FOR OFFICIAL USE ONLY Report No: PADHP00149 INTERNATIONAL DEVELOPMENT ASSOCIATION PROGRAM APPRAISAL DOCUMENT ON A PROPOSED IDA CREDIT IN THE AMOUNT OF JPY 46,455,100,000 (US$300 MILLION EQUIVALENT OF WHICH US$188 MILLION FROM THE REGIONAL WINDOW) TO THE ISLAMIC REPUBLIC OF PAKISTAN FOR A PUNJAB CLEAN AIR PROGRAM MARCH 10, 2025 Transport Practice South Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS (Exchange Rate Effective Jan 31, 2025) Currency Unit = Pakistani Rupee US$1 = PKR 278.93 US$1 = JPY 154.85 FISCAL YEAR July 1 – June 30 Regional Vice President: Martin Raiser Regional Directors: Pankaj Gupta, Dina Umali-Deininger Country Director: Najy Benhassine Practice Managers: Jung Eun Oh, Christian Albert Peter Task Team Leaders: Shyam Srinivasan, Shafick Hoossein ABBREVIATIONS AND ACRONYMS 2W Two-wheeler 3W Three-wheeler ADB Asian Development Bank AED Anti-encroachment Drive AGP Auditor General of Pakistan AM Accountability Mechanism AQ Air Quality AQM Air Quality Management ASI Avoid-Shift-Improve ASTM American Society for Testing and Materials BoP Bank of Punjab BRT Bus Rapid Transit CCDR Country Climate and Development Report CH4 Methane CHS Community Health and Safety CMU Coordination and Monitoring Unit CO2 Carbon Dioxide CPF Country Partnership Framework DA Designated Account DLI Disbursement Linked Indicator DLR Disbursement Linked Result E-2/3Ws Electric two- and three-wheelers E-2W Electric two-wheeler E-3W Electric three-wheeler E-Bus Electric buses E&S Environmental and Social EMC Environmental Monitoring Centre EPA Environmental Protection Agency EPCCD Environmental Protection and Climate Change Department ESCP Environmental and Social Commitment Plan ESF Environmental and Social Framework ESIA Environmental and Social Impact Assessment ESSA Environmental and Social Systems Assessment EV Electric Vehicle FY Fiscal Year GDP Gross Domestic Product GHG Greenhouse Gas GoPb Government of Punjab GPS Global Positioning System GRS Grievance Redress Service IA Implementing Agency ICE Internal Combustion Engine IDA International Development Association IFC International Finance Corporation IFSA Integrated Fiduciary Systems Assessment IGP-HF Indo-Gangetic Plain and Himalayan Foothills IMF International Monetary Fund IPCC Intergovernmental Panel on Climate Change IPF Investment Project Financing IPSAS International Public Sector Accounting Standards ITMS Intelligent Transport Management System IVA Independent Verification Agency km Kilometers km2 Square Kilometers MFD Maximizing Finance for Development MRV Measurement, Reporting, and Verification mtCO2 Metric Tons of Carbon Dioxide MW Megawatt NBS Nature based solutions NMT Non-motorized transport NOX Nitrogen Oxides NPV Net Present Value O&M Operations and Maintenance OHS Occupational Health and Safety P&D Planning and Development PAP Program Action Plan PCAP Punjab Clean Air Program PCE Private Capital Enabling PCM Private Capital Mobilization PDO Program Development Objective PEF Program Expenditure Framework PforR Program-for-Results PGDP Punjab Green Development Program PIU Program Implementation Unit PKR Pakistani Rupee PM Particulate Matter PMA Punjab MassTransit Authority PPP Public–Private Partnership PPSD Project Procurement Strategy for Development PPTA Punjab Provincial Transport Authority PSC Program Steering Committee PTC Punjab Transport Company PTSC Public Transport Service Contract QA Quality Assurance RA Results Area RVSF Registered Vehicle Scrapping Facility SEA/SH Sexual Exploitation and Abuse/ Sexual Harassment SEP Stakeholder Engagement Plan SLCP Short-Lived Climate Pollutant SMAP Smog Mitigation Action Plan SML Short Maturity Loan SO2 Sulfur Dioxide Basics SOP Series of Projects SORT Systematic Operations Risk-rating Tool SSP Shared Socioeconomic Pathway T&MD Transport and Masstransit Department TA Technical Assistance US$ United States Dollar WB World Bank µg/m3 Micrograms Per Cubic Meter The World Bank Punjab Clean Air Program (P508222) TABLE OF CONTENTS DATASHEET ........................................................................................................................................ i I. STRATEGIC CONTEXT .................................................................................................................. 1 A. Program Strategic Context .............................................................................................................. 1 B. Multi-Sectoral and Institutional Context ......................................................................................... 1 II. PROGRAM DESCRIPTION ............................................................................................................ 4 A. Program Development Objective(s) (PDO)....................................................................................... 4 B. Theory of Change and PDO Indicators.............................................................................................. 4 C. PforR Program Scope ........................................................................................................................ 5 D. Disbursement Linked Indicators ....................................................................................................... 9 E. Role of Partners ................................................................................................................................ 9 F. Lessons Learned and Reflected in the Program Design .................................................................... 9 III. PROGRAM IMPLEMENTATION .................................................................................................. 10 A. Institutional and Implementation Arrangements .......................................................................... 10 B. Results Monitoring and Evaluation, and Verification Arrangements ............................................. 10 C. Disbursement Arrangements.......................................................................................................... 11 IV. PROGRAM ASSESSMENTS SUMMARY ....................................................................................... 11 A. Technical ......................................................................................................................................... 11 B. Fiduciary.......................................................................................................................................... 18 C. Environmental and Social ............................................................................................................... 18 D. IPF Appraisal ................................................................................................................................... 20 E. Program Action Plan ....................................................................................................................... 21 V. KEY RISKS ................................................................................................................................. 25 ANNEX 1. RESULTS FRAMEWORK ..................................................................................................... 26 ANNEX 2. DETAILED PROGRAM EXPENDITURE FRAMEWORK ............................................................ 50 The World Bank Punjab Clean Air Program (P508222) @#&OPS~Doctype~OPS^dynamics@padpfrbasicinformation#doctemplate DATASHEET BASIC INFORMATION Project Beneficiary(ies) Operation Name Pakistan Punjab Clean Air Program Does this operation have an IPF Environmental and Social Risk Operation ID Financing Instrument component? Classification (IPF Component) Program-for-Results P508222 Yes Substantial Financing (PforR) @#&OPS~Doctype~OPS^dynamics@padpfrprocessing#doctemplate Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Fragile State(s) [ ] Contingent Emergency Response Component (CERC) [ ] Fragile within a non-fragile Country [ ] Small State(s) [ ] Conflict [ ] Alternative Procurement Arrangements (APA) [ ] Responding to Natural or Man-made Disaster [ ] Hands-on Expanded Implementation Support (HEIS) Expected Approval Date Expected Closing Date 31-Mar-2025 30-Jun-2030 Bank/IFC Collaboration Joint Level Yes Complementary or Interdependent project requiring active coordination Proposed Program Development Objective(s) To strengthen air quality management and reduce population-weighted PM2.5 annual average exposure in Lahore Division @#&OPS~Doctype~OPS^dynamics@padborrower#doctemplate i The World Bank Punjab Clean Air Program (P508222) Organizations Borrower: Islamic Republic of Pakistan Contact Title Telephone No. Email Kazim Niaz Secretary, Ministry of 92-51-9202056 secretary@ead.gov.pk Economic Affairs Implementing Agency: Government of Punjab: Environment Protection and Climate Change Department, Government of Punjab: Transport and Masstransit Department, Government of Punjab: Planning and Development Board, Government of Punjab: Agriculture Department, Government of Punjab: Industries, Commerce & Investment Department Contact Title Telephone No. Email Wajid Ijaz Deputy Director, +92 333 6621129 wajid.ijaz@punjab.gov.pk Monitoring and Evaluation, Strategic Planning & Implementation Unit Waseem Akram Director, Transport +92 335 4898891 waseemakram555@hotmail.com Planning Unit Saba Ashgar Ali Chief Environment +92 333 4518682 Srchiefca@pndpunjab.gov.pk Sajid Nasir Director General, +92 300 8403890 fieldwing@gmail.com Agriculture, Field Wing Asif Ali Farrukh Director General, +92 300 6349337 asif.farrukh.ansari@gmail.com Industries @#&OPS~Doctype~OPS^dynamics@padfinancingsummary#doctemplate COST & FINANCING (US$, Millions) Maximizing Finance for Development Is this an MFD-Enabling Project (MFD-EP)? Yes Is this project Private Capital Enabling (PCE)? Yes SUMMARY Government program Cost 825.00 Total Operation Cost 599.00 Total Program Cost 579.00 IPF Component 20.00 ii The World Bank Punjab Clean Air Program (P508222) Total Financing 599.00 Financing Gap 0.00 Financing (US$, Millions) World Bank Group Financing International Development Association (IDA) 300.00 IDA Credit 300.00 Non-World Bank Group Financing Counterpart Funding 210.00 Borrower/Recipient 210.00 Commercial Financing 89.00 Unguaranteed Commercial Financing 89.00 IDA Resources (US$, Millions) Guarantee Credit Amount Grant Amount SML Amount Total Amount Amount Regional 188.00 0.00 0.00 0.00 188.00 National Performance-Based 112.00 0.00 0.00 0.00 112.00 Allocations (PBA) Total 300.00 0.00 0.00 0.00 300.00 @#&OPS~Doctype~OPS^dynamics@paddisbursementprojection#doctemplate Expected Disbursements (US$, Millions) WB Fiscal Year 2025 2026 2027 2028 2029 2030 Annual 0.00 78.00 60.00 59.50 54.50 48.00 Cumulative 0.00 78.00 138.00 197.50 252.00 300.00 @#&OPS~Doctype~OPS^dynamics@padclimatechange#doctemplate PRACTICE AREA(S) iii The World Bank Punjab Clean Air Program (P508222) Practice Area (Lead) Contributing Practice Areas Environment, Natural Resources & the Blue Economy; Transport Agriculture and Food; Energy & Extractives CLIMATE Climate Change and Disaster Screening Yes, it has been screened and the results are discussed in the Operation Document @#&OPS~Doctype~OPS^dynamics@padrisk#doctemplate SYSTEMATIC OPERATIONS RISK- RATING TOOL (SORT) Risk Category Rating 1. Political and Governance ⚫ High 2. Macroeconomic ⚫ High 3. Sector Strategies and Policies ⚫ High 4. Technical Design of Project or Program ⚫ Substantial 5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial 6. Fiduciary ⚫ Substantial 7. Environment and Social ⚫ Substantial 8. Stakeholders ⚫ Substantial 9. Overall ⚫ Substantial @#&OPS~Doctype~OPS^dynamics@padpfrcompliance#doctemplate POLICY COMPLIANCE Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No Does the project require any waivers of Bank policies? [ ] Yes [✓] No iv The World Bank Punjab Clean Air Program (P508222) Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Area OP 7.60 No ENVIRONMENTAL AND SOCIAL Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance ESS 1: Assessment and Management of Environmental and Social Risks and Relevant Impacts ESS 10: Stakeholder Engagement and Information Disclosure Relevant ESS 2: Labor and Working Conditions Relevant ESS 3: Resource Efficiency and Pollution Prevention and Management Relevant ESS 4: Community Health and Safety Relevant ESS 5: Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Not Currently Relevant ESS 6: Biodiversity Conservation and Sustainable Management of Living Natural Not Currently Relevant Resources ESS 7: Indigenous Peoples/Sub-Saharan African Historically Underserved Not Currently Relevant Traditional Local Communities ESS 8: Cultural Heritage Not Currently Relevant ESS 9: Financial Intermediaries Not Currently Relevant NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS). @#&OPS~Doctype~OPS^dynamics@padlegalcovenants#doctemplate LEGAL Legal Covenants Sections and Description Within 3 months of the Effective Date, the Implementing Entity shall adopt the Operation Manual as shall have been approved by the Association and thereafter, implement the Program and Project in accordance with the Operation Manual. The Implementing Entity shall ensure that the Program excludes any activities which involve Direct Contracting which is equal to or more than fifteen (15) percent of the Program’s annual procurement value, determined cumulatively and applied to all contracts entered into in that year. v The World Bank Punjab Clean Air Program (P508222) The Implementing Entity shall appoint by the earlier of the date which is six (6) months after the Effective Date and the first date on which the Implementing Entity undertakes a verification, and thereafter maintain, at all times during the implementation of the Program, a verification agent or agents having experience and qualification, and under terms of reference, satisfactory to the Association, to (i) support the Operation’s monitoring and evaluation and (ii) verify the data and other evidence supporting the achievement of one or more DLRs and recommend corresponding withdrawals to be made thereunder The Implementing Entity shall prepare and furnish to the Association, by not later than September 30 of each year, an annual work plan and budget covering the activities proposed for the subsequent year of Project implementation. @#&OPS~Doctype~OPS^dynamics@padconditions#doctemplate Conditions Type Citation Description Financing Source Notwithstanding the provisions of Section IV.A of Schedule 2 to the Financing Agreement, with respect to the Program, no withdrawal shall be made: (a) on the basis of DLRs achieved prior to the Signature Date, except that withdrawals up to an aggregate amount not to exceed one billion eighty- three million nine hundred fifty thousand Yen (JPY 1,083,950,000) may be made on the basis of DLRs Disbursement Section IV.B.1 IBRD/IDA achieved prior to the Signature Date but on or after January 1, 2025; or (b) for any DLR until and unless the Recipient has furnished evidence satisfactory to the Association that said DLR has been achieved, including verification reports from the Verification Agent, based on reports prepared by the Recipient certifying the achievement of the DLRs in accordance with the Verification Protocol. vi The World Bank Punjab Clean Air Program (P508222) Notwithstanding the provisions of Part B.1(b) of this Section, the Recipient may withdraw an amount not to exceed ten billion eight hundred thirty-nine million five hundred twenty-five thousand Yen (JPY 10,839,525,000) as an advance; provided, however, that if the DLRs in the opinion of the Association, are not achieved (or only partially achieved) by the Closing Date, the Recipient shall refund such advance (or Disbursement Section IV.B.2 portion of such advance as IBRD/IDA determined by the Association with reference to the Verification Protocol) to the Association promptly upon notice thereof by the Association. Except as otherwise agreed with the Recipient, the Association shall cancel the amount so refunded. Any further withdrawals requested as an advance under any Category shall be permitted only on such terms and conditions as the Association shall specify by notice to the Recipient. Notwithstanding the provisions of Section IV.A of Schedule 2 to the Financing Agreement, with respect to the Project, no Disbursement Section IV.C IBRD/IDA withdrawal shall be made for payments made in respect of the Project prior to the Signature Date, except that withdrawals up vii The World Bank Punjab Clean Air Program (P508222) to an aggregate amount not to JPY 619,400,000.00 may be made for payments made prior to the Signature Date but on or after the date twelve (12) months prior to the Signature Date. viii The World Bank Punjab Clean Air Program (P508222) I. STRATEGIC CONTEXT A. Program Strategic Context 1. Pakistan has made recent progress towards macroeconomic stabilization, but risks remain high and faster sustained growth will require substantial reform. At the beginning of fiscal year (FY)24, following the COVID-19 crisis, and the 2022 catastrophic floods that hit the country, and rising global commodity prices, Pakistan's economy faced a severe crisis in the context of political uncertainty, global monetary policy tightening, and fiscal and external imbalances that led to pressures on domestic prices and foreign reserves. Measures to manage imports and capital outflows were introduced, which disrupted local supply chains and economic activity, and exacerbated inflationary pressures. Under the interim government, an International Monetary Fund (IMF) Stand-By Arrangement was approved in July 2023. Consequently, exchange rate flexibility was restored, import controls were relaxed, and steps were taken to contain the fiscal deficit. Political uncertainty also diminished. Coupled with favorable weather conditions and easing external conditions, the economy began recovering in FY24 and inflation was brought down significantly. Growth of real gross domestic product (GDP) is estimated to have risen to 2.5 percent year-over-year in FY24, after contracting by 0.2 percent in FY23. Downside risks remain however high, with the outlook predicated on the new IMF Extended Fund Facility program remaining on track, continued fiscal restraint, and additional external financing. Heavy banking sector exposure to sovereign debt, domestic policy uncertainty, and geopolitical instability pose significant risks to the outlook. Robust economic recovery over the medium term will require the steadfast implementation of fiscal, energy, trade, and other economic reforms. 2. The 2022 Country Climate and Development Report (CCDR) highlights Pakistan’s severe climate vulnerability, ranking it among the top 10 most affected countries. Frequent droughts, floods, heat waves, and risks to coastal cities such as Karachi from sea level rise and erosion increase development challenges and could reduce GDP by 18 – 20 percent annually by 2050. Punjab province in particular faces multiple, overlapping climate and environmental threats: it has the largest settlement area exposed to fluvial flooding (163 square kilometers/km2) and pluvial flooding (129 km2) in Pakistan, while in central and eastern regions over 700,000 residents are exposed to dangerous heatwaves with routinely high temperatures. 3. The Punjab Clean Air Program (PCAP) is aligned with the World Bank Group Country Partnership Framework (CPF), as well as with corporate and regional priorities. The Program is consistent with the World Bank Group CPF FY26-35 for Pakistan discussed by the Board of Executive Directors on January 14, 2025 (Report No. CPF0000037). One of the six CPF outcomes includes reducing Pakistan’s high levels of air pollution by focusing on key contributing sectors, such as transport, construction, residential cooking, industry, agriculture, and land use. The target of the CPF’s Air Quality Outcome 4.2 is to reduce the population-weighted particulate matter below 2.5 microns (PM2.5) average annual exposure by 35 percent in a decade: from 55 to 35 micrograms per cubic meter (µg/m3) by 2035. This operation aims to reduce exposure in Lahore Division by 2.3 µg/m3 against a baseline of 99.79 µg/m3 in 2030. In the longer run, Program interventions are expected to reduce exposure in Lahore Division by 6 µg/m3 by 2035. The operation will form part of a series of operations to tackle air quality countrywide and in the region. B. Multi-Sectoral and Institutional Context 4. The Punjab province in northeast Pakistan is part of the Indo-Gangetic Plain and Himalayan Foothills (IGP-HF) region, which is now a global air pollution hotspot. IGP-HF includes parts of Bangladesh, Bhutan, India, Nepal, and Pakistan, and it has the most people exposed to hazardous air in the world. In Pakistan, Bangladesh, India, and Nepal, between 93 and 97 percent of the population are exposed to hazardous air pollution. 5. Air pollution poses a chronic health threat in Punjab and has become a national and provincial priority. PM2.5 can be inhaled through the lungs and is the most significant contributor to the public health burden associated with air Page 1 The World Bank Punjab Clean Air Program (P508222) pollution—including child stunting, the first outcome area of the CPF. Annual average concentrations of 110–130 µg/m3 have been measured in central Lahore and 87 µg/m3 for Lahore Division. Across Punjab, the figure is 52 µg/m3, which is more than 10 times the World Health Organization (WHO) guideline (of 5 µg/m3) and 3.5 times the Punjab ambient air quality standard (of 15 µg/m3). Without additional measures, exposure to PM2.5 in Punjab will increase to 58 µg/m³ through 2030 and to 99 µg/m³ in Lahore Division. PM2.5 exposure (both ambient and household) in Pakistan caused 230,000 premature deaths and illnesses in 2019, with estimated health costs equivalent to 9 percent of GDP (due to premature deaths and years lost to disability). 6. Transboundary effects of air pollution are significant. Transboundary air pollutants travel far within “airsheds,” including to other countries, influenced by climate and geography. More than half (53 percent) of PM2.5 air pollution in 2021 originated from within Punjab, 9 percent came from other provinces in Pakistan, and 13 percent from other countries. Likewise, emissions from within Punjab also have transboundary impacts. Interventions in Punjab, Pakistan could therefore help mitigate air pollution across the border and vice versa. 7. Regional cooperation is crucial to reduce air pollution in South Asia, especially in the IGP-HF airshed. Countries in the IGP-HF airshed depend on collective action to meet clean air targets. The World Bank is supporting Bangladesh, Bhutan, India, Nepal, and Pakistan on a comprehensive IGP-HF air quality management (AQM) program implemented as a series of projects (SOP). The support covers: (i) institutional strengthening and emissions abatement measures; and (ii) regional high-level convening, technical knowledge exchanges, and analytics in all countries. Clean air engagements are currently ongoing in the South Asia Region. 8. Based on World Bank analyses, anthropogenic sources of air pollution within Punjab account for 75 percent of air pollution. Natural sources account for 25 percent. Sectoral contributors to PM2.5 concentrations are: (i) residential (23 percent), mostly burning of solid fuels for cooking; (ii) transportation (16 percent), largely heavy-duty vehicles (buses and trucks), two- and three-wheelers (2/3Ws), and road dust; (iii) industries (16 percent), largely heavy industry and brick kilns; (iv) agriculture and livestock (13 percent), including crop residue burning, fertilizer, and manure; and (v) municipal solid waste burning (7 percent). In Lahore Division, residential (28 percent) and transport (24 percent) sectors have larger shares. Other sectors have similar shares as in Punjab, but natural sources are lower at 9 percent. 9. The Government of Punjab (GoPb) has started to lay the foundation for improved AQM planning and governance, which are essential for reducing air pollution, in particular via its recently launched Smog Mitigation Action Plan (SMAP). Policies such as the 2017 Smog Control Policy, the 2022 Health Advisory System for Critical Air Pollution Events, the 2023 Clean Air Policy and Action Plan, and especially the new 2024 SMAP demonstrate GoPb's commitment. These plans focus on abating PM2.5 in the transport, agriculture, industry, energy, and municipal sectors, while promoting behavioral change and citizen engagement. Strengthening enforcement will be an essential part of successful implementation of the SMAP, especially in a context of limited institutional capacity and budgets. The Punjab Environment Protection and Climate Change Department (EPCCD), responsible for overseeing AQM, is currently under-resourced in terms of personnel, facilities, and systems. 10. Effective AQM governance and planning requires several key technical elements. GoPb is expanding the regulatory grade air quality monitoring network in the province under the World Bank-funded Punjab Green Development Program (PGDP; P165388). This expansion is crucial for monitoring compliance of air quality standards and providing real-time information to protect sensitive populations. However, this expansion has largely been restricted to central Lahore. Further expansion of monitoring stations can cover more areas within the province that impact Lahore Division, while also supporting the development of operation and maintenance protocols, data validation, and quality assurance (QA) plans. In addition, strengthening the province’s analytical and modeling framework, including emissions inventory, scenario planning, and decision support systems, is essential for evidence-based decision-making and assessing the effectiveness of current and planned interventions. Effective data-driven behavioral change and Page 2 The World Bank Punjab Clean Air Program (P508222) citizen engagement campaigns are essential to leverage the monitoring data and sustain public support for pollution reduction policies. 11. Road transport is a major contributor to air pollution in Punjab. Motorization trends indicate rapid proliferation of private vehicles, which will add to emissions if not addressed promptly. In Lahore, registered private vehicles have doubled in the last decade and number around 7.4 million vehicles, with two-wheelers (2Ws) accounting for 82 percent. The actual number of vehicles is likely to be substantially lower as vehicles are generally not de-registered in Punjab. Lahore has limited public transport for its size, with 27 kilometers (km) of metro, a bus rapid transit (BRT) line, and feeder buses. Around 250 buses under public sector concessions currently operate in Lahore, with an unknown but possibly larger number of private buses (against an estimated need of over 4,000 buses in 2026 if no further BRT or metro lines are added). With low fares ranging from PKR 15 to 30 per trip, public buses in Lahore require annual subsidies of around US$15 million, straining fiscal resources. GoPb is committed to improving urban transport, in consultation with stakeholders, and has commissioned several studies, including the ongoing Lahore Transport Study. 12. Outdated emission norms exacerbate road transport emissions. The prevailing emissions standard of EURO II for diesel buses is significantly more polluting than newer iterations (16 times more PM2.5 per km compared to cleaner EURO VI standard). Unclean diesel with high sulfur content of 0.5 percent is still in use. There is a need to expand fuel quality inspections to curb the supply of adulterated fuel. Establishing fuel quality testing laboratories will document the extent of substandard fuel usage, initially motivating stricter emission standards and later enabling enforcement against non-compliant suppliers once supply chains adapt. 13. Road transport pollution can be mitigated using Avoid-Shift-Improve (ASI) approaches. “Avoid” refers to reducing motorized travel; “shift” refers to modal shifts from private vehicles to public and non-motorized transport; and “improve” refers to reducing the emissions intensity of vehicles, partly via the transition to low emission vehicles. 14. Electric buses (e-buses) can reduce emissions through a combination of “Shift” and “Improve”. E-buses can reduce life cycle PM2.5 emissions by 88 percent relative to EURO VI diesel buses, and by 98 percent relative to cars and 2Ws of equivalent capacity, emphasizing the importance of modal shifts.1 An impact evaluation of the Lahore BRT found that 40 percent of riders on the BRT shifted from private vehicles, mainly motorcycles.2 This would be the upper bound for modal shifts from feeder buses given their lower operating speeds. Although e-buses cost more upfront, savings accrue via lower operations and maintenance (O&M) costs. The total cost of ownership for a 12-meter e-bus in Pakistan is an estimated 14 percent lower than hybrid, 11 percent lower than Diesel EURO VI, and 4 percent lower than a Diesel EURO II bus. GoPb recently procured 27 e-buses for a pilot in Lahore under the PGDP and is also deploying around 500 e-buses across Punjab under its Annual Development Plan in FY25. For successful rollout, transit agencies need to build capacity on e-bus operations and contract management. With improving macroeconomic conditions, business models that transfer fleet procurement and technology risks to the private sector may be explored. 15. Low emission alternatives for existing vehicle fleets include electric two- and three-wheelers (e-2/3Ws). 2Ws are the predominant mode of personal mobility and last mile logistics in Punjab, while 3Ws are common for passenger and goods transportation. E-2W emissions have been estimated to be 88 percent lower than internal combustion engine (ICE) equivalents in India, while e-3W emissions are 95 percent lower.3 The reductions are likely larger in Pakistan given the cleaner power generation mix, and the older emission norms (EURO II vs EURO VI in India). However, despite favorable cost economics, high upfront costs, limited charging infrastructure availability, and the lack of affordable commercial financing are limiting uptake. E-2Ws offer a total cost ownership advantage, particularly commercial applications with higher utilization. The higher upfront cost can be recouped via operating cost savings 1 World Bank and International Transport Forum (2023), “Lifecycle Assessment of Passenger Transport, An Indian Case Study ”. 2 Majid, Malik and Vyborny (2018), “Infrastructure Investments and Public Transport Use Evidence from Lahore, Pakistan”. 3 World Bank and International Transport Forum (2023), “Lifecycle Assessment of Passenger Transport, An Indian Case Study ”. Page 3 The World Bank Punjab Clean Air Program (P508222) within two years for commercial e-2Ws and four years for commercial e-3Ws. Expanding risk sharing facilities, such as partial credit guarantees for e-2/3Ws, can catalyze affordable commercial financing and uptake. One such mechanism is being trialed in Punjab under the Chief Minister’s Youth Initiative Students Bikes Scheme. 16. Besides electrification, there is a need to take polluting vehicles off the road. Punjab’s vehicle inspection regime is emerging. It was introduced in 2015 for public service and goods vehicles and subsequently extended to private vehicles under PGDP. 2Ws are currently excluded from vehicle fitness inspections under the existing legal framework. A valid fitness certificate is a pre-requisite for the issuance of a route permit for public service and goods vehicles, but currently the government does not have a mechanism to scrap vehicles. Fines for non-compliance with fitness certificates are low. The SMAP contemplates a buyback scheme for polluting vehicles, given the environmental benefits demonstrated in the Peshawar Bus Rapid Transit, Latin America, and China. 17. The agriculture sector is also a significant contributor to air pollution in Punjab. Annually, there is a risk of open-field burning equivalent to 6–7 million tons of rice straw in the province. Inefficient use of nitrogenous fertilizer and inadequate manure management add to emissions. In the short term, technological solutions for rice straw management such as super seeders (tractor-drawn machines to chop, till, and sow seeds in one operation), rice harvesters, and other machinery can provide alternatives to burning, along with awareness raising. Digital solutions can improve small farmers’ access to this machinery through the provision of rental subsidies employing proven global models (e.g., Hallo tractor). In the long term, policy reform with increased focus on research and development, transition to diversified cropping from rice-wheat monocropping, fertilizer use efficiency, livestock feed efficiency and manure management, improved agriculture marketing, and developing the value chain can all sustain reductions. II. PROGRAM DESCRIPTION A. Program Development Objective(s) (PDO) 18. To strengthen air quality management and reduce population-weighted PM2.5 annual average exposure in Lahore Division. B. Theory of Change and PDO Indicators 19. The Program will achieve the PDO via three results areas (RAs) that form a comprehensive approach to AQM in Lahore Division, as illustrated by the theory of change below. Under RA1, strengthening the air quality monitoring network and developing an emissions inventory will enable data-driven identification of pollution hotspots and inform targeted interventions. Combined with behavioral change campaigns, this will enhance institutional capacity and public support for sectoral abatement measures. RA2 aims to reduce PM2.5 emissions through expanding mass transit access, supporting e-2/3W adoption, strengthening vehicle inspections, and retiring polluting vehicles. These measures are expected to induce more people to shift to cleaner public transport, invest in maintaining their vehicles, and adopt cleaner alternatives. RA3 aims to reduce agricultural emissions by distributing super seeders and improving crop straw management, thereby reducing the need for crop residue burning. These coordinated interventions across sectors will contribute to stronger air quality management and governance and reduce by an estimated 6 μg/m3 the population-weighted exposure to PM2.5 in Lahore Division by 2035, contributing to target outcome 4.2 of the CPF. 20. The Program will measure progress toward the PDO via the following indicators: • Population-weighted exposure to PM2.5 annual average concentrations due to emissions reductions by PCAP (Micrograms/m3) [RA1, RA2, and RA3] • Index on expanded systems for air quality management (Number) [RA1] • People in Lahore Division with real-time access to air quality and environmental information (Number) [RA1] • PM2.5 emission reduction to transboundary airshed (Microgram/m3) [RA2 and RA3] Page 4 The World Bank Punjab Clean Air Program (P508222) • PM2.5 emission reductions from priority sectors supported by the Program (Metric tons) [RA2 and RA3] • PM2.5 emission reduction from Transport (Metric tons) [RA2] • PM2.5 emission reduction from Agriculture (Metric tons) [RA3] • People with improved access to sustainable transport infrastructure and services (Number) [RA2] Figure 1: Theory of Change Note: AQ = air quality; NBS = Nature Based Solutions; NMT = Non-Motorized Transport. C. PforR Program Scope 21. The Punjab Clean Air Policy and Action Plan (2023) and the Punjab SMAP (2024) form the basis of the government program (“p”, the program). The Policy has a longer time horizon (through 2030) while the SMAP (2024) is the short- term implementation mechanism, with annual budgeted activities. GoPb is expected to update the Action Plan annually with activities and budgets. Both these documents identify the need for action across multiple sectors and awareness raising and behavior change to reduce air pollution. 22. The World Bank envisages supporting the GoPb’s program to strengthen AQM through a SOP. This operation, the “Punjab Clean Air Program (PCAP)”, will support the GoPb in curbing emissions across transport and agriculture and establishing a foundation for AQM. While improving the emissions inventory and air quality analytics, PCAP will study means to reduce industrial and other source sector emissions, which could be implemented downstream. PCAP comprises three RAs and an investment project financing (IPF) component described as follows. Page 5 The World Bank Punjab Clean Air Program (P508222) 23. RA1: AQM Governance and Awareness Raising. This supports strengthening AQM infrastructure, regulatory and institutional capacity; data, inventory and source attribution involving the development of an integrated pollutant and greenhouse gas (GHG) emissions inventory system; and strengthening public communication and inducing behavior change. a. Strengthen AQM infrastructure, regulatory and institutional capacity. The Program will support the expansion of regulatory grade air quality monitoring stations and regulatory capacity across Punjab, with real- time data reporting on a publicly available website. The Program will also enhance fuel quality testing by adding two new laboratories, with testing quality aligned with the American Society for Testing and Materials (ASTM) standard. Institutional capacity will be further strengthened through training of EPCCD staff to manage the monitoring network, laboratories, and data analysis, such as the inventory. b. Data, inventory, and source attribution. The Program will facilitate the development of an integrated pollutant and GHG emissions inventory system, which will provide a comprehensive and systematic approach to track and manage emissions data. The inventory will be used to inform AQM policy making and budget allocations, including potential revisions to Punjab’s Clean Air Policy and Action Plan and Punjab’s Smog Mitigation Action Plan. c. Strengthening public communication and inducing behavioral change. The Program will develop a data- driven behavioral change and citizen engagement campaign, building on lessons learned from previous initiatives and utilizing air quality monitoring data and emissions inventories. This comprehensive outreach effort will employ multiple communication channels, including five “roadshow” vehicles and at least 450 awareness sessions to educate stakeholders about air pollution sources, health impacts, and reduction measures. Special attention will be given to vulnerable populations through targeted messaging and advisories, including schools and hospitals. The campaign will integrate with and enhance the existing Health Advisory System, enabling real-time communication of air quality data and health recommendations through both digital platforms and direct messaging. 24. RA2: Transport Sector Abatement Mechanisms will focus on measures to curb road transport emissions including expanding and encouraging modal shifts to mass transit; fostering the transition to e-2/3Ws; and expanding vehicle inspections and retiring polluting vehicles. This reflects a combination of “shift” and “improve” measures: a. Expanding and encouraging modal shifts to mass transit. This will support 600 e-buses in Lahore Division and supporting infrastructure (depots and charging facilities). A study will evaluate e-bus business models, including public-private partnership (PPP) options. GoPb plans to implement a distance-based fare policy for e-buses, which could increase fare revenue and improve financial sustainability. GoPb will sign a Public Transport Service Contract (PTSC) with the Punjab Masstransit Authority (PMA) that improves government funding commitment in exchange for PMA meeting service targets to benefit commuters. Measures to boost female labor force participation in e-bus and depot operations will be promoted. GoPb will separately pursue complementary interventions to improve access to public transport while tackling road dust. b. Fostering the transition to e-2/3Ws. GoPb plans to adopt a provincial electric vehicle (EV) policy with clear EV penetration targets, institutional arrangements and action plan to support EV uptake, and an associated charging infrastructure roadmap for cities in Punjab. A provincial EV entity will be established to spearhead policy implementation. A financing facility will be established via a financial intermediary (Bank of Punjab, BoP) to catalyze the flow of affordable commercial financing to e-2/3Ws across Punjab. c. Expanding vehicle inspections and retiring polluting vehicles. Two Disbursement Linked Indicators (DLIs) will promote the expansion of vehicle inspections to 2Ws and a buyback scheme for polluting vehicles, backed by a legal framework. This will reduce the emissions intensity of the existing vehicle stock. Financial incentives to encourage cleaner alternatives will be provided, with the possibility of linking these to the EV financing facility described in paragraph 24b. Page 6 The World Bank Punjab Clean Air Program (P508222) 25. RA3: Agriculture Sector Abatement Measures. This RA will support abatement in agriculture through promoting alternatives to crop residue burning, and digital access to straw management machinery and crop residue management service. a. Alternatives to crop residue burning. This activity will support the scale-up of GoPb’s initiative on the provision of 5,000 super seeders (equipped with adequate tractor capacity) and in providing the access of other straw collection and crop residue management machinery through a digital platform to farmers as an alternative to crop residue burning. b. Digital access to straw management machinery and crop residue management service. This activity will focus on digital solutions using proven models to improve access to super seeders, balers, and rice harvesters to farmers through rental subsidies to reduce crop residue burning and provide data on usage by farmers. This activity will run rigorous awareness campaigns on alternative options for crop residue management, digital machinery rental services and subsidies, off-farm management options for straw management, and banning of crop burning to improve air quality in Punjab. These efforts will attempt to include targeted awareness campaigns for women in agriculture where possible, enabling them to adopt climate-smart practices and advocate for better residue management, supporting emissions reduction goals. Table 1: Alignment between GoPb’s program and the PforR Program Government program PforR Program Reasons for non-alignment Objective Clean air through emission reductions and To strengthen AQM and reduce Overall objectives well aligned sustainable green development for increasing access population-weighted PM2.5 to living-friendly environment (Punjab Clean Air annual average exposure in Policy) Lahore Division Duration Punjab Clean Air Policy (to 2030), Smog Mitigation 2025 to 2030 N/A Action Plan (annual) Geography Punjab province Focus is impact on Lahore Lahore has highest population- Division weighted PM2.5 exposure Results Areas Plans tackle awareness, abatement in transport, • AQM governance and Remaining sectors will be municipal, industrial, agriculture, energy, awareness raising supported by GoPb or potential infrastructure/housing, public health, environmental • Sectoral abatement across subsequent operations protection, school education, parks and horticulture transport and agriculture Financing US$825 million US$579 million Gap will be financed by GoPb 26. Program beneficiaries include a broad range of stakeholders within Lahore Division and beyond. First, by improving Lahore's air quality, the Program will enhance health outcomes for all 13 million city residents. Since air pollution travels across the entire airshed, these improvements will also benefit many of Punjab province's 127 million inhabitants and populations in neighboring countries within the shared airshed. Second, direct beneficiaries of Program interventions include public transport users, individuals and corporates accessing financing for EV purchases, and vehicle owners who would be able to renew ageing vehicles. Farmers will benefit from improved access to technologies, which will improve crop straw management with significant health benefits. The Program will also create jobs, particularly in e-bus and depot operations, with interventions to boost female labor force participation, and benefit the supply chains for EVs and agricultural equipment. Lastly, government officials will benefit from receiving training, capacity building, and access to global knowledge under the Program. 27. The government program is estimated at US$825 million, of which the PforR Program is US$579 million. The operation will be funded by US$210 million counterpart resources, an IDA credit of US$300 million (includes an IPF component of US$20 million), and commercial financing of US$89 million. IDA resources make up around 48 percent of the Program Expenditure Framework (PEF), which signals government commitment and would avoid financing gaps. The summary of financing sources and the PEF is provided in Tables 2 and 3. Page 7 The World Bank Punjab Clean Air Program (P508222) Table 2: Financing Sources for PCAP Amount (US$, million) Financing Source PforR IPF Total IDA Contribution 280 20 300 Recipient Contribution 210 - 210 Commercial Financing 89 - 89 Total 579 20 599 28. The PEF includes expenditures supporting: (i) capital and operating expenditures across implementing agencies; (ii) EPCCD and the Environmental Protection Agency (EPA) expenditures to strengthen air quality monitoring, awareness raising, and enforcement; (iii) capital and operational expenditures for e-buses, and supporting infrastructure such as depots, charging infrastructure, and automated fare collection systems; (iv) transfers to BoP for the EV financing facility; (v) subsidies for super seeders; and (vi) Program management and operational costs. All infrastructure investments will apply environmental and social (E&S) risk management measures. Activities with high E&S risks and high-value contracts exceeding the World Bank’s PforR policy limits have been excluded from the Program. Table 3: Program Expenditure Framework (details in Annex 2) Amount (PKR, million) Economic Nature of Expense Budget for Next 5 % of 2025/ 2026/ 2027/ 2028/ 2029/ Code Years PEF 26 27 28 29 30 Employee-related expenses A01 3,637 2.7 709 780 858 614 676 Operating expenses A03 25,336 18.5 2,345 3,775 5,084 6,303 7,829 Grants, subsidies/write-off loans A05 12,600 9.2 1,960 1,400 1,960 3,080 4,200 Development A14 95,599 69.7 24,821 19,192 17,660 17,038 16,888 Total PEF in PKR million 137,172 100 29,835 25,147 25,562 27,035 29,593 Total PEF in US$ million 490 - 106.6 89.8 91.3 96.6 105.7 29. An IPF component of US$20 million will support studies and capacity building to facilitate PCAP implementation and identify industrial abatement measures. The list of activities is outlined in Table 4. Table 4: IPF Component Supported Activities Activity Description Agencies E-bus business Studies to determine appropriate business models for e-bus deployment Transport and Masstransit models in Lahore Division. Transport feasibility studies are already underway Department (T&MD), PMA, Punjab under the government program. Transport Company (PTC) Public transport A bus services satisfaction survey to gather regular feedback on the T&MD, PMA, PTC satisfaction survey experience of passengers on public transport. Buyback scheme Consultancy service to design a buyback scheme for polluting vehicles and T&MD, Punjab Provincial Transport the scrappage mechanism, informed by stakeholder consultations. Authority (PPTA) Battery waste Consultancy service to develop battery waste management rules and PCAP-CMU, supported by EPCCD, management identify strategies for ecosystem development. T&MD 2W inspections Consultancy services to develop legal, financial, and technical framework T&MD, PPTA for inspection and emission certification of 2Ws. E-2/3W adoption Technical assistance (TA)/consultancy to design e-2/3W financing facility. T&MD Page 8 The World Bank Punjab Clean Air Program (P508222) Carbon credits End-to-end process for monetizing GHG emissions reductions from the PCAP CMU shift to cleaner vehicles in the form of carbon credits. Institutional Institutional strengthening for transport agencies with a focus on curbing T&MD strengthening emissions, bus procurement and contract management, and road safety. Industry detailed Detailed study of cleaner technologies and alternative less polluting PCAP CMU, Industries, Commerce study combustion fuels for boilers, furnaces, and brick kilns. The study will first and Investment Department, EPCCD map the problem in Lahore Division and three districts and then propose multi-scenario solutions to inform downstream implementation. Other studies Any other studies to support Program implementation as necessary. Staff and Staff salaries and miscellaneous expenses, aligned with the institutional PCAP CMU, T&MD implementation arrangements described in Section III, will also be supported via the IPF costs component. D. Disbursement Linked Indicators Table 5: PCAP DLIs DLI Agencies Financing (US$, millions) Results Area 1: Air Quality Management Governance and Awareness Raising DLI 1: Additional regulatory grade monitors added to air quality monitoring network EPCCD/EPA 9 (Number) DLI 2: Integrated air pollutant/SLCP/GHG emissions inventory system is developed and EPCCD/EPA 6 routinely updated, used for assessment of Smog Action Plan and informs annual development plans (Yes/No) DLI 3: Fuel quality testing laboratories with mobile and fixed facility operational (Number) EPCCD/EPA 3 DLI 4: Interactive public information and behavioral change campaign sessions held EPCCD/EPA 2 (Number) Results Area 2: Transport Sector Abatement Mechanisms DLI 5: Expand cleaner public transport in Lahore Division (electric buses) (Number) T&MD via PMA/PTC 140 DLI 6: Transition to electric two- and three-wheelers (new vehicles) (Number) T&MD; EPCCD 50 DLI 7: Expanding vehicle inspections (Percentage) T&MD 10 DLI 8: Buyback of polluting vehicles (Number) T&MD 40 Results Area 3: Agriculture Sector Abatement Measures DLI 9: Expanding mechanized crop straw management (Number) Agriculture 20 E. Role of Partners Partner Name Nature of Involvement /Description Asian The Agricultural Crop Mechanization Program aims to introduce technological options such as efficient modern Development half feed rice harvesters to reduce rice residue burning. ADB’s program would strengthen capacity by Bank (ADB) establishing an agricultural machinery testing and evaluation center to improve agricultural mechanization. While ADB’s program is focused on medium-term measures, PCAP will focus on offering alternatives to farmers as a short-term solution for crop residue burning. F. Lessons Learned and Reflected in the Program Design 30. Global experience reveals that a multisectoral, multi-year approach is essential for addressing air pollution through clean air operations, as recommended by the Independent Evaluation Group. For example, the People’s Republic of Page 9 The World Bank Punjab Clean Air Program (P508222) China reduced average PM2.5 concentrations from 100 µg/m³ to 35 µg/m³ over twelve years – an annual improvement of 8.4 percent – through comprehensive airshed planning, multi-sectoral abatement measures, and enhanced governance and data access. The key sources targeted were vehicle exhaust emissions, coal use, industrial processes, and construction and road dust. Similarly, Mexico first implemented targeted measures in Mexico City, which included the procurement of low-emission public buses and strict enforcement of vehicle emissions standards with regular inspection. These measures led to a reduction of PM10 by 60 percent since 1990 and PM2.5 by 4 percent since 2004. Mexico then expanded to a regional multi-sectoral approach that expanded these vehicle measures, restricted heavy industry through emission caps and technology requirements, limited agricultural burning during high pollution periods and enhanced forest fire management. Civil society played a crucial role in sustaining clean air commitments in both cases. The Program draws from these and other experiences in designing the Program activities. 31. While there is a need to address air pollution contributions across sectors, recent experience with the PGDP suggests that separate operations, each focusing on fewer sectors, are warranted. PGDP faced challenges during implementation due in part to the involvement of five sectors (environment, transport, energy, industries, and finance) and a broad PDO. Line agencies individually had limited stake in the program and there were gaps in interagency coordination. PCAP aims to address these issues by focusing on air quality management and primarily on the transport and agriculture sectors for better outcomes, with remaining sectors tackled separately. PCAP will also have stewardship from the Planning and Development (P&D) Board, which is an apex decision-making body in GoPb. III. PROGRAM IMPLEMENTATION A. Institutional and Implementation Arrangements 32. GoPb will establish a Program Coordination and Monitoring Unit (CMU) under P&D Board responsible for overall Program coordination across implementing agencies (IAs), monitoring and reporting of Program progress, and DLIs/ Disbursement Linked Results (DLRs). The PCAP-CMU will be headed by a dedicated Program Director. 33. A dedicated Program Implementation Unit (PIU) will be established in the Transport and Masstransit Department (T&MD) given the scope and scale of transport sector activities under the Program. Remaining IAs, i.e., EPCCD and the Agriculture Department, will execute the Program using their existing staff. The departments will involve agencies under their charge for selected Program activities or studies, viz. the PMA, the PTC, the PPTA, and EPA. A study on industries will be procured by PCAP-CMU with technical reviews from the Department of Commerce and Industries. 34. A Program Steering Committee (PSC) will oversee Program implementation and provide strategic guidance to the PCAP-CMU and IAs. The PSC will be led by Chairman of P&D Board and comprise secretaries of concerned departments including Finance Department. B. Results Monitoring and Evaluation, and Verification Arrangements 35. Program monitoring will comprise standard progress monitoring, verification, and evaluation procedures. The PCAP-CMU will monitor, evaluate, and report based on the results framework, and IAs will be responsible for achieving respective results. The expanded air quality monitoring network and emissions inventory will be used to monitor PDO indicators on PM2.5 exposure and emission reductions from sectors. A Program Operation Manual with monitoring and evaluation arrangements will be developed and adopted within three months after credit effectiveness. An Independent Verification Agent (IVA), to be hired by PCAP-CMU, will conduct regular DLI assessments and furnish evidence on the achievement of DLRs, which will inform disbursements. IVA reports will be submitted to the World Bank. The PCAP-CMU will evaluate the Program in coordination with the World Bank during a mid-term review and following implementation completion. Lessons learned from the Program would inform subsequent operations or other similar operations elsewhere. Page 10 The World Bank Punjab Clean Air Program (P508222) C. Disbursement Arrangements 36. The DLI/DLR matrix and the agreed financial allocations are outlined in Annex 1. GoPb will finance expenditures using budgetary resources via existing budget lines and new budget lines as necessary. Upon verification and certification by the IVA, GoPb will communicate DLR achievement to the World Bank in an agreed format. Based on the World Bank’s approval letter, disbursement requests (Withdrawal Application) will be submitted by GoPb on client connection. Funds will be disbursed by the World Bank to GoPb via the Provincial Consolidated Fund. Withdrawals on account of an advance payment up to 25 percent of the undisbursed amount could be made against agreed DLRs that represent key milestones toward achieving the DLIs. If the DLRs are not achieved by the end of the Program, advanced funds will be refunded to the World Bank. Many DLRs are scalable, with funds being disbursed in proportion to results achieved. Where actions are not achieved in any particular year, the allocated amount will be carried over to the subsequent year for scalable results. If targets are reached before deadlines, disbursement may be made earlier after clearance from the World Bank. At the end of the Program, the total disbursed amount will be less than or equal to the Program cost. IV. PROGRAM ASSESSMENTS SUMMARY A. Technical 37. Strategic relevance. The Program supports AQM, which is one of the top national and provincial priorities. The Program aligns with the Pakistan National Clean Air Policy (2023) of reducing PM2.5 to 35 ug/m3 by 2035 (“35 by 35”). 35 μg/m3 is the WHO Interim Target-1 (the first of four interim targets towards the WHO guideline or “safe” level). IGP-HF countries, including Pakistan, have agreed to 35 by 35 as the regional target. GoPb’s policies and plans align with these goals. The Program is also aligned with Outcome 4.2 of the World Bank Group CPF FY26–35, which aims to reduce population-weighted PM2.5 average annual exposure across Pakistan by 35 percent to 35 ug/m3 by 2035. 38. Technical soundness of Program design. The Program includes complementary interventions to build a strong AQM foundation, selected based on technical studies and global experiences, including that of China and Mexico. An Operation Manual will be prepared for both PforR and IPF activities. It will describe the DLRs, processes, institutional, staffing, and fund flow arrangements. The Program will support the review and annual update of the 2024 SMAP to ensure robustness and value for money, informed by the inventory and data collected via the monitoring stations. 39. RA1: AQM governance and awareness raising. A robust AQM system provides the foundation for improving air quality. Under PGDP, Punjab EPCCD currently operates 30 regulatory grade air quality monitoring stations that present live air quality data on the EPCCD website, which is an important step toward providing the public and decision-makers with foundational data for baseline assessments of pollution levels and public exposure. A data center has been set up and the first of the new stations are currently providing results. Establishing routine data analysis and publication of data for the public and decision-makers to track the progress and impact of programs will help mainstream AQM considerations in departmental planning, including abatement measures supported or prepared under PCAP. PCAP will expand the Environmental Monitoring Centre's (EMC) air quality monitoring network by adding 25 new regulatory grade stations under its operational control to be installed across cities in Punjab. Moreover, the Program will ensure that both the existing 30 stations currently in operation under the PGDP and the 25 new monitoring stations are reporting hourly data according to standardized operating procedures and stringent QA protocols to ensure credible data collection (DLI 1). To inform the behavioral change campaign, real-time data will be reported online hourly and available to the public using accessible visuals. 40. An integrated, comprehensive, and continuous emission inventory is a core element of AQM. Three features are required for an emissions inventory: (i) integrated, i.e., including GHGs, short-lived climate pollutants (SLCPs), and traditional air pollutants; (ii) comprehensive, i.e., covering all key sectors for both climate and air pollutants; and (iii) continuous, i.e., a recurring process that seeks a cycle of improvements between updates. An emissions inventory will Page 11 The World Bank Punjab Clean Air Program (P508222) help GoPb: (i) understand the sources and sectors that contribute to air pollution, serving as a key technical input to more sophisticated air pollution modeling methods; (ii) understand trends in various emission sectors and activities that result in air pollution, thereby enabling focus on the resources, policy approaches, and actions that will yield the most benefit; and (iii) assess whether efforts to reduce emissions are successful or not. 41. Under the Program, an integrated air pollutant inventory system will be set up and become fully operational with a dedicated team at the EMC (DLI 2). This system will cover five major cities—Faisalabad, Multan, Lahore, Gujranwala, and Sheikhupura—and include all key sectors such as agriculture, industry, transport, energy, residential, and waste. Using this integrated system, a provincial integrated emission inventory for 2025 will be completed. The inventory will be supported by a QA cycle and an external review process. The final inventory will be shared with the Minister of Environment for policy decision-making, including future revisions to the SMAP. 42. Fuel testing laboratories are critical for managing Punjab's air quality, as vehicle emissions represent a major source of pollution in the province. The mandate for fuel testing rests with EPCCD under the Environment Protection Act of 1997 and Punjab Clean Air Policy and Action Plan of 2023. Currently, no baseline data on fuel quality has been collected. The Program will support EPA's expansion from three to five fuel testing laboratories (both fixed and mobile) and ensure quality control according to ASTM standards (DLI 3). These labs will support enforcement against non- compliant fuel suppliers and data collection to raise vehicle and fuel emission standards from the current EURO II. 43. Effective behavioral change and citizen engagement campaigns are essential for sustaining public support for pollution reduction abatement measures. The Program will leverage real-time, high-quality data on air quality from its expanded monitoring network through a public-facing dashboard and Health Advisory System to drive these efforts. Before launching new initiatives, the Program will evaluate lessons learned from previous public awareness campaigns in Punjab and globally to create a behavioral change plan. This evidence-based approach will use monitoring data to identify pollution hotspots and develop targeted interventions. The campaign will disseminate information through multiple channels, including mobile "roadshow" vehicles, in-person sessions, and various media platforms. Additionally, the monitoring station network will enable direct communication with citizens through the health advisory website and text message alerts, allowing them to make informed decisions about PM2.5 exposure. Advisories will be customized for key stakeholders, including schools, hospitals, and industries in polluting sectors. 44. While the elements under RA1 of the Program are technically sound and implementable by Punjab EPCCD, it will be essential to follow-up these investments with further capacity building and support during potential follow-on projects as part of this series. Experience shows that AQM capacity building is an ongoing and continual effort that pays significant dividends, albeit over decades rather than years. 45. RA2: Transport sector abatement mechanisms constitute the bulk of Program financing and draw from rich local, regional, and international experience. Transport sector measures fall under the “shift” and “improve” dimensions of the ASI framework and have been chosen based on their potential impact on emissions, feasibility, and readiness for implementation, as well as convergence with sectoral priorities. Program interventions represent short- and medium-term interventions which will need to be sustained and extended in the long term. 46. The addition of public feeder buses (DLI 5) is expected to foster modal shifts to public transport. The 600 e-buses to be introduced under the Program together with better passenger information via the Intelligent Transport Management System (ITMS) and better access will induce modal shifts away from motorcycles and informal paratransit and therefore reduce emissions. The buses are likely to be well used as, even with these buses, Lahore will have a low bus-to-population ratio relative to the international norm of 500 buses per million population. The IPF component includes a study to identify suitable business model(s), with the eventual model to be chosen based on value for money. While existing BRT and feeder bus systems in Punjab use PPP models, with private operators responsible for fleet procurement, operations, and maintenance, GoPb opted for public procurement (followed by Page 12 The World Bank Punjab Clean Air Program (P508222) private operations) for the latest rounds of e-bus deployments owing to high interest rates, which peaked at over 22 percent in 2023/2024. With the rates coming down to around 12 percent, technology obsolescence risks may be passed on to the private sector at lower cost. 47. While considerations of affordability are critical to assessing rate policies, raising fares is unlikely to affect ridership significantly. Fares currently cover around 20 percent of operating costs, thus requiring subsidies. A simple measure of affordability is the cost of 30 roundtrips (one per day) as a proportion of monthly minimum wage (PKR 32,000). This is at 3.75 percent in Lahore compared to the internationally acceptable rate of 10 percent4, suggesting room to raise fares. Riders are also willing to pay significantly higher fares.5 Targeted subsidies for vulnerable users have been effective in boosting ridership on public transport elsewhere and will be considered during implementation. 48. Expanding e-2/3W adoption (DLI 6) requires strong policy support and financing. The EV financing facility, supported by the envisioned provincial EV policy and charging infrastructure roadmap, would stimulate EV adoption. A World Bank assessment in India showed that risk sharing mechanisms offering first loss or second loss partial credit guarantees could lead to more EV adoption for each dollar of public money. GoPb will appoint BoP to manage the facility. Based on high level due diligence, BoP is suitable given its experience running similar risk sharing facilities, financial position, and track record in managing government initiatives. The Program will increase e-2W sales penetration to 5 percent across Punjab. By this “tipping point,” it is expected that the supply, financing, and charging ecosystems would be more mature. Most of the early adoption is expected to happen in Lahore. 49. Promoting e-2/3Ws alongside public transport are not contradictory moves. E-2/3Ws under the Program are expected to be bought in place of conventional 2/3Ws and therefore would not add to the vehicle stock. The IPF component study to design the facility would calibrate financial incentives such that e-2/3Ws do not become attractive to the point of competing significantly with public transport. 50. Program interventions to expand vehicle inspections (DLI 7) and retire polluting vehicles (DLI 8) will reduce emissions from the existing vehicle stock. The Motor Vehicle Ordinance (1965) amendments will strengthen the government’s mandate to inspect 2Ws and require scrapping of vehicles. The buyback scheme will be designed via the IPF component. A range of options including retrofitting of engines, partial scrappage of old engines, while salvaging chassis for resale, or complete scrappage of vehicles via government-approved scrappage facilities will be explored, with appropriate incentives. The study will also explore ways to mitigate key risks such as ensuring sufficient oversight and fidelity of the process, and potential environmental impacts. While the buyback scheme will largely focus on heavy vehicles, equivalency ratios for other vehicle segments will be included to provide flexibility for the government to extend the initiative to other vehicle segments. The government may also decide to tie the incentives for scrappage of 2/3Ws to the financing facility to be established under DLI 6, which will hasten the renewal of these fleets with cleaner alternatives. There will be no duplication of incentives across the two schemes. 51. RA3: Agriculture Sector Abatement Measures. Measures to reduce crop residue burning focus on expanding access to technological alternatives (DLI 9). Smallholder farmers (with farms under 5 hectares) are more likely to burn crop residue due to limited access to alternative technologies and labor, while collectively managing a significant portion of Punjab's agricultural land. GoPb approved the provision of super seeders on April 4, 2024, to mitigate smog in Punjab after banning crop residue burning. An estimated 12,500 super seeders are required to cover all rice growing areas and significantly minimize crop residue burning. GoPb initiated a program to provide a 60 percent subsidy on 5,000 super seeders to medium-sized farmers (equipped with adequate tractor capacity) across Punjab. The focus on medium-sized farmers is justified as they are likely to have the technical capacity but not the financial resources to invest in the technology. The initiative provided 1,000 super seeders in 2024 while the remaining 4,000 super seeders 4 Carruthers, Dick and Saurkar (2005), “Affordability of Public Transport in Developing Countries” . 5 Majid, Malik and Vyborny (2018), “Infrastructure Investments and Public Transport Use Evidence from Lahore, Pakistan”. Page 13 The World Bank Punjab Clean Air Program (P508222) will be provided during the course of 2025. The Program aims to scale up the initiative by providing 5,000 additional super seeders. A digital platform will be developed to track the use of crop residue management machinery to cover 1.2 million acres as an alternative crop residue management strategy. The Punjab Agriculture Department Field Wing will provide these 5,000 super seeders following the existing subsidy mechanism. The Program will also include rental subsidies to expand small farmers’ access to super seeders, balers, and rice harvesters. The Agriculture Department will tentatively provide a subsidy of PKR 5,000 per acre on machinery use to small farmers to reduce crop burning. 52. Climate co-benefits. The Program's AQM activities reduce GHG emissions and warming SLCP. The expanded monitoring stations under DLI 1 will collect real-time data on GHG emissions and SLCP, while DLI 2 establishes an integrated inventory to track and document the source of both air pollutants and GHGs (CO₂, methane/CH4, nitrous oxide/NOX) across six key sectors. Similarly, the inspection scheme under DLI 7 will directly measure GHG emissions from polluting vehicles in addition to air pollutants. DLI 5 supports a modal shift away from largely polluting, aged private vehicles towards the use of e-buses. DLI 6 provides access to low-cost capital to promote adoption of e-2/3Ws, resulting in significant emissions savings. Under this DLI, EPCCD will also implement battery waste management rules that will regulate the informal waste disposal sector and ensure proper battery lifecycle management supported under the IPF component. DLI 8 supports the buyback of polluting vehicles to reduce emissions from inefficient engines with higher fuel consumption per kilometer. Under RA3, DLI 9 promotes super seeders among rice farmers, which reduces crop residue waste and thus GHG and methane emissions from burning. The IPF component supports the implementation of RA2 and advances clean technologies studies for industrial sector to reduce GHG emitting fuels. 53. The Program would reduce climate risks and strengthen Punjab's resilience to climate change and air pollution impacts through improved data collection, transparent decision-making, and behavioral change initiatives. By monitoring and detecting hazardous pollution (DLI 1) and warning the population accordingly to take mitigating actions (DLI 4), the Program alleviates a critical vulnerability of the Punjab population, helps decrease respiratory diseases, and thus increases their resilience to the adverse impacts of climate change. Both the monitoring stations (DLI 1) and infrastructure investments for transport, such as bus depots (DLI 5), will be insured against climate risks, located outside of flood plains and on elevated ground to reduce flood risks. Transport infrastructure will be protected by effective stormwater drainage systems, whereas bus depots will be sheltered to protect passengers against heat. Monitoring stations and fuel quality testing labs will also have reliable power to protect against extreme heat. 54. GHG accounting. GHG emission reductions will be tracked via an intermediate results indicator and calculated for the 2025–2037 vehicle stock based on vehicle type, energy source and annual utilization. Emission factors per vehicle-km are assigned to each category and projected for two scenarios: (i) baseline scenario assuming business-as-usual; and (ii) a PCAP intervention scenario. The difference in emissions represents emissions savings from PCAP. Transport interventions (retiring 900 heavy or equivalent vehicles, introducing 600 e-buses, deploying 120,000 e-2Ws or equivalent e-3Ws, and improving inspections to reduce polluting vehicles by 13 percentage points) are projected to reduce emissions by at least 11,500,000 metric tons of CO2 over 12 years. In agriculture, super seeders reduce emissions through lower fuel consumption through fewer tractor kilometers required and elimination of crop residue burning. Without interventions, baseline agricultural emissions would be 6,800,000 metric tons of CO2 in 5 years and 24,175,000 in 12 years. Agriculture interventions (5,000 super seeders avoiding 20,500,000 tons of crop burning) would reduce GHG emissions by 24,130,000 metric tons of CO2 over 12 years based on the 70 percent reduction in burning area. Estimates use a no-new-technologies counterfactual baseline, subject to updates if conditions change. 55. The Program aligns with the Paris Agreement’s goals and has low mitigation and adaptation risks. This alignment is achieved through: (i) maximizing synergies across air pollutant and GHG emissions reduction; (ii) sectoral air pollution abatement measures that have significant climate change mitigation impacts; and (iii) strengthening state capabilities for AQM through planning, coordination, and monitoring systems. All Program activities are on the universally aligned list, indicating that they either contribute to decarbonization or have negligible GHG impacts, including public Page 14 The World Bank Punjab Clean Air Program (P508222) transport expansion, EV adoption, and crop residue management. The Program is aligned with measures identified both under Pakistan's Nationally Determined Contribution and the National Clean Air Policy to reduce air pollutant emissions, such as improving air quality monitoring, expanding access to public transport, and promoting EV adoption. The Program also strongly aligns with recommendations in the Pakistan CCDR to address air pollution, green urban mobility, climate-smart agriculture, and cleaner production in industry. The Program supports Pakistan’s National Adaptation Plan's goals by strengthening monitoring systems, governance frameworks, and pollution reduction measures through both infrastructure development and behavior change interventions. 56. Lahore Division faces extreme heat and riverine flooding, although these pose low to moderate risk to Program activities and the PDO and align with the adaptation goals of the Paris Agreement. By 2100, Pakistan's annual days above 35°C heat index will increase by 9–13 (Shared Socioeconomic Pathway/SSP1–1.9), 16–30 (SSP2–4.5), or 21–39 days (SSP3–7.0). Punjab is Pakistan's most heat-vulnerable province, with over 700,000 residents exposed to heatwaves annually (wet-bulb globe temperature measure), and the largest flood-exposed settlement area (163 km2 fluvial, 129 km2 pluvial). Most Program activities have minimal fixed infrastructure and hence a low inherent risk, including inventory system development (DLI 2), awareness campaigns (DLI 4), EV promotion (DLIs 5, 6), vehicle inspection expansion (DLI 7), buyback scheme (DLI 8), and super seeder provision (DLI 9). Fixed infrastructure investments, though small within the Program, face high heat/flood likelihood but moderate risk: 25 monitoring stations (DLI 1), two fuel testing labs (DLI 3), and transport infrastructure, particularly e-bus depots (RA2). To mitigate these risks, all the investments will include climate risk screening in design and location planning. 57. Gender. Safe and accessible transport is essential for women’s access to education, jobs, and services. The Program will boost women’s employment in public transport. Women are significantly underrepresented in the transport sector, comprising only 30,200 employees out of a total workforce of 4.79 million in 2022, according to the Asian Transport Observatory. In bus operations managed by PMA, women make up only 9.4 percent of the workforce, and no women are employed in technical and managerial positions at PTC (e.g., drivers, supervisors, engineers, etc.). The primary reasons are: (i) limited skills development opportunities; and (ii) unfavorable workplace policies and environment for women. To address this, the Program will track the hiring of more women in public transport to help design systems that better address women’s safety, accessibility, and mobility needs, encouraging greater adoption and managerial roles and implement measures to ensure the safety of women on buses as well as in depots and workspaces through secure facilities and harassment reporting mechanisms. Results indicator that will be tracked: Women employed in technical and managerial roles within the Lahore e-bus system. 58. Facilitate women’s access to e-2/3Ws and offer a more independent and affordable transport option. Significantly fewer women own 2/3Ws in Pakistan compared to men. For example, in Karachi, it is reported that 2.3 million men hold motorcycle licenses, compared to just 4,052 women. Besides cultural norms, this is in part due to limited financing options available to women. The number of women accessing loans to purchase vehicles is very low/non-existent: a diagnostic survey by the State Bank of Pakistan revealed that less than 1 percent of women who are small and medium enterprise owners utilized vehicle finance products. Around 82 percent of Pakistani women remain unbanked. E- 2/3Ws are emerging as a safe and clean transport solution for women, enhancing their mobility and independence. Under the Chief Minister’s Youth Initiative in Punjab, which supported loans for 10,200 2Ws (both electric and ICE), 4,499 were taken up by women, highlighting the demand for financing mechanisms that support women's access to independent transportation. Women on Wheels is a similar initiative undertaken by GoPb’s Sustainable Development Goals Unit. The e-2/3W financing facilities will embed incentives for participating financial institutions to expand lending to women such as discounts on credit guarantee fees or lower interest rates, support women-focused loan desks, and targeted awareness raising to highlight financing options available for women and the benefits of using EVs to reduce emissions. Results indicator that will be tracked: Share of loans by value made to women under the e-2/3W financing facility. Page 15 The World Bank Punjab Clean Air Program (P508222) 59. Citizen engagement and public communications. The operation supports the development and rollout of a comprehensive citizen engagement plan under RA1, which seeks to increase public awareness, bring about social and behavioral change, and garner public support for AQM investments. The campaign will deliver real-time air quality alerts and actionable guidance through multiple channels—from mobile phones and social media—ensuring information reaches all segments of society. Youth will be engaged through targeted school curricula to build early awareness and understanding of air quality issues. To strengthen accountability and community participation, the Program will launch a user-friendly digital grievance system accessible via web and mobile platforms. The importance of citizen participation is captured by one of the PDO indicators, which measures the proportion of the population in Lahore Division provided with real-time access to air quality information. An intermediate outcome monitors how effectively the behavioral change campaign drives community participation in air quality monitoring and reporting initiatives. Sectoral interventions will be informed by detailed stakeholder consultations. 60. Maximizing Finance for Development (MFD). DLIs 5, 6, and 8 are MFD-enabling. DLI 5 creates the enabling environment for private sector engagement in public buses by reducing commercial, operational, and funding risks. The distance-based fare policy will reduce government subsidies. The PTSC will improve assurance of government funding to cover revenue shortfalls. Taken together, these will improve payment assurance to prospective private operators for feeder buses. DLI 6 entails the adoption of a provincial EV policy and charging infrastructure roadmap. Together with the National Electric Vehicle Policy (2019), this will provide policy certainty and enable private investment in EV manufacturing as well as charging infrastructure. The e-2/3W financing facility will also unlock commercial financing for EV purchases. DLI 8 supports the implementation of a buyback scheme which may include private investments in scrappage facilities. Under the IPF component, the technical assistance (TA) can also be identified as MFD-enabling as it will support the implementation of activities under DLIs 5, 6, and 8. The IPF component will also pave the way for monetizing GHG emission reductions in the form of carbon credits. Studies on industrial emissions abatement will also be MFD-enabling as they unlock these private sector opportunities to reduce emissions. 61. Private Capital Mobilization (PCM) and Private Capital Enabling (PCE). There are several avenues for private sector participation in this Program with a total expected PCM of US$89 million. The e-2/3W financing facility under DLI 6 will expand lending to EV users with an estimated co-lending from participating financial institutions and equity contributions from individuals and corporates of around US$80 million. Private sector driven models will also be considered for the proliferation of charging solutions as part of the charging infrastructure roadmap. On expanding access to agricultural technologies to reduce crop residue burning under DLI 9, farmers will bear 40 percent of the cost of super seeders estimated at US$9 million. DLI 5 is verified PCE, with PPP approaches to be explored under the IPF component. The extent of PCE will depend on the business model with 50 percent of initial capital expenditure on e-buses and chargers is around US$70 million but, for the time being, it has been assumed that the government will use public procurement of e-buses, with no PCE. Achievement of PCE will be tracked via the non-monetary indicator: “Expand Cleaner Public Transport in Lahore Division (E-Buses) (Number)”. DLI 7 may require private investments in 2W vehicle inspection facilities and DLI 8 in scrappage facilities, but the scale of investment is yet to be determined. 62. Expenditure framework adequacy. The PEF will provide adequate funding to implement all activities under the three RAs. GoPb has already earmarked a substantial amount of funding towards the SMAP, which forms the basis for the government program. In FY25 alone, PKR 29 billion (US$104 million) has been approved for smog mitigation activities, demonstrating government commitment for these efforts. 63. The approach to financial sustainability. The business model for e-bus deployment will be chosen based on robust value for money analyses under an IPF component study. The PTSC will ensure continuity of funding for public bus operations in exchange for mass transit agencies meeting service targets. A new distance-based fare policy will be instituted, with the goal of raising fare revenue and narrowing the subsidy burden for public bus operations. The e- Page 16 The World Bank Punjab Clean Air Program (P508222) 2/3W financing facility will be designed to phase out government equity subsidies over time and build the supply side and financing ecosystem to let market forces drive longer-term EV adoption. 64. Economic Analysis: Rationale for World Bank involvement. The World Bank’s strategic, technical, and financing support would help GoPb tackle the challenges of a large and complex air quality program, while developing capacity for the long term. The World Bank can leverage international experience and expertise with AQM and improve the success, financial sustainability, and efficiency of sectoral abatement measures. The World Bank will facilitate dialogue and knowledge exchange at a regional level, given the strong need for an airshed approach to tackle air pollution. 65. A cost-benefit analysis was performed to assess the economic impact of PCAP. The evaluation focuses on sectoral abatement measures across the transport and agriculture industry sectors. Benefits and costs from RA1 were excluded from the analysis as it is challenging to quantify the benefits of these interventions. The evaluation considered a 12- year time horizon corresponding to the lifespan of buses, the biggest investment under the Program. The economic evaluation references international best practices, e.g. as adopted by the Department for Environment, Food and Affairs in the United Kingdom, and lessons learned from other projects, e.g. as undertaken by Vital Strategies in 2023. 66. Economic costs and benefits. Incremental Program costs were estimated against the counterfactual scenarios for each intervention. The net present value (NPV) of incremental capital expenditure is US$386 million with a discount rate of 6 percent. Benefits accrue from four sources: (i) health savings from the reduction of PM2.5 concentration; (ii) monetary value of GHG emission reductions; (iii) O&M cost savings; and (iv) improvement in job accessibility due to new bus routes. The total NPV of benefits is US$1.35 billion as broken down in Table 7. Further details on all areas of benefits are included in the Technical Assessment. 67. The overall NPV for PCAP is US$1.35 billion with a 6 percent discount rate and the overall EIRR is 44 percent showing robust results. The costs and benefits are broken down by sectors and sources of benefits as per the Table 7 below: Table 7: Cost–Benefit of PCAP Sector Economic Costs O&M Savings GHG Emissions Improved NPV Monetized Job Accessibility Transport -366 +240 +388 +128 390 Agriculture -20 +60 +830 N. A 870 Health Benefits Aggregated Across Sectors +85 Total PCAP NPV (US$, million) 1,345 68. The Program is expected to reduce PM2.5 emissions by 201 kilotons cumulatively through 2037, with the agriculture sector yielding 177 kilotons and the transport sector 24 kilotons. PM2.5 concentration in Lahore is expected to reduce by 6.0 µg/m3 in 2037, with transport contributing 5.5 µg/m3 and agriculture contributing 0.5 µg/m3. The disproportionate reduction in concentration relative to emissions across the transport and agriculture sectors is due to the reduced crop burning being spread over six divisions, whereas the transport interventions are assumed to be largely focused on Lahore. The estimate is likely to be an upper bound as it assumes strong implementation of key measures such as vehicle inspections and maintenance, which would require significant effort. The reduction in PM2.5 will yield health benefits in terms of reduced mortality and morbidity as well as improved productivity. 69. Emission reductions in transport ensue from a combination of “shift” and “improve” interventions. a. A basic travel demand model was developed for Lahore using assumptions on travel demand and trip characteristics from a 2016 Lahore study and from cities with similar size and population in India (Chennai/Bangalore). A gradual increase in passenger and freight travel demand was assumed. b. The addition of e-buses was assumed to shift travel demand away from diesel buses and 2/3Ws. 40 percent of the travel demand on e-buses was assumed to come from 2Ws (33 percent) and 3Ws (7 percent). (Shift). Page 17 The World Bank Punjab Clean Air Program (P508222) c. With the financing interventions for e-2/3Ws expected to catalyze EV adoption, an accelerated increase in EV penetration was assumed in the Program scenario beyond 5 percent sales penetration. The analysis assumes continued policy and financial support for EV adoption beyond 2030. (Improve). d. The extension of vehicle inspections to 2Ws was assumed to reduce the proportion of high emitters from 33 percent of the vehicle stock, corresponding to the rough proportion of vehicles that fail their first inspection today across other vehicle segments, gradually to 10 percent of the vehicle stock. (Improve). e. The buyback scheme for heavy vehicles was assumed to be tied to improved vehicle inspections, which would reduce the proportion of high emitters from around 60 percent of heavy vehicles today to 20 percent in 2037. f. Active management of road dust re-suspension through the paving of road shoulders and standard operating procedures as part of the results framework was also expected to reduce the road dust contribution to PM2.5. 70. Improved accessibility to jobs with feeder routes. Based on nightlight data to locate economic hotspots, new bus routes under PCAP are estimated to increase job accessibility by up to 34 percent and generate travel time savings. Based on the minimum wage rate for Punjab and bus capacity, a fleet of 500 e-buses is expected to generate additional job opportunities and incomes estimated at US$128 million (NPV) over 12 years. 71. For agriculture, the use of super seeders is expected to reduce crop burning and the number of passes of tractors leading to emission reductions. The Program will introduce super seeders covering 1.2 million acres spread across six divisions, including Lahore Division. Crop burning within this area is expected to reduce by 70 percent, representing a reduction of 2.01 million tons of rice straw burned. 72. The Program will also reduce GHG emissions by 35.6 million metric tons of carbon dioxide (mtCO2) over the next 12 years yielding a net benefit of US$1.2 billion in NPV terms based on a discount rate of 6 percent and shadow price of US$40–58 per mtCO2. The transport sector yielded 11.5 million mtCO2 (excluding road dust interventions) and the agriculture sector 24.1 million mtCO2. Operating cost savings with more efficient technologies add to the benefits. B. Fiduciary 73. The World Bank carried out an integrated fiduciary systems assessment (IFSA) covering procurement and financial management aspects of the Program. The IFSA identified areas of fiduciary risk and agreed mitigation measures have been incorporated in the Program Action Plan (PAP). With this, the residual fiduciary risks have been assessed to be Substantial. The assessment covered all implementation agencies to ensure that adequate fiduciary systems are in place to manage Program funds. Fiduciary risks relate to weak fiduciary capacity, inadequate budget allocation, delayed availability of funds, available provision in rules for direct contracting of public sector entities for time bound and sensitive projects, and ineffective monitoring and compliance mechanisms given the substantial volume of procurements envisaged under the Program. Mitigation measures to address identified risks are included in the PAP, such as the hiring of qualified fiduciary staff and adherence to budgeting guidelines of the government. Internal controls will be improved by strengthening the capacity of key fiduciary staff. The operation’s annual financial statements (combined) will be prepared in accordance with the Cash Basis International Public Sector Accounting Standards (IPSAS) and audited by Auditor General of Pakistan (AGP). Audited financial statements of the operation for each fiscal year will be submitted to the World Bank within nine months of the end of the financial year. Similarly, the procurements under the PforR will follow Punjab Public Procurement Rules of 2014. The World Bank’s “Guidelines on Preventing and Combating Fraud and Corruption in Program-for-Results Financing,” dated February 1, 2012, and revised July 10, 2015, will apply to the Program. C. Environmental and Social 74. The Program's environmental risks are rated Substantial and largely stem from transport sector activities. EVs generate indirect GHG emissions due to battery charging from the fossil fuel-based electricity grid in Punjab. Lithium batteries in e-buses, when damaged, results in life and fire safety risks and are not easily extinguished by traditional methods. Charging stations, use of diesel generators (as back up) and storage areas also pose life and fire safety risks. Page 18 The World Bank Punjab Clean Air Program (P508222) Expired batteries require disposal, wherein informal recycling practices in Punjab are largely unregulated and thus, lead to hazardous material discharge and emissions. Bus washing results in contaminated wastewater and sludge. Improper disposal of old vehicles may lead them back onto roads and cause soil, air, and water contamination. Construction activities for bus depots, stops, road repairs, footpaths, cycling lanes, and charging stations carry minor, temporary, and reversible environmental risks including noise, dust, Occupational and Community Health and Safety (OHS/CHS) concerns. Similarly, the procurement and operationalization of super seeders can pose risks such as: increased soil disturbance, fuel consumption and emissions, biodiversity impacts due to promotion of monoculture farming, and increased incidences of pest breakout. The utilization of mobile vehicles for roadshows are also assessed to have minor risks related to release of air emissions, leakage of hazardous chemicals, and noise nuisance. 75. AQM governance activities under the Program will generate e-waste. The Program activities, under expansion of the air quality monitoring network, developing continuous emission monitoring for the priority industries, and establishment of brick kiln district monitoring stations, will require procurement and installation of IoTs (Internet of Things), i.e., devices with sensors, processing ability, software and other technologies. The environmental and health and safety impacts occur during improper utilization (weak Operations and Management, O&M), recycling and disposal of e-waste. The improper recycling arrangements result in polluting air, water, and soil due to release of pollutants such as persistent organic pollutants including flame retardants (poly brominated biphenyl), dioxins (polychlorinated dibenzodioxins and dibenzofurans), perfluoroalkyls, polycyclic aromatic hydrocarbons, and heavy metals (lead, chromium or hexavalent chromium, cadmium, mercury, zinc, nickel, lithium, beryllium) during dismantling, burning, chemical processing, and disposal activities. 76. The Program's social risks are rated Substantial, linked to public transport infrastructure construction and potential exclusion of vulnerable groups from benefits. Ineffective communication and poor consultation can heighten these risks. For RA2 transport measures, construction of e-bus routes, bus stops, depots, pavements, and cycle lanes pose health and safety risks for workers and the public. Land acquisition could forcefully remove encroachers from government lands for e-bus depots. People with disability may face exclusion from using e-buses and related infrastructure, while women, students, and low-income people might struggle to access financing for e-2/3Ws. Women employed in e-bus operations, female public transport users, and women driving EVs face risks of sexual exploitation and abuse/sexual harassment (SEA/SH). RA3 agriculture sector measures may exclude women small farmers from mechanization options, cause income loss from crop burning bans, penalize small farmers unequally, and exclude various groups from digital solutions. Mechanization and new machinery such as super seeders present health and safety risks for farmers, workers, and children. RA1 AQM governance and awareness activities could render government employees with low information technology literacy redundant, especially older and female staff. Increased monitoring might lead to stricter actions on small, less influential industries, risking closures, layoffs, and potential social tension. 77. An Environmental and Social Systems Assessment (ESSA) for the PforR Program has been prepared following the World Bank PforR Policy and Directive. ESSA consultations were held in Lahore on January 30, 2025. The existing E&S management systems are adequate for addressing the Program's risks. Environmental risks are managed by federal and provincial Environmental Protection Acts. Social aspects are governed by Local Government Acts, Social Welfare Acts, provincial Grievance Redress Systems, Transparency and Right to Information Acts, and Ombudsman Offices. Land acquisition follows the Land Acquisition Act 1894, which outlines compensation for land titleholders but does not address replacement costs for assets, livelihood compensation, or measures for non-titleholders and encroachers. The Program will apply two key exclusion criteria regarding land acquisition and resettlement. E-bus depot sites will exclude: (i) areas displacing 200 or more individuals per site; and (ii) areas which have legacy anti-encroachment drives (AED) starting from December 9, 2024. Page 19 The World Bank Punjab Clean Air Program (P508222) 78. The ESSA makes the following recommendations to maximize the benefits of the Program: consider Low Floor Series (LFS) for e-buses with lithium batteries, and develop battery waste management rules and strategies for ecosystem development under IPF; address E&S aspects in bus depots, mobilization of vehicles for roadshows and labs; manage E&S risks through regular staff training and reporting; prepare and implement OHS/CHS plans based on World Bank Environmental and Social Framework (ESF) guidelines; standard operating procedures for e-waste management and measures for battery waste management; O&M procedures/guidelines for super seeders; ensure women and persons with disabilities benefit from the Program through a Gender Inclusion and SEA/SH Action Plan and a Disability Inclusion Plan; tailor and adopt PGDP’s standard operating procedures for land acquisition and resettlement ensuring provisions for screening checklists, compensation for affected landowners, tenants, and non-titleholders aligned with market rates, and preparation of Resettlement Action Plans; maintain transparent consultations and ensure communication materials and awareness campaigns are tailored to vulnerable groups with a clear plan for stakeholder engagement; and review grievance redressal forums' accessibility for vulnerable groups. 79. Grievance Redress. Communities and individuals who believe that they are adversely affected as a result of a Bank supported PforR operation, as defined by the applicable policy and procedures, may submit complaints to the existing program grievance mechanism or the Bank’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address pertinent concerns. Project affected communities and individuals may submit their complaint to the Bank’s independent Accountability Mechanism (AM). The AM houses the Inspection Panel, which determines whether harm occurred, or could occur, as a result of Bank non-compliance with its policies and procedures, and the Dispute Resolution Service, which provides communities and borrowers with the opportunity to address complaints through dispute resolution. Complaints may be submitted at any time after concerns have been brought directly to the Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the Bank’s Grievance Redress Service (GRS), visit https://www.worldbank.org/GRS. For information on how to submit complaints to the Bank’s Accountability Mechanism, visit https://accountability.worldbank.org. D. IPF Appraisal 80. The E&S risk relating to the IPF-supported activities is rated Substantial overall. To manage E&S risks and impacts, an Environmental and Social Commitment Plan (ESCP) and Stakeholder Engagement Plan (SEP) have been prepared and publicly disclosed in-country and on the World Bank external website on March 4, 2025.6 Environmental risks are assessed as Substantial while social risks are assessed as Moderate. The TA does not directly involve civil works or goods procurement, but significant downstream environmental risks are foreseen during implementation, mostly related to procurement and operationalization of e-buses, 2/3 wheelers and vehicle buy-back schemes. Poorly designed studies may result in downstream impacts, including e-waste, battery waste, soil and water contamination, re-entry of polluting vehicles, OHS/CHS risks, and hazardous waste generation. Social risks include livelihood impacts, exclusion of vulnerable groups in consultations and studies (for e-bus deployment, vehicle buyback, and e-2/3W adoption), and low institutional capacity for social risk management in line with the ESF. These risks will be managed by embedding E&S considerations in terms of reference for TA activities. Standard operating procedures and E&S plans addressing downstream risks will be prepared under the operation. The SEA/SH risk rating is Low. Under the IPF component, the operation will implement the Protection Against Harassment of Women 6 In-country disclosure weblinks: ESCP: (https://pnd.punjab.gov.pk/system/files/PCAP%20Environment%20and%20Social%20Commitment%20Plan_0.pdf); SEP (https://pnd.punjab.gov.pk/system/files/PCAP%20Stakeholder%20Engagement%20Plan_0.pdf); World Bank weblinks: SEP (https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099030425111017891); ESCP (https://documents.worldbank.org/en/publication/documents-reports/documentdetail/099030425111036754). Page 20 The World Bank Punjab Clean Air Program (P508222) at the Workplace Act (2010), establish a Code of Conduct, form an inquiry committee, and set up a confidential grievance redress mechanism. 81. A procurement risk assessment revealed capacity gaps and identified mitigation measures. The assessment covered PCAP-CMU and T&MD PIU. Key procurement related risk includes the lack of experience of implementing entities on World Bank-financed projects. To mitigate these risks, dedicated fiduciary staff will be hired in each entity to enhance the capacity and timely complete the procurements in compliance with the regulations. 82. IPF component procurements will be carried out in accordance with the World Bank Procurement Regulations for IPF Borrowers, dated September 2023 (Procurement Regulations). The IPF component will require consulting services and goods contracts to support implementing entities in Program execution. The PCAP-CMU has prepared a Project Procurement Strategy Document (PPSD) and Procurement Plan that will be updated periodically. The Procurement Plan covers the first 18 months of implementation and will be approved through the Systematic Tracking of Exchanges in Procurement system before commencement of any procurement. The World Bank’s “Guidelines on Preventing and Combating Fraud and Corruption in Projects Financed by IBRD Loans and IDA Credits and Grants”, dated October 15, 2006, revised in January 2011 and as of July 1, 2016, will apply to the IPF component. 83. A dedicated Finance Manager will be engaged throughout PCAP in accordance with the terms of reference acceptable to the World Bank, one each for T&MD and P&D Department. Government budgeting processes will apply for the TA component, and PCAP’s TA budget will be a part of the GoPb’s Annual Development Plan. Both T&MD and P&D Department will maintain separate books of accounts on cash basis to record PCAP related receipts and payments. Bi-annual Interim Unaudited Financial Reports (IUFRs) will be submitted to the World Bank within 45 days of the end of each semester for both IAs. Combined Annual financial statements (segregated for each IA) will be prepared in accordance with the Cash Basis IPSAS and audited by the AGP. The audited financial statements will be submitted to the World Bank within six months of the end of the financial year. Two segregated DAs, one each for T&MD and P&D Department, will be established in the National Bank of Pakistan and will be operated following the provisions of “Revised Accounting Procedure for Revolving Fund Account (Foreign Aid Assignment Account)” dated August 4, 2022, issued by the Finance Division. Disbursements will be based on forecasts of six months, and the subsequent bi-annual IUFRs will document expenditures in the preceding six months. 84. Retroactive financing. Retroactive financing of up to 20 percent of the IPF component allocation for payments made against eligible expenditures incurred 12 months prior to signing date will be allowed, provided that the World Bank’s requirements are met. 85. Oversight and monitoring. The World Bank will conduct annual (or ad hoc as needed) procurement post review in addition to prior review as required in the Procurement Plan and regular implementation support missions. The procurement activities are also subject to auditing by the AGP’s office. E. Program Action Plan @#&OPS~Doctype~OPS^dynamics@padpfrannexprogramactionplan#doctemplate Completion Action Description Source DLI# Responsibility Timing Measurement Adopt policy Technical NA T&MD Due Date 30-Jun-2027 Government Order framework to or notice issued integrate formal Page 21 The World Bank Punjab Clean Air Program (P508222) and informal public transport Climate resilience Technical NA T&MD Recurrent Continuous Based on design for bus depots & documents charging infra incorporated Fill key staff in Technical NA PCAP-CMU & Recurrent Continuous Staffing based on PCAP-CMU and T&MD PIU Program T&MD PIU Operation Manual Implement: 1) Environmental NA PCAP-CMU & Other 1), 2), 3) 12 Plans acceptable Gender Inclusion & and Social IAs months after to WB and SEA/SH Action Plan, Systems effectiveness approved (PSC 2) P-SEP w/ GM, 3) Minutes). Disability Inclusion Plan Appoint Environmental NA PCAP-CMU, Other Within 90 Specialists and Environmental and and Social T&MD & IAs days of focal points Social/Gender Systems Program appointed and Specialists at PCAP- effectiveness maintained CMU & T&MD PIU, throughout and Env/Social Focal Program Point within each IA implementation Prepare & Environmental NA PCAP-CMU & Other Within 90 E&S acceptable to operationalize E&S and Social T&MD PIU days of WB and approved technical manual Systems Program (based on PSC effectiveness minutes) Develop and Environmental NA PCAP-CMU & Other Within 90 E&S training implement training and Social IAs days of module developed for IAs on E&S Systems Program and acceptable to management, effectiveness World Bank, and including CHS, child and before E&S training labor, SEA/SH, e- civil works completed waste, and lithium start battery fire safety Conduct annual Environmental NA PCAP-CMU Other Annual Citizen feedback citizen feedback and Social surveys surveys and publish Systems implemented and results Page 22 The World Bank Punjab Clean Air Program (P508222) results disseminated Ensure timely and Fiduciary NA FD Other Annual Sufficient and effective planning Systems timely funds and budgeting available to IAs for Program implementation Strengthen Fiduciary NA All IAs Other Annual Clear provisions in grievance/complaint Systems review procurement redressal documents mechanism for all specifying bidder procurement rights and independent committee established Conduct Fiduciary NA PCAP-CMU Other Annual Annual independent Systems procurement audit procurement audit conducted by a reputable third- party firm Implement anti- Fiduciary NA PCAP-CMU Recurrent Semi- Compliance of IAs corruption and Systems Annually with ACG policies, governance (ACG) incl. debarred and controls suspended entities/individuals Comprehensive and Fiduciary NA PCAP-CMU, Other Annual Compliance of IAs timely reporting and Systems T&MD PIU & with financial full disclosure in all IAs reporting financial statements framework Compliance to open Fiduciary NA IAs Other Annual Realistic competition and Systems review evaluation and non-discriminatory qualification provisions criteria proportionate to estimated value of contracts, as per PPF Page 23 The World Bank Punjab Clean Air Program (P508222) Tailor and adopt Environmental NA T&MD & Other Within 90 Tailored standard PGDP land and Social PCAP-CMU days of operating acquisition & Systems Program procedures resettlement effectiveness acceptable to WB standard operating and before and approved procedures civil works (based on PSC start minutes) Environmental and Environmental NA T&MD & Other Prior to the ESIA acceptable to Social Impact and Social PMA/PTC start of the WB and approved Assessment (ESIA) Systems civil works by EPA prepared for bus infra and operations, incl. OHS and CHS plans Tailor and adopt Environmental NA PCAP-CMU & Other Within 6 Standard standard operating and Social IAs months of operating procedures for e- Systems Program procedures waste management effectiveness acceptable to WB and approved (based on PSC minutes) Strategy for proper Environmental NA T&MD Other Prior to start Strategy vehicle disposal and Social of buy-back acceptable to WB Systems scheme and approved (based on PSC minutes) E&S checklists for Environmental NA Ag Dept & Other Prior to E&S acceptable to superseeder and Social PCAP-CMU superseeder WB and approved deployment Systems deployment (based on PSC minutes) Exclude from Environmental NA PCAP-CMU & Recurrent Continuous Regular reporting consideration as a and Social IAs by PCAP-CMU Program area any Systems areas subject to AED on or after December 9, 2024, or that may involve the displacement of 200 or more individuals Page 24 The World Bank Punjab Clean Air Program (P508222) V. KEY RISKS Category Risk Rating Explanation of Risk Rating Mitigation Measures Political and High Multi-sectoral Program requires strong buy-in PAP requires a well- staffed PCAP-CMU and Governance from GoPb. Leadership changes can shift PIU to maintain continuity on Program priorities and delay implementation. implementation. Macroeconomic High Pakistan's economy faces significant risks Risks are partly mitigated by government despite recent stabilization. Risks include commitment to implementation of reforms potential worsening of external conditions, under the ongoing International Monetary further natural disasters, and a slowdown or Fund arrangement and World Bank support reversals in policy adjustment. Realization of to structural policy reforms in the fiscal and these risks may lead to macroeconomic power sectors. In addition, close monitoring instability, constraining public resource of the fiscal conditions of the province, availability and imposing additional burdens on inclusion of achievable DLIs in the first year, government organizational and technical and provision of an advance against the capacity, thereby impeding achievement of PforR envelope will help ensure sufficient results. fiscal space for Program implementation. Sector Strategies High High turnover of departmental heads and staff World Bank will undertake analyses to and Policies may weaken institutional memory, while the strengthen the evidence base for AQM coordination mechanism, though interventions across sectors. Emissions organized, remains nascent. Competing policy inventory under the Program will also priorities could put at risk the achievement of highlight sources. RA1 commits government Program objectives. to discussing results from monitoring. Technical Design Substantial The Program is complex and multi-sectoral with DLIs and PAP focus on policy and legal of Program significant information gaps. Its success depends changes. Meaningful disbursements have on legislative and policy changes and effective been attached to reform agenda items to implementation of legal amendments and plans. incentivize action. IPF component studies will design Program interventions. Institutional Substantial Client capacity to monitor and manage air Institutional arrangements place PCAP-CMU Capacity for quality is currently low. under P&D Board, which is responsible for Implementation development agenda in the province. IPF and component will support capacity building. Sustainability Stakeholders Substantial The Program involves a wide range of Strong focus on stakeholder consultations stakeholders, including IAs and private and across all Program elements. Awareness public sector. Program needs to motivate raising and behavior change campaign in behavioral change to achieve the PDO. RA1 will also mitigate this risk. Fiduciary Substantial Fiduciary risks are Substantial, due to weak The risks are mitigated by hiring qualified capacity and procurement monitoring, budget fiduciary staff and enforcing government constraints, and delayed fund availability. budgeting guidelines. Environmental Substantial E&S risks are Substantial, stemming from To mitigate these, high-risk activities, like and Social Risks potential mismanagement of battery and large-scale displacement, have been (E&S) electronic waste, possible land acquisition for excluded from the Program, and E&S bus depots, exclusion of vulnerable groups, and standards will apply. occupational health and safety concerns. Page 25 The World Bank Punjab Clean Air Program (P508222) ANNEX 1. RESULTS FRAMEWORK @#&OPS~Doctype~OPS^dynamics@padpfrannexpolicyandresult#doctemplate Program Development Objective(s) To strengthen air quality management and reduce population-weighted PM2.5 annual average exposure in Lahore Division PDO Indicators by Outcomes Baseline Closing Period Strengthen air quality management Population-weighted exposure to PM2.5 annual average concentrations due to emissions reductions by PCAP (Microgram/m3) Jun/2030 Jun/2030 99.79 97.47 Index on expanded systems for air quality management (Number) Feb/2025 Jun/2030 0 5 People in Lahore Division with real-time access to air quality and environmental information (Number) Feb/2025 Jun/2030 56,000 500,000 PM2.5 emission reduction to transboundary airshed (Microgram/m3) Jun/2030 Jun/2030 3.18 3.14 Reduce emissions from targeted sectors PM2.5 emission reductions from priority sectors supported by the Program (Metric ton) Feb/2025 Jun/2030 0 85,454 ➢PM2.5 emission reduction from Transport (Metric ton) Feb/2025 Jun/2030 0 3,737 Page 26 The World Bank Punjab Clean Air Program (P508222) ➢PM2.5 emission reduction from Agriculture (Metric ton) Feb/2025 Jun/2030 0 81,717 Direct users that benefit from improved access to sustainable transport infrastructure and services (Number of people) CRI Feb/2025 Jun/2030 0 520,000 ➢Direct users that benefit from improved access to sustainable transport infrastructure and services - Female (Number of people) CRI Feb/2025 Jun/2030 0 130,000 ➢Direct users that benefit from improved access to sustainable transport infrastructure and services - Youth (Number of people) CRI Feb/2025 Jun/2030 0 98,000 Intermediate Indicators by Results Areas Baseline Closing Period Air Quality Management Governance and Awareness Raising Additional regulatory grade monitors added to AQM network (Number) DLI Feb/2025 Jun/2030 30 Regulatory Grade AQ monitoring stations across Punjab (25 fixed; 5 mobile) 25 additional regulatory grade monitors added to air quality monitoring network. operational and calibrated by external contractors with three-year contracts. Area covered by air quality monitoring stations (Square kilometer(km2)) Feb/2025 Jun/2030 1,000 1,900 Integrated air pollutant/SLCP/GHG emissions inventory system is developed and routinely updated, used for assessment of Smog Action Plan and informs annual development plans (Yes/No) DLI Feb/2025 Jun/2030 Inventory last updated for 2021, but not integrated. Integrated 2025 inventory developed, used for assessment of Smog Action Plan and informs annual development plans. Fuel quality testing laboratories with mobile and fixed facility operational (Number) DLI Feb/2025 Jun/2030 3 fuel quality testing laboratories with provincial government operational 2 additional fuel quality testing laboratories established and testing completed as per ASTM standards Interactive public information and behavioral change campaign sessions held (Number) DLI Page 27 The World Bank Punjab Clean Air Program (P508222) Feb/2025 Jun/2030 65 awareness sessions held in last two years. 450 awareness sessions held EPCCD Env Monitoring Centre’s staff skilled to validate, quality assure and analyze monitoring data (Percentage) Feb/2025 Jun/2030 0 100% of staff responsible for monitoring data Industrial units monitored and inspected annually (Percentage) Feb/2025 Jun/2030 The program baseline starts with new enforcement staff and a new Environmental Final program report with cumulative activity reported annually Technology & Policy Center within EPCCD from the PGDP. Transport Sector Abatement Measures Expand Cleaner Public Transport in Lahore Division (E-buses) (Number) DLI Feb/2025 Jun/2030 250 diesel buses in Lahore, and 27 e-buses under public sector concessions. 600 additional e-buses operating in Lahore Division, with supporting infrastructure, sustainable institutional and funding arrangements in place Women employed in technical and managerial roles within the Lahore e-bus system (Percentage) Feb/2025 Jun/2030 0 5 Transport sector staff trained (Number) Feb/2025 Jun/2030 0 100 Transition to Electric Two- and Three-Wheelers (new vehicles) (Number) DLI Feb/2025 Jun/2030 <10,000 and 0 e-2Ws and e-3Ws in Lahore respectively, with sales penetration less than 120,000 e-2Ws or e-3W equivalent supported under financing facility to be established 1% in either segment under the Program Private capital mobilized (Amount(USD)) Feb/2025 Jun/2030 0 80,000,000 Share of loans by value made to women under the e-2/3W financing facility (Percentage) Feb/2025 Jun/2030 0 10 Expanding Vehicle Inspections (Percentage) DLI Feb/2025 Jun/2030 Two wheelers currently excluded from vehicle inspections under the Provincial Motor Vehicle inspections extended to two-wheelers, with at least 5% of registered vehicles Vehicles Ordinance (1965) (based on the average number of registrations in preceding three years) tested annually Buyback of polluting vehicles (Number) DLI Feb/2025 Jun/2030 Page 28 The World Bank Punjab Clean Air Program (P508222) No buyback or vehicle retirement scheme for polluting vehicles 900 heavy vehicles (or equivalent) scrapped Standard operating procedures for road dust management adopted (Yes/No) Feb/2025 Jun/2030 No Yes GHG emissions reduced - Transport (Metric ton) Feb/2025 Jun/2030 0 2,000,000 Agriculture Sector Abatement Measures Expanding mechanized crop straw management (Number) DLI Feb/2025 Jun/2030 0 1.2 million acres Private capital mobilized (Amount(USD)) Feb/2025 Jun/2030 0 9,000,000 GHG emission reduced - Agriculture (Metric ton) Feb/2025 Jun/2030 0 6,800,000 Disbursement Linked Indicators (DLI) Period Period Definition Prior Results Pakistan FY 24-25 Period 1 Pakistan FY 25-26 Period 2 Pakistan FY 26-27 Period 3 Pakistan FY 27-28 Period 4 Pakistan FY 28-29 Period 5 Pakistan FY 29-30 Baseline Prior Results Period 1 Period 2 Period 3 Period 4 Period 5 1:Additional regulatory grade monitors added to AQM network (Number ) Page 29 The World Bank Punjab Clean Air Program (P508222) 30 Regulatory Grade 1.01: 10 additional 1.02: 15 additional AQ monitoring fixed and 30 existing fixed stations stations across Punjab AQM stations positioned throughout (25 fixed; 5 mobile) positioned throughout Punjab, operated by operational and Punjab, operated by EMC and reporting calibrated by external EMC and reporting data per SOP/QA contractors with data per SOP/QA protocols, and real- three-year contracts. protocols, and real- time data made time data made available online hourly available online hourly with public access with public access (scalable) (scalable) 0.00 0.00 5.00 0.00 4.00 0.00 0.00 DLI allocation 9.00 As a % of Total DLI Allocation 3.21% 2:Integrated air pollutant/SLCP/GHG emissions inventory system is developed and routinely updated, used for assessment of Smog Action Plan and informs annual development plans (Yes/No ) Inventory last updated 2.01: Integrated and 2.02: Integrated 2.03: External review for 2021, but not comprehensive air emission inventory of the inventory integrated. pollutant inventory covering the five completed, and system operational, districts for 2025 feedback incorporated with dedicated staff in developed, as per into the inventory; EMC, covering five 2006 IPCC guidelines 2.04: Updated districts (Faisalabad, including requisite emissions inventory Multan, Lahore, quality assurance submitted to the Gujranwala and Provincial Minister in Sheikhupura) and all charge for major sectors Environment & (agriculture, industry, Climate Change. transport, energy, Inventory system used residential and waste) for assessment of province-wide smog action plan and informs the decision making of relevant departments in their Page 30 The World Bank Punjab Clean Air Program (P508222) preparation of annual development plans 0.00 0.00 2.00 2.00 2.00 0.00 0.00 DLI allocation 6.00 As a % of Total DLI Allocation 2.14% 3:Fuel quality testing laboratories with mobile and fixed facility operational (Number ) 3 fuel quality testing 3.01: 2 additional fuel 3.02: At least 20 tests laboratories with quality testing of private fuel provincial government laboratories sellers/users have operational established been conducted at each fuel quality testing laboratory as per ASTM standards 0.00 0.00 2.00 0.00 1.00 0.00 0.00 DLI allocation 3.00 As a % of Total DLI Allocation 1.07% 4:Interactive public information and behavioral change campaign sessions held (Number ) 65 awareness sessions 4.01: A 4.03: 450 additional held in last two years. comprehensive data- data-driven behavioral driven behavioral change campaign change plan sessions held and developed using feedback collected existing inventory (city and summary reports and provincial level) compiled on quarterly and monitoring data; basis. Real-time 4.02: Plan informs the monitoring and use of at least 5 air forecasted data are quality roadshow used in Health vehicles operational Advisory System for 250 working days. providing air quality Feedback mechanism alerts for hazardous for citizens to provide air quality conditions comments and and mitigatory suggestions on an advisory online platform and in recommendations person has been both to the general established public and target sectors. Feedback Page 31 The World Bank Punjab Clean Air Program (P508222) mechanism for citizens to provide comments and suggestions on an online platform and in person is in use 0.00 0.00 1.00 0.00 1.00 0.00 0.00 DLI allocation 2.00 As a % of Total DLI Allocation 0.71% 5:Expand Cleaner Public Transport in Lahore Division (E-buses) (Number ) 250 diesel buses in 5.01: T&MD approves 5.02: PMA/PTC 5.05: Implementing 5:09: PMA/PTC signs 5.11: PMA/PTC signs 5.13: PMA/PTC signs Lahore, and 27 e- Bus Service advertises tender(s) Entity signs a Public contract(s) for 100 contract(s) to procure contract(s) to procure 100 buses under public Transformation Plan for e-buses using Transport Service additional e-buses 100 additional e-buses additional e-buses in sector concessions. for PMA contractual Contract with PMA; (tranche 3) (scalable); in Lahore Division Lahore Division (tranche documents based on 5.06: ITMS covering 5.10: Operation of 100 (tranche 4) (scalable); 5) (scalable); 5.14: business model feeder bus operations additional e-buses 5.12: Operation of 100 Operation of 100 chosen via study; 5.03: in Lahore; 5.07: commence (tranche 3) additional e-buses additional e-buses Implementing Entity PMA/PTC sign (s) with associated commence (tranche 4) commence (tranche 5) implements distance- contracts to procure supporting with associated with associated based fare policy for 100 additional e-buses infrastructure supporting supporting infrastructure e-buses; 5.04: in Lahore Division (scalable) infrastructure (scalable) Commencement of (tranche 2) (scalable); (scalable) operations of 200 5.08: Operation of 100 additional e-buses in additional e-buses Lahore Division commence (tranche 2) (tranche 1) with associated supporting infrastructure (scalable) 0.00 1.00 42.00 29.50 22.50 22.50 22.50 DLI allocation 140.00 As a % of Total DLI Allocation 50% 6:Transition to Electric Two- and Three-Wheelers (new vehicles) (Number ) <10,000 and 0 e-2Ws 6.01: Implementing 6.02: Implementing 6.06: 11,000 e-2Ws 6.07: 21,000 e-2Ws 6.08: 35,000 e-2Ws 6.09: 50,000 e-2Ws (or and e-3Ws in Lahore Entity notifies Entity establishes (or equivalent number (or equivalent number (or equivalent number equivalent number of e- respectively, with provincial electric financing facility for e- of e-3Ws) supported of e-3Ws) supported of e-3Ws) supported 3Ws) supported under the sales penetration less vehicle policy and 2Ws and e-3W under the financing under the financing under the financing financing facility. Amount associated charging established via a facility. Amount to be facility. Amount to be facility. Amount to be to be pro-rated based on Page 32 The World Bank Punjab Clean Air Program (P508222) than 1% in either infrastructure financial intermediary; pro-rated based on pro-rated based on pro-rated based on the actual number of e- segment roadmap 6.03: Implementing the actual number of the actual number of the actual number of 2Ws (or equivalent Entity introduces e-2Ws (or equivalent e-2Ws (or equivalent e-2Ws (or equivalent number of e-3Ws) dedicated EV entity number of e-3Ws) number of e-3Ws) number of e-3Ws) (scalable) with clear terms of (scalable) (scalable) (scalable) reference; 6.04: Implementing Entity introduces battery waste management rules; 6.05: 3,000 e- 2Ws (or equivalent number of e-3Ws) supported under the financing facility (scalable) 0.00 3.00 10.00 4.00 7.00 11.00 15.00 DLI allocation 50.00 As a % of Total DLI Allocation 17.86% 7:Expanding Vehicle Inspections (Percentage ) Two wheelers 7.01: Implementing 7.02: 3% of registered 7.03: 5% of registered currently excluded Entity amends Motor two wheelers two wheelers from vehicle Vehicles Ordinance to inspected, calculated inspected, calculated inspections under the subject motorcycles to against a base of the against a base of the Motor Vehicles vehicle emissions average number of average number of Ordinance (1965) inspections two-wheelers two-wheelers registered in Punjab registered in Punjab over the preceding over the preceding three years, based on three years, based on data from the Excise data from the Excise and Taxation and Taxation Department Department 0.00 3.00 0.00 0.00 4.00 3.00 0.00 DLI allocation 10.00 As a % of Total DLI Allocation 3.57% 8:Buyback of polluting vehicles (Number ) No buyback or vehicle 8.01: Implementing 8.03: 225 polluting 8.04: 225 polluting 8.05: 225 polluting 8.06: 225 polluting heavy retirement scheme for Entity amends the heavy vehicles heavy vehicles heavy vehicles vehicles (truck/bus) (or polluting vehicles relevant legal (truck/bus) (or (truck/bus) (or (truck/bus) (or equivalent) scrapped Page 33 The World Bank Punjab Clean Air Program (P508222) framework to allow equivalent) scrapped equivalent) scrapped equivalent) scrapped under buyback scheme for vehicle retirement under buyback under buyback under buyback (scalable) tied to emissions scheme (scalable) scheme (scalable) scheme (scalable) inspections; 8.02: Implementing Entity notifies buyback & scrappage scheme for polluting vehicles identified via emissions inspections, with appropriate financial incentives, scrapping mechanism and informed by stakeholder consultations 0.00 0.00 8.00 8.00 8.00 8.00 8.00 DLI allocation 40.00 As a % of Total DLI Allocation 14.29% 9:Expanding mechanized crop straw management (Number ) 1000 super seeders 9.01: Implementing 9.02: Implementing 9.03: Mechanized 9.04: 70 percent with 60 percent Entity provides 2,000 Entity distributes management of crop reduction in crop subsidy provided to super seeders on 60 3,000 super seeders straw on 1.2 million residue burning areas farmers across Punjab percent subsidy to on 60 percent subsidy acres of land. Scalable as compared to 2023 farmers selected via to farmers selected via pro rata in FY27-28, crop acreage burning balloting who balloting who with the balance data contribute 40 percent contribute 40 percent released if DLR share (scalable) share. Scalable pro achieved in a rata based on number subsequent FY on the of super seeders full 1.2 million acres of provided (scalable) land (scalable) 0.00 0.00 6.00 9.00 2.50 2.50 0.00 DLI allocation 20.00 As a % of Total DLI Allocation 7.14% Page 34 The World Bank Punjab Clean Air Program (P508222) Monitoring and Evaluation Plan: PDO Indicators by PDO Outcomes Strengthen air quality management Population-weighted exposure to PM2.5 annual average concentrations due to emissions reductions by PCAP (Micrograms/m3) This indicator will measure the change in the concentration of primary PM2.5 emissions in Lahore at the end of the Description Program, relative to the Program baseline for 2030. Current baseline and endline are based on World Bank projections. The baseline and endline targets will be reviewed once the inventory has been developed. Frequency End of Program Data source Emissions inventory data and monitoring data from expanded network Methodology for Data Estimation method used by the EMC to report to the EPCCD. Collection Responsibility for Data EMC/EPCCD Collection Index on expanded systems for air quality management (Number) Citizen engagement indicator. This indicator is a composite governance index comprising binary variables on the use of five core competencies in air quality management in routine decision making. These competencies are: 1) Description monitoring, 2) inventory, 3) source apportionment, 4) decision support, and 5) citizen engagement. Each competency receives a score of 1 if achieved, or 0 if not achieved. The total index score is the sum of all competencies achieved, with a maximum score of 5. This is a once-off target. Frequency End of Program Monitoring data, inventory analysis, source apportionment studies, decision support system reviews, citizen Data source feedback mechanisms Methodology for Data Review of qualitative and quantitative data and information to score each dimension. Collection Responsibility for Data EPCCD Collection People in greater Lahore with real-time access to air quality and environmental information (Number) This indicator measures the number of people with enhanced real-time access to air quality information Description disseminated through various communication channels. Frequency Annual Unique annual website visitors; dashboard of user traffic on mobile app and text messages sent; number of Data source Measurement, Reporting, and Verification (MRV) submissions in green credits portal public engagement through official social media handles/pages Methodology for Data Review of qualitative and quantitative data to estimate number of unique beneficiaries across various Collection communication media. Responsibility for Data EPCCD Collection PM2.5 emission reduction to transboundary airshed (Micrograms/m3) Transboundary impact indicator and climate resilience indicator. This indicator measures the annual emission load Description from the Lahore Division area that is transboundary and will contribute to the PM2.5 concentrations in neighboring countries. Reductions in the transboundary emission load is a co-benefit of the Program. Frequency End of Program Data source Emissions inventory data  Methodology for Data Estimation method used by the EMC to report to the EPCCD.   Collection Responsibility for Data EMC/EPCCD  Collection Reduce emissions from targeted sectors PM2.5 emission reductions from priority sectors supported by the Program (Metric ton) This indicator would sum up the cumulative decrease in the emissions in the metric tons as a result of implementing Description priority sectors activities supported by the Program. Current baseline and endline are based on World Bank projections. The baseline and endline targets will be reviewed once the emissions inventory has been developed. Frequency Annually Data source Emissions inventory data Page 35 The World Bank Punjab Clean Air Program (P508222) Methodology for Data Estimation method used by EMC and reported to EPCCD. Collection Responsibility for Data EMC + T&MD + Agriculture Department Collection PM2.5 emission reduction from Agriculture (Metric ton) This indicator would quantify the cumulative decrease in the emissions in metric tons as a result of implementing Description agriculture activities supported by the Program. Current baseline and endline are based on World Bank projections. The baseline and endline targets will be reviewed once the emissions inventory has been developed. Frequency Annually Data source Emissions inventory data Methodology for Data Estimation method used by EMC and reported to EPCCD. Collection Responsibility for Data EMC + Agriculture Department Collection PM2.5 emission reduction from Transport (Metric ton) This indicator would quantify the cumulative decrease in the emissions in metric tons as a result of implementing Description transport activities supported by the Program. Current baseline and endline are based on World Bank projections. The baseline and endline targets will be reviewed once the emissions inventory has been developed. Frequency Annually Data source Emissions inventory data Methodology for Data Estimation method used by EMC and reported to EPCCD. Collection Responsibility for Data EMC + T&MD Collection People with improved access to sustainable transport infrastructure and services (Number) Corporate Results Indicator. This indicator measures the total number of people benefiting from improved access to Description electric buses and electric two- and three-wheelers (sustainable transport) infrastructure and services. Frequency Mid-term and end-term Ticketing data furnished by PMA/PTC via T&MD (e-buses) and data on number of vehicles supported under financing Data source facility from financial intermediary. Methodology for Data Daily/quarterly/annual boarding of buses disaggregated by gender. Number of vehicles supported under financing Collection facility, with the assumption that each vehicle will benefit one user. Responsibility for Data T&MD with inputs from PMA/PTC Collection Women with improved access to sustainable transport infrastructure and services (Number) Corporate Results Indicator. Gender tagged indicator. This indicator measures the total number of women benefiting Description from improved access to electric buses and electric two- and three-wheelers (sustainable transport) infrastructure and services. Frequency Mid-term and end-term Ticketing data furnished by PMA via T&MD (e-buses) and data on number of vehicles supported under financing Data source facility from financial intermediary. Methodology for Data Daily/quarterly/annual boarding of buses disaggregated by gender. Number of vehicles supported under financing Collection facility, with the assumption that each vehicle will benefit one user. Responsibility for Data T&MD with inputs from PMA/PTC Collection Youth with improved access to sustainable transport infrastructure and services (Number) Corporate Results Indicator. This indicator measures the total number of youth benefiting from improved access to Description electric buses and electric two- and three-wheelers (sustainable transport) infrastructure and services. Frequency Mid-term and end-term Ticketing data furnished by PMA via T&MD (e-buses) and data on number of vehicles supported under financing Data source facility from financial intermediary. The number of youth is calculated using the proportion of youth in Lahore Division as published by the Pakistan Bureau of Statistics. Methodology for Data Daily/quarterly/annual boarding of buses disaggregated by gender. Number of vehicles supported under financing Page 36 The World Bank Punjab Clean Air Program (P508222) Collection facility, with the assumption that each vehicle will benefit one user. Responsibility for Data T&MD with inputs from PMA/PTC Collection Monitoring and Evaluation Plan: Intermediate Results Indicators by Results Areas Air Quality Management Governance and Awareness Raising Additional regulatory grade monitors added to air quality monitoring network (Number) DLI This indicator measures the number of additional regulatory grade air quality monitoring stations added to the Description network and reporting in alignment with standardized operating procedures and stringent quality assurance (QA) protocols. Frequency Annual Data source Technical inspection, data trails and operation logs, calibration records, and quality assurance assessments. Methodology for Review of qualitative and quantitative data and count of operational air quality monitors over the baseline. Data Collection Responsibility for EMC/EPCCD Data Collection Area covered by air quality monitoring stations (Square kilometer(km2)) This indicator captures the change in total area (measured in square kilometers) covered by regulatory grade air Description quality monitoring stations as the network expands. The same geographic area covered by different stations will not be counted twice in the calculation. Frequency Annual Data source Global Positioning System (GPS) locations of regulatory grade air quality monitoring stations Radius coverage for each air quality monitoring stations will be estimated and then summed up to calculate total Methodology for unique area covered, accounting for overlapping coverage between stations. Total coverage area at baseline and new Data Collection total coverage area after network changes will be estimated. Responsibility for EMC/EPCCD Data Collection Integrated air pollutant/SLCP/GHG emissions inventory system is developed and routinely updated, used for assessment of Smog Action Plan and informs annual development plans (Yes/No) DLI The indicator assesses whether a 2025 integrated and comprehensive inventory has been developed, after such a Description system has been set up covering five districts and six sectors. The inventory will undergo a quality assurance cycle and external review process. Frequency End-term Data source Inventory reports, relevant QA procedures, QA validation reports Methodology for Qualitative assessment of the inventory procedures and validation Data Collection Responsibility for EMC/EPCCD Data Collection Fuel quality testing laboratories with mobile and fixed facility operational (Number) DLI This indicator counts the number of new fuel quality testing laboratories that are established and conduct testing as Description per ASTM standards. Frequency Annual Data source Technical inspection of laboratories and testing reports Methodology for Review of inspection and testing reports Data Collection Responsibility for EMC/EPCCD Data Collection Interactive public information and behavioral change campaign sessions held (Number) DLI Citizen engagement indicator. This indicator measures the number of roadshow vehicles operational, behavioral Description change sessions conducted, and daily updates to the Health Advisory System, utilizing real-time data from the monitoring stations. Frequency Annual Data source GPS, logbooks, and attendance lists Methodology for Review of GPS, logbooks, attendance lists, daily alerts Data Collection Responsibility for EMC/EPCCD Page 37 The World Bank Punjab Clean Air Program (P508222) Data Collection EPCCD Env Monitoring Centre’s staff skilled to validate, quality assure and analyze monitoring data (Percentage) This indicator measures the percentage of staff within the EPCCD Centre that are trained in validation protocols of AQM monitoring, staff capacitated to collect measurements in line with standardized protocol, correct quality control Description procedures are in place, quality control procedures are being met, sample identification procedure are standardized and ensure international standard reporting procedures are followed. Frequency Annual Data source Environmental Monitoring Centre (EMC)/Environment Protection and Climate Change Department (EPCCD) Methodology for Annual reports and records of training Data Collection Responsibility for EMC/EPCCD Data Collection Industrial units monitored and inspected annually (Percentage) This indicator tracks the percentage of industrial units monitored on an annual basis and inspected against Description standardized good industry guidelines and provincial standards for PM2.5. Frequency Quarterly Data source Industry Department and EPCCD Methodology for Monitoring data Data Collection Responsibility for Industry Department and EPCCD Data Collection Transport Sector Abatement Measures Expanding Cleaner Public Transport in Lahore (E-buses) (Number) DLI PCE (non-monetary) indicator. This indicator measures the number of additional electric buses operating in Lahore Description Division relative to the baseline, with supporting infrastructure, sustainable institutional and funding arrangements in place. Frequency Annually Data source Transport and Masstransit Department, in consultation with the Punjab Masstransit Authority Methodology for Independent verification agency to review and validate key documentation shared by T&MD, including operating Data Collection schedules Responsibility for T&MD/PMA Data Collection Women employed in technical and managerial roles within the Lahore e-bus system (Percentage) This indicator aims to support gender diversity and inclusion in the workforce, specifically focusing on technical and Description managerial role that are often underrepresented by women. It also encourages the effectiveness of recruitment and retention strategies aimed at increasing female participation in key positions. Frequency Annually Human resources records of the Lahore e-bus system, specifically focusing on employment contracts, job titles, and Data source gender information. Methodology for T&MD to collect data from PMA Data Collection Responsibility for T&MD Data Collection Transport sector staff trained (Number) This indicator measures the number of staff trained in the transport sector, focusing on developing competencies for Description current roles and adaptation to new PCAP-related technologies, regulations, and practices. Frequency Annually Data source Training records from various departments within the transport sector Methodology for T&MD to maintain training records with input from concerned transport sector agencies Data Collection Responsibility for T&MD Data Collection Transition to Electric Two- and Three-Wheelers (new vehicles) (Number) DLI This indicator tracks the transition to electric two-wheelers and three-wheelers in Lahore Division by measuring the Description number of new electric vehicles supported under a financing facility to be established under the Program via a financial intermediary. Page 38 The World Bank Punjab Clean Air Program (P508222) Frequency Annually T&MD will be responsible for collecting information on the financing facility from the financial intermediary, including Data source vehicle registration records and purchase records from the financing facility. Methodology for Independent verification agency to review and validate key documentation shared by T&MD and financial Data Collection intermediary Responsibility for Financial intermediary Data Collection Private capital mobilized (Amount (USD)) Scorecard indicator. This indicator tracks the amount of private capital financing mobilized under Program Description interventions. Frequency Mid-term and end-term Data source Data from PMA on e-bus concessions, and e-2/3W loan quantum data from financial intermediary. Methodology for Based on concession contracts for e-buses, and loan data on e-2/3Ws. Data Collection Responsibility for PCAP-CMU in conjunction with T&MD. Data Collection Share of loans by value made to women under the e-2/3W financing facility (Percentage) Gender indicator. This indicator measures the share of loans made to women under the e-2/3W financing facility, Description promoting financial inclusion and women's access to sustainable transport options through dedicated financing. Frequency Annually Financial records and loan disbursement reports from the financial institutions participating in the financing facility, Data source including loan agreements and borrowers’ profiles. Methodology for T&MD to collect data from financial intermediary periodically Data Collection Responsibility for T&MD Data Collection Expanding Vehicle Inspections (Percentage) DLI This DLI supports the Government of Punjab to expand its vehicle inspections regime to cover two-wheelers and Description measures the share of registered vehicles inspected annually, based on the average number of registrations in the preceding three years. Frequency Annually Data source T&MD for vehicle inspection data Methodology for Independent verification agency to review and validate key documentation shared by T&MD. Data Collection Responsibility for T&MD Data Collection Buyback of polluting vehicles (Number) DLI This indicator measures the presence of a well-functioning buyback scheme for polluting vehicles, which is proxied by Description the number of the most polluting heavy-duty vehicles (or equivalent number of vehicles from other segments) taken off the road via a buyback and scrappage scheme. Frequency Annually Data source Scrapping records from Registered Vehicle Scrapping Facility (RVSF), photo evidence, and budget records Methodology for Independent verification agency to review and validate key documentation shared by T&MD Data Collection Responsibility for T&MD Data Collection Standard operating procedures for road dust management adopted (Yes/No) This indicator is a binary variable measuring the adoption of standard operating procedures aimed at managing road Description dust to mitigate environmental and health impacts. Frequency End-term Data source Relevant environmental procedures Methodology for Conduct scheduled inspections of road construction and maintenance sites to ensure that dust management Data Collection procedures are followed Responsibility for PCAP-CMU in conjunction with the Lahore Development Authority Data Collection GHG emissions reduced - Transport (metric tons) Page 39 The World Bank Punjab Clean Air Program (P508222) Scorecard indicator and climate change indicator. This indicator measures the GHG emissions reduced due to Description investments in the transport sector. Once-off target. Frequency End of Program Data source Emissions inventory data Methodology for Estimation method used by EMC and reported to EPCCD. Data Collection Responsibility for EMC + T&MD Data Collection Agriculture Sector Abatement Measures Expanding mechanized crop straw management (Number) DLI Description This indicator measures the number of super seeders provided to farmers on subsidy, number of acres covered with the super seeders and reduction in the crop residue burning in rice growing areas and contribute to smog reduction in Punjab. Frequency Quarterly reports on distribution of super seeders, land area covered by super seeders and reduction in crop area burning will be prepared until targets are met. Data source The Agriculture Department Field Wing mechanization program data under government mitigation plan on super seeders provision, data collected on land area covered, records of crop straw management machinery used on number of acres covered and reduction in crop burning across Punjab. Methodology for Count of verified provision of super seeders. Agriculture Department data with geolocation of super seeders farmers Data and third-party verification in the field. Evidence of farmers selection through balloting, allotment letters issued to the Collection beneficiaries, and district inspection report (machinery delivery verification report at beneficiary premises). The Agriculture Department super seeders use data on land area covered through digital platform and crop reporting service data from EPCCD on crop burning reduction reports, as compared to 2023 crop burning acreage data. Responsibility for Punjab Agriculture Department Field Wing and Third-Party Monitors Data Collection Private capital mobilized (Amount (USD)) Scorecard and PCE (monetary) indicator. This indicator tracks the amount of private capital financing mobilized under Description Program interventions. Frequency Mid-term and end-term Data source Data from Agriculture Department. Methodology for Based on loan data and subsidy provided for super seeders. Data Collection Responsibility for PCAP-CMU in conjunction with relevant agencies. Data Collection GHG emissions reduced - Agriculture (Metric ton) Scorecard indicator and climate change indicator. This indicator measures the GHG emissions reduced due to Description investments in the agriculture sector. Once-off target. Frequency End of Program Data source Emissions inventory data Methodology for Estimation method used by EMC and reported to EPCCD. Data Collection Responsibility for EMC + Agriculture Department Data Collection Page 40 The World Bank Punjab Clean Air Program (P508222) Verification Protocol: Disbursement Linked Indicators 1: Additional regulatory grade monitors added to air quality monitoring network (Number) Baseline: 30 Regulatory Grade AQ monitoring stations across Punjab (25 fixed; 5 mobile) operational and calibrated by external contractors with three-year contracts. Year 1: 1.01: $5 million for 10 additional fixed stations and 30 existing air quality monitoring stations positioned throughout Punjab, operated by EMC and reporting per standard operating procedures and quality assurance protocols; and real- Formula time data made available online hourly with public access. $0.5 million per station (scalable). Year 3: 1.02: $4 million for 15 additional fixed stations positioned throughout Punjab, operated by EMC and reporting data per standard operating procedures and quality assurance protocols. Real-time data made available online hourly with public access. $266,666.7 per station (scalable). The DLI supports expanding Punjab's air quality monitoring network of 30 existing air quality monitoring stations with 25 additional stations in cities and areas of Punjab not currently covered by monitoring stations over four years, with a Description focus on transitioning operations from external contractors to EMC's direct management, ensuring data quality through standardized protocols and quality assurance, and ensuring hourly public data availability using accessible visual illustrations on an EPCCD-owned website. Data source/ Agency Environmental Monitoring Centre/Environment Protection and Climate Change Department Verification Entity Independent verification agency (IVA) 1.01: IVA to verify the contracts indicating that standard operating procedures and quality assurance/validation protocols are in place with provision to train the EMC/EPCCD staff according to these protocols. IVA to verify operational status of the 30 existing monitoring stations and 10 additional fixed stations through physical inspection and operation logs: 1) operational status by checking equipment is functioning with no visible issues and no extended periods of unexpected recorded downtime, 2) positioned throughout Punjab province in cities, with priority assigned to hotspot areas that were not previously covered by monitoring stations, 3) adherence to standard operating procedures and quality assurance protocols via calibration records and QA assessments, and 4) data uploaded to the website on at least an hourly basis Procedure and with free public access, verified for the previous one month. (scalable) 1.02: IVA to verify operational status of 15 additional fixed stations through physical inspection and operation logs: 1) operational status by checking equipment is functioning with no visible issues and no extended periods of unexpected recorded downtime, 2) positioned throughout Punjab province in cities, with priority assigned to hotspot areas that were not previously covered by monitoring stations, 3) adherence to SOP/QA protocols via calibration records and QA assessments, and 4) data uploaded to the website on at least an hourly basis and with free public access, verified for the previous one month. (scalable) 2: Integrated air pollutant/SLCP/GHG emissions inventory system is developed and routinely updated, used for assessment of Smog Action Plan and informs annual development plans (Yes/No) Baseline: Inventory last updated for 2021 but not integrated. Year 1: 2.01: $2 million for integrated and comprehensive air pollutant inventory system operational, with dedicated staff in EMC, covering five districts (Faisalabad, Multan, Lahore, Gujranwala, and Sheikhupura) and all major sectors (agriculture, industry, transport, energy, residential and waste). Formula Year 2: 2.02: $2 million for integrated emission inventory covering the five districts for 2025 developed, as per 2006 IPCC guidelines including requisite quality assurance. Year 3: 2.03: $1 million for external review of the inventory completed, and feedback incorporated into the inventory. Page 41 The World Bank Punjab Clean Air Program (P508222) 2.04: $1 million for updated emissions inventory submitted to the Provincial Minister in charge for Environment & Climate Change; inventory system used for assessment of province-wide smog action plan and informs the decision- making of relevant departments in their preparation of annual development plans. The DLI supports establishing and implementing a provincial emissions inventory system across five major cities (Faisalabad, Multan, Lahore, Gujranwala, and Sheikhupura), including capacity building and quality assurance protocols. The inventory will be developed according to 2006 IPCC guidelines, covering all major sectors (agriculture, industry, Description transport, energy, residential and waste management) with completion of the first comprehensive inventory for 2025. The system will be operationalized with dedicated staff in EMC, undergo external review, and inform provincial-level environmental planning and departmental decision-making. Data source/ Agency Environment Protection and Climate Change Department Verification Entity IVA 2.01: IVA to verify that the inventory system is integrated (i.e., includes major greenhouse gases (at least CO2, CH4), short- lived climate pollutant (at least black carbon) and traditional air pollutants (at least Particulate Matter, SO 2, and NOx), comprehensive (i.e., covering all six sectors and continuous (i.e., feedback incorporated after external review to improve future rounds). 2.02: IVA to verify that the inventory report for 2025 has been developed, covering the specified sectors, geographic Procedure coverage and emissions (air pollutants, major GHG and SLCPs as listed in 2.1) and meets 2006 IPCC. 2.03: IVA to verify external review has been conducted (yes/no) and feedback integrated into inventory (yes/no). 2.04: IVA to verify that the updated emissions inventory has been submitted to the Provincial Minister in charge for Environment & Climate Change (yes/no); inventory system used for assessment of province-wide Smog Action Plan (yes/no) and referenced in the minutes of key meetings held by key departments covering the six sectors above in the design of their annual development plans. 3: Fuel quality testing laboratories with mobile and fixed facility operational (Number) Baseline: Three fuel quality testing laboratories with provincial government operational. Year 1: Formula 3.01: $2 million for two additional fuel quality testing laboratories established. Year 3: 3.02: $1 million for at least 20 tests of private fuel sellers/users conducted at each fuel quality testing laboratory as per ASTM standards. The DLI supports the establishment and operation of fuel quality testing laboratories that conduct ASTM-standard Description testing to enhance monitoring and enforcement of fuel quality standards. Data source/ Agency Environment Protection and Climate Change Department Verification Entity IVA 3.01: IVA to verify two additional fuel quality laboratories has been set up and stocked with testing equipment and materials. Procedure 3.02: IVA to verify that the two new fuel quality laboratories are being routinely used through testing logs showing that at least 20 tests of private fuel sellers or users have been conducted within each laboratory, along with type of samples tested, results and quality control checks showing adherence to ASTM procedures. 4: Interactive public information and behavioral change campaign sessions held (Number) Baseline: 65 awareness sessions have been held in last two years. Year 1: 4.01: $0.5 million for comprehensive data-driven behavioral change plan developed using existing inventory (city and provincial level) and monitoring data. Formula 4.02: $0.5 million if the plan informs the use of at least five air quality roadshow vehicles operational for 250 working days; and the establishment of a feedback mechanism for citizens to provide comments and suggestions on an online platform and in person. Year 3: Page 42 The World Bank Punjab Clean Air Program (P508222) 4.03: $1 million for 450 additional data-driven behavioral change campaign sessions held, feedback collected, and summary reports compiled on quarterly basis. Real-time monitoring and forecasted data are used in health advisory system providing air quality alerts for hazardous air quality conditions and mitigatory advisory recommendations both to the public and target sectors. Feedback mechanism for citizens to provide comments and suggestions on an online platform and in person is in use. $500,000 per 225 awareness sessions. The DLI supports a data-driven campaign and feedback mechanisms to increase public awareness, citizen engagement, and behavior change regarding air quality. The campaign will be informed by the data collected via the monitoring Description networks and inventory and disseminated through various communications channels, including a Health Advisory System providing air quality alerts and action recommendations. Data source/ Agency Environment Protection and Climate Change Department Verification Entity IVA 4.01: IVA to verify that an awareness plan has been developed, integrating lessons learned from previous years of implementation (yes/no), using data from the monitoring stations and existing inventory to identify sectors to target (yes/no) and develop data-driven messages (yes/no). 4.02: IVA to verify the operational status of roadshow vehicles using GPS coordinates to track their movements, daily logbooks documenting the vehicle's location and duration of activities, and feedback to assess the reach and effectiveness of the disseminated information. IVA to verify that a feedback mechanism has been established and functional, i.e., receiving feedback and compiled in quarterly summary and placed on official website for public access (yes/no). Procedure 4.03: IVA to verify that 450 awareness-raising sessions have been completed, with evidence demonstrating that air quality monitoring data and pollution inventory findings were incorporated into the session content. Verification will confirm that citizens actively participated in dialogue about air quality issues, as documented through recordings, photographs, attendance lists and/or meeting minutes. IVA to verify that Health Advisory System has been established and updating on a daily basis based on real-time monitoring and forecasted data with air quality alerts, early warnings and recommended actions and verify that targeted messaging has been sent to schools, hospitals and polluting sectors. IVA to verify that a feedback mechanism has been established and functional, i.e. receiving feedback and compiled in quarterly summary and placed on official website for public access (yes/no). 5: Expanding Cleaner Public Transport in Lahore Division (E-Buses) (Number) All DLRs are non-scalable and non-timebound, unless explicitly stated otherwise. Amounts for all scalable DLRs to be pro-rated based on the formula: Allocated Amount multiplied by (actual achievement divided by Target) minus amount disbursed previously under this DLR. Any overachievement will count towards the subsequent year’s target. “Three wheelers” means motorcab rickshaws, motorcycle rickshaws, motorcab loaders and motorcycles loaders. “Two wheelers” means motorcycles and scooters. Baseline: 250 diesel buses in Lahore, and 27 e-buses under public sector concessions. Prior Result: 5.01: $1 million if T&MD approves a Bus Service Transformation Plan for PMA. Year 1: Formula 5.02: $2 million if PMA/PTC advertises tender(s) for e-buses using contractual documents based on business model chosen via a study. 5.03: $5 million if Implementing Entity implements a distance-based fare policy for electric buses. 5.04: $35 million for the commencement of operations of 200 additional electric buses in Lahore Division. Year 2: 5.05: $5 million if Implementing Entity signs a Public Transport Service Contract with PMA. 5.06: $2 million for ITMS system covering feeder bus operations in Lahore. 5.07: $10 million if PMA/PTC signs contract(s) to procure 100 additional e-buses in Lahore Division (tranche 2). (scalable) 5.08: $12.5 million if operation of 100 additional e-buses commences (tranche 2) with associated supporting infrastructure (scalable) Year 3: 5.09: $10 million if PMA/PTC signs contract(s) to procure 100 additional e-buses in Lahore Division (tranche 3). (scalable) Page 43 The World Bank Punjab Clean Air Program (P508222) 5.10: $12.5 million if operation of 100 additional e-buses commences (tranche 3) with associated supporting infrastructure (scalable) Year 4: 5.11: $10 million if PMA/PTC signs contract(s) to procure 100 additional e-buses in Lahore Division (tranche 4). (scalable) 5.12: $12.5 million if operation of 100 additional e-buses commences (tranche 4) with associated supporting infrastructure (scalable) Year 5: 5.13: $10 million if PMA/PTC signs contract(s) to procure 100 additional e-buses in Lahore Division (tranche 5). (scalable) 5.14: $12.5 million if operation of 100 additional e-buses commences (tranche 5) with associated supporting infrastructure (scalable) This DLI supports the scale-up of mass transit through the introduction of electric buses, based on a bus service Description transformation plan. The DLI also supports the adoption of a financially sustainable fare policy, and the signing of a PTSC which ensures funding continuity in exchange for the achievement of service targets. Data source/ Agency Transport and Masstransit Department, in consultation with the Punjab Masstransit Authority Verification Entity IVA Prior Result: 5.01: IVA to confirm that the Implementing Entity adopts a Bus Service Transformation Plan for at least the subsequent 5 years, based on formal approval letter from T&MD to PMA. Year 1: 5.02: IVA to confirm that PMA/PTC issues tender(s) using contractual documents based on based on business model selected for e-buses via a study and approved by PMA/PTC as the case may be (timebound). PMA/PTC to furnish the report of the study, and the tender notice(s). 5.03: IVA to confirm that the Implementing Entity implements a distance-based fare policy for electric buses in Lahore, with the maximum slab of fare being more than PKR 20. 5.04: IVA to verify that bus services for 200 additional electric buses (over the baseline) have commenced in Lahore Division, with associated supporting infrastructure, namely, depot(s) and charging infrastructure. This is based on the issuance of a commencement of operations certificate by PMA/PTC to the operator. Year 2: 5.05: IVA to confirm that the Implementing Entity (via T&MD) signs/approves a Public Transport Service Contract with PMA. The PTSC is defined as a document which commits the Implementing Entity to pay operational subsidies to PMA in exchange for meeting service targets. The PTSC will be at least five years in duration and cover at least 50 percent of Procedure PMA’s feeder buses in Lahore. 5.06: IVA to verify ITMS system covering feeder buses in Lahore Division, passenger information, digital ticketing and performance monitoring. 5.07: IVA to verify the signing of contract(s) by PMA/PTC for 100 additional e-buses in Lahore Division based on contractual documents developed under DLR 5.02 with amendments deemed necessary by PMA/PTC (tranche 2). (scalable) 5.08: IVA to verify the commencement of operations of 100 e-buses (tranche 2) in Lahore Division with associated supporting infrastructure, namely, depot(s) and charging infrastructure. This is based on the issuance of a commencement of operations certificate by PMA/PTC to the operator. (scalable) Year 3: 5.09: IVA to verify the signing of contract(s) by PMA/PTC for 100 additional e-buses in Lahore Division based on contractual documents developed under DLR 5.02 with amendments deemed necessary by PMA/PTC (tranche 3). (scalable) 5.10: IVA to verify the commencement of operations of 100 e-buses (tranche 3) in Lahore Division with associated supporting infrastructure, namely depot(s) and charging infrastructure. This is based on the issuance of a commencement of operations certificate by PMA/PTC to the operator. (scalable) Year 4: Page 44 The World Bank Punjab Clean Air Program (P508222) 5.11: IVA to verify the signing of contract(s) by PMA/PTC for 100 additional e-buses in Lahore Division based on contractual documents developed under DLR 5.02 with amendments deemed necessary by PMA/PTC (tranche 4). (scalable) 5.12: IVA to verify the commencement of operations of 100 e-buses (tranche 4) in Lahore Division with associated supporting infrastructure, namely depot(s) and charging infrastructure. This is based on the issuance of a commencement of operations certificate by PMA/PTC to the operator. (scalable) Year 5: 5.13: IVA to verify the signing of contract(s) by PMA/PTC for 100 additional e-buses in Lahore Division based on contractual documents developed under DLR 5.02 with amendments deemed necessary by PMA/PTC (tranche 5). (scalable) 5.14: IVA to verify the commencement of operations of 100 e-buses (tranche 5) in Lahore Division with associated supporting infrastructure, namely depot(s) and charging infrastructure. This is based on the issuance of a completion certificate by PMA/PTC to the operator. (scalable) 6: Transition to Electric Two- and Three-Wheelers (new vehicles) (Number) Amounts for all scalable DLRs to be pro-rated based on the formula: Allocated Amount multiplied by (actual achievement divided by Target) minus amount disbursed previously under this DLR. Any overachievement will count towards the subsequent year’s target. Equivalency ratio: One e-3W will be considered equivalent to four e-2Ws for the purpose of this DLI. Vehicles supported under the financing facility in this DLI can include those offered in exchange for vehicles that are bought back under DLI 8, provided there is no duplication of subsidies under the two schemes. Baseline: <10,000 and 0 e-2Ws and e-3Ws in Lahore respectively, with sales penetration less than 1% in either segment. Prior Result: 6.01: $3 million if Implementing Entity notifies provincial electric vehicle policy and associated charging infrastructure roadmap. Year 1: 6.02: $5 million if Implementing Entity establishes financing facility established for e-2Ws and e-3Ws via a financial intermediary. Formula 6.03: $1 million if Implementing Entity introduces dedicated EV entity with clear terms of reference. 6.04: $2 million if Implementing Entity introduces battery waste management rules. 6.05: $2 million for 3,000 e-2Ws (or equivalent number of e-3Ws) supported under the financing facility. (scalable) Year 2: 6.06: $4 million for 11,000 e-2Ws (or equivalent number of e-3Ws) supported under the financing facility. Amount to be pro-rated based on the actual number of e-2Ws (or equivalent number of e-3Ws) (scalable) Year 3: 6.07: $7 million for 21,000 e-2Ws (or equivalent number of e-3Ws) supported under the financing facility. Amount to be pro-rated based on the actual number of e-2Ws (or equivalent number of e-3Ws) (scalable) Year 4: 6.08: $11 million for 35,000 e-2Ws (or equivalent number of e-3Ws) supported under the financing facility. Amount to be pro-rated based on the actual number of e-2Ws (or equivalent number of e-3Ws) (scalable) Year 5: 6.09: $15 million for 50,000 e-2Ws (or equivalent number of e-3Ws) supported under the financing facility. Amount to be pro-rated based on the actual number of e-2Ws (or equivalent number of e-3Ws) (scalable) This DLI supports the notification of a provincial EV policy to promote EV adoption in the province. The DLI also Description supports the establishment of a financing facility which aims to address the upfront cost differentials and lack of access to affordable commercial financing for e-2/3Ws. Page 45 The World Bank Punjab Clean Air Program (P508222) T&MD will be responsible for collecting information on the financing facility will be collected from the financial Data source/ Agency intermediary. EPCCD is responsible for furnishing information on the Battery Waste Management Rules. Verification Entity IVA Baseline: No provincial EV policy. Financing facility for 8,200 e-2Ws via Bank of Punjab targeted at youth under the Chief Minister’s Youth Initiative. Equivalency ratio: One e-3W will be considered equivalent to four e-2Ws for the purpose of this DLI. Prior Result: 6.01: IVA to confirm the Implementing Entity’s notification of a provincial EV policy and charging infrastructure roadmap, based on government order or notice, as furnished by T&MD. Year 1: 6.02: IVA to confirm the establishment of a financing facility for electric two and three wheelers via a financial intermediary evidenced by a legal agreement or Memorandum of Understanding (MoU) between the Implementing Entity (T&MD) and the financial intermediary. 6.03: IVA to confirm the Implementing Entity’s establishment of a dedicated EV entity based on government orders furnishing the terms of reference of the entity, and letter(s) of appointment of core staff to be appointed to the EV entity. 6.04: IVA to confirm the introduction of Battery Waste Management Rules by the Implementing Entity, based on notification furnished by EPCCD. 6.05: IVA to confirm disbursement of loans for 3,000 e-2Ws (or equivalent number of e-3Ws) via the financing facility Procedure based on regular reports submitted by the financial intermediary to T&MD. IVA to confirm no duplication of subsidies with DLI 8. (scalable) Year 2: 6.06: IVA to confirm disbursement of loans for 11,000 e-2Ws (or equivalent number of e-3Ws) via the financing facility based on regular reports submitted by the financial intermediary to T&MD. (scalable) Year 3: 6.07: IVA to confirm disbursement of loans for 21,000 e-2Ws (or equivalent number of e-3Ws) via the financing facility based on regular reports submitted by the financial intermediary to T&MD. (scalable) Year 4: 6.08: IVA to confirm disbursement of loans for 35,000 e-2Ws (or equivalent number of e-3Ws) via the financing facility based on regular reports submitted by the financial intermediary to T&MD. (scalable) Year 5: 6.09: IVA to confirm disbursement of loans for 50,000 e-2Ws (or equivalent number of e-3Ws) via the financing facility based on regular reports submitted by the financial intermediary to T&MD. (scalable) 7: Expanding Vehicle Inspections (Percentage) Baseline: Two wheelers currently excluded from vehicle inspections under the Motor Vehicles Ordinance. Prior Result: 7.01: $3 million if Implementing Entity amends Motor Vehicles Ordinance to subject motorcycles to vehicle emissions inspections. Year 3: Formula 7.02: $4 million for 3 percent of registered two wheelers inspected. 3 percent is calculated against a base of the average number of two-wheelers registered in Punjab over the preceding three years, based on data from the Excise and Taxation Department. Year 4: 7.03: $3 million for 5 percent of registered two wheelers inspected. 5 percent is calculated against a base of the average number of two-wheelers registered in Punjab over the preceding three years, based on data from the Excise and Taxation Department. Page 46 The World Bank Punjab Clean Air Program (P508222) Description This DLI supports the Government of Punjab to expand its vehicle inspections regime to cover two-wheelers. Data source/ Agency T&MD for data on vehicle inspections. Verification Entity IVA Prior Result: 7.01: IVA to confirm the Implementing Entity’s amendment of the Provincial Motor Vehicle Ordinance (1965) to subject motorcycles to vehicle inspections, based on evidence furnished by T&MD. Year 3: 7.02: IVA to verify that 3 percent of registered two wheelers have been inspected in the year in Lahore Division, with the percentage of vehicles to be calculated based on the formula above. Only unique two-wheelers to be considered. Two- Procedure wheelers going through repeat inspections will not be double-counted within the same year. Repeat inspections across different years can be re-counted. Year 4: 7.03: IVA to verify that 5 percent of registered two wheelers have been inspected in the year in Lahore Division, with the percentage of vehicles to be calculated based on the formula above. Only unique two-wheelers to be considered. Two- wheelers going through repeat inspections will not be double-counted within the same year. Repeat inspections across different years can be re-counted. 8: Buyback of polluting vehicles (Number) All DLRs are non-scalable and non-timebound, unless explicitly stated otherwise. Amounts for all scalable DLRs to be pro-rated based on the formula: Allocated Amount multiplied by (actual achievement divided by Target) minus amount disbursed previously under this DLR. Any overachievement will count towards the subsequent year’s target. Equivalency ratio across vehicle segments: 1 heavy vehicle equals to 90 two wheelers, 2 minibuses/vans, 7 cars and 23 three wheelers. Baseline: No buyback or vehicle retirement scheme in place. Year 1: 8.01: $4 million if Implementing Entity amends the relevant legal framework to allow for vehicle retirement tied to emissions inspections. 8.02: $4 million if Implementing Entity notifies buyback and scrappage scheme for polluting vehicles identified via Formula emission inspections, with appropriate financial incentives, scrapping mechanism and informed by stakeholder consultations. Year 2: 8.03: $8 million if 225 polluting heavy vehicles (truck/bus) (or equivalent) scrapped under the buyback scheme. (scalable) Year 3: 8.04: $8 million if 225 polluting heavy vehicles (truck/bus) (or equivalent) scrapped under the buyback scheme. (scalable) Year 4: 8.05: $8 million if 225 polluting heavy vehicles (truck/bus) (or equivalent) scrapped under the buyback scheme. (scalable) Year 5: 8.06: $8 million if 225 polluting heavy vehicles (truck/bus) (or equivalent) scrapped under the buyback scheme. (scalable) Description This indicator measures the number of the most polluting heavy-duty vehicles scrapped via a buyback scheme. Data source/ Agency Scrapping records from Registered Vehicle Scrapping Facility (RVSF), photo evidence, and budget records Verification Entity IVA Year 1: 8.01: IVA to confirm the Implementing Entity’s amendment to the relevant legal framework to allow for vehicle Procedure retirement, based on evidence furnished by T&MD. 8.02: IVA to confirm Implementing Entity’s notification of buyback scheme for polluting vehicles based on the operational Page 47 The World Bank Punjab Clean Air Program (P508222) guidelines for the scheme furnished by T&MD. The buyback and scrappage will be: (i) tied to vehicle inspections, (ii) with appropriate financial incentives, (iii) include a scrapping mechanism via registered vehicle scrappage facilities, and (iv) informed by stakeholder consultations. Year 2: 8.03: IVA to confirm the buyback and scrappage of 225 polluting heavy vehicles (truck/bus) (or equivalent) based on equivalency ratio defined under the Formula above. IVA will analyze and verify scrapping records/certificates/documents issued by relevant authority as per the legal framework, including site inspections. IVA to also assess budgetary records of T&MD to verify that incentives have been provided to vehicle owners. (scalable) Year 3: 8.04: IVA to confirm the buyback and scrappage of 225 polluting heavy vehicles (truck/bus) (truck/bus) (or equivalent) based on equivalency ratio defined under the Formula. IVA will analyze and verify scrapping records/certificates/documents issued by relevant authority as per the legal framework, including site inspections. IVA to also assess budgetary records of T&MD to verify that incentives have been provided to vehicle owners. (scalable) Year 4: 8.05: IVA to confirm the buyback and scrappage of 225 polluting heavy vehicles (truck/bus) (truck/bus) (or equivalent) based on equivalency ratio defined under the Formula. IVA will analyze and verify scrapping records/certificates/documents issued by relevant authority as per the legal framework, including site inspections. IVA to also assess budgetary records of T&MD to verify that incentives have been provided to vehicle owners. (scalable) Year 5: 8.06: IVA to confirm the buyback and scrappage of 225 polluting heavy vehicles (truck/bus) (truck/bus) (or equivalent) based on equivalency ratio defined under the Formula. IVA will analyze and verify scrapping records/certificates/documents issued by relevant authority as per the legal framework, including site inspections. IVA to also assess budgetary records of T&MD to verify that incentives have been provided to vehicle owners. (scalable) 9: Expanding mechanized crop straw management (Number) Baseline: 1,000 super seeders with 60 percent subsidy provided to farmers across Punjab. Year 1: 9.01: $6 million, if the Implementing Entity provides 2,000 super seeders on 60 percent subsidy to farmers selected via balloting who contribute 40 percent share. Scalable pro rata based on number of super seeders provided. Year 2: 9.02: $9 million if Implementing Entity distributes 3,000 super seeders on 60 percent subsidy to farmers selected via Formula balloting who contribute 40 percent share. Scalable pro rata based on number of super seeders provided. Year 3: 9.03: $2.5 million if mechanized management of crop straw on 1.2 million acres of land. Scalable pro rata in FY27-28, with the balance released if DLR achieved in a subsequent FY on the full 1.2 million acres of land. Year 4: 9.04: $2.5 million if 70% reduction in crop residue burning areas as compared to 2023 crop acreage burning data. To provide super seeders to farmers through in-situ management of crop straw on 1.2 million acres using super seeders Description and other straw management machinery through digital application and 70 percent reduction in crop residue burning areas. The Agriculture Department Field Wing mechanization program data under government mitigation plan on super Data source/ Agency seeders provision, super seeders use and crop residue burning area data in focused divison of Punjab. Verification Entity IVA Year 1: 9.01: The Agriculture Department Field Wing furnishes evidence of balloting list of 2,000 beneficiary farmers, allotment Procedure letters issued to the beneficiaries, and district inspection report (machinery delivery verification report at beneficiary premises). The Agriculture Department furnishes third-party verification reports to IVA. Page 48 The World Bank Punjab Clean Air Program (P508222) Year 2: 9.02: The Agriculture Department Field Wing furnishes evidence of balloting list of 3,000 beneficiary farmers, allotment letters issued to the beneficiaries, and district inspection report (machinery delivery verification report at beneficiary premises). The Agriculture Department furnishes third-party verification reports to IVA. Year 3: 9.03: Agriculture Department Field Wing furnishes super seeders use tracking and physical verification data on number of acres covered by super seeders and other crop straw management machinery. IVA extracts land area coverage data from the digital platform and review third-party verification reports on machinery usage. Year 4: 9.04: Agriculture Department furnishes verified crop reporting service data on 70 percent reduction in in crop burning acreage as compared to 2023 crop acreage burning data. Page 49 The World Bank Punjab Clean Air Program (P508222) ANNEX 2. DETAILED PROGRAM EXPENDITURE FRAMEWORK Amounts in USD million Budget for Nature of expense Agency/Remarks % of PEF 2025- 2026- 2027- 2028- 2029- next 5 years 2026 2027 2028 2029 2030 Employee-related expenses (A01) 2.7% 2.53 2.79 3.06 2.19 2.41 12.99 10% of overall 0.48 0.53 0.58 0.64 0.7 2.93 EPCCD/EPA salaries 20% for T&MD & 1.17 1.29 1.41 1.56 1.71 7.14 T&MD, PMA, PTC PMA, 10% for PTC Agriculture Department Field Wing 10% 0.88 0.97 1.07 2.92 Operating expenses (A03) 18.5% 10.01 15.11 19.78 24.14 29.59 90.49 Subsidies for bus operations T&MD 6.79 10.35 13.90 17.46 21.02 69.52 O&M of IT platform for agricultural equipment Agriculture 0.64 1.05 0.81 2.50 Automated Fare Collection (AFC) maintenance T&MD 0.95 2.09 3.44 5.05 6.94 18.47 Grants, subsidies/write-off loans (A05) 9.2% 6.00 5.00 7.00 11.00 15.00 45.00 DLI 6 - Transfers to BOP for EV financing facility T&MD 7.00 5.00 7.00 11.00 15.00 45.00 Development (A14) 69.7% 88.65 68.54 63.07 60.85 60.31 341.42 DLI 1 - AQM monitoring stations EPCCD 2.4 2.4 4.8 2.4 12.00 DLI 2 - Emissions inventory EPCCD 1 0.5 0.5 2.00 DLI 3 - Fuel testing labs EPCCD 1 0.8 0.1 0.1 2.00 DLI 4 - Public awareness campaigns EPCCD 1 0.5 0.3 0.2 2.00 DLI 5 - CAPEX for buses T&MD 60 28.5 28.5 28.5 28.5 174.00 DLI 5 - CAPEX for depots T&MD 16.27 17.89 19.68 21.65 23.81 99.30 DLI 5 – AFC Installation cost T&MD 0.52 0.52 DLI 6 - Consultancy for provincial EV policy T&MD 0.1 0.10 DLI 8 - Buyback scheme T&MD - 8 8 8 8 32.00 DLI 9 - Subsidies for super seeders Agriculture 6.36 9.95 1.19 17.50 Total PEF in US$ million 100% 489.90 Total PEF in PKR million 100% 137,172 Page 50