Document of The World Bank Report No: ICR00003124 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-35900, IDA-47680) ON CREDITS IN THE AMOUNT OF SDR 119.0 million (US$ 151.60 million equivalent) SDR 99.3 million (US$ 150.00 million equivalent) TO THE REPUBLIC OF INDIA FOR A SECOND KARNATAKA RURAL WATER SUPPLY AND SANITATION PROJECT December 19, 2014 Global Practice for Water India Country Management Unit South Asia Region i CURRENCY EQUIVALENTS (Exchange Rate Effective June 2014) Currency Unit= Indian Rupees INR 1.00 = US$ 0.02 (to fill up from the system) US$ 1.00 = INR 63.38 FISCAL YEAR April 1 – March 31 ABBREVIATIONS AND ACRONYMS AF Additional Financing AFP Additional Financing Project BPL Below Poverty Line CBO Community-based organization CAS Country Assistance Strategy CDD Community driven development CLTS Community Led Total Sanitation DBOT Design-Built-Operate-Transfer DPSU District Project Support Unit EMP Environmental Management Plan ERR Economic Rate of Return GOI Government of India GoK Government of Karnataka GP Gram Panchayat HH Household ICR Implementation Completion Report IEG Independent Evaluation Group IEC Information, Education and Communication IPDP Indigenous Peoples Development Program ITDP Integrated Tanda Development Plan ISR Implementation Status and Review Report JNP Jal Nirmal Project KREDA Karnataka Renewable Energy Development Agency KRWSSA Karnataka Rural Water Supply and Sanitation Agency KRWSSP-I First Karnataka Rural Water Supply and Sanitation Project KUWSDD Karnataka Urban Water and Sanitation Development Department LPCD Liters per capita per day LTSF Long term sustainability framework M&E Monitoring & Evaluation MOA Memorandum of Agreement MVS Multi Village Scheme NGO Non-governmental Organization O&M Operation and Maintenance MRD Ministry of Rural Development MTR Midterm Review MDGs Millennium Development Goals NPV Net Present Value ii PDO Project Development Objective PAD Project Appraisal Document PRED Panchayati Raj Engineering Department PRI Panchayati Raj Institution QSA Quality Supervision Assessment RDPR Rural Development and Panchayati Raj RWSS Rural Water Supply and Sanitation SHP Sanitation and Hygiene Promotion SC/ST Scheduled Castes/Tribes SA Support Agency SME Sustainability Monitoring Exercise TTL Task Team Leader TSC Total Sanitation Campaign VWSC Village Water and Sanitation Committee WATSAN Water and Sanitation ZP Zila Parishad Country Director Onno Ruhl Senior Global Practice Director Junaid Ahmed Global Practice Director Jennifer Sara Practice Manager William Kingdom Project Team Leader Suryanarayan Satish ICR Team Leader Suryanarayan Satish iii INDIA SECOND KARNATAKA RURAL WATER SUPPLY AND SANITATION PROJECT DATA SHEET A. Basic Information ................................................................................................................. v B. Key Dates ............................................................................ Error! Bookmark not defined. C. Ratings Summary ................................................................ Error! Bookmark not defined. D. Sector and Theme Codes..................................................... Error! Bookmark not defined. E. Bank Staff ............................................................................ Error! Bookmark not defined. F. Results Framework Analysis ............................................... Error! Bookmark not defined. G. Ratings of Project Performance in ISRs.............................. Error! Bookmark not defined. H. Restructuring (if any) .......................................................... Error! Bookmark not defined. I. Disbursement Profile ........................................................................................................... xi CONTENTS 1. Project Context, Development Objectives and Design ......................................................... 1 2. Key Factors Affecting Implementation and Outcomes......................................................... 5 3. Assessment of Outcomes .................................................................................................... 12 4. Assessment of Risk to Development Outcome ................................................................... 18 5. Assessment of Bank and Borrower Performance ............................................................... 19 6. Lessons Learned.................................................................................................................. 21 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ..................... 22 Annex 1 - Project Costs and Financing ................................................................................... 23 Annex 2. Outputs by Component............................................................................................ 25 Annex 3. Economic and Financial Analysis ........................................................................... 30 Annex 4. Bank Lending and Implementation Support/Supervision Processes ....................... 36 Annex 5. Beneficiary Survey Results ..................................................................................... 38 Annex 6. Stakeholder Workshop Report and Results ............................................................. 39 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ............................... 40 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ................................. 63 Annex 9. List of Supporting Documents ................................................................................ 64 MAP ..................................................................................................................................... 65 iv DATA SHEET A. Basic Information IN Second Karnataka Country: India Project Name: Rural Water Supply and Sanitation Project Project ID: P050653 L/C/TF Number(s): IDA-35900,IDA-47680 ICR Date: 12/19/2014 ICR Type: Core ICR GOVERNMENT OF Lending Instrument: SIL Borrower: INDIA Original Total XDR 119.00M Disbursed Amount: XDR 191.29M Commitment: Revised Amount: XDR 191.29M Environmental Category: B Implementing Agencies: Karnataka Rural Water Supply and Sanitation Agency Cofinanciers and Other External Partners: B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 07/26/1999 Effectiveness: 04/19/2002 04/19/2002 11/21/2007 12/15/2008 Appraisal: 08/06/2001 Restructuring(s): 05/19/2010 05/15/2013 Approval: 12/18/2001 Mid-term Review: 02/10/2005 Closing: 12/31/2007 06/30/2014 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Satisfactory Risk to Development Outcome: Moderate Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Satisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Satisfactory v Implementing Quality of Supervision: Moderately Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Overall Borrower Moderately Satisfactory Moderately Satisfactory Performance: Performance: C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments (if Indicators Rating Performance any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any time Quality of Supervision Yes Satisfactory (Yes/No): (QSA): DO rating before Satisfactory Closing/Inactive status: D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) General water, sanitation and flood protection sector 1 1 Other social services 7 7 Sanitation 43 43 Sub-national government administration 7 7 Water supply 42 42 Theme Code (as % of total Bank financing) Decentralization 22 22 Gender 11 11 Indigenous peoples 22 22 Participation and civic engagement 22 22 Pollution management and environmental health 23 23 E. Bank Staff Positions At ICR At Approval Vice President: Annette Dixon Mieko Nishimizu Country Director: Onno Ruhl Edwin R. Lim Practice Manager/Manager: William D. Kingdom Keith Robert A. Oblitas Project Team Leader: Suryanarayan Satish Ghanasham V. Abhyankar ICR Team Leader: Suryanarayan Satish vi ICR Primary Author: Nishtha Mehta Suryanarayan Satish F. Results Framework Analysis1 Project Development Objectives (from Project Appraisal Document) The project will assist Government of Karnataka (GOK) in: (i) increasing rural communities' access to improved and sustainable drinking water and sanitation services; and (ii) institutionalizing decentralization of Rural Water Supply and Sanitation (RWSS) service delivery to Gram Panchayats (village governments) and user groups. Revised Project Development Objectives (as approved by original approving authority) No change in PDO (a) PDO Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years Number of people in rural areas provided with access to improved water sources under Indicator 1 : the Project Value quantitative or 1,041,588 4,200,000 5,981,584 7,026,924 Qualitative) Date achieved 08/01/2001 12/30/2001 05/19/2010 06/30/2014 Comments (incl. % The target was surpassed by over 17%. achievement) Number of people in rural areas provided with access to improved sanitation facilities Indicator 2 : under the Project Value quantitative or 0 1,396,946 1,377,990 Qualitative) Date achieved 08/01/2001 12/30/2001 05/19/2010 06/30/2014 Comments (incl. % The achievement stands at 99% achievement) Number of people in rural areas provided with access to improved lanes and drainage Indicator 3 : under the Project Value 0 2,600,000 3,842,500 4,492,024 1 These indicators are from the last ISR (archived on 29 June, 2014). However, all Project indicators are not reflected here. Please refer to Section 1.2 and 1.3 of the ICRR for further details. vii quantitative or Qualitative) Date achieved 08/01/2001 12/30/2001 05/19/2010 06/30/2014 Comments Target was surpassed by over 17%. Lanes and drainage are a part of the community (incl. % sanitation interventions and contribute towards overall environmental health. achievement) Indicator 4 : Number of kilometer of lanes and drains constructed under the Project Value quantitative or 0 800 909 828 Qualitative) Date achieved 08/01/2001 12/30/2001 05/19/2010 06/30/2014 Comments (incl. % The target was achieved over 90% achievement) The number of rural households provided with access to household latrines under the Indicator 5 : Project Value quantitative or 0 220,000 372,476 380,616 Qualitative) Date achieved 08/01/2001 12/30/2001 05/19/2010 06/30/2014 Comments (incl. % Target was fully achieved achievement) The number of rural households provided with access to Improved Smokeless Stoves Indicator 6 : (indoor air quality control measures) under the Project Value quantitative or 0 220,000 302,103 449,873 Qualitative) Date achieved 08/01/2001 12/30/2001 05/19/2010 06/30/2014 Comments (incl. % Target exceeded by 49% achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised Target approval Completion or Values documents) Target Years New piped household water connections that are resulting from the Project Indicator 1 : interventions Value (quantitative 0 137,044 168,397 or Qualitative) Date achieved 08/01/2001 12/30/2001 05/19/2010 06/30/2014 Comments (incl. % Target was surpassed by 22% achievement) viii Indicator 2 : Number of service providers the Project is supporting Value (quantitative 0 700 1,323 1,369 or Qualitative) Date achieved 08/01/2001 12/30/2001 05/19/2010 06/30/2014 Comments (incl. % Target was surpassed. achievement) Number of Village Water Supply & Sanitation Committees engaged in service Indicator 3 : provision Value (quantitative 0 2,100 2,961 4,029 or Qualitative) Date achieved 08/01/2001 12/31/2001 05/16/2010 06/30/2014 Comments (incl. % The target was surpassed by over 36% achievement) Indicator 4 : Sustainability of Water Supply Services Value (quantitative 0 1,050 1,050 3,796 or Qualitative) Date achieved 08/01/2001 12/30/2001 05/19/2010 06/30/2014 Comments This indicates the total no. of schemes for which SME has been conducted. . The SME (incl. % helps in assessing performance of schemes, brings out difficulties/deficiencies achievement) encountered, and also helps in identifying mitigation measures required G. Ratings of Project Performance in ISRs Date ISR Actual Disbursements No. DO IP Archived (USD millions) 1 01/18/2002 Satisfactory Satisfactory 0.00 2 04/01/2002 Satisfactory Satisfactory 0.00 3 10/21/2002 Satisfactory Satisfactory 4.00 4 04/01/2003 Satisfactory Satisfactory 4.53 5 07/31/2003 Satisfactory Satisfactory 4.80 6 11/21/2003 Satisfactory Unsatisfactory 5.63 7 06/16/2004 Satisfactory Unsatisfactory 7.10 8 06/28/2004 Satisfactory Unsatisfactory 9.20 9 12/29/2004 Satisfactory Unsatisfactory 16.50 10 04/15/2005 Moderately Satisfactory Moderately Unsatisfactory 29.71 11 06/09/2005 Moderately Satisfactory Moderately Unsatisfactory 29.71 12 11/16/2005 Satisfactory Satisfactory 52.06 13 06/28/2006 Satisfactory Satisfactory 74.11 14 12/28/2006 Satisfactory Satisfactory 87.73 15 06/29/2007 Satisfactory Satisfactory 104.13 16 12/27/2007 Satisfactory Satisfactory 118.85 ix 17 06/27/2008 Satisfactory Satisfactory 133.88 18 12/31/2008 Satisfactory Satisfactory 142.05 19 05/27/2009 Satisfactory Satisfactory 146.43 20 11/29/2009 Satisfactory Satisfactory 148.76 21 05/24/2010 Satisfactory Satisfactory 151.79 22 12/04/2010 Satisfactory Satisfactory 169.57 23 06/21/2011 Satisfactory Moderately Satisfactory 170.50 24 08/22/2011 Satisfactory Moderately Satisfactory 171.30 25 02/14/2012 Satisfactory Moderately Satisfactory 177.03 26 08/17/2012 Satisfactory Moderately Satisfactory 196.25 27 02/20/2013 Satisfactory Moderately Satisfactory 218.65 28 05/23/2013 Moderately Satisfactory Moderately Satisfactory 229.46 29 09/30/2013 Moderately Satisfactory Moderately Satisfactory 238.90 30 02/02/2014 Moderately Satisfactory Moderately Satisfactory 248.75 31 06/29/2014 Satisfactory Satisfactory 274.74 H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Restructuring Disbursed at Reason for Restructuring & Key Approved PDO Date(s) Restructuring Changes Made Change DO IP in USD millions 11/21/2007 S S 116.32 Closing date extension 12/15/2008 S S 140.27 Closing date extension 05/19/2010 S S 151.79 Additional Financing 05/15/2013 S MS 229.46 Closing date extension x I. Disbursement Profile xi 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal Country and Sector Background: 1. During the 1990s, Karnataka made significant progress in increasing access to water supply and sanitation in rural areas. In 1991, Karnataka became one of the first Indian states to provide at least one safe drinking water source in all 27,000 villages. This was done through increasing investments in the sector and also by changing relevant policies. By 2001, Karnataka had achieved significant success in creating infrastructure that enabled the provision of basic drinking water supply (40 liters per capita per day, or 40 lpcd) to most of its rural population. However, service delivery was quite poor. At the same time, demand for better service was rising. The level of environmental sanitation in rural areas was also extremely low. Thus Karnataka was faced with the challenge to not only make facilities deliver as expected, but also to meet increasing demand and rising expectations. 2. The key issue was that all programs and schemes were exclusively based on a supply driven approach, with very little provision for local participation. Schemes were designed and constructed by the state engineering agencies with no involvement of local communities; however, Operation and Maintenance (O&M) responsibility rested with local self-governments - Gram Panchayats (GPs). As a result, operational performance suffered from a lack of ownership as well as inadequate capacity at the GP level. For ground water schemes, source dwindling and drying was quite common, resulting in an increasing number of defunct/partially defunct schemes. 3. On the financial front, cost recovery was quite poor as water was considered a ‘free good’ and the State was providing substantial subsidies for O&M. Additionally, there was no integration between sanitation and water supply programs. Public sector institutions were unresponsive to user demands and private sector involvement was neither supported nor encouraged. The Karnataka Rural Water Supply and Sanitation Project II (also called the Jal Nirmal Project – JNP I) was designed to address these issues.2 4. The Project followed the First Karnataka Rural Water Supply and Sanitation Project (KRWSSP I), which was implemented from 1993 to 2000 and was beset with all the issues listed above. Consequently, KRWSSP I suffered heavily from significant cost and time overruns, with some water supply schemes remaining incomplete even after credit closure. Challenges faced during the implementation of KRWSSP I led to a shift, from a top down, supply driven public- sector led approach to a bottom-up, demand driven, community led model for JNP I. The focus was on building the capacity of local institutions to allow them to participate in decision making processes. 5. This follow-on project aimed at covering 3,062 villages spread across 744 GPs in11 Districts of North Karnataka3. The decision to confine the Project to the northern districts was 2 Main Credit (Cr 3590-IN) is referred to as Jal Nirmal I and the Additional Finance Project/ Credit (4768-IN) is Jal Nirmal II. 3 Towards the end of JNP-I, Gulbarga district was bifurcated into two, but the project continued with 11 District Support Units only. 1 taken in the background of the growing disparity between the southern and northern parts of the State, with the latter lagging behind substantially in development4. This was the first ever development intervention in Karnataka aimed exclusively for the backward northern region. 6. JNP I was consistent with the Country Assistance Strategy5 (CAS) objectives of (i) strengthening the enabling environment for development and growth, and (ii) supporting interventions that benefit the poor and disadvantaged. The Project implemented the CAS strategic principles of selectivity by concentrating on Karnataka, a reforming state, while also ensuring pro-poor development by locating interventions in the less developed northern parts of the State. The project provided an opportunity to strengthen the Bank’s partnership with India, Karnataka, and NGOs for improving RWSS services. 1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved) 7. The objective of the project was to assist GoK in: (i) increasing rural communities' access to improved and sustainable drinking water and sanitation services; and (ii) institutionalizing decentralization of rural water supply and sanitation service delivery to GPs and user groups. Performance indicators selected to measure the achievement of the development objective were: PDO 1  Percentage of rural population, particularly vulnerable groups, having access to improved and sustainable drinking water and sanitation services. PDO 2  Number of GPs planning and constructing RWSS improvement schemes;  Number of user groups managing operation and maintenance of RWSS facilities;  Percentage of state and district investment funds devolved to GPs and user groups. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification 8. The PDO was not revised. The Key Indicators were enhanced at the time of the Additional Financing to reflect the Bank’s shift to core sector indicators in July 2009 and to respond to the lessons learned during the JNP I. At the time of additional financing, the PDO level indicators were reduced from four to three. The intermediate indicators for JNP I (as indicated in the PAD) were 17, and at the time of the additional financing, the number of indicators increased to 23. PDO 1  Total number of people/households (and people/households from vulnerable communities) in project areas with access to improved water supply services (fully covered status). PDO 2  Improvements in decentralized planning and management of RWS services: o No. of GPs participating o Contribution to capital cost by GPs & Communities 4 http://planning.kar.nic.in/sites/planning.kar.nic.in/files/Economic_Survey/17Balanced%20Reional%20Developmen t.pdf 5 Document number:2 2541-IN; Date of latest CAS discussion: April 5, 2001 2 o User fees collected towards O&M cost o Tariff collection efficiency in the project GPs 1.4 Main Beneficiaries. 9. It was estimated at appraisal that the project would directly benefit approximately 4 million people across 700 GPs. In addition, the project would also benefit 200,000 indigenous peoples in about 400 settlements. Other intended beneficiaries of capacity building programs were identified as staff of various agencies: GPs participating in the project; Rural Water Supply and Sanitation Institutions under the Government of Karnataka; NGOs and consultants affiliated with the Project. 1.5 Original Components 10. JNP I had three key components that are discussed below. More details are included in Annex 2. 11. Component A: Community Development and Infrastructure Building (US$166.00 million): This was the largest investment component and had three parts: Community Development Support focused on engaging Support Agencies that could work with GPs and project communities. It included a sub-component on women’s development programs, which included ensuring 33% membership in Village Water and Sanitation Committees (VWSCs) and skill training. The Infrastructure Building sub-component supported the construction of 2,100 water supply schemes, 1,000 groundwater recharge schemes, 220,000 household latrines and 220,000 smokeless chullahs6. It also included Drainage and Lane Improvement schemes, and the building of institutional latrines, pay-and-use type community latrines, and garbage and compost pits. The Indigenous People’s Development Program sub-component financed civil works contracts and consultancy contracts for community development and infrastructure building in about 400 indigenous peoples settlements. 12. Component B: Institution Building (US$21.30 million) This component had four parts: Project Management supported operating costs of the state-level Karnataka Rural Water Supply and Sanitation Agency (KRWSSA) and the District Support Units (DSUs) in 11 Zila Panchayats (ZP). It supported (i) procurement of office equipment and vehicles; and (ii) a range of consultancies for technical assistance, training, audit, and construction quality monitoring. Sanitation and Hygiene Promotion supported consultancies for strategy formulation and production of Information, Education and Communication (IEC) materials, training, and dissemination workshops. The Capacity Building sub-component supported 2,600 training programs under 36 specially designed training modules. The fourth sub- component, GP Strengthening supported (i) small works and procurement of equipment to improve office facilities at GPs (ii) small development works as desired by GPs under flexible funding (US$2,200 per GP); (iii) consultancy to provide an accountant to work with the GP secretary for 12 months, and (iv) data management on a pilot basis in 50 GPs through the provision of computer systems. 6 Smokeless chullahs are stoves designed to reduce the health impacts of smoke from open fires or hazardous materials inside a home/dwelling. 3 13. Component C: Sector Strengthening Programs (US$6.10 million) The design of this component focused on strengthening the Government of Karnataka’s RWSS sector policies and overall management. It had five sub-components: Creating enabling environment financed the costs of conducting advocacy workshops, exposure visits, publications and the consultancy costs for disseminating reforms through mass media campaigns. Sector information management system financed consultant contracts for system design and pilot implementation and the procurement of computers and other equipment for statewide scaling up. Continuous learning financed a number of studies: (i) developing and piloting alternate institutional models for multi village schemes; (ii) sustainability monitoring of schemes built under KRWSSP I and learning from other similar projects (DANIDA, GOI sector reform pilots); and (iii) other special studies supporting research and innovative activities. The Goods and Equipment sub-component supported the procurement of a range of state-of-the-art equipment for scientific water prospecting, including VLF and resistivity instruments, and hydro-fracturing units and pump testing units. The fifth sub-component, Water Quality Monitoring supported water testing of 200,000 samples over the life of the Project. 1.6 Revised Components 14. The components remained unchanged. 1.7 Other significant changes 15. The project involved the following changes: (i) Additional Financing: On June 15, 2010, an additional financing of US$150 million (JNP II) was approved. During JNP I implementation, it was noted the demand for WSS services was increasing, and as project villages received improved services, neighboring habitations also began asking for similar schemes. Thus, Government of Karnataka requested addition financing. From JNP I to JNP II, the scale of project interventions was also increased from benefiting only certain sections of a community to covering entire villages and habitations. The key purpose of JNP II was to do ‘more of the same’ schemes and saturate the Project districts with RWSS coverage. JNP II also accorded greater attention to sustainability. It was expected that an additional 2 million people would benefit from the Project. The key Project indicators were enriched and refined to better measure the PDO. Under JNP II, the PDO level indicators were reduced from four to three, and the number of intermediate indicators was increased from 17 to 23. The implementation period was three years, and the Project closing date was changed to June 30, 2013. (ii) Amendment of sanitation investments: In 2007 Karnataka adopted the Government of India’s Total Sanitation Campaign (TSC). This program covered sanitation investments, including latrine construction. As a result, JNP I did not include sanitation investments, but supported activities related to hygiene promotion and related capacity building. (ii) Time Extensions: The closing date of the Project was extended four times in all, from December 31, 2007 as stated in the Credit Agreement, till the final closing date of June 30, 2014. These extensions were due to the need for additional time to complete ongoing project activities, including the MVS, process the Additional Financing proposal, and support the implementation of the Government of Karnataka’s RWSS sustainability framework. 4  November 2007. The Project closing date was extended by 1 year to ensure sustainability of interventions and to allow extra time for the completion of key activities – including 900 water schemes, 16 MVS, and 400 lane and drain schemes. The delay in completion was because – (i) water schemes needed to be completed before lane and drain schemes were initiated, and this had not been taken into consideration; (ii) MVS were complex not only for mobilizing the community but also for procuring contracts; and, (iii) for the first time in India, GPs were managing complex activities and building their capacity took longer than anticipated.  December 2008. The Project was contingent on voluntary land donations by the community. The GP required additional time to ensure land availability, which led to some delays, necessitating a 1-year extension. Some 400 schemes were completed during this extension period.  May 2013. It was determined that the benefits of JNP II would only partially be achieved by the closing date and additional time would be required for the completion of 130 SVS and 18 MVS. It was also estimated that, after completion, six months were needed for commissioning, and an additional two months were needed to ensure that the schemes were fully operational. The closing date was extended to June 30, 2014. (iv) Credit cancellation: There were two cancellations during the life of the Project: (i) in June 2005, based on a request from Government of India, US$13.94 million was canceled from the Project and was allocated for the Emergency Tsunami Reconstruction Project, which was implemented in 2005; and (ii) From Project appraisal to closing, the Indian Rupee depreciated 36% against the US Dollar. As a result, the Project had an additional US$12 million.7 The additional funds could not be used and US$12 million were cancelled from the Credit. (v) Reallocation of Credit. In June 2009, an amount of US$22.86 million was reallocated within the existing disbursement categories. As: (i) more allocations were needed to finance additional water supply schemes (civil works); and, (ii), savings were anticipated from the allocations made for Goods and consultancy and trainings. Further, the unallocated credit amount (US $13.72) was also used for civil works. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 2.1.1 Soundness of Background Analysis. 16. Background analysis undertaken during project preparation was sound. The project was grounded in careful institutional analysis, and based on a thorough study of lessons learned during the World Bank’s decade long engagement in India’s RWSS sector. In particular, the KRWSSP I’s successes and failures influenced the project design. The key lessons identified in OED’s Impact Evaluation Report of five Bank-supported RWSS projects and from projects supported by other donors were also reflected in the design. In particular, innovations adopted during the Swajal Project (Uttarakhand) and the Kerala Rural Water Supply and Sanitation Project were reflected in the design of JNP I and II. Most notable among the many lessons 7 At the time of appraisal, the conversion rate was Rs. 47.227 to a US dollar, at the time of the AFP the conversion rate was Rs. 45.68 and in August 2013, the rate was Rs 64.10 to a US dollar. 5 distilled and incorporated in the project design were: importance of decentralization and community involvement; strong investment in building capacity and increasing engagement of local governments in service delivery; and importance of checks and balances to ensure accountability of local government organizations. 17. The rationale for the Bank’s involvement was to strengthen India’s RWSS sector, in line with the Government of India’s National Sector Strategy. This strategy indicated the Government’s commitment to institutionalize a demand-driven, community based approach for rural water supply across the country. JNP I and II implemented the principles agreed between the Government and the Bank, including: operationalizing a demand driven approach; shifting the role of State and District governments to policy formulation and monitoring & evaluation; providing opportunities for GPs to contribute to capital costs, operation and maintenance costs, and to management of schemes; and improving focus on water resource management. Additionally, the project promoted linkages across multiple sectors, including watershed development, education, health, rural development, and women’s development programs. 2.1.2 Assessment of Project Design 18. In order to achieve the PDOs, it was necessary to implement reforms in the sector. These included: (i) adopting a demand responsive approach and use of participatory processes; (ii) shifting the role of government from ‘provider’ (direct service delivery) to that of a ‘facilitator’ (policy formulation, arranging for capacity support/building and monitoring and evaluation); (iii) enabling local governments/communities greater control over resources and decision making; and (iv) ensuring local ownership by mandating partial capital cost sharing and 100% O&M from local self-governments and communities. The project was designed to operationalize these reform elements. Project design was premised on the principles of participation and inclusion, accountability, transparency, convergence and sustainability. 19. Institutional and implementation arrangements were fully aligned with the three-tier PRI institutional setup - the Gram Panchayats (GPs) at the village level, followed by the Taluka Panchayat (TP) at the tehsil8 level, and the Zila Parishads (ZP) at the district level. The GPs were put in the driver’s seat and, along with the Village Water Supply and Sanitation Committees (VWSCs), were capacitated to shoulder the primary responsibility for planning, procurement, construction, operation & maintenance and management of rural water supply and sanitation facilities. ZPs (district level PRI) and their engineering wing (ZP Engineering Division (ZPEDs)) were responsible for providing technical support. In order to ensure that the role of the government shifts from provider to facilitator, the Karnataka Rural Water Supply and Sanitation Agency (KRWSSA) was set up at the state level. KRWSSA had adequate autonomy for planning project activities, developing capacity building programs for all project partners, arranging technical, institutional and financial support for PRIs, and organizing sector strengthening activities, including monitoring and evaluation. KRWSSA was also responsible for engaging with private stakeholders and development partners, including the World Bank. 20. Implementation arrangements established clear links from components to outcomes. The design of all components was found to be adequate. First, the Community Development and Infrastructure Building component included support agencies at the GP and District level that 8 A tehsil is a subdivision of a district 6 were responsible for creating awareness, mobilizing communities, providing technical guidance, and assisting in procurement, supervision, and contract management. Second, the decision to focus on Institution Building in Component Two was appropriate as it supported decentralization and helped in institutionalizing a bottom-ups approach to project management. Separate capacity building plans for each stakeholder group allowed for improved implementation. Third, the design was appropriate for creating greater awareness about sanitation and hygiene, building an enabling environment, supporting sector strengthening, and developing ways to share information on sector status. 21. JNP II, in particular, enhanced focus on water quality affected areas. The design was not changed, and ‘more of the same’ schemes were planned under the additional financing. JNP II sought to extend services to an additional 1,650 villages and meet any remaining demand. In some cases, low availability of potable water in project districts required that water be drawn from surface sources up to 110 km away. As a result, JNP II included more multi-village schemes. These schemes presented a high degree of technical complexity and institutional challenges, particularly under the decentralized implementation arrangements. A Scheme Level Committee (SLC), comprising representatives of VWSCs, was set up to address these governance issues. Yet, O&M proved a challenging task, which meant exploring alternatives during implementation, including outsourcing of O&M to private operators. However, to implement such arrangements, a new O&M policy was necessary. 2.1.3 Adequacy of Government Commitment. 22. Government commitment was high at the time of project preparation and even before. In 1998, Government of India put in place the National Sector Strategy for rural water supply and sanitation. When the Project was initiated, the Ministry of Rural Development (MRD) was in the process of implementing the sector reform agenda identified in this strategy. 23. At the State level, the Government of Karnataka also demonstrated its commitment to the reform agenda by: (i) building a broader partnership with the Bank to implement a comprehensive development framework for the state; (ii) implementing decentralization programs which would be conducive to further devolution of powers to GPs and user groups, (iii) successfully introducing sectoral reforms through other projects, as well as its own schemes – the “Swajaldhara” and the "Swatcha Grama" (Clean Village) Programs, (iv) obtaining cabinet approval for the State's new sector reform strategy (2000-2005); and (v) demonstrating willingness to further broaden and deepen the decentralization agenda for the RWSS sector. 2.1.4 Risk Assessment and Mitigation 24. At the time of the appraisal, the overall risk rating was ‘Modest’, reflecting a thorough assessment of project risks, including: the chance that the Government of Karnataka will reverse the autonomy of KRWSSA; potential unwillingness on the part of State and District agencies to shift from implementer to facilitator roles; slow implementation due to capacity constraints, particularly at GP level; district-level agencies unwilling to support GP empowerment or allocate resources and provide support to GP/community initiatives. 25. During the design of JNP II, the risk rating was ‘Moderate’. Some new risks were identified at this stage, including: potential hurdles to the operationalization of the Government of Karnataka’s O&M policy; inability to meet ambitious targets; cost and time overruns; 7 procurement issues related to complex water schemes and a decentralized approach; and inadequate financial management capacity. 26. Mitigation measures were appropriate including: setting bylaws and MOA to ensure KRWSSA’s autonomy; providing necessary technical and policy support to facilitating and implementing agencies at all levels (State, District, and Village); training district and village level staff to support the demand-responsive approach to rural water supply and sanitation service delivery; releasing funds to GPs based on the utilization of previous tranches and physical progress of schemes; internal checks for procurement and financial activities; collecting data and mandatory recordkeeping for all contracts procured by GPs; ‘training of trainers’ (support agency staff at district and state level) in procurement; ensuring that KRWSSA is carrying out project monitoring & evaluation; and, joint reviews of program performance by the Bank and Government. 27. Despite the comprehensive risk identification, several unanticipated issues emerged during the course of implementation, including: (i) GoK enacted a policy banning sand mining, which delayed progress because sand for the construction of civil works had to be brought in from outside the State; (ii) there were three PRI elections during implementation which led to delays and, after each election, the capacity of the GPs had to be re-built; and (iii) time taken for getting the necessary permissions from other departments, such as Railways and National Highway Authority of India, also affected implementation progress. 2.1.5 Quality at Entry 28. The rationale for Bank involvement was strong and the PAD comprehensively analyzed the background issues, which justified the Bank’s intervention. The project PDO had two distinctive elements - Increasing rural communities’ access to improved and sustainable drinking water and sanitation services, and Institutionalizing decentralization of rural water supply and sanitation service delivery to Gram Panchayats and user groups. The PDOs and PDO indicators were designed to address issues identified in project preparation, e.g., weak capacity at local levels, and limited access to water supply and sanitation services. The indicators were enhanced and refined at the time of JNP II in order to better assess achievements against the PDOs. 2.2. Implementation 29. The Project became effective on April 19, 2002. The implementation progress was rated unsatisfactory for 18 months, from November 2003 to June 2005. In June 2005, after the mid- term review (MTR), implementation improved significantly. Ultimately, the physical targets were not only achieved, but were surpassed at the time of credit closing. Some reasons for implementation delays are discussed below:  Aligning with the PRIs. The project aimed to decentralize constructing, operating and managing of RWSS schemes to GPs. This required changing the existing way of managing RWSS projects, at State, district and local levels. Most GP representatives had not previously worked on RWSS schemes, and additional time was needed to build their capacity, particularly on financial and technical aspects. The district and state level agencies also needed to change their standard operating procedures in order to provide more technical support to GPs. GPs were managing large and complex activities for the 8 first time and GoK too was new at playing the role of a facilitator. GPs’ capacity had to be built on all fronts, including procurement and book keeping and audits. The selection and orientation of support agencies (to work with PRIs) was also a formidable challenge. All these activities took time, especially putting in place appropriate protocols and building understanding and coordination among different stakeholders. Thus, the learning curve was long and steep; however, by project closing, these challenges were addressed.  Large and Complex Surface Source Schemes. The surface source schemes were technically and institutionally complex: (i) the project was contingent on voluntary land donations by the community which was time consuming; (ii) Private sector consultants were expected to support the design and implementation of these schemes, however this did not materialize as expected, some consultants left halfway through the work; (iii) It was challenging to mobilize communities across villages/GPs for multi-village schemes; and (iv) it was time consuming to obtain clearances and approvals from other agencies, including the departments of irrigation, urban development, forestry, national highways and railways.  Rupee-Dollar Ratio. The Dollar to Rupee exchange rate varied almost on a daily basis, and it was not possible for the project to change activities continuously to absorb all the surplus credit. As contracts in the Project were in Indian Rupees, and it was decided to firm up the work program at INR 9,398 million, which was 15% higher than the original outlay. Eventually, the undisbursed balance of US$ 12 million was cancelled from the credit.  Level 2 Restructuring: The Project went through two closing date extensions before JNP II became operational9. Subsequently, two additional Level 2 Restructurings were also processed - first was in May 2010 to process the Additional Financing, and the second was in June 2013 to extend JNP II’s closing date (see Section 1.7 for more details). Section 2.3 Monitoring and Evaluation 30. M&E Design: The M&E design was comprehensive. There were some changes in reporting and presentation as the project aligned itself in 2009 with the Bank’s global core sector indicator system, and then again in 2010 at the time of the additional financing. JNP II had three PDO level indicators compared to four for JNP I. The intermediate indicators were increased from 17 in JNP I to 23 in JNP II. The indicators were refined to better measure sustainability and decentralization. Not all of these indicators were captured in the ISRs. The changes in PDO-level indicators are discussed in Section 1.3. 31. JNP I used an innovative sustainable monitoring tool – the Village Immersion Program (VIP) to conduct sustainability monitoring exercises (SME) for MVSs and SVSs. An extensive computerized MIS was also developed to gather village level data across four areas – inputs, outputs, sustainability and impacts. The project required that all stakeholders - village communities, GPs, SAs, Contractors, and KRWSSA - sign off after evaluating completed activities against expectations. The stakeholders together identified difficulties and deficiencies (if any), agreed on corrective measures, and put in place an O&M management plan. 9 Prior to the extension of JNP II, closing date extensions were not regarded as ‘Level 2 restructurings’. 9 32. M&E Implementation. The ISRs did not include information on all indicators; however this data was included in the clients’ progress reports, and monitored in the aide memoires. The MIS system was used to track and review activities, and also to enhance transparency. The system functioned well throughout the life of the Project. All reports were produced on time: (i) monthly consolidated reports were prepared at the village and district levels and sent to KRWSSA for review; (ii) quarterly reports were shared with GoK and the Bank; and (iii) detailed notes were developed for the Tri-Partite DEA-Bank-GoK reviews, which were held on a bi-annual basis. 33. M&E Utilization. M&E results were used to enhance the effectiveness of implementation. Internal and independent control mechanisms helped ensure good quality construction. The SME was a useful tool to evaluate the completed schemes. For example, it looked at the quality and quantity of available water, based on which it was possible to identify areas where groundwater recharge was required. However, the SME did not sufficiently assess financial sustainability and the M&E utilization was weak in addressing cost recovery gaps (see Section 3.2). Several thematic studies were undertaken and best practices under the Project were documented. Three detailed documents in the local language (Kannada) have been disseminated widely across the State. 2.4 Safeguard and Fiduciary Compliance 34. Environmental and Social Safeguards Compliance. There are no outstanding environmental or social safeguards issues in the Project and social and environmental management were seen as key areas of focus. 35. Environmental Management. The Project was appropriately classified as Category B and triggered OP/BP/GP 4.01 (Environmental Assessment). In response, an Environmental Management Plan (EMP) was developed and successfully integrated into the Project. Civil works financed under the Project were environmentally safe and in compliance with local legislation and standards, as well as Bank policies. 36. Social Safeguards: No land acquisition was required because the Project was contingent upon voluntary donation of land by GPs/community members. As a result, OP 4.12 was not triggered. 37. The Bank’s operational policy relating to Indigenous Peoples (OD 4.20 at project appraisal, currently replaced by OP 4.10) was triggered and in response, an Integrated Tanda Development Program was included as a sub-component under Component 1. An Integrated Tanda Development Plan (ITDP) was prepared and successfully implemented. In line with Bank Policy, ITDP involved community development and infrastructure building in settlements inhabited by identified indigenous peoples -- Lambanis and Siddis. Overall, 400 water schemes serving the tribal communities were implemented. In addition, all safeguard requirements were implemented in compliance with Bank policies. 38. Procurement was carried out in accordance with agreed procedures. Despite the highly decentralized operations involving a large number of civil works and a variety of actors, the Project procurement was efficient and transparent. KRWSSA and district level agencies were seen as having adequate capacity to carry out procurement activities. 39. Having a large amount of contracting done at the community level was seen as a potential risk at appraisal. To mitigate this, several steps were planned, in particular: (i) continual capacity 10 building for stakeholders at various levels; (ii) extending the project auditors’ scope of services to cover a percentage of physical assets; and (iii) technical audit of community constructed works on a sample basis. The outcome was increased ability at the GP level to procure works contracts. GPs followed proper accounting and recording procedures. A complaint handling system was also put into place. Going forward, KRWSSA will continue to monitor this system, as per Bank recommendations. An online procurement system was also established and is being regularly updated by the district project support units (DPSUs). 40. Although the mitigation measures worked well and community contracting was central to the Project, there were some delays in scheme completion and contract closures due to the inexperience of GPs in handling such activities. When more than one GP was involved (for example, in MVS), contract management was noted as a key issue. As a result, procurement was rated as ‘Moderately Satisfactory’ for most of the implementation period. 41. Financial Management. Financial management was implemented well. The Financial Management Reports (FMRs) were provided in a timely manner and the accounts were up to date. Contract closure and GP account closure processes worked well and accounts for a majority of schemes have been successfully concluded and closed. However, funds advanced to GPs need to be recovered to ensure accountability. The Project complied with all fiduciary covenants during implementation. There were no overdue or qualified audits. No significant accountability issues were raised in any audit report. 2.5 Post-completion Operation/Next Phase 42. Transition arrangements. Transition arrangements for future operations appear adequate, as demonstrated by the following measures adopted by GoK  Policies. GoK approved a new O&M policy in September 2012. A Government Order has been issued towards operationalizing this policy. The policy provides for: (i) the establishment of a Sustainability Fund; (ii) out-sourcing of MVS common facilities; (iii) a transparent subsidy for power charges; and (iv) full cost recovery of operational expenses over a period of eight years.  Institutional. Karnataka is one of the two states in India which (till recently) did not have any dedicated department for RWSS activities. As a result of an institutional analysis, a new department – Rural Water Supply and Sanitation Department – has been established. KRWSSA is expected to be scaled up throughout the state and merged with the Department.  GoK needs to accord urgent attention to defining the role of KRWSSA in the new institutional setup. Earlier deliberations had planned to carve out a niche for KRWSSA by assigning it all software functions (such as capacity building, IEC, M&E including water quality monitoring, sector strengthening, and O&M). However, this has not happened as yet.  Technical. Capacity of KRWSSA staff has been strengthened, especially on technical, procurement, financial management, and project management aspects. KRWSSA’s inclusion in the new institutional setup will ensure continuity of technical support to GPs and VWSCs. Capacity building and IEC activities will be continued as a part of sector development programs. 11  Financial. In the initial 3-4 years, the operations of large MVS, 30% subsidy for O&M will be available to GPs. Subsequently, GPs are expected to meet O&M expenses through taxes/ tariffs.  Other Managerial Support. Rural Development and Panchayati Raj (RDPR) has Panchayat Development Officers (PDO) and Secretaries for each GP, who will extend managerial support. Consultants will also be engaged as needed. 43. Follow-on project. No follow-on project is currently envisioned. 3. Assessment of Outcomes Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank Assistance Strategy) 3.1 Relevance of Objectives, Design and Implementation Relevance of Objective: High 44. The Project development objectives are highly relevant to the country’s development objectives, needs of the RWSS sector in Karnataka, and the Bank’s Assistance Strategy. GOI aspires that every rural person has enough safe water for drinking, cooking and other domestic needs as well as for livestock throughout the year, including during natural disasters. GOI also desires that by 2022 every rural person in the country should have access to 70 lpcd water, either within their household premises or within a horizontal/vertical distance of 50 meters or less from their households.10 GoI has increased its commitment to the water supply and sanitation sector, both in terms of sector investments and focus on reforms. Karnataka intends to align itself with the national goal of improving water supply service delivery in a sustainable and accountable manner. Thus, the decentralized approach implemented and institutionalized in the design is highly relevant to the priorities of GoI and GoK. 45. The Project is also highly relevant to the Bank’s priorities and development objectives. The Project remains consistent with the current Country Partnership Strategy (CPS 201311). The project contributes to the CPS 2013 outcome indicators across two strategic areas of engagement - transformation and inclusion. Under the transformation pillar, the Project contributes to improving water supply and sanitation services; and under the inclusion pillar, it contributes to improving access to services for the residents of the poorer northern part of Karnataka. Relevance of Design: Substantial The design is relevant from three perspectives. 46. First, infrastructure improvements were appropriate and technically sound. Multiple technology options were considered for water supply interventions before one was selected for implementation. For the construction of latrines, alternate design of superstructures and use of 10 http://mdws.gov.in/sites/upload_files/ddws/files/pdf/StrategicPlan_2011_22_Water.pdf 11 Country Partnership Strategy – India dated March 21, 2013 Report No. 76176-IN. 12 local materials was promoted. Interventions also focused on increasing water supply and sanitation access for vulnerable groups, and tribal communities, thus addressing Bank, GoI and GoK’s priorities. 47. Second, implementation arrangements were appropriate. Extensive consultations, feedback from GPs and VWSC, and independent monitoring were important aspects of implementation arrangements. The Project also expanded and refined techniques used in KRWSSP I, including linking District level agencies to KRWSSA for improved communication and data transfer, and monitoring progress on the Project website. 48. Third, the project nurtured and supported government partnership with GPs and VWSCs as well as with private sector consultants/operators and NGOs. Local level capacity building programs were planned to ensure that GPs were able to acquire ‘governance’ skills. In some cases, GPs were also able to manage construction through community contracting. 49. Even though the project design was relevant, it had some shortcomings: (i) institutional arrangements for the Project were quite complex, and involved bringing together multiple stakeholders from different sectors – public, private & NGO- with their own priorities and preferences; (ii) GP capacity was quite low and to prepare them for project activities was a formidable challenge; and (iii) JNP II was quite ambitious as it planned for an outlay of US$150 million in three years, even though it had taken almost eight years to spend the same amount under JNP I. 3.2 Achievement of Project Development Objectives Overall Rating: Substantial 50. This section assesses outcomes against project targets and objectives. Annex 2 provides a more detailed picture. Development Objective 1: Increasing rural communities’ access to improved and sustainable drinking water and sanitation services (High achievement of coverage targets, substantial achievement on sustainability of services) 51. The Project has resulted in wider water coverage across 11 districts12 in Northern Karnataka that comprise 2,305 GPs and 9,693 villages. JNP I and II together have led to improved water supply in 1,369 (59.4%) GPs and 4,796 (49.5%) villages. This is about 4% and 17% higher than the respective appraisal targets. In two districts-Uttar Kannada and Bidar-, coverage exceeds 80% of all villages. The remaining nine districts have more than 50% GP coverage (Table 1). Cumulatively, the project has financed 3,516 water supply schemes13, thus surpassing the PAD target by about 17%. 12 The Northern Karnataka area districts: Bidar, Bagalkote, Belgaum, Bijapur, Dharwar, Gulbarga, Gadag, Haveri, Koppal, Raichur, Uttara Kannada. 13 Table 1: Project Coverage Villages GPs Credit Line PAD Target Achieved % Variance PAD Target Achieved % Variance JNP I 2,500 3,062 22.5% 700 744 7% JNP II 1,600 1,734 8.4% 623 625 0.3% TOTAL 4,100 4,796 16.97% 1,323 1,369 3.5% 52. The Project also led to better access to improved sanitation. Overall, more than 380,000 people gained access to improved latrines, exceeding the PAD target. Targets from JNP I were exceeded and 73% of the PAD target for JNP II was achieved at closing. Household sanitation also improved due to increased access to smokeless chullahs. More than 449,000 households were provided access to smokeless chullahs, exceeding PAD targets by 49%. Table 2 indicates the overall improvements in access to water supply and sanitation in Project districts. Table 2: Population having access to improved services Achievement Indicators Baseline Target Coverage (%) Number of people in rural areas JNP I 1,041,588 4,200,000 5,150,058 123% provided with access to Improved JNP II 277,862 1,781,584 1,876,866 105% Water Sources under the project TOTAL 5,981,584 7,026,924 117% JNP I 8% 30% 30% 100% % Households with Access to Piped Water Connections JNP II 30% 40% 70% 175% TOTAL 33% 52% 158% Number of people in rural areas JNP I 0 2,600,000 2,600,000 100% provided with access to improved JNP II 88,415 1,242,500 1,892,024 152% lane and drainages TOTAL 3,842,500 4,492,024 117% Number of Households with access JNP I 0 220,000 269,000 122% to improved household latrine JNP II 25,469 152,476 111,616 73% facilities TOTAL 372,476 380,616 102% JNP I 0 220,000 354,000 161% Number of Households with Smokeless Chullahs JNP II 0 82,103 95,873 116% TOTAL 302,103 449,873 149% 53. Completion of the physical infrastructure was affected by some delays. JNP I and II had to be extended for three years and one year, respectively, in order to meet, and eventually surpass, PAD targets. 54. Sustainability of Services. The Project has made multi-pronged interventions to ensure ‘sustainability’ of the water and sanitation services. At the State level, policy and institutional development efforts have been made to formulate a long term sustainability framework (LTSF) for the RWSS sector as a whole. At the GP level, a sustainability monitoring exercise (SME) was deployed to assess overall sustainability. The SME served as an operational tool to assess the sustainability of service delivery across multiple pre-defined parameters, including - the availability of minimum levels of water, supply schedules, effectiveness of institutions, O&M, and community perception- across technical, social, institutional and financial factors. Finally, based on the scores, the sustainability of schemes was ranked. The SME was conducted 5 times across the life of the Project and covered all schemes. Most 14 schemes from JNP I schemes have now been functioning well for over 7-8 years. The latest SME, which covered 300 schemes from JNP II, reveals that 59% schemes were ‘highly likely’ to be sustainable, 33% of schemes were ‘likely’, and about 7% were ‘uncertain’. Only 1% was found as ‘unlikely to sustain’14. Based on this analysis, at least 92% of the schemes are functioning well and are expected to continue to perform as per expectations. The SME was a useful tool to assess schemes but it did not look at cost recovery from these interventions (discussed in the next section on Development Objective 2). Development Objective 2: Institutionalizing decentralization of rural water supply and sanitation service delivery to Gram Panchayats and user group (Moderate achievement on institutionalization of decentralization) 55. The decentralized service delivery model has been successfully implemented, with some residual challenges. GoK decentralized the rural water supply and sanitation services by aligning the Project’s institutional arrangements with the existing PRI set up – ZP at the district level; TP at tehsil level; and GP at the village levels. GPs were placed in the ‘driver’s seat’ and, together with the VWSCs (established as a sub-committee of the GP), were capacitated to make decisions, procure materials, carry out construction, manage funds, and contribute towards capital cost. The TPs and ZPs provided additional support as needed. However, the capacity building process required significantly more time than was envisaged at appraisal. Additionally, at Project closing, the schemes had not met the financial parameters set at appraisal and it is likely that the schemes will not be sustainable without financial grants from the State government. The institutional arrangements, particularly the role of KRWSSA, were also not firmed up. These residual issues (discussed below) raise questions regarding the GPs ability to operate and manage schemes in the long run :  Construction funds were devolved fully to the GPs. Before the Project, GPs were only allowed to handle about Rs500,000 (about US$10000). Under the Project, GPs were managing the construction of schemes, and handling funds ranging from Rs.5 million to Rs380 million per scheme (US$100,000 to US$6 million). Overall, civil works costing Rs133,700 million were devolved completely to GPs. However, the community contribution to capital cost was at US$ 31.7 million, significantly lower than the appraisal targets of US$ 15.2 and 43.82 million for JNP I and II, respectively.  Out of a total of 4,328 contracts, 40% were implemented through community contracting. These were completed within budget, to quality, and within the required timeline. Currently, about 4,400 VWSCs are carrying out O&M responsibilities, including revising, levying and collecting water tariff from consumers. However, the tariff collection efficiency at Project closing was at 52%, significantly lower than the appraisal targets for JNP I (60%) and JNP II (70%). Percent user fee collected towards O&M costs was 48% compared to the target of 80%.  The cost recovery figures are conservative estimates of sustainability, and only provide a part of the picture. A large number of water supply schemes from JNP I have now been functioning well for over 6 years. There have been no cost recovery related issues with 14 Highly Likely: performing as planned and can continue to do so; Likely: performance slightly below expectations demanding minor repair/ rehabilitation measures; Uncertain: demands major repair and rehabilitation measures; Unlikely: requires a complete re-visit. 15 SVS. For large and complex MVS, the new O&M policy includes provisions for government subsidies and for private sector support to ensure financial sustainability and better management.  At the state level, under the aegis of the RDPR, GoK established KRWSSA, a special purpose agency to provide policy and implementation support to the GPs. As appraisal, it was expected that KRWSSA would eventually be scaled up and would become a part of State’s institutional set up to manage RWSS service delivery. Since then, GoK has established the Rural Water Supply and Sanitation Department, which is responsible for RWSS service delivery in the state and KRWSSA has no clear role under this new set-up. Even though the Project supported extensive capacity building for agency staff, the long- term impacts of this activity remain uncertain. Overall, the results under this component suggest that even though GP capacity was increased, and provisions were made to ensure scheme sustainability, some financial and institutional targets were not fully achieved. 3.3 Efficiency Rating: Substantial 56. An ex-post economic analysis of water supply investments (For more detail, see Annex 3) was carried using the same methodology that was employed at Project appraisal. At appraisal, the ERR for the Project was computed based on 23 schemes, and was estimated to be 21.4%, for a 20-year horizon. At Project closing, the ERR, based on 300 completed schemes at a discount rate of 12.5%, is estimated at 29%. The ERR for MVS (at a discount rate of 12.5% for a 20-year horizon) is 22% and for SVS it ranges from 8 to 40%, depending on the technology15. The analysis revealed variations due to difference between districts and due to the use of varying technologies - essentially diverse pre-project situations. The project also established a culture of paying for water as a result of the long-term engagement with the communities, and was able to improve the capacity of communities to manage RWSS schemes. 57. Even though the project was able to substantially meet its development objectives, four additional years were required and there were significant delays during the early stages of implementation, which affected the overall efficiency. Efficiency is rated as Substantial. 3.4 Justification of Overall Outcome Rating Rating: Moderately Satisfactory The Project remains highly relevant to the GoI, GoK and Bank priorities. Taking into account the rating of High for Relevance of Design, and Substantial for Achievement of Project Development Objectives and Efficiency, overall Project Outcome is rated Moderately Satisfactory. The Project’s development objective rating on the final ISR was ‘Satisfactory’; however, looking at the progress across the life of the Project, on balance, the ICR team has assigned a rating of Moderately Satisfactory. 15 The ERR (at a discount rate of 12.5% for a 20 year horizon) for Ground Water schemes is estimated at 40; for ITDP schemes at 10; for Gravity schemes at 8; for SSI schemes at 33; and, for SSR schemes at 23. 16 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 58. Schemes have been designed in way to ensure that all the households in a village and associated settlements are covered. Consequently, the coverage for Scheduled Castes/Tribes (SC/STs), Below Poverty Line (BPL) and other Tribal households/ settlements is high. Half of the beneficiaries of the project belong to the BPL category, and 25% to the SC/STs. About 180,000 women have joined the VWSC, accounting for 35% of all members under the original project and nearly 50% of all members under the JNP II. 59. It is expected that the Project will make life easier for all members of the households, particularly women and girls, saving from the daily drudgery. The Project also recognized that women are the ‘managers of water’ and developed programs aimed at building their capacity, including training them to run sanitary marts. In a number of villages, exclusive women’s committees were set up for monitoring and evaluation of Project activities. Women were also involved in sector strengthening and O&M activities. 353,000 women were trained in construction, operation and maintenance of schemes and in ways to mobilize communities for Project related activities through 37,550 programs. Apart from the training programs, 96 exposure visits, and 971 cross learning programs were conducted, which were all well attended by women. 60. Social Development: The Project included areas with indigenous peoples. An ITDP was developed and 400 water schemes to serve tribal communities were implemented. Many tribal areas were also equipped with solar energy devices to supplement/complement the power supply. Ground water recharge measures were also adopted to counter the dwindling resources. 61. The project succeeded in promoting sanitation by using innovative methods such as the Community Led Total Sanitation (CLTS) approach. As compared to the situation at appraisal, at Project closing there was a 93% increase in access to sanitation and 149% increase in use of smokeless chullahs. 62. Due to the increased number of household-level water connections and latrines, it is expected that children will not be required to spend time collecting water or defecating in the open. Consequently, school drop-out rate and absenteeism may reduce. (b) Institutional Change/Strengthening 63. The project resulted in substantial institutional development impact:  GoK successfully decentralized rural water supply and sanitation services by aligning the project’s institutional arrangements with the existing Panchayat Raj Institutional set up  Sector Information Management System developed under the project facilitated two-way flow of information between state level policy makers and GP members.  GPs successfully closed civil works contracts and implemented proper accounting and recording procedures.  The online procurement information system was implemented well and is kept up to date by individual DPSUs. (c) Other Unintended Outcomes and Impacts 64. There were several unintended outcomes and impacts resulting from the project: 17  Pressure filter based water treatment plants were used extensively as a viable alternative to traditional sand filter based plants that require large tracts of land. This is now being implemented in other states.  Impounding Reservoirs were used extensively to serve as summer storage, enabling year round water supplies for irrigation canal based schemes. This is being promoted in the country for water security.  A variety of innovative technologies were adopted: (i) SCADA based audit system to ensure equitable supply under MVSs; (ii) mobile water distribution system that purifies water on site using an Ultra Filtration system (or other similar measures); (iii) solar pumping to address power shortages and/or high power costs, particularly in groundwater- based schemes; (iv) water purification & kiosks in areas facing water quality problems due to arsenic, fluorides, iron etc.; and (v) groundwater well recharge with V-Wire technology.  Property prices are expected to rise in Project villages due to the easy availability of drinking water and improved lanes and drainage facilities. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops. Not Applicable 4. Assessment of Risk to Development Outcome Rating: Moderate 65. The risk to development outcome is rated Moderate for the following reasons: (i) More than 90% of all schemes have been completed and commissioned, contracts closed, and are operating successfully; (ii) following the operationalization of the O&M policy, GoK has out- sourced O&M of the common facilities of one MVS (Belgaum district) to private operators; (iii) Adequate capacity development for GPs/VWSCs; (iv) an O&M management action plan is in place for all single and/or in-village facilities; (iv) Even though the future of KRWSSA is uncertain, the new Department of Water Supply and Sanitation is committed to providing post- construction O&M support to schemes; (v) For large and complex schemes, the Government is providing financial support through subsidies and is also allowing for private sector involvement in O&M; and (vi) there is sustained political commitment to decentralization. 66. There are several major concerns that are likely to impact Project outcomes:  Inadequate and erratic power supply.  Dwindling of resources, which will particularly affect groundwater schemes.  Even though more people are paying for water as a result of the project interventions, sustainable cost recovery mechanisms have still not been established. The cost recovery and tariff collection targets need to be met in order to ensure sustainability of schemes. Going forward, the Government of Karnataka will have to monitor scheme performance on a regular basis to plan appropriate corrective measures as needed.  Despite significant efforts to build KRWSSA’s capacity, the future of the agency remains uncertain. This can impact overall project outcomes. 18 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 67. The strategic relevance of the project was strong, both in terms of objectives and design. Capacity building arrangements and interventions were put into place to ensure readiness for implementation. The Project design included a focus on building GP capacity to ensure smooth implementation. Project preparation was carried out with adequate resources. The Bank provided specialists with the necessary technical skills to address any concerns that arose during preparation. In particular, financial and procurement specialists provided necessary support to GPs. The Project included two sub-components that focused on women’s development and tribal development to allow for an increased focus on gender and social development aspects. All relevant safeguards were properly addressed during project design and appraisal. Fiduciary aspects were designed based on an assessment of capacities in procurement and financial management. Risks were identified upfront and mitigation measures were incorporated. 68. The quality at entry was affected by a number of shortcomings: (i) complex institutional arrangements involving multiple stakeholders; (ii) ambitious scale and scope of the Project, particularly JNP II, which envisaged US$150 million being utilized in three years; (iii) the M&E system design (Section 2.1.5) required modifications; (iv) low capacity of the implementing agency and of the local governments necessitated additional dialogue and technical assistance, and led to delays, particularly during the initial years of implementation; (v) the design did not take into consideration that water schemes needed to be completed before lane and drain schemes were initiated; and (vi) difficulties in implementing MVS were not addressed (multiple GPs are involved, and management responsibilities for common assets are not clearly defined). These shortcomings led to initial implementation delays. (b) Quality of Supervision Rating: Moderately Satisfactory 69. Bank's performance during the implementation of the project was moderately satisfactory. Specifically, the task team took the following actions that helped achieve the development objectives: (i) the implementation faced considerable challenges due to the devolution of responsibilities to the GP that lacked sufficient capacity, and due to low community contributions towards capital and O&M costs. As a result, the team downgraded the Implementation Progress (IP) and Development Objective (DO) rating during the initial stages of implementation. The MTR was held in 2005. At the MTR, the team and the implementing agency agreed on a set of measure to address these issues – GoK agreed that GPs could contribute in kind (food grains, labor, etc.) in addition to cash and the State government agreed to cover any remaining shortfall. Post-MTR, the IP and DO ratings were upgraded to Moderately Satisfactory (MS); (ii) At the MTR, the team updated the implementation plan to allow the Project to make up for initial delays; (iii) the team supported the use of innovative technologies to address implementation challenges, including improving groundwater levels through recharge and using different filtration methods to improve water quality in affected areas. 19 70. The Bank allocated sufficient budget and staff resources for the Project. The team regularly prepared Aide-Memoires and was candid and rigorous in assessing and addressing project management issues. However, there were some weaknesses in M&E reporting. While, the Implementation Status Reports (ISRs) realistically rated the performance of the project in terms of achievement of development objective and project implementation, they did not assess the progress across all indicators. Even though all indicators were included in client reports and in aide memoires, only a few were monitored in the ISR. Additionally, the PDO level indicators monitored in the ISRs are not the same as those in the additional financing paper. 71. Supervision of fiduciary and safeguards aspects was strong. The Bank team provided detailed reports and recommendations in the aide memoires, and adjusted the ISR ratings to reflect compliance performance. 72. There are residual issues related to cost-recovery at the GP-level. Both community contribution towards capital and O&M costs, and the tariff collection efficiency were lower than the targets for JNP I and II. These issues could not be addressed by Project closing and are likely to impact scheme sustainability. 73. The task team was involved in a dialogue with GoK to define KRWSSA’s role and significant efforts were made to build the agency’s capacity. However, KRWSSA’s role in the new institutional set-up remains unclear (See Section 3.2). 74. One important aspect of the Bank's performance and contribution was the continuity of the Task Team, including the TTL and other key sector specialists, from project inception through completion. This continuity ensured consistency, and facilitated dialogue with the government to resolve implementation issues. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory With a Moderately Satisfactory rating for Quality at Entry and a Moderately Satisfactory rating for Quality of Supervision, overall Bank performance is rated as Moderately Satisfactory. 5.2 Borrower Performance (a) Government Performance Rating: Moderately Satisfactory 75. GoK’s commitment to the decentralized service delivery remained unchanged despite three government changes during the project period. As planned, GoK also set up the new KRWSSA, staffed it fully, and enabled it to operate with full autonomy. However, the post- Project role of the agency is unclear and GoK has included no provisions to scale-up or mainstream KRWSSA. 76. Counterpart funds were provided in a timely manner and sufficient resources made available for all activities. Necessary directives (Government Orders) were issued for the project and the sector to work efficiently. In particular, GoK established: appropriate levels of review and approvals; financial accountability and follow-up mechanisms; authorization of expenditures before they were incurred; and, periodic review of all documentation. GoK deliberated extensively on ‘sustainability’ and formulated a long term sustainability framework. However, the cost recovery from Project interventions is uncertain, and no measures are in place to address these issues. As a result, the financial sustainability of schemes is uncertain. 20 (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory 77. The project includes two implementing agencies: KRWSSA at the state level, which provided apex support; and ZP- DSUs at the district level and GPs at the village level. KRWSSA excelled in its functions and went beyond its mandate to become a water supply and sanitation leader in the State. However, at the district level performance was uneven, with a few districts lagging behind consistently throughout the Project. KRWSSA had to put in substantial efforts to ensure that the districts accorded approvals as well as made payments in a regular and proper manner. Significant efforts were required to secure accounting information for reimbursements claims. Despite these efforts, both the community contributions towards O&M and the tariff collection efficiency remained low. Project staff, especially the Chief Executive Officer of the ZP (who was also the Project Manager) was burdened with a number of other activities and responsibilities. Based on the varying performance at State, District and Local level, the Implementing Agency performance is rated Moderately Satisfactory. (c) Justification of Rating for Overall Borrower Performance Rating: Moderately Satisfactory With a Moderately Satisfactory rating for government performance and a Moderately Satisfactory rating for implementing agency performance, overall Borrower performance is rated Moderately Satisfactory. 6. Lessons Learned The lessons emerging from this project are as follows: 78. Decentralization. In order to implement decentralized RWSS service delivery, strong institutions and political will is needed at State, District and GP level. For JNP I and II, the presence of KRWSSA at the State level, and technical support from ZP for local governments was essential for successful implementation. The success of such a model requires significant Bank dialogue with government (as well as technical assistance support) before project effectiveness. It is also necessary to build adequate time and flexibility into the design of RWSS projects. 79. Ensuring sustainability. The project was able to establish a culture of paying for water and also used the sustainability monitoring index to assess completed schemes across several parameters, however many GPs were unable to establish sustainable cost recovery mechanisms and, as a result, tariff collection targets were not met. This is linked to larger sector issues regarding scheme sustainability, which needs to be systematically thought through and addressed across other RWSS projects. A Sustainability Framework was established under this Project. Such a framework, backed up by legislative support, is necessary to ensure consistent and uniform implementation of RWSS Projects across the State. 80. Capacity building. RWSS projects that implemented in a decentralized environment should build in additional time to enhance capacity of the lowest tier of local government agencies. For JNP I and II, GPs lacked experience in managing water schemes and required extensive training to perform procurement, financial management, and M&E functions. Ultimately, this led to some implementation delays. 21 81. Community Management: Community management is difficult to implement for MVS schemes, and can lead to implementation delays as seen in JNP I and II. For RWSS projects that include MVS, it may be necessary to spend time addressing these challenges before the schemes are implemented, or explore other management strategies. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 82. Annex 7 provides a summary of the Borrower’s ICR. The report was very well prepared, drawing on a strong evidence base. The overview of the project design and assessment of its implementation and outcomes are consistent with the ICR. The Borrower’s evaluative comments are highlighted the following: (i) the project improved the Rural Water Supply and Sanitation Sector in Karnataka; (ii). The Bank’s role was highly valued and a good working relationship was established between Bank staff, GoK and implementing agencies; (iii) the importance of maintaining and enhancing decentralized service delivery piloted under this Project. The Government of Karnataka had no comment on the draft ICR shared with them. (b) Cofinanciers Not Applicable (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society) Not Applicable 22 Annex 1 – KRWSSP I (JNP- IDA Credit Number 3590 –IN) (a) Project Cost by Component (in US$ million equivalent) Appraisal Actual /Latest Percentage of Appraisal Components Estimate Estimate (US$ million) (US$ million) Component A : Community 166.02 173.92 104.76 Development and Infrastructure Building Component B: Institution 21.33 15.91 74.59 Building Component C: Sector 6.09 1.11 18.23 Strengthening Programs Total Baseline Cost 193.44 190.94 98.71 Physical Contingencies Price Contingencies Total Project Costs 193.44 190.94 98.71 Project Preparation Facility (PPF) Front-end fee (IBRD only) 193.44 190.94 98.71 Total Financing Required (Total rows and percentage column will be calculated by the system) (b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower 20.75 0.00 0.00 Local Communities 10.98 54.44 495.81 International Development Association 151.60 136.50 90.03 (IDA) Local Govt. (Prov., District, City) of 10.11 0.00 0.00 Borrowing Country Total 193.44 190.94 98.71 23 II. KRWSSP – II (Additional Financing Project - IDA Credit Number 47680 –IN) (a) Project Cost by Component (in US$ million equivalent Appraisal Actual /Latest Percentage of Appraisal Components Estimate Estimate (US$ million) (US$ million) Component A : Community 148.30 143.65 96.86 Development and Infrastructure Building Component B: Institution 12.72 11.98 94.18 Building Component C: Sector 9.56 1.99 20.82 Strengthening Programs Total Baseline Cost Physical Contingencies 4.13 Price Contingencies 5.20 Total Project Costs 180.00 157.62 87.6 Project Preparation Facility (PPF) Front-end fee (IBRD only) Total Financing Required 180.00 157.62 87.6 (b) Financing Appraisal Actual/Latest Type of Estimate Estimate Percentage of Source of Funds Cofinancing (USD (USD Appraisal millions) millions) Borrower Local Communities 30.00 30.62 102.00 International Development Association 150.00 127.00 84.67 (IDA) Local Govt. (Prov., District, City) of Borrowing Country Total 180.00 157.62 87.56 24 Annex 2. Outputs by Component Component A: Community Development and Infrastructure Building (Village Level) The component on Community Development and Infrastructure Building includes the following sub- components: A.1.1 Community Development Support The sub-component mainly caters to recruiting the services of over 22 Support Agencies during Jal Nirmal Project. The SAs provided support to GPs and project communities in technical, financial and management aspects. During the AFP, 16 additional SAs were recruited to provide technical and social support for 18 MVS. For the AFP, instead of SAs to support SVS, technical agencies were recruited to provide engineering surveys. Individual consultants and coordinators at the district level also supported the GPs. KRWSSA took the necessary steps to ensure that the SAs were from different parts of the state and had the necessary skills to support project activities. Immediately upon selection, KRWSSA provided training to the selected SAs to enable them to gain understanding on the project objective and the expected outcomes. SAs later carried out similar training programmes at the district level. A.1.2 Women Development Initiatives The sub-component mainly catered to providing training for women to enhance their participation in water supply and sanitation activities. The aim was to enable women to serve as “change agents” for hygiene behaviour. Additionally, under this component, women’s groups were encouraged and supported to establish of sanitary marts. This increased household latrine construction substantially, as the required materials were available in villages, reducing the cost of transportation. Other key achievements under this sub-component are indicated below:  A total of 37,551 training programs were held across the project area to train over 333,897 women. The training programs were conducted by the SAs. In addition to training opportunities, women also participated in 96 exposure visits, and 971 cross learning programs.  Self Help Groups (SHGs) were set up in each participating village.  Over 28 sanitary marts and 31 supply chains were established in the project region between 2002 and 2005.  Over 80,000 women are members of VWSCs, constituting 35% of all members under the JNP and close to 50% under the AFP. Women hold at least 392 executive posts in the 4,806 VWSCs formed under the project. In a number of villages exclusive women’s committee were also set up for monitoring and evaluation. A.2 Infrastructure Building This sub-component mainly focused on building water supply schemes, implementing groundwater recharge measures, promoting community sanitation and household sanitation including constructing household latrines and providing smokeless chullahs, and improving drainage and lanes. The physical progress covering the various elements of this sub-component are as follows: 25 A.2.1 Water Supply Schemes: A total of 3,273 schemes were implemented to provide water supply to over 4,322 villages in the project area. A variety of technologies were utilized to meet the site-specific requirements. The achievements under this subcomponent surpassed the targets at appraisal and for the AFP by 122% and 109%, respectively. Private household connections were provided on an on-demand basis with a mandatory requirement for the household to fund the cost. At project completion, over 60% of the households in the Project area have private household connection. The water supply schemes were implemented using a variety of technologies to ensure that they were site-specific. More importantly, community concurrence was ensured through extensive consultations prior to the selection of the technology. The array of technologies utilized is discussed later in this annex. A.2.2 Groundwater Recharge Measures: A total of 1,419 groundwater recharge measures were implemented to augment groundwater levels in a number of schemes. These measures included check dams, infiltration galleries, and point recharge structures. Under the AFP, 92 point-recharge structures that use v-wire technology were implemented. A.2.3 Sanitation A total of 322,938 household latrines (229, 000 in KRWSSP I) and 93,938 (under the AFP) were constructed against a total target of 356,476 (204,000 in JNP I and 152,476 in JNP I), respectively. Additionally, a total of 207 community latrines were constructed under the JNP against a target of 700. Under KRWSSP I, 1,735 institutional latrines were built for schools and GP offices against a target of 700; under the AFP, 2,260 against a target of 2,700 were built. Upon the launch of Total Sanitation Campaign in April 2005, the role of KRWSSA was continued in promotional activities for constructing HHLs. In addition, 422,104 smokeless chullahs (336,000 in JNP and 86,104 in the AFP) were commissioned for Project area households. A.2.4 Drainage and Lane Improvement Drainage and lane improvement was one of the critical infrastructure building measures that was implemented under the. A total of 1,750 drainage and lane improvement works were carried out across all Project villages. The drainage and lane improvement works have led to improvements in the immediate living environment around the households and has provided an incentive for the community to participate in the Project. A.3 Indigenous Peoples Development Program The Bank policy on indigenous peoples outlined in its Operational Directive (OD) 4.20 was successfully implemented in the project. The OD 4.20 stipulates that the Indigenous Peoples in the region benefit from the project and, any potential adverse effects from the project should be avoided or mitigated. In order to address issues related to inclusion, equity, accessibility and for the empowerment of social and sub-social groups living in the Project district, the Integrated Tanda Development Plan (ITDP) was developed and implemented. In line with the Bank Policy, the ITDP involved community development and infrastructure building in settlements inhabited by identified indigenous peoples, including the Lambanis living in Tandas and Siddis in Siddi habitations of Uttara Kannada. 26 About 424 settlements were selected based on selective targeting and prioritizing. As part of IEC campaigns between 2002 and 2005, 112 films screenings, 51 cable shows, 50 audio programs, 133 wall paintings and 15 folk-media programmes were conducted in the districts of Dharwad, Gulbarga and Haveri. Additionally, over 315 awareness campaigns and 11 exhibitions were conducted for the benefit of the Lambinis to familiarize them with institutional arrangements emerging from the project. In each of the identified settlements, all the infrastructure components viz., water supply schemes, groundwater recharge, community and household sanitation, smokeless chullahs, drainage and lanes were implemented. The project has successfully completed infrastructure building activities in all selected settlements. Component B:Institution Building The component on Institution Building includes the following sub-components: B.1 Project Management This sub-component financed investments and operating costs of KRWSSA and the DSUs housed in the 11 ZPs. The investment costs covered procurement of office-equipment, vehicles, and a range of consultancies for technical assistance, including M&E, SHP, Training, Audit and Construction Quality Surveillance. B.2 Sanitation and Hygiene Promotion The three distinct elements of Sanitation and Hygiene Promotion (SHP) - personal hygiene, household hygiene and community environmental sanitation - were achieved by implementing it as a social-marketing program. A SHP Consultant was appointed to finalize the strategy formulation and production of IEC materials. A total of 2,379 training and dissemination workshops for key stakeholders, including for Anganawadi workers, GP / VWSC members, and other professionals involved in the project. A hygiene education professional, who worked under the guidance of a state level specialist, was placed in each project district to promote behavior changes in communities. These promotional activities have added to the positive effects from building 332,478 household latrines and providing 422,104 smokeless chullahs. Sanitation and hygiene promotion resulted in achieving 93 % increase in sanitation and 146% increase in use of smokeless chullahs, as compared to the situation at appraisal. Further, the SHP has resulted in improved hygiene behaviour among the households in the project villages. B.3 Capacity Building This component financed costs to build the capacity of stakeholders of various institutions. The target groups consisted of policy makers in the government, staff of KRWSSA and associated government departments, staff of ZPs, TPs, SAs, grass-root level participants encompassing GPs, and other user groups. More than 58,041 (40,682 under JNP and 17,359 under AFP) training programs were conducted against a target of 24,465 (4959 for JNP and 19,506 in AFP). 98% of the participation in these programs was from stakeholders at the district level and the GP level. The project also included specific training programs to build capacity to implement multi-village water supply schemes. B.4 Gram Panchayat Strengthening 27 This sub-component financed three key things for GPs – (i) implementation of small-developmental works in 369 GPs; (ii) procurement of office equipment, including computers, printers and copier on an as-needed basis by KRWSSA and RDPR; and (iii) personnel for account management. Component C: Sector Strengthening (State Level) The component on Sector Strengthening supported new roles that the government had to carry out as a result of the Project. Component C has six sub-components. C.1 Creating Enabling Environment Under this sub-component, over 96 advocacy workshops were held to disseminate the sectoral reforms to a wider audience. The advocacy workshops were attended by over 3,069 participants from government, private sector, NGOs, citizen groups and community organizations. Additionally, representatives from KRWSSA, RDPR, PRED, GPs and VWSCs participated in exposure visits to other projects to gain an understanding of reform effectiveness. In addition, the project generated publications including a Technical Manual, Procurement Manual, and Finance Manual and “We, Our Water, Our Life – Best Practices in Community Water Management” for use by other programs across the country. KRWSSA also hosted a website for dissemination of the project’s performance for the benefit of public in general and project stakeholders in specific. A study was carried out to determine the institutional arrangements for ensuring sustainable rural water supply and sanitation facilities. As part of the study, a long term sustainability framework was developed. The dissemination of reforms and creating greater awareness was performed effectively through these activities. C.2 Sector Information Management System (SIMS) This sub-component supported the design of a system to scale up the sector information management system. A number of computers and other equipment were procured to modernize the sector information management system. The SIMS helped the project achieve a two-way flow of information between the state level policy makers and the district and GP members. This allowed for effective policy formulation and improved O&M. Under the AFP, GP coordinators and accounting firms were also employed, to enable smooth flow of information between the GPs and the state. A management control was also instituted through the use of internal auditors. C.3 Continuous Learning This sub-component enabled the state to monitor sustainability and pilot alternate institutional models to formulate a long-term sectoral strategy and an action plan for its implementation. Under this sub-component, four consultancy studies were performed to conduct research and experimental activities to learn from the project experiences and achieve continuous improvement in sector performance. Additionally, KRWSSA participated in a number of tri-partite Portfolio Review (TPR) meetings during the term of the project. The TPR meetings were held once in six months at various locations across the country. The participants at the TPR meetings included representatives from the Department of External Affairs (DEA) GoI, World Bank, New Delhi and the States. The TPR meetings were an opportunity for the participating states to share their project-related experience and learn from one another. C.4 Goods and Equipment 28 This sub-component enabled the state to procure a range of state-of-the-art equipment for scientific water prospecting. Under this sub-component, vehicles and other equipment were also procured and professionals were trained in their use. C.5 Water Quality Monitoring Providing high-quality potable water was one of the key benefits envisaged from the project. The project institutionalized water quality testing and also involved the Chief Executive Officer of the ZP and the District Health Officer of the ZPED. Under this sub-component, each of the project districts was provided with quality monitoring equipment. Approved private testing agencies and laboratories were used to conduct water quality tests. C.6 Piloting water quality affected habitations The AFP focused on providing improved water supply in quality-affected habitations. To support this, various technologies such as solar membrane filter, SCADA, solar pumps, mobile filtration units, geo-membrane units and V-wire technology were implemented under this sub-component. 29 Annex 3. Economic and Financial Analysis 1. Project Benefits and Rate of Return estimated in PAD The project planned for investments in: (i) water supply infrastructure; (ii) sanitation facilities; (iii) capacity building as well as capacity support to the communities and local self-governments; and (iv) other managerial costs. Economic analysis in the PAD was based on generating data from 23 proposed schemes, and drawing samples from different sources of water supply and technologies. The analysis focused on quantifying benefits from: (i) time savings in fetching water; (ii) the incremental water consumed; (iii) health benefits from reduction in diarrhea and gastroenteritis diseases; (iv) time saved as a result of household latrines ; (v) time saved resulting from improved ‘chullhas’; and (vi) value of capital and O&M costs saved. On average, a household spent 1.37 hours/day on water collection and the expected time savings was 0.81 hours/household/day after the project. The incremental water consumption, as a result of improved availability, estimated as the difference between the designed supply (49 liters per capita per day (lpcd)) and the current consumption (34 lpcd), was 15 lpcd. With regard to household latrines and ‘chullhas’, it was expected that time saving will be for 25% of the households only. The benefits from reduction in morbidity of diarrhea and gastroenteritis (GE) and reduction in mortality from GE had been considered rather ‘conservative’. Estimations were made as a result of both direct and indirect costs associated with the two diseases- value of the labor days lost and the treatment costs. Benefits and costs were forecasted over a 20 year horizon. Switching values were calculated using the 12% opportunity cost of capital in India. The Economic Rate of Return (ERR) estimated for the project was 21.4% for the whole project (all costs and benefits) and 29% if drains and lane improvements were excluded. ERR of water supply alone was estimated at 24.6%. 2. The ICR economic analysis closely followed the appraisal methodology. Economic values generated by the Jal Nirmal Projects I and II16, emanates from a representative randomized sample17 of 300 schemes, spread across the two phases.1819 The set of stakeholders was defined so as to include beneficiaries of these 300 schemes and a proportionate percentage of project team and partner resources20. Tangible and non-tangible socio-economic benefits created by the projects were identified, and where possible, values of tangible benefits were quantified over 10, 15 and 20 year time horizons21. Different time horizons were considered as it became evident that some of the technologies, especially GW based schemes, may not sustain beyond 15 years. Only the surface source based schemes seem to have a potential to sustain up to 20 years. The data was collected through primary survey and corroborated by community discussions. The data on health benefits was further corroborated by discussions with medical practitioners A discount rate of 12.5% was used for calculation of ERR. Given the differential impact of the various technological options, the cost benefit analysis segregated benefits by technology and computed the weighted average based on the 16 Jal Nirmal I refers to the original credit and Jal Nirmal II refers to the Additional Finance Credit. 17 Schemes selected are representative of districts, the different types of schemes and technologies used 18 To exclude nascent schemes in their period of morphosis towards stable forms, only schemes which had been operational for at least one year were allowed to compete for selection in the random sample. 19 Economic Analysis forms a part of the Sustainability Assessment Study done by Ms Ecorys, an international consulting firm. 20 Proportionate to the share of these 300 schemes in the total budget of JNPI and JNPII. The approach was premised on VIP based participatory rural appraisal methods which also included structured interview scheduling with 1000 households. 21 Assuming a uniform 20 year horizon was found impractical in respect of certain technologies and hence three different durations were considered. Further, instead of extrapolating benefits of all schemes to a particular point in time, benefit streams of schemes were considered to begin from the respective year of commencement of operation 30 total project value. The analysis has been conservative in estimating benefits and liberal in calculating costs. As a result, the net Project benefits are expected to be higher. 2. Costs and benefits Economic analysis of investments draws from: (i) the primary information gathered from additional benefits accrued to user community; and (ii) from secondary information on the costs. 2.1 Costs Costs considered for economic analysis include: 1. Direct capital investment in infrastructure development for water supply and sanitation, and lanes and drains; including costs incurred on community development, women development initiatives, and indigenous peoples development programs 2. Costs for institutional development, capacity building, strengthening of PRIs and VWSCs, and promotion of sanitation and hygiene 3. Costs incurred on program management including: (i) expenses on dedicated institutional resources and proportionate expenses on non-dedicated resources, and (ii) expenses on wages and salaries of dedicated team members (e.g. KRWSSA and DSU), and proportionate expenses on non-dedicated staff (e.g. PRI staff, ) engaged in program management 4. Costs incurred on operation and maintenance of infrastructure and systems, including costs incurred by VWSCs or other agencies on levy and collection of user charges 2.2 Benefits The project resulted in tangible and non-tangible benefits. The tangible benefits of the project include savings in time, avoided cost of medical expenditure from illness, avoided wage loss due to illness, and utility gains from increased water supply. The intangible benefits include women’s empowerment, increased school attendance, particularly for girls, and improved social status for marginalized communities. The analysis computes value of three of the tangible benefits from those mentioned above. The intangible benefits are listed in a tabular format, recognizing that, while these are important but no attempt has been made to quantify these. Tangible benefits  Time Savings: Members of the households had to spend time walking to fetch water, often making several trips through the day. The project has provided household connections, and as a result, residents no longer have to spend as much time fetching water. As a result of the Project interventions, user families are spending 30 minutes to 3 hours per day less on water collection, as compared to the pre-project situation. The gross benefit has been computed using the formula “time saved per household” x “adjusted daily wages” x “households in the community”.  Avoided cost of medical expenditure: The consumption of drinking from unsafe sources was a health hazard to the community. Project interventions resulted in safe piped water, and led to reduced instances of water borne diseases. As a result, average households’ medical expenditure reduced. After the scheme implementation, the medical expenditure per family per month reduced from RS 300 to Rs 100. The gross benefit has been computed using the formula “reduction in household expenditure” x “households in the community” 31  Utility gain from incremental water: The project was undertaken because the consumers were not receiving adequate quantity of water supply. Water usage increased from the pre- project numbers of 30 to 40 LPCD, to 55 LPCD after the project. The increase in water availability is expected to have resulted in utility gain. The computation of utility gain is a complex process, requiring expensive surveys to discover its true value. For the sake of simplicity, the analysis assumes that price for operation and maintenance of water supply systems, for which collection rate is 90 percent or above, is a suitable proxy for the utility gain. This understates the true value of utility gain but is consistent with the principle of computing benefits conservatively. Intangible benefits The following are the intangible benefits from the project22:  As the project adopted community based decentralization approaches, huge capacity has been built in the local communities and PRIs in areas such as procurement, financial management, and contract management. PRIs also interface with external agencies, which is useful for both the project as well as other development activities.  The project enabled empowering vulnerable sections of community and women to take part in local governance and other developmental process. Capacity building and engagement in the VWSCs has allowed women to take part in O&M of schemes as well as other developmental activities beyond water supply and sanitation.  Improved school attendance due to less time spent fetching water. This also results in better prospects for higher future income.  As a result of the project, 25 to 40 % of the households have constructed and are using HHL. This not only saved time, but also ensured privacy and dignity, particularly for women. In addition, around 66% of the households are using smokeless chullahs, which has reduced respiratory problems.  Sector strengthening activities, especially, technological innovations, have improved the overall RWSS sector in the State.  Due to improved services, Project villages have reported inward migration of retired persons and of residents form nearby towns. This may also increase property value and improve investments in the districts.  Creation of new job opportunities, especially for private sector consultants, NGOs, and other social entrepreneurs, due to program activities including for O&M of schemes.  The Project activities led to an improved environmental sustenance due to artificial recharge of source aquifers. 3. Economic Returns of the Project At credit closure, the project has benefited 1,871,240 people spread across 625 GPs in 11 districts of the State. Economic benefits have been mapped for 15 years for simple (Gravity and Ground Water based schemes) and 20 years for large/complex surface water schemes. Against a project cost of US$ 356.50 million, the ERR for the project at credit closing is estimated at 29%, with Borewell- 22 These intangible benefits are real and do reflect true values. However, they do not lend themselves to valuation. It is difficult to derive or assign a figure. 32 based SVS recording as high as 40%, and surface source schemes at 23-33%. The NPV of the project (at an assumed discount rate of 12.5%) works out to INR 1,911 million, which translates to US$35 million (at INR 55 to a US$). In comparison, these values are higher than the estimates from the project conceptualization. An ERR of 22% had been estimated assuming a uniform horizon of 20 years for all technologies. Table-1 Sl Particulars Estimated at No Project Design Credit Closure 1 Project Cost INR 16880 million INR 18460 million (US$ million) 356.60 335.63 2 ERR 21.40 29 3 NPV --INR million 1911 --US$ million 34.74 The analysis reveals significant differentials across the various technologies as well as districts. Overall, ERR ranges between 8 to 40% (Table-2). Several factors contribute to the significant differentials: (i) the heterogeneity in the pre-project situation in water availability status; (ii) population to be served and the geo-physical situation; (iii) technology adopted; and (iv) distance from the source. Lower returns are understandable in the case of Gravity and ITDP schemes as they are isolated settlements and households are quite small. One significant determinant was the time horizon. Returns on investment declines significantly if the time horizon gets reduced (to 10 or 15 years), emphasizing the importance of an effective O&M system. Table – 2: Return on Investment Net Present Value ERR Sl No Technology (US$ million) (%) 15yrs 20yrs 15yrs 20yrs Ground 1 Water 9.608547818 9.608547818 40 40 2 ITDP 0.064548218 0.064548218 10 10 33 3 Gravity 0.770409545 0.770409545 8 8 4 SSI 0.019640258 0.027404164 29 33 5 SSR 0.710602943 0.771088782 21 23 6 MVS 20.43075908 23.49537293 22 27 31.60450786 34.73737145 26 29 Details of costs and benefits considered Estimated cost: The cost of JNP I & II was Rs 9,296.675 million and Rs 9,398.million, respectively. JNP I schemes are completed and being managed by user communities for the past 3 to 10 years. Most schemes under JNP II are also complete; however, O&M has started recently. The ERR is estimated based on the entire Project cost including the construction costs, which vary with schemes and districts. Other costs included in the calculations are for capacity building and community development. The per capita cost of community development is Rs. 194 and Rs 525 for JNP I and JNP II, respectively, for and capacity building, it was Rs.213 for JNP I and Rs. 240 for JNP-II. O&M costs include: electricity, manpower and others consumables such as disinfectants and minor repair and replacements. Time savings: The absolute time saved has been gathered on an annual basis from residents of Project villages. The time saved by a household varies from 1 to 3 hours per day in different schemes, depending on the pre-project situations. It also includes the reduction in time spent commuting for, collecting, and waiting for water as compared to the pre-project situation. To assign an economic value, total time saved is multiplied by the minimum wage rate for agricultural labor. The benefit from time saved is estimated based on the rate adopted in the JNP I PAD, which was Rs. 24.4 per day( in 2000-01) and then compounded based on the price index for agricultural laborers. For estimation of return, the time saved is compounded for an entire village, which is converted into working man days of eight hours. As the opportunity cost is limited and water collection was usually done by non-working family members and at odd time, the time saved has been reduced to 25% of the estimated person days for arriving at an opportunity cost for economic activities. Incremental water: Water availability in scheme villages during pre-project was estimated at 40 LPCD. Project design is for delivery of 55-70LPCD. The user community is getting benefitted from the increased water supplies. Incremental water availability gets reduced during the summer seasons by about 20% due to drying of source and inadequate power supplies. Hence, incremental water availability is estimated for 200 days. The benefit accrued is estimated by equating production cost of water at the rate of O&M cost for the scheme. Reduction in household cost of illness: The increased availability of water has influenced the user community to improve consumption and maintain healthier lifestyles, which has reduced the morbidity and medical expenditure. The primary survey showed that an average Rs 150 to Rs 300 per household per month is being saved on medical bills in villages where the Project was implemented. This reduction in medical expenditure varied between schemes and districts and it is one of the tangible benefits from the schemes. 34 Other Assumptions .  Exchange rate - US$ 1 = INR55  Economic usage of time saved 25%  8 working hours per day  100 working days per person per year.  33% time savings were transformed into economic benefits  Proportion of medical benefits accounted against improvement in WSS is 25%  Minimum proportion of households securing private water supply connections is 52%  Minimum hours of power supply for surface source schemes is 22 hours  A maximum of 20% of groundwater schemes requiring new sources at/around the tenth year 35 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Supervision/ICR Ghanasham V. Abhyankar Consultant SASDU Ashish Bhateja Senior Procurement Specialist OPSOR Francois Boulanger Sr Urban Economist MNSSU Michelle Lisa Chen Program Assistant SASDO Lead Financial Management Manoj Jain SARFM Specialist Priti Jain Senior Procurement Specialist SARPS Santhanam Krishnan Consultant EASOS TanujMathur Sr Financial Management Specialist SARFM Subhash Mittal Consultant SARFM D. Maruthi Mohan Consultant SASDC Senior Social Development Ramachandran R. Mohan SASDS Specialist Krishnamurthy Sr Financial Management Specialist SARFM Sankaranarayanan Mariappa Kullappa Water & Sanitation Specialist TWISA Srinivas Podipireddy Sr. Water & Sanitation Specialist SASDU Lakshmi Narayanan Team Assistant SASDO Pyush Dogra Environmental Specialist SASDI William D. Kingdom Lead Water & Sanitation Specialist SASDU Oscar E. Alvarado Sr. Water & Sanitation Specialist SASDU Task Team Leader Suryanarayan Satish Sr. Social Development Specialist SASDS Task Team Leader Sunita Singh Program Assistant SASDO N. S. Srinivas Operations Analyst SASDT (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY98 52.98 FY99 1.96 FY00 3 4.79 FY01 53 145.98 FY02 67 147.40 FY03 0.00 FY04 0.00 FY05 0.00 FY06 0.00 36 FY07 0.00 FY08 0.00 Total: 122 353.10 Supervision/ICR FY02 2.33 FY03 23 44.06 FY04 21 68.76 FY05 29 88.95 FY06 36 125.45 FY07 18 78.55 FY08 24 122.93 FY09 22 119.81 FY10 29 163.15 FY 11 20 80.28 FY 12 16 67.38 FY 13 20 72.90 FY 14 12 48.94 Total: 269 1,083.48 37 Annex 5. Beneficiary Survey Results Not Applicable 38 Annex 6. Stakeholder Workshop Report and Results N/A 39 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR 1.0 Project Information Government of Karnataka (GoK) implemented the World Bank assisted Karnataka Integrated Rural Sanitation and Water Supply Project covering 1,104 villages in 12 districts (became 16 districts after bifurcation) districts across the state during 1993-2000 (Cr. 2483-IN). Based on the encouraging results of the 1st World Bank project, GoK took up the Second World Bank Assisted Karnataka Rural Water Supply and Sanitation Project namely JNP I to cover a target of 2,500 villages coming under 700 Gram Panchayats (GPs) of 11 districts in North Karnataka. Encouraging from the success of Jal Nirmal Project, GoK sought additional financing from the World Bank for implementing the demand of community for additional schemes. Adopting the same objective, principles, institutional arrangement and implementation strategy as the JNP i.e. more of the same, the additional financing project covered another 1,600 villages in the same 11 districts of north Karnataka. The Jal Nirmal Project and the AFP ushered the state into a new era of reforms in the rural water supply and sanitation sector especially in terms of demand-response approach, community participation, devolution of responsibilities to the Panchayat Raj Institutions (PRIs), cost-recovery, 100% financing for Operation and Maintenance (O&M) and ensuring sustainability of services, among others. This summary reflects the completion of the Second Karnataka Rural Water Supply and Sanitation Project implemented between February 2002 and June 2010. (Hereinafter referred to as JNP or JNP I) and Project under Additional Financing implemented between July 2010 and June. 2014 (hereinafter referred to as JNP II). 2.0 Key Dates The key dates relevant to the project are as follows: No. Description of Activity Key Dates JNP I 1 Project Appraisal Document (Report No:23204-IN) Nov. 16, 2001 Credit Agreement and Project Agreement signed (Project 2 Jan. 25, 2002 Credit 3590-IN) 3 JNP I Launched Feb. 11, 2002 4 Total Sanitation Campaign Cell housed at KRWSSA April 1, 2005 5 JNPI extension approved Dec. 15, 2008 6 State Water and Sanitation Mission housed at KRWSSA April 1, 2009 Sector Strategy- Karnataka Rural Water Supply & 7 May 10, 2010 Sanitation- 2006-2015 finalized 8 JNP I Credit Closure Jun 30, 2010 40 No. Description of Activity Key Dates JNP II Additional Financing Project Request by GoK sent to Oct. 24, 2009 World bank Additional Financing Agreement Signed (Project Credit 9 Jul. 17, 2010 Cr. 4768-IN) 10 JNP II Commenced Jul. 17, 2010 Operation & Maintenance Policy Issued by RDPR – GO 11 Aug. 26, 2011 No. RDP/KWA/144/2002(P-2) 12 JNP II extension approved Mar. 31, 2013 Responsibilities of VWSC towards operation, 13 maintenance and management of RWSS and revised Dec. 2, 2013 circular issued vide No. RDP/KWA/807/2013 State Water and Sanitation Department established vide 14 Mar. 3, 2014 – GO No. RDP/56/RWS(2)2013 15 JNP II Credit Closure Jun. 30, 2014 3.0 Project Development Objectives The project assisted GoK in: i) Increasing rural communities’ access to improved and sustainable drinking water and sanitation services and its sustainability; and ii) Institutionalizing decentralization of rural water supply and sanitation (RWSS) service delivery to Gram Panchayats (village governments) and users’ group. 4.0 Project Components There are three main project components. Each project component has a few sub-components. The details of the main project components include the following; Component A: Community Development and Infrastructure Building (Village Level) This component involves providing support to community and user groups in social, technical and management aspects of planning, design, implementation and operations of water supply and sanitation facilities. The component comprised following four sub-components: i) Community Development Support ii) Women Development Initiatives; iii) Infrastructure Building; iv) Integrated Tanda Development Program (Lambanis and Siddis) Component B: Institution Building (Project Level) This component involved constituting VWSCs as sub-committee of Gram Panchayat and strengthening the Panchayat Raj Institutions (PRIs) in planning, design, implementation and maintenance of water supply and sanitation facilities. The component comprised the following four sub-components: (i) Project Management; (ii) Sanitation and Hygiene Promotion; (iii) Capacity Building; (iv) Panchayat Strengthening. Component C: Sector Strengthening Programmes (State Level) This component aimed to provide assistance for formulation of long-term sector policy, development of a sector information management system and incorporation of a continuous learning program to achieve constant improvement in the water sector management. The activities carried out focused on moving the government from the role of “provider” to “facilitator” of water and sanitation service. The component comprised the following sub-components: (i) Creating Enabling Environment; (ii) 41 Sector Information Management System; (iii) Continuous Learning; (iv) Goods and Equipment; (v) Water Quality Monitoring; (vi) Piloting water quality affected habitations (only in JNP II). 5.0 Project Financing, Cost Sharing Pattern and Rules Of Engagement Finance Pattern Credit Total Project Contribution at Start Line Cost WB GoK, GP &Users’ (at Start) Community USD Million USD Million USD Million JNP I 193.44 151.60 41.84 JNP II 180.00 150.00 30.00 TOTAL 373.44 301.60 71.84 Project Cost Sharing Pattern Project Component Contribution Users GPs Project Water Supply 10% 5% 85% Lanes &Drainage 5% 10% 85% Household Latrines i) Initially stage (Project Fund) : Rs.1200/- for APL Rs.2000/- for BPL ii) Implementation stage (TSC fund): Rs.3700/- for BPL iii) Presently :Rs.10000/- for BPL& :Rs.15000/- for SC&ST Smokeless Chullahs i) Initially stage : Rs.143/- per unit ii) Implementation stage: Rs.240/- per unit iii) End of Project : Rs.350/- per unit (mud chullahs) Rs.450/- per unit (molded chullahs) Rules of Engagement The project conceived democratic procedures called rules of engagement which have been adopted in the selection of villages. The rules of engagement include the following: I. Demand Driven Development: The project adopted a Demand Driven Approach that required that the communities must demand their desire for water services. II. GP Selection Criteria: GPs were included in the project by adopting a self-selection process, a prerequisite of demand driven development. All the GPs in the project area that agreed to the project rules were eligible to apply. III. Village Selection Criteria: The criteria for selection of villages to participate in the project included obtaining an agreement from the villages to adhere to project approach and rules. However, those villages that had a baseline supply level of 55lpcd of safe water were not eligible to participate. Further, in JNP II, the priority was given to villages having water quality issues. IV. Community Contribution and Cost Recovery: The participating communities took the lead in implementing rural infrastructure schemes including water, sanitation, lanes and drainage through mandatory contribution to all construction and operating costs of water and sanitation systems. 6.0 Institutional Arrangement 42 GoK had the overall responsibility for managing project implementation. The institutional arrangement of the project is shown below: Level Component Responsibility Village Level Community Development & GP & VWSCs with Support Infrastructure Building Agencies Project Level Institution Building Zila Panchayat with KRWSSA State Level Sector Strengthening Program KRWSSA with GoK The institutional arrangement envisaged for the project revolved around the PRIs being the prime- mover of the project covering all stages. However, the PRIs were provided support from the various government agencies at the state and district level including KRWSSA, PRED and RDPR. Further, the PRIs were provided additional assistance through the SAs, consultants and NGOs who were recruited by KRWSSA to work with the PRIs on specific schemes. Karnataka is the first state in the country to involve the three-tier PRIs to create a vital service to the rural community. Implementation Mechanism The JNP’s Bottom-Up implementation model has ensured required convergence of acts and actors partnering in project implementation. This has substantially improved the sustainability of schemes implemented under the project. The Bottom-Up model for the project implementation is depicted in Figure below: Bottom-up Implementation Model for JalNirmal Project Implementation of the project started slowly and gathered pace after the successful completion of the pilot stage and finally exceeded the coverage targets. 43 7.0 Implementation Performance 7.1 Project Coverage The project is spread across 11 districts in Northern Karnataka that comprises 2,305 Gram Panchayats and 9,693 villages. The JNP I and AFP together cover 1,369(59.4%) GPs and 4,796 (49.5%) villages in the project area. The project was implemented in 1,383 GPs and 4,796 villages about 7% and 16.97% higher than the respective appraisal targets. The details of the coverage are provided below: Credit Villages GPs Line PAD Achieved % PAD Achieved % Target Variance Target Variance JNP I 2,500 3,062 22.5% 700 744 7% JNP II 1,600 1,734 8.4% 623 625 0.3% TOTAL 4,100 4,796 16.97% 1,323 1,369 3.5% 7.2 Achievement of Development Objectives (DO) DO 1 (a): The successful achievement of DO 1 is clearly depicted in the tables below. Additionally, for JNP I all PAD targets were met and surpassed; and for JNP II, other that provision of individual latrines, all targets were exceeded. Population having access to improved water supply and sanitation services – JNP I Achievement Coverage Core Indicators Units Baseline Target in JNP I JNP I in % People provided with access to Nos. 1,041,588 4,200,000 5,150,058 123% improved water services People provided with access to Nos. 0 220,000 269,000 122% Individual Latrines People provided with Nos. 0 220,000 354,000 161% Smokeless Chullahs People provided with improved lane and drainage Nos. 0 2,600,000 2,600,000 100% services Population having access to improved water supply and sanitation services – JNP II Achievement Coverage Core Indicators Units Baseline Target in JNP II JNP II in % People provided with access Nos. 277,862 1,781,584 1,876,866 105% to improved water services Households provided with HH 25,469 152,476 111,616 73% access to Individual Latrines Households provided with HH 0 82,103 95,873 116% Smokeless Chullahs People provided with improved lane and drainage Nos. 88,415 1,242,500 1,892,024 152% services 44 The component-wise - achievement of JNP-1 and JNP-2 are given below: JNP I: DO I Description Units Baselin PAD Achievemen (a) e Target t of JNP I % DO I increasing rural communities' access to improved and sustainable (a) drinking water and sanitation service; A 1 % of households having access Receiving at least 17.80 100.00 113% 40lpcd supply SC / ST % HH 18.40 100.00 117% ITDP - Lambani and % HH 7.34 100.00 253% Siddhi General Population % HH 27.67 100.00 108% Having piped water 2 % HH 8 30.00 47% connection Walking < 150 Mts to 3 % HH 15.25 100.00 96% fetch water Having adequate 4 %HH 11.50 90.00 94% pressure at tap B Improved Services – Village level in % Water Supply system 5 %Villages 18.00 90.00 92% functioning Water available in % 6 17.00 90.00 90% summer Villages Most street taps have % 7 12.00 90.00 85% taps Villages Chlorination done every % 8 1.00 80.00 85% day Villages Lane & Drainage % 9 covered within the 3 80.00 93% Villages village No stagnation in drains % 10 of 100% drainage 2 80.00 72% Villages covered villages C Sanitation Coverage > 30% HH having % 11 3 80.00 61% latrines Villages Households having 12 latrines including ITBP, %HH 8.25 35.00 38% BPL and Others 13 Smokeless- chullahs % HH 3.25 35.00 60% D Improved Health and Hygiene Status in % Washing hands with 14 4 70 47% soap before eating 15 Washing hands with 1 70 49% 45 DO I Description Units Baselin PAD Achievemen (a) e Target t of JNP I % soap after defecation Using latrines for 16 defecation (when they 10 70 73% have it) E Overall functioning and user satisfaction No. of schemes Nos. 17 functioning 18 80 95% Schemes satisfactorily Users rating service No. 18 10 80 95% delivery as satisfactory Schemes JNP II DO I Description Units Baseline PAD Achievemen (a) Target t of JNP II % DO I increasing rural communities' access to improved and sustainable (a) drinking water and sanitation service; A 1 % of households having access Receiving at least 40lpcd supply SC / ST % HH 11.79 100 108% ITDP - Lambani and % HH 7.19 100 100% Siddhi General Population % HH 18.46 100 110% Total BPL House Holds % HH 16.54 100 100% Total Other House % HH 23.45 100 155% Holds Having piped water 2 % HH 8.06 40 75% connection Walking < 150 Mts to 3 % HH 14.30 100 78% fetch water Having adequate 4 %HH 10.20 90 80% pressure at tap B Improved Services – Village level in % Water Supply system % 5 15.62 90 90% functioning Villages Water available in % 6 17.92 90 80% summer Villages Lane & Drainage % 7 covered within the 11.80 80 100% Villages village C Overall Functioning and User Satisfaction Water Supply Schemes 8 Nos. 29 513 99% Completed 9 Schemes Functioning % 15.00 80 100% 46 DO I Description Units Baseline PAD Achievemen (a) Target t of JNP II % Satisfactorily Schemes Users Rating Service % 10 14.00 80 90% Delivery as Satisfactory Schemes D Sanitation Coverage House hold toilet 11 %HH 11.00 65 73% coverage Smokeless- 12 % HH 0.00 35 117% chullahs(stove) GPs declared NGP Nos. 13 0.00 250 49% awardees GPs DO 1 (b): Sustainability While sustainability has been part of the main development objective since the beginning, the increased focus enabled KRWSSA to carry out specific studies to ascertain sustainability of the completed schemes. Details of achievement of DO 1 (b) are provided below: JNP I DO I Description Units Baselin PAD Achievement (b) e Target of JNP I % DOI Its sustainability (b) E Source Sustainability – % of Completed Schemes % 19 Constant Good Yield 2.00 80 84% Source % 20 Partial but Adequate Yield 53.00 20.00 8% Source % 21 Source Failure* 45.00 5 2% Source F Financial Sustainability – % of Completed Schemes Paying water charges for 22 % HH 1 70 65% street taps Paying water charges for 23 % HH 12 80.00 74% Hhold connections % User fees collected % 24 1 80 65% towards O&M cost VWSC G Institutional Sustainability - % of Completed Schemes VWSCs Action Plan % 25 0 80 107% endorsed by GPs VWSC VWSCs preparing budget % 26 and collecting water tariff 2 80 100% VWSC regularly VWSCs having women > % 27 4 90 122% 33% VWSC 47 DO I Description Units Baselin PAD Achievement (b) e Target of JNP I % VWSCs having SC/ST > % 28 3 90 122% 18% VWSC TWSCs preparing budget % 29 and collecting water tariff 0 80 70% TWSC regularly TWSCs having women > % 30 0 90 105% 33% TWSC JNP II DO I Description Units Baseline PAD Achievement (b) Target of JNP II % DO I Its sustainability (b) F Source Sustainability – % of Completed Schemes 14 Constant Good Yield % Source 2.00 80 73% Partial but Adequate 15 % Source 5.00 15.00 5% Yield 16 Source Failure % Source 48.00 5 2% G Financial Sustainability – % of Completed Schemes Paying water charges 17 % HH 1 70 35% for street taps Paying water charges 18 % HH 8 80 75% for Hhold connections % User fees collected 19 % VWSC 1 80 61% towards O&M cost 20 Collection efficiency % VWSC 1 60 60% H Institutional Sustainability - % of Completed Schemes VWSCs Action Plan 21 % VWSC 4 80 100% endorsed by GPs VWSCs preparing 22 budget and collecting % VWSC 1 80 80% water tariff regularly VWSCs having 23 % VWSC 7 90 100% women > 33% VWSCs having 24 % VWSC 4 90 100% SC/ST > 18% TWSCs preparing 25 budget and collecting % TWSC 0 80 82% water tariff regularly TWSCs having 26 % TWSC 0 90 100% women > 33% During the project, Sustainability Monitoring Exercises (SME) were carried out through a multidisciplinary team representing project stakeholders focusing on system functioning (technical, 48 social, institutional and financial), O&M, VWSC functioning and User’s perception. The SMEs were carried out in three-rounds as shown below: 7.3 Details of SME Rounds SME Results Schemes JNP SME Rounds Year Highly Likely Uncertain Unlikely Nos Likely 1st round 56% 35% 2% 7% SME (In- 2008 2460 House) 2nd round 51% 40% 1% 8% SME JNP- 2009 300 (External 1 Consultant) 3rd round 70% 27% 1% 2% SME 2010 300 (External Consultant) 1st round 82% 15% 3% 0% SME (In- 2014 436 House) JNP- 2 2nd round 59% 33% 07% 01% SME 2014 300 (External Consultant) The table included above reveals, more than 90% schemes fall under likely to highly-likely sustainable categories which means schemes are providing water on daily basis and management of schemes (technically, institutionally, socially and financially) is satisfactory. The reasons affecting schemes to fall under ‘Un-Certain’ or ‘Un-Likely’ sustainable categories, as emanated from the assessment, are being addressed locally making the schemes to move to higher sustainability level. 7.4 Development Objective – 2 Achievement of DO 2 can be seen from the results on the ground that shows that successful decentralization has been accomplished by aligning the services with the existing three-tier PRI set up – Zila Panchayat, at the district; Taluka Panchayat (TP) at Taluka; and Grama Panchayat (GP) at the village level. Additionally, it confirmed the viability of the project’s demand - approach in which the GPs and VWSCs make decisions, procure materials, carry out construction, manage funds, share in the capital cost and manage the system operations with their own resources. Project GPs, hitherto used to handling funds of the order of a maximum of Rs. 500,000, today, are managing construction funds ranging from Rs. 5 million to Rs. 10 million. The entire civil works costing Rs. 800 Crores were devolved to the GPs and has been managed by GPs efficiently. In summary, there is ample evidence to demonstrate that GoK has : (i) decentralized WSS related decision making to the GPs and user groups; (ii) this is adequately backed up by financial devolution; (iii) transferred all the 49 corresponding functionaries to the ZPs and TPs who in turn provide technical assistance to the GPs; (iv) transformed the role of all apex institutions, including the Government Departments from that of a ‘provider’ to a ‘facilitator’; and (v) capacitated and enabled GPs achieve operational sustainability by appropriate tax/ tariff fixing and collection mechanisms. As a part of the project, over 37,551.training programs have been organized by KRWSSA to train the VWSC / GP members in procurement, financial management, construction supervision and operation and maintenance of the schemes. As a result, 40% of the schemes have been implemented by the community. The GPs have successfully accomplished institutional responsibilities by closing civil works contracts and obtaining complete documentation including No-Due Certificate and As-Built drawings from the Contractor. Further, proper accounting and recording procedures have been followed by the GPs diligently. The community contributed to the extent of Rs. 87.2 Crores during JNP and Rs. 61.49 Crores in JNP II towards scheme capital costs. At this time, over 4,404 VWSCs are carrying out the O&M responsibilities effectively as per the bye laws since scheme commissioning including revising, levying and collecting water tariff from the consumers. The details of achievement of DO 2 are provided below: JNP I DO II Description Units Baseline PAD Achievemen Target t of JNP I % DO II Institutionalizing decentralization of RWSS service delivery to GPs and user groups H No. of GPs planning and constructing RWSS Using project funds- No. 30 20 700 744 Project GPs GPs Using project funds- No. 31 0 2100 3062 Project VWSCs VWSCs Collection efficiency % 32 1 60 68% >80% VWSC F No of VWSCs managing O& M of RWSS Completed Schemes Project beneficiary No. 33 0 2100 2687 villages VWSCs JNP II DO II Description Units PAD Achievemen Baseline Targe t of JNP II t % DO II Institutionalizing decentralization of RWSS service delivery to GPs and user groups H No. of GPs planning and constructing RWSS 27 Using project funds- No.GPs 0 623 625 Project GPs Tariff collection 28 efficiency more than % GPs 1 70 45 60% in project GPs 50 I No of VWSCs managing O& M of RWSS Completed Schemes 29 Project beneficiary No.VWSCs 0 861 1342 villages 7.5 Physical and Financial Progress Component-wise physical and financial progress of the project is detailed below; Physical Progress of Infrastructure Building Overall Credit Line JNP I JNP II Achieved PAD % of PAD % of Infrastructure Achiev Achieve % Targe Targe Targe Targ Total Type ed d t t t et Water Supply 102 Schemes (#s 2,500 2,759 110% 689 514 75% 3,273 % Schemes) Groundwater 129 1,000 1,327 133% 92 92 100% 1419 Recharge (#s) % Household 204,0 152,47 34744 97 Sanitation (# 229,000 112% 118441 78% 00 6 1 % IHHL) Institutional 700 1,735 248% 2,700 2,260 84% 3,995 117 Sanitation Community 700 207 30% NA* NA* NA* 207 30 Sanitation Smokeless Chullahs 204,00 431,87 336,000 165% 83,604 95,873 115% 150 (#s) 0 3 Drainage and 2,100 1,227 58% 689 891 129% 2,118 76 Lanes (#s schemes) Financial Progress of Infrastructure Building Credit Line JNP I JNP II Overall Utilization Infrastructure Budget Utilizat % Budget Utilization % Total % Type in Rs. ion in Achiev in Rs. in Rs. Achiev in Rs. Lakhs Rs. ed Lakhs Lakhs ed Lakh Lakhs s Water Supply 104,4 11 30,871 48,332 157% 61,381 56,068 91% Schemes 00 3 Groundwater 1,984 1,420 71.57% 152 18 12% 1,438 67 Recharge Household 3,016 1,823 60.43% NA* NA* NA* 1,823 60 Latrines Smokeless 182.89 11 183 335 450 374.91 83% 710 Chullahs % 2 Lane and 29,333 10,390 35.42% 21852 21436 98% 31,82 62 51 Credit Line JNP I JNP II Overall Utilization Infrastructure Budget Utilizat % Budget Utilization % Total % Type in Rs. ion in Achiev in Rs. in Rs. Achiev in Rs. Lakhs Rs. ed Lakhs Lakhs ed Lakh Lakhs s Drainage 6 Community 844 331.00 39.22% NA* NA* NA* 331 39 Latrines Institutional 286.88 26 475 1,365 NA* NA* NA* 1,365 Latrines % 8 Compost Yards 1,137 16.25 1.43% NA* NA* NA* 16.25 1.4 *NA = Not Applicable for JNP II Integrated Tanda Development Programme The Bank policy on indigenous peoples outlined in its Operational Directive (OD) 4.20 was successfully implemented in the project. The project has implemented the Integrated Tanda Development Plan (ITDP) for Lambanis living in tandas and Siddis in Siddi habitations of Uttar Kannada. Physical progress of infrastructure building in IPDP areas are provided below: Overall Credit Line JNP I JNP II Achieved Infrastructure PAD % of PAD % of Achieved Achieved Total % Type Target Target Target Target Water Supply Schemes (#s 303 303 100% 121 121 100% 424 100 Schemes) Groundwater 200 75 38% 66 0 0% 75 28 Recharge (#s) Household Sanitation 6,000 5,400 90% 6,288 4,732 75% 10,132 82 (# IHHL) Smokeless 6,000 5,750 96% 3,386 2,471 73% 8,221 88 Chullahs (#s) Drainage and Lanes 400 200 50% 59 96 162% 296 64 (#s schemes) The project has successfully completed infrastructure building activity covering 545 habitations as per target showing a performance of 100%. Further, a consulting study was completed to develop the socio-economic profile of the Siddhis and other backward communities in Uttar Kannada district. The financial progress of the program is shown below: Credit Line Award Amount Expenditure % Rs. Lakhs Rs. Lakhs JNP I 5,993.66 2,226.64 37% JNP II 1975.00 1764.00 89% TOTAL 7968.66 3990.64 50% 52 7.6 Overall Financial Performance of the Project The overall financial performance of JNP I and JNP II is provided below Credit Total Project Contribution at Close Line Expenditure WB GoK, GP and Users’ Community INR Crores INR Crores INR Crores JNP I 963.74 696.34 267.40 JNP II 867.00 722.00 145.00 TOTAL 1830.74 1418.34 412.40 GoK, GP and User’s community contribution to the project increased from approximately 15% that was envisaged at project start to 27.7% at project close on JNP I and 18% on JNP II. An amount of US$12million was returned to the Bank to meet the emergency assistance required for Tsunami Rehabilitation Project during JNP I. Additionally, an amount of US$12 million was returned to the Bank during JNP II as well because the fluctuation in currency exchange ratio resulted in the surplus funds being available for the project. The overall expenditure for JNP I and JNP II are provided below: JNP I Total JNP I District Name Consultanc JNP-II JNPI and Civil O&M Total y JNPII Bagalkot 3,175.32 493.57 126.54 3,795.43 7964.43 11,759.86 Belgaum 15,755.26 981.05 188.59 16,924.90 8654.45 25,579.35 Bidar 8,045.24 785.60 127.67 8,958.51 12029.42 20,987.93 Bijapur 10,766.31 7,951.65 128.29 18,846.25 1678.91 20,525.16 Dharwad 3,976.80 420.63 95.22 4,492.65 6311.92 10,804.57 Gadag 4,421.79 484.57 97.26 5,003.62 4893.99 9,897.61 Gulbarga 9,033.25 669.50 161.76 9,864.51 19487.31 29,351.82 Haveri 12,873.16 973.01 185.03 14,031.20 1268.12 15,299.32 Uttar 4,247.30 685.04 164.09 5,096.43 4049.89 9,146.32 Kannada Koppal 3,598.27 272.12 77.50 3,947.89 2891.53 6,839.42 Raichur 335.84 312.45 92.56 740.85 15914.45 16,655.30 Head Office 414.09 705.39 352.62 1,472.10 1552.16 3,024.26 TOTAL 76,642.60 14,734.59 1,797.12 93,174.34 86696.58 179,870.92 In Rs Lakhs 8.0 Sanitation and Hygiene Promotion The three distinct elements of Sanitation and Hygiene Promotion (SHP) viz., personal hygiene, household hygiene and community environmental sanitation were achieved by implementing it as a social-marketing program. The sanitation and hygiene promotional activities have had a positive effect in the project villages as 332,478 household latrines were constructed and 422,104 smokeless chullahs were provided under the project. As such, sanitation and hygiene promotion resulted in achieving 93 % increase in sanitation access and 146% increase in introduction of smokeless chullahs with respect to baseline situation. Other aspects related to sanitation are given below: 53 Baseline at Impact study Increase in Practice time of two-years Performance intervention later Usage of Latrine 16% 48% 200% Hand washing after defecation 38% 67% 76% Washing hands before food 30% 67% 123% Disposal of child excreta in 9% 23% 155% latrines 9.0 Capacity Building The project has implemented a comprehensive capacity building programmes for various stakeholders of the project. The target groups consisted of policy makers in the government, staff of KRWSSA and associated government departments, staff of ZPs, TPs and SAs and grass-root level participants encompassing GPs and other user groups. 10.0 Gram Panchayat Strengthening The sub-component financed costs towards implementation of small-developmental works within GPs, procurement of equipment for office facilities for GPs and personnel for account management within GPs. As a part of the project, small-developmental works were implemented in 369 scheme GPs. 11.0 Sector Strengthening (State Level) The component on Sector Strengthening to support the new-roles that the government has to carryout includes the six sub-components which are; (i) Creating Enabling Environment; (ii) Sector Information Management System; (iii) Continuous Learning; (iv) Goods and Equipment; (v) Water Quality Monitoring; (vi) Piloting water quality affected habitations. 12.0 Benefit Assessment The project’s major contribution include (i) Availability of time for villagers; (ii) Additional income- generating activities; (iii) Improved health status; (iv) Procurement of local materials as an added benefit for local economies; (v) increased project implementation experience for GPs and VWSCs in internationally accepted procurement mechanisms; (vi) Increased demand for project activities in non-project villages, as a result of which GoK requested JNP II; (vii) Improved family well-being through household water connections; (viii) Improved scheme ownership and accountability through O&M. 13.0 Key Highlights and Significant Achievements Array of Technologies Technology has been an integral part of the project activities. In order to overcome certain shortcomings in meeting the demands of water supply to certain pockets within the villages / habitations, and also meet the requirements of group of villages / habitations, multiple technologies have been adopted, including (but not limited to) gravity schemes, piped water supply, and surface source schemes. Multiple treatment methods were also used including pressure filter, micron filter, lamella filter, solar condensation unit and a mobile ultra-filtration purification unit. Other technologies used were Scada Systems for Monitoring Water Supply, Pico-Micro Hydro Power Generation, Solar-based Water Pumping Systems and Solar-based Stand Alone Water Purification System. 54 14.0 Social and Environmental Management Considering social and environmental issues in rural infrastructure projects were almost non-existent prior to the start of the JalNirmal Project. The project set a new direction for the introduction of social issues in decision making. Towards this, the World Bank guidelines on social management have been utilized. Some of the key social issues include the following; i) Community participation in deciding on the particular technology for water extraction and treatment viz., Asoga Village, Belgaum District; ii) Participation of women in VWSCs viz., 33% of the VWSC members are reserved for women; (GoK has raised the quota to 50%); iii) VWSCs participate in construction activities; iv) Establishment of water quality testing labs and conduct of water quality tests on a regular basis; v) Construction of covered drains for draining storm-water runoff and sewage from households; vi) Wastewater treatment plant was also constructed as part of the project viz., Hulikoti Village to showcase the possibility of utilizing treated water for agricultural purposes. 15.0 Private Sector Participation The project set a new horizon for the participation of private sector as they are engaged in many development and welfare activities at the grassroots level and upwards. During the project, the services of individuals (subject specialists), NGOs, SAs and Chartered Accountants were procured on consultancy basis at State, District and GP level as the case may be for assisting project implementation including quality monitoring. Apart from these professionals, services of State Level Consultancies for Sanitation and Hygiene Promotion and Training Management have also been procured. In addition to SA, provision has also been made for SAs to have partnership with NGOs in the specific areas of community development. The participation of both government and private sector in RWSS schemes has resulted in the owning the assets by the bottom line PRI and the user’s community. 16.0 Women’s Participation In order to ensure effective mobilization and participation of women, the project has made a separate component on Women Development Programme. This has focused on institutional development, inclusion and empowerment. Towards this, by-laws of VWSC provide 33% reservation for women in the committee in the project villages. This provision has enhanced the women’s capabilities across board including decision making in water and sanitation activities. Further, to enhance the capacity of women for active participation in the project various levels, 192251 (33%) women have been trained in the project villages. Women are involved in O&M of water supply schemes as caretakers of pumps and pump houses, bill collectors, conducting water quality tests etc. 17.0 Community and GP Contribution Community and GP both have shared partial capital cost of the JNP, which resulted in developing sense of ownership of the assets created in the project villages and also reflected significantly in managing the schemes locally with user charges. Achievement of the project (JNP-1 & JNP II) in this regard is represented below: 55 Community Contribution GP Contribution Schemes Target Achievement % Target Achievement % JNP1 5767.00 5314.00 92.14 3494.00 3406.00 97.48 JNP-2 5112.17 4346.06 85.01 4777.7 4372.46 91.52 TOTAL 10879.2 9660.06 88.58 8271.7 7778.46 94.50 Rs. in Lakhs 18.0 O & M Outsourcing The demands of communities for save drinking water enormously increased; JNP opted for multi village schemes. These schemes required technical and financial support to sustain O & M. KRWSSA’s persistent effort, GoK approved the O & M Policy in September 2012. The O & M Policy provides for: (i) establishment of a Sustainability Fund; (ii) out-sourcing of the Common Facility (CF) of Multi GP/Village water supply schemes; (iii) a transparent subsidy, particularly, for meeting the power charges; and (iv) full cost recovery of the operational expenses to be achieved over a period of eight years. The O&M of the CF of the Mamdapur MVS in Belgaum District is being performed by a private agency for the last three years and their contract has been renewed for a further period of three years. The performance of the Mamdapur MVS under the O&M outsourcing policy is provided below. Sl. Parameter Performance No. 1 O&M Cost The scheme has reduced O&M cost at an average of 12.66% per year as against estimated costs. 2 Power Charges Power charges have been reduced on an average of 27% per year as against estimated by supplying treated water as per the requirement of the community. 3 Water Tariff Household Connection = Rs. 50/= per month; Stand post = Rs. 25/= per month. Mamdapur scheme was visited by two foreign country delegates which are Bangladesh and France. 19.0 Reinvestment on Schemes Reinvestment on schemes has done towards construction of infrastructure or enhancement of service delivery. The investment includes the following; i) Upgradation to piped water supply from the multi-village source; ii) Expansion of distribution line to include additional households; iii) Drilling of additional bore wells and construction of new open well etc.; iv) Arranging of express feeder line to existing SSI scheme; v) A total of Rs.93.61 lakhs and 8.5 lakhs is invested in U. Kannada and Raichur district respectively for various infrastructure facilities and repairs; Reinvestments on existing RWSS schemes implemented under the JNP showcases not only the acceptability of the schemes by the communities but also their willingness to provide a share of the fund requirements towards capital infrastructure and / or enhance service delivery. 56 20.0 Cost Recovery The project, for the first time, introduced reforms in RWSS sector that envisaged community ownership and management of water supply schemes. The PRIs have realized that efficient recovery of O & M costs on a regular basis is essential for effective service delivery. Two major costs for O & M of the schemes have been found to be towards salary to the scheme operator and cost for repairs to the pump-set and electrical installations. Each GP / VWSC is allowed to fix the monthly tariff and devise their own methods for recovery of tariff. The average cost recovered is in the range of 50% of the total estimated monthly charges. Many PRIs have not been able to establish sustainable cost recovery mechanisms. However, the project in general has definitely been successful in inculcating the culture of paying for the water services among the people. District wise cost recovery status both for JNP1 and JNP2 is given below: JNP-1 * O&M No of % Tariff O&M No. of Demand % Pending Sl House House collected District budget House (April Tariff KPTCL No Hold Hold (April to 2014- Holds to Sep collected Bill Connection Connection Sep 2014) 15 2014 ) 1 Bagalkote 256.81 70177 33259 47.39 128.40 70.61 54.99 203.21 2 Belgaum 703 164099 107276 65.37 351.50 206.69 58.80 1158.57 3 Bidar 251.54 98854 64735 65.49 109.51 42.46 38.77 58.43 4 Bijapur 301.44 126617 58194 45.96 150.72 72.21 47.91 - 5 Dharwad 76.20 32778 13615 41.54 38.10 13.95 36.61 - 6 Gadag 332.7 86340 39573 45.83 166.35 66.11 39.74 1402.89 7 Gulbarga 191.72 110884 35149 31.70 95.86 43.47 45.35 - 8 Haveri 590.44 117904 48123 40.82 295.22 128.28 43.45 - 9 Koppal 176.75 54594 33968 62.22 88.32 48.40 54.80 14.92 10 Raichur 166.35 34274 10747 31.36 83.17 34.16 41.07 59.00 11 U.Kannada 81.89 35820 22924 64.00 40.94 22.39 54.69 3.82 Total 3128.84 932341 467563 50.15 1548.09 748.73 48.36 2900.84 JNP-2 * O&M Tariff No of % O&M No. of Demand collected % Pending Sl House House District budget House (April (April to Tariff KPTCL No Hold Hold 2014- Holds to Sep Sep collected Bill Connection Connection 15 2014 ) 2014 ) 1 Bagalkote 177.12 26222 10842 41.35 88.56 41.18 46.50 38.90 2 Belgaum 62.12 10617 9938 93.60 31.06 13.25 42.66 83.94 3 Bidar 79.48 43256 21994 50.85 39.74 22.52 56.67 33.58 4 Bijapur 26.10 4065 1267 31.17 13.05 9.01 69.04 - 5 Dharwad 57.37 26816 9405 35.07 28.68 13.75 47.94 6 Gadag 76.69 13718 5356 39.04 37.96 11.83 31.16 156.02 7 Gulbarga 82.01 35139 12574 35.78 41.00 16.93 41.29 - 8 Yadgir 25.04 12271 4704 38.33 12.52 4.80 38.34 - 9 Koppal 15.26 2047.00 1618.00 79.04 7.62 4.11 53.94 2.61 10 Raichur 229.41 46035 26715 58.03 114.7 48.26 42.07 62.42 57 11 U.Kannada 25.44 11690 8066 69.00 12.76 7.63 59.80 1.24 Total 856.04 231876 112479 48.51 427.65 193.27 45.19 378.71 * with power charges; Rs in Lakhs * with power charges; Rs in Lakhs 21.0 Financial Management JNP envisaged that GPs are the focal point for implementation of the scheme and payments to the works. The stakeholders for the project were the community, GPs and GoK. Hence, the Financial Management system to meet the funds flow to the GPs and the accounting was put in place for proper maintenance of accounts at all the levels and reliable and timely flow of funds and accounting information from the GPs to DSUs and in turn to the KRWSSA at state level. 22.0 Source of Funds The funds come from the World Bank, Government of Karnataka, Gram Panchayat / Community contribution. 23.0 Procurement Management Procurement arrangements have been in accordance with the Bank’s procurement guidelines, making the process more effective and efficient. To ensure the consistency in procurement and for mobilization of works, project prepared a Procurement Manual. The implementing entities have followed the procedures laid in the procurement manual for its procurement activity. A Procurement Cell was established at the Head Office to oversee the procurement happening across the 11 districts. Adequate training programmes were organized to all technical and non-technical and social staff of Districts, including President of JCs, SAs and presidents of GPs in case of big Surface Source Regional schemes. During trainings, emphasis was on contract management and contract closure to avoid legal complications in future. Robust procurement information system was established within the project MIS to have effective, efficient and transparent procurement systems. The records were maintained at both District and GP level. Details of procurement undertaken in the JNP under various procurement methodologies are given below: Procurement Details of Infrastructure Building JNP I JNP II Water Supply Water Supply Schemes R&D R&D Schemes Description Pilot, B 1-3, MVS ITDP, SaralJal, (CF and SVS MVS Jhari IVF) No. of 2749 288 1522 496 27 862 Contracts ICB Nil Nil Nil Nil Nil Nil NCB – W1 229 20 67 119 Nil 306 NCB – W2 118 9 35 169 28 106 NCB – W9 363 74 86 8 Nil 1 W5 864 79 559 192 Nil 396 W6 1175 106 775 8 Nil 53 58 Procurement Details of Goods and Services Office Sector Description Equipment’s and Strengthening Vehicles No. of Contracts 196 32 Shopping - E - 5 110 11 Shopping – W-5 77 - NCB – E1 7 - NCB – W1 2 - DG and SD - 21 24.0 Reporting System A regular reporting system was adopted under the project for ensuring proper flow of accounting information from the GPs to the DSUs and to the KRWSSA. For this, district wise designated Chartered Accountant firms provided accounting support to the GPs and furnished a consolidated statement of financial transactions in the GPs along with the transactions at the DSUs level. Further, all district-wise financial transactions were consolidated at state level and these reports were processed for Project Progress Appraisal to the WB and for reimbursement of project expenditure. 25.0 Best Practices i) Google awarded village for best O&M of water supply scheme by user community in Shiraguppi village of Belgaum district where VWSC makes live telecast of its meeting. 100% house hold connection and 1005 water tariff collection. ii) Belwadi village of Belgaum district: O&M of water supply is managed by community with 100% house hold connection and 100% tariff collection. User community deposit monthly water tariff directly to the O&M account in the local bank. iii) Determination makes decision a reality – Hulkoti Village, the only village in the State (Gadag district) with water supply scheme and UGD system iv) Excellent example of community management - Iddalahonda village of Belgaum district v) O&M of Multi Village Scheme – Mamadapur MVS, Belgaum district 26.0 Government Order and Policies Initiated i) Government Order on State Policy for Operation and Maintenance of Rural Drinking Water Supply Schemes dated 26.08.2011 (provided in Annexure V); ii) Government Order on Operation and Maintenance Outsourcing dated 12.03.2013 (provided in Annexure VI); iii) Circular on Responsibilities of VWSC towards Operation, Maintenance and Management of RWSS schemes dated 02.12.2013 (provided in Annexure VII); iv) Government Order on creation of State Water Supply and Sanitation Department dated 04.03.2014 (provided in Annexure VIII). 27.0 Return on Investments The analysis on the Return on Investments (RoI) made in JNP was conducted by Ecorys (India) Private Limited. The analysis on the return on investments made in JNP is based on the primary information gathered on the benefits accrued to user community on implementation of schemes and from secondary information on the costs. The analysis is considered for 15 years for ground water schemes and 15- 20 years for surface source schemes with a discount rate of 12.5%. For surface source based schemes, ROI has been estimated for 20 years as theses have sustainable sources. The 59 ROI estimated for 20 years higher ERR for SSI scheme and at equal level for SSR and MVS schemes. 28.0 Long Term Sustainability Framework JNP has provided opportunity to understand the various spectrums of the process required for community based demand driven rural water supply and sanitation project. Over the years, the project has demonstrated successfully the philosophy of demand driven project. Success lies with the decentralized three-tier system of PRIs. Advocacy workshops, exposure visits, hands on training, capacity building programmes, regular IEC activities at the grassroots levels have sensitized the GPs / VWSCs / user groups to realize their lead role and understand the importance of managing RWSS facilities in a sustainable manner. Additionally, the complexity of managing MVS has given rise to a need for the GoK to provide a suitable policy framework that addresses the key issues involved in ensuring effective delivery of RWSS services. Towards this, studies were conducted to determine the sustainability status of the schemes in terms of technical, financial, social and institutional facets. 29.0 Institutional Study An institutional study was also conducted to determine the best possible institutional arrangement for ensuring an effective service delivery system. The project enabled the GoK to develop an O&M Policy under the umbrella of a long-term sustainability framework that addressed technical, financial, social and institutional aspects of sustainability. Further, the GoK created a State Water Supply and Sanitation Department to exclusively deliver water and sanitation services to the people living in rural areas. 30.0 Lessons Learnt Following are the lessons learnt during the implementation of the project: i) The change of the Government perception from its role as a “provider” to “facilitator” of service is essential to successfully deepen the a bottom-up approach for implementing water supply and sanitation schemes; ii) Introducing an innovative approach such-as demand-driven approach resulted in the identification of villages that had critical water supply service issues including accessibility, scarcity and quality. iii) Participatory approach facilitated the communities to exercise “voice & choice” for improved services and ownership; iv) Decentralized governance is the key to bring in transparency and accountability in implementing schemes; v) The role of PRIs is critical to improve efficiency and achieve sustainability of water and sanitation service delivery; vi) Utilizing un-biased criteria for selection of schemes is important to ensure acceptance and eventual success of the scheme; vii) Sustainability of any scheme can be enhanced when schemes promote ownership, flexibility in design, appropriate tariff setting and simplicity in operation and maintenance; viii) Active participation of communities has established organic linkage among stakeholders and facilitated inclusive development and sectoral reforms; ix) Communities’ willingness to contribute to capital costs and pay for services is often much higher than expected especially when a demand-based approach is utilized to implement schemes; x) Communities and user-groups need assistance in planning and implementing schemes and deciding how to operate, maintain and manage these schemes through regular training, exposure visits and peer-to-peer learning programmes; 60 xi) Women participation is the key to increase acceptability of any water supply and sanitation scheme as women tend to have a major say in decision making in such aspects and are in a better position to facilitate community actions; xii) Achieving lasting and sustainable project outcomes depend on the degree of attention paid to gender considerations, sanitation and hygiene promotions; xiii) Vulnerable groups need to be identified and their view needs to be incorporated in project design to ensure that these groups receive the intended benefits from the project; xiv) Participation of the private sector and non-governmental organizations (NGOs) in all phases of the project can be enhanced and alternative ways of packaging participatory and construction activities should be considered to improve service. xv) Better ways for ensuring spare parts availability in the local market should be developed. 31.0 Looking Forward – RWSS Sector in Karnataka Sector Strategy developed as part of the project has an underlying principle that the success of rural water supply and sanitation services is in maintaining a focus on sustainability rather than speed of implementation. Towards this, the GoK and the executing agencies has recognized that IEC activity is a vital element and gives particular emphasis to making people fully aware of the relationship between water supply, sanitation facilities and health. Also, the sector strategy is underpinned by the principles of allocating decision-making and management at the lowest appropriate level, and emphasizing the participation of women in management. As a way forward, the GoK has issued orders to form the State Water and Sanitation Department under the Rural Development and Panchayat Raj Department with an exclusive focus on planning, design, implementation and operation and maintenance of rural water supply and sanitation services. In the immediate future, the GoK’s focus shall be to operationalize the Government Order and disseminate the decision through issue of necessary executive orders describing the roles and responsibilities of RDPR, the new RWSS Department, KRWSSA and PRIs (GPs, ZPs, VWSCs, etc.) as far as RWSS activities are concerned. Additionally, the RWSS Department shall focus on continued enhancement of the overall capacity of district and local institutions in carrying out all stages of activities in providing effective water and sanitation services to the rural population. Further, the GoK policy encourages private participation in water and sanitation sector particularly in community development, technical assistance and operation and maintenance services. 32.0 Contribution of the World Bank The project has extremely benefited from the contribution of following members of the World Bank Team which visited Karnataka at different stages of implementation of the project. The World Bank support to the project is encouraging. The Bank has regularly offered critical suggestions for improving project implementation. The WB supervision missions have been taking place at regular intervals. The team members of the supervision mission were renowned experts in different areas who provided high-quality of technical and managerial advice on several issues, including technical, financial management, implementation, procurement, water sector, environment, social etc. Upon completion of the missions, the Bank shared the Mission Field Visit and Aide Memoires which greatly helped in guiding implementing agencies to realize project outputs and to comply with agreed actions time to time. The WB’s norms and guidelines for quality control mechanism were effective to improve quality of work. The Bank assisted and guided the field engineers and staff from time to time to achieve quality in construction. The Bank’s mission played a vital role of a facilitator and partner in development which has had a healthy impact on the borrower. Additional financing provided a boost 61 to increase water supply and sanitation coverage and enable the Borrower meet the overwhelming demand from the project districts. Another important outcome of the Project is the establishment of Rural Water Supply and Sanitation Department with a specific focus on achieving sustainable water supply and sanitation services in the rural areas of the state. Supervisory mission of the Bank provide valuable guidance and support for creation of this apex body. The reimbursement of funds was smooth and timely. A very good working relationship was established and continued throughout the project period among the Bank staff, the GoK and the implementing agencies. The Supervision Missions played a supportive role in the Community Development and formation of VWSCs in the respective schemes. The technical advice and support provided by the successive missions contributed to identification and timely resolution of several implementation issues. 33.0 Conclusion This project has immensely improved Rural Water Supply and Sanitation Sector in Karnataka through its strategic interventions namely principles, polices, implementation strategies, institutional mechanism, community participation modules, capacity building programme, private sector participation, cost recovery, monitoring and evaluation system, external support etc. 62 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders N/A 63 Annex 9. List of Supporting Documents  Project Implementation Plan  Project Appraisal Document for India: Second Karnataka Rural Water Supply and Sanitation Project (KRWSSP-II) dated November 16, 2001 (Report No:23204-IN)  Additional Financing Paper for India: Second Karnataka Rural Water Supply and Sanitation Project dated May 19, 2010 (Report No: 54263-IN)  Office Memorandum: India: Second Karnataka Rural Water Supply and Sanitation Project (KRWSSP-II) Additional Financing Project – Request for approval of a one year extension from June 2013 to June 2014  Office Memorandum: India: Second Karnataka Rural Water Supply and Sanitation Project (KRWSSP-II) – Request for approval of a one year extension from December 2008 to December 2009.  Office Memorandum: India: Second Karnataka Rural Water Supply and Sanitation Project (KRWSSP-II) – Request for approval of a one year extension from December 2007 to December 2009.  Aide Memoires, Back-to-Office Reports, and Implementation Status Reports.  Project Progress Reports.  Borrower's Evaluation Report dated November 2014. *including electronic files 64 MAP 65