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Document of The World Bank

Report No: ICR00003616

IMPLEMENTATION COMPLETION AND RESULTS REPORT(IDA-45060)

ON A

CREDIT

IN THE AMOUNT OF SDR 98.4 MILLION(US$149 MILLION EQUIVALENT)

TO THE

PEOPLE’S REPUBLIC OF BANGLADESH

FOR A

DHAKA WATER SUPPLY AND SANITATION PROJECT

December 21, 2016

Global Water Practice (GWADR) Country Department SACBNSouth Asia Region

CURRENCY EQUIVALENTS

Exchange Rate Effective 10/30/2016

Currency Unit = Bangladesh Taka (BDT) 0.0128 BDT = US$

US$ 1.00 = 78.3 BDT

FISCAL YEAR July to June

Senior Global Practice Director: Guang Zhe ChenCountry Director: Qimiao FanPractice Manager: Meike van Ginneken

Project Team Leader: Sudipto SarkarICR Team Leader: Sudipto SarkarICR Lead Author: Susanna Smets with Nishtha Mehta

ABBREVIATIONS AND ACRONYMS

ADB Asian Development BankBoDCAS

Board of DirectorsCountry Assistance Strategy

DCC Dhaka City CorporationDMA Dhaka Metropolitan AreaDPPDSIPDWASADWSSP

Development Project ProformaDhaka Sanitation Improvement ProjectDhaka Water Supply and Sanitation AuthorityDhaka Water Supply and Sanitation Project

EMF Environmental Management FrameworkFGDFMFSMFY

Focus Group DiscussionFinancial ManagementFecal Sludge ManagementFiscal Year

GFDRRGoB

Global Facility for Disaster Risk ReductionGovernment of Bangladesh

ICR Implementation Completion and Results ReportIDAIOIRR

International Development Association Intermediate OutcomeInternal Rate of Return

ISR Implementation Status and Results ReportIWMJMP

Institute of Water ModellingWHO/UNICEF Joint Monitoring Program

LIC Low Income CommunityLICSIP Low Income Community Service Improvement PlanM&E Monitoring and EvaluationMDGs Millennium Development GoalsMoFMoLGRDCMTR

Ministry of FinanceMinistry of Local Government, Rural Development & CooperativesMid-Term Review

NPVNGO

Net Present ValueNon-Governmental Organization

OP/BPO&MPAD

Operational Policy and Bank ProcedureOperations and MaintenanceProject Appraisal Document

PAH Project Affected HouseholdsPDO Project Development ObjectivePMU Project Management Unit

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PVRAP

Present ValueResettlement Action Plan

RPFSO STPTA

Resettlement Policy FrameworkSupport OrganizationSewage Treatment PlantTechnical Assistance

WASA Water Supply and Sewerage AuthorityWSSWSP

Water Supply and Sanitation ServicesWater and Sanitation Program

WSUP Water and Sanitation for the Urban Poor

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BANGLADESHDhaka Water Supply and Sanitation Project

CONTENT

Data SheetA. Basic InformationB. Key DatesC. Ratings SummaryD. Sector and Theme CodesE. Bank StaffF. Results Framework AnalysisG. Ratings of Project Performance in ISRsH. Restructuring I. Disbursement Graph

1. Project Context, Development Objectives and Design....................................................12. Key Factors Affecting Implementation and Outcomes...................................................53. Assessment of Outcomes...............................................................................................114. Assessment of Risk to Development Outcome.............................................................175. Assessment of Bank and Borrower Performance..........................................................186. Lessons Learned............................................................................................................207. Comments on Issues Raised by Borrower/Implementing Agencies/Partners...............22Annex 1. Project Costs and Financing...............................................................................23Annex 2. Outputs by Component......................................................................................24Annex 3. Economic and Financial Analysis......................................................................30Annex 4. Bank Lending and Implementation Support/Supervision Processes.................37Annex 5: Summary of Borrower's ICR and/or Comments on Draft ICR..........................39Annex 6. Comments of Co-Financers and Other Partner Stakeholders............................48Annex 7. List of Supporting Documents...........................................................................49MAP...................................................................................................................................51

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DATA SHEET

A. Basic Information

Country: Bangladesh Project Name:BD Dhaka Water Supply and Sanitation Project

Project ID: P093988 L/C/TF Number(s): IDA-45060ICR Date: 11/02/2016 ICR Type: Core ICR

Lending Instrument: SIL Borrower:GOVERNMENT OF BANGLADESH

Original Total Commitment:

XDR 94.80M Disbursed Amount: XDR 50.87M

Revised Amount: XDR 50.97MEnvironmental Category: BImplementing Agencies: Dhaka Water Supply and Sewerage Authority (DWASA) Cofinanciers and Other External Partners:

B. Key Dates

Process Date Process Original Date Revised / Actual Date(s)

Concept Review: 02/01/2005 Effectiveness: 03/17/2009 03/17/2009

Appraisal: 07/21/2008 Restructuring(s):06/13/201311/23/2015

Approval: 12/02/2008 Mid-term Review: 10/31/2012 11/28/2012 Closing: 06/30/2013 06/30/2016

C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Unsatisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)Bank Ratings Borrower Ratings

Quality at Entry: ModeratelyUnsatisfactory Government: Moderately

UnsatisfactoryQuality of Supervision: Moderately Satisfactory Implementing Moderately

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Agency/Agencies: UnsatisfactoryOverall Bank Performance:

Moderately Unsatisfactory

Overall Borrower Performance:


C.3 Quality at Entry and Implementation Performance IndicatorsImplementation

Performance Indicators QAG Assessments (if any) Rating

Potential Problem Project at any time (Yes/No):

YesQuality at Entry (QEA):

None

Problem Project at any time (Yes/No):

YesQuality of Supervision (QSA):

None

DO rating before Closing/Inactive status:


D. Sector and Theme Codes Original Actual

Sector Code (as % of total Bank financing) Flood protection 51 51 Public administration- Water, sanitation and flood protection

8 8

Wastewater Collection and Transportation 19 19 Wastewater Treatment and Disposal 19 19 Water supply 3 3

Theme Code (as % of total Bank financing) City-wide Infrastructure and Service Delivery 50 50 Urban services and housing for the poor 50 50

E. Bank Staff Positions At ICR At Approval

Vice President: Annette Dixon Isabel Guerrero Country Director: Qimiao Fan Xian Zhu Practice Manager/Manager:

Meike van Ginneken Junaid Kamal Ahmad

Project Team Leader: Sudipto Sarkar Fook Chuan Eng ICR Team Leader: Sudipto Sarkar ICR Primary Author: Susanna Smets with Nishtha Mehta

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F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document)The Project Development Objective (PDO) is to improve the sustainable delivery of stormwater drainage, wastewater and water services by the Dhaka Water Supply and Sewerage Authority (DWASA) to the population of Dhaka through: (a) the installation of selected stormwater pumping stations and the rehabilitation of selected canals to help improve drainage and minimize urban flooding; (b) the rehabilitation, repair and expansion of priority investments in the city's sewerage network and treatment plant to help improve the urban environment; and (c) supporting DWASA's pilot expansion of water and sanitation services into selected Dhaka slums to help increase services to the urban poor.

Revised Project Development Objectives (as approved by original approving authority)The revised PDO to improve storm water drainage in select catchments in Dhaka and improve DWASA's planning capacity

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Direct project beneficiaries (number), of which female (%)

Value quantitative or Qualitative)

1500000 4000000 3600000

Date achieved 06/13/2013 06/30/2016 06/30/2016

Comments (incl. % achievement)

90% achieved; introduced at restructuring. The number is from the drainage impact modeling exercise; it is the population of wards that would see a change in flood depth and duration for a 1 in 10 year event; the percent of female beneficiaries is 50%.

Indicator 2 : Increase in permanent storm water pumping capacity (m3/d)


0 40 40

Date achieved 12/08/2008 06/30/2016 06/30/2016


100% achieved; before restructuring this was an IO level indicator, lifted to PDO level at restructuring. Due to the completion of Rampura (25 m3/s) and Kamalapur (15 m3/s) the indicator is achieved;

Indicator 3 : Increased capacity of rehabilitated drainage canals (m3/s)


0 250 250

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Date achieved 06/13/2013 06/30/2016 06/30/2016


100% achieved; introduced at restructuring; this indicator is achieved through the rehabilitation and development of 13 sections of drainage canals

Indicator 4 : Number of plans prepared and approved by DWASA Board of Directors


0 4 2

Date achieved 06/13/2013 06/30/2015 06/30/2016


50% achieved; introduced at restructuring; The sewage master plan was approved on Sep 30, 2014; The drainage master plan on Jun 23, 2016. 2 other plans were prepared, but not approved. These plans were prepared with BE funds & not attributed to project

Indicator 5 : Water level and number of days of waterlogging in the eastern part of Dhaka


NA NA

Date achieved 12/12/2008 06/30/2013Comments (incl. % achievement)

Indicator dropped at restructuring in June 2013; DWASA does not have the systems to monitor this indicator

Indicator 6 : Number of households with access to sewerage services


50853 57000


Indicator dropped at restructuring in June 2013; sewerage investments were cancelled at restructuring.

Indicator 7 : Increase in number of people in project area ward slums with access to safe water


0 180000 49000

Date achieved 12/12/2008 06/30/2013 06/30/2016


Indicator dropped at restructuring in June 2013; LIC investments were cancelled. However, the project included some small LIC works, and 49000 LIC residents gained access to safe water supply as a result of project activities.

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Indicator 8 : Increase in number of people in project area ward slums with access to improved sanitation


0 218000


Indicator dropped at restructuring in June 2013; LIC investment component was cancelled

x

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : A new sewerage master plan for Dhaka city is approved by DWASA's Board of Directors

Value (quantitative or Qualitative)

no yes yes

Date achieved 06/13/2013 06/30/2016 06/30/2016Comments (incl. % achievement)

100% achieved; introduced at restructuring; The sewerage master plan was approved by DWASA's Board of Directors on September 30, 2016

Indicator 2 : Diagnostic study on septage management practices in Dhaka


no yes yes

Date achieved 06/13/2013 06/30/2016 06/30/2016Comments (incl. % achievement)

100% achieved; introduced at restructuring; a diagnostic study on septage management was carried out and completed by June 30, 2016;

Indicator 3 : length of storm water canals constructed/rehabilitated (m)


0 30000 20885 20885

Date achieved 12/08/2008 06/30/2013 06/30/2016 06/30/2016Comments (incl. % achievement)

100% achieved

Indicator 4 : A new drainage master plan for Dhaka city is approved by DWASA's Board of Directors


no yes yes yes


100% achieved; indicator introduced at restructuring; The drainage master plan was approved by DWASA's Board of Directors on June 23, 2016

Indicator 5 : Drainage modeling undertaken of the impact of the project's i) khal rehabilitation and ii) storm water

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no yes yes no

Date achieved 06/13/2013 12/31/2015 06/30/2016 06/30/2016


Not achieved; indicator introduced at restructuring; drainage impact modeling was completed by June 30 2016 with Bank-executed funds. Rated not achieved as this is not attributable to the project

Indicator 6 : Number of project affected households successfully compensated


0

All entitled PAH fully compensated prior to relocation from project site

500 441


100% achieved as this represents all households affected by the project eligible for compensation (indicator continued)

Indicator 7 : Service Improvement Plan for LICs is prepared


no yes no

Date achieved 06/13/2013 06/30/2016 06/30/2016


Not achieved; indicator introduced at restructuring; LIC service improvement plan was developed in close collaboration with DWASA. This was completed using Bank-executed funds; rated not achieved as not attributable to the project;

Indicator 8 : Annual statutory audits for DWASA demonstrating transparent and accountable financial management (cumulative)


0 No fiduciary issues with project funds

4 4


100% achieved; Annual audits have been submitted regularly; indicator was continued

Indicator 9 : Water utilities that the project is supporting

Value 1 1 1

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(quantitative or Qualitative) Date achieved 06/13/2013 06/30/2016 06/30/2016Comments (incl. % achievement)

Core indicator introduced at restructuring

Indicator 10 : Development of an institutional structure for DWASA’s decentralization and an action plan for its implementation


no yes no

Date achieved 06/13/2013 06/30/2016 06/30/2016


Not achieved. Indicator introduced at restructuring; a diagnostic and options study for DWASA's decentralization was completed with Bank executed funds; rated not achieved as not attributable to the project.

Indicator 11 : A new decentralized zonal management structure and action plan for its implementation are approved by DWASA's Board of Directors


no yes no

Date achieved 06/13/2013 06/30/2016 06/30/2016


Not Achieved; indicator introduced at restructuring; Plan was completed with Bank-executed funds, in close coordination with DWASA. Following DWASA's preferred option for decentralized management, detailed organogram was prepared; not yet approved by BoD

Indicator 12 : DWASA zonal office refurbished and equipped


0 1 6

Date achieved 06/13/2013 06/30/2016 06/30/2016


Target surpassed; indicator introduced at restructuring; due to fund reallocation a total of 6 zonal offices have been refurbished and equipped, compared to the target of one zonal office

Indicator 13 : Length of sewage lines rehabilitated/extended (km)


0 30

Date achieved 12/12/2008 06/30/2013Comments (incl. %

This indicator was dropped at restructuring in June 2013 due to the cancellation of sewerage investment

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achievement)

Indicator 14 : Volume of solid waste collected along the canals (tons)


0 20000


Indicator dropped at restructuring in June 2013; DWASA does not have the monitoring systems or mandate to ensure collection

Indicator 15 : Increase in population in project area ward slums with access to safe water


0 56000 49000

Date achieved 12/12/2008 06/30/2013 06/30/2016


Indicator dropped at restructuring; some LIC investments were completed. 49000 LIC residents gained access to safe water supply as a result of project activities.

Indicator 16 : Increase in population in project area peri-urban unions with access to safe water


0 124000


Indicator dropped at restructuring

Indicator 17 : Increase in population in project area ward slums with access to improved sanitation


0 94000



Indicator 18 : Increase in population in project area peri-urban unions with access to improved sanitation


0 124000

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G. Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP

Actual Disbursements(USD millions)

1 05/25/2009 Satisfactory Satisfactory 0.75 2 07/29/2009 Satisfactory Satisfactory 0.75 3 11/28/2009 Satisfactory Satisfactory 3.30 4 05/26/2010 Satisfactory Moderately Satisfactory 3.22 5 12/19/2010 Satisfactory Moderately Satisfactory 5.61 6 07/10/2011 Satisfactory Moderately Satisfactory 5.61 7 06/05/2012 Satisfactory Satisfactory 8.42 8 12/31/2012 Unsatisfactory Unsatisfactory 15.49 9 06/22/2013 Unsatisfactory Unsatisfactory 15.49

10 10/09/2013 Unsatisfactory Unsatisfactory 22.04 11 12/14/2013 Unsatisfactory Unsatisfactory 22.04 12 06/22/2014 Moderately Satisfactory Moderately Satisfactory 27.82 13 11/23/2014 Moderately Satisfactory Moderately Satisfactory 40.03 14 06/10/2015 Moderately Satisfactory Moderately Satisfactory 44.76

15 11/17/2015 Moderately Unsatisfactory

Moderately Unsatisfactory 58.34





H. Restructuring (if any)

Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD millions

Reason for Restructuring & Key Changes MadeDO IP

06/13/2013 Y U U 15.49 The project was restructured to scale-down investments and focus on activities that could be completed within an additional 2.5 year period. The restructuring also increased project focus on

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Restructuring Date(s)

Board Approved

PDO Change

ISR Ratings at Restructuring

Amount Disbursed at

Restructuring in USD

Reason for Restructuring & Key Changes MadeDO IP

institutional strengthening and capacity building activities

11/23/2015 N MU MU 58.34

A six-month extension was required to complete crucial investments (e.g. one of the pumping stations) and other ongoing activities

If PDO and/or Key Outcome Targets were formally revised (approved by the original approving body) enter ratings below:

Outcome RatingsAgainst Original PDO/Targets UnsatisfactoryAgainst Formally Revised PDO/Targets Moderately UnsatisfactoryOverall (weighted) rating Moderately Unsatisfactory

I. Disbursement Profile

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1. Project Context, Development Objectives and Design

1.1 Context at Appraisal

1. From 2000 to 2008, Bangladesh’s economy grew at 5.8 percent per annum. At the same time, in 2008, about 40 percent of the population continued to live below US$1.25 per day. While majority of this population was in rural areas, at least 25 percent of the poor population lived in Bangladesh’s urban areas. Urban poverty was further exacerbated by rapid urbanization.

2. Between 2000 and 2008, Bangladesh experienced faster urbanization than South Asia as a whole (World Bank, 2015). In 2008, about 40 million people lived in urban areas across the country, with about 15 million living in the Dhaka Metropolitan Area (DMA). While Dhaka was the center for manufacturing, commerce and construction for the country, the city’s rapid growth also led to considerable infrastructure and environmental challenges.

3. In 2005, 29 percent of Bangladesh’s urban population had access to piped water services and 55 percent had access to other improved water sources, while access to improved sanitation was 58 percent (JMP) 1. Dhaka was the only city with a water-borne sewerage system that served about 20 percent of its population. The large majority of households were not connected to the combined sewer system and either used septic tanks or had no on-site facility in place at all. As a result, septic tank effluent and black water discharged directly in the storm water canals and drains. This affected the drainage systems and led to pollution of water sources and contamination of water supply. In the absence of adequate planning and enforcement, the canals also became dumping areas for solid waste. In 2008, only 26 out of Dhaka’s 43 canals (or khals) were functional.

4. In 1996, the Government of Bangladesh adopted the Water Supply and Sewerage Authority (WASA) Act. Under this Act, Dhaka WASA (DWASA) was assigned the responsibility of providing water, sewerage and storm water drainage2 services in Dhaka. As per the Act, DWASA’s management was answerable to a Board of Directors, which included stakeholders appointed by the GoB. In order to increase DWASA’s autonomy and improve operations, the GoB also approved various regulations and signed a Performance Agreement with DWASA. Despite these steps, the increasing population, increased risk of flooding due to inadequate drainage systems, and limited infrastructure resulted in critical challenges for DWASA.

5. The Dhaka Water Supply and Sanitation Project (DWSSP) was designed to address some of the issues confronting DWASA. The Bank had a long history of supporting water supply and sanitation infrastructure in Dhaka - financing four projects since the 1960s. Despite a gap after the closure of the Fourth Water Supply and Sanitation project in 2002, the Bank was able to prepare DWSSP bringing its experience

1 The latest JMP (2015) estimate for Bangladesh shows a slight improvement of 32 percent with piped services, and 55 percent with access to other improved water sources (urban). Urban sanitation access shows 58 percent improved access, 30 shared access, and 12 unimproved access (no open defecation).2 Storm water drainage responsibilities are shared with Dhaka City Corporations (DCC). DCC is responsible for smaller drainage pipes, while DWASA has responsibility for larger canals and some storm water pipes.

1

and relevant sector knowledge. DWSSP was also well aligned with the Country Assistance Strategy (CAS) 2006-2009 objectives of improving the governance and efficiency of infrastructure services, including in the water sector.

1.2 Original Project Development Objectives (PDO) and Key Indicators (as approved)

6. The PDO was to improve the sustainable delivery of stormwater drainage, wastewater and water services by the Dhaka Water Supply and Sewerage Authority to the population of Dhaka through:

a) The installation of selected stormwater pumping stations and the rehabilitation of selected canals to help improve drainage and minimize urban flooding;

b) The rehabilitation, repair and expansion of priority investments in the city's sewerage network and treatment plant to help improve the urban environment; and

c) Supporting DWASA's pilot expansion of water and sanitation services into selected Dhaka slums to help increase services to the urban poor.

7. Progress towards achieving the PDO were monitored through a set of indicators linked to the PDO:

a) Water level and number of days of water logging in the eastern part of Dhaka;

b) The number of households with access to sewerage services; and

c) Increase in the number of people in project area ward slums with access to safe water and improved sanitation.

1.3 Revised PDO and Key Indicators, and Reasons/Justification

8. During the project mid-term review (MTR) in December 2012, the ratings for both the Development Objective and Implementation Progress were assessed as ‘unsatisfactory’. This was mainly due to shortcomings in the design, lack of readiness, and low capacity of the implementing agency. Thus, the project was restructured in June 2013 with an aim to scale-down the project scope, increase project period by 2.5 years, complete ongoing works and technical assistance (TA) activities, and enhance DWASA’s capacity to better plan for future investments in sanitation and drainage

9. The revised PDO was to improve storm water drainage in select catchments in Dhaka and to improve DWASA's planning capacity. To reflect the above changes and to mark the Bank’s shift to core sector indicators in July 2009, previous PDO indicators were dropped and the following were added:

a) Direct project beneficiaries (number), of which female (percentage)

b) Increase in permanent storm water pumping capacity

c) Increased capacity of rehabilitated drainage canals

d) Number of plans prepared and approved by DWASA’s Board of Directors

2

The intermediate outcome indicators were also revised at restructuring: seven were dropped, four continued, and 12 new indicators were introduced (See Section F of Data Sheet).

1.4 Main Beneficiaries

Original target beneficiaries. 10. At appraisal, the target beneficiaries were defined broadly as people of Dhaka city benefiting from the proposed investments in drainage, wastewater and water supply and sanitation. Other intended beneficiaries were residents of Dhaka’s low-income communities where water and sanitation services would be extended.

Revised target beneficiaries11. After restructuring the target beneficiaries were defined as 4 million people (of which 50% female) living in the catchment areas of the project’s drainage canals and stormwater pumping stations. DWASA was seen as intended beneficiary of the project’s institutional capacity building programs.

1.5 Original Components (as approved)

12. DWSSP had five components, which are summarized below.3

Component 1. Rehabilitation and Strengthening of Existing Sewerage System: US$63.8m4 (IDA US$52.4m). This component was to support the rehabilitation and strengthening of the existing sewerage system, including the rehabilitation of lifting/pumping stations, the rehabilitation and augmentation of the Pagla sewage treatment plant, the replacement of trunk sewer mains and sewer lines, and expansion of branches to augment the coverage area of the Pagla sewer basin. Purchase of sewer cleaning equipment and TA to improve operation and maintenance (O&M) was also included. This component also included support to develop a sewerage masterplan.

Component 2. Rehabilitation and Strengthening of Stormwater Drainage System: US$80.3m (IDA US$75.9m). This component was to improve the stormwater drainage system by installing two pumping stations at Rampura and Kamalapur sites to alleviate periodic flooding in the central catchment area of Dhaka. The component supported improving the hydraulic performance of 13 khals (canals) through re-excavation, re-profiling and protection. In addition, cleaning equipment for drains and TA for O&M were included. The component also had support for solid waste management along khals rehabilitated under the project and TA to formulate and implement institutional arrangements for O&M. It also included the updating of the stormwater drainage master plan for Dhaka.

Component 3. Support to the implementation of environment and social safeguards: US$5.2m (IDA US$5.0 m). This component was to support the implementation of environmental management and social safeguards activities, including Resettlement Action Plans (RAP) for rehabilitation of selected canals and Environmental Management

3 At appraisal the US$ equivalent of the IDA credit was estimated at US$ 149 million, out of a total estimated project costs of US$ 165.7m. The amounts are expressed in estimated US$ values at the time of appraisal and time of restructuring.4 Theo overall cost for all components includes contingencies – as indicated in the project appraisal document

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Framework (EMF) for the project. It also included the provision of laboratory equipment and chemicals, and TA to DWASA to improve water quality management and monitoring activities.

Component 4. Support to service provision to Low Income Communities: US$8.7m (IDA US$8.4m). This component was to support the piloting of several approaches for water and sanitation service provision to low income communities and the strengthening of DWASA’s capacity to deliver water and sanitation services to these communities.

Component 5. Project Management, M&E, Consultations and Communications: US$7.7m (IDA US$7.3m). This component was to support TA for project implementation, monitoring and evaluation (M&E) and DWASA’s communications program. Project implementation support included TA for engineering, financial, legal, environmental and social M&E.

1.6 Revised Components13. A level-1 restructuring5 took place in June 2013. The revised components are described below. More details are included in Annex 2.

Component 1: Investment Planning in Sanitation: The original IDA credit was US$ 52.4 m, of which, US$49.3m was canceled. The new IDA amount was US$3.1m. The component was significantly amended and the name was changed. The revised component retained the development of Dhaka’s sewerage master plan and the preparation of engineering designs and bidding documents for priority sewerage interventions identified in the master plan. A diagnostic study related to fecal sludge management (FSM) in Dhaka was added to better understand practices and suggest ways to improve services. Given the significant delays in preparing the sewerage masterplan and associated bidding documents, implementation was dropped.

Component 2: Rehabilitation and Strengthening of Stormwater Drainage System: The original IDA credit was US$75.9m, of which US$15.4m was canceled. There are no major changes under this component. As the actual cost of the activities was less than originally estimated, part of the IDA credit was cancelled, and a part was allocated for (i) additional canal rehabilitation (ii) cost-overruns for the stormwater pumping stations; and (iii) updating of the Drainage Master Plan6.

Component 3: Support to Implementation of Environmental and Social Safeguards: The original IDA credit was US$5.0m, of which US$2.7m was canceled. The new IDA amount was US$2.3m. There were no major changes to this component. As the wastewater treatment and sewerage investments under Component 1 were cancelled, the overall cost was reduced.

Component 4: Support to Service Improvement Planning to Low Income Communities: The original IDA credit was US$8.4m, of which US$6.9m was canceled. The new IDA 5At the beginning of the project, based on the then applicable exchange rate, the IDA Credit of SDR 94.8 million equaled US$ 149 million. Due to variation in the SDR to US Dollar exchange rate, at restructuring, SDR 94.8 million was US$ 141.3 million. Therefore, the project total in June 2013 was US$ 141.3 million. 6 A drainage impact modelling exercise has been included in the restructuring paper and RF, however, the legal agreement for the restructured project does not mention this study explicitly.

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amount was US$1.5m. This component was significantly amended and the name was changed. The original design and implementation approach encountered various challenges (See Section 2.1). Thus, service provision activities in LICs were dropped and a TA to prepare a Service Improvement Plan for LICs was added. The TA would include: (i) a review of approaches; (ii) ways to mainstream service provision to LICs; and, (iii) identifying DWASA’s institutional requirements to better serve LICs.

Component 5: Project Management and Institutional Capacity Building: The original IDA credit was US$7.4m. There was an addition allocation of US$1.3m under the component, bringing the IDA credit to US$8.6m. This component was significantly changed, including its name. TA activities were added to assist DWASA in decentralizing operations, including: i) developing an institutional structure and management instruments for decentralization; ii) preparing an action plan for implementation; (iii) support for equipping and refurbishing zonal offices; and, (iv) staff training.

1.7 Other significant changes

14. The project had the following significant changes:

a) Level-1 Restructuring: In June 2013, a level 1 restructuring was completed. The project PDO was revised and the results framework was updated to reflect this change. The overall scope of the project was reduced as the sewerage and the LIC components were amended. Institutional strengthening activities were added (See Section 1.6). In order to complete the revised project scope, 49 percent of the IDA credit amount was canceled and the project closing date was extended by 2.5 years, from June 30, 2013 to December 31, 2015.

b) Time Extension: The closing date of the project was extended from December 31, 2015 to June 30, 2016 to allow additional time for completion of critical works.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

Soundness of background analysis

15. Several lessons learned during previous engagements in Dhaka’s WSS sector were included. Based on a review of previous sector engagements and overall Bank support, the need for a long-term engagement with GoB and DWASA to sustain reforms for improved service delivery was recognized. Learning from the difficulties of the fourth Dhaka Water Supply and Sanitation Project, closed in 2002, to deliver on its institutional objectives, the project design took a gradual approach and hence did not have an institutional focus in its original development objective. Rather it was decided to address sector and policy risks through a broader instrument, namely the Partnership Framework and Letter of Sector Policy that were signed in 2007 between GoB and several development partners. As part of the project design, a Performance Agreement between DWASA and GoB which complemented the Partnership Framework was reinstituted as a means to reintroduce performance assessments and implement key elements of the WASA Act. A drawback of this approach was the non-legally binding nature of the Partnership Framework for the project, although an annual audit of the performance

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Agreement was included as a project covenant.

16. Capacity strengthening activities under the project aimed to leverage the Policy Letter, and support long term institutional development activities, using the Performance Agreement as the major vehicle to assess progress. In addition, the framework provided opportunities for greater cooperation between development partners, particularly the Bank and the Asian Development Bank, on institutional strengthening. However, there were also some gaps in the project design. The background analysis did not address the lack of readiness of priority investments. In addition, difficulties in implementing the project in densely populated low-income communities were underestimated, especially given the fact that DWASA was new to delivering services to LICs at the start of the project7.

17. The rationale for the Bank’s involvement was to strengthen Dhaka’s WSS sector. This included: supporting operationalization of the WASA act; facilitating access to WSS services in line with the National Policy for Safe Water Supply and Sanitation (1998); and strengthening DWASA’s capacity to provide services to all customers, including LIC customers.

Assessment of Project Design

18. The Project Appraisal Document (PAD) proposed a phased approach: i) preparation of masterplans, feasibility studies and further investments; (ii) implementation of priority drainage and sewerage infrastructure, and iii) a phased expansion of services in LIC through piloting and replication. The phased approach was a reasonable strategy, to ensure incremental progress and long-term engagement. However, the implementation period for the project was set at 4.5 years and the priority investments were not ready at the time of effectiveness. Even though the results framework established links from activities to outcomes, the targets were too ambitious. The tight timeline, complex design, and ambitious targets led to significant implementation challenges8 (See Section 2.3).

19. Although implementation arrangements were simple, with DWASA as sole implementing agency, the ambitious design placed a heavy procurement load on the Project Management Unit (PMU). The implementation agency did not have the capacity to or the experience to meet the demands of the project. The design also did not address institutional coordination with Dhaka City Corporations (DCC) and other public agencies, particularly around drainage and solid waste management.

20. For Component 4 (service provision for LICs), the project design proposed that DWASA manage the construction, social mobilization and management of services for LICs through Service Organizations (SOs). DWASA had limited experience in service provision to LICs and the SOs were not qualified to handle such “hybrid’ contracts (investments and social mobilization). In addition, some of the LICs selected for interventions were on privately owned land, which affected access and implementation. The design for sanitation service provision in LICs did not take into account existing sanitation services. The proposed technical solutions were also not optimal for the 7 At project approval, DWASA only delivered services to LICs through intermediary NGOs.8 For example by assuming that additional wastewater treatment capacity would be put in place by YR2, stormwater pumping capacity in place by YR3, and new services operational in LICs by YR2.

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densely populated LICs.

Adequacy of Government Commitment

21. Government commitment was high at the time of project preparation. In 1998, the GoB put in place the National Policy for Safe Water Supply and sanitation to facilitate access for all citizens to a basic level of water and sanitation services for all citizens. In addition, in 2005, the Dhaka Water Supply Policy was formulated, which reiterated GoB’s commitment to provide water supply services to LICs. At the time of preparation, GoB indicated its commitment to the reform agenda by signing a Letter of Policy and Framework Agreement between GoB and Development Partners – which provided a framework to sustain institutional reforms in the long term and create avenues for cooperation between development partners. Outside the project, GoB reinstated a five-year Performance Agreement with DWASA, signed in 2008, which included performance targets although it did not specify incentives or sanctions.

Risk assessment and mitigation

22. At the time of appraisal, the overall risk rating was “substantial”. Key risks were: DWASA’s capacity limitations; weakening of GoB’s commitment to implement the WASA Act; inadequate legislative and institutional oversight for the project; weak financial management systems; limited capacity to respond to needs of LIC residents; weak procurement capacity; and limited experience to implement resettlement actions.

23. Most mitigation measures were appropriate, including: extensive financial management and procurement training; the phasing of khal rehabilitation; intensive capacity building of DWASA on resettlement; establishing an LIC team in DWASA; TA support; and agreement on policy actions to sustain development.

24. During implementation, some of the mitigation measures were less effective, including: The Letter of Sector Policy and Partnership Framework to support institutional development was non-binding and was not adhered to; GoB-DWASA’s Performance Agreement was not regularly audited, and there were gaps in maintaining this agreement. This affected DWASA’s accountability; and an international procurement advisor was not hired, leading to delays.

25. Some unforeseen risks also led to implementation delays including: the longer than anticipated time needed to acquire land for the Kamalapur pumping station; and the shifting of the location of Rampura station.

2.2 Implementation

26. The project became effective on March 14, 2009. In December, 2012, after the MTR, the implementation progress was rated as unsatisfactory until December 2013. After restructuring in June 2013, the acceleration of implementation and the refocus of the project on institutional measures took 12 months to take effect and only in June 2014 the project was rated moderately satisfactory. During the last 7 months, the project was rated unsatisfactory again for from Nov 2015 to June, 2016. Some reasons for implementation delays are discussed below:

a) Slow Procurement: DWASA had no prior experience in executing the two-step procurement process for the pumping stations. As a result, it took over 40 months to

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procure the two pumping stations, leading to significant delays. The sewerage masterplan and engineering designs for priority sewerage works took 24 months to procure due to a variety of procurement issues. Slow government approvals for procurement packages also contributed to delays.

b) Complex Project Design: The overall project timeline was tight and the targets were too ambitious, which affected implementation progress (See Section 2.1).

c) Lack of Capacity: The PMU was understaffed and the capacity to manage contracts, and financial and procurement issues was low, leading to delays. Building DWASA’s capacity to implement the project took additional time.

d) Land Acquisition: Land acquisition for both the stormwater pumping stations required more time that envisaged

e) Restructuring: The project was restructured in June 2013 in a number of key issues were addressed: (i) the project developed a more strategic planning approach for both sewerage and drainage; (ii) the project included provisions to prepare a comprehensive approach for LIC service provision; (iii) technical assistance to assess DWASA’s organizational set-up and management structure was added; (iv) almost half of the IDA credit was cancelled; and, (v) the implementation period was extended by 2.5 years. Subsequently, another level-2 restructuring was processed in December 2015 to extend the project closing date by 6 months.

f) Exchange Rate Fluctuation: The Dollar to XDR exchange rate fluctuation led to changes in the overall IDA credit amount,9 which impacted implementation. Committed activities, such as the IT packages under Component 5, could not be implemented due to the change in the project amount.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

27. M&E design: The M&E design of the original project was comprehensive even though the targets for some indicators were overambitious. The PDO on water logging was also not clearly defined. A consulting firm was hired to monitor the project progress and provide quarterly monitoring reports. After the 2012 restructuring, the results framework was refined to reflect changes in the PDO (See Section 1.3 and Annex 2) and to align the project to the Bank’s core sector indicators. The indicators related to the following were dropped after restructuring: sewerage investments; LIC service provision; solid waste collection around canals; extent of urban flooding; O&M of drainage and sewer systems. PDO-level indicators for stormwater drainage and DWASA’s planning capacity were added.

28. M&E Implementation: Pre-restructuring, the Implementation Status and Results Reports (ISRs) did not include information on all the indicators. At the MTR, DWASA provided a comprehensive report assessing project results. This was used to define the results framework for the restructured project. After restructuring, the ISRs consistently included progress for each indicator. Through the project period, the PMU’s ability to monitor the project improved significantly, and it shared detailed quarterly progress

9 XDR 50.9 was US$76.0m at restructuring, and US$70.9m at project closing.

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reports with the Bank in a timely manner10. During the restructuring, DWASA agreed to implement several TA activities, including: the low-income customer’s service improvement plan; a decentralized institutional structure and action plan; zonal management structure and action plan; drainage modeling exercise. After the restructuring was approved, these activities were not included in the Government’s revised Development Project Performa (DPP). The task team mobilized Bank-executed funds for these tasks, however the RF was not formally adjusted and therefore several indicators are rated as not achieved, as they cannot be attributed to the project.

29. Utilization of M&E. After restructuring, M&E information was used to support implementation. Consistent monitoring of the RF indicators in the ISRs helped to keep focus on both infrastructure progress, as well as results of technical activities (including those financed from Bank-executed funds). This focus helped i) ensure that institutional activities were seen as an integral project result, ii) keep DWASA’s focus on progress of civil works, and iii) address problems in a timely manner. In addition, the project developed a drainage asset database, which will help DWASA in asset management and guide drainage-related decision making.

2.4 Safeguard and Fiduciary Compliance

30. Environmental and Social Safeguards Compliance. There are no outstanding environmental or social safeguards issues in the project.

31. Environmental safeguards compliance. The project was appropriately classified as Category B and triggered OP/BP/ 4.01 (Environmental Assessment). In response, an Environmental and Social Management Framework was prepared and integrated into the project. Limited environmental assessments were prepared for sub-projects as per Bank guidelines. Civil works under the project were all in compliance with local legislations and Bank policies. Compensation was provided for a case of non-compliance (trees felled on a work site). An incident of land subsidence also occurred at the Kamlapur pumping station site, however there were no injuries.

32. Social safeguards compliance. The Bank’s operational policy on involuntary resettlement (OP/BP/4.12) was triggered and in response DWASA prepared a Resettlement Policy Framework, and subsequently prepared RAPs to ensure adequate compensation for project affected households. Even though no private land was acquired for the project, the two pumping stations affected 221 households and the khal rehabilitation affected 216 households. These were adequately compensated as per the RAPs. A complaint regarding the partial demolition of a building on the Khilgaon-Bashabo canal right-of-way was received. This issue was adequately resolved. DWASA also carried out a Social Impact Assessment, including extensive stakeholder consultations. As a result of the project, DWASA has developed adequate in-house capacity to address social safeguard issues. Mainly due to the cancellation of the sewerage investments, the level of spending on environmental and social safeguards was much lower than originally foreseen (see Annex 1 and Annex 2).

10 Although not all indicators reported on were adequately evidenced, for example the increased design capacity of the rehabilitated khals.

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Fiduciary compliance

33. Procurement. Procurement was generally carried out in accordance with agreed procedures. A Procurement Capacity and Risk Assessment was conducted at appraisal and a Procurement Risk Mitigation Plan was developed. As per the plan, DWASA would develop quarterly reports to monitor procurement performance, and contract an International Procurement Specialist for the PMU. DWASA did provide quarterly M&E reports after restructuring. An international procurement specialist could not be hired due to lack of candidates, thus a local expert was contracted.

34. Slow procurement affected project implementation, leading to significant delays (See Section 2.2). For example, the contract amendment for the variation orders of the pumping stations, which also required approval from the government, were delayed by over 12 months. Significant delays occurred in the consultancy procurement for the sewerage masterplan and engineering designs for priority investment. Due diligence was required to validate the shortlisting process and other irregularities were encountered that needed extra time to get resolved. Complaint handling was a major issue and overall turnout period for advertising, evaluation and award took significant time. The PMU did not have a technical expert to review complex bids, which necessitated extensive technical support from the Bank, including the hiring of a drainage consultant using Bank-executed funds.

35. Financial Management (FM). Financial management was implemented adequately, and there are no overdue or outstanding audits. However, there was no full time FM specialist with the PMU, which led to some limitations including maintaining books of accounts, and timely submission of Interim Unaudited Financial Reports. No project specific FM was set up and DWASA’s accounts department largely handled project accounting and disbursements. Since the project designated account was not managed directly by the PMU, there were delays in reporting project expenditures.

36. External project audit reports, conducted by Foreign Aided Projects Audit Directorate (FAPAD), were of quality and submitted to the Bank in a timely manner. The project complied with all fiduciary covenants during implementation. There are some outstanding issues from various fiscal years. A final opinion by FAPAD on these issues and the audit report for FY 2015-16 will be provided to the Bank by December 31, 2016.

2.5 Post-completion Operation/Next Phase

37. Transition arrangements: Transition arrangements are summarized below:

a) Technical: newly built pumping stations, rehabilitated khals and drainage cleaning equipment have been formally handed to the respective divisions/circles within DWASA for O&M after relevant training was provided.

b) Financial: At this time, there is no clear plan and budget for O&M of newly constructed assets.

c) Institutional: DWASA is currently carrying out a review of a new organogram and is looking to set up a new sewerage directorate, however this has not yet been approved by the DWASA’s board.

38. Future operation. The proposed Dhaka Sanitation Improvement Project (DSIP),

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which is a follow-up operation, is currently being prepared. The project aims to improve sanitation in selected catchments of Dhaka city, improve DWASA capacity to provide sanitation services and reduce domestic wastewater pollution in and around Dhaka. The detailed engineering design and tender documents for priority investments prepared under DWSSP will allow for a faster implementation.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

Relevance of Objectives: Substantial (before) and Substantial (after restructuring)

39. Before restructuring, the PDO were relevant to the country’s development objectives and the needs of Dhaka city. The GoB’s Perspective Plan 2012-2020 and the 7th Five Year Plan articulate the government’s medium and long-term measures to improve urban development, basic service provision, minimize risks from flooding, and enhance environmental protection. In addition, the Dhaka Water Supply Policy (2005) confirmed DWASA’s mandate to extend basic water supply and sanitation services to slums within its service area. While the project objective was clearly aligned with government priorities, it did not explicitly address strengthening of DWASA’s institutional capacity. Thus, the relevance before restructuring is rated as substantial. After restructuring, the objectives continued to be in-line with government priority to improve storm water drainage in Dhaka. The project also aimed to improve DWASA’s planning capacity, which was ultimately expected to improve service delivery in the city. As the PDO scope was narrowed, the relevance after restructuring is substantial.

40. The project, both before and after restructuring, remained substantially relevant to the Bank’s priorities and development objectives. The Country Partnership Framework (2016-2020) has three pillars: i) growth and competiveness, ii) social inclusion and iii) climate and environment management. The project directly supports objectives under pillar 1 and 3, namely ‘Delivery of Basic Services in Urban and Rural Areas’, and ‘Improved Water Resource Management for Climate Resilience’. After restructuring, the project also focused on building DWASA’s capacity, which is aligned with the CPF aim to strengthen institutions through activities embedded in Bank operations.

Relevance of Design and Implementation: Modest (before) and Substantial (after)

41. Before restructuring, the relevance of the design was modest. The design was relevant from the following perspectives: (i) The proposed infrastructure investments focused on improving water and sanitation access for the poor residents, and on improving necessary services in the city; and (ii) the implementation arrangements were relevant as the project management responsibility was with DWASA, which also had the mandate for water, sanitation and stormwater drainage services for Dhaka. However, There were several shortcomings: i) tight timeline and overambitious targets, ii) weak institutional coordination mechanism iii) design shortcomings for service delivery to LICs and inadequate slum selection, and iv) reliance on the non-binding Partnership Framework for DWASA’s institutional strengthening.

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42. After restructuring, the relevance of the design improved to substantial, due to the following: (i) narrowing of the PDO and a focus on drainage investments that could be realistically achieved within the project period; (ii) increased focus on DWASA’s institutional strengthening; (iii) focus on understanding fecal sludge management practices in Dhaka to comprehensively address sanitation in the long term; (iv) planning to improve services in LICs; v) defining an action plan and management structure for DWASA’s decentralization. Implementation arrangements for the restructured project were appropriate as the mandate for stormwater drainage remained with DWASA. Even though the overall design of the restructured project was relevant, it also included several new TA activities, even though DWASA’s capacity to implement ongoing works and new TA activities was limited.

3.2 Achievement of Project Development Objectives

43. This section assess outcomes against project targets and objectives before and after project restructuring.

Rating: Substantial (before restructuring) and Substantial (after restructuring)

Before restructuring:

PDO 1: Improve the sustainable delivery of stormwater drainage services (Substantial)

44. The project put in place permanent storm water drainage capacity of 40 m3/s through the full commissioning of Rampura (25 m3/s) and Kamalapur (15 m3/s) station (original target 40 m3/s) before the closing date. The project has rehabilitated a total of 13 parts of drainage canals, covering a length of 20.89 km (formally revised target 20.855 km), representing an estimated increase in discharge capacity of 250 m3/s (formally revised target of 250 m3/s). This objective was intended to be measured through collection of depths and duration of water logging. However, DWASA did not have a suitable monitoring systems in place and due to fluctuating year-on-year precipitation, such empirical data would have to be collected over a long time period. Hence, drainage impact modeling (See Annex 3) is a good alternative and evidences the widespread reduction of flood as a result of the project investments in Dhaka. Risks of khal siltation/clog-up and pump breakdown due to inadequate O&M remain (See section 4).

PDO 2: Improve the sustainable delivery of wastewater services (Negligible)

45. The project aimed to improve the sustainable delivery of wastewater services for households in Dhaka, specifically those served by Pagla Sewage Treatment Plant (STP; original PAD target from 50,853 to 57,000 households served, 280 km of sewer rehabilitated, and Pagla STP capacity increased from 19,500 to 120,000 m3/day). These improvements could not be realized and were canceled at the time of restructuring.

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PDO 3: Improve the sustainable delivery of water services, especially in low-income areas (Negligible)

46. The project aimed to improve sustainable delivery and access to improved water and safe sanitation in slum areas, targeting to reach 180,000 (water) and 218,000 (sanitation) people. These were not met, and the investments were canceled at the time of restructuring.

After restructuring

PDO 1: Improve storm water drainage situation in select catchment of Dhaka (Substantial)

47. The project resulted in improved storm water drainage in select catchments of Dhaka. The stormwater pumping capacity target of 40 m3/day was met after the commissioning of the Kamlapur and Rampura pumping stations. The khal rehabilitation work for 13 canals was completed and their capacity increased by an estimated 250 m3/s fulfilling the target (see Table 1). With Bank-executed funds, a drainage impact modelling exercise was carried out for a one in ten year flood event assuming optimal O&M. It found that the project investments will reduce the extent, depth and duration of waterlogging in 24 wards in Dhaka city and would positively impact around 3.6 million people (See Annex 3), of which 50 percent female. In case of partial pump failure and siltation of khals, 0.5 million people in Central Dhaka would not fully benefit from this flood reduction as a result of project investments11. Nine focus groups discussions were held in the Rampura catchment area along the rehabilitated Mohakhali canal. Respondents stated less severe waterlogging during the heavy 2015 monsoon season when the Rampura pumping station was operational (See section 3.6)12. As indicated in section 4, risks of khal siltation and pump breakdown due to inadequate O&M remain.

Table 1. Improve storm water drainage: achievement of indicators.Indicator Target Achieved Comment

Number of direct project beneficiaries (million)

4.0 3.6 PDO Indicator

Increase in permanent storm water capacity

40 m3/s 40 m3/s PDO Indicator (after restructuring)

Increased capacity of rehabilitated drainage canals

250 m3/s 250 m3/s Intermediate Outcome Indicator; baseline in 2013 was 60 m3/s

Drainage modelling of impact of the project’s khal rehabilitation and stormwater pumping

Yes No (not attributable)

Intermediate Outcome Indicator; Completed but not attributable as this was Bank-executed

PDO 2: Improve DWASA’s planning capacity (Modest)11 IWM, 2016. Flood Modelling of Dhaka City – Impact and Resilience of Storm Water Drainage Investments of Dhaka Water Supply and Sanitation Project. See also annex 3 for a summary of results.12 DWASA (2015) Drainage Impact Assessment Exercise – Report on Focus Groups Discussion conducted in two Catchment Areas of Dhaka. A total of 18 FGD were conducted, however, nine FGDs took place in Kamalapur catchment area before the station was operational. This qualitative evidence should be seen as complementary to the obtained results from the drainage impact modelling.

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48. The restructured project focused on institutional strengthening measures, as well as planning, feasibility and design studies. A total of four different plans were to be developed and approved by DWASA’s Board. Table 2 provides an assessment of the indicators achieved.

Table 2. Improve DWASA’s planning capacity: achievement of indicatorsIndicators Target Achieved Comment

No. of plans prepared & approved by DWASA’s Board of Directors (BoD)

4 2 PDO Indicator; Out 4 plans, 2 were prepared with Bank-executed funds, and these plans are not attributable to the project

A new sewerage masterplan is approved by DWASA’s BoD

Yes Yes Intermediate Outcome Indicator;; Approved on September 30, 2014

A new drainage masterplan is approved by DWASA’s BoD

Yes Yes Intermediate Outcome Indicator; Approved on June 23, 2016

Diagnostic study on septage management practices in Dhaka

Yes Yes Intermediate Outcome Indicator; Strategy and implementation plan for non-networked sewer prepared

A Service Improvement Plan for LICs is prepared (LICSIP)


Intermediate Outcome Indicator; completed with Bank executed funds; thus not attributable to the project

Development of an institutional structure for DWASA’s decentralization and an action plan for its implementation


Intermediate Outcome Indicator; completed with Bank executed funds; thus not attributable to the project

A new decentralized zonal management structure and action plan for its implementation are approved by DWASA’s BoD

Yes No Intermediate Outcome Indicator; Not attributable to the project, as this was Bank-executed. New organizational structure prepared, but not yet approved by BoD

49. As indicated in Table 2, the LICSIP, the decentralization structure and action plan and the zonal management structure and action plan are not attributable to the project as these were executed by the Bank using WSP funds (See section 1.7 and 3.5). Thus, the PDO outcome is rated Modest.

50. The project also assessed DWASA’s financial aspects. Audited balance sheets for FY11 – FY15 show that the ratio of current assets over current liabilities is above the required threshold in the covenant, ranging from 2.05 to 3.13. DWASA’s income statements show that a positive net income was maintained throughout the period, with US$ 2 million (BDT 160 million) in FY15.

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3.3 Efficiency

Rating: Substantial

51. The economic analysis looked at impacts from flooding that occur with and without the project investments over the period of 2016-2030 for a one in ten year flood event (See Annex 3). The ICR analysis takes into account the likely socio-economic changes in the project area from 2016-2030. Scenarios with various discount rates are illustrated in Annex 3, using discount factors ranging from 3, 6, 9 and 13 percent. A discount factor of 6 percent is confirm the latest World Bank Guidance note, while 13 percent was used at appraisal13.

52. At appraisal, the economic analysis considered the benefits resulting from avoided damage costs due to reduced flooding and avoided disruption in economic activities. The Net Present Value (NPV) of project investments was estimated at US$ 23.1 million at a 13% discount rate.

53. At project closing, a similar economic analysis was carried out, however the hydraulic and economic model used was more refined as it was developed for a recent Bank publication14 with support of the Bangladesh Climate Change Resilience Fund. Using a discount rate of 6 percent, the NPV of project investments was estimated to be US$ 24.2 million between 2016 and 2030 and the EIRR 12.1 percent (the present value of the investments and O&M costs was estimated at US$ 53 million; and the present value of the accumulated avoided damage was estimated at US$ 77.1 million). Avoided damages can almost equally be attributed to khal rehabilitation and pumping station investments. The majority (82 percent) of avoided damages occur in Central Dhaka catchment. Using a discount factor of 13 percent (as used during appraisal), the NPV of the project investments turns negative to US$ -4.6 million. However, it is to be noted that the model used to quantify the benefits at project closing was different compared to appraisal (see Annex 3). Furthermore, externalities due to flood investments cannot be fully captured in the model.

54. A financial analysis for the khal rehabilitation was not carried out at project closing since the investments do not generate additional revenues to DWASA. However, an average unit cost per meter khal rehabilitated under the project was calculated. A unit cost analysis for the khal rehabilitation was difficult to perform, as benchmarking is complicated by site-specific conditions like cross-sections and lining requirements. An average unit costs per meter khal rehabilitated under the project was calculated for different canal lining types and compared favorably with DWASA’s budget norms15.

55. Overall, the NPV is positive (at a 6% discount rate), EIRR is high, and unit cost

13 Word Bank Communications February 2016. (Fay, M., et al., 2016) Discounting Cost and Benefits in Economic Analysis of World Bank Projects. Washington DC.14 Dasgupta, Susmita; Zaman, Asif; Roy, Subhendu; Huq, Mainul; Jahan, Sarwar; Nishat, Ainun. (2015). Urban Flooding of Greater Dhaka in a Changing Climate: Building Local Resilience to Disaster Risk . Directions in Development--Environment and Sustainable Development; Washington, DC: World Bank. 15 Meter unit cost of khal rehab, for varying cross-sections range from US$ 1000-4000/m for RCC U-drains/retaining walls and US$500-2000/m for Trapezoidal block lining. The values compare favorably with DWASA’s budget norms: US$4500-5125/m for RCC U drains/retaining walls and US$3200/m for Trapezoidal block lining.

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for khal rehabilitation was lower than DWASA norms, indicating high efficiency of investments. Although it took longer than anticipated to implement the project, the interventions will lead to long term net benefits due to the impacts on reducing flood damage. Thus, overall efficiency is rated as Substantial.

3.4 Justification of Overall Outcome Rating

Rating: Moderately Unsatisfactory

56. Before restructuring, the overall outcome rating is Unsatisfactory based on a Substantial rating for relevance of objectives, a Modest rating for relevance of design and implementation, a Substantial rating for efficiency, and a Modest rating for achievement of PDO (efficacy). After restructuring, the overall outcome rating is Moderately Unsatisfactory based on a Substantial rating for relevance of objectives, relevance of design and implementation, efficiency, and a Modest rating for achievement of PDO. Based on a weighted average as per the relevant disbursement amounts before and after restructuring as indicated in Table 3, the overall Project Outcome is Moderately Unsatisfactory.

Table 3. Calculation of outcome rating based on weightingPre-

restructuringPost-

restructuringOverall

Relevance of Objectives Substantial SubstantialRelevance of Design/Implementation

Modest Substantial

Efficacy (PDO achievement) Modest ModestEfficiency Substantial SubstantialDisbursement amount US$ 15 m US$ 57 m US$ 7216

Weighting factor 21 % 79 % 100 %Outcome rating 2

(Unsatisfactory)3 (Moderately

Unsatisfactory)2.8 rounded to 3

(Moderately Unsatisfactory)

3.5 Overarching Themes, Other Outcomes and Impacts

(a) Poverty Impacts, Gender Aspects, and Social Development

57. Poverty Impacts: It is expected that the project will help improve overall quality of life for all residents, including the poor, by reducing incidents of flooding and waterlogging. In addition, project interventions resulted in water supply access for about 49,000 LIC residents. As a result of this work, DWASA’s capacity to provide water supply services in LICs is also expected to improve.

58. Gender and Social Development Impacts. The project did not report any specific gender or social development impact, other than stating 50 percent of direct beneficiaries are female, based on the 2015 Bangladesh country

16 At project closing (June 2016), the XDR exchange rate represented a total of US$ 71.8 (see Annex 1)

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estimates of the World Bank. Water committees were established in LICs, to mobilize community contributions and ensure regular fee collection for DWASA’s. These committees enhance social capital and are instrumental in tackling issues and conflicts that may arise.

(b) Institutional Change/Strengthening

59. Due to the Bank and other partners’ support, DWASA has developed an understanding of its obligations to serve LICs. Through this project, DWASA has also nurtured partnerships with local and international Non-Governmental Organizations (NGOs) to support interventions in LICs. Connections to LIC customers increased from 615 in 2013 to 3290 by August 2016, serving an estimated number of 545,617 residents. The project demonstrated feasible water service delivery models. However, without continued external support to its LIC unit and/or corporate budget prioritization, service provision in these communities is unlikely to scale up rapidly17.

60. DWASA is currently carrying out a review of a new organogram and is looking to set up a new sewerage directorate, however this has not yet been approved by the DWASA’s board.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops.

61. DWASA commissioned 18 Focus Group Discussions (FGDs) in selected areas of Dhaka to gather empirical qualitative evidence of impacts of project interventions. All selected sites were low lying, densely populated areas that were regularly affected by floods. The participants included petty business owners, homemakers, heads of households, teachers, and school administrators. Across all FGDs, respondents indicated that inundation led to negative impacts, including: transportation issues; loss of school days; loss of livelihood; and increased costs for home and business maintenance. In nine FGDs conducted along the Mohakhali khal in the Rampura station sites, respondents reported less severe waterlogging. Many participants also suggested a need for improved maintenance of canals and sewers, and better coordination between agencies responsible for waste management, city planning and drainage.

4. Assessment of Risk to Development Outcome

Rating: Substantial

62. The risk to development outcome is rated as Substantial for the following reasons:

a) Pumping station sustainability: Risk to sustainable and optimal operation of the pumping stations are: (i) Adequacy of human and financial resources for O&M, including preventive maintenance. In FY13, the O&M budget for the two pumping stations (with temporary pumping capacity of 12 m3/s) was US$86,000. DWASA has not yet increased O&M budget forecasts18 for the new assets. (ii)

17 8 of 16 LIC staff are financed by WSUP. Development of LIC services requires resources for customer service agents for social mobilization and community grants for investments beyond the service connections. These costs are not yet internalized.18 A modest estimate of 1 percent of investment costs would require US$ 300,000 O&M budget. DWASA forecasted

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O&M training for 20 DWASA staff was organized 18 months ago. The pumps have recently become operational, and DWASA staff may need additional training to ensure optimal operations. Moreover, complex repairs may have to be handled by international experts.

b) Khal sustainability: DWASA procured drainage cleaning equipment under the project and is also receiving TA on O&M for storm water drains from a Dutch utility19. However, average budgets for O&M for all khals for last three FYs was on US$ 1.9 million annually and for FY17, the budget has been reduced to US$ 0.9 million. Limited O&M budget and weak coordination with DCC in terms of solid waste management can affect khal sustainability.

c) Execution of the sewerage and drainage masterplans: Successful implementation of masterplans requires strong commitment from DWASA’s Board and management to continue dialogue with relevant public agencies and development partners. It requires broad support from all stakeholders, including other agencies and the citizens. At this stage, consensus to implement the masterplans is building. This is illustrated by the Government’s interest to engage in a follow-up Bank operation that would use the recommendations of the masterplans (the Dhaka Sanitation Improvement Project). However, it remains too early to assess the sustainable use of these plans.

d) Integrated measures for improved drainage situation. In addition to putting in place sustainable O&M arrangements for all drainage related infrastructure (pumping stations, khals), sustaining the improved drainage situation requires complementary investments along up and downstream parts of the drain canals to stop encroachment and improve the hydraulic capacity of the entire system, and not just isolated parts of the canals. It is not clear, if the prevention of encroachment can be sustained in the longer term.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry


63. The Bank deployed a team with diverse technical skills to design and appraise the project over a 3-year preparation period. The relevance of project objectives was substantial and there was a clear focus on poverty through the LIC-component. A risk assessment was carried out and mitigation measures were put in place. All relevant safeguards were adequately addressed during design and appraisal. Fiduciary aspects were informed by a capacity assessment in procurement and financial management and relevant training measures and covenants were included to manage risk.

64. The quality at entry was negatively affected by the following factors: (i) the

O&M budget for FY17 for two pumping stations is around US$ 150,00019 This is separate from the Bank-supported project.

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implementation timeline was tight at 4.5 years; (ii) additional work was needed on bidding documents and feasibility studies for priority investments, which affected overall project readiness; iii) the LIC component design had to be rethought in accordance with DWASA’s capacity limitations and prior experience; and, v) additional capacity strengthening activities were needed to ensure improved project management. Although the project design deliberately did not include a large institutional component at entry, the MTR showed that such measures could not be overlooked in order to strengthen DWASA’s capacity for sustainable service delivery and focus on LICs.

(b) Quality of Supervision

Rating: Moderately Satisfactory

65. The Bank allocated sufficient budget and staff resources for the project. The task team undertook regular implementation support missions and prepared detailed Aide Memoires. Specialist consultants were proactively engaged to support the project. During the initial project period, there were some weaknesses in M&E reporting (See Section 2.3), which were addressed after the MTR. At MTR stage, the task team candidly assessed the project, mobilized seasoned utility exerts to assist in an institutional diagnostics and conducted a close dialogue with the client to address shortcomings. Based on this, a level-1 restructuring was completed one month before the original closing date. Some of the activities agreed at the time of the restructuring were not reflected in the Government’s DPP, for example, the LICSIP and the institutional decentralization plan. The Bank, however, swiftly mobilized Bank-executed trust funds for technical assistance to support the institutional reform in close collaboration with DWASA. (See Section 2.3). The Bank also closely followed the construction of pumping stations and khal rehabilitation through regular field visits and documentation of progress. However, adequate transition and O&M arrangements for the newly developed assets were not put into place.

66. Supervision of fiduciary and safeguard aspects was adequate. Resettlement issues were dealt with in a pro-active manner. The Bank successfully handled a complaint along one of the rehabilitated khals by engaging regional safeguard support and in order to solve the case an external mediator was brought in with Bank support.

(c) Justification of Rating for Overall Bank Performance


67. With Moderately Unsatisfactory rating for Quality at Entry, and a Moderately Satisfactory rating for Quality of Supervision, the overall Bank performance is rated Moderately Unsatisfactory.

5.2 Borrower Performance

(a) Government Performance


68. The Ministry of Local Government Rural Development and Co-operatives (MoLGRDC) and the Ministry of Finance (MoF), Government of Bangladesh signed a

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Partnership Framework in November 2007 with the Bank and other donors committing to “address long-standing reform issues that have hampered effective operations, sound financial management and good supply of services…” A Performance Agreement signed between GoB and DWASA in 2008 was meant to reinstitute monitoring of performance and the implementation of the provisions in the WASA Act. Although the Framework was non-binding in nature, the absence of joint annual reviews of policy actions resulted in limited policy level engagement. GoB and DWASA did not adhere to the annual audits of the Performance Agreement, included as a covenant in the project, despite frequent requests to do so in Aide Memoires, nor was the agreement continued after its expiry. This hindered the assessment of DWASA’s progress towards becoming an autonomous service delivery institution.

69. Slow government decision, for example, the time taken to approve the contract variations for the two pumping stations and the revised DPP, had a significant impacts on project implementation.

(b) Implementing Agency Performance


70. DWASA was the sole project implementing agency. DWASA put in substantial effort to facilitate coordination with stakeholder in transfer of land for the pumping station and consistently followed up with GoB ministries to ensure the all bureaucratic processes were followed. DWASA also followed all Bank safeguards policies, helping resolve resettlement issues effectively.

71. Project progress was affected by DWASA’s limited technical capacity and chronic understaffing to assess the adequacy and quality of studies, for e.g. the sewerage and drainage master plan. The PMU was heavily burdened with complex procurement and extensive handholding from the Bank was needed throughout the project period to ensure that Bank’s policies were followed. The Bank team suggested increasing PMU staff and hiring consultants for procurement, contract management, site supervision and FM. However, this was not completed. Several institutional measures included at restructuring and reflected in the legal agreements were not included in the revised DPP and hence could not be financed under the project, affecting achievement of institutional development objectives.

(c) Justification of Rating for Overall Borrower Performance


72. With a Moderately Unsatisfactory rating for Government Performance and a Moderately Unsatisfactory rating for Implementing Agency Performance, the overall Borrower performance is rated Moderately Unsatisfactory.

6. Lessons Learned

73. Project Readiness. Realistic timelines, targets and readiness of designs are necessary for large and complex infrastructure projects. This can help avoid a situation in which the entire process from identification, feasibility, design, procurement and construction has be completed within one project cycle. Therefore, to mitigate unnecessary implementation delays, funds for the preparation of future investments

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studies and bidding packages can be allocated within the project. DWSSP demonstrated this approach successfully. After restructuring, long-term master plans, conceptual design, feasibility studies, and bidding packages for the next round of priority investment were delivered. The phasing of large infrastructure investments through various project cycles will be an effective way to ensure that each project has a large amount of its infrastructure investments ready at approval (design, bidding and land assignment), while preparing the detailed documents for the next follow-on stage.

74. Integrated urban planning. While integrated solutions for drainage, sanitation and solid waste would be ideal, their complexity need to be balanced with the capacity of the implementing agencies. With increasing emphasis on integrated urban solutions, future project interventions would need to include some elements of integrated planning, involving multiple institutions, while at the same time recognizing that implementation may be less streamlined if many agencies are involved. The project could not address integrated solutions well, as it positioned itself solely with DWASA and it did not engage substantially with DCCs that are responsible for solid waste management and khal clean-up. The sewerage and drainage masterplans emphasize incentives for better coordination, the need to delineate and rationalize mandates, and can provide a vehicle to gradually implement such institutional changes, while building capacity of the various entities.

75. Sustainability and institutional measures. Institutional measures along-side large infrastructure projects cannot be left unaddressed to ensure sustainable services. Inadequate utility performance is often a symptom of a lack of a proper institutional set-up. In this case, the project did not address DWASA’s overall financial sustainability to ensure that adequate financing arrangements were in place for O&M of pumping stations and regular clean-up of the khals. Institutional measures would need to be accompanied with monitoring of performance indicators and business incentives, as proposed in DWASA’s new organizational structure that emphasizes decentralization of services.

76. LIC service delivery. Service delivery to LICs is complex and requires comprehensive planning, based on an understanding of slum types, existing conditions, legal aspects, suitable technologies, and different service delivery models. The project struggled to implement a “pilot and replicate” program for LIC areas due to complexities in service delivery and the need to go beyond a “blue-print” service delivery model. A strategic and comprehensive approach is articulated in the LICSIP and forms a solid foundation for DWASA to expand services to LICs with support from development partners and NGOs.

77. Complementarity of Bank-executed funds for Technical Assistance. When project activities include institutional measures, it is essential to ensure that Bank-executed funds are not used to “substitute” activities that should be executed by the implementing agency of the project. The Bank can provide complementary Bank-executed technical assistance, while ensuring that core institutional activities linked to the project development objective will be implemented the project implementation agency.

78. Procurement. The procurement process needs be identified upfront and reflected in the overall project work plan. A clear set of criteria should be developed to evaluate the proposals and assess the strength of the vendors. The procurement process should be decided based on the nature and complexity of works and should include an assessment

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of various technology options. The two-stage bidding process used for the pumping stations may not have been required if such upfront assessment of technologies had been carried out. In addition, even though larger packages are desirable to avoid inefficiency, under this project it was clear that for civil works with local tendering (such as for canal rehabilitation), smaller packages were better suited to the capacity of local contractors.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies

79. Annex 5 provides a summary of the Borrower’s ICR. The report provides a good overview of the project design and assessment of its implementation. Findings are generally consistent with this ICR, although there are some discrepancies in data and ratings for outcome achievement and Bank and Borrower performance. The Borrower’s evaluative comments highlighted that a long-term engagement combining investments and TA is a suitable approach to strengthen DWASA’s capacity.

(b) Cofinanciers

NA

(c) Other partners and stakeholders NA

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Annex 1. Project Costs and Financing Dhaka Water Supply and Sanitation Project – Credit Number – 4506-BD

(a) Project Cost by Component (in US$ million equivalent)

Components20*

Appraisal

Estimate (US$ m)

(IDA)

Revised Estimate at

Restructuring (US$ m)

(IDA)

Actual Estimate (US$ m)(IDA)21

Percentage at

Appraisal(% of IDA)

Percentageof Revised(% of IDA)

Component 1: Investment Planning in Sanitation 63.8 3.1 3.87 6% 102%

Component 2: Rehabilitation and Strengthening of Storm Water Drainage System

80.3 60.5 52.28 69% 86%

Component 3: Support to the Implementation of Environmental and Social Safeguards

5.2 2.3 1.03 21% 45%

Component 4: Support to Service Improvement Planning in Low-Income Communities

8.7 1.5 1.82 22% 121%

Component 5: Project Management and Institutional Capacity Building

7.7 8.6 12.69 174% 148%

Total Baseline Cost 165.7 76.0 70.9 48% 93%Total Contingencies**

Total Project Costs 165.7 76.0 71.8Front-end fee PPFFront-end fee IBRD

Total Financing 165.7 76.0 71.8** Contingencies were included in component estimates. Physical and price contingencies at appraisal were US$ 19 million, and US$ 6 million after restructuring. (b) Financing

Source of Funds

Type of Co-

financing

Appraisal Estimate

(US$ millions)

RevisedEstimate

(US$ millions)

Actual/latest Estimate

(US$ millions)

Percentage at

Appraisal

Percentage of Revised

Borrower 16.70 NA 0.9 5% NA* IDA 149.0 76.0 70.9 51% 93%Total 165.7 76.0 71.8 43% 94%

20 Components 1, 4, and 5 were renamed after restructuring. This information is included in Section 1.2 and 1.321 At the beginning of the project, based on the then applicable exchange rate, the IDA credit of XDR 94.8 million was US$ 149 million. Due to variation in the XDR-US Dollar exchange rate, XDR 94.8 million was US$ 141.3 million at the time of restructuring. After cancellation and at the time of restructuring (June 2013), the project total was XDR 51 million or US$ 76 million. At project closing (June 2016), XDR 51 million was US$71 million.

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* In the restructuring paper no counterpart funding is included to finance the restructured project cost. The total use of GoB fund stands at BDT 70.0 million, or US$ 0.9 million.

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Annex 2. Outputs by Component

Component 1: Investment Planning in Sanitation (actual IDA US$ 3.17 m) (previously: rehabilitation and Strengthening of Existing Sewerage Systems)

Component 1 focused on the rehabilitation, repair and expansion of priority investments in the city’s sewerage network and treatment plant to help improve the urban environment. The start of activities under this component was considerably delayed, due to procurement issues, lengthy GoB approvals, and debate on technical design issues. As a result, the component was significantly amended at the time of restructuring and the name was changed to Investment Planning in Sanitation (original IDA US$ 52.4 million was reduced to US$ 3.1 million). At restructuring, it was determined that investments could not be completed and were dropped. Instead the focus of shifted to support DWASA’s planning capacity for wastewater investments.

DWASA prepared a sewerage master plan, which was endorsed by the Board on September 30, 2014.The plan identifies US$ 1.7 billion worth of investments for Dhaka city. Based on the priority investments identified in the master plan, DWASA updated the bidding documents for the eastern trunk sewer and rehabilitation/expansion of Pagla STP. In addition, a comprehensive package of engineering designs and bidding documents for wastewater treatment and sewerage investments in Mirpur and Uttara catchments, as well as an overall diagnostic study on fecal sludge management (FSM) were prepared.

Table 2.1 below indicates the achievements of indicators that relate to the original and revised component 1.

Table 2.1 Achievement of indicators relating to component 1Indicators baseline target achieve

dComment

A new sewerage masterplan is approved by DWASA’s Board of Directors

no yes yes On September 30, 2014

Diagnostic study on septage management practices in Dhaka

no yes yes Diagnostic study and plan for non-network sewer (FSM) arrangements were carried out

Number of households with access to sewer services

51,800 57,000 no Indicator was dropped after restructuring

Length of sewer lines rehabilitated/extended (km)

0 280 no Indicator was dropped after restructuring

Number of sewer blockages reported (no/km)

0.54 0.25 no Indicator was dropped after restructuring

Volume of wastewater collected and treated in Pagla (m3/day)

19,500 120,000 no Indicator was dropped after restructuring

Component 2- Rehabilitation & Strengthening of Stormwater Drainage (actual IDA 52.3 m)

Component 2 represents the major infrastructure works under this project that aimed at

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improving the drainage situation and reduce urban flooding. The component included (i) construction of Rampura and Kamalapur stormwater pumping stations; (ii) khal rehabilitation; (iii) storm water drainage cleaning equipment, and (iv) preparation of the Drainage Master Plan.

Construction of Rampura and Kamalapur stormwater pumping stations

As per Bank guidelines, DWASA started a two‐stage bidding process for the pumping station contracts. The procurement process took over 40 months. Contracts became effective 11 months after the Bank’s no objection. Land transfer for Kamalapur station (from Bangladesh Railways) required various approvals, further delaying physical works till September 2013. Additional time was also required for approval of contract variation orders. Rampura pumping station progressed faster and the Completion Certificate was issued on January 7, 2015. During the warranty period, it was noted that the sluice gates were not watertight. As a result, these were refurbished, and re-evaluated. Based on successful testing, an Operational Acceptance Certificate was issued on June 29, 2016. Most major works for the Kamlapur station were completed by June 2016, and the Completion Certificate and Certificate of Operational Acceptance were signed on June 26, 2016, and June 30, 2016, respectively. The total permanent capacity of the two pumping stations is 40 m3/s (25 m3/s for Rampura and 15 m3/s for Kamalapur). Both stations were designed for a one in five year 2 day rainfall event and replace previous temporary pumping capacity of 12 m3/s. A total of US$ 30.7 million was spent on the pumping stations.

Canal Rehabilitation

The component included the rehabilitation of selected drainage canals by re‐excavation, re‐profiling, and protection and improvements of their banks. The objective was to improve drainage flow and prevent encroachment, using a 2 day rainfall for a one in five year return period. Some canals were dropped due to complex resettlement issues. Ultimately, 13 sections with a total 20.89 km in length were rehabilitated, increasing average design drainage with 250 m3/s drainage capacity (no individual canal values could be provided) (see Table 2.2). A total of US$ 17.8 million was spent on canal rehabilitation.

Table 2.2. Details of khal rehabilitationNo. Name of Canal Completed Length

(m)Avg. new design discharge (m3/s)

Old design discharge

(m3/s)1 Khilgaon-Bashabo Khal Apr 2015 1440 27.72 na2 Shahjahanpur Khal Jul 2015 477 na na3 Gerani Khal Jun 2013 4005 65.93 na4 Shajadpur Khal Dec 2015 1914 38.93 na5 Kallayanpur Main Khal Jun 2015 720 77.49 na6 Baunia Khal Jul 2012 1030 99.48 na7 Digun Khal Mar 2013 3720 180.65 na8 Mohakali khal Aug 2013 630 55.31 na9 Abdullahpur Branch Khal Feb 2015 131.2 na na10 Sutivola Khal Dec 2015 3180 41.40 na

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11 Abdullahpur Khal Jun 2016 3000 51.94 na12 Segunbagicha Khal Jun2016 431 75.29 na13 Khilgaon-Bashabo (upstream) Dec 2015 212.5 na na

Total 20,890.7

Stormwater Drainage Cleaning Equipment

Various drainage cleaning equipment were procured. The procured drainage equipment included a mini-excavator, dump truck, tractor, jetting and suction machine, ten O&M vehicles, and light maintenance equipment. The sub-component financed the installation of gauges at 3 locations to monitor inundation.

Dhaka Drainage Master Plan

The Dhaka Drainage Master Plan was completed in August 2015. It was approved by the Board by June 23, 2016 and disseminated to stakeholders. It includes both structural and nonstructural aspects, although various non-structural issues are described in terms of options and will need further agreements between relevant public agencies (such as DCC and DWASA). As per the master plan, US$ 1.99 billion investment is required to improve drainage across 13 management zones by 2040. To support asset management, a Storm Water Drainage Management Database was established and staff were trained in the use of this tool.

Table 2.3 Achievement of indicators relating to component 2Indicators baseline target achieved CommentNumber of direct beneficiaries, of which female 50 percent (million)

no 4.0 3.6 Based on calculation noted in annex 3

Increase in permanent storm water drainage capacity (m3/s)

0 40 40 after restructuring, this was a PDO-level indicator

Increased capacity of rehabilitated drainage canals (m3/s)

0 250 250 No comparison between discharge before and after rehabilitation could be found

Length of storm water drainage canals developed (km)

0 20.80 20.89 Fully achieved.

A new drainage master plan is approved by DWASA’s BoD

no yes yes Fully achieved

Drainage modelling undertaken of the impacts of i) khal rehabilitation and ii) storm water station

no yes No (not attributable)

Completed but not attributable to the project, financed with GFDRR funds

Water level and number of days of waterlogging in eastern part of Dhaka

na na No Indicator was dropped after restructuring

Volume of solid waste collected along the canals (t)

0 20,000 No Indicator was dropped after restructuring

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Component 3 Implementation of Environmental and Social Safeguards (actual IDA US$ 1.02)

Environmental support

The environmental and safeguards program was defined in the PAD. The initial plan was quite ambitious. It included: (i) the establishment of an environment unit (Circle) in DWASA to support safeguards implementation in subprojects; and (ii) capacity strengthening of the DWASA Central Lab. However, at restructuring, the project scope was reduced, and these activities were dropped.

The following outputs and were achieved:

Implementation of the Environmental Management Framework was fully implemented, including: (i) use of limited environmental assessments for the preparation of the Environmental Management Plan in 12 sub‐projects; ii) Environmental Impact Assessment for three of the larger projects; iii) testing of excavated materials (in canals) for potentially harmful substances (they were found to be free of toxic materials in significant concentrations)

Capacity Building on Environmental Management: the project was able to improve the analytical and environmental management capacity of the DWASA Central lab, through: i) procurement of laboratory equipment22 and chemicals, ii) provision of vehicle and motorbike for sample collection, iii) providing training for staff in use of newly procured equipment, Quality Assurance and Quality Control (QAQC) in chemical analysis, and Standard Operating Procedures (SOP), iv) water quality assessment for Dhaka watershed, and v) international training.

All equipment was installed properly in DWASA Central Lab. DWASA lab staff stated that not all reagents were procured, and thus some of the equipment is not yet in use. DWASA lab staff are now able to take samples and analyze these as per agreed QAQC and SOPs. Sampling frequency (around 250-300/month) is still restrained due to available budget. The water quality assessment for Dhaka watershed produced water quality maps for three quarters of a hydrological cycle. These maps can be used by DWASA to plan for flood events.

Safeguard Support

During project preparation, DWASA undertook a Social Impact Assessment (SIA), including extensive community/stakeholder consultations for each canal and for the storm water drainage pumping stations. Resettlement Plans were prepared and implemented in close coordination with the Bank team. The project built PMU capacity to handle complex resettlement issues. These lessons were reflected in the revision of the Resettlement Policy Framework. Complex khal rehabilitations were dropped23, to

22 A full listing of equipment has been provided in the ISRs.23 In one of the khals eviction took place of an unknown number of people. A tracer study was expedited by DWASA. However due to the risk that these studies are incomplete, this khal was dropped. A total of seven khals were dropped due to complex resettlement issues

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minimize the number of PAHs. A total of 216 households were compensated along the khals and 225 households received compensation (US$ 0.3 million). Table 2.4 indicates the achievements under this component.

Table 2.4 Achievement of indicators relating to component 3Indicators baseline target achieved CommentNumber of project affected households successfully compensated

no 500 441 This represents all households that were eligible for compensation

Component 4 Support Service Improvement Planning in Low-Income Communities (actual IDA US$ 1.82 million)

The original component was expected to support pilot sub-projects in various low-income communities (LIC) and focused on strengthening DWASA’s capacity to provide services to LICs. At restructuring, the scope of the component was considerably reduced. The restructured component focused on improving DWASA’s capacity to serve LIC residents.

The project financed three deep tube wells in six LICs and supported small value works to connect LIC customers. As a result, about 49,000 people in six LICs gained access to legal water supply (see Table 2.5). Table 2.6 indicates the achievements under this component.

Table 2.5. Access to water supply in LICs by the project

No. LICs Persons Households Total Connections

1 Duaripara 10,770 2,692 1012 Mollar Basti 11,960 3,148 1233 Kallayanpur 11,357 2,840 1804 Kalshi 8,976 2,244 1185 Beguntila 3,954 988 606 City colony 1,991 556 70

Total 49,008 12,468 652

Table 2.6. Achievement of indicators relating to component 4Indicators Baseline Target Achieved CommentService Improvement Plan for LICs is prepared

No Yes No (not attributable)

Completed but not attributable to the project, financed with WSP funds

Increase in number of people in project area ward slums with access to safe water

0 180,000 NA This indicator was dropped at restructuring; nevertheless achievements were made

Increase in number of people in project area ward slums with access to improved sanitation

0 218,000 NA This indicator was dropped at restructuring

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Component 5 Project Management & Institutional Capacity Building (actual IDA US$ 12.7m)

At restructuring this component focused on institutional strengthening to position DWASA as a stronger service delivery institution. An institutional assessment suggested that decentralization would allow DWASA to deliver effective and efficient services. Through Bank-executed resources, Water and Sanitation Program (WSP) facilitated the execution of a diagnostic study and an option study to investigate appropriate decentralized organizational structures, aimed to improve incentives for effective zonal management. An implementation plan for its preferred decentralized organizational arrangement was delivered, including a new organogram for DWASA, outline of job descriptions for key positions, and revised salary structure. DWASA’s management and Board is currently considering the proposal.24

Under this component, the repair, refurbishment and equipment for six zonal offices and the existing training center was also executed.

Table 2.7 Achievement of indicators relating to component 5Indicators baselin

eTarget Achieved Comment

Annual statuary audits for DWASA demonstrating transparent and accountable financial management

1 4 4 Indicator before restructuring defined qualitatively “no fiduciary issues with project funds”, which is achieved

Development of an institutional structure for DWASA decentralization and an action plan for its implementation

no yes No (Not attributable)

Completed but not attributable as financed with Bank executed funds (WSP)

A new decentralized zonal management structure and an action plan for its implementation are approved by DWASA’s BoD

no yes No Proposed organigram was developed with Bank executed funds; proposal not approved by DWASA Board

DWASA Zonal Offices refurbished and equipped

0 1 6 Total of 6 zonal offices have been refurbished and equipped

24 See also Castalia (2015) Options Report of the Organizational Structure of DWASA. Three options were proposed with increasing degree of autonomy at zonal level. DWASA’s preferred option was the “Integrated Zonal Management”. This implies that each zone is organized under an administrative unit, headed by a Zonal Manager. This model strives to improve collaboration between technical and commercial teams, minimize costs and optimize efficiency through increased accountability at zonal level.

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Annex 3. Economic and Financial Analysis

The project planned for investments in i) storm water drainage infrastructure, including storm water pumping stations and canal rehabilitation, ii) sewerage investments, and iii) water supply and sanitation investments in LICs. After restructuring the investments were narrowed to drainage improvement. The economic analysis at appraisal stated that project benefits would accrue from avoided damages to infrastructure, avoided disruption in economic activities, and avoided environmental degradation and their associated costs to the society. Using a damages impact model available at that time, it was estimated that the NPV of incremental benefits was US$ 23.1 million at a 13 percent discount rate for a one in five year flood event. The IRR of the project at appraisal was estimated at 17.2 percent. It was estimated that a total investment of US$ 80 million would be required for the drainage investments, including recurrent O&M costs.

This ICR economic analysis uses in principle the same avoided damages methodology, however has benefitted from the development of recent hydraulic and economic damage models with support of Global Facility for Disaster Risk Reduction for a series of recently published World Bank reports on climate change and the impact of urban flooding in Dhaka25. The ICR analysis uses the actual costs for the drainage investments, accounting for US$ 47 million and reasonable estimates for recurrent O&M expenditures and includes state-of-the-art i) hydraulic modelling to estimate the impact of the project investments on urban flooding, and ii) analyses of avoided damages and the estimation of economic benefits26. Other differences than the hydraulic and economic models used at appraisal and at ICR are i) the return period used (at appraisal one in five year, at ICR one in ten years), ii) discount factor (at appraisal 13 percent, at ICR 6 percent), and iii) the lifespan of NPV calculations (at appraisal 30 years, at ICR fifteen years). A sensitivity analysis has been carried out that uses discount factors of 3, 9 and 13 percent, the latter being used at appraisal27.

Flood modelling

The objective of the study is to simulate the impact of project investments, particularly on changes in flood depth and duration across the project area. In addition, the study also aimed to simulate different O&M scenarios, demonstrating the need to maintain well-functioning drainage infrastructures and institutions. The location of project investments, including for the pumping stations and the 13 canals, is indicated in Figure 3.2. The

25 Dasgupta, Susmita; Zaman, Asif; Roy, Subhendu; Huq, Mainul; Jahan, Sarwar; Nishat, Ainun. 2015. Urban Flooding of Greater Dhaka in a Changing Climate: Building Local Resilience to Disaster Risk. Directions in Development--Environment and Sustainable Development;.Washington, DC: World Bank and World Bank (2015b). Climate and disaster resilience of greater Dhaka area: a micro level analysis. Bangladesh development series; paper no. 32. Washington, D.C. World Bank Group.26 These are IWM (2016) Flood Modeling of Dhaka City – Part 2 Impact and Resilience of Storm Water Drainage Investments of Dhaka Water Supply and Sanitation Project (DWSSP); and Roy, S. (forthcoming) The Impact of Storm Water Drainage Investments by DWASA in Greater Dhaka Area – Estimation of Potential Damages Component and Economic Analysis.27 Discount rate of 6 percent is the current recommended practice as per the World Bank (2016) Discounting Costs and Benefits in Economic Analysis of World Bank projects. The discount period used is conservatively estimated at 15 years, while benefits may extend beyond this period but are not expected to contribute considerably due to the time value of money.

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modeling was done for a ten year flood event, applying a hydraulic inundation model with existing drainage infrastructure and baseline conditions of 2010 for imperviousness of surfaces and land-fill/topographic conditions. In addition, scenarios were simulated with different O&M levels (e.g. siltation of canals due to lack of maintenance, fall-out of 1 or 2 pumps at monsoon peak).

Data for the improved khals cross sections and pumping station regime were collected from DWASA and used to update the hydrodynamic model for the “with project” scenario. Other boundary conditions are external water levels, inter-zonal flows and wastewater flows. The modelling used the latest drainage models for four catchment zones: i) Central Dhaka, ii) Kallyanpur, iii) Goranchatbari, and iv) eastern Dhaka. Results for flood depth and duration comparing the “without” project” and the “with project” scenario for each of different zones are summarized in Table 3.1.

Table 3.1. Summary of impact of project investments on flood depth and duration Catchment zone

Flood depth Flood duration Comment

Central Dhaka Significant reductions in flood extent and depth in ward 24, 31, 32 and 75

Large to modest reduction in average flood duration in ward 21, 23, 24, 25, 26, 30, 31, 32, 33, 35, 37, 54, 55, 75, 76, 84, 85 (up to 25 hrs)

Includes two pumping stations and three khals rehabilitated

Overall flood depth increase slightly in ward 22 and 5528

Kallyanpur Mixed reduction/increase in flood depth in ward 10, 13, 16, 4329

No significant changes in average flood duration

One khal was rehabilitated

Goranchatbari Slight decrease in medium flood depth in ward 15

Slight decrease of average flood duration in ward 4, 5 and 15

Four khals were rehabilitated

Eastern Dhaka No significant change in flood extent and depth

No significant change in average flood duration

Five khals were rehabilitated

The extent by which the khal rehabilitation helped to mitigate urban flooding in other catchment areas is minor, mostly because: i) khals have only been improved partially (not the whole system), and ii) the influence of the improvement is localized to the rehabilitated area as the drainage system is controlled by downstream levels. Nevertheless, the canal rehabilitation produced other benefits, such as the protection from encroachment, aesthetic enhancement, and improvement of waste water flow in off-peak season.

Economic modellingThe economic modeling exercise estimates the reduction in monetary damages due to project interventions by comparing the “without project” and “with project” scenario results using 2016 socio-economic conditions. The monetary damage is estimated by examining the direct and indirect impacts of flooding. 28 This is due to high initial water level at Hatirjheel retention area (not the case in the “without project” scenario)29 In ward 10 and 43 (downstream of improved Kallyanpur canal) the area with low and medium flood depth is decreasing, while area with high flood depth has increased. In ward 13 and 16 the reverse situation is found (upstream of the improved canal section).

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Flooding can affect buildings and property and lead disruption of livelihoods. The longer duration of the flood can exacerbate the damage. While impacts like damage to property and loss of income from flooding can be more easily quantified, it is often difficult to assign monetary values to the socio-economic, environmental, and health impacts of flooding. Wherever possible, the analysis tried to impute monetary values for these intangible damages.

The analysis compared the economic impacts with and without project interventions from a one in ten year flood event over a fifteen year period (2016-2030)30. Changes in the valuation of damage between 2016 and 2030 are estimated using a 6 percent growth in GDP, the average rate over the past decade. To assess the damage in real terms, all economic data are based on 2016 prices and thus ignores any inflation that can occur by 2030. The analysis also takes into account the likely socioeconomic changes in the project area during a 15 year period, which includes considerable uncertainties given Dhaka’s rapid development. To determine the expected total damage between 2016 and 2030, the cumulative damage between 2016 and 2030 is based on random assignment of 1-year to 10-year storms during each year.

Flood damage is split into two categories: direct damage and indirect damage - if time is a primary factor for the estimates.

Direct Damage: This economic loss is primarily concerned with the damage to physical capital from water submersion, and the depth of flooding is the primary determinant of such damage. However, the degree of damage can also increase with the duration of flooding of a given depth. The most common examples of damage to private resources are buildings and property. Other losses include damage suffered by owners of transport vehicles, and telecommunication and electric infrastructure. Publicly owned infrastructure like roads, railways, water and sewerage facilities, etc. can be damaged.

Indirect Damage: The main determinant of such damage is the duration of the flooding above a certain depth that can lead to disruption of normal activity over a period of time. While majority of the loss in this category will occur during the flooding, some of the losses can continue even after water recedes. The most significant component of this loss arises from the loss of income due to the inability of people, businesses, and industries to carry out their normal economic activity. The loss of resources covered under direct damage can also prolong the total or partial loss of earning capacity even after flood water recedes. Indirect damage can also occur from impacts on transport and communications infrastructure. Indirect damage also arises from additional health care costs and reduced income from higher morbidity (See Table 3.2).

30 While the economic lifespan of the investments are longer, the projection beyond fifteen year will add additional uncertainty in the assumptions, and due to the time value of money will not contribute greatly to the overall damage estimates.

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Figure 3.1. Drainage investments done under the project

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Table 3.2. Assessment of damages across sectorsSector Direct Damage Indirect damageResidential Building, Property Loss of IncomeCommercial Building, Property Loss of IncomeIndustrial Building, Machinery, Inventory Loss of IncomeHealth Infrastructure, Mortality Treatment costs, MorbidityRoads Infrastructure Travel DislocationTransport Damage to vehicles Loss of IncomeRailways Infrastructure Travel Dislocation

Avoided damage estimates and affected beneficiaries

The accumulative damage for the period 2016-2030 for the different catchment areas is indicated in Table 3.3. The largest damage reduction occurs in avoided income loss31, followed by residential property and buildings. The cumulative damage reduction from project implementation is around US$ 77.1 million.

The number of beneficiaries is the total (2016) population living in the wards where project interventions are expected to have an impact (See Table 3.4). The total number of people benefiting from project interventions is estimated to be around 3.6 million32.

Table 3.4. Estimated number of population (in million) affected by project investmentsCentral Dhaka

Kallyanpur Goranchatbari

Eastern Dhaka

Total

Total population in catchment

3.73 3.04 5.16 5.27 17.2

Population positively impacted

1.37 0.97 1.22 0.01 3.6

Population negatively impacted33

0.29 - - - 0.3

31 Income losses for Dhaka residents are estimated based on per capita GDP data as it reflects per capita income of residents. The income loss computation is based on the number of people affected by flood multiplied by the lost work days among them. The income loss also includes the loss suffered by migrant workers coming daily to Dhaka.32 In the worst case maintenance scenario (2 pump failure, 30% siltation), five wards in Central Dhaka (w30, w31, w32, w38, w75) will experience significant negative impact, with around 0.5 million people experiencing less than optimal flood reduction due to the project investments33 0.3 million people will experience an increase in flooding due to changes in the fixed water level at Hatirjheel retention pond ( beyond the influence of the project)

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Central Dhaka Kallyanpur Goranchatbari Eastern Dhaka

without

with

avoided

Without

with

avoided

without

with

avoided

without with avoid

ed

Residential Building

43.4 32.0 11.4 33.1 29.8 3.3 9.5 9.3 0.2 820.6 820.5 0.1

Residential Property

57.9 44.7 13.2 35.9 32.6 3.4 12.3 12.0 0.3 806.5 806.

5 0.1

Commerce 9.4 5.6 3.8 3.1 2.9 0.2 2.1 2.1 0.1 219.6 219.

6 0.0

Industry 24.1 17.8 6.3 8.3 7.8 0.5 5.6 5.4 0.1 602.5 602.5 0.0

Income Loss 47.6 33.9 13.7 29.3 27.2 2.1 6.1 5.6 0.4 1480.

21479

.9 0.2

Health 29.3 23.0 6.3 8.8 8.3 0.5 10.9 10.8 0.2 51.5 51.5 0.0

Roads 7.5 3.2 4.4 6.7 6.3 0.3 2.4 2.3 0.1 332.4 332.4 0.0

Railways 1.3 0.7 0.5 0.8 0.7 0.1 0.1 0.1 0.0 33.1 33.1 0.0

Transport 13.0 9.1 3.9 17.7 16.6 1.1 9.0 8.7 0.3 1736.

91736

.8 0.0

Total 233.5 170.0 63.4 143.8 132.

2 11.6 58.0 56.3 1.6 6083.

56083

.0 0.5

Table 3.3. Accumulated Damage in Catchments for 2016-2030 (discount factor 6 percent)

Cost Benefit Analysis and Ratios

The analysis also looked at the separate impacts of the two pumping stations, and the khal rehabilitation, and showed that the pumping stations would account for US$ 42.3 million, and the khal rehabilitation for avoided damages of US$ 34.8 million (Table 3.5).The economic return from the project is based on the avoided damages from the project and the initial investment costs and annual O&M costs under the project for 2016-2030. A total investment of $48.5 million was used for the complete project ($30.7 million for installation of two new pumps and $17.8 million for rehabilitation of the canals). Based on past experience, the O&M costs for the two pumping stations were estimated at US$ 0.15 million annually and for the khals at US$ 0.31 million. The ratios are presented in Table 3.5.

Table 3.5. Results of Cost Benefit Analysis with discount factor of 6 percent PV of

Investment PV of

Avoided Net Present

ValueReturn on Investment

Economic Internal

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and O&M (US$ m)

Damages(US$ m) (US$ m)

Rate of Return

Total Project 53.0 77.1 24.2 1.46 12.1%

Pump Installation 32.2 42.3 10.2 1.32 9.9%

Canal Rehabilitation 20.8 34.8 14.0 1.67 15.7%

The total project has a high ROI of 1.46 with a positive NPV of $ 24.2 million. The EIRR is 12.1 percent. Both investments (pump installation and canal rehabilitation) show positive returns. The damage estimates reveal that for a one in 10 year flood, project-related damage savings from 2016-2030 exceed the investment made in the project. The EIRR of 12.1 percent reveals significant returns from the investment.

Sensitivity analysis for different discount factors

Table 3.6 summarizes the ratios, using different discount factors of 3, 9 and 13 percent (the latter was used at appraisal). As can be seen, the EIRR slightly decreases from 12.1 percent for a discount factor of 6 percent, to 10.9 percent with a higher discount factor of 9 percent and the project continues to deliver net economic benefits.

Table 3.6 Ratios for situation with different discount factors

Discount factor

PV of Investment and O&M (US$ m)

PV of Avoided Damages(US$ m)

Net Present Value

(US$ m)Return on Investment

Economic Internal Rate

of Return3% 54.0 98.5 44.5 1.82 13.3%6% 53.0 77.1 24.2 1.46 12.1%9% 52.2 61.4 9.2 1.18 10.9%13% 51.5 46.8 -4.6 0.91 9.4%

Only at a much higher discount factors of 13 percent, used at appraisal, the net economic benefits turn negative (NPV of minus 4.6 million) and the EIRR drops to 9.4 percent (below the discount rate used of 13 percent).

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/Specialty

Lending

Supervision/ICR

Sudipto Sarkar Lead Water Supply and Sanitation Specialist GWADR TTL

Josses Mugabi Senior Water Supply and Sanitation Specialist GWADR TTL

Martin Gambrill Lead Water Supply and Sanitation Specialist GWASS TTL

Fook Chuan Eng Lead Water Supply and Sanitation Specialist GWADR TTL

Arif Ahamed Senior Water Supply and Sanitation Specialist GWADR Co-TTL

Nishtha Mehta Water and Sanitation Specialist GWADR Team Member Burhanuddin Ahmed Consultant GED06 Sheikh Naveed Uddin Ahmed Consultant SASHN -

HIS Md. Akhtaruzzaman Sr Institutional Dev. Spec. GWASS

Soma Ghosh Moulik Lead Water and Sanitation Specialist GWADR Team Member

Shideh Hadian Senior Infrastructure Economist GWADR Team MemberArvind Prasad Mantha Financial Management Specialist GGODR FMIshtiak Siddiqi Senior Procurement Specialst GGODR Procurement Marghoob Bin Hussein Senior Procurement Specialist GGODR Procurement Zafrul Islam Lead Procurement Specialist GGODR Procurement Muhammed Riadul Islam Procurement Analyst CMEAS Procurement

Dr. M. Khaliquzzaman Local Consultant ST GEN06 Environmental Safeguards

Tarak Sarker Program Assistant SACBD Team MemberAbu Ahmed Mansoor Kabir Program Assistant GWASS Team Member Md Abul Fayez Khan Program Assistant EDS12 Team Member Lilian MacArthur Program Assistant GSURR Team Member Abdul Motaleb Sr Water & Sanitation Spec. GWASS Team Member Fabio Pittaluga Senior Social Development Spec GSURR Social Safeguards

Prakash Raghunath Sanglikar Local Consultant ST GWA06 Technical Consultant

Shyamal Sarkar Consultant GWA06 Technical Consultant

Chau-Ching Shen Senior Finance Officer WFALN Finance

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Kishor Uprety Senior Counsel LEGAM Lawyer

(b) Staff Time and Cost

Stage of Project CycleStaff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands (including travel and consultant costs)

Lending FY05 8.86 3.51 FY06 56.62 109.22 FY07 62.33 198.03 FY08 103.87 403.19

Total: 231.68 713.95Supervision/ICR

FY05 0.00 FY06 -0.33 FY07 0.00 FY08 0.00FY09 48.85 162.24FY10 31.91 115.24FY11 28.65 130.91FY12 42.46 205.91FY13 52.32 233.10FY14 39.45 172.28FY15 59.14 252.47FY16 37.39 239.56

Total: 340.17 1,511.38

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Annex 5: Summary of Borrower's ICR and/or Comments on Draft ICR

1.1 Context at appraisal

Dhaka is the primary urban center in Bangladesh. Dhaka’s population is estimated at around 12 million, comprising about one third of Bangladesh’s urban population. It is by far the largest urban center in Bangladesh. In contrast, the second largest city in Bangladesh, Chittagong, has a population of about four million. The preeminence of Dhaka as the overwhelmingly largest urban center in Bangladesh is both a source of concern and opportunity. The city provides livelihood options for millions of migrants that come from rural areas in search of better opportunities to improve their living standards. Dhaka is growing rapidly. Between 2000 and 2005, the city grew at an average rate of 4.4% per year. It is estimated to be one of the fastest growing mega city in the world.

WSS service provision unable to meet demand growth. Much of the growth in the city has been from migration of the rural population. Other contributing factors include natural growth of population and expansion of new areas to the existing city limits. Dhaka attracts private sector investments in manufacturing, commerce and construction due to availability of labor pool and better quality of supporting infrastructure services. Extensive investment in the past in urban infrastructure in Dhaka further influenced the growth of industrial and commercial activities. However, the extraordinary growth in Dhaka’s population puts pressure on utility service providers to meet the needs of its population.

DWASA is the sole authority for water and sewerage service provision. Dhaka Water Supply and Sewerage Authority (DWASA) manages about 3462 kilometers of water distribution network and 916 kilometers of sewerage networks. DWASA is responsible for about 350,772 water and about 59,366 sewerage connections. It is estimated that only about 20% of the Dhaka City Corporation (DCC) area is covered by the sewerage network (DWASA, Annual Report 2014-15).

DWASA lacks autonomy in practice. In practice DWASA’s autonomy is significantly constrained. While the WASA Act (1996) provides for a multi-stakeholder Board of Directors structure, the GOB retains the sole responsibility for the appointment of the Board. There are no established rules or procedures for the appointment of the Board of Directors providing for the systematic input of other stakeholders in this process. The Act provides for GOB approval and involvement when the GOB provides financing or guarantees to DWASA - which is the case in DWASA operations, particularly in infrastructure development activities. Recently, implementing rules and regulations of the WASA Act (1996) have been approved. Of the five Rules and Regulations, two have been published in the National Gazette while three are pending final GOB approval. This is expected to increase the functional autonomy of DWASA.

DWASA is responsible to provide WSS service to slums. The Dhaka Water Supply Policy (2005) confirms DWASA’s mandate to extend basic water supply and sanitation services to slums within its service area, to provide legal connections, and to introduce formal billing and collections. Through this guideline, the GOB commits to 100% water supply coverage to the urban poor of all slums. Nevertheless, DWASA faces an

40

enormous implementation challenge to ensure that all sections of the society, including the urban poor, can access water and sanitation services.

DWASA is unable to provide adequate sewerage services. Dhaka’s sewerage system has deteriorated particularly due to the damage caused by the 2004 floods, which devastated the functioning of the sewerage network of the city. The primary, secondary and tertiary lines are partly or fully damaged, and the damage to the trunk sewer main to the Pagla Sewerage Treatment Plant (PSTP) from the 2004 floods has contributed to the 50% reduction in capacity utilization of the plant. Additionally, new treatment plants would need to be constructed to expand the sewerage coverage for newly occupied areas throughout the city.

Deteriorated sewerage systems adversely affect water quality. The pressure on Dhaka’s sewerage system has sewerage system exacerbates the poor and deteriorating condition of the water quality of the surrounding water bodies. Indiscriminate dumping of industrial effluents, solid wastes and untreated sewage into the Buriganga, Balu, Turag and Shitalakhya rivers continue to strain an already overburdened sewerage network and treatment capacity. Though several agencies - Department of Environment, Institute of Water Modeling (IWM) and Water Resources Planning Organization (WARPO) - regularly monitor raw water quality, the lack of enforcement of acts, policies and guidelines have aggravated the pollution in these water bodies. Water quality parameters of Dissolved Oxygen (DO), Biological Oxygen Demand (BOD), and Chemical Oxygen Demand (COD) exceed the permissible limits, particularly during the dry season between January and April, making water unusable for any domestic purposes and for treatment by the Saidabad Water Treatment Plant. The GOB has taken the initiative for surface water management on a priority basis.

DWASA has also been given the mandate for major storm water drainage. The responsibility for storm water drainage in Dhaka was transferred from the Dhaka City Corporation (DCC) to DWASA in 1989 through an LGD circular and subsequently included in the WASA Act (1996). Under this arrangement, the operations and maintenance of 43 Khals (canals) and two associated drainage pumping stations (Kalyanpur and Dholaikhal) came under the responsibility of DWASA. This comprises about 350 km of the city’s storm water drainage system, which covers about 38% of the DCC area, to drain out the flood water through natural canals into the adjoining rivers. It should be noted that there are no separate provision for DWASA to be remunerated for the cost of storm water drainage operations.

Inadequate storm water drainage poses significant costs to the city. Currently only 26 khals (canals) out of the former 43 canals are recognizable in Dhaka city, as the remaining khals have been partially filled in. Illegal encroachment and its associated problems such as maintenance difficulties and khal clogging is a significant issue in major khals. Moreover, the functioning of the storm sewer system is hindered by sedimentation in the storm water inlets caused by road carpeting materials and construction materials. Improper maintenance of the inlets of storm sewers aggravates the scale of the problem. These problems have resulted in continued frequent water logging in the city during the monsoon seasons. During the 2004 floods, it was estimated that approximately US$6.3 million of losses per day were sustained by businesses and residents during the 30 days when the city was incapacitated by flooding.

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Solid Waste Management in Dhaka. While DWASA is partly responsible for the storm water drainage systems in Dhaka, solid waste management in Dhaka remains the responsibility of the Dhaka City Corporation (DCC). Inefficient solid waste management in Dhaka adversely affects DWASA’s operations of the storm water drainage, particularly in slum areas where solid and other wastes are frequently thrown into the canals.

1.2 Rationale for Bank involvement

The Primacy of Dhaka City and Dhaka’s Investment Needs. Dhaka is the preeminent urban center of Bangladesh supporting the livelihood of about 12 million people. It has historically attracted and is presently attracting large numbers of migrant workers from the rural areas of Bangladesh. This trend has contributed largely to Dhaka being estimated as one of the fastest growing megacity in the world. The recent population growth of about 4.4% per year is projected to continue, with the population projected to increase to about 21.6 million by 2025. Dhaka is the main commercial hub of Bangladesh and contributes more than 20% of Bangladesh’s GDP (estimated at about US$61 billion in current terms in 2006). The investment needs to provide services to Dhaka’s population are significant.

1.3 Implementation Strategy

The project sponsored interventions were expected to bring about public health and environmental benefits, by improving delivery and quality of DWASA services

1.4 Project Development Objective (PDO) and Key Indicators:

The Original Project Development Objective was to “improve the sustainable delivery of storm water drainage, waste water and water services by DWASA to the population of Dhaka City through: (i) the installation of selected storm water pumping station and the rehabilitation of selected canals to help improve drainage and minimize urban flooding; (ii) the rehabilitation , repair and expansion of priority investments in the city’s sewerage network and treatment plant to help improve the urban environment; (iii) supporting DWASA’s pilot expansion of water and sanitation services into selected Dhaka slums to help increase services to the urban poor”. The key outcome indicators of the development objectives are the following:

(i) Water level and number of days of water logging in the eastern part of Dhaka(ii) Number of households with access to sewerage services(iii) Increase in number of people in project area ward slums with access

1.5 Revised PDO

The project was restructured mid-June 2013 and the PDO also changed. The original project was declared effective on March 17, 2009 but implementation suffered due to slow disbursement. It was only 10.5 percent in four years, the closing date of the project being on 30 June 2013. The project suffered the consequences of delays resulting from issues related to its initial readiness and design (at appraisal, no detailed engineering designs were ready, the consultancy assignments to prepare the detailed interventions had not been procured, the LIC component had not been clearly conceived), start up delays and problems with the procurement of key consultancies and civil works. Significant delays occurred regarding (i) procurement of the sewage master plan consultancy, which

42

included identification, detailed design, preparation of bidding documents for priority sewerage and wastewater treatment works (ii) the adoption of a complicated two-stage bidding process for the two large storm water pumping stations, (iii) procurement of consultancy services to prepare the drainage master plan, and (iv) the initial design of the LIC component. As a result following changes (restructure) in the project components were made: (i) reducing the scope of activities under the sewerage and the LIC component (component 1 and 4), (ii) incorporating additional DWASA institutional strengthening activities into the project management component, (iii) cancelling US$65.34 million of the original IDA credit, (iv) extending the closing date and (v) amending the PDO and results framework to correspond with the revised project scope and extended project implementation period.

The revised PDO was stated as “to improve storm water drainage in Dhaka and to improve DWASA’s capacity for investment planning and operations”. To reflect the above changes in the PDO the results framework and its indicators were also adjusted as mentioned below.

(i) Number of direct project beneficiaries and percentage of female population;

(ii) Increase in permanent storm water pumping capacity

(iii) A new drainage master plan for Dhaka city is approved by DWASA’s Board of Directors;

(iv) A new sewerage master plan for Dhaka city is approved by DWASA’s Board of Directors;

(v) A new decentralized zonal management structure and action plan for the implementation are approved by DWASA’s Board of Directors.

1.6 Main Beneficiaries

The primary target group was the local communities and in particular the poor and vulnerable groups in the eastern part of Dhaka city. Total beneficiaries of two pump houses and 13 rehabilitated canals are estimated at 3.6 million. This estimate is based on the assumption of the catchment area of these infrastructure estimated at 105.28 km2 with a density of population of 34,700/km2.

1.7 Status of Implementation Performance

The project has made good progress on all components.

Achievements and Progress update

(i) Component 1: Achievement and progress made by the close of implementation period include (i) Dhaka Waste Water Management Master Plan has been approved by DWASA’s Board; (ii) the priority sewerage and Sewerage Treatment Plant (STP) designs identified in the Master Plan have been completed, and the corresponding bidding documents were finalized;(iii) detailed engineering designs and bidding documents for sewerage investments in the Uttara and Mirpur catchments were also completed.

(ii) Component 2: The drainage master plan has been completed, finalized and disseminated to key stakeholders. The final master plan was approved by DWASA’s

43

Board by project closing. The canal rehabilitation works have been completed; the Rampura pumping station has been completed and commissioned. The contractor has carried out the required refurbishment of all the sluice gates which were subsequently tested by technical experts from the Bangladesh University of Engineering Technology (BUET). There was no barrier to issue Operational Acceptance Certificate (OAC) by DWASA for Rampura pump station.

The delay in completion of the Kamalapur pumping station has led to the risk of project closure with unfinished works. The delays in works implementation was due to delays in import of pipe jacking instruments, slow progress in works implementation with limited labor force, breakdown of major jacking equipment as well as required repair. However, the contractor successfully installed four discharge pipe sections underneath a busy road through pipe jacking method and completed all ancillary works by project closure.

(iii) Component 3: Support to the Implementation of Environment and Social Safeguards:

Environmental Safeguards: Work on all the sub‐projects (i.e.13 canals and two pumping stations) have been completed. The implementation of Environmental Management Plan (EMP) in the sub‐projects did reasonably well. Some violations were observed in the implementation of EHS provisions such as non‐universal use of PPE by the workers, missing safety signs and barriers, and piling up of construction debris.

Social Safeguards: Social safeguard issues under DWSSP were concerned with the impacts resulted from displacement of people during recovery, re‐excavation and other improvements implemented on 9 drainage canals. During preparation of DWSSP, DWASA carried out Social Impact Assessment (SIA), including extensive community/stakeholder consultations for the individual canals. In view of the potential impacts as found in the SIA, DWASA prepared a Resettlement Policy Framework (RPF) in April 2006 in accord with the principles and guidelines provided in the Bank’s OP 4.12 on Involuntary Resettlement. The RPF, which was cleared by the Bank, provided the necessary bases to prepare Resettlement Action Plans (RAPs) for individual and/or batches of canals that were selected for improvement. There was no need for private land acquisition. But the improvements on the 9 canals, as a whole, affected 187 persons/households, of which 67 were encroachers who owned land adjacent to the canals. Impacts on the encroachers were negligible and, according to the RPF they were ineligible for any resettlement assistance.

(iv)Component 4: Support to Service Provision to Low Income Communities (LIC). The original design of this component and the implementation approach envisaged presented practical challenges which necessitated a reevaluation and change in scope. The required planning and design to address these challenges demanded more time and as a result service provision activities to LICs were dropped from the restructured project and the associated cost, estimated at US$ 6.47 million, was canceled from the IDA Credit. The name of this component was changed to Support to Service Improvement Planning in Low‐Income Communities (Original

44

component name: Support to Service Provision to Low Income Communities; original IDA US$ 8.4 million; cancellation US$ 6.47 million; new IDA total US$ 1.5 million). The down‐sized component included preparations of a Service Improvement Plan for LICs. However, the study to prepare a Service Improvement Plan for low‐income customers has been completed using Water and Sanitation Program (WSP) funds. DWASA also continued to strengthen its existing Nongovernment Organization (NGO) partnerships to serve the poor through implementation of small value works in selected LICs. As a result of these partnerships, approximately 12,500 households across six LIC areas have access to legal water supply provided by DWASA through the project. Works for installation of deep tube wells at selected LIC locations to supplement water supply to these communities was also completed by project closure including completion of pump house, installation of electric sub‐station, electricity connection and delivery line installation.

(v) Component 5: Project Management, Monitoring and Evaluation (M&E), Consultations and Communications. A study to prepare an organizational restructuring plan was undertaken using WSP funds and was completed. The repair and refurbishment work for three zonal offices and the existing training center completed and renovation work for three additional zonal offices was also completed. DWASA completed preparations of the design and bid documents for a modern training center. DWASA has completed procurement of computers and database licenses. Unfortunately, the contracts of other key items to improve the utility’s information and communication technology infrastructure namely servers and storage systems as well as video‐conferencing services could not be fulfilled due to lack of project funds. These contracts were cancelled before the project closing date.

1.8 Key Challenges

The major difficulty encountered in the implementation of the canal excavation was to make part of these canals free from encroachers, and removal of excavated solid waste, political conflict and resultant law and order situation. Delay of handing over of land by the Bangladesh Railway for the construction of Kamalapur Pump house also hampered the progress of the project implementation.

2 Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

Use of Lessons in Project Design. The main lesson incorporated is the introduction of decentralized service delivery approach, including community demand driven approach with partial capital cost recovery and 100 percent O&M financing by the users that unveiled the major shift from adopting a supply driven mode to a more demand driven and decentralized service delivery approach.

Focus on Institutional Changes. The project objectives – especially after restructuring - focused on the institutional strengthening that was needed to implement the project. The project components represented a balance of institutional support, capacity building and infrastructure development.

45

Government Commitment and Risks: GOB’s commitment and ownership to the reform agenda remained firm throughout project implementation. The project design had identified all the possible risks, which were “High”. Despite all measures proposed, the actual implementation experienced problems and risks.

2.2 Implementation

Implementation was moderately satisfactory throughout the course of the project. The PAD physical targets were not only fully achieved at the extended closing date of June 2016 and good progress was made on all components.

2.3 Monitoring & Evaluation

The project was successful in institutionalizing the mechanism of information processing and data analysis on MIS system developed by DWSSP. M&E capacity has been developed during the project within DWASA.

2.4 Safeguard & Fiduciary Compliance

Social Safeguards: No lands were acquired involuntarily. Social safeguard issues under DWSSP were concerned with the impacts resulted from displacement of people during recovery, re‐excavation and other improvements implemented on the drainage canals. During preparation of DWSSP, DWASA carried out Social Impact Assessment (SIA), including extensive community/stakeholder consultations for the individual canals. In view of the potential impacts as found in the SIA, DWASA prepared a Resettlement Policy Framework (RPF) in April 2006 which provided the necessary bases to prepare Resettlement Action Plans (RAPs) for individual and/or batches of canals that were selected for improvement.

Environmental Safeguards: The implementation of Environmental Management Plan (EMP) in the sub‐projects were done reasonably well. Some violations were observed in the implementation of EHS provisions such as non‐universal use of PPE by the workers, missing safety signs and barriers, and piling up of construction debris.

2.5 Fiduciary Management: Fiduciary compliance was satisfactory throughout implementation. Fund flow and expenditures monitoring were adequate. Financial management reports were prepared in a timely manner throughout project implementation.

2.6 Procurement: Procurement was carried out in accordance with the agreed procedures. Delays in decision making took plays due capacity constraints of the PMU officials.

2.7 Post-completion Operation/Next Phase

The post completion operation is adequately addressed: Project design was adequate in ensuring sustainability on all fronts: technical, financial and institutional. All the infrastructure assets (pumping stations, canals, LIC water connections) have been completed and commissioned and are being operated and maintained by DWASA.

Project’s sustainability prospects are good: Overall performance of DWASA in managing the drainage, water and sanitation facilities has been excellent. The capacities created

46

under the project will continue to be available for the sector. GOB has now got a commitment of World Bank to develop a new project for continued support.

3.1 Relevance of Objectives, Design and Implementation

The project objectives remain highly relevant to current Government priorities. The sector development framework aimed for total urban sanitation services throughout Bangladesh by 2015. The Bangladesh Millennium Development Goals (MDGs) envisage 100% coverage for access to safe drinking water in urban areas by 2015, and 86% access to improved sanitation in urban areas by 2010. The scale and timeframe of the sector development framework targets are slightly more ambitious than the MDGs. These various sector targets

Represent a huge challenge to the Government of Bangladesh (GOB). In addition, the GOB targets to provide access to higher quality piped water supply to 70% of urban areas by 2010 and 90% by 2015. These targets now are included in Sustainable Development Goals (SDGs).

3.2 Achievement of Project Development Objectives the revised Project Development Objective (PDO) was “to improve storm water drainage in Dhaka city and to improve DWASA’s capacity for investment planning and operations”.

The project has achieved this PDO as all the result indicators recorded good achievements. Key important result indicator of 20,885 m of storm water canals constructed/rehabilitated has been fully achieved by re-excavating 13 canals. The indicator target to increase discharge capacity of the rehabilitated 13 canals to 250m3/s has been achieved. The indicator target to achieve 40 m3/s permanent storm water drainage capacity has been fully achieved. The indicator target of a sewerage master plan and drainage master plan approved by the Board have been fully achieved.

3.3 Achievement of Project Impact

The initial impact of the Kamalapur pump house in the catchment area was not visible to the intended beneficiaries as it was not operational when beneficiaries were interviewed in October 2015. In fact the incidence of water logging during the last monsoon got worse due to heavy rainfall and the results of the beneficiary interviews can provide a good baseline data for any drainage development impact analysis in future. Data on the depth and duration of water logging in Kamalapur is consistent with the above statement. Rampura catchment area presented a different picture as the operations of the Rampura pump house continued throughout the monsoon and completion of the Mohakhali canal rehabilitation activities resulted in positive impacts by reducing duration, depth and extent of water logging in the catchment area. Loss of school days, loss of livelihoods and traffic congestion were also reduced quite substantially.

4.1 Lessons learnt

(i) PMU staff should not only have commitment but they should have good management skills, fully knowledgeable and be computer literate. If possible they should be given training in areas which affects the progress of project implementation.

47

(ii) Loan should be made effective only when the initial readiness of the Executing Agency is fully complied with.

(iii) The procurement process, including all the required steps and timeline, should have been identified and needs to be considered in the total project work plan.

(iv)For small civil works such as canal rehabilitation, large packaging in case of local tendering is not optimal and desirable. It has been observed that limited number of capable local contractors is available to undertake large works in canals.

(v) Procurement packages of civil works should be considerably larger to avoid engagement of insolvent and inefficient vendors.

(vi)Proposal evaluation should be thoroughly reviewed with set criteria to get a good understanding of the strength of vendor to carry out the assignment.

(vii) PMU should have its own accounting section to improve financial management. PMU should also have dedicated M&E section/focal point.

(viii) Procurement process needs to be decided based on the nature of works in particular considering the complexity of the works involved, including veracity of alternative technologies.

(ix) Communities should be made aware and involve in the maintenance work of canals for sustainability of investment through engagement of NGOs.

(x) Communities should be regularly briefed about the project output and the expected impact

(xi) PMU Coordination with Zonal Offices is a pre-requisite for expanding service delivery to LICs since zonal offices are responsible for final delivery of services.

(xii) Understanding of existing legislative provisions in service provision is key e.g. on‐site sanitation is not DWASA’s mandate which is also not covered under WASA Act

4.2 Looking forward

Since the project has achieved its goals, Government ensure to consolidate on the gains by formulating a follow on project proposal which targets to sanitation sector improvement issues.

48

Annex 6. Comments of Co-Financers and Other Partner Stakeholders

Not Applicable

49

Annex 7. List of Supporting Documents

Project Appraisal Document for Bangladesh: Dhaka Water Supply and Sanitation Project, dated October 31, 2008 (Report No: 44935-BD

Restructuring Paper for Bangladesh: Dhaka Water Supply and Sanitation Project, dated June 13, 2013 (Report No: 78117-BD)

Aide Memoires, Implementation Status Reports

Project Progress Reports by Dhaka Water Supply and Sanitation Project – PMU

Borrower’s Evaluation Report, dated November 2016

IWM (2016) Flood Modeling of Dhaka City – Part 2 Impact and Resilience of Storm Water Drainage Investments of Dhaka Water Supply and Sanitation Project (DWSSP)

Roy, S. (2016) The Impact of Storm Water Drainage Investments by DWASA in Greater Dhaka Area – Estimation of Potential Damages Component and Economic Analysis

Dasgupta, Susmita; Zaman, Asif; Roy, Subhendu; Huq, Mainul; Jahan, Sarwar; Nishat, Ainun. (2015). Urban Flooding of Greater Dhaka in a Changing Climate : Building Local Resilience to Disaster Risk. Directions in Development--Environment and Sustainable Development; Washington, DC: World Bank.

DWASA (2014) Sewerage Master Plan for Dhaka City

DWASA (2015) Low Income Customers Improvement Plan

DWASA (2015) Drainage Impact Assessment Exercise - Report on Focus Groups Discussion conducted in Two Catchment Areas of Dhaka

DWASA (2016) Storm Water Drainage Master Plan for Dhaka City

Castalia (2015) Diagnostic Report of the organizational Structure of DWASA; and Options Report of the Organizational Structure of DWASA

World Bank (2016) Strengthening Poor-Inclusive Urban Water Supply and Sanitation Service Quality Information Systems in Bangladesh (P131951)

World Bank (2016) Country Partnership Framework for Bangladesh for the period FY16-FY20. Report No. 103723-BD

World Bank (2015) Systematic Country Diagnostics for Bangladesh. More and better Jobs to Accelerate Shared Growth and End Extreme Poverty

World Bank (2015b). Climate and disaster resilience of greater Dhaka area: a micro level analysis. Bangladesh development series; paper no. 32. Washington, D.C. World Bank Group.

World Bank (2011) Country Assistance Strategy for Bangladesh 2011-2014.

World Bank (2006) Country Assistance Strategy for Bangladesh 2006-2009. Report No. 35193

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World Bank (2006) Bangladesh Country Assistance Strategy (2001-2005) Completion Review. Independent Evaluation Group. Report No. 89106

Government of Bangladesh (2011) Perspective Plan 2010-2021 Making Vision 2021 a Reality. Economic planning Commission

Government of Bangladesh (2015) The Seventh Five Year Plan FY16-FY20. Accelerating Growth, Empowering Citizens. Economic Planning Commission

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MAP

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