FOR OFFICIAL USE ONLY Report No: PAD4713 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT PROJECT APPRAISAL DOCUMENT ON A PROPOSED LOAN IN THE AMOUNT OF US$280 MILLION TO INDIA FOR A GUJARAT RESILIENT CITIES PARTNERSHIP: AHMEDABAD CITY RESILIENCE PROJECT October 28, 2022 Urban, Resilience And Land Global 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 September 30, 2022) Currency Unit = Indian Rupee (INR) US$1 = INR 81.45 FISCAL YEAR April 1 - March 31 Regional Vice President: Martin Raiser Country Director: Auguste Tano Kouame Regional Director: John A. Roome Practice Manager: Meskerem Brhane Task Team Leaders: Harsh Goyal, Roland White ABBREVIATIONS AND ACRONYMS AMC Ahmedabad Municipal Corporation Integrated Financial Management Ahmedabad Urban Development IFMS System AUDA Authority IUFR Interim Unaudited Financial Reports BMF Biodiversity Management Framework INR Indian Rupee Cultural Heritage Management IPF Investment Project Financing CHMF Framework KPI Key Performance Indicators CHS Community Health and Safety LMP Labor Management Procedures CIP Capital Investment Planning LVC Land-value Capture CFC Central Finance Commission MIS Management Information Systems CPF Country Partnership Framework MTR Midterm review CRI Corporate Results Indicator M&E Monitoring and Evaluation DBOT Design, Build, Operate and Transfer MLD Million Liters Per Day DC Direct Contracting NGT National Green Tribunal DPR Detailed Project Report O&M Operations and Management EEP Eligible Expenditure Program OSR Own Source Revenue ENPV Economic Net Present Value OHS Occupational Health and Safety ERR Economic Rate of Return OR Operating ratio Environmental and Social Commitment PBC Performance-Based Condition ESCP Plan PAD Project Appraisal Document ESF Environment and Social Framework PD Project Director ESS Environment and Social Standards PDO Project Development Objective Environmental and Social Management PIE Project Implementation Entity ESMIS Information System PIM Project Implementation Manual Environmental and Social Management PIU Project Implementation Unit ESMF Framework PMC Project Management Consultant Environmental and Social Impact Project Procurement Strategy for ESIA Assessment PPSD Development Environmental and Social Management PSC Project Steering Committee ESMP Plan PT Property Tax E&S Environmental and Social RPF Resettlement Policy Framework FM Financial Management SEP Stakeholder Engagement Plan FSI Floor Space Index SCADA Supervisory control and data acquisition FY Financial Year SCD Systematic Country Diagnostic Gujarat Resilient Cities Partnership: Systematic Tracking of Exchanges in G-ACRP Ahmedabad City Resilience Project STEP Procurement GDP Gross Domestic Product STP Sewage Treatment Plant GHG Green House Gas SPV Special Purpose Vehicle GIS Geographic Information System TA Technical Assistance GoG Government of Gujarat Urban Development and Urban Housing GOI Government of India UD&UHD Department GUDI Gujarat Urban Development Institute ULBs Urban Local Bodies GPCB Gujarat Pollution Control Board UoF Utilities of Future GRC Grievance Redressal Committee US$ United States Dollar GRS Grievance Redress Service WB World Bank GUDM Gujarat Urban Development Mission WBG World Bank Group International Bank for Reconstruction WRM Water Resource Management IBRD and Development The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) TABLE OF CONTENTS DATASHEET ............................................................................................................................ i I. STRATEGIC CONTEXT ...................................................................................................... 1 A. Country Context................................................................................................................................ 1 B. Sectoral and Institutional Context .................................................................................................... 2 C. Relevance to Higher Level Objectives............................................................................................... 6 II. PROJECT DESCRIPTION.................................................................................................... 7 A. Project Development Objective (PDO) ............................................................................................. 7 B. Project Components ......................................................................................................................... 7 C. Project Beneficiaries ....................................................................................................................... 15 D. Results Chain .................................................................................................................................. 16 E. Rationale for Bank Involvement and Role of Partners ................................................................... 16 F. Lessons Learned and Reflected in the Project Design .................................................................... 16 III. IMPLEMENTATION ARRANGEMENTS ............................................................................ 17 A. Institutional and Implementation Arrangements .......................................................................... 17 B. Results Monitoring and Evaluation Arrangements......................................................................... 18 C. Sustainability................................................................................................................................... 18 IV. PROJECT APPRAISAL SUMMARY ................................................................................... 18 A. Technical, Economic and Financial Analysis ................................................................................... 18 B. Fiduciary.......................................................................................................................................... 22 C. Legal Operational Policies ............................................................................................................... 23 D. Environmental and Social ............................................................................................................... 23 V. GRIEVANCE REDRESS SERVICES ..................................................................................... 25 VI. KEY RISKS ..................................................................................................................... 25 VII. RESULTS FRAMEWORK AND MONITORING ................................................................... 27 ANNEX 1: Implementation Arrangements and Support Plan .......................................... 45 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) DATASHEET BASIC INFORMATION BASIC INFO TABLE Country(ies) Project Name India Gujarat Resilient Cities Partnership: Ahmedabad City Resilience Project Project ID Financing Instrument Environmental and Social Risk Classification Investment Project P175728 Substantial Financing Financing & Implementation Modalities [ ] Multiphase Programmatic Approach (MPA) [ ] Contingent Emergency Response Component (CERC) [ ] Series of Projects (SOP) [ ] Fragile State(s) [✓] Performance-Based Conditions (PBCs) [ ] Small State(s) [ ] Financial Intermediaries (FI) [ ] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict [ ] Deferred Drawdown [ ] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA) [ ] Hands-on Enhanced Implementation Support (HEIS) Expected Approval Date Expected Closing Date 22-Nov-2022 31-Dec-2028 Bank/IFC Collaboration No Proposed Development Objective(s) To strengthen institutional, financial and service delivery performance in Ahmedabad Components Component Name Cost (US$, millions) Strengthening Ahmedabad Municipal Corporation’s (AMC) institutional and financial 15.00 Page i The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) systems Improving wastewater management services 366.30 Developing state level institutional systems and capacities 18.00 Organizations Borrower: India Implementing Agency: Ahmedabad Municipal Corporation Gujarat Urban Development Mission Urban Development and Urban Housing Department PROJECT FINANCING DATA (US$, Millions) SUMMARY -NewFin1 Total Project Cost 400.00 Total Financing 400.00 of which IBRD/IDA 280.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Bank for Reconstruction and Development (IBRD) 280.00 Non-World Bank Group Financing Counterpart Funding 120.00 Borrowing Agency 120.00 Expected Disbursements (in US$, Millions) WB Fiscal Year 2023 2024 2025 2026 2027 2028 2029 Annual 0.00 30.00 40.00 50.00 60.00 60.00 40.00 Cumulative 0.00 30.00 70.00 120.00 180.00 240.00 280.00 Page ii The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) INSTITUTIONAL DATA Practice Area (Lead) Contributing Practice Areas Urban, Resilience and Land Water Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT) Risk Category Rating 1. Political and Governance  Low 2. Macroeconomic  Moderate 3. Sector Strategies and Policies  Moderate 4. Technical Design of Project or Program  Moderate 5. Institutional Capacity for Implementation and Sustainability  Substantial 6. Fiduciary  Substantial 7. Environment and Social  Substantial 8. Stakeholders  Low 9. Other  Low 10. Overall  Substantial 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 Page iii The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) Environmental and Social Standards Relevance Given its Context at the Time of Appraisal E & S Standards Relevance Assessment and Management of Environmental and Social Risks and Impacts Relevant Stakeholder Engagement and Information Disclosure Relevant Labor and Working Conditions Relevant Resource Efficiency and Pollution Prevention and Management Relevant Community Health and Safety Relevant Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant Local Communities Cultural Heritage Relevant 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). Legal Covenants Sections and Description • Section I.A.3 of the Schedule to the Project Agreement (PA): Not later than three (3) months after the Effective Date, the Project Implementation Entity (PIE) shall establish and thereafter maintain, throughout Project implementation, a high-level Project Steering Committee (PSC), at the state level, with composition, resources, qualifications, experience, and terms of reference acceptable to the Bank, to be responsible for periodic monitoring, strategic oversight, and resolution of key issues, all as set forth in the Project Implementation Manual (PIM). • Section I.B.1 of the Schedule to the PA: Not later than three (3) months after the Effective Date, the PIE, through the AMC in collaboration with Gujarat Urban Development Mission (GUDM), shall prepare and adopt, and thereafter maintain throughout the implementation of the Project, the PIM, acceptable to the Bank, containing detailed guidelines and procedures for the implementation of the Project. • Section I.D.1 of the Schedule to the PA: The PIE, through the AMC and GUDM, shall ensure that the Project is carried out in accordance with the Environmental and Social Standards (ESS), in a manner acceptable to the Bank. Page iv The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) Conditions Type Financing source Description Disbursement IBRD/IDA Section III.C.1 of Schedule 2 to the Loan Agreement: With respect to Eligible Expenditures for PBCs under Category (4): (a) the Borrower may request withdrawals of Bank financing when the relevant Eligible Expenditures for PBCs have been incurred and said time- bound PBCs have been met (even if before the timelines set forth in Schedule 3 to this Agreement); and (b) in the case of scalable PBCs, the Borrower may request withdrawals of Bank financing (even before the timelines set forth in Schedule 3 to this Agreement) of a lesser amount of the unwithdrawn proceeds of the Loan then allocated to Category (4) which, in the opinion of the Bank, corresponds to the extent of achievement of said PBC, said lesser amount to be calculated in accordance with the formula set forth in Schedule 3 to this Agreement; all after furnishing evidence satisfactory to the Bank that the PBCs for which payment is requested have been achieved as set forth in Schedule 3 to this Agreement in form and substance satisfactory to the Bank and in accordance with the verification protocols agreed with the Bank and as verified by the Project Management Consultant (PMC), all as set forth in the PIM. If, at any time, the Bank determines that any portion of the amounts disbursed under Category (4) was not in compliance with the provisions of this Section, the Borrower shall promptly refund any such amount to the Bank as the Bank shall specify by notice to the Borrower. Page v The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) I. STRATEGIC CONTEXT A. Country Context 1. The growth rebound in Financial Year 22 (FY) was quick, pulled up by investment, recovering consumer demand and, a low base. Real Gross Domestic Product (GDP) growth moderated from an average of 7.4 percent during FY15-19 to an estimated 3.7 percent in FY20 1, mostly due to (i) shocks to the financial sector, and (ii) decline in private consumption growth. Against this backdrop, the outbreak of COVID-19 had a significant impact, with real GDP contracting by 6.6 percent in FY21. On the fiscal side, the general government deficit widened significantly in FY21, owing to higher spending and lower revenues 2. However, with the easing of COVID-19 restrictions, Goods and Services Tax (GST) collections have crossed the INR 1 trillion mark every month since July 2021, reaching INR 1.44 trillion in August 2022. The robust GST revenue collections are expected to continue as the economic recovery gathers momentum. The real GDP in FY22 expanded by 8.7 percent and exceeded the FY20 level, on the back of increased capital expenditure and recovering consumer demand. Given the global concerns on significant uncertainty around the pandemic, elevated inflation, geo-political tensions, and extended supply disruptions, growth in FY23 is expected to be 7.5 percent 3. The expected recovery will put India among the world’s fastest-growing emerging economies over the next two years. 2. Although India has made remarkable progress in reducing absolute poverty in recent years, the COVID-19 outbreak has delayed the course of poverty reduction 4. Between 2011-12 and 2020-21, India’s poverty rate declined from 22.5 percent 5 to values estimated to range between 9 to 12.3 percent 6. However, projections of GDP per capita growth suggest that this estimated decline also includes a reversal of poverty reduction due to the pandemic7. Labor market indicators from high frequency surveys -including from the Centre for Monitoring Indian Economy (CMIE) - suggest that vulnerability has increased after the pandemic, particularly for urban households, with a moderate recovery in 2021. Overall, the pandemic and its economic impacts are estimated to have raised urban poverty, creating a set of “new poor” that are relatively more likely to be engaged in the non-farm sector and to have received at least secondary education. To respond to the pandemic, Government of India (GoI) has deployed significant resources as part of the Prime Minister Garib Kalyan Yojana (PMGKY) for social assistance, including for urban poor households and migrants. 3. India’s urban transition is unprecedented in scale. By 2040, India’s urban population will grow by an estimated 270 million people. 8 India is expected to reach 50 percent urbanization by 2051. 9 If managed well, it can contribute effectively to India’s future growth trajectory and contribute to national climate targets. India has an opportunity to shape its future urban growth and opt for a more resilient and low-carbon future. Three areas need special attention. First, it is important to plan for and manage the emerging urban footprint - urban growth needs to be directed away from high-vulnerability areas and key planning decisions need to be taken. Second, infrastructure and service delivery - including water, sanitation, solid waste management, mobility - approaches need a quantum shift to ensure inclusive coverage, efficiency, and sustainability. Third, institutional systems and financial performance need to be strengthened at the local level to ensure that Urban Local Bodies (ULBs) undertake necessary actions for pivoting towards resilient and sustainable urban development. 1 National Accounts Data, National Statistical Office, Ministry of Statistics and Program Implementation (MOSPI). 2 Union budget 2021, 2022, Ministry of Finance. 3 World Bank real GDP forecasts for FY22-23 published in June 2022. 4 World Bank projections. The Government of India has deployed significant resources for social assistance, including towards urban poor households and migrants. 5 Consumption Expenditure Survey 2011-12, National Sample Survey Office (NSSO), Government of India 6 World Bank estimates. Macro Poverty Outlook, October 2021. 7 World Bank estimates. Source: Macro Poverty Outlook, 2020. 8International Energy Agency (IEA), India Energy Outlook, 2021. 9 Revi et al., 2015, as cited in IIHS 2020. Page 1 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) B. Sectoral and Institutional Context 4. Gujarat is one of the most urbanized states in India with a total population of approximately 71 million, of which approximately 34 million (~48 percent) lives in urban areas. The state has experienced a high rate of urbanization for about four decades with its urban population increasing from 34 percent in 1991 to ~48 percent in 2020. The urbanization level in the state is anticipated to increase to 55 percent by 2036 – adding an urban population of ~11.4 million over the period 2021-36. Gujarat Government identifies ongoing rapid urbanization as a key driver for the state’s economic growth 10 in the coming decades. The state has prioritized infrastructure investments and urban reforms for accelerated growth and development in the four largest cities - Ahmedabad, Surat, Vadodara, and Rajkot, which cover more than 50 percent of the total urban population of the state. The goal is to develop good quality infrastructure in these major economic centers and position them competitively for attracting foreign trade and investments in the state. 5. Ahmedabad is the largest city in the state, with an estimated current (2020) population of 7.3 million. The city has played a crucial role in Gujarat's economic growth, contributing 60 percent of the total productivity of the state. It is the largest inland industrial center in India, the second largest Industrial center in Western India and a prominent industrial hub. In addition, it is also a center for Information Technology (IT) and financial services, and an important educational hub in the country. However, the city continues to be plagued by spatial disparities and still faces some critical challenges with respect to urban poverty, social inclusion, and access to services. 6. Ahmedabad has a coherent urban management and service delivery institutional system. The state of Gujarat has instituted a horizontally integrated and relatively autonomous urban management, governance, and service delivery system for its main cities, centered on ULBs (local governments known as Municipal Corporations). The Ahmedabad Municipal Corporation’s (AMC’s) powers are vested in the Municipal Commissioner and the elected Municipal Council. AMC is responsible for delivering services in all major urban sectors 11 and, within certain parameters, has broad powers and mandates for fiscal and investment planning across these sectors, as well as local revenue mobilization, asset management and the regulation of the local economy. Within its jurisdictional boundaries, AMC is responsible for the management of the built environment, including development control and land-use and spatial planning which it undertakes in coordination with the Ahmedabad Urban Development Authority (AUDA), a state-owned agency responsible for planning at the broader metropolitan and regional scale. To deliver services more effectively and efficiently within Ahmedabad, several municipal utility companies have been established as distinct corporate entities within the city. These are fully or partially owned and controlled by AMC and are responsible for development and operations in spheres such as transport (for example: bus rapid transit) and urban regeneration (for example: the Sabarmati Riverfront development) 12. Notwithstanding this relatively coherent institutional system, in the face of rapid city growth, intensifying service demand and escalating climate change risks, AMC faces increasingly serious organizational capacity constraints. These include limited and technologically obsolete planning and operating systems in key service sectors (such as wastewater), ineffective approaches to the management of contracts with private entities involved in municipal service delivery, and insufficiently skilled and trained human resources. 7. Ahmedabad has relatively good infrastructure coverage for most of the core urban services but faces increasing challenges from an efficiency and sustainability perspective. There are substantial gaps in coverage and quality of wastewater management and stormwater management services. High levels of water consumption have led to rising service demands for wastewater management that are largely unmet and have generated complex and 10State government committee report on economic revival measures post COVID19 pandemic 11 Water supply, wastewater, drainage; urban roads, transport, and mobility; Solid Waste Management (SWM); and social services e.g., public health, education 12 Sabarmati Riverfront Development Corporation, Ahmedabad Janmarg, Ahmedabad Metropolitan Transport Service, Ahmedabad Smart City Development Ltd. Page 2 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) interlocking problems related to environmental pollution, natural resource degradation and resource inefficiency. 8. Ahmedabad is exposed to multiple climate risks and chronic stresses (including heat, water scarcity, flooding and rising Green House Gas (GHG) emissions) that are impacting the city’s water resilience and sustainability. Prolonged heat waves, rising temperatures and varying levels of precipitation caused by climate change are compounding the challenges related to water availability to service an expanding urban population in the city – essentially making water security a major climate risk faced by the city. Water resource management has the least adaptation score 13 and wastewater management 14 is the largest contributor to GHG emissions amongst all municipal services delivered by AMC. Overall, addressing wastewater management challenges in the city is critical to enhance climate resilience with a focus on water security and contribute to low-carbon urban development in the long-term. 9. Inadequate and inefficient wastewater management is leading to widespread environmental pollution and non-compliance with national environmental regulations. The city faces severe sustainability and resilience risks to water resource availability in the long-term due to the rapidly expanding population, heavy concentration of industrial and commercial activities and environmentally unsustainable wastewater management practices. Sabarmati River, a major source for drinking water supply for the city, has experienced rapid escalation in pollution due to the direct and indirect discharge of untreated domestic sewage and untreated industrial effluent. Sabarmati River’s water quality severely deteriorates as it passes through Ahmedabad, as reflected in the multifold increase in key water pollution indicators 15. Industrial pollution has been identified as a key pollution source for Sabarmati River. AMC has prioritized addressing the water pollution risks as a major challenge but has not yet addressed this in a comprehensive manner. 10. The urban poor and vulnerable communities are disproportionately impacted due to the lack of access to good quality wastewater management services. The urban poor and migrant workers residing in slums and informal settlements suffer from poor access to water supply and sanitation services – only 60 percent of households are connected to covered sewer network. Further, climate change events (such as floods, heat stresses) impact the slums and informal settlements disproportionately – high concentration of water and vector-borne diseases is reported. 11. Wastewater management is constrained by inadequate treatment capacities, aged network systems, and severe operational inefficiencies. 82 percent of the existing 16 wastewater treatment capacity (a cumulative capacity of 817 million Liters Per Day, MLD) needs immediate system upgrade (in terms of efficient technologies, physical infrastructure, and monitoring systems) to comply with the national regulatory requirements related to wastewater discharge, improve operational performance, and enhance resilience to evolving risks. In addition, the capacity of the wastewater management system needs to be expanded to respond to Ahmedabad’s rising wastewater management service requirements. In addition, AMC’s sewerage network suffers from major constraints: (i) an aged network, leading to frequent network breakdowns and leakages; (ii) constrained capacities, compared to the increasing wastewater generation; (iii) a mismatch between network conveyance capacity and treatment capacity due to fragmented planning; and (iv) poor structural adequacy. Lastly, AMC needs to develop a sustainable model for reuse of treated wastewater and pivot towards water resource circularity to achieve the state government’s policy target of 100 percent recycling & reuse by 2030 and mitigate freshwater demand from bulk non-residential consumers. 12. Addressing these infrastructure and service delivery gaps in wastewater management in Ahmedabad can 13 Conducted based on National Institute of Urban Affairs’ Climate Smart Cities Assessment Framework (CSCAF)’ 14 Accounting for 38 percent of baseline (2017) GHG inventory of ~681,589 tCO2e), primarily due to operational inefficiencies in service delivery15 Total Dissolved Solids (TDS) and Ammonia (N) contamination by 29 times, Chemical Oxygen Demand (COD) by 17 times and Biochemical Oxygen Demand (BOD) by 59 times 15 Total Dissolved Solids (TDS) and Ammonia (N) contamination by 29 times, Chemical Oxygen Demand (COD) by 17 times and Biochemical Oxygen Demand (BOD) by 59 times 16 Comprising of 16 STPs of ~993 MLD installed capacity, additional 7 STPs of ~400 MLD that are under construction/advanced procurement stages Page 3 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) be a triple-win for AMC in terms of: (i) addressing critical environmental pollution and ensuring full regulatory compliance for water resource management in and around the city; (ii) enhancing city resilience and inclusion by addressing water security and climate risks; and (iii) adopting sustainable, resource efficient and low-carbon solutions for service delivery that contribute to long-term green, inclusive, and resilient urban development. However, addressing these issues will require a paradigm shift in AMC’s approach that also focuses on complex institutional, organizational, and financial capacity related gaps in addition to infrastructure coverage and quality issues. 13. Service delivery systems for wastewater management remain weak and fragmented. AMC’s current systems for wastewater management services are constrained by weak institutional mechanisms, lack of data systems, weak organizational capacity, and inadequate financial sustainability. Firstly, AMC’s institutional systems for planning, operations and maintenance, and asset management are weak and fragmented. The Water Resource Management (WRM) Department of AMC plans and undertakes capital investments in both treatment facilities and the network in an ad hoc manner without strategic long-term planning. There is no unified system for Operations and Management (O&M) of the wastewater network and treatment systems to ensure a coordinated and data driven approach for asset management and O&M. O&M systems for wastewater treatment facilities has been outsourced to private operators, but the contract structures, contract management, and service performance monitoring systems remain largely absent leading to dysfunctional O&M and rapid decay of treatment facilities. Secondly, there is no comprehensive citywide database of wastewater connections, physical assets, and performance reporting. Records are managed manually at the zonal level, which are insufficient for the purposes of proper O&M. The existing assets lack geo-coding or integration on a Geographic Information System (GIS) platform, limiting the efficiency of AMC’s investment and O&M planning systems. There is no systemic practice of formal customer engagement and regular customer feedback. Thirdly, financial sustainability is weak, as there is no system for integrated budgeting and expenditure management at the service sector level for wastewater and the true economic cost of service is unknown. There is no dedicated revenue source for wastewater: a surcharge on property tax is collected for wastewater, but it is not assigned to the wastewater budget and the amounts collected are significantly below the costs of service-delivery. Without remedial action, financial sustainability is expected to further decline as AMC continues to expand services. Lack of a customer database does not permit AMC to shift to financially sustainable revenue practices. 14. The institutional, organizational, and financial weaknesses that characterize wastewater service delivery and management systems in Ahmedabad are not limited to this sector alone. Similar weaknesses can be found in other sectors as well. It is thus important that interventions focused on the wastewater sector create a model and foundation for systemic improvements in other sectors to leverage the improved resilience and service performance of Ahmedabad. 15. Ahmedabad’s overall financial strength has been declining due to its weakening revenue surplus, increasing recurrent expenditures, and stagnating transfers from the state government. In the past, AMC’s overall financial performance was better than most large Indian cities. It received an AA credit rating in 2019. However, revenue performance is weak and its dependence on grants from the State Government is high. Limited growth in own source revenue (OSR) mobilization is contributing to AMC’s declining revenue performance. While AMC has consistently generated an operating revenue surplus on an annual basis, this has declined significantly in last six fiscal years from US$66 million in FY16 to US$3-6 million in FY21. AMC’s revenue expenditures have grown at a compound annual growth rate (CAGR) of 12 percent against the eight percent growth rate in revenue over the period FY16-21. Overall grant support from the state has stagnated since FY10. OSRs increased by a modest 7.5 percent over the period FY14-19 and have been largely static over FY15-18 in real terms. AMC’s combined average per capita revenue from tax and non-tax sources was US$25 during FY16-18, which is low compared to other peer cities in India. Property Tax (PT) rates have been stagnant for many years now with sporadic revisions and fixed adjustment factors. The coverage of tax base is high due to periodic property assessments, but the current property tax Management Information System (MIS) suffers from Page 4 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) weaknesses, such as the lack of GIS enabled systems and manual administration. 16. AMC has managed its financial performance with revenues from land-value capture (LVC) and limited commercial borrowing. Ahmedabad was the first Indian city to raise municipal bonds in 1998 and has since raised ~US$70 million. However, it’s borrowing has been limited to only two percent of capital expenditure levels in FY16-21. AMC also has significant experience of implementing LVC instruments; however, income from LVC (as a fraction of revenue income) has been around 17 percent (averaging ~US$80 million/year). Despite the high revenue potential of municipal land assets, LVC remains underleveraged due to the underperforming asset management and monetization systems. 17. More broadly, AMC’s annual capital expenditures are stagnant and are inadequate to address the rising service needs and to manage spatial expansion in a sustainable and resilient manner. AMC’s current levels of annual capital expenditure (~US$300 million) are inadequate, considering the city’s future investment requirements of ~US$7.5 billion. Capital expenditure has been almost stagnant over the past five years at ~ US$45 per capita, primarily due to (i) weak OSR, stagnant grant support, and limited access to commercial financing; (ii) lack of strategic long-term capital investment planning (CIP) systems; and (iii) emerging institutional capacity constraints to deliver an expanded capital investment program and manage complex issues related to climate risks and natural resource management. Lack of a structured city-wide investment planning and prioritization system leads to an ad hoc capital spending program that does not align with the long-term investment needs of the rapidly urbanizing city. Institutional capacity constraints also negatively impact AMC’s implementation capacity – the average annual budget execution rate over the period FY16-20 is ~62 percent and cost-overruns due to implementation delays are about 20 percent. 18. AMC’s municipal budgeting, accounting, and auditing practices need to be further strengthened for better financial sustainability and accountability. AMC’s current budgeting and accounting practices do not allow for proper reporting of service delivery expenditures and do not provide a sound basis to develop a system for cost recovery and financial sustainability. The existing system of local fund audits by the state government is heavily constrained leading to a huge backlog of annual external audits. Disclosure practices 17 for better transparency and accountability are absent. AMC has not undergone an external audit over the past three years – external audits are undertaken intermittently, mostly to meet the creditworthiness requirements for issuing municipal bonds. 19. Investments in AMC’s institutional capabilities can help women workers’ access technical job roles, occupational mobility, and safe working environments in AMC managed sites. The assessment 18 identified three priority gaps in women employment and safety systems: (i) women employees and informal women workers experience persistent barriers in accessing on-the-job technical trainings, health insurance, social safety nets and employment opportunities in AMC managed sites; (ii) women workers employed on AMC managed sites experience disproportionate vulnerabilities - ~72 percent of informal women workers engaged on AMC managed sites were migrants from tribal communities; and (iii) over 57 percent of informal women workers engaged on AMC managed sites were illiterate and none of the informal women workers had certified skill sets. 75 percent of informal women workers on AMC managed sites are employed in ‘informal or helper’ roles and did not have the technical certification for higher-paying, technical job roles. The assessment confirmed that informal women workers lack the necessary information, networks, access to childcare, workplace safety and financial assistance to gain technical skills required for specialized and technical jobs. 20. To tap the economic growth potential of rapid urbanization and enhance livability in the city, AMC needs to significantly improve the sustainability, resilience and efficiency of its infrastructure and service delivery systems. 17External audit for financial statements is done on transactional basis and kept propriety, leading to limited public and external oversight by people/civil societies. 18Institutional Assessment for Women Employment and Safety in Ahmedabad to unpack sectoral gender gaps and decode structural and institutional bottlenecks that prevent women from accessing technical jobs in the city. Page 5 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) AMC needs to take urgent steps to address these critical sustainability and resilience challenges to ensure that increasing service demands are addressed in a sustainable and resource-efficient manner, without degrading the natural assets of the city – this is particularly vital in the wastewater management sector, which poses a major risk to water resource availability. This is also critical to tackle the water scarcity challenges faced by the city due to climate change impacts (rising temperature, prolonged heat waves, and varying precipitation patterns), and to address the negative public health outcomes, especially on the poor and vulnerable sections of the city. In this context, the key priorities for AMC include: (i) strengthening institutional and service delivery systems to better plan, deliver and manage urban services with a focus on improving efficiency, sustainability and resilience; (ii) improving and expanding resilient and low-carbon infrastructure in line with the anticipated urban expansion, climate change projections, and increasing service demands; and (iii) improving its financial performance to develop a robust fiscal base and leverage external sources of financing in a planned and phased manner, to sustainably meet expanding capital and O&M investment requirements. C. Relevance to Higher Level Objectives 21. The project is consistent with the World Bank Group India Country Partnership Strategy FY18-22 Report No. 126667-IN, July 25, 2018, discussed at the Board on September 20, 2018. Pillars I and III of the Systematic Country Diagnostic (SCD) recognize the role of efficient cities as a direct contributor to a resource-efficient growth path for India. The SCD identifies policies and actions to make cities more productive and livable, including the reduction of environmental impacts, strengthening of city finances, and strengthening the public sector. Similarly, Area I of the Country Partnership Framework (CPF) on “promoting resource efficient growth” focuses on creating urban footprints that are more green, livable, and productive to create more sustainable cities and improving climate resilience. 22. In line with the approach outlined in the CPF, the project will initiate a partnership with the state of Gujarat focused on building resilient cities for sustainable urbanization and enhanced productivity. Urban resilience and sustainability challenges in Gujarat are not limited to Ahmedabad. Surat – Gujarat’s second biggest city – faces escalating resilience issues, as do other cities in the state’s urban hierarchy. In this context, the World Bank and Government of Gujarat (GoG) have entered in an urban resilience partnership focused on its two biggest cities. The Gujarat - Ahmedabad City Resilience Project (G-ACRP) constitutes the first operational phase of this partnership (the Gujarat Resilient Cities Partnership). It adopts an urban sector strategic framework with three interlinked and mutually reinforcing pillars to strengthen resilience and sustainability in the two cities: (i) strengthening institutional capacity; (ii) enhancing coverage and quality of urban services; and (iii) improving financial sustainability. The second operation in the partnership is proposed for Surat, using the same strategic framework with the substantive focus of the operation trained on the specific resilience challenges and fiscal and institutional conditions of that city. The G-ACRP will also support GoG in enhancing its institutional systems to support other ULBs in improving infrastructure, service delivery and planning systems, and establishing a state-level knowledge generation, curation and dissemination system to leverage the innovations of the state’s leading cities and foster knowledge sharing and cross-learning among the big and emerging cities in Gujarat. More broadly, this approach will showcase how cities in other states can leverage the urbanization dividend in India and enhance economic performance. The strategic premise of the operation is that Bank funding – which is not particularly significant relative to the amounts that are required to meet India’s urban investment needs – can be used to help leverage the critical changes in approaches to investment planning, resource mobilization and service-delivery which are urgently required across the urban sector through the creation of “lighthouse models” which can show the way for others. 23. The project is also well-aligned with the Bank’s Climate Change Action Plan 2021-2025 and the South Asia Roadmap, as well as with Gujarat’s Second State Action Plan on Climate Change that was launched in 2021. The Bank’s global Climate Change Action Plan 2021-25 has prioritized cities as one of the five main transition pathways for building Page 6 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) climate resilience and decarbonization. Along the same lines, the Bank’s Climate Change Roadmap for the South Asia Region has identified sustainable urbanization as a key priority for the region and for India specifically, with a commitment to support cities towards the delivery of resilient services and infrastructure. Gujarat government has acknowledged and prioritized the climate change impacts on cities and urban areas as a major threat to the state’s economic development goals, highlighting that 43 percent of the state’s population is highly vulnerable to the climate change impacts. The project will be supporting Ahmedabad in pivoting towards green, resilient, and inclusive urbanization by addressing the urban management and service delivery constraints in an integrated manner, with a specific focus on building resilience and sustainability in the service delivery, institutional and financial systems. II. PROJECT DESCRIPTION A. Project Development Objective (PDO) PDO Statement To strengthen institutional, financial and service delivery performance in Ahmedabad PDO Level Indicators (1) Improved performance of AMC's property tax systems (2) People with access to improved, climate-resilient wastewater services (Number, gender disaggregated) (3) Improved performance of AMC’s wastewater management systems B. Project Components 24. The project will support AMC in addressing key institutional, financial, and service delivery constraints to strengthen urban resilience and sustainability in Ahmedabad. The project will provide a combination of technical and financial assistance to AMC in pivoting towards an integrated service delivery approach – one that is resilient, green, sustainable, and inclusive. In line with the three pillars of the urban sector partnership framework, the institutions pillar will focus on strengthening the systems, implementing critical reforms, and building AMC’s capacity for planning, delivering, and managing urban services; the finance pillar will focus on strengthening the investment planning and financial management systems, strengthening the revenue base, and expanding access to finance; and the service delivery pillar will focus on improving the infrastructure coverage and service levels for wastewater management in Ahmedabad. While the institutions and finance pillars are focused on strengthening the AMC-wide transversal systems, the service delivery pillar is focused on enhancing the performance in one service sector (wastewater management), that has been identified as a priority to address the critical resilience, environmental pollution, and service delivery constraints that are described above. The service delivery pillar, focused on climate-resilient wastewater management, is expected to leverage the broader reforms and systems development under the institutions and finance pillars, and thus create a model and foundation for systems-strengthening in other key municipal services delivered by AMC. Sustainable improvements in wastewater management services will be realized by enabling AMC to transition from an infrastructure-oriented approach to a more professional, performance-oriented, and efficient utility approach for planning, development, and service delivery. G-ACRP will support this transition by: (i) expanding resilient infrastructure capacity; (ii) integrating service networks; (iii) strengthening monitoring systems for operational efficiency, climate resilience and service performance; (iv) establishing robust O&M systems; and (v) enhancing financial sustainability through cost recovery mechanisms. The project will demonstrate an integrated and reform-oriented approach for building resilience (covering institutional, fiscal and climate dimensions) and pivoting towards green urban development in Ahmedabad by supporting interventions across the three interconnected and mutually reinforcing pillars. 25. The project comprises three components: (i) strengthening AMC’s institutional and financial systems; (ii) Page 7 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) improving wastewater management services; and (iii) developing state level institutional systems and capacities. Component 1: Strengthening AMC’s institutional and financial systems (Total Financing: US$15 million; IBRD Financing: US$15 million) 26. This component will finance technical assistance (TA) to AMC for strengthening institutional and financial systems. It will support AMC in addressing key capacity, systems and policy constraints which affect its institutional and financial performance, hence its ability to invest in and maintain urban infrastructure services in a sustainable and resilient manner. Accordingly, the assistance delivered under this component will be focused on AMC-wide transversal systems for financial planning, revenue mobilization, service delivery and urban management. Improvements in these transversal systems is expected to strengthen AMC’s overall institutional and financial capabilities to transition to a resilient, sustainable and green urban development trajectory. This component comprises six subcomponents as briefly described below. 27. Subcomponent 1.1: Improving municipal revenue performance. This subcomponent will provide TA and policy reform interventions focused on AMC’s revenue enhancement potential in relation to the revision of PT rates within permissible limits as per state guidelines and provide a robust analytic basis for implementing evidence-based policy actions to improve PT performance. It will enable AMC to improve its municipal revenue mobilization, focusing on PT which constitutes the largest OSR of AMC. 28. Subcomponent 1.2: Land-based financing. This subcomponent will support the AMC in developing systems to enable more effective and efficient use of land-based financing tools to resource infrastructure investments through TA to: (i) improve the formula of Floor Space Index (FSI) premium charges to expand the use of FSI charges as a source of infrastructure funding, and (ii) improve the real estate data system for AMC and enhance the asset management and monetization practices for AMC’s real estate portfolio. 29. Subcomponent 1.3: Strengthening AMC’s institutional systems for service delivery. This subcomponent will provide TA to the WRM Department of AMC for setting up systems that enable and enhance operational efficiencies and service performance in wastewater and stormwater management. It will comprise three activities: (i) supporting the development and operationalization of systems for managing performance-based contracts; (ii) establishing systems for sector-level utility planning, budgeting and cost recovery for enhancing financial and operational sustainability – this will include policy reform to introduce wastewater tariffs in an incremental and phased manner starting with the bulk commercial and industrial consumers first, as well as the budgeting reforms to establish a system that is able to account for all sector expenditures and identify the full cost of service; and (iii) strengthening planning, infrastructure development and asset management systems for stormwater management with a specific focus on adopting integrated nature-based solutions to enhance resilience to flood risks and support preparatory activities for future phases of engagement. The project will also support the development and operationalization of a GIS-enabled MIS to support asset management and the O&M systems for wastewater and stormwater management services, which is described in Subcomponent 1.4. 30. Promoting occupational mobility for informal women workers. This subcomponent will also strengthen gender inclusion in service delivery systems by undertaking localized zone-level needs assessments and delivering on- the-job skills modular training over three to six months linked to a technical job role (e.g., masons, rod binders, sludge vehicle drivers, site-operators). The technical training on skills will be complemented by the delivery of life skills training for women workers, including digital literacy, financial literacy, reproductive literacy, and legal literacy. Finally, the project will support the design and roll-out of digital learning tools and performance assessments to help track women workers’ uptake of technical skills and improvements in productivity and performance. Page 8 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) 31. Subcomponent 1.4: Integrated GIS-based system for urban management, financing, and service delivery. This subcomponent will support the establishment and institutionalization of GIS-enabled MIS for property taxation, the management and monetization of the AMC real estate portfolio, and asset management and O&M of wastewater services. In addition to systems development, this subcomponent will support the establishment of a GIS center in the e-Governance department and deliver formal training and handholding support to the three user departments. 32. Subcomponent 1.5: Strengthening the municipal financial management system. This subcomponent will provide: (i) TA for improving municipal budgeting systems through the development and adoption of streamlined budget coding structures that will enable detailed functional classifications for capital and O&M expenditures, (ii) technical support to AMC for strengthening accounting systems in the Integrated Financial Management System (IFMS) through system upgrades, and (iii) technical support to institutionalize the practice of conducting external audits of AMC’s annual financial statements and publish the same on their website, in line with the mandatory conditions for accessing fiscal transfers from XV Central Finance Commission (CFC). 33. Subcomponent 1.6: Climate-smart CIP system. This subcomponent will support AMC in developing and institutionalizing a climate-smart CIP system to (i) plan, prioritize and finance infrastructure investments in line with city’s urban expansion and associated service demands, and (ii) address planning and financing related constraints in budget execution and fund utilization. The CIP system will be developed in a climate-risk informed manner to ensure that future infrastructure development and service delivery is climate resilient and emission-sensitive. To institutionalize the CIP system, AMC’s organizational capacities will also be strengthened so that the CIP process is well-coordinated across all the departments of AMC. Component 2: Improving wastewater management services (Total Financing: US$366.30 million; IBRD Financing: US$246.30 million, Government Financing: US$120 million) 34. This component will finance investments for improving the coverage, quality, efficiency, sustainability, and resilience of wastewater management services, following an integrated approach for service delivery. It will also help in addressing the immediate risks related to enviornmental pollution and natural water resource degradation in the city owing to the discharge of untreated/partially treated wastewater. Wastewater management has been prioritized based on a detailed technical assessment of AMC’s infrastructure and service delivery performance, that highlighted significant infrastructure gaps, suboptimal service levels, regulatory non-compliance, substantial resource sustainability and resilience risks, and negative environmental and social externalities. Enhancing wastewater management will not only improve the service performance and environmental pollution issues for the city, but will also contribute to building resilience to emerging climate change impacts and chronic stresses such as water scarcity by adopting circular approaches such as reuse of treated wastewater for non-portable/industrial purposes. Lastly, improved access to good quality wastewater services is also expected to contribute to the social inclusion agenda – especially with respect to the urban poor and vulnerable communities, who are most exposed to negative public health outcomes caused by inadequate/poor quality of wastewater management. 35. Component 2 comprises five subcomponents which will address the identified gaps in an integrated manner, as briefly described below. These subcomponents are critical elements of the utility approach for wastewater management services and will leverage the insitituional development support that will be provided under Subcomponent 1.3 for effectively implementing the utility systems in AMC. Further, these activities will contribute to enhancing the resilience of wastewater services and the adoption of low-carbon solutions including i) efficient, climate- smart and disaster-proof designs, technologies and O&M systems for wastewater infrastructure, ii) wastewater recycling and resource efficiency (treated wastewater and sludge), iii) adoption of life cycle costing and procurement modalities for wastewater investments, and iv) robust performance monitoring. 42.8 percent of the total IBRD financing for this Page 9 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) component (US$120 million) is linked to PBCs, while the remainder will be provided under the input-based modality. 36. Subcomponent 2.1: Developing resilient and efficient wastewater treatment systems. This subcomponent will finance investments for expanding the wastewater treatment capacity and upgrading the treatment technology systems to address the major capacity gaps, operational inefficiencies and regulatory non-compliances in the core city areas of Ahmedabad. The investments will enable AMC to adopt energy efficient and low-carbon treatment technologies that will effectively reduce GHG emissions, optimize land requirements and improve the system’s resilience towards increasing industrial pollution risks and climate risks, including flooding. Safe sludge management and disposal systems will be developed to enable sustainable and resource-efficient wastewater management practices. 37. Subcomponent 2.2: Improving wastewater network systems including household connections. This subcomponent will finance rehabilitation and capacity expansion of existing wastewater networks in the core city area in line with the treatment capacity expansion. The network system improvements will enhance the wastewater carrying capacities in line with rising wastewater generation, limit infiltration & inflows into the network, augment their structural adequacy, and improve operational efficiency of the overall wastewater system. The project may also support expansion of the network systems in newly added peripheral areas and areas where Low Income Groups (LIGs) live to provide quality wastewater services to the newly added urban population and to reduce inequities in access to services. Network expansion will be planned in an integrated manner with the treatment systems following the decentralized approaches. Last mile network connectivity and the coverage of household connections will be expanded to improve service delivery to consumers and limit infiltration and inflows into the sewerage network. 38. Subcomponent 2.3: Wastewater recycling and reuse for circularity and resource efficiency. This subcomponent will finance integrated wastewtaer treatment with the objective of promoting wastewater recycling and reuse for circularity and resource efficiency. This would mitigate freshwater demand in the city’s major industrial clusters and contribute to the target of 100 percent treated wastewater reuse as per Gujarat state’s wastewater recycling and reuse policy. The system will be developed in an integrated and efficient manner to align the recycling & reuse infrastructure with treated wastewater, as well as with high water demand centers for industrial usage, to minimize the conveyance network and pumping costs. 39. Subcomponent 2.4: Industrial pollution abatement in Ahmedabad’s wastewater systems. This subcomponent will support: (i) implementation of a water quality monitoring mechanism to provide early warning system to monitor the industrial pollution instances on a real-time basis and issue warning to manage the impacts on the treatment process; (ii) AMC to undertake studies, surveys and investigations in identifying pollution hotspots for developing a systemic long-term approach for pollution abatement; and (iii) integration of necessary design, technology, response Standard Operating Procedures (SOPs) and O&M requirements as part of the wastewater investments to enhance the operational resilience of the system against industrial wastewater pollution. Overall, this subcomponent will establish systems and processes for industrial pollution monitoring and abatement – that would enable AMC to monitor the pollution risks on a real-time basis and protect the wastewater systems from frequent shocks and operational breakdowns. 40. Subcomponent 2.5: City-wide integrated digital monitoring and control systems. This subcomponent will support a robust water quality monitoring system for enhancing water resource governance in the city and for operationalizing a dedicated management system for key industrial pollution hotspots. The focus will be on upgrading and operationalizing a city-wide unified wastewater monitoring and quality control system for enhanced operational control, process optimisation and robust monitoring of wastewater system including conveyance and treatment processes, to enable city wide efficiency improvement. 41. Safe working environment and support systems for promoting occupational mobility in informal women Page 10 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) workers. As part of the infrastructure investment support, the project will invest in developing safe working environments and support systems for informal women workers through: (i) development of zone-level pilots to provide child-care facilities - the project will support the development and use of at least two make-shift day cares near project sites for informal women workers with children; (ii) support for women’s safety and violence prevention through the development of zone-level women’s safety plans to ensure the safety of women workers on AMC’s project sites during night shifts by including urban design elements focused on violence prevention, women’s safety cells, and information and outreach for workers and supervisors. This will be included as a metric in the performance and service disclosure. 42. Interventions in wastewater management systems will be: (i) prioritized based on integrated service- catchment based system planning that would focus on coordinated end-to-end systems improvement, including wastewater network and treatment systems in priority catchments in the core city area, based on the needs and gaps identified during technical assessments; and (ii) spatially integrated and balanced in terms of rehabilitating, upgrading, and expanding the systems in the core city area, and developing new systems in the peripheral urban areas within the prioritized catchment areas. The long-term city-wide wastewater management master plan currently being prepared by AMC will serve as a sound basis to identify and prioritize the investments under this component. Priority will be accorded to investments that are urgently required to mitigate environmental pollution, ensure regulatory compliance and address capacity gaps. The technical design and implementation process will ensure that the most resource-efficient, climate-resilient and green technological solutions and infrastructure systems are adopted to not only enhance service performance and sustainability, but also reduce GHG emissions and develop adaptive capacity to manage climate risks. This would serve as a model of integrated planning, climate resilient infrastructure development and sustainable service delivery that can be scaled-up across other service catchments as per the long-term wastewater master plan. 43. This component will introduce performance-based Design, Build, Operate and Transfer (DBOT) contract modalities to leverage private sector participation for wastewater treatment systems by including outcome-oriented service delivery and sustainable O&M for 15 years, in addition to infrastructure development. The Key Performance Indicators (KPIs) developed for the DBOT contracts are concretely targeted on key expected service outcomes in terms of treatment efficiency, efficacy, resilience and service performance. Institutional support provided under Component 1 will provide the necessary technicial asisstance to AMC for contract management and performance monitoring of these performance-based DBOT contracts. Targeted support in this sector will enable improvements in the coverage, service levels and performance; enhance resource efficiency and sustainability through circular approaches such as recycling and reuse; ensure regulatory compliance and mitigate risks related to water pollution and resource degradation; enhance climate resilience; and reduce GHG emissions. Component 3: Developing state level institutional systems and capacities (Total Financing: US$18 million; IBRD Financing: US$18 million) 44. This component will finance TA to (i) GUDM for developing state-level systems and an urban knowledge ecosystem for emerging cities; and (ii) AMC and GUDM for project implementation and management. It will focus on developing a platform to leverage AMC’s good practices for building the capacity and systems of other emerging cities in Gujarat. Technical support to GUDM will focus on adopting a ‘lighthouse approach’ to leverage good practices and learning from Ahmedabad, as well as other national and global cities, to provide institutional and capacity building support to other emerging cities in Gujarat and India for resilient, sustainable, and inclusive urbanization. 45. Subcomponent 3.1: Developing state-level systems and urban knowledge ecosystem for emerging cities. This subcomponent will support (i) building an urban knowledge ecosystem for emerging cities through the establishment of a Gujarat Urban Development Institute (GUDI), and (ii) supporting GUDM through the development of a state-level integrated project and fiduciary management system that will streamline financial management and procurement Page 11 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) practices across all the second and third tier ULBs in the state and will centrally track procurement and funds flow. These activities will strengthen the state systems to support other medium and small-sized ULBs of Gujarat in improving the systems for infrastructure development and service delivery – and monitoring their performance and compliance. 46. Women’s employment and occupational mobility in technical job roles. The project will support zone-level pilots to reach unskilled, informal female workers and link them with on-the-job trainings in pre-identified technical job roles in wastewater management. The key activities will focus on: (i) zone-level needs assessment to map demand for specific job roles; (ii) create awareness among informal women workers on techncial skills’ certification in wastewater management; (iii) provide information on insurance, eligible safety nets, and life skills training including digital literacy; (iv) on-the-job trainings in pre-selected technical occupational standards for informal women workers annually; and (v) link the skills training to assessments and certification as per the National Skills Qualification Framework. 47. Subcomponent 3.2: Technical support for project implementation and management. This subcomponent will support project management, coordination and monitoring support to AMC and GUDM through (i) incremental operating costs for units established for implementing, coordinating, and reporting the project activities; and (ii) specialized consultancy services for project management, investment project preparation and implementation supervision, environmental and social management, and fiduciary management. 48. Climate Co-Benefits. Given Ahmedabad’s high vulnerability to climate change, the project aims to assist the city in mainstreaming climate risk management throughout the entire investment cycle. The systems developed under Component 1 for climate-smart capital investment planning and asset management will enhance the city’s resilience and ensure that future infrastructure development and service delivery is climate-resilient and emissions-sensitive. Additionally, the planned city-wide GIS system will allow AMC to: (i) inventorize the assets that can be leveraged for localized monitoring and resilience; (ii) efficiently plan, maintain and operate the assets; and (iii) adapt effectively to climate shocks with reduced response time. Technical support to adopt nature-based solutions (NBS) for addressing climate risks and stresses (heatwaves, flooding, water stress) will contribute to both adaptation and mitigation benefits in the long term. Wastewater infrastructure and services improvement supported under Component 2 will incorporate climate-smart planning, energy/resource-efficient technologies, resilient design, construction, and O&M of facilities, adapting to climate change vulnerability risks. GHG analysis of the proposed infrastructure investments estimates that the project will potentially reduce GHG emissions by 24.79 million tonnes of CO2 equivalent compared to a “counterfactual scenario”, by adopting energy-efficient and green solutions for wastewater management. Asset management systems under Component 1 and digital investments for wastewater monitoring under Component 2 will enhance the resilience of existing infrastructure and reduce GHG emissions. The proposed GUDI will foster regional and international partnerships with global cities and knowledge partners, showcasing cities’ good practices for enhancing adaptability and resilience against climate change. Activities planned under Component 1 will also improve AMC’s fiscal resilience to respond and adapt to climate change. 49. Leverging the private sector for enhanced operational efficiency and service performance. The project will leverage private sector participation to improve the efficiency, quality, and sustainability of wastewater service delivery in line with the WBG agenda on Maximizing Finance for Development, by: (i) introducing performance-based DBOT contract modalities that will cover infrastructure development, service delivery and O&M activities; (ii) building AMC’s institutional capacity to develop sound contract structures and undertake contract management and performance monitoring; (iii) improving municipal revenue performance and financial management systems to strengthen AMC’s financial position and provide revenue security to private operators; and (iv) establishing monitoring systems to mitigate any pollution risks and shocks that may affect operational performance. 50. Financial arrangement between GoG and AMC. GoG will on-lend the IBRD resources for Components 1 and Page 12 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) 2 (70 percent of the total project cost) to AMC on a back-to-back basis, i. e., on the same terms that GoG receives the funds from the IBRD loan via GoI. In addition, GOG will provide 15 percent of the total project cost (US$60 million) as a grant to AMC. AMC will provide an additional 15 percent of the project cost (US$60 million) from its own resources. A comprehensive debt sustainability analysis was carried out to assess the impact of the loan on AMC’s fiscal position, the fiscal risks that this creates for AMC, and to identify measures to ensure that AMC can meet its debt obligations in a sustainable manner. A summary of the main findings of this analysis is presented in Section IV. 51. The project will adopt a results-focused financing approach to deliver financial assistance as incentives to AMC for implementing reforms, strengthening systems and enhancing practices. The results-focused approach hardwires some of the critical service delivery, institutional and financial systems and performance improvements of the operation as PBCs, linking the achievement of these results to disbursement of IBRD financing. PBCs identified under G-ACRP are particularly targeted to areas that (i) require significant effort to change established practices; (ii) require strong inter-departmental coordination and collaboration within AMC (which has proven elusive in the past); and (iii) will provide the foundations for long-term sustainability of the infrastructure investments that will be financed using IBRD resources and enable sustained improvements in the quality of service. Disbursements will be triggered by the documented execution of eligible expenditures and the verification of achievement of PBCs, which will provide incentives for achieving results. The project will have seven PBCs for a total allocation of US$120 million, as summarized in Table 1 below. The description, verification methodology, allocation formula and timelines are mentioned in Section VII. They are strategically allocated along the project’s disbursement curve to avoid resource shortfalls during the execution of contracts, but also to enforce the importance of their achievement. 52. Approach and rationale for the PBCs. PBCs are targeted towards those activities and results that are critical to achieving the desired shifts in the way AMC plans, delivers, and manages service delivery. First three PBCs are directly linked to the wastewater investments that will be financed under Component 2 and focus on: (i) environmental compliance achieved in identified Sewage Treatment Plants (STPs); (ii) wastewater pollution and quality monitoring system strengthened; and (iii) performance orientation introduced in wastewater services. The remaining four PBCs are linked to important systems and policy reforms that are supported under Component 1 for broader transversal improvement in AMC’s performance but are also important for the sustainability and resilience of wastewater services, including: (i) improved performance of AMC's property tax systems; (ii) AMC's wastewater assets digitized in GIS; (iii) User Charges for wastewater introduced; and (iv) disclosure of financial performance of AMC improved. A detailed description is provided in Section VII. Table 1: List of Performance Based Conditions Total Loan Target Amount Achievement PBCs Allocated Amounts Allocated to Timelines* PBC (US$) PBC 1. At least 90 percent of 20,000,000 December 31, Scalable: The disbursement amount will be divided wastewater effluent samples in 2027 equally amongst the STPs targeted and disbursement previous quarter comply with will be for each STP. Achievement will be complete for disposal standards in at least two each STP when 90 percent of samples meet effluent (2) STPs. standards; and the corresponding fortnightly and monthly statutory reports to Gujarat Pollution Control Board (GPCB) along with Performance Reports of STPs are disclosed in public domain. US$20,000,000 upon achievement. Page 13 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) PBC 2. AMC has disclosed at least 20,000,000 September 30, Non-Scalable: US$10,000,000 for each Fiscal Year in two (2) consecutive quarterly 2028 which two consecutive quarterly effluent monitoring effluent monitoring reports in reports in wastewater network are disclosed, up to wastewater network. US$20,000,000. PBC 3. AMC has carried out at 20,000,000 September 30, Non-Scalable: US$20,000,000 upon submission of least four consecutive quarterly 2028 performance review and payment reports of contractors performance reviews of for at least four consecutive quarters for at least two contractors for at least two STPs STPs. and made payments to respective contractors as per findings of performance review report. PBC 4. AMC has geo-coded in the 10,000,000 December 31, Scalable: Disbursement will be proportionate to number GIS database 900,000 active 2027 of active properties geo-coded in GIS, subject to properties in the property tax minimum achievement of 40 percent of target. database of AMC. US$11.11 for each property geocoded subject to a maximum of US$10,000,000. PBC 5. AMC has digitized in GIS 20,000,000 September 30, Non-Scalable: US$20,000,000 upon achievement. and completed ground truthing 2028 of at least 1700 kms of wastewater pipelines, 6000 manholes, twenty (20) pumping stations, six (6) STPs and 750,000 wastewater connections. PBC 6. AMC has completed at 15,000,000 December 31, Non-Scalable: US$15,000,000 upon achievement. least two (2) billing cycles of 2026 wastewater user charges for commercial customers. PBC 7: AMC has disclosed in its 15,000,000 June 30, 2024 Non-Scalable: US$15,000,000 upon achievement. website audited annual accounts for FY21-22 and unaudited annual accounts for FY22-23. 52.1 PBC#1 and PBC#2 will measure the compliance of AMC’s new STPs with regulatory standards for wastewater disposal and ensure that AMC has a fully functional monitoring system for industrial pollution in the wastewater network. These two results are critical to enhance the resilience and sustainability of wastewater service delivery and require a major shift in AMC’s current practices, which will be supported through the TA under Component 1 and investments under Component 2. The WRM Department will be responsible for achieving these PBCs. 52.2 PBC#3 will encourage AMC to shift to performance-based contracts (for select investments) and to monitor the performance of private contractors for enforcing the contractual provisions related to service performance. This is a critical result, as AMC uses outsourcing arrangements extensively for wastewater management; however, these are conventional contracts and even when there are performance parameters, they are not necessarily linked to service delivery and are not regularly monitored/enforced. The WRM Department will be responsible for achieving this PBC. 52.3 PBCs#4 and #6 will measure improvement in the financial sustainability of AMC at two levels: (i) improved performance of the PT system; and (ii) specifically for wastewater management, through the introduction of user Page 14 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) charges. PBC#4 will measure progress on the number of properties that will be geo-coded on the GIS-MIS system, so that AMC can use it for PT demand and collection processes. The PT Department and the e-Governance Department will be jointly responsible for this PBC. PBC#6 will focus on introduction of a policy to levy user charge for wastewater in a phased manner, starting with non-residential properties. This is a critical policy reform, as currently wastewater services do not have an earmarked revenue source. 52.4 PBC#5 incentivizes AMC to adopt a modern digital system for sustainable asset management and O&M of infrastructure, including asset data, customer data, complaint data and O&M data on the GIS platform. This PBC will support AMC to shift to a professional utility approach and systematically record and use data, carryout proactive O&M planning, and budgeting. The WRM and e-Governance departments will be jointly responsible for this PBC. 52.5 PBC#7 incentivizes AMC to institutionalize the practice of external statutory audit and public disclosure of financial statements. While AMC routinely prepares its financial statements, these are not externally audited regularly and are not publicly disclosed. This PBC is also aligned with the mandatory requirements for seeking grants under XV- CFC but advances the schedule for achieving this. The Finance department of AMC will be responsible for this PBC. 53. Overall, the risks related to the achievement of PBCs are not assessed to be high, as the PBCs are fully aligned with and linked to the activities that will be financed under the project. Most of the PBCs are targeted towards strengthening institutional systems and practices that have been agreed with AMC. The most important policy reform related to the introduction of user charges for wastewater services has been discussed at the highest political level with positive feedback. AMC’s past record of implementing reforms as a leading city in India and undertaking innovative initiatives is also a determining factor. The PBCs related to systems and policy reforms will require strong inter-departmental coordination within AMC, as the underlying activities are being led by multiple departments. However, this does not pose a major risk owing to the horizontally integrated institutional framework of AMC, and the strong accountability relationships in place. 54. Eligible Expenditure Program (EEP). The EEP for PBCs includes project expenditure on works, goods, consulting services, incremental operating costs, trainings, and non-consulting services. These expenditures will include the cost of the investments under Subcomponents 2.1 and 2.2. 55. Verification Protocol. Verification of PBC achievement will be undertaken by the Project Management Consultant (PMC). AMC will provide the necessary documents, reports, and information as detailed information to the PMC in line with the agreed verification protocol and enable the PMC to conduct specific assessments/sample checks as detailed in the verification protocol that is part of the Project Implementation Manual (PIM). For each PBC, the PMC will verify the documentation provided by AMC as per the protocol and will confirm the achievement of PBCs along with the extent of eligible disbursement. In the case of scalable PBCs, the PMC will verify the achievement of results and certify the extent of disbursement permissible against the PBC. Wherever AMC is required to disclose information in the public domain (such as audit reports and pollution monitoring reports), the PMC will only use the publicly disclosed information for verification. The Bank will also undertake its own validation of the verified results and reports by deploying the required technical experts (see Section VII for details). C. Project Beneficiaries 56. Three main target groups will directly benefit from the project: (i) over 7.3 million residents of Ahmedabad city (as per AMC database), through improved access to wastewater services and reduced environmental pollution; (ii) staff of AMC and GUDM, through improved institutional systems, organizational capacity, and access to resources for improving infrastructure and service delivery; and (iii) officials from the 156 smaller ULBs in Gujarat will benefit from the good practices and learning gained from Ahmedabad on resilient, sustainable, and inclusive urbanization. Page 15 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) D. Results Chain 57. The links between the project activities, outputs, and outcomes are presented in the diagram below, along with the Key Constraints being addressed by the Project and the Critical Assumptions. Figure 1: Results chain for G-ACRP E. Rationale for Bank Involvement and Role of Partners 58. The World Bank is well placed to support the urban transformation of mega cities and metropolitan areas through long-term, programmatic engagement. The Bank has extensive global experience and knowledge on good practices in spatially integrated development of large cities; institutional strengthening of local governments and urban management and service delivery agencies; local economic development and city competitiveness; municipal finance and own-source revenue enhancement; and environmentally sustainable and socially inclusive flood risk and solid waste management. World Bank-supported projects in Accra, Kampala, Dar es Salaam, Tamil Nadu, Nairobi, Kinshasa, Karachi, Maputo, Buenos Aires, and Dhaka, among others, have demonstrated that the combination of the Bank’s financing and TA significantly improved the capacity of cities and their local governments to deliver climate-resilient urban infrastructure and inclusive service delivery. F. Lessons Learned and Reflected in the Project Design 59. Urban transformation approaches in large, mega cities entail strengthening institutional, financial, and service delivery systems with infrastructure investments through results-based financing mechanisms. The project draws lessons from World Bank supported projects in Kampala and Casablanca, where the growth of the national economy is intrinsically linked to how efficiently major urban centers are managed. In Kampala, the project supported Page 16 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) the development of a GIS enabled property mass valuation management system to improve municipal revenue mobilization, which resulted in more than a fourfold increase in revenues. In Morocco, a results-based financing approach was used to incentivize the government to implement an integrated package of urban infrastructure investments and institutional and financial reforms that would improve access to basic services in the city’s most vulnerable neighborhoods and strengthen municipal finance and local governance. G-ACRP’s design draws on these lessons and seeks to transform AMC by hardwiring some of the critical service delivery and financial performance improvements in the operational design, and by providing World Bank financing as an incentive to achieve key results consistent with existing national programs. 60. Performance-based contracting can be used effectively to reduce pollution in rivers caused by untreated urban wastewater discharge. Global experience shows that performance-based contracting using DBOT modalities – if structured well, implemented with good technical capacity, and enforced by adequate monitoring – yield significant environmental benefits. The Bank financed project introduced performance based DBOT contracts that included infrastructure development and 15 years of O&M for wastewater management facilities, leveraging the experience and expertise of the private sector. In parallel, TA was provided to enhance ULBs’ capacity to plan and review designs, and eventually operate and maintain these assets. The G-ACRP draws valuable insights by adopting similar performance based contracting modalities for wastewater treatment systems. 61. A long-term, climate-smart CIP system needs to be adopted to prioritize and invest in sustainable infrastructure. Global experience demonstrates that cities need to take a medium to longer-term view to prioritize investments that maximize impact on communities and local economies, address growing service demands and contribute to cities’ development goals. Long-term CIP is not possible without integrating climate change considerations and offering climate‐smart options for reducing GHG emissions and increasing resilience to extreme climate events. The project draws critical lessons from the CIPs recently developed in Cape Town and Eskisehir Metropolitan Municipality. In Cape Town, the World Bank supported the city in developing a 10-year infrastructure strategy informed by the city’s 20-year sector plans and corporate strategies. In Eskisehir, the World Bank supported a climate-smart CIP process that included project pipeline prioritization, financial planning, and ranking based on emission forecasts and vulnerability to hazards. Supporting Ahmedabad in this process will be key to achieving climate-resilient and low-carbon growth. III. IMPLEMENTATION ARRANGEMENTS A. Institutional and Implementation Arrangements 62. The Gujarat Government’s Urban Development and Urban Housing Department (UD&UHD) will be the nodal department responsible for project implementation and monitoring at the state level. AMC will be the primary implementation agency responsible for management, implementation, and monitoring of all the city-level (Ahmedabad) project activities. A dedicated Project Implementation Unit (PIU) has been established in AMC with the Deputy Municipal Commissioner (Projects) as the Project Director (PD), supported by the City Engineer (WRM) as the Deputy PD and a team of core technical, fiduciary, environment, and social experts. The PIU structure is fully integrated within AMC’s organization structure and focal points have been designated from all relevant departments to lead the critical institutional and financial reform activities in Component 1, while all the activities in Component 2 will be led by the WRM Department team comprising staff at the headquarters and zonal offices. The PIU will be supported by a PMC for project management, design review, and implementation supervision of infrastructure investments and service systems. 63. GUDM will lead the implementation of all state level activities under Component 3. A PIU at GUDM has been set up under the Additional Chief Executive Officer, GUDM and will consist of core technical, fiduciary, environmental, and social experts. For all state level activities under Component 3, the GUDM-PIU will undertake overall project Page 17 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) management, implementation monitoring and reporting (e.g., Interim unaudited financial reports [IUFRs]), including the preparation and submission of separate progress reports to the Bank. Overall institutional arrangements for project implementation, coordination, monitoring, and reporting will be detailed out in the PIM. 64. A high-level Project Steering Committee (PSC) will be established at the state level for periodic monitoring, strategic oversight, and resolution of key issues on a fast-track basis. The Committee will be chaired by the Principal Secretary (PS), UD&UHD and will include the Municipal Commissioner (AMC), the Additional Chief Executive Officer (GUDM), the Project Director (G-ACRP), and other key members involved in project implementation. More details of the implementation arrangements are provided in Annex 1. B. Results Monitoring and Evaluation Arrangements 65. The project will establish a robust monitoring and evaluation (M&E) mechanism allowing the implementing agencies to generate data-driven information in a timely and accurate manner. AMC will have the primary responsibility to monitor overall project performance and report on implementation status, including progress towards achieving the PBCs. The M&E arrangement will follow the project’s Results Framework (RF), which includes clearly defined, relevant, measurable, and time-bound annual targets to be achieved by the implementing agencies. 66. AMC and GUDM will provide progress reports to the PSC and the Bank on a periodic basis, as outlined in the PIM. The progress reports will include component-wise status updates and activities implemented, results achieved during the period, challenges faced (if any) and actions taken, status of staff deployed/vacancies at PIUs, planned activities for the next reporting period, status of progress towards the RF and PBCs, capacity building activities undertaken for project implementation, and any other relevant information. Detailed M&E arrangements, including defined responsibilities and templates for periodic progress reports will be included in the PIM. Data verification and analysis of results for assessing implementation progress will be undertaken separately by AMC and GUDM. C. Sustainability 67. The project includes targeted activities to enhance the environmental, financial, and operational sustainability of AMC’s service delivery systems. The targeted improvements in AMC’s wastewater infrastructure and service delivery systems will reduce environmental pollution and enhance environmental sustainability. TA activities under Components 1 and 3 will ensure that AMC’s overall financial sustainability is improved through better revenue performance, more efficient investment planning and transparent Financial Management (FM) systems, and overall institutional sustainability is improved through better capacity and systems to plan, manage, and deliver services using modern and efficient systems. IV. PROJECT APPRAISAL SUMMARY A. Technical, Economic and Financial Analysis Technical Analysis 68. The overall approach and technical design of the project is informed by a comprehensive assessment of AMC’s institutional systems, financial performance, infrastructure coverage and service delivery systems. The assessments were undertaken following international frameworks (including the Utility of Futures (UoF), framework for wastewater management) and were focused on identifying the critical gaps and constraints that affect AMC’s overall capacity to invest in infrastructure and deliver services, as well as on prioritizing the areas that need to be targeted under this project for long-term transformation. The project design has been informed by the following key findings: (i) AMC needs to implement critical reforms and strengthen institutional systems to pivot towards a positive growth trajectory - wherein Page 18 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) improved financial performance and robust institutional systems will enable AMC to fund its future investment needs and deliver services in a sustainable, resilient and efficient manner; (ii) there is an urgent need to shift from infrastructure focused approach to a more integrated utility approach for service delivery, with technically sound and modern systems/practices for planning, designing, implementing and managing infrastructure for better quality of service; (iii) AMC needs to shift towards sustainable and resource-efficient practices to deal with water scarcity and future uncertainty in an incremental and well planned manner; and (iv) financial sustainability is critical not only at the institutional level but also at the service sector level, to manage the pressures related to increasing population, rising service demand and emerging complex issues (such as climate risks, industrial pollution risks). Accordingly, the project focuses on a combination of transversal institutional and financial reforms for broader AMC wide improvements, and focused support to transform wastewater management services, which is currently the highest priority for the city. 69. Activities under Components 1 and 2 are designed to provide mutually reinforcing support to AMC in operationalizing the shift towards utility systems for service delivery in line with the Bank’s global UoF framework. AMC will undertake priority infrastructure investments, develop institutional systems, build organizational capacity, and implement policy reforms to improve performance against the five pillars of utility framework, namely: (i) technical operations; (ii) commercial operations; (iii) financial management; (iv) governance and legal framework; and (v) human resource capacity. In addition, project activities will also seek to enhance service quality and performance with respect to resilience and customer orientation. 70. To address the critical gaps in wastewater management infrastructure systems, the project seeks to shift infrastructure planning towards an integrated and long-term service-catchment based approach – wherein AMC will move away from the current fragmented planning approaches that led to mismatch in capacities and operational efficiencies. With the adoption of the new service-catchment approach, AMC will expand and upgrade the treatment and network systems in an integrated manner in line with long-term wastewater generation projections and service needs within each service area (identified geographically as part of the city-wide master plan for wastewater management that is currently being prepared by AMC). The end-to-end system wide improvements will align the flow and treatment capacities, and mitigate risks related to leakages, cross-contamination, and untreated discharges into water bodies. Two priority investments for wastewater treatment of 615 MLD with a cumulative value of ~US$140 million have been prepared and procured by AMC to initiate implementation of the investment activities in the first year of implementation. 71. Activities under Component 2 will develop operating and monitoring systems that are vital to identify, manage and mitigate the industrial pollution risks. AMC has undertaken radical action in line with judicial orders to disconnect all illegal industrial connections in its wastewater system and has also recognized the need to establish a sound wastewater quality and pollution monitoring system to avoid such instances in the future. The project seeks to reinforce AMC’s ongoing regulatory enforcement interventions by implementing monitoring and early warning systems that would provide necessary real-time data for monitoring these risks, identification of pollution hotspots, and reporting to the regulatory authorities for necessary legal action. In addition, the project will also support: (i) the adoption of technological solutions which are more resilient to such shocks and are better equipped to recover from such shocks/operational disruptions; and (ii) the inclusion of performance indicators and specific contractual clauses in performance based DBOT contracts to ensure that there are adequate incentives, safeguards, and monitoring mechanisms to handle any future potential issues related to industrial contamination. These interventions are based on extensive technical investigations, pollution mapping and consultations with GPCB. 72. The project is fully aligned with national urban programs, including AMRUT 2.0 that prioritizes 100 percent wastewater collection, treatment, and recycling, and the XV CFC recommendations for devolution of fiscal transfers to ULBs. Firstly, the project is envisaged to support AMC in achieving the objectives laid out under the national urban program AMRUT 2.0 with respect to wastewater services. Secondly, the project has adopted a performance-based Page 19 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) financing approach in alignment with AMRUT 2.0 that links 40 percent of the disbursements from the National Government to meeting functional targets, and not just asset creation. Thirdly, AMRUT 2.0 also encourages private sector participation and technological innovation for efficient water and wastewater management – in alignment with this, the project introduces performance-based contracts in wastewater management and provides dedicated support to digitize its wastewater systems. Lastly, the introduction of a user charge policy for commercial properties is also aligned with the AMRUT 2.0 objective of recovering O&M costs through user charges. In addition, the XV CFC places emphasis on timely audit, disclosure of financial statements, and improvements in property tax collections. It also links disbursement of 25 percent of its grants to improvements in sanitation. The project is fully aligned with these priorities. The wastewater investments will support AMC to improve service performance and access XV CFC grants linked to sanitation improvements. Financial & Economic Analysis 73. The project provides powerful incentives to AMC to implement some difficult but urgently needed policy and system reforms. AMC’s financial health has deteriorated since FY16 - operating expenditure has outpaced operating income by 4.9 percent, p.a. (FY16-20) resulting in a reduction in revenue surplus by 95 percent to US$4 million in FY20. The declining revenue surplus has also affected growth in capital expenditure, which has grown at an average annual rate of only 2.1 percent in the same period. Wastewater capital expenditure has a share of 11 percent in total capital expenditure (~ US$5.2 per capita), of which a major share (~85 percent) is directed towards rehabilitation of the network – even though investment needs are significant due to persistent under-investments in the sector and the huge backlog. In this context, the project provides financial assistance to AMC in overcoming this challenge and enables it to finance priority investments in this sector - the average capital expenditure in wastewater management will increase by 233 percent from US$36.33 million between FY18-20 to US$121 million between FY23 and FY27. This increase is not possible with the current financial position of AMC and hence provides powerful incentives to AMC to implement some difficult reforms and develop systems that are critical to put AMC back on a growth trajectory in terms of overall financial health and the ability to fund its infrastructure needs. In addition, TA under Component 1 for integrated planning, asset management and O&M will enable AMC to shift towards more efficient systems that would minimize the financial burden related to frequent capital maintenance requirements by enhancing the economic life of physical assets. 74. AMC’s O&M expenditures on wastewater management services over the past five years are disproportionately low as compared to service needs and system requirements. The reported expenditure on wastewater management 19 is only ~2 cents per Kilo-Liter (electricity charges, and O&M fee for STPs and pumping stations). Overall, the current levels of wastewater O&M expenses are not reflective of the ‘true cost’ needed for O&M of an efficient wastewater management system. 75. A substantial increase in capital expenditures to improve wastewater management systems supported by the project will lead to a steep rise in O&M expenses, which is likely to impact AMC’s current financial position. The recurrent expenditures of wastewater services to ensure proper O&M of the newly developed assets and service its contractual payment obligations will increase by an average of 60 percent compared to the business-as-usual scenario. The incremental annual O&M expenses are US$110 million in the first five years of full operation of all new facilities; over a 15-year period (FY29-43), the incremental O&M expenses for the proposed investments accumulate to ~US$463 million. The annual incremental O&M burden is 2.5 percent to 3.3 percent of AMC’s annual revenues 20 and 2.2 percent to 3.1 percent of AMC’s annual revenues with LVC revenues included over the 15-year operations period. In the past, 19 The current budgetary & financial planning systems lack full cost accounting for wastewater functions and therefore financial analysis was constrained due to fragmented financial information available in AMC’s annual statements. 20 Revenue projections are based on assumptions - revenue growth of 4.58 percent p. a. in nominal terms, and LVC revenues growth at 2 percent Page 20 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) income from conservancy tax has exceeded O&M expenditures of wastewater services, primarily due to weak O&M and performance monitoring systems. However, this trend will undergo a reversal from FY27 onwards due to the steep rise in O&M costs and the slow revenue growth trajectory, resulting in annual O&M expenditures of wastewater services exceeding revenues by 2031. Over the 15-years O&M period, the inability of conservancy tax revenues to finance the recurring expenditure is likely to result in a rapid decline in AMC’s operating performance for wastewater services – the operating ratio (OR) 21 will increase to 1.1-1.2 in long term (well beyond the international benchmarks of 0.85-0.9 for a well-performing/ financially healthy utility). AMC will need to implement reforms to shift to financially sustainable wastewater service delivery to be able to finance the O&M expenditures sustainably and to ensure robust O&M of infrastructure assets; otherwise, it runs the risk of falling back into the vicious cycle of ‘build-decay-rebuild’. The project will support AMC in introducing user charges for wastewater for commercial customers to generate resources to offset incremental O&M expenditure. 76. While GoG will provide the IBRD financing for Components 1 and 2 as a loan, the fiscal impacts of the loan are manageable. A fiscal impact analysis conducted for various loan options 22 revealed that the maximum annual debt service requirement (interest + principal repayments) ranges from 4.9 percent to 7.1 percent of AMC’s annual recurrent revenues, depending on loan choices made by GOG and AMC. With the inclusion of capital revenues from land value capture sources, primarily sale of FSI (growing at marginal rates), the maximum annual debt service requirement ranges from 4.5 percent to 6.5 percent of AMC’s revenues. The average annual debt service requirement during the repayment period ranges from 2.9 percent to 4.7 percent of AMC’s total revenues (without LVC revenues). 77. The debt service requirement can be addressed with modest increases in nominal revenue growth. To realize this, AMC needs to achieve any one of the following: (i) annual property tax revenue growth rate of 9.0 percent, which is lower than the XV CFC recommendations; or (ii) nominal growth of LVC revenues at 7.5 percent p.a. Alternatively, it needs to achieve a combination of these two measures at lower levels of revenue yield in each case. If these measures were to be unsuccessful, or only partially successful, AMC could meet its debt service obligations in their entirety through monetizing the real estate assets it has acquired through the land readjustment process under the Town Planning Schemes (TPS). An initial assessment undertaken during project preparation conservatively estimates the NPV of the monetizable element of this asset base at approximately US$450 million, well above the loan size. 78. While the financial impacts of the loan and the additional O&M costs are manageable in and of themselves, AMC needs to implement reforms to strengthen its overall financial sustainability. The fiscal impact analysis indicates that irrespective of the World Bank project and for reasons unrelated to it, AMC’s fiscal position has been weakening for some time. If recent trends continue uninterrupted, AMC may incur increasingly large deficits, and relative to these trends the fiscal impacts of the project are minor. The project seeks to assist AMC to address the issues with its broader fiscal position by supporting reforms in property tax administration, LVC revenue mobilization, and the wastewater user charge policy in Component 1, with the overall goal of substantially increasing revenue yields. The project will support AMC in introducing user charges for wastewater for commercial customers to generate resources to offset incremental O&M expenditure. 79. Economic analysis has been carried out considering cost/benefit assessments related to strengthening sustainability and efficiency of wastewater services. The key economic benefits considered for the analysis include: (i) avoided environmental pollution and other socio-economic externalities caused by the discharge of untreated wastewater; and (ii) avoided GHG emissions due to the reduced carbon footprint of STP facilities, priced at the shadow 21OR is expressed as the ratio of recurrent expenditures incurred and income from wastewater services. 22Options include 1) GoG passing on the loan from GoI to GoG on back-to-back basis, and 2) GoG providing the loan to AMC at a rate comparable to the market borrowing cost of AMC. 5-year grace period and a repayment period of either 10 or 15 year, resulting in 15-20 years total maturity loan is considered. Page 21 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) price of carbon 23. The economic analysis 24 of the program yields a net economic benefit, expressed in Net Present terms – Economic Net Present Value (ENPV), of US$4.45-5.1 billion 25, with an average estimate of US$4.77 billion; a net Benefit- cost ratio of 9.97-11.24, with an average B/C ratio of 10.6; and an average Economic Rate of Return (ERR) of 86 percent. The positive ENPV, positive gap between the ERR & the discount rate, and the B/C ratio much greater than 1 indicate that the project is economically feasible. Significantly improved resource recovery and water circularity, enhanced capital utilization efficiency, resilience, improved economic life of assets, and systemic institutional shift towards a well- functioning utility will bring additional socio-economic benefits. The detailed economic analysis is in the Project Files. B. Fiduciary (i) Financial Management 80. A comprehensive assessment of the financial management systems of AMC and its financial management performance, as well as an assessment of the financial management systems followed by GUDM, confirm that both AMC and GUDM have well-functioning and acceptable financial management systems - and provide reasonable assurance that loan proceeds will be used for intended purposes and properly accounted. AMC has developed a road map covering significant actions on planning, budgeting, and budget execution; accounting systems; external audits; and transparency and public disclosure. Some of the critical priority reform activities have been included in Component 1. Based on these factors, the residual FM risk is rated Moderate. See Annex 1 for details of FM and disbursement arrangements. 81. The applicable disbursement methods will be ‘reimbursement of the eligible expenditure’. An amount equivalent to 43 percent of the loan (under Category 4 in the loan agreement disbursement table) will be disbursed based on the achievement of PBCs and the remaining 57 percent (under Category 3 in the Loan Agreement disbursement table) will be disbursed in accordance with regular Investment Project Financing (IPF) procedures based on expenditures reported in the quarterly IUFRs. Disbursement against PBCs will be made based on satisfactory achievement of PBCs, and verified according to the agreed verification protocol, supported by expenditures incurred under the EEP. (ii) Procurement 82. All procurements under the project will be carried out in compliance with the World Bank's procurement regulations and policies for IPF (Procurement Regulations for IPF Borrowers, July 1, 2016, revised November 2017, July 2018, and November 2020). The project will also be subject to World Bank Anticorruption Guidelines, dated October 15, 2006, and revised in January 2011 and as of July 1, 2016. All procurements under the project shall be carried out through e-procurement (under the National Informatics Center [NIC] platform which has been assessed by the World Bank). All works/DBOT contracts above US$10 million and goods/non-consulting contracts above US$10 million will be subject to prior review. The selection of consultant firms above US$1 million will also be prior reviewed by the World Bank, and Bank will review the terms of reference (ToR) for the selection of the consulting firm. The World Bank will carry out post procurement reviews every twelve months during implementation. This operation will be subject to procurement supervision based on independent post-review procedures. 83. Procurement risk assessment. The procurement assessment of AMC and GUDM rated the residual procurement risk of the Project as Substantial, based on the risks identified and the risk mitigation measures to be implemented. The main risks related to the procurement function for project implementation are: (i) lack of familiarity of PIU staff with procurement procedures in accordance with the World Bank's procurement policies; (ii) lack of comprehensive internal 23 In line with the World Bank’s Guidance note on shadow price of carbon in economic analysis 24 The economic analysis is conducted on constant price basis for 2022 and covers a period of 20 years from 2022, with future economic values (costs/benefits) discounted to present value using a 6 percent discount rate (equal to long-term GDP growth rate for the country), as per standard World Bank guidance. 25 Range depends on shadow price of carbon as per the Bank’s Guidance note. Without considering shadow price, the ENPV will accumulate to US$3.82 bn. Page 22 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) procurement manuals and hence, the need to improve the set of procedures to ensure fairness and transparency in the procurement process; (iii) need for improvement in record keeping; (iv) strengthening the procurement review function and the resolution of complaints; and (v) need for building the capacity of the staff in procurement and contract management. Risk mitigation measures identified for the project include: (i) training of procurement staff; (ii) hiring of a consultant (firm) experienced in Bank' financed projects to prepare documents and to strengthen procurement capacity; (iii) streamlining the contract management system to ensure satisfactory contract performance; (iv) adopting a clear and fair complaint mechanism and disseminating it among the bidding community; (v) improved document filing; and (vi) adopting best practices in the advertisement of procurement opportunities and increasing competition. 84. Project Procurement Strategy for Development (PPSD). PPSD has been prepared and the packages of procurement have been determined based on market analysis to ensure the adequate participation of bidders. Based on the PPSD, the Procurement Plan has been prepared for the first 18 months. The Procurement Plan will be updated periodically and will be approved by the World Bank. Annex 1 provides more details on procurement under the project. .C. Legal Operational Policies . Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No . D. Environmental and Social 85. Relevant Environment and Social Standards (ESS’). The relevant ESS’s are: ESS1 - Assessment and Management of Environmental and Social Risks and Impacts; ESS2 - Labor and Working Conditions; ESS3 - Resource Efficiency and Pollution Prevention and Management; ESS4 - Community Health and Safety; ESS5 - Land Acquisition, Restrictions on Land Use and Involuntary Resettlement; ESS6 - Biodiversity Conservation and Sustainable Management of Living Natural Resources; ESS8 - Cultural Heritage; and ESS10 - Stakeholder Engagement and Information Disclosure. 86. Environment and Social Framework (ESF) Documents. As the locations, designs, and capacities of the STPs and the sewerage network improvement investments to be supported under the project are not fully known at this stage, the GoG has prepared and disclosed the required Environmental and Social Management Framework (ESMF) which describes the procedures to be followed during the planning, design, implementation, and O&M of sub-projects. The ESMF has been prepared based on baseline assessment, cumulative risks and impacts, regulatory aspects, institutional capacity assessment, and stakeholder consultations. The ESMF sets out the mechanisms to assess and manage the Environment and Social (E&S) risks and impacts of the Project, including the criteria and procedures to screen, identify, and mitigate the potential E&S risks of the proposed activities and interventions. AMC has also prepared a Stakeholder Engagement Plan (SEP), a Gender Based Violence (GBV) action plan, a Biodiversity Management Framework (BMF), a Cultural Heritage Management Framework (CHMF), Labor Management Procedures (LMP), and a Resettlement Policy Framework (RPF). The project will rely primarily on the use of available public land for civil works; however, a RPF has been prepared in case land acquisition is needed during implementation. 87. Site-specific Environmental and Social Impact Assessment (ESIAs) and Environmental and Social Management Plans (ESMPs) have been prepared for two sub-projects: (i) rehabilitation of the Vasna 240 MLD STP (Moderate Risk) and (ii) construction of a new Vasna 375 MLD STP (Substantial Risk). ESMPs have been included in the procurement documents for the DBOT contract and will be updated based on the final designs prepared by the contractor after the required investigations and suggested technology, and the results of the Flooding and Dam Safety Study for the Vasna Page 23 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) Barrage to be undertaken by AMC. “Associated Facilities” will be known at the detailed design stage and will need to meet the requirements of the ESS’ and adhere to the E&S risk identification and mitigation process spelled out in the Project’s ESMF (to the extent that AMC has control or influence over the associated facilities). Where the requirements of the ESS’ cannot be met in the associated facilities, AMC will provide the Bank details of the relevant legal, regulatory, and institutional factors to demonstrate the extent to which it cannot exercise control or influence over the Associated Facilities. 88. Arrangements for the implementation, monitoring, and supervision of E&S management plans and instruments have been agreed and are described in the disclosed ESMF. The AMC PIU shall have a Sustainable Urban Development Unit (SUDU) with four E&S specialists. The GUDM PIU shall have two E&S specialists to support the management of E&S risks and the implementation of the E&S instruments. The Project Management Consultant (PMC) shall also have E&S experts (including Heritage, Biodiversity, and Hydrology experts) to coordinate and support the ESF specialists of the PIUs during the preparation, implementation, supervision, monitoring, and reporting of E&S aspects. An Environmental and Social Management Information System (ESMIS) is planned to link and monitor project details and schedule with the ESIA / ESMP schedules, integration of E&S aspects in design and ESMP in bid documents, and ESMF implementation to ensure the effective preparation and updating of ESF instruments, as well as their implementation, supervision, and monitoring. Additional E&S institutional arrangements and requirements are reflected in the Environmental and Social Commitment Plan (ESCP). 89. Citizen engagement. Extensive consultations were held with over 500 stakeholders, that included project affected people, interested parties and vulnerable groups (including women and marginalized groups), during the preparation of the environmental and social documents of the project. The SEP describes the strategy and specific methods of engagement that would facilitate effective participation of the different affected and interested groups. The AMC has a functional complaint system that can be accessed using a web portal and a toll-free number and has been recording an average of 40,000-50,000 complaints each month. Each complaint has a unique case number by which it can be traced and escalated or reopened, if one is not satisfied with the action. Under this Project, AMC will implement an accountable and citizen-centric service delivery and grievance redressal system for the Project, including a survivor centric approach to address Sexual Exploitation and Abuse/ Sexual Harassment (SEA/SH) related grievances. AMC will set up systems that would enable systemic shifts in service delivery performance monitoring, feedback, reporting and disclosure mechanisms. These will include: (i) a geo-tagged database of customer/household connections and customer complaints and integrating it with the GIS platform and mechanisms; (ii) consumer feedback surveys; and (iii) public disclosure of annual performance reports covering service performance and consumer feedback. AMC will hire a consultant to design the performance disclosure and citizen feedback systems, and survey agencies to conduct annual citizen satisfaction surveys. 90. Public consultation and disclosure of information. Stakeholder consultations (mostly virtual due to the COVID-19 pandemic) on the ESMF, CHMF, BMF, LMP, RPF, SEP, and ESCP were conducted during June 2021 - January 2022. After the disclosure of the draft ESF documents, consultations were held with the stakeholders in June 2022, and comments/suggestions were incorporated to finalize all documents. Feedback from the consultations has been reflected in the revised E&S documents. To comply with disclosure and access to information requirements, AMC disclosed these instruments, with Gujarati translations of the summary ESMF and ESIA, on its official website on June 24, 2022. These are available at the following link: https://ahmedabadcity.gov.in/portal/index.jsp. These documents have also been disclosed on the external website of the WB as follows: ESIA: http://documents.worldbank.org/curated/en/099400102102233784/ESIA01260MLD0STP0withSumm 0in0Eng0Guj; and ESMF: http://documents.worldbank.org/curated/en/099400002102232171/ESMFwithSumm 0in0Eng0Guj. Page 24 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) V. GRIEVANCE REDRESS SERVICES 91. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate GRS, please visit http://www.worldbank.org/en/projects- operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. VI. KEY RISKS 92. The overall residual risks to development outcomes are assessed as Substantial. The residual risks associated with institutional capacity for implementation and sustainability, environmental and social management systems, and fiduciary systems are rated Substantial, while all other risks are rated as either Moderate or Low. As discussed earlier, the project faces moderate fiscal risks for AMC deriving from its debt service obligations and increased O&M expenditures. 93. Institutional capacity related risks are substantial for implementation and sustainability. AMC has traditionally followed an input-based budget allocation approach for building infrastructure in a fragmented manner without measuring the improvements in service outcomes for citizens. Therefore, the envisaged transition towards close monitoring of overall service performance, an emphasis on improved financial performance, and the use of results-based financing will require significant effort and time. Shift from an infrastructure focused approach to a service delivery focused approach will require fundamental changes in the institutional systems and processes adopted by AMC to plan, deliver and manage infrastructure assets and services, that will be gradual and incremental in nature. The Project design has identified a combination of PBCs and EEPs that will together serve as a strong incentive to enable this shift. Adequate capacity building/handholding support will also be provided for the implementation of the new approaches and instruments. The process will nevertheless be difficult, and the risks will remain substantial. In addition, the wastewater management sector has been facing significant challenges posed by the illegal discharge of untreated industrial wastewater in AMC’s urban wastewater system, which have been escalated at the judicial level and strict orders have been issued for AMC to take urgent actions. While the project includes dedicated interventions (such as establishing a citywide pollution monitoring system and including performance indicators in DBOT contracts for STPs), implementation of these systems will require a step-change effort from AMC. 94. Fiduciary risks related to procurement and contract management are rated Substantial. While AMC has been implementing contracts for infrastructure development for a long time, the envisaged shift towards performance-based DBOT contracts requires a step-change in AMC’s institutional capacity and systems for developing sound contract structures with well-defined performance indicators, contract management and performance monitoring. In addition, the scale of the investments and the complexity of procurement issues is high, as AMC is working with the World Bank for the first time and there is a steep learning curve to ensure full compliance with Bank procurement regulations. The fiduciary risks will be mitigated by TA under Component 1 to develop institutional systems and capacities for designing, implementing, and managing these complex, large contracts effectively. In addition, the Bank team will provide close support and will supervise project implementation in line with Bank fiduciary requirements. . Page 25 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) 95. Environmental and social risks are rated Substantial. Overall, the project activities will be beneficial to the environment as it is aimed at ensuring better coverage of wastewater services and minimizing pollution. Based on the assessment of the potential risks and impacts of the project components, including the rehabilitation of existing STPs, construction of new STPs, laying of sewer networks, the Environmental and Social risks are rated substantial. Risk management and mitigation mechanisms have been appropriately included in the ESMF in line with Bank ESF requirements. All investments, technical assistance, and capacity-building activities to be implemented by AMC and GUDM will follow ESMF procedures to identify, assess, and mitigate risks. Page 26 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) VII. RESULTS FRAMEWORK AND MONITORING Results Framework COUNTRY: India Gujarat Resilient Cities Partnership: Ahmedabad City Resilience Project Project Development Objectives(s) To strengthen institutional, financial and service delivery performance in Ahmedabad Project Development Objective Indicators RESULT_FRAME_TBL_ PD O Indicator Name PBC Baseline End Target Enhance resilient and sustainable service delivery, institutional and financial systems in Ahmedabad properties are not geo-tagged in GIS for tax administration At least 900,000 active properties have been geo-coded Improved performance of AMC's property tax systems (Text) PBC 4 purposes in the database by AMC. People with access to improved, climate-resilient wastewater services (Corporate Results Indicator [CRI], Climate indicator) 0.00 1,500,000.00 (Number) Certified accounts of wastewater operations of the previous year published with consolidated actual capital Improved performance of AMC's wastewater management Fragmented capital planning, O&M planning and revenue and O&M expenditure and revenue including tax, user systems (Text) management system charges; and subsidy. PDO Table SPACE Page 27 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) Intermediate Results Indicators by Components RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline End Target Component 1: Strengthening AMC’s institutional and financial systems AMC has completed at least two billing cycles of User Charges for wastewater introduced (Text) PBC 6 0.00 wastewater user charges for commercial customers. IFMS system generates complete Balance Sheet / Annual IFMS system upgraded for better budgeting and accounting systems (Text) 0.00 Accounts for timely finalization of municipal accounts (within three months of FY closure) Disclosure of financial performance of AMC improved (Text) External audits are not done annually and reports are not AMC has disclosed in its website audited annual accounts PBC 7 disclosed publicly for 2021-22 and unaudited annual accounts for 2022-23 At least [1700] of wastewater pipelines, [6000] manholes, Wastewater assets are not available in digital form for AMC's wastewater assets digitized in GIS (Text) PBC 5 [20] pumping stations, [6] STPs and [750000] wastewater O&M planning connections digitized in GIS and ground truthing completed Percentage of consumers satisfied with waste water and storm 0.00 75.00 water management services (Percentage) Component 2: Improving wastewater management services Wastewater discharge from AMC's treatment facilities is At least 90 percent of wastewater effluent samples in Environmental compliance for wastewater treatment systems achieved (Text) PBC 1 not compliant with regulatory standards for treated previous quarter comply with disposal standards in wastewater discharge identified STPs. Wastewater pollution and quality monitoring system AMC has disclosed at least two consecutive quarterly There is no wastewater quality and pollution monitoring PBC 2 effluent monitoring reports on wastewater network in a strengthened (Text) system financial year. At least 4 consecutive quarterly performance reviews of Performance orientation introduced in wastewater services AMC's wastewater management contracts do not include contractors carried out for [list of contracts] and payments PBC 3 (Text) performance indicators and monitoring mechanisms to respective contractors are determined based on the findings of performance review reports Additional quantity (MLD) of wastewater treated as per National Green Tribunal (NGT) norms (Number) 0.00 650.00 Page 28 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) RESULT_FRAME_TBL_ IO Indicator Name PBC Baseline End Target Percentage of informal women workers skilled and provided access to technical job roles in AMC's wastewater services 0.00 15.00 (Percentage) Component 3: Developing state level institutional systems and capacities IT based project lifecycle management system GUDM’s project and fiduciary management system operationalized (Text) 0.00 operationalized in GUDM and in at least 50 percent of municipalities Project implementation arrangement fully operationalized and Project implementation arrangement has been fully Project implementation arrangement to be operationalized staffed at AMC and GUDM (Text) operationalized and staffed IO Table SPACE UL Table SPACE Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection This indicator measures the AMC will provide the AMC with the AMC's MIS number of active properties PMC with access to the assistance of Project Improved performance of AMC's property Year 5 and GIS in the existing property tax GIS and MIS database Management tax systems database. database geo-referenced in of AMC. Consultants the GIS by AMC. Climate indicator: Measures AMC's AMC will consolidate the number of people customer and provide the GIS AMC (WRM People with access to improved, climate- accessing sustainable and Annual database for enabled customer department) with resilient wastewater services (Corporate climate-resilient wastewater priority database to PMC. The assistance of PMC Results Indicator [CRI], Climate indicator) services that will contribute service connection database to reduction of GHG catchment shall be converted at Page 29 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) emissions. areas 4.5 people per connection for assessing the performance. AMC's This indicator aims at accounts AMC will prepare and measuring AMC's department make available to the performance in improving AMC (WRM and WRM PMC the consolidated Improved performance of AMC's its wastewater management Annual department) with department's and certified capital wastewater management systems systems including assistance of PMC expenditure and O&M budgets for preparation and publishing and revenue wastewater services. of certified accounts of records wastewater operations. ME PDO Table SPACE Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Customer AMC will make database, bill available to the PMC ing and the customer database, This indicator will check if collection the billing and AMC has introduced system and collection system and AMC (WRM Department) wastewater user charges Year 4 User Charges for wastewater introduced documentati documentation of with assistance of PMC and measure if at least two on of municipal council/ GoG billing cycles for commercial municipal approval, customers are completed council/ GoG rules/amendments for approval, user charges. rules/amend Page 30 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) ments for user charges. IFMS AMC will provide PMC generated co with access to the IFMS mplete system. PMC will assess This indicator measures AMC Balance the process of IFMS system upgraded for better overall financial Annual (Finance Department) Sheet / recording expenditure budgeting and accounting systems management performance with assistance of PMC Annual and revenue in IFMS, of AMC Accounts of and generating Annual AMC Accounts . PMC will access the unaudited and audited Disclosure of AMC's audited financial statements AMC with the assistance Disclosure of financial performance of Year 3 AMC website annual accounts in public through websites and of PMC AMC improved domain. through AMC's back end systems. AMC has digitized in GIS and completed ground truthing Digitized of at least [1700] kms of AMC will provide PMC AMC (WRM department) asset wastewater pipelines, Year 6 with access to the with the assistance of AMC's wastewater assets digitized in GIS database of [6000] manholes, [20] digitized asset database PMC AMC pumping stations, [6] STPs and [750000] wastewater connections. This indicator will measure AMC will make Percentage of consumers satisfied with Annual AMC (WRM department) the level of consumer Year 4 available the results of waste water and storm water Surveys with assistance of PMC satisfaction with regard to the annual survey to management services the waste water and storm PMC Page 31 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) water management services provided by AMC Technical investigation reports of AMC will provide PMC the treated AMC (WRM department) Compliance of wastewater access to the statutory Environmental compliance for Year 5 wastewater with the assistance of effluent samples with reports submitted to wastewater treatment systems achieved samples as PMC disposal standards. the GPCB. per regulatory requirement Reports from AMC will provide PMC the access to quarterly Disclosure of reports from wastewater AMC (WRM department) Year 5 and wastewater quality Wastewater pollution and quality the wastewater quality and quality and with the assistance of 6 reports. monitoring system strengthened pollution pollution PMC control/monitoring system control/moni toring system AMC's AMC will Performance reviews of wastewater share operator AMC (WRM department) wastewater service contracts and Performance orientation introduced in Year 6 performance review with the assistance of operators performance wastewater services and operator payment PMC review records with PMC. reports AMC's AMC will share the AMC (WRM department) Additional quantity (MLD) of wastewater Additional MLD of Annual wastewater monitoring reports with with the assistance of treated as per National Green Tribunal wastewater treated (as per monitoring PMC PMC (NGT) norms NGT norms) reports for Page 32 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) new STPs This indicator measures Rapid Gender informal women informal Assessment who received on-the-job Primary data collection AMC (WRM department) Percentage of informal women workers undertaken training, technical Year 5 using stratified with the assistance of skilled and provided access to technical during certification and are sampling PMC job roles in AMC's wastewater services project performing a technical job preparation role. (examples of job roles: masons, pump operators Project Operationalizing project lifecycle Periodic Progress GUDM’s project and fiduciary lifecycle management Year 2 management Reports submitted by GUDM management system operationalized system in GUDM and system in GUDM municipalities GUDM Government order passed by relevant authorities (e.g., AMC) This indicator will measure if establishing AMC and GUDM will the project implementation Project implementation arrangement fully the make available GOs and staff and arrangements have Year 1 AMC and GUDM operationalized and staffed at AMC and implementati details of staff been fully operationalized in GUDM on deployed to PMC AMC and GUDM for arrangement implementing the project (PIU, name of officers, positions, etc.) Page 33 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) ME IO Table SPACE Performance-Based Conditions Matrix DLI_TBL_MATRI X At least 90 percent of wastewater effluent samples in previous quarter comply with disposal standards in at least two (2) PBC 1 STPs. Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome Yes Percentage 20,000,000.00 7.10 Period Value Allocated Amount (USD) Formula Baseline 0.00 Year 1 0.00 0.00 0.00 Year 2 0.00 0.00 0.00 Year 3 0.00 0.00 0.00 Year 4 0.00 0.00 0.00 Year 5 90.00 20,000,000.00 The disbursement amount will be divided equally amongst the STPs targeted and disbursement will be for each STP. Year 6 0.00 0.00 0.00 Page 34 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) DLI_TBL_MATRI X PBC 2 AMC has disclosed at least two (2) consecutive quarterly effluent monitoring reports in wastewater network. Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Number 20,000,000.00 7.10 Period Value Allocated Amount (USD) Formula Baseline 0.00 Year 1 0.00 0.00 0.00 Year 2 0.00 0.00 0.00 Year 3 0.00 0.00 0.00 Year 4 0.00 0.00 0.00 Year 5 2.00 10,000,000.00 100 percent disbursement when two consecutive quarterly effluent monitoring reports in wastewater network are disclosed in a FY. Year 6 2.00 10,000,000.00 100 percent disbursement when two consecutive quarterly effluent monitoring reports in wastewater network are disclosed in a FY Page 35 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) DLI_TBL_MATRI X AMC has carried out atleast four consecutive quarterly performance reviews of contractors for at least two STPs and made PBC 3 payments to respective contractors as per finding of performance review report Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Number 20,000,000.00 7.10 Period Value Allocated Amount (USD) Formula Baseline 0.00 Year 1 0.00 0.00 0.00 Year 2 0.00 0.00 0.00 Year 3 0.00 0.00 0.00 Year 4 0.00 0.00 0.00 Year 5 0.00 0.00 0.00 Year 6 4.00 20,000,000.00 100percent disbursement on submission of performance review & payment reports of STP contractors DLI_TBL_MATRI X PBC 4 AMC has geo-coded in the GIS database 900,000 active properties in the property tax database of AMC. Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Outcome Yes Number 10,000,000.00 3.60 Period Value Allocated Amount (USD) Formula Page 36 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) Baseline 0.00 Year 1 0.00 0.00 0.00 Year 2 0.00 0.00 0.00 Year 3 0.00 0.00 0.00 Year 4 0.00 0.00 0.00 Year 5 900,000.00 10,000,000.00 Disbursement will be proportionate to number of active properties geo- coded in GIS. US$11.11 for each property geocoded upto US$10mn Year 6 0.00 0.00 0.00 DLI_TBL_MATRI X AMC has digitized in GIS and completed ground truthing of at least 1700 kms of wastewater pipelines, 6000 manholes, PBC 5 twenty (20) pumping stations, six (6) STPs and 750,000 wastewater connections. Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Text 20,000,000.00 7.10 Period Value Allocated Amount (USD) Formula Baseline Wastewater assets of AMC not digitized in GIS Year 1 0.00 0.00 0.00 Year 2 0.00 0.00 0.00 Year 3 0.00 0.00 0.00 Page 37 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) Year 4 0.00 0.00 0.00 Year 5 0.00 0.00 0.00 Year 6 [1700 kms] of wastewater pipelines, [6000] 20,000,000.00 100 percent disbursement when all manholes, [20] pumping stations, [6] STPs and identified assets are digitized. [750000] wastewater connections DLI_TBL_MATRI X PBC 6 AMC has completed at least two (2) billing cycles of wastewater user charges for commercial customers. Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Number 15,000,000.00 5.40 Period Value Allocated Amount (USD) Formula Baseline 0.00 Year 1 0.00 0.00 0.00 Year 2 0.00 0.00 0.00 Year 3 0.00 0.00 0.00 Year 4 2.00 15,000,000.00 100 percent disbursement upon completion Year 5 0.00 0.00 0.00 Year 6 0.00 0.00 0.00 Page 38 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) DLI_TBL_MATRI X PBC 7 AMC has disclosed in its website audited annual accounts for FY21-22 and unaudited annual accounts for FY22-23. Type of PBC Scalability Unit of Measure Total Allocated Amount (USD) As % of Total Financing Amount Intermediate Outcome No Text 15,000,000.00 5.40 Period Value Allocated Amount (USD) Formula Baseline Audited annual accounts not available in AMC website Year 1 0.00 0.00 0.00 Year 2 0.00 0.00 0.00 Year 3 AMC has disclosed in its website audited annual 15,000,000.00 100 percent disbursement upon accounts for 2021-22 and unaudited annual achievement of PBC accounts for 2022-23 Year 4 0.00 0.00 0.00 Year 5 0.00 0.00 0.00 Year 6 0.00 0.00 0.00 Verification Protocol Table: Performance-Based Conditions At least 90 percent of wastewater effluent samples in previous quarter comply with disposal standards in at least two (2) PBC 1 STPs. Description At least 90 percent of wastewater effluent samples in previous quarter comply with disposal standards in identified STPs. Page 39 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) Fund allocation expires at end of FY5 if PBC is not achieved. Data source/ Agency AMC Verification Entity PMC AMC will carry out wastewater effluent testing as per the effluent quality monitoring protocol (refer PIM). AMC will publish the statutory reports submitted to the Gujarat Pollution Control Board in its website. The PMC will verify that AMC is in conformance with the indicator based on these statutory reports. In its report, PMC will provide a comparison of the Procedure effluent quality requirements as per the standards and the achievement in each of the STPs in the previous quarter. The disbursement amount will be divided amongst the identified STPs equally. Achievement will be calculated for each STP separately and accordingly disbursements will also be made for each STP. PBC 2 AMC has disclosed at least two (2) consecutive quarterly effluent monitoring reports in wastewater network. At least two consecutive quarterly effluent monitoring reports in wastewater network disclosed in a financial year. Description Disbursements will be made for a maximum of two financial years. Fund allocation expires at end of FY6 if PBC is not achieved. Data source/ Agency AMC Verification Entity PMC AMC will carry out wastewater quality monitoring as per the protocol provided (refer PIM) and publish quarterly wastewater quality reports in its website. The PMC will verify the reports published on the website and confirm that the scope of monitoring adheres to the protocol (locations of monitoring, sampling frequency, parameters to be tested, testing method to be followed, reporting requirements, analysis and follow-up actions taken). In its report, PMC will provide a comparison of the monitoring requirements and the actual practice, whether AMC is in Procedure compliance with the monitoring requirements for the quarter and for two successive quarters including the current reporting quarter. In case of lapses, that in PMC’s opinion are minor and do not negate the overall conformance with the monitoring requirement, the PMC will list such lapses and provide its justification of why it considers these as minor lapses. PMC will also confirm that AMC has carried out a baseline testing as per the same protocol prior to 31st March 2023 and the baseline report is disclosed in the website of AMC. Page 40 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) AMC has carried out atleast four consecutive quarterly performance reviews of contractors for at least two STPs and PBC 3 made payments to respective contractors as per finding of performance review report At least 4 consecutive quarterly performance reviews of contractors carried out for 2 STPs. Payments to respective Description contractors are determined based on the findings of performance review reports. Fund allocation expires at end of FY6 if PBC is not achieved. Data source/ Agency AMC Verification Entity PMC AMC will enter into performance-based contracts for identified STPs. The contracts will link operator revenue/fee/payments to performance. The performance will measure output/outcomes during construction stage as well as O&M. AMC will carry out performance evaluation of the operator during O&M stage. AMC will prepare and submit a) operator performance review and b) operator payment based on performance which may Procedure include deductions/ incentives. The PMC will verify that a) performance review is conducted as per the schedule for review provided in the contracts, b) the scope of the review covers all performance evaluations as included in the contract and c) the payments to the operator reflect all the provisions in the contract that link payments to performance and the results of the performance evaluation. PBC 4 AMC has geo-coded in the GIS database 900,000 active properties in the property tax database of AMC. At least 900,000 active properties have been geo-coded in the database by AMC. Disbursement will be proportionate to Description number of active properties geo-coded in GIS, subject to minimum achievement of [40 percent] of target. US$11.11 for each property geocoded subject to a maximum of US$10 Mn. Fund allocation expires at end of FY5 if PBC is not achieved. Data source/ Agency AMC Verification Entity PMC AMC will be responsible for updating the property tax layer of the GIS database. It will geo-code the properties in the Procedure existing MIS database on the GIS platform. AMC will provide the PMC with access to the GIS and MIS database of AMC. The Page 41 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) PMC will verify that a) the number of active properties that have been geo coded as on the verification date, b) it is possible to retrieve property information as maintained in the MIS database from the GIS database and c) the disbursement that is due to AMC based on the actual number of properties geo coded. Geo coding means selecting a property polygon (marking location) on Map from address of Property available in Database. Active properties refer to properties that have made at least one property tax payment in the three years ending 31st March 2022. A minimum of 40 percent of target needs to be geo-coded to trigger any disbursement under this PBC. AMC has digitized in GIS and completed ground truthing of at least 1700 kms of wastewater pipelines, 6000 manholes, PBC 5 twenty (20) pumping stations, six (6) STPs and 750,000 wastewater connections. AMC has digitized in GIS (from available maps or Ground Survey of assets for which maps/information are not available) and Description completed ground truthing of at least [1700 kms] of wastewater pipelines, [6000] manholes, [20] pumping stations, [6] STPs and [750000] wastewater connections. Fund allocation expires at end of FY6 if PBC is not achieved. Data source/ Agency AMC Verification Entity PMC The quantities correspond to approximately [75 percent] of the pipeline length, manholes and connections estimated and will be updated after baseline survey is completed by 31st March 2023; and number of major pumping stations and STPs. Digitization implies recording of the following information for each category of assets to be digitized. 1. Sewage major assets (STP/Pumping Station Name & ID, Capacity.) 2. Network (Pipe ID, Pipe Diameter, Pipe Section Length, Pipe Material, Year of Installation, Start & End Node/Point as Manhole ID/Pumping Station ID, Joint Node ID) Procedure 3. Manholes (Manhole ID) 4. Sewage connections (Connection ID, Start Point as Property Code/no. from Property Tax Database, End Point as Joint Node ID) Ground truthing means verifying mapped information on ground to verify/ confirm accuracy of mapping and attribute information. Page 42 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) PBC 6 AMC has completed at least two (2) billing cycles of wastewater user charges for commercial customers. AMC has completed at least two billing cycles of wastewater user charges for commercial customers (including industrial Description customers if applicable). Fund allocation expires at end of FY4 if PBC is not achieved. Data source/ Agency AMC Verification Entity PMC AMC will introduce user charges for wastewater for commercial properties after obtaining the required approvals from the municipal council/ State Government or amendments in the municipal act/ rules as may be necessary. User charges for wastewater will mean a method of levying wastewater charges other than the current method which is calculated as a percentage of property tax. The user charges may be levied based on water consumption, estimated wastewater discharge, or any other method and may be differentiated based on the size of the customer, type of commercial activity etc. Billing cycle of user charge would imply one cycle of issue and collection of bills to commercial customers for wastewater. The frequency of charging could be monthly or quarterly or any other frequency. If the billing cycle is annual, then the Procedure requirement under this PBC would be one billing cycle. In other cases the requirement would be two billing cycles. AMC would have met all the legal requirements to levy user charges for wastewater, including, if required, GoG approval and/or Municipal Act amendment. AMC will also have a customer database and an IT application for billing and collection. AMC will make available to the PMC the customer database, the billing and collection system and documentation of municipal council/ GoG approval, rules/amendments for user charges. The PMC will verify that a) the legal basis for user charges for wastewater for commercial properties has been created, b) customer database exists to cover the targeted properties/users within AMC and c) that the required number of cycles of billing and collection have been completed. No quantitative targets are specified for billing or collection. PBC 7 AMC has disclosed in its website audited annual accounts for FY21-22 and unaudited annual accounts for FY22-23. AMC has disclosed in its website audited annual accounts for FY21-22 and unaudited annual accounts for FY22-23. Fund Description allocation expires on 30th June 2024 if PBC is unachieved. Data source/ Agency AMC Page 43 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) Verification Entity PMC AMC will appoint consultants to prepare the financial statements of AMC. In addition, AMC will appoint independent auditors for audit of the financial statements. AMC will make the financial statements available in public domain (both unaudited and audited including comments of the auditor/ notes to the audit). Public domain means unrestricted access in the AMC website and any other means. Prior to Procedure disclosure, AMC will also obtain Standing Committee’s approval of the audited financial statements. The PMC will verify that a) the unaudited and audited financial statements were made available in public domain by the required date, b) they continue to remain available in public domain as on date of verification and c) the audited financial statements have been approved by the Standing Committee. Page 44 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) ANNEX 1: Implementation Arrangements and Support Plan Component 1: Strengthening AMC’s Institutional and Financial Systems 1. Each of the six activities will be undertaken by a designated Technical Coordinator who will be a part of the PIU and will report to the PD. The key coordinating departments within AMC that will be responsible for implementing the respective subcomponents are listed below; detailed implementation arrangements are included in the PIM. 2. Subcomponent 1.1: Improving municipal revenue performance. The Property Tax Assessor and Tax collector will be responsible for implementing this subcomponent, which involves hiring specialized consultants, building the property database for the GIS platform, and coordinating with the e-Governance department. 3. Subcomponent 1.2: Land-based financing. The Chief Town Planner (CTP) and the Chief Estate Officer (CEO), Town Planning Department will be responsible for implementing this subcomponent. 4. Subcomponent 1.3: Strengthening AMC’s institutional systems for service delivery. The WRM Department will be responsible for developing the asset management and O&M systems as well as the sector-level utility planning, budgeting, and cost recovery systems. 5. Subcomponent 1.4: Integrated GIS-based system for urban management, financing, and service delivery. The e- Governance department will be responsible for developing the overall framework for establishing a city-wide integrated GIS system for use across several departments in AMC. The respective line departments (Property Tax, Revenue, WRM, Town Planning Department (TPD), and Estate) will be responsible for building the database and using the GIS system. 6. Subcomponent 1.5: Strengthening the municipal financial management system. The Chief Accounts Officer (CAO) will be responsible for the implementation of this subcomponent which involves coordinating with the technical departments and the revenue department to identify the expenditure classifications and to integrate the AMC revenue module in the IFMS. 7. Subcomponent 1.6: Climate-smart CIP system. The Deputy Municipal Commissioner (Projects) will lead the strategic planning unit under the Municipal Commissioner’s office and will be responsible for establishing a city-wide multi-year CIP system. Component 2: Improving Wastewater Management Services 8. The PIU in AMC will be responsible for implementing the activities of this component. The activities will be led by the City Engineer (CE-WRM), supported by the engineers from the Drainage Project and the STP department. The PIU will identify sub-projects that confirm with the Master Plan and will be supported by design consultants for conducting sub- project feasibility studies, developing Detailed Project Reports (DPRs, wherever applicable), preparing bid documents, developing KPIs for performance-based contracts, and bid process management. Separate consultants will be hired by the project to support the PIU in preparing sub-project specific E&S instruments (e.g., ESIAs, ESMPs) based on the ESCP and the ESMF of G-ACRP. The PIU will ensure coordination between the design and E&S consultants and will undertake day to day monitoring, implementation coordination, and management of field level activities. The following table illustrates the various stages of sub-project life cycle and the key responsibilities of the PIU in AMC. Table 2: Key Responsibilities of the PIU in AMC in Sub-project Implementation Stages Activities Identification  Identification of sub-projects based on technical justification in conformity with the prepared master plan. Page 45 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) Stages Activities Preparation  Supervise FR preparation with support from the PMC, including the preparation of the E&S and technical screening checklists.  Supervise the preparation of E&S documents and studies as in the ESCP. Review, clearance, consultation and disclosure responsibilities, as outlined in the ESMF.  Supervise the preparation of DPRs/specifications for bid documents with support from the PMC.  Obtain requisite administrative and/or technical sanctions (if any). Procurement  Publish the NIT/RFP/RFB.  Bid process management with support from the design consultants/PMC  Ensure availability of land and initiate the transfer process.  Contract awards. Implementation  Ensure land hand over to the contractor at the mobilization stage.  Provide support for the handover of existing assets and their operation to the contractors.  Review of contractor’s design with support from the PMC.  Review, clearance and disclosure of contractor’s E&S documents, with the PMC’s help.  Ensure regulatory and other permissions are in place.  Coordinate with other line departments/agencies.  Contract management and supervision, and performance reporting.  Review and approve contractors’ claim with support from the PMC.  Quality assurance and periodic supervision through the PMC, including occupational Health and Safety and E&S monitoring, and third-party audit. Commissioning  Supervise commissioning.  Review as-built drawings from the contractor, with support from the PMC. O&M  Management of O&M contract.  Review and approve contractors’ claim with support from the PMC.  Supervise operators’ performance in line with contract conditions/KPIs.  Supervise Occupational, Health & Safety (OHS) & E&S aspects and audit. 9. The PIU will also implement and oversee the sector focused GIS and IT systems (e.g., Supervisory control and data acquisition [SCADA], GIS) planned under the project. The technical engineers in the PIU will be responsible for overall implementation of SCADA, including the review of technical designs and reports, overseeing the testing process, and facilitating training and handholding for technical staff. The PMC will assist the AMC PIU to: (i) identify sectoral needs and prioritize sub-projects in line with the Master Plan; (ii) review all the sub-project specific technical and design documents (FRs, DPRs, bid documents); (iii) hire E&S consultants, review all sub-project specific E&S instruments, ensure E&S monitoring and implementation, compliances, and monitor the timely submission, consultations and disclosure of E&S reports; (iv) undertake implementation supervision and quality assurance of the infrastructure investments and service delivery systems; (v) provide contract management support for all DBOT/ Engineering, Procurement and Construction (EPC)/service contracts; (vi) review designs and documents related to GIS/SCADA systems; and (vii) review performance- based contracts under the project. Component 3: Developing State Level Institutional Systems and Capacities 10. Subcomponent 3.1: Developing state-level systems and urban knowledge ecosystem for emerging cities. GUDM will be responsible for implementing this subcomponent, which involves collaborating with institutional partners to set up the GUDI in Gujarat and developing a state-level integrated project and fiduciary management system. 11. Subcomponent 3.2: Technical support for project implementation and management. The PIUs under AMC and GUDM will be responsible for this subcomponent. Page 46 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) 12. Gender interventions. AMC will establish a technical working group (led by the WRM Department) on women’s employment and safety in Ahmedabad. The project will hire a technical support agency to support PIU in overseeing the skilling of informal women workers and childcare pilots in select zones. AMC will also appoint a focal point from the Urban Community Development Department and the Housing and Slums Networking Department to supervise the roll-out of the technical skills training. Financial Management 13. Budgeting and Flow of Funds. AMC and GUDM will prepare their Annual Action Plan/s for each FY. Based on the agreed Annual Action Plans, GUDM will seek appropriate annual budget allocations. The project will be budgeted as a separate line item under UD&UHD and drawn on a periodic basis by the authorized Drawing and Disbursing Officer, GUDM and deposited in the separate project bank account of GUDM. GUDM will retain the funds for its own expenditures and arrange to transfer the funds that relate to AMC within 15 days of the fund releases from the State Treasury. For FY22-23, a budget provision of INR 1 crore has been made for G-ACRP. 14. Accounting and maintenance of accounting records. For all project funds drawn from the State budget and deposited in the AMC and GUDM bank accounts, all accounting records (cash books, vouchers with supporting documents, and reconciled bank statements) will be maintained by the respective implementing agencies using their existing computerized accounting systems, which have been assessed as acceptable. Separate heads of accounts aligned to the project cost tables will be created and will facilitate the tracking of project expenditures. 15. Internal Controls, including internal audit. The extant internal control systems, including internal audit at AMC and GUDM, will apply for all project expenditures. These systems are acceptable to the Bank. 16. Financial Reporting. AMC and GUDM will be responsible for preparing quarterly financial reports, using agreed reporting templates. AMC and GUDM will submit the quarterly IUFRs separately and individually to the Bank within 45 days of the close of each quarter. These will form the basis for IBRD loan disbursements. 17. Staffing and capacity building. AMC and GUDM finance staff will be responsible for managing project funds. To cope with the additional workload, additional accounting staff, will be engaged on a contract basis to support existing departmental staff to ensure adequate oversight of project FM performance. 18. External audit. GUDM and AMC will separately and individually engage a firm of chartered accountants to undertake the annual external audit as per the agreed terms of reference. The auditors will certify the annual project financial statements in the form of IUFRs covering all receipts and payments for AMC and GUDM. Each of the audit reports will be submitted to the Bank within nine months of the end of each financial year. 19. Disbursement arrangements. The Bank will finance 70 percent of project expenditures up to US$400 million. Disbursement will be based on quarterly IUFRs submitted to the office of Controller of Aid Accounts and Audit and the Bank. GoG will pre-finance all project expenditures using the state budget. On a quarterly basis, GUDM and AMC will prepare separate IUFRs (in INR) and electronically upload them to the Office of Controller General of Aid, Accounts and Audit portal. The Office of Controller General will process and electronically submit IUFRs to the Loan Office, World Bank, Chennai for disbursement in US$. The World Bank Chennai will trigger the payment in US$ to the GoI Consolidated Fund maintained at the Reserve Bank of India New York, and on a back-to-back basis, GoI will transfer funds (in INR equivalent) to the Consolidated Fund of Gujarat maintained in the Reserve Bank of India, Nagpur. Table 3: Eligible Expenditures Page 47 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) Loan amount Percent Expenditures to be Category allocated financed (inclusive of (US$) taxes) Category 1: Goods, non-consulting services, consulting services, 23,500,000 100 percent Incremental Operating Costs, and Training, for Parts A and C.2 Category 2: Goods, non-consulting services, consulting services, Training, 9,500,000 100 percent and Incremental Operating Costs under Parts C.1 Category 3: Goods, Works, non-consulting services, consulting services, 126,300,000 67 percent Training, and Incremental Operating Costs under Parts B 67 percent Category 4: Goods, Works, non-consulting services, consulting services, in accordance with Training, and Incremental Operating Costs for Eligible Expenditures for 120,000,000 Schedule 3 to the Loan PBCs for Part B Agreement Amount payable pursuant to Section 2.03 of this Front end fee 700,000 Agreement in accordance with Section 2.07 (b) of the General Conditions Interest Rate Cap or Interest Rate Collar premium] 0 Amount due pursuant to Section 4.05 (c) of the General Conditions TOTAL AMOUNT 280,000,000 Procurement 20. Procurement for the proposed project will be carried out in accordance with the World Bank’s Procurement Regulations for IPF Borrowers (Regulations) for Goods, Works, Non-Consulting and Consulting Services, dated July 1, 2016, revised November 2017, July 2018, and November 2020. The project will also be subject to the World Bank’s Anticorruption Guidelines, dated October 15, 2006, and revised in January 2011 and July 2016. 21. Project Procurement Strategy for Development. Extensive market analysis has been carried out for the different procurement packages and based on the findings of the analysis, packages and lots have been finalized for civil works to ensure adequate participation of bidders. Consultancy contracts have also been framed based on market research and packaging in terms of the scope of services and the duration of work. The Project has decided to adopt the Government e Marketplace [GeM] for the procurement of Goods and Works. Based on risk and market analysis, the procurement plan has been prepared to set out the contract approaches to be adopted, including the selection methods to be followed in the procurement of goods, works, non-consulting and consulting services financed by the World Bank. 22. Systematic Tracking of Exchanges in Procurement (STEP). The details of the procurement activities, presently prepared in the Procurement Plan, will be transferred to the STEP system. Initial training has been provided to the procurement staffs of the IAs on the operation of the STEP system. 23. e-procurement system. AMC and GUDM will be using the NIC e-procurement system – which has been accepted for use for procurements under World Bank funded projects - for all ICB/NCB procurements. 24. Procurement planning. For each contract to be financed by the loan, the different procurement methods, or consultant selection methods to be used, the need for pre-qualification, estimated costs, prior review requirements, and timeframe will be reflected in the Procurement Plan. The Procurement Plan will be uploaded in STEP. Page 48 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) 25. Procurement training. Key staff may be sent for trainings at various institutes in India that offer courses on World Bank procurement methods. The PIU staff may also avail the free Massive Open Online Course on public procurement (www.procurementlearning.org) offered by the World Bank, as well as the paid Professional Diploma in Public Procurement course delivered through the Charter of Public Procurement Studies. 26. Procurement risk assessment. Table 4 describes the major procurement-related risks and the mitigation plan. Table 4: Procurement Risks and Mitigation Measures Completion Residual Risk Factor Initial Risk Mitigation Measure Date Risk Limited capacity and Substantial • Use of skilled procurement staffs for handling Continuous Substantial inefficiencies resulting in procurement activities from Year 1 delays in procurement and • Monitoring through the Procurement Plan and contract management quarterly reports processes • Use of e-Procurement and contract management tools • Participation in trainings and workshops Noncompliance with agreed Substantial • Training and handholding provided by the World Continuous Substantial procurement arrangements Bank from Year 1 • Prior and post reviews by the World Bank • Internal and external audits External interference in the Substantial • Disclosure of procurement-related information Continuous Substantial procurement process • Appropriate handling of complaints from Year 1 Overall Risk Substantial Substantial 27. Prior review by World Bank. In the case of contracts subject to prior review, the PIU shall seek the World Bank’s no objection before agreeing to (i) an extension of the stipulated time for the performance of a contract that either increases the contract price or has an impact on the planned completion of the project; (ii) any substantial modification to the scope of works, goods, non-consulting services, or consulting services and other significant changes to the terms and conditions of the contract; (iii) any variation order or amendment (except in cases of extreme urgency) that, singly or combined with all variation orders or amendments previously issued, increases the original contract amount by more than 15 percent; and (iv) the proposed termination of the contract. Complaints received in all prior review cases shall be sent to the Bank for review and the response to the complaint in such cases shall be cleared with the Bank. Complaints with allegations of fraud and corruption shall be shared with the Bank, irrespective of the thresholds. 28. All contracts not covered under prior review by the Bank will be subject to post review. Post procurement review may be conducted either by a consultant hired by the Bank or by Bank staff during implementation support missions. The Bank may conduct, at any time, Independent Procurement Reviews of all the contracts financed under the loan. For Post Review cases, the inputs of the Bank on Technical Specifications/TORs will be obtained by project. 29. Disclosure of procurement information. The following documents shall be disclosed on the project/state websites: (i) the Procurement Plan and updates; (ii) invitation for bids for goods and works for all contracts; (iii) request for expression of interest for selection/hiring of consulting services; (iv) contract awards of goods and works procured following international and national procedures; (v) a list of contracts/purchase orders placed following shopping procedures on a quarterly basis; (vi) a list of contracts under direct contracting (DC) on a quarterly basis; (vii) a monthly financial and physical progress report of all contracts; and (viii) an action taken report on a quarterly basis. 30. The following details shall be sent to the World Bank for publishing in the United Nations Development Business and the World Bank external website: (i) invitation for bids for the procurement of goods and works, using open international procedures; (ii) contract award details for the procurement of all goods and works using open international Page 49 of 50 The World Bank Gujarat Resilient Cities Partnership – Ahmedabad City Resilience Project (P175728) procedure; and (iii) a list of contracts/purchase orders placed following DC procedures on a quarterly basis. The IAs will also publish on their websites any information required under the provisions of suo moto disclosure, as specified by the Right to Information Act. Environment and Social 31. Environmental and Social. The environmental and social activities will be overseen by the PIUs established at AMC and GUDM, based on the ESMF, the ESCP, and the ESIAs/ESMPs and other studies and ESF documents for each sub-project. 32. ESMIS, Monitoring and Reporting. Three types of monitoring and reporting are envisaged: Third Party, external, and internal. Internal monitoring is a continuous process undertaken by contractors’ E&S officers, the PMC (who will carry out regular monitoring on all E&S aspects and special monitoring on OHS and Community Health and Safety (CHS) hand in hand with the monitoring of civil works) and the PIUs. A third-party monitoring agency will undertake an annual E&S audit, including ESMP compliance and a review of environmental monitoring and OHS/CHS. 33. Grievance Redress Mechanism. AMC has a functional complaint system (comprehensive complaint redressal system, CCRS), http://www.amccrs.com) which includes a web portal and a toll-free number. Grievances of Project Affected Persons (PAPs) will be first brought to the attention of the site office level of the PIU and unresolved grievances will be addressed by the Grievance Redress Committee (GRC), formed at a zonal level comprising the Zonal Officer AMC, Environmental and Social staff of the PIUs, and a local Civil Society Organization (CBO/CSO) representative. GRCs will continue to function during the life of the project, including the defects liability period. Cases not resolved at the GRC level would be brought for resolution by the Commissioner, AMC. Implementation Support Plan and Resource Requirements 34. Semi-annual implementation support missions will be supplemented by additional technical missions during the first 18 months of project implementation. The World Bank will provide continuous implementation support as needed. 35. First 12 months. The Bank will closely support the PIUs to comply with the technical, fiduciary, environmental and social requirements, and climate and disaster resilience approaches. The World Bank will review: (i) overall project management, coordination, reporting and implementation supervision activities, as well as capacity building initiatives; and (ii) investment sub-project activities being undertaken by the PIU in AMC. The World Bank will provide dedicated assistance in procurement and FM systems, including both formal and informal training on the World Bank’s fiduciary systems and procedures. Dedicated support will be provided for the rollout of the ESMF, and project specific ESIAs/ESMPs. 36. After the first 12 months. Dedicated members of the Bank team will help oversee the outputs to ensure that institutional strengthening of the PIUs is undertaken and appropriate capacity is built at the state and city levels for the sustainability of the investments. Field visits will take place to monitor implementation. Regular monitoring and support of procurement and FM activities will continue throughout the duration of the project. Specific activities will include procurement prior and post reviews, preparation of timely and comprehensive financial reports (such as annual financial statements and annual audit reports). On-demand training and refresher courses on fiduciary aspects are also envisioned. Environmental and social aspects include: (i) review of ESF documents to confirm compliance with World Bank policies and the ESMF; (ii) carrying out field visits to sensitive sites with significant E&S risks; (iii) review of environmental and social audit reports to address related risks; and (iv) follow-up on the satisfactory implementation of the project-level GRM and complaints received under the corporate GRS. 37. Mid-term review (MTR) and project completion. By the end of the third year of project implementation, guidance will be provided to the PIU for the MTR of the project and to identify any changes that may be required to the project design. Towards the end of the project, additional support will be provided to ensure proper project completion and documentation, including any final evaluations and account reconciliations. Page 50 of 50