RUIDP

Sceond Phase of RUIDP

Background:
Hon'ble Chief Minister, Government of Rajasthan had proposed Second Phase of RUIDP in her Budget Speech 2004 for infrastructure development works in urban towns. In compliance of Budget Speech infrastructure development works have been taken up in fifteen towns namely Alwar, Baran-Chhabra, Barmer, Bharatpur, Bundi, Chittorgarh, Churu, Dhaulpur, Jaisalmer, Jhalawar-Jhalarapatan, Karauli, Nagaur, Rajsamand, Sawai Madhopur and Sikar.

Approval by ADB & GOI:

The ADB's Board of Directors in its meeting held on 31st October 2007 has approved the Investment Program for a loan of US$ 273 million under its Multi-tranche Financing Facility (MFF).

The investment program shall be implemented in three tranches; each tranche having five years period of implementation. The first tranche of US$75 Million has been agreed by ADB with US$ 60 million loan component from ADB.

The Loan Agreement and Project Agreement for Tranche-I has been signed on dated 17th January 2008. The Loan Agreement was signed between DEA-GOI and ADB whereas the Project Agreement was signed between GOR and ADB, being the loan financing on back to back basis.

Repayment of loan shall be done over a period of 25 years (including 5 years grace period and 7 years implementation period in three Tranches.

Project Objective, Impact and Outcome :
Rajasthan Urban Sector Development Investment Program (RUSDIP) vision is to optimize social and economic development in urban Rajasthan. The vision will be achieved through policy reforms to strengthen urban management and support for priority investments in urban infrastructure and services required to meet basic human needs, improve quality of life, and stimulate sustainable economic development. RUSDIP will: (i) redress immediate infrastructure and service deficiencies to meet basic service delivery norms; (ii) act as a medium through which policy reforms are effectively executed; and (iii) provide maximum demonstration effect for replication in other cities of the State.
The Investment Program is designed to improve the urban environment and promote on-going reforms for sustainable, efficient, and responsive urban service delivery in 15 initially identified urban local bodies (ULBs) of Rajasthan with economic growth and tourism potential. The physical investments include improvements in water supply, waste water management, solid waste management, urban drainage, urban transport and roads, social infrastructure and infrastructure support to cultural heritage. Physical improvements are coupled with a capacity development program to support the implementation of on-going urban institutional, financial and service delivery reforms.
The Investment Program increase economic growth, reduced poverty, and sustained improvement in the urban environment and quality of life in the 15 initially identified ULBs in Rajasthan (the Investment Program ULBs). The expected outcome of the Investment Program will be increased access to sustainable urban infrastructure and services for 1.6 million people in the Investment Program ULBs, and improve capacities of, and sustainable management of urban services by the Investment Program ULBs.

Financing Facility, Facility Amount, & Financing Plan:
GoR, GoI and ADB has agreed financing for the Investment Program through a multitranche financing facility (the Facility).The Investment Program is estimated to cost US$ 390 million including taxes and duties of US$ 36.5 million over a 7-year period to finance the infrastructure investments and capacity development to support on-going urban institutional, financial and service delivery reforms.
The financing plan agreed between, ADB, GoI & GoR is as under:-

Source	Amount (US$ million)	%
Asian Development Bank	273.00	70
GoR and other agencies	117.00	30
Total	390.00	100

The Facility of US$273 million from the ordinary capital resources (OCR) of ADB will be provided to the GOI. Final terms of conditions will be determined in the context of each loan, and be based on prevailing policies of ADB. Financing made available under each loan will be provided under ADB's London Inter-Bank Offered Rate (LIBOR)-based. GOI has the option to choose between eligible currencies and the interest rate regime most suitable for each loan. ADB also provides flexibility in terms of repayment and interest swaps during the financing period. Repayment schedules can also be structured for each loan, in essence to match the needs of each batch of subprojects with their cost recovery and sustainability profiles.
GOI will pass down the total loan amounts to the State of Rajasthan, on the same terms as stated in the ADB loans.
Period of Utilization of loan amounts shall be available upto December 2014 for the last Periodic Financing Request (PFR) and the Estimated Investment Program Completion period shall be upto June 2014.

Project Execution:
The Local Self Government Department will implement the Investment Program through the existing Rajasthan Urban Infrastructure Development Project (RUIDP) headed by Project Director.

Sectors:
The sectors to be included in the II Phase are Water Supply: Rehabilitation & Expansion; Urban Environmental Improvements: Waste water Management, Solid Waste Management, Drainage, Fire Fighting Services, Historical Site & Environmental Management, Slum Improvements; Urban Transportation and Management: Roads, Bridges, Bus/ Truck Terminals and Parking; Tourism: Heritage for Employment; Community Awareness and Participation; Implementation Assistance and Capacity Building.

Safeguards:
Attached under Schedule 5 are the Safeguards Frameworks required under ADB’s safeguard policies and which India will cause the State to comply with and implement. The safeguard requirements for each financing loan, as well as the categorization of each loan, will follow the approach and procedure defined in three existing ADB safeguard policies. ADB safeguard policies currently include (i) Policy on Involuntary Resettlement (1995), (ii) Policy on Indigenous Peoples (1998), and (iii) Environment Policy (2002).

Procurement:
All goods and services to be financed under the Facility will be procured in accordance with ADB's Procurement Guidelines (April 2006, as amended from time to time).
Advance Contracting and Retroactive Financing:
Under each loan of the Facility, advance contracting of civil works and equipment and materials, and recruitment of consulting services may be requested subject to these being eligible in accordance with agreed procedures and guidelines as above.
Except as otherwise agreed with ADB, the expenditures incurred for civil works, equipment and materials and consulting service eligible for advance contracting will be eligible for retroactive financing of up to 20% of the proposed amount for the loans under the Facility for eligible expenditures, including consultants, goods, and civil works, incurred prior to effectiveness of each of the loan, but no earlier than 12 months before the signing of the respective loan agreement for the loan under the Facility. India and the State have been advised that ADB's approval of advance contracting and retroactive financing does not constitute a commitment to finance relevant projects under this Facility.

Monitoring, Evaluation and Reporting Arrangements:
The Investment Program Management Unit (IPMU) will establish an Investment Program Performance Monitoring System (IPPMS) acceptable to ADB within 3 months of the effectiveness of the first loan under the Facility and under each succeeding loans. The IPPMS will first select a set of performance monitoring indicators relating to physical implementation and institutional capacity and implementation support milestones including those in the Design and Monitoring Framework (Schedule 2). IPMU will establish baseline data for each of the selected indicators and will conduct annual surveys with the assistance of consultants and update ADB and GoR on the progress against each indicator. The IPMU will also provide ADB with quarterly progress reports on the implementation of each individual subproject within 45 days of the end of each quarter. The progress reports will cover progress made during the period of review; changes to the Implementation schedule, if any; problems or difficulties encountered and remedial actions taken; and work to be undertaken and subprojects and/or components to be proposed for financing in the coming quarter. The reports will also include a summary financial account for each implementing agency, expenditures to date, and a report on benefit monitoring. Based on the quarterly progress reports, ADB will prepare annual implementation progress reports to be submitted to the Board each December. The IPMU will submit to ADB a project completion report within 3 months of physical completion of the subprojects financed under each loan and a Facility completion report within 3 months of physical completion of all supported activities and subprojects under the Facility. These reports will describe the details of implementation, costs, monitoring and evaluation results, problems encountered and actions taken, and other relevant information that ADB may request.

Institutional and financial improvement action plan
a. Water Supply
Water tariff revision: Tariff implementation in all the 15 ULBs shall follow the principle of the mandatory reforms under the JNNURM. By December 2014, the water tariff level should be sufficient to cover full operation and maintenance of the water operation for each ULB.
Water supply coverage: By end of year 4 of each tranche, water supply service coverage of 90% should be achieved through the water supply investment under the Investment Program.
Water tariff collection: By the end year 3 of each tranche, water tariff collection performance should be kept at no less than 85%.
b. Sewerage
Sewerage tariff revision: The current sewerage tariff level as prescribed at 20% of water bill without a treatment plant and 33% of water bill with a treatment plan should be maintained provided that the full O&M cost is recovered for sewerage operation for each of the Investment Program ULBs.
Sewerage asset transfer: If the PHED is to transfer sewerage assets to ULBs, an asset transfer plan including skills/human resource transfer, revenue sharing, and associated debt/equity transfer should be prepared within 1 year of commencement of the Investment Program implementation.
Sewerage connection: As part of and along with sewerage services, connection to sewer should be made mandatory in each of the Investment Program ULBs taking up sewerage investment.
c. Solid waste management:
SWM charges should be introduced to cover no less than 50% of operation and maintenance cost of SWM operation for each ULB within not later than one year of related subproject completion.
d. Infrastructure Development Tax:
Infrastructure Development tax shall be so maintained by the state so as to augment the financial stability of the ULBs.
e. Institutional Reform and Capacity Development:
Financial management: Implementation of double entry accrual accounting systems in each ULB within 4 years of the commencement of the Investment Program implementation.
Capacity Development Plan (CDP) Implementation: The IMPU, with assistance from the loan consultants, will prepare a comprehensive CDP, for the Investment Program ULBs and the State line agencies based on consultations with all the stakeholders by December 2008. This CDP should be acceptable to the respective City level committees, the Empowered committee, and its implementation be completed by the IPMU, through IPIUs, by 2010.

Loan Assurances:
GoI and GoR have given the following assurances, which have been incorporated in the Framework Financing Agreement (FFA), and will be incorporated in the individual Loan Agreements as applicable, subject to any amendment to be mutually agreed on by the GoI, GoR and ADB.

(i) The GoR will make available sufficient counterpart funds from its budget for each fiscal year, in a timely manner, for the efficient implementation of the Investment Program and the facility towards its contribution and that of the ULBs.
(ii) The GoR will ensure adequate funds towards operations and maintenance of the facilities created under the Facility through budgetary allocations or other means, to be provided to the EA, the appropriate ULB, or line agencies during and after subproject completions.
(iii) The GoI will make available to GoR the proceeds of the financing provided by ADB.
(iv) The GoR will on-lend the loan proceeds to the ULBs under the appropriate on-lending arrangements.
(v) The GoR shall ensure that for each of the Investment Program ULBs, the institution and financial improvement action plan (Appendix 12 of the RRP) is implemented on schedule.
(vi) The GoR will ensure that the contractual documents under any PPP modality, in particular extended O&M, BOT, or performance-based management contracts (PBMC), as applicable, are provided to ADB for prior review and approval in order to be used under the individual sub-projects.
(vii) The GoR will ensure that all ULBs and subprojects therein are selected, processed and implemented in accordance with Appendix 6 of the RRP and Schedule 5 of the FFA (on Safeguard compliances) as further detailed in FFA.
(viii) The GoR will ensure that 90% customer metering is achieved in the relevant ULBs within three years of the completion of water supply subprojects in the ULBs concerned.
(ix) The GoR will ensure that the PHED/ULB will set up a separate accounting system for water supply and sewerage for the ULB before the start of works on any water supply subproject in the ULB.
(x) For Urban Transport and Road subprojects, prior to commencement of civil works, the ULB will have prepared a citywide traffic and transportation plan.
(xi) The GoR will ensure that the domestic waste is segregated from the industrial, medical and hazardous waste in the ULBs where solid waste management subprojects are being implemented under the Facility, is to be treated separately as per the prescribed system in the Municipal Solid Waste Handling Rules 2000 of GoI.
(xii) The GoR will ensure that civil works contracts under the Facility will follow all applicable labor laws of the GoI and GoR and that these further include provisions to the effect that contractors; (i) carry out HIV/AIDS awareness programs for labor; and disseminate information at worksites on risks of sexually transmitted diseases and HIV/AIDS as part of health and safety measures for those employed during construction; and (ii) follow and implement all statutory provisions on labor (including do not employ or use children as labor, equal pay for equal work), health, safety, welfare, sanitation, and working conditions. Such contracts shall also include clauses for termination by the GoR/EA in case of any breach of the stated provisions by the contractors.
(xiii) Approval of the second PFR that may be submitted by India would be subject to review by ADB of the progress in implementing the water tariff reform in those ULBs that have introduced the revised water tariff in September 2007, according to the institutional and financial improvement action plan (Appendix 12 of the RRP)

Implementation Arrangements :
(a) Empowered Committee
In compliance of the approval received from Hon'ble Chief Minister on file; order for the constitution of EC has been issued by Administrative Reforms Department (Group-3) vide no F6(45)AR/Gr.-3/99 dated 6.10.2006 and further amended by order dated 28.10.2006. A state-level and inter-ministerial Empowered Committee has been formed for the Investment Program to provide policy guidance and coordination across all ULBs and subprojects, and take decisions on matters related to the Investment Program. The EC will be chaired by the Minister of Urban Development and Local Self Governance, and members will include Ministers, Directors and/or representatives of other relevant government ministries and departments. All powers of the State Government in respect of the following matters has been delegated to Empowered committee:-

Approval of the works to be taken up under the Project.
Approval of Sectoral and City-wise allocations.
Approval of the Annual Works Programme.
Sanction of expenditure within the Annual Plan ceiling for the Project.
Award of all contracts and engagement of Consultants.
Sanction of temporary posts and contractual services for the duration of the project only.
Take any other decisions in respect of Project-implementation matters so as to ensure timely Project implementation, within the scope of the Project as approved by the State Government.

The committee shall also discharge the following functions:

Ensure necessary co-ordination between the different implementing Departments and agencies.
Monitor and review the progress of implementation of the project.
Issue necessary directions for ensuring that the Project is implemented according to schedule.

The decisions of the Empowered committee shall be complied with by the Project Management Unit, RUIDP and the Departments as well as the implementing agencies under the project to which they relate. Further examination and scrutiny and approval at various levels by the Departments concerned shall not be necessary.

The committee shall meet at least once quarterly, or more frequently if necessary. The tenure of the committee will be till completion of the project.

The Administrative Department for the above committee is Local Self Government Department.
(b) Work Finalization Committee :
Methodology for identification of works as approved by Empowered Committee in its 1st meeting of RUSDIP held on 07.11.2006 and proposal of Works Finalization Committee has been further approved by Hon'ble CM on file and orders has been issued by Administrative Reform Department no. F6 (45)AR/Gr.-3/99(i) dated 10.04.2007. The committee shall finalize the list of works considering the sectors and the priority of works identified during detailed feasibility study. Approval of Hon'ble State Minister, Urban Development & LSG on file is required before finalization of taking of works under RUIDP Phase-II. The 1st Meeting of Work Finalization Committee (WFC) of RUSDIP (RUIDP Phase-II) was held under on 22nd June 2007 and finalized the list of works of three sample representative towns namely Alwar, Jaisalmer & Jhalawar-Jhalrapatan.
(c) City Level Committee for RUSDIP :
In compliance of the approval received from Hon'ble Chief Minister on file; order for the constitution of City Level Committee in its each project town for Rajasthan Urban Infrastructure Development Project for implementation of RUIDP Phase- II (now named as RUSDIP) has been issued by Administrative Reforms Department (Group-3) vide no F6(45)AR/Gr.-3/99 dated 2.1.2007.

The inclusion of Hon'ble Members (MP) of Parliament & Members of Legislative Assembly (MLA) is under process.

(d) Investment Program Management Unit (IPMU) :
The IPMU will be responsible for Project execution, implementation, management and supervision of sub-projects. IPMU will also be responsible to put up matters for decision of the Empowered Committee and ensures their compliance, submits periodic reports to the Bank, obtains necessary approvals from the Bank, issues bid documents, evaluates bids received, exercises supervision over and release funds to PIUs, submits reimbursement claims, ensures compliance with the loan covenants and exercises supervision over the PIUs. IPMU will function under the supervision and control of LSGD as Administrative Department.

The IPMU headed by a Project Director will be assisted by competent, qualified and experienced officers from various Engineering (PWD, PHED & ULBs), Finance and other departments.

(e) Investment Program Implementation Units (IPIU): Fifteen Investment Program Implementation Units (IPIUs) will be established at ULB levels, and a full-time representative of the IPIUs will be appointed in each of the Investment Program ULB. The IPIUs will carry out daily implementation activities required under the Investment Program. The IPMU and IPIUs will be assisted by the Design and Supervision Consultants (DSCs) in preparing the design documents, managing tendering of contractors and supervising the construction as well as the overall management of the Investment Program by the IPMC and IPMU.
Investment Program Implementation Units (IPIUs) for towns shall be established in phased manner. Full fledged Investment Program Implementation Unit (IPIUs) shall start functioning in the cities after award of work order in the city.

(f) Investment Program Management Consultant (IPMC) :
IPMC will be based in Jaipur and the scope of consulting services for the IPMC will include (i) to prepare detailed feasibility of remaining twelve towns (ii) to assist Investment Program Management Unit (IPMU) and Investment Program Implementation Units (IPIUs) in project management activities including checking & reviewing engineering designs and procurement documents; and assist in Contract Administration; (iii) guidelines for preparation of sub-projects and carrying out the appraisals of subprojects; (iv) policy and planning; (v) training for capacity building and (vi) to oversee the work of all the three DSC's and provide necessary guidance to them in implementation of the project.

M/s Consulting Engineering Services (India) Pvt. Ltd., New Delhi in association with M/s Poyry Environment GmbH, Kolkata has been mobilized as Investment Programme Management Consultant (IPMC) for complete project from 1st January, 2008.

(g) Design & Construction Supervision Consultants: The DSCs will be located in three regions, which will assist the IPMU and IPIUs in preparing the design documents, managing tendering of contractors and supervising the construction works. The three DSCs will have the following arrangements: (i) regional office at Bharatpur and sub-head quarters at Alwar, Bharatpur, Dholpur, Karauli and Sawai Madhopur; (ii) regional office at Nagaur and sub-head quarters at Barmer, Churu, Jaisalmer, Nagaur and Sikar; and (iii) regional office at Jhalawar and sub-head quarters at Baran - Chhabra, Bundi, Chittaurgarh, Jhalawar-Jhalarapatan and RajsamandThree at Nagaur, Bharatpur and Jhalawar.

The scope of consulting services for the DSCs will include (i) carrying out all surveys, studies and site investigations; (ii) update feasibility study findings wherever available; (iii) prepare conceptual, preliminary and detailed designs; (iv) prepare detailed technical specifications, bill of quantities, drawings and bid documents (v) to assist IPIUs in Contract supervision & administration of sub-projects etc.

M/s Gherzi Eastern Ltd., New Delhi in association with M/s Consulting Engineers Group, Jaipur has been mobilized as Design & Construction Supervision Consultants (DSC) Package-I (Bharatpur) for complete project from 1st January, 2008.

M/s Span Consultants Pvt. Ltd., New Delhi in JV with M/s Voyants Solutions Pvt. Ltd. (Formely Ramky Infra Consulting Pvt. Ltd.), Gurgaon and M/s Intercontinental Consultants & Technocrats Pvt. Ltd, New Delhi has been mobilized as Design & Construction Supervision Consultants (DSC) Package-II (Nagaur) for complete project from 1st January, 2008.

M/s Shah Technical Consultants Pvt. Ltd., Mumbai in association with M/s Mott MacDonald Pvt. Ltd., Noida and M/s SOWIL Ltd., Noida has been mobilized as Design & Construction Supervision Consultants (DSC) Package-III (Jhalawar) for complete project from 1st January, 2008.