the project. This was verified in the request of the Government (Deputy Prime Minister Hamidov), dated March 3, 1997 requesting IBRD and EBRD to proceed with project preparation. The Municipality's support was confirmed on March 11, 1997 in a meeting between the Hokim and joint IBRD/EBRD project preparation mission. At that time, immediate tariff increases were agreed, along with the release of waste-related tax revenues for operation of the MSWM system. The implementation of the promised domestic tariff increases has occurred with the issuing of Resolution No. 90, dated March 20, 1997, by the Tashkent Municipality. A further tariff increase in the second quarter of 1998 has been agreed with the Municipality. The government further indicated its commitment to the project by sending in January 1998 a policy letter to the Bank detailing the government's strategy in the sector and upcoming sectoral changes as well as a letter confirming the project scope and size.  Page 8 Project Appraisal Document Tashkent Solid Waste Management Project Uzbekistan 12. Value added of Bank support: This project responds to one of Tashkent's basic environmental priorities, namely the maintenance of an adequate level of MSWM service. The Bank's involvement has acted as a catalyst for other cofinancing and has helped to mediate differences between municipal and national government objectives. The Bank's involvement has also increased the understanding of Spetstrans' finances and made them more sustainable. In the medium term, the Bank would help upgrade the environmental practices in Tashkent's landfills to international standards and move the solid waste collection system towards financial and environmental sustainability. In the longer term, the project would potentially create the basis for local source reduction and recycling opportunities. The rehabilitation of the system and strengthening of its ability to ultimately operate on a full cost-recovery basis would likely create investment opportunities for the private sector as it takes an increasing role in financing, management and operation of public services. Additional benefits have derived from the Bank's requirement for a social assessment and beneficiary consultation which are being adopted by the Municipality for its future developments and operations in the sector. The Bank's and EBRD's leadership in this initiative should also attract private sector interest to various aspects of future system development. The Bank's involvement has stimulated institutional and organizational restructuring to increase revenues and operational efficiency. Finally, this projects represents a potential model that could be implemented as high impact, affordable infrastructure development projects in other municipalities within the former Soviet Union and elsewhere. Block 3: Summary Project Assessments (Detailed assessments are in the project file. See Annex 8) 13. Economic Assessment [x] Cost-Benefit Analysis: NPV=US$3.6 million; [ ] Cost Effectiveness [ ] Other (see Annex 4): ERR=13.2% Analysis: [Specify] The switching values of critical items and the main assumptions for the economic analysis are presented in Annex 4. 14. Financial Assessment (see Annex 5) NPV=US$3.0 million; FRR=12% Internal Rate of Return. The result of the base case scenario shows a rate of return of 12 percent. In calculating the benefits, the net payments by the Municipality of Tashkent were considered as benefits accruing to the project, as the source of the payments was a specific 0.5 percent waste removal/disposal tax, assessed by the Municipality on all enterprises. A sensitivity analysis was performed to test the robustness of the project against variations in benefits and costs, and the results are shown in Annex 5. Net Present Value. In determining the Net Present Value a discount rate of 10 percent was used, which is considered to be the opportunity cost of capital in Uzbekistan. A sensitivity analysis similar to the one for the calculation of the internal rate of return was used, and the results are included in Annex 5. 15. Technical Assessment: The proposed project involves incremental changes in the configuration and technical operation of the present system. The most significant changes is from using multiple landfill sites within the city to a single landfill outside the city. Consequently, a detailed technical assessment was conducted, and the results are detailed below. Collection Vehicles and Infrastructure. The introduction of more rear loading collection trucks and new style of bins will require additional route planning and coordination to ensure optimal matching of equipment with specific service requirements. Transport to the transfer stations would also have to be incorporated into the route planning and coordination. The selection of vehicles should emphasize simple compactor and roll-off truck designs as well as have matching fuel, lubrication and tire requirements suitable for locally available materials in order to ensure affordable operation and realization of anticipated service lives. The selection of bin material (locally manufactured plastic bins versus locally fabricated metal bins) is a critical technical issue in the system's viability. Notwithstanding the local political interest in using plastic bins, these can not be considered to be pither durable enough or cost effective, except in small sizes (less than 300 liters) where care and custody is provided by individual households. Any substitution of plastic bins in the majority of applications is precluded by project conditionality. Transfer Stations and Landfill Haul Vehicles. A simple transfer station concept has been adopted based on proven equipment with a high level of environmental control. Technical assistance would be required in getting these operations established and is best provided within the scope of a turnkey design, procure and construction arrangement. The critical technical and implementation issue identified is the need to quickly and effectively site these facilities. While a reasonable choice of sites located on the Tashkent ring road within industrial areas appears feasible, this process, along with ensuring optimum highway access, is being undertaken by a local design institute with the assistance of Danish technical experts. Vehicle Park Development. The issue here is the re-organization of maintenance operations away from independent rayon centers to  Project Appraisai Document Page 9 Uzbekistan Tashkent Solid Waste Management Project a centralized operation for heavy maintenance and overhaul. This requires selection of location and organization of staff resources. L;andfill Modernization. The upgrading of the centralized landfill operation at Aghangaranskoe is technically feasible. Present hydrogeological studies indicate that the site has a substantial clay and till barrier with ground water only occurring at substantial depths as well as a substantial area that could be considered for future expansion. On this basis, it is concluded that this site can be upgraded to sanitary landfill standards. The main issues relate to implementation of improved operating practice in site compaction and cover and the upgrading of the local infrastructure to sustain the substantial increase in utilization. Landfill Closure. Both city landfill sites would require development and implementation of adequate closure plans. These must address the land reclamation and fugitive gas emissions and should make specific efforts to obtain public input into landfill closure and any long-term land use proposals. Biomedical Waste Management. The project's initiative to address this issue is viewed as a low-cost interim solution that would mitigate the immediate risks associated with co-disposal of these wastes with other wastes. It requires the development of a detailed implementation plan by the authorities and careful monitoring as to effectiveness. Technical assistance covering this would be provided for within the project's institutional strengthening. 16. Institutional Assessment: Improving Institutional Capacity. Existing institutional arrangements for the solid waste management in Tashkent are based primarily on a Soviet model with some minor modifications resulting from reforms that have been made since independence. The most important reform has been the setting up of Spetstrans as a separate legal entity, fully owned by the Municipality, with its own financial management system and a tariff setting mechanism that is supposed to allow the enterprise to cover its operations and maintenance costs. Further reforms are required in the tariff setting policies and procedures as well as in the commercialization and corporatization of Spetstrans and eventual private sector participation and effective, independent regulation of the system. The project provides technical assistance to the Municipality to enable it to decide on the preferred options for sector arrangements and ensuring that it has the necessary capacity for effective implementation. A major challenge in implementing institutional changes would be integration of effective public input, such that public acceptance is achieved and that it is sensitive to the issues related to affordability. Project Management and Execution. Lack of familiarity with modem project management and supervision practices is a common feature of organizations operating under the old Soviet system. As in the case of the Uzbekistan Water Supply, Sanitation and Health Project, provisions have been made under the technical assistance component of the proposed project to provide foreign expertise to assist and train the Tashkent Solid Waste Management Department and Spetstrans and in the required procedures to ensure the successful imnplementation of the project. 17. Social Assessment: In March 1997, a social assessment was conducted with the assistance of local social scientists in which 500 households were interviewed in 10 of the 11 districts of Tashkent. About half the respondents said that inadequate solid waste management in Tashkent was the single most important environmental problem facing the city. Most of these respondents mentioned inadequate collection as the primary solid waste problem in Tashkent. The average household was found to have approximately five people and an income of 9,600 Sum (the local currency) a month. This is further supported by the government statistics. The current solid waste collection tariff for domestic households is 15 Sum per person which represents about 0.8 percent of household income in March 1997. For 20 percent of the households surveyed, the 15 Sum per person payment was more than 1.5 percent of household income. About 21 percent of the surveyed households said they would be willing to pay double the current tariff for improved collection service. The social assessment suggested that solid waste collection is a priority for domestic customers, and while solid waste tariff increases in real terms are feasible, a significant portion (perhaps 20 percent) of the population would have difficulty paying. Thus the tariff study would investigate options for providing a safety net for this group. In addition, one of the main implications of the social assessment findings was that the institutional strengthening component of the project should include a public participation, information and education components to: provide general consumer information about Tashkent's solid waste services; inform the public about the project and the need to pay increased solid waste tariffs prior to implementation; introduce municipal solid waste management into the formal education system; sensitize the general population to the need for public cleanliness; and involve public consultations during project implementation. The project would include resources to carry-out follow-up beneficiary assessments in the course of project implementation.  Page 10 Project Appraisal Document Tashkent Solid Waste Management Projecf Uzbekistan 18. Environmental Assessment: Environmental Category [ ] A [x] B [ ] C Justification/Rationale for category rating: Environmental impacts associated with the project would be small and would largely be those associated with higher energy consumption and air pollution associated with additional vehicles operating as service levels are restored and the longer distances driven as land disposal is transferred to a more remote location. On the other hand, the rehabilitation of the system, as provided for by the project, would contribute significantly to improvement in the environmental performance of the overall MSWM system. Upgrading of landfill operations, particularly those related to cover practices and operating face restriction would reduce environmental risk as well as enhance sanitary and aesthetic impacts. Closure of the two city landfills would imprcve local conditions so long as the closures use appropriate design and include land restoration and long-term monitoring. Upgrading of service centers and the consolidation of major maintenance in a central operation would minimize future risks associated with hydrocarbon ground and surface water contamination. The provision of better designed collection points, adequate containment and periodic bin washing would mitigate environmental and health impacts locally. 19. Participatory Approach: Identify each stakeholder below and describe their planned involvement as: information sharing (IS); consultation (CON); or collaboration (COL) Stakeholders Preparation Implementation Operation Beneficiaries/community groups CON/COL IS/CON/COL IS/CON/COL Intermediary NGOs CON IS/COL IS Academic institutions COL IS/COL IS Local government CON/COL COL COL Private Sector IS IS/CON IS/CON/COL 20. Sustainability: Project sustainability is principally dependent on the establishment and maintenance of a stable financial and institutional structure for the operation of the MSWM system. In the absence of these, the project investment simply delays rather than prevents the anticipated collapse of the system. This is being addressed in the project's preparation by obtaining Borrower commitments 'o implement tariff increases and transferring the existing revenues needed for the full operation and maintenance of the MSWM system and its eventual restructuring. Project design addresses these issues by providing directed technical assistance, institutional strengthening and training such that ultimately a fully self-financing, commercialized system would evolve. The main emphasis of this assistance would be directed at ensuring institutional change toward a fully corporatized structure with priVate sector participation. In outlining a tariff policy, care would be given to achieve equity in the tariff structure by incorporating the results from the social assessment work related to willingness-to-pay, the affordability assessment, and the maintenance of public support. It would also ensure that an appropriate balance of tariff levels and revenue dependence exists across the various generating sectors, and that reliable mechanisms for ensuring timely payment for services are in place. 21. Critical Risks (see fourth column of Annex 1): Risk Risk Rating Risk Minimization Measure Project outputs to Lack of sustained political will to Low to Maintain a policy dialogue with the Government development objectives undertake financial reforms in the form medium and Municipality; design and operation of a of tariff increases and enforcement of comprehensive financial monitoring system; payment mechanisms; unwillingness of provision of technical assistance and training; the existing institutional structure to comprehensive semi-annual project reviews; allow the evolution of MSWM delivery cooperation with cofinancier to build up responsibility to an independent institutions and foster a climate conducive to organization; limited institutional and reforms; involve beneficiaries and stakeholders in financial resources; inability of service project preparation and implementation; and customers to pay for increases in cost appropriate loan conditionality. of service. Project components to Limited institutional and operational Low to Building up of institutional capacity through outputs resource capacity; failure to deliver medium institutional strengthening and training sufficienit service improvement quickly component; loan conditionality to assure enough to maintain public support; Borrower contributions, early initiation of public  Project Appraisal Document Page 11 Uzbekistan Tashkent Solid Waste Management Project selection of unaffordable future awareness initiatives and involvement of development options that could risk stakeholders and affected groups in project long-term system viability; lack of implementation; periodic social assessment familiarity with Bank rules on updates; integration of a strategic planning procurement, disbursement, accounting component into the project; advance training and and auditing. procurement documentation preparation; involve the central PIU in project implementation to carry out common features required to process Bank loans. Low to Overall Risk Rating medium 22. Possible Controversial Aspects: Public Acceptance of Required Tariff Increases. While the social assessment indicates that strong public support exists for improved residential MSWM service and a general willingness to pay exists, the required implementation of these measures in advance of the project's implementation would likely cause negative public reaction. The project's implementation plan must address this through early public awareness initiatives and rapid improvements in service delivery. Block 4: Main Loan Conditions 23. Conditionality: During negotiation agreement was reached that: 1. The Municipality of Tashkent and Spetstrans will: (a) ensure that the turning access from the highway to the Aghangaranskoe landfill meets safety standards acceptable to the Bank; (b) ensure that the closures of the Zangiata and Hasanbay landfills are done in an environmentally sustainable and publicly and socially acceptable manner acceptable to the Bank; (c) ensure that the design and siting of the four waste transfer stations are acceptable to the Bank; (d) (i) maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to the Bank, the carrying out of the Project and the achievement of the objectives thereof; (ii) prepare, under terms of reference satisfactory to the Bank, and furnish to the Bank, on or about June 30, 1999, a report integrating the results of the monitoring and evaluation activities performed pursuant to sub-paragraph (i) of this paragraph, on the progress achieved in the carrying out of the Project during the period preceding the date of said report and setting out the measures recommended to ensure the efficient carrying out of the Project and the achievement of the objectives thereof during the period following such date; -and (iii) review with the Bank, by November 15, 1999, or such later date as the Bank shall request, the report referred to in sub-paragraph (ii) of this paragraph, and, thereafter, take all measures required to ensure the efficient completion of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the Bank views on the matter; and (e) (i) have its records, accounts and financial statements for each fiscal year audited, in accordance with appropriate auditing principles consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, but in any case not later than six months after the end of each such year, certified copies of the financial statements for such year as so audited and the report of such audit by said auditors of such scope and in such detail as the Bank shall have reasonably requested; and (iii) furnish to the Bank such other information concerning said records, accounts and financial statements as well as the audit thereof, as the Bank shall from time to time reasonably requests. 2. The Municipality of Tashkent will: (a) (i) by January 1, 1999, engage consultants for the preparation of a strategic solid waste management plan (Strategic Plan) under terms of reference acceptable to the Bank; (ii) have the Strategic Plan completed by June 30, 1999; (iii) upon completion of the Strategic Plan, furnish the same to the Bank for its review and comments; (iv) by December 31, 1999 adopt the Strategic Plan taking into account the comments, if any, thereon by the Bank; and (v) thereafter implement the Strategic Plan in a manner satisfactory to the Bank; (b) (i) by December 31, 1999, engage consultants for the preparation of a tariff study (Tariff Study) under terms of reference acceptable to the Bank; (ii) have the Tariff Study completed by April 30, 2000; (iii) upon completion of the Tariff Study, furnish  Page 12 Project Appraisal Document Tashkent Solid Waste Management Project Uzbekistan the same to the Bank for its review and comments; and (iv) by July 1, 2000, adopt and put into effect a policy on tariffs on the basis of the Tariff Study and taking into account the comments, if any, thereon by the Bank. The said tariff policy shall, as a minimum, provide for: (i) full adjustment of the tariffs for inflation on an annual basis; and (ii) real term increases to achieve full recovery of all operating and maintenance costs for the solid waste management system by such time as demonstrated feasible in the Tariff Study. To the extent that the tariffs do not cover the full operating and maintenance costs of Spetstrans and other waste management operators, the Municipality of Tashkent shall contribute the funds (including proceeds from the City Improvement tax) to cover any shortfall of the said operators. 3. Spetstrans will: (a) (i) undertake and, by October 15, 1998, complete an assessment of its requirements for insurance; (ii) prepare, on the basis of such review, a plan for insurance of its assets and operations against such risks and in such amount as shall be consistent with appropriate practices; (iii) furnish the said insurance assessment and plan to the Bank; and (iv) commencing January 1, 1999, implemenit the insurance plan taking into account the comments thereon, if any, by the Bank; (b) take all measures necessary to ensure that its accounts receivable (after allowances for accounts receivable determined to be uncollectable) do not exceed three months of sales revenue on December 31, 1998 and two months of sales on December 31, 2000; and (c) (i) by January 1, 1999, engage consultants for the design and implementation of a utility accounting system under terms of reference, acceptable to the Bank; (ii) have the said system design completed by August 31, 1999; and (iii) by July 1, 2000, implement the utility accounting system in a manner satisfactory to the Bank. 4. A Special Account will be established under terms and conditions acceptable to the Bank. 5. The execution of the Loan Agreement between the GoU and the European Bank for Reconstruction and Development is a condition of effectiveness for the Bank loan. 6. The IBRD loan would be made to the GoU as a LIBOR-based single currency loan on the following terms: a maturity 20 of years with 5 years of grace. The GoU would onlend to the Municipality of Tashkent on terms and conditions acceptable to the Bank including a maturity of 12 years with 3 years of grace, at an interest rate of 12.5 percent. Block 5: Compliance with Bank Policies [x] This project complies with all applicable Bank policies. Project ea ad atstone Country Director: Ishratlusain  Project Appraisal Document Page 13 Uzbekistan Tashkent Solid Waste Management Project Annex 1 Tashkent Solid Waste Management Project Project Design Summary Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Risks CAS Objective 1. Support macroeconomic - Establishment of a cost 1. Project supervision as 1. Sustainability of political stabilization in conjunction with effective, self-financing detailed below, inclusive of commitment to the structural and sectoral reforms. MSWM organization, offering follow-up social corporatization process. opportunities for private assessments. sector participation. 2. Public fiscal and regulatory policies supportive of 2. Strengthen market incentives, - Tariff policies consistent 2. Comprehensive project investment and operation of particularly in agriculture and with full service cost recovery review with agreement on market forces. energy. and which are attractive to actions after 18 months of continued investment in the implementation. 3. Willingness of the present system after project institutional and political completion. structure to abdicate control of the present MSWM system's 3. Protect vulnerable groups - Provision in tariff setting 3. Periodic Country operation in the long term. through establishing an effective policies for affordability tests portfolio reviews. safety net and more efficient and mechanisms to ensure 4. Institutional and service delivery. service at reasonable rates to management capacity to low-income groups. efficiently transfer existing - MSWM service delivery is municipal assets and expertise to responsive to container an independent organization access, collection point operating under market sanitation and waste disposal conditions. land-use conflict issues. 5. Political and institutional sensitivity and flexibility in responding to public input to service delivery requirements and affordability constraints imposed to achieve full cost recoverability. Project Development Objectives 1. Restoration of the basic - Complete coverage MSWM 1. Reports on regular 1. PBS and Spetstrans have MSWM system. service requirements. intervals (monthly, operational management - Reversal of present trends in quarterly, semi-annually and capacity and resources to ad hoc and illegal dumping. annually) on key indicators undertake implementation. In its with outline of actions to be absence, a risk exists of not 2. Provision of adequate - All collection sites upgraded taken in case of major being able to use supplied collection infrastructure, by the end of 1999. discrepancy. equipment and assistance - Absence of uncontained effectively. waste deposition. 2. Comprehensive project review with agreement on 2. Resistance to changes in 3. Improve accessibility and - Reduction in litter at actions after 18 months of operating practice by the work  Page 14 Project Appraisal Document Tashkent Solid Waste Management Project Uzbekistan Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Risks sanitation at collection points. collection points. implementation. force. Public do not accept or - Increased public confidence cooperate in changes in service and reduction in complaints. 3. Carry out project start up delivery. workshop and seminars on 4. Upgrade or close existing - Implementation of training relevant Bank policies. 3. Failure of counterparts in landfill operations. and design activities. Carry out follow-up social housing authorities to facilitate - Delivery of new equipment. assessment. changes in collection points. - Identification of cover material. 4. Political resistance to continued operation of landfills 5. Creation of environmental - Operation of environmental having land-use conflicts, monitoring capacity. monitoring system and despite improvement in reporting of results. operating practice. 6. Develop low-cost interim - Operation of secure area for 5. Ineffective environmental disposal capacity for biomedical exclusive disposal of regulation such that compliance waste biomedical waste, including with proper disposal practice is vehicles, containers etc. not enforced and the market for - Implementation of training MSWM services declines. and design activities 6. Resistance of the existing municipal institutions to allow 7. Financial sustainability and - Regular adjustment of tariffs - Meeting financial the development of a biomedical full cost recovery. according to increases in input performance targets, waste collection system. cost; adjustment of tariffs - Reduction of accounts 7. Lack of political will to receivable maintain the required tariff - Operation of effective policy and implement measures management and accounting necessary to enforce payment for systems. service. 8. Institutional change to create a - Consolidated independent 8. Political insistence on the more efficient MSWM service organization operating the development of unaffordable delivery organization. system by project completion. waste processing facilities in the near term in favor of incremental 9. Identification of suitable plans - Adoption of plan for development of more realistic for privatization privatization of SW disposal. options. 10. Identification of waste Initiation of pilot waste 9. Resistance of waste reduction, recovery and recycling reduction/recycling initiative generators in all sectors to pay options. in 1999. appropriate costs of the service provided. 11. Preparation of a strategic plan - Identification of long-term for future system development. facility development options 10. Resistance of waste for evaluation. generators in all sectors to pay - Development of a appropriate costs of the service management approach for provided. industrial hazardous waste. - Identification of future business structure options. -Definition of longer term initiatives to upgrade street I  Project Appraisal Document Page 15 Uzbekistan Tashkent Solid Waste Management Project Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Risks washing, sweeping and litter collection capacity. . Project Outputs 1. Acceptable collection - Minimum collection 1. Reports on regular 1. The project is unable to frequency. frequency of four times/week intervals (monthly, respond quickly enough in achieved. quarterly, semi-annually and implementing service - Absence of bin overflow. annually) on key indicators improvements to preserve public - Reduction in complaints. with outline of actions to be support for them. taken in case of major 2. Service capacity for all - 1.5 million tons collected in discrepancy. 2. Waste volumes have been MSWM requirements. 1999, 1.6 million tons underestimated and additional collected in 2000. 2. Comprehensive project requirements would be identified - Full capture of industrial review with agreement on when the project is market by 2000. actions after 18 months of implemented. implementation. 3. Adequate collection points. - Development of detailed 3. Worker resistance would plans for design and hinder automation of collection placement of bins and bases. and operational optimization. - Public acceptance and usage. 4. Lack of basic skills 4. Optimized collection - Increased vehicle usage, necessary to utilize improved efficiency. automated bin pick up and maintenance capacity. reduced unit operating cost. 5. Failure to allocate sufficient 5. Improved vehicle - Vehicle availability beneficiary resources to maintenance. increased to 90 percent. undertake supporting works for - Establishment of landfill restoration. preventative maintenance programs. 6. Regulatory resistance to - Centralization of major allow continued operation of city maintenance activities. landfills until medium and long- term options can be developed. 6. Accurate quantification of - Operation of weight scales. MSWM handled. - Landfill deliver records 7. Failure to maintain or act reported and verified. upon environmental monitoring information. 7. Upgraded landfill operations. - Adoption of modem compaction and cover 8. Flexibility to develop practice. interim solutions to - Reduction in active areas. accommodate hazardous - Increased acceptance by industrial waste currently neighbors. directed to MSWM facilities. - Regulatory acceptance. 9. Commitment to implement 8. Operational environmental - Bi-monthly reports on bio- and operate efficient cost monitoring capacity. gas generation, and ground accounting systems and financial and surface water impacts. control system 9. Monitoring and rejection of - Availability of trained staff 10. Competent regulatory hazardous waste. for load inspection. capacity would exist to - Reports on waste effectively oversee the system. composition and load Timely decision making is not rejection. ._ ._. _ ._ forthcoming with respect to  Page 16 Project Appraisal Document Tashkent Solid Waste Management Project Uzbekistan Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Risks strategic waste management plan 10. Financial management - Accurate and timely recommendations. capacity. financial statements and cost reports. 11. Waste recovery and - Anticipatory cost control recycling initiatives are action. committed without a sound - Operation of a viable economic basis and appropriate 11. Independent MSWM utility. organization. markets for recovered material. - Substantial degree of financial independence from government. - Full regulatory compliance. 12. Tariff structures allowing - Financial performance adequate cost recovery. demonstrating adequate level of cost recovery by 2000. 13. Full payment for services. - Reduction in accounts receivable to 5 months of sale by 1999 and 4.5 months by 2000. 14. Public awareness and - Information transfer acceptance. initiatives implemented. - Improvements in satisfaction response in follow-up social assessments. 15. Strategic waste management - Decisions on new landfill plan adoption. development in 1999. - Decision on proceeding with long-term development of waste processing facilities. - Implementation of privatization and contracting out initiatives by 2000. - Implementation of waste reduction and recycle initiatives. - Presentation of hazardous waste management facility proposals. Project Components i. Availability of competitive 1. Collection Infrastructure. - Delivery of 50,150 new and 1. Reports on regular local suppliers for bins and bases replacement bins, and 10,000 intervals (monthly, who can also supply on-going bases in 1998 and 1999. quarterly, semi-annually and requirements. - Replacement of 20,000 bins annually) on key indicators in 2000. with outline of actions to be .________________ _____________ I taken in case of major 2. Ability to accommodate  Project Appraisal Document Page 17 Uzbekistan Tashkent Solid Waste Management Project Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Risks 2. Collection Vehicles. - Delivery of 170 x 3 ton discrepancy. large influx of new equipment vehicles of rear and side with staff and maintenance loading design and 45 x 5 ton 2. Comprehensive project capacity. dump trucks and other support review with agreement on vehicles with 15 additional 10 actions after 18 months of 3. Coordination of delivery of ton vehicles. implementation. new equipment, upgraded - Additional service vehicles collection infrastructure and for Aghangaranskoe to service 3. Carry out project start up implementation of optimized landfill expansion workshop and seminars on operating practice. - Delivery of spares for 100 relevant Bank policies. existing vehicles in 1998 and 4. Timely decision on location 100 each for Czech and 4. Carry out follow up of central maintenance Korean vehicles social assessment. operation. 3. Vehicle Park Upgrading. - Early design and 5. Completion of works implementation of required to prepare maintenance modifications to 11 existing operations in 1997 and early service centers. 1998. - Decision on location and preparation of central 6. Lack of motivation to maintenance operation. improve operations by part of - Delivery of maintenance work force. equipment requirements in 1998 and 1999. 7. Failure to obtain adequate - Training of maintenance cover material for new operating personnel. practices. 4. Landfill Upgrading/ - Immediate closure of 2 in- 8. Diversion of landfill Modernization and Closure. city landfills, Zangiata and equipment to other municipal Hasanbay using new works. operating/closure procedures - Delivery of new landfill 9. Imposition of political and operating and closure institutional bias into strategic equipment in 1998, and planning activity. transfer of closure equipment to remaining landfill as it 10. Failure to identify strong becomes available. local counterparts to support - Plan for expansion and strategic plan. upgrading of remaining landfill, including building I1. Availability of suitable safe efficient turning access to counterpart staff and skill sets to Aghangaranskoe site. implement modern financial - Identification and management and accounting contracting of cover material. systems. 5. Transfer Stations - Completion of four transfer 12. Institutional resistance to stations on outer edges of city implementation of public by January 2000, equipped awareness programs. with two high-density compacting systems each, 13. Availability of suitable staff waste transfer containers and for landfill and environmental vehicles. monitoring training.  Page 18 Project Appraisal Document Tashkent Solid Waste Management Project Uzbekistan Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Risks 6. Residential Collection Bin - Ownership of bins by JEKs. 14. In ability of project Ownership implementation resources to process international 7. Strategic Plan - Confirmation of donor procurement requirements. funding if applicable. - Qualification of Plan 15. Inability of Municipality consultants, both local and and National Highway foreign. Authorities to address issue - Establishment of strong local relating to safe access and counterpart arrangements for turning space to the plan consultants. Aghangaranskoe site. - Overall Corporatization Plan by the end of 1998. 16. Failure of Municipality to complete rapid site selection for 8. Technical Assistance. - Operation of effective transfer stations, land acquisition financial management and and detailed design accounting systems in Spetstrans by mid-1999. 17. Detailed engineering and - Collection system environmental studies conclude optimization plan adopted by that transfer to single landfill is end of 1998. not feasible - Landfill upgrading design and training complete in 1998. 18. Public Consultation process - Public awareness programs for closure of landfills produces implemented in early 1998. negative results -Environmental monitoring systems operational and 19. Onlending arrangements training complete by end of undermined by change in 1998. political establishment; Inflation - Development of bidding level becomes less stable; Cash documents for tendering of operating expenses, changes in waste processing facility on working capital, minimum cash build-own-and-operate basis. balances and contribution of internally generated funds not 9. Project Implementation - Trained project met Assistance. implementation staff available upon loan effectiveness, in 20. Not possible to use 0.5% PIU industrial waste disposal tax to - Efficient procurement and cover cash shortfalls; and tariff disbursement. increase beyond inflationary adjustment in case annual receipts of waste disposal tax insufficient  Project Appraisal Document Page 19 Uzbekistan Tashkent Solid Waste Management Project Table IA: Monitoring Indicators and Targets 1998 1999 2000 2001 2002 Project Outputs Physical Implementation Operational Collection Vehicles - Residential/ Commercial/ Budget Organizations, Services i) Number of Vehicles 398 415 472 472 475 ii) Availability of Vehicles (%) 70 75 75 75 75 Operational Collection Vehicles - Industrial Services i) Number of Vehicles 35 40 50 51 52 ii) Availability of Vehicles (%) 70 75 75 75 75 Transfer Station to Landfill Operations i) Number of Vehicles 0 15 35 35 36 ii) Availability of Vehicles (%) 70 75 75 75 75 Street Cleaning, Latrine and Support Services i) Number of Vehicles 52 58 86 86 88 ii) Availability of Vehicles (%) 70 75 75 75 75 Landfill Operations i) Pieces of Operating Equipment 10 18 21 21 21 ii) Availability of Equipment (%) 50 70 75 75 75 Number of Collection Bins in Service i) Residential 0 10,000 20,500 21,000 21,500 ii) Apartment Buildings 10,000 22,500 45,000 46,000 47,000 iii) Commercial Establishments 2,500 11,250 22,500 23,000 23,500 iv) Budget Organizations 5,000 11,250 22,500 23,000 23,500 v) Industrial Customers 2,500 7,500 11,000 11,200 11,300 Number of Transfer Stations in Operation 0 2 4 4 4 Waste Collected in ton - Industry 216,000 223,000 230,000 236,000 243,000 Waste Collected in ton - Budget/Commercial Organizations 410,000 423,000 437,000 443,000 454,000 Waste Collected in ton - Residential Area 770,000 790,000 810,000 831,000 852,000 Waste Delivered to Transfer Stations (tons) 0 201,000 1,080,000 1,108,000 1,137,000 Waste Delivered Directly To Landfill by System (tons) 1,396,000 1,232,000 391,000 408,000 414,000 Waste Delivered Directly to at Landfill by others(tons) 134,000 138,000 142,000 146,000 151,000  Page 20 Project Appraisa! Document Tashkent Solid Waste Mafiagement Project Uzbekistan Financial Aspects Average Tariff Industry 477 622 877 1023 1195 Average Tariff Budget/Commercial Organizations 908 1185 1671 1948 2277 Average Tariff Residential 25 32 45 53 62 Tariff Waste Removal from Grounds at Apartment Buildings 682 890 1254 1463 1709 Tariff for Street Washing/Latrine Services 270 352 497 579 677 Spetstrans Accounts Receivable, average days of billing 90 75 60 60 60 Industry Spetstrans Accounts Receivable, average days of billing 90 75 60 60 60 Budget/Commercial Organizations Spetstrans Accounts Receivable, average days of billing 90 75 60 60 60 Residence Spetstrans Operating Ratio 116 123 124 120 III Institutional Development Utility Accounting Systems (Implementation in