Cukurova urban development project
 Report No: ; Type: Report/Evaluation Memorandum ; Country: Turkey; Region: Europe And Central Asia; Sector: Urban Management; Major
                                            Sector: Urban Development; ProjectID: P008970




Turkey: Cukurova Urban Development Project (Loan 2819-TU)

The Implementation Completion Report (ICR) for the Turkey Cukurova Urban Development Project (Loan 2819-
TU, approved in FY87) was prepared by the Europe and Central Asia Region. A Bank loan for US$120.0 million
equivalent was approved in FY87. The loan was amended in FY92, and reduced to US$28.5 million because the
municipalities found the project too ambitious to implement. The loan was closed on June 30, 1995, two years
behind schedule; the amended amount was fully disbursed. The borrower's report on implementation is attached to
the report as an annex.

The project objectives were to assist five municipalities to: (i) overcome service deficiencies and manage growth by
financing urban infrastructure; (ii) introduce municipal policies and institutional arrangements which would be
suitable for replication in other Turkish cities for investment planning and implementation, cost recovery, financial
management, and staff development; and (iii) build up a capacity in Iller Bank to appraise and monitor municipal
infrastructure projects and investment programs. The infrastructure program had eight components: urban
expansion, housing management, squatter settlement upgrading, water supply, sanitation, drainage, solid waste
management, and transportation.

After the loan restructuring, contracts which had already been let, consisting largely of water and sanitation
components, were allowed to run to completion, and the balance of the proceeds went to the purchase of goods
(US$13.7 million). The project did not achieve its original municipal and institutional development goals, nor did
the municipalities adopt patterns of inter-agency coordination and/or staff and financial management worthy of
replication elsewhere, although it largely fulfilled its (less important) revised physical objectives. This, in spite of
the US$13.2 million invested in preparing the urban development project by a previous technical assistance loan,
the Cukurova Urban Engineering Project (Loan 2537-TU). The Government of Turkey did not approve reforms
critical to the project's success. The project was poorly supported by key implementers: it was prepared by
consultants who did not involve the municipalities or the Project Management Unit from Iller Bank (where top
management strongly opposed the project) in preparation and, as a result, each group felt little ownership. The lack
of political commitment to change national regulations constrained the municipalities' ability to act independently.
The municipalities did not raise public utility tariffs to sustainable levels. Existing municipal staff lacked the
requisite experience and expertise, but the cities' salary structure did not permit them to compete with the private
sector for qualified staff. The project also failed to increase the developmental orientation of Iller Bank vis-…-vis
its municipal clients. Greater involvement of Iller Bank in preparation would have led to its managers having a
better understanding of project objectives. The SAR had estimated an ERR of 30 percent on components
comprising 53 percent of project cost. The ERR was not recalculated for several cities because sales of water with
the project are lower than estimated water sales without the project; and for the one city where it could be
reestimated, the ERR is only 7 percent (versus an appraisal estimate of 8.9 percent).

The main lesson identified by the ICR is that the Bank should not hesitate to restructure an unsatisfactory project.
OED agrees with this lesson and notes additionally that fundamental aspects of the governance structure were not
wholly taken into account in project design-key implementers were expected to make major organizational changes
without fully recognizing that the status quo served strongly established interests in important ways. OED rates the
project's outcome as unsatisfactory, its sustainability as uncertain, its institutional development as negligible, and
Bank performance as unsatisfactory (on account of its unrealistic assessment of the Borrower's commitment to the
objectives of the project). These ratings are consistent with those in the ICR.

The ICR is of good quality although it could have explained better why project design was not revisited following
completion of the Cukurova Urban Engineering Project, when it was already apparent that ownership was negligible
and that Iller Bank was hostile to the project's goals. No audit is planned.