Page 1 PROJECT INFORMATION DOCUMENT (PID) CONCEPT STAGE Report No.: AB6347 Project Name Third Ulaanbaatar Urban Service Improvement Project (USIP3) Region EAST ASIA AND PACIFIC Sector Road Transport (30%) Solid Waste Management (30%); Flood Protection (30%) Sanitation (5%); Sewerage (5%) Project ID P122535 Borrower(s) Government of Mongolia Implementing Agency Municipal Government of Ulaanbaatar USIP Project Management Unit 504, Peace Avenue 56 TG Center, Khoroo 1, Sukhbaatar District Mongolia Contact Person: Tel: +976-11-321-674 Fax: +976-11-321-674 Email: Usip2@magicnet.mn Environment Category [ ] A [X] B [ ] C [ ] FI [ ] Date PID Prepared February 8, 2011 Estimated Date of Appraisal Authorization September 5, 2011 Estimated Date of Board Approval January 17, 2012 1. Key development issues and rationale for Bank involvement The sustainable development of ger 1 areas in Ulaanbaatar (UB), the capital city of Mongolia, is one of the critical development issues facing the country. The transition to a market economy since the 1990s and a series of severe winters have resulted in the migration of many low-income families from the countryside into the ger areas of UB. The city grew from some 600,000 people in 1989 to over 1.03 million in 2007 2 , rep resenting 39 percent of the nation’s population. The city now generates more than 60 percent of Mongolia's GDP and accounts for one-half of the total investment in the country. Given the lack of employment opportunities in other major cities, migration to UB is expected to continue. The latest forecasts indicate that the population of UB is likely to reach 1.3 million in 2015 and about 1.7 million in 2025 3 . The growth has led to an unprecedented expansion of the ger areas. The total administrative area of the city is now estimated at about 4,700 km 2 , which is more than 35 times larger than the original center of the city (around 130 km 2 ). The population of the ger areas is now estimated to make up about 60 percent 4 of the total population of UB. Basic services are very limited or non-existent in ger areas. Nearly 85 percent of ger residents use wood or coal-burning stoves for heating, while apartments are connected to a central heating 1 Ger is a nomadic felt tent with wooden lattice substructures, used by Mongolian nomads for centuries. 2 JICA, June 2008 3 JICA, June 2008 4 Population of nine Districts where majority of ger areas are located. UB Census 2004 Page 2 system. Ger residents must travel to public kiosks as far as 500m from their homes to purchase water, which they carry back home in plastic or metal tanks. Residents of apartments, by contrast, enjoy an around-the-clock supply of piped-in drinking water and hot water. Provision of very basic public services in the ger areas is very costly, largely due to the low population density and the extremely cold climate of Mongolia. The lack of basic urban services in the ger areas has also resulted in environmental degradation, including the pollution of air, water and other natural resources. This situation also poses serious health risks to residents, including respiratory diseases and hepatitis. The World Bank has recently completed an economic sector work on ger areas in Ulaanbaatar, which is titled “Mongolia: Managing Urban Expansion in Mongolia: Best Practices in Scenario-Based Urban Planning” (The Ger Report). This is the first comprehensive review on ger areas which has ever been carried out and has widely been accepted by the Government and donors as one of the most credible reviews on feasibility of various development scenarios for the ger areas. The project design and borrower’s request followed the findings of the report. The proposed USIP3 is consistent with the Bank’s Interim Strategy Note (CY 2009-10) for Mongolia. Under the ISN, the WBG program will support the Government’s efforts to stabilize the economy and maintain employment and growth. In, particular, USIP3 would support the second strategic area – “ protect the poor and vulnerable ”. The proposed USIP3 is also consistent with the Government policies on ger area development, which are laid out in the “MDG-based Comprehensive National Development Strategy” adopted by the Parliament in 2007, and the ‘2008 UB City Urban Development Master Plan”. The proposed Project is a follow-on engagement with MUB, deepening collaboration carried out under the on-going USIP2, the first USIP1, and other donor-funded program such as JSDF1, JSDF2 and NEMO. 2. Proposed objective(s) The proposed project development objective (PDO) is to reduce vulnerability of the poor population in selected ger areas of Ulaanbaatar in the aspects of income generation, living condition and natural disaster by improving connecting roads, solid waste collection services, sanitation facilities, and drainage facilities. 3. Preliminary description The proposed project consists of five components: (I) Municipal access road upgrading ($5.8 million – preliminary estimate); (II) Solidwaste operation improvement ($5.2 million – preliminary estimate); (III) Flood protection ($5.0 million – preliminary estimate); (IV) Water and sanitation improvement ($1.0 million – preliminary estimate); and (V) Operation and Management Support ($3.0 million – preliminary estimate). Page 3 Component I. Municipal Access Road Upgrading ($5.8 Million-Preliminary Estimates): Under the proposed component, upgrading of these roads would be carried out for a stretch of 1.5-2.5 kms from drop-off points of main roads to inside of kholoos in 30-40 locations of some 20-30 selected kholoors . The improved roads will not-only provide better transport for residents and business opportunities for commercial vehicle operators such as mini-buses and taxies, but will also make the streets safer in terms of traffic hazards and crimes at night. They will also improve drainage and provide preliminary infrastructure for expansion of utility services such as water, sewerage or electrification for future. Furthermore, it will contribute to reduction of dusts generated from earthen roads, which is one of the significant factors of the severe air-pollution of MUB. Component II: Solidwaste Operation Improvement ($5.2 Million – Preliminary Estimates): The proposed component would include two subcomponents: (a) technical assistance to prepare prototype of new output-based contracts and provide advice through contract negotiation processes for garbage collection operators for selected kholoos (or for districts), if appropriate ($1.6 million – with possible co-finance from the Global Partnership on Output-Based Aid – GPOBA - covering a part/whole of technical assistance), as pilots; and (b) budgetary support to several selected kholoos (or for districts - duureg ) for subsidies for pilot improvements on garbage collection services ($3.6 million, with possible additional co-finance from GPOBA). Component III: Flood Protection ($5.0 million – Preliminary Estimates): This component would include construction of new flood prevention facilities such as embankment or small channels, as well as improvement on existing f acilities. During Bank’s assessment mission following the flood in July 2009, a list of possible works was presented by MUB to the Bank mission. While the list is a bit too broad, with further assessments and reviews, appropriate candidates will be selected, and design works can be initiated soon. Component IV: Water and Sanitation Improvement ($1.0 million – preliminary estimate): This component would include construction of: (a) limited number of stand-alone water supply kiosks and possibly associated sewerage and (b) small number of sanitation facilities such as public toilets and public bathhouses. These are to be carried out only for selected areas which disparately needs basic facilities for humanitarian assistance. Primary areas would be at the fringe of Dambadarjaa ger areas in Sukhbaataar District, the northern part of Chingeltei District and western part of Bayanzurkh District, where MUB targets of water supply services standards – one water kiosk per 1,000 residents – are not yet met. These kiosks to be developed under this component would be mostly stand-alone kiosks where ground water from local boreholes available and there is no need to connect them to main distribution networks or to tanker-feed water. Component V: Operation and Management Support ($3.0 million-preliminary estimates): The component would continue to support project implementation by the Project Management Unit of MUB. While the PMU has one of the best capacity in the country in implementing Bank- financed and donor-funded projects, it will require further enhancement of capacity as some of the component are innovative and more complex to implement. It would be complimented by capacity enhancement grants from GPOBA on solidwaste management component and Dutch ORIO grant facility for water supply and sanitation component. The proposed component will Page 4 cover the areas of: (i) preparation o f detailed engineering designs, bidding documents; (ii) construction supervision and quality control, and construction management: (iii) assistance with overall project management, including technical, financial, environmental, and social aspects, as well as project reporting; (iv) OBA contract management; (v) overseas training; and (vi) operation support. 4. Safeguard policies that might apply Possible safeguards policies that might apply are Environmental Assessment and Involuntary Resettlement. 5. Tentative financing Source: ($m.) Borrower 7.5 International Bank for Reconstruction and Development 20.0 Total 27.5 6. Contact point Contact: Toyoko Kodama Title: Operations Officer Tel: (202) 473-8526 Fax: (202) 477-1205 Email: tkodama@worldbank.org Location: Washington D.C., U.S.A.