Document of

The World Bank

Report No. ICR0000192

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(Loan No. 43260)

ON A

LOAN

IN THE AMOUNT OF US$24.0 MILLION

TO

REPUBLIC OF UZBEKISTAN

FOR THE

TASHKENT SOLID WASTE MANAGEMENT PROJECT

March 28, 2007

Environmentally and Socially Sustainable Development ECCU8 Europe and Central Asia Region This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS Currency Unit = Soum Soum 1.00 = US$0.001

US$1.00 = 1,239.53 Soum (Exchange Rate Effective December 20, 2006)

UZBEKISTAN FISCAL YEAR January 1–December 31

ABBREVIATIONS AND ACRONYMS

CAS Country Assistance Strategy EBRD European Bank for Reconstruction and Development IBRD International Bank for Reconstruction and Development IDA International Development Agency ICB International Competitive Bidding IMF International Monetary Fund PAD Project Appraisal Document PDO Project Development Objective PIU Project Implementation Unit QAG Quality Assurance Group

Vice President Shigeo Katsu (ECAVP) Country Director Annette Dixon (ECCU8) Sector Director Peter Thomson (ECSSD) Sector Manager Juergen Voegele (ECSSD) Task Team Leader Janis Bernstein (ECSSD)

UZBEKISTAN

TASHKENT SOLID WASTE MANAGEMENT PROJECT CONTENTS A. Basic Information.................................................................................................................................... i B. Key Dates ................................................................................................................................................. i C. Ratings Summary.................................................................................................................................... i C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)..................................................... i C.3 Quality at Entry and Implementation Performance Indicators ......................................................ii D. Sector and Theme Codes .......................................................................................................................ii E. Bank Staff................................................................................................................................................ii F. Results Framework Analysis .................................................................................................................ii G. Ratings of Project Performance in ISRs.............................................................................................. v H. Restructuring (if any) ............................................................................................................................ v I. Disbursement Profile.............................................................................................................................vi 1. Project Context, Development Objectives, and Design ....................................................................... 1

1.1 Context at Appraisal (brief summary of country and sector background, rationale for Bank assistance)..................................................................................................................................... 1

1.2 Original Project Development Objectives and Key Indicators..................................................... 2 1.3 Revised Project Development Objectives and Key Indicators, and Reasons/Justification........... 3 1.4 Main Beneficiaries........................................................................................................................ 3 1.5 Original Components (as approved)............................................................................................. 3 1.6 Revised Components .................................................................................................................... 6 1.7 Other Significant Changes............................................................................................................ 6

2. Key Factors Affecting Implementation and Outcomes..................................................................... 6 2.1 Project Preparation, Design, and Quality at Entry........................................................................ 6 2.2 Implementation............................................................................................................................. 8 2.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization ............................. 9 2.4 Safeguard and Fiduciary Compliance......................................................................................... 10 2.5 Post-completion Operation/Next Phase ...................................................................................... 10

3. Assessment of Outcomes .................................................................................................................... 10 3.1 Relevance of Objectives, Design, and Implementation.............................................................. 10 3.2 Achievement of Project Development Objectives...................................................................... 11 3.3 Efficiency.................................................................................................................................... 12 3.4 Justification of Overall Outcome Rating .................................................................................... 14 3.5 Overarching Themes, Other Outcomes and Impacts .................................................................. 14 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops........................... 16

4. Assessment of Risk to Development Outcome ................................................................................. 16 5. Assessment of Bank and Borrower Performance............................................................................ 17

5.1 Bank Performance ...................................................................................................................... 17 5.2 Borrower Performance ............................................................................................................... 19

6. Lessons Learned ................................................................................................................................. 20 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners............................... 22

Annexes Annex 1: Results Framework Analysis...................................................................................................... 23 Annex 2: Project Costs and Financing....................................................................................................... 25 Annex 3: Outputs by Component............................................................................................................... 27 Annex 4: Economic and Financial Analysis .............................................................................................. 30 Annex 5: Bank Lending and Implementation Support/Supervision Processes.......................................... 34 Annex 6: Beneficiary Survey Results ........................................................................................................ 37 Annex 7: Stakeholder Workshop Report and Results................................................................................ 39 Annex 8: Summary of Borrower’s ICR and/or Comments on Draft ICR.................................................. 40 Annex 9: Comments of Cofinanciers and Other Partners/Stakeholders .................................................... 50 Annex 10: List of Supporting Documents ................................................................................................. 52

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A. Basic Information

Country: Uzbekistan Project Name: Tashkent Solid Waste Management Project

Project ID: P049582 L/C/TF Number(s): IBRD-43260 ICR Date: 03/20/2007 ICR Type: Core ICR

Lending Instrument: SIL Borrower: TASHKENT MUNICIPALITY

Original Total Commitment:

USD 24.0M Disbursed Amount: USD 21.4M

Environmental Category: B

Implementing Agencies: Hokimiyat of Tashkent

Cofinanciers and Other External Partners: European Bank for Reconstruction and Development (EBRD)

B. Key Dates

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

Concept Review: 04/17/1997 Effectiveness: 05/13/1999 05/13/1999 Appraisal: 01/13/1998 Restructuring(s):

Approval: 05/21/1998 Mid-term Review:

09/18/2001

Closing: 12/31/2003 06/30/2006 C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Satisfactory Risk to Development Outcome: Moderate Bank Performance: Satisfactory Borrower Performance: Satisfactory

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

Quality at Entry: Satisfactory Government: Satisfactory Quality of Supervision: Satisfactory Implementing

Agency/Agencies: Satisfactory

Overall Bank Performance: Satisfactory Overall Borrower

Performance: Satisfactory

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C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance Indicators QAG Assessments (if

any) Rating

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

No Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

No Quality of Supervision (QSA):

Satisfactory

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes

Original Actual Sector Code (as % of total Bank financing) Solid waste management 100 100

Theme Code (Primary/Secondary) Environmental policies and institutions Primary Primary Municipal governance and institution building Primary Primary Pollution management and environmental health Primary Primary E. Bank Staff

Positions At ICR At Approval Vice President: Shigeo Katsu Johannes F. Linn Country Director: Annette Dixon Ishrat Husain Sector Manager: Juergen Voegele Michele E. de Nevers Project Team Leader: Janis D. Bernstein Roger J. Batstone ICR Team Leader: Janis D. Bernstein ICR Primary Author: Wendy Schreiber Ayres F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The project's development objectives were to (a) return the existing municipal solid waste management system to a satisfactory level of service, and (b) improve the technical, financial, and institutional basis for its future operation and development. The project would achieve these objectives (called specific development objectives in the project appraisal document) by: • Ensuring that adequate collection infrastructure in the form of collection bins and vehicles exist to provide basic municipal solid waste management services to the residential, commercial, institutional, and industrial sectors. • Improving access and sanitation at public and residential collection points.

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• Upgrading infrastructure at the city’s long-term landfill including landfill practices and operations to improve efficiency and reduce environmental impact. • Providing for the closure of two existing landfills within the city. • Developing four transfer stations to optimize long-term use of the remaining landfill facility. • Providing interim capability for the safe handling of biomedical waste. • Initiating actions to place the system on a stable financial footing in terms of cost recovery and the ability to finance on-going operations and equipment replacement. • Upgrading institutional capacity to manage the system as an independent, self-financing utility suitable for privatization in the medium term. • Developing a strategic plan for the system’s future development, including identification of major capital facility requirements and business structure options for the system’s financing and operation. • Providing for comprehensive public consultation in developing and operating the system. Neither the Loan Agreement nor the Project Agreement included a set of key indicators. This was not standard practice at the time the project was approved in 1998. The project appraisal document, however, contained a set of monitoring indicators and targets in annex 1 that served as the basis for the project’s monitoring and evaluation system. Revised Project Development Objectives (as approved by original approving authority) The project development objectives were not revised. (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 : Population satisfied with solid waste collection service

Value quantitative or Qualitative)

30% (based on initial household survey)

There was no target established

60% city-wide 80% those receiving highest service level

Date achieved 03/14/1997 12/31/2005 12/31/2005 Comments (incl. % achievement)

Indicator 2 : Spetstrans accounts receivable - average days of billing - residential clients

Value quantitative or Qualitative)

90

60

27

Date achieved 03/14/1997 12/31/2005 12/31/2005 Comments (incl. % achievement)

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Indicator 3 : Spetstrans accounts receivable - average days of billing - industrial and commercial organizations

Value quantitative or Qualitative)

90

60

55

Date achieved 03/14/1997 12/31/2005 12/31/2005 Comments (incl. % achievement)

Indicator 4 : Spetstrans accounts receivable - average days of billing - budget organizations Value quantitative or Qualitative)

90

60

130

Date achieved 03/14/1997 12/31/2005 12/31/2005 Comments (incl. % achievement)

The average days of billing rose for budget organizations because they were not receiving adequate budget allocations from the government to pay for their operations, including solid waste management services.

(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 : Availability of collection vehicles -- % of total that are operational Value (quantitative or Qualitative)

70

75

82

Date achieved 12/12/1998 12/31/2005 06/29/2006 Comments (incl. % achievement)

The international standard for average vehicle availability is between 80 and 90 percent.

Indicator 2 : Number of transfer stations in operation Value (quantitative or Qualitative)

0

4

3

Date achieved 12/12/1998 12/31/2005 06/29/2006 Comments (incl. % achievement)

Indicator 3 : Spetstrans operational ratio Value (quantitative or Qualitative)

116

111

101

Date achieved 12/12/1998 12/31/2005 12/31/2005 Comments (incl. % achievement)

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Indicator 4 : Utility accounting systems (percent implemented) Value (quantitative or Qualitative)

0

100

100

Date achieved 12/12/1998 12/31/2005 06/29/2006 Comments (incl. % achievement)

G. Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP

Actual Disbursements (USD millions)

1 07/02/1998 Satisfactory Satisfactory 0.00 2 01/14/1999 Satisfactory Satisfactory 0.00 3 01/27/1999 Satisfactory Satisfactory 0.00 4 09/17/1999 Satisfactory Satisfactory 0.00 5 01/19/2000 Satisfactory Satisfactory 0.00 6 06/21/2000 Satisfactory Satisfactory 0.00 7 08/10/2000 Satisfactory Satisfactory 0.00 8 08/23/2000 Satisfactory Satisfactory 0.00 9 02/22/2001 Satisfactory Satisfactory 3.91

10 04/23/2001 Satisfactory Satisfactory 4.59 11 11/12/2001 Satisfactory Satisfactory 8.85 12 05/03/2002 Satisfactory Satisfactory 9.91 13 05/08/2002 Satisfactory Satisfactory 9.91 14 06/19/2002 Satisfactory Satisfactory 10.04 15 12/11/2002 Satisfactory Satisfactory 11.06 16 06/27/2003 Satisfactory Satisfactory 12.28 17 12/30/2003 Satisfactory Satisfactory 13.70 18 03/29/2004 Satisfactory Satisfactory 14.29 19 08/31/2004 Satisfactory Satisfactory 14.51 20 12/08/2004 Satisfactory Satisfactory 14.64 21 06/16/2005 Satisfactory Satisfactory 14.97 22 02/24/2006 Satisfactory Satisfactory 18.07 23 06/29/2006 Satisfactory Satisfactory 20.90

H. Restructuring (if any) Not Applicable

vi

I. Disbursement Profile

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UZBEKISTAN TASHKENT SOLID WASTE MANAGEMENT PROJECT

Loan No. 43260 1. Project Context, Development Objectives, and Design 1.1 Context at Appraisal (brief summary of country and sector background, rationale for Bank assistance) Country and sector background. At the time when preparations for the project began in 1996, Uzbekistan had been independent from the Soviet Union for only five years. During the period following independence, the government launched an ambitious program to reform the housing and municipal services sector, leaving the responsibility for municipal solid waste management and other urban services largely decentralized. Service provision responsibilities were transferred in large part to the local governments. Tashkent is Uzbekistan’s largest city with a population of 2.2 million people, nearly 10 percent of the country’s population. It had been an important administrative center for the central Asian republics during the Soviet period, and remained the home of the central government administration at independence. However, the city was struggling to provide services at the levels enjoyed during its years as a Soviet republic due to reductions in the subsidies that it had been receiving under the former arrangements. As with other services, solid waste collection and disposal services had declined significantly since independence, leading residents and businesses to dump and burn solid waste in unauthorized piles throughout the city. According to a 1997 social assessment the people of Tashkent were growing increasingly dissatisfied with the solid waste situation.1 More than half of the respondents in a citywide household survey indicated that they were not satisfied with their solid waste services and would be willing to pay considerably more for their collection service if it were improved. Reflecting the priority the government assigned to improving solid waste conditions in the capital city, the authorities sought advice and financial assistance from the World Bank and the European Bank for Reconstruction and Development (EBRD) in establishing a more market-oriented approach to delivery of solid waste services, upgrading collection infrastructure (vehicles, bins, collection points), constructing transfer stations, closing in-city landfill sites, and improving operations at a landfill outside of city boundaries. The total estimated cost of the project was US$56.0 million, requiring a World Bank loan of US$24.0 million, EBRD loan of US$19.2 million, and a local contribution of $10.7 million. Rationale for World Bank involvement. The World Bank’s involvement in the project was important for several reasons. First, the Bank offered unbiased advice on choice of technologies, and enabled the city authorities to resist pressures by foreign suppliers of expensive, but inappropriate high technology approaches. Second, it provided assistance to strengthen the operational and financial management of Spetstrans—the publicly-owned 1 Bernstein, Janis with support from Network of Social Scientists from the Aral Sea Region. 1997. “Uzbekistan: Tashkent Solid Waste Management Project Social Assessment.” Unpublished manuscript. June.

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service provider—with the long-term aim of establishing a financially self-sustaining entity. Third, it helped in providing for public consultations in designing and operating the system. Fourth, the World Bank helped to upgrade environmental management at Tashkent’s main landfill. Fifth, the Bank helped to secure resources from a parallel financier, the EBRD. Contribution to higher-level objectives. The project’s objectives were consistent with the Country Assistance Strategy (CAS) 1998–2000, discussed by the World Bank’s Board of Directors on March 10, 1998, particularly the CAS’s strategic component calling for the removal of inefficiencies in resource utilization in municipal services and infrastructure. The project directly addressed this concern by supporting the rehabilitation and reorganization of the solid waste management sector of Uzbekistan’s largest city, and as such, increasing the operational efficiency and financial sustainability of providing solid waste management services. 1.2 Original Project Development Objectives and Key Indicators The project’s development objectives were to (a) return the existing municipal solid waste management system to a satisfactory level of service, and (b) improve the technical, financial, and institutional basis for its future operation and development. The project would achieve these objectives (called specific development objectives in the project appraisal document) by: • Ensuring that adequate collection infrastructure in the form of collection bins and

vehicles exist to provide basic municipal solid waste management services to the residential, commercial, institutional, and industrial sectors.

• Improving access and sanitation at public and residential collection points. • Upgrading infrastructure at the city’s long-term landfill including landfill practices

and operations to improve efficiency and reduce environmental impact. • Providing for the closure of two existing landfills within the city. • Developing four transfer stations to optimize long-term use of the remaining landfill

facility. • Providing interim capability for the safe handling of biomedical waste. • Initiating actions to place the system on a stable financial footing in terms of cost

recovery and the ability to finance on-going operations and equipment replacement. • Upgrading institutional capacity to manage the system as an independent, self-

financing utility suitable for privatization in the medium term. • Developing a strategic plan for the system’s future development, including

identification of major capital facility requirements and business structure options for the system’s financing and operation.

• Providing for comprehensive public consultation in developing and operating the system.

Neither the Loan Agreement nor the Project Agreement included a set of key indicators. This was not standard practice at the time the project was approved in 1998. The project appraisal document, however, contained a set of monitoring indicators and targets (see annex 1) that served as the basis for the project’s monitoring and evaluation system. The key indicators related to the number and availability of each type of waste collection vehicles and landfill operating equipment, amount of waste collected and delivered to the

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landfill, tariff levels for each category of consumer, accounts receivables, and Spetstrans’ operating ratio. 1.3 Revised Project Development Objectives and Key Indicators, and Reasons/Justification The project’s development objectives were not formally revised during implementation. The loan agreement, however, was amended once to reduce the number of in-city landfills that would need to be closed in fulfillment of a condition of the loan agreement from two to one. Under the amendment, the hokimiyat of Tashkent (city administration) would not be required to close the Zangiota landfill because it is located outside the city’s jurisdiction. 1.4 Main Beneficiaries (original and revised; briefly describe the “the primary target group” identified in the PAD and as captured in the PDO, as well as any other individuals and organizations expected to benefit from the project) The primary target beneficiaries were the 2.2 million residents of Tashkent and nonresidents who work in or visit the city. The project specifically targeted: (a) residents in high-density housing and private single-family homes where limited waste collection was leading to unsanitary and unsightly conditions, (b) women and children who are in general responsible for handling household waste disposal, and (c) people living in the vicinity of the Hasanbay landfill. Other important beneficiaries of the project included the city administration, which would benefit from strengthened procurement, fiduciary, and project management practices, and Spetstrans, which would benefit from improved managerial, operational, financial, and strategic planning systems. 1.5 Original Components (as approved) The project comprised two main components: investment, and institutional support. The World Bank financed only investment in equipment (bins, waste collection vehicles) and the transfer stations. The World Bank’s financing partner, the EBRD, financed both investment and, largely on a grant basis, technical assistance. The technical assistance helped the city administration and the service provider, Spetstrans, to improve financial and operational management of solid waste services and to develop a strategy for the future development of the sector. It also assisted the municipality in developing capacity for project management. The financier for each component is indicated in the description of the components below. Investment Component The investment component was to finance the upgrading of the basic waste collection capacity of the municipal solid waste management system, modernization of the long-term landfill facility, closure of the two in-city landfills, and development of four strategically located transfer stations, in order to bring the system up to a reliable level of service. Investments covered:

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(a) Collection Infrastructure (IBRD). This subcomponent would finance the procurement of a variety of types of collection bins to serve residences (both single family houses and multistory residential buildings owned and maintained by the housing authorities), business, government offices, and others. These included 750 liter metal collection bins, suitable for use by both side and rear loading vehicles, and 1,100 liter bins having wheels for transfer from secure collection points to rear loading vehicles and small plastic or metal residential bins (100-liter and 240-liter) for use by single family residences. In addition, the subcomponent was to finance procurement of prefabricated concrete slabs for the nonsecure collection points, designed to facilitate user access, litter control, and bin washing. (b) Collection Vehicles (IBRD) and Support Equipment (EBRD). The subcomponent would bring the Spetstrans fleet up to 610 collection and support vehicles from 433 by the end of 1998, allowing for expansion and improved efficiency of services. Most of the new vehicles were to be three-ton rear and side loading compactors and five-ton dump trucks, both of which are suitable for service within the city and for hauling of waste to transfer stations. A number of ten-ton roll-off type container trucks would be introduced to serve large commercial and industrial users and haul trash to the landfill. In addition, the project would supply a number of vacuum trucks, service vehicles, bin washing vehicles, and tractors. To ensure that newer existing vehicles were able to remain in service, the project included spares for 100 trucks purchased in 1996. (c) Vehicle Park Development (EBRD). The project would finance the upgrading of all existing district service centers plus the development of a central repair workshop for major repairs. The district centers would provide running maintenance, while the central facility would be responsible for major maintenance and overhaul of vehicles and landfill equipment. The central facility would be located at either an existing district service center or at the Zangiota waste processing facility. (d) Landfill Modernization (EBRD). The project would finance the upgrading of the Akhangaran highway landfill, the city’s long-term disposal facility. This would involve procurement of new bulldozers, landfill compactors, excavators, and support equipment for maintenance and transport of staff. The project would also support investments to improve the operation of the landfill, including construction of site maintenance shops and a service building, upgrading of access roads and utilities, strengthening of capacity for environmental monitoring, and closing filled-in areas of the landfill while opening new sections for disposal of waste. The government would be responsible for improving the turning access from the main four-lane highway to the landfill. (e) Landfill Closure (EBRD). The project would finance the equipment and civil works required to close the Zangiota and Hasanbay landfills in an environmentally-sound manner, and the strengthening of capacity for long-term environmental monitoring. The equipment initially acquired for this work would be assigned to the Akhangaran landfill operation once the other landfills were closed. (f) Transfer Stations (IBRD) and Transfer Vehicles (EBRD). The project would finance four transfer stations, each handling an equal portion of the estimated 1.1 million tons per year of waste that would be disposed of at the Akhangaran landfill. Each transfer station, developed on a turnkey basis, would be designed to handle up to 280 incoming

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vehicles and 30 outgoing vehicles per day. Each facility would employ two fixed compaction systems that would fill containers of 30 cubic meters. Two containers per trip would be transported on a flat bed truck and trailer combination. The transfer stations would be located on the perimeter of the city, each serving roughly a city quadrant and would be sited for convenient access to the ring road system leading to the Akhangaran highway. Selection of the sites to be used would be undertaken by the municipality as a prerequisite to project initiation. (g) Biomedical Waste Facilities (EBRD). The project would support the establishment of an interim biomedical waste facility to allow the separate collection and disposal of medical waste until a lasting solution is found (medical waste is currently commingled with other waste at landfills). It would also finance procurement of dedicated vehicles and containers to be used to collect the waste from generators, and the construction and operation of a segregated cell to be developed at the Akhangaran landfill for its disposal. Institutional Support Component (EBRD) EBRD was to finance on a grant basis technical assistance for project management and institutional strengthening aimed at ensuring the sustainability of the services following the end of the project. This would ensure that implementation of the project proceeded in concert with longer-term system planning and institutional strengthening. (a) Project Management Support. During project preparation, it was envisaged that this subcomponent would support the establishment and operation of two project implementation units (PIUs), which, with the support of the project management consultant, would supervise the project’s implementation. The central PIU would be located within the Ministry of Macroeconomics and build on an existing PIU that had a proven track record in managing Bank projects, including financial management. The subsidiary PIU, staffed with two professionals, would be located in the solid waste management department of the municipality. The project would finance procurement of computer and office equipment, office upgrading, PIU staff costs, and support related to procurement and disbursement. (b) Institutional Strengthening. This subcomponent would support a range of planning and other technical assistance activities, including the preparation of a strategic plan for the medium and long-term development of the system. The plan would cover the longer-term approaches, initiatives, and investments required to maintain services, modernize waste processing facilities, improve hazardous waste management, and introduce measures to minimize and recycle waste. It would also provide for the development and implementation of a modern financial management system, including the necessary support equipment and training. It would facilitate the corporatization and the ultimate privatization of Spetstrans, as appropriate. In addition, the subcomponent would provide direct technical assistance and training related to collection operations, landfill operation and closure, and design of future landfill expansion. Finally, the subcomponent would support periodic beneficiary assessments and preparation and implementation of a public participation and education plan aimed at facilitating public consultations on landfill design and closure, promoting public participation in strategic planning, and raising public awareness of the service improvements.

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1.6 Revised Components The components were not revised. 1.7 Other Significant Changes (in design, scope and scale, implementation arrangements and schedule, and funding allocations) In response to new information, several elements of the original project design were changed during project implementation. First, once the project-financed weighbridge produced more accurate data on how much waste the city actually generated, the hokimiyat, Spetstrans, and international experts agreed that three rather than four transfer stations would be sufficient for handling the city’s waste. Moreover, the hokimiyat and Spetstrans were planning for a carbon finance solid waste composting project, which, if approved, would further reduce the need for a fourth station by reducing the amount of waste that would go through the transfer stations. Thus the hokimiyat decided not to build the fourth transfer station. Second, the Zangiota landfill was discovered to be outside of the city’s jurisdiction, and therefore could not be closed by the city. Third, a decision was made to involve one, rather than two PIUs, in managing the project because of concerns that decision-making would be unnecessarily complicated with two PIUs. Instead, capacity of the PIU in the solid waste management department of the municipality would be strengthened with EBRD-financed technical assistance to enable it to manage all aspects of the project. All these changes were widely discussed with Bank and country experts, but were not formally approved by Bank management because they did not affect the ability of the project to meet its objectives. The project closing date was extended twice. The first extension to December 31, 2005 was granted to allow completion of procurement of waste collection equipment, construction of two transfer stations and remaining local works, and achievement of key institutional reforms through EBRD-financed technical assistance to the hokimiyat and Spetstrans. The extension was needed due to the one and a half year delay associated with EBRD’s financing of its four technical assistance packages. The second extension to June 30, 2006 was granted to complete procurement of equipment (value of US$6.5 million, or 27 percent of the total loan) purchased out of project cost savings. The vehicles and equipment (including 100 five-ton collection trucks and 6,000 waste bins) were needed to improve system efficiency and viability. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design, and Quality at Entry (including whether lessons of earlier operations were taken into account, risks and their mitigation identified, and adequacy of participatory processes, as applicable) Quality at entry was satisfactory. The project is rated satisfactory overall in each of the main areas of quality at entry: relevance, design, government ownership, and appropriateness in relation to implementation capacity. The project was relevant because it addressed a priority of the municipality and fit well within the CAS, particularly its goal of improving public sector efficiency. The project was well designed, covering all aspects of solid waste management from operations (collection, transfer, and disposal) to financial management, to planning for future expansion and adoption of modern approaches, such as

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recycling. The project was designed in close collaboration with the EBRD, which was a parallel financier. Drawing on lessons of experience with solid waste management projects in other countries of the former Soviet Union and in countries with levels of income similar to those of Uzbekistan, the project team (a) identified a consistent counterpart team with the authority to make implementation decisions, (b) created mechanisms for interagency coordination, (c) established an implementation unit early and trained staff in Bank procurement and disbursement procedures, and (d) involved local institutes in designing the project. In addition, a Bank-supported social assessment influenced the design of collection points and the technical specifications of bins (specifically, their height). The social assessment also revealed that people were willing to pay substantially higher tariffs for improved solid waste collection. This finding was decisive in ending an impasse with the hokimiyat, which had thought that raising tariffs to cover costs of services would be politically unacceptable. Such social assessments are considered good practice under OECD good practice guidelines for evaluation.2 The project appraisal document noted alternative approaches, the trade-offs between them, and the rationale for the final decisions. The project incorporated a monitoring and evaluation (M&E) framework that facilitated project management and supervision. The project logframe, however, contained far too many indicators, many of which were not readily monitorable. To compensate for this deficiency, the project appraisal document included a table of monitoring indicators, with baselines and targets, which, although mainly focused on outputs rather than outcomes, provided a reasonable framework for monitoring project implementation performance. The project was classified appropriately as environmental category B. Government commitment to the project was strong. The President of Uzbekistan personally requested the project when he met with the World Bank vice president in Tashkent in 1996 to discuss the Bank’s lending program in the country. The hokimiyat of Tashkent subsequently demonstrated its commitment with its investments in works, including improvements in the access road from the highway to the landfill, improvements to the landfill, construction of nonsecure and secure collection points, establishment of the central facility for vehicle maintenance and repair, and the closing of the Hasanbay landfill. The hokimiyat increased tariffs for services prior to the start of the project as a first step towards Spetstrans financial self-sufficiency. This action signaled borrower commitment and reduced project risk. The design of the project was appropriate in relation to the implementation capacity of the municipality. Designers chose to rely on conventional landfill and transfer station-based technology for waste management—a technology with which the Uzbeks were familiar—which simplified implementation. In addition, considerable preparation took place prior to project effectiveness. For example, all main bidding documents for goods packages (bins, vehicles, concrete slabs for nonsecure collection points) were drafted by the time of loan negotiations. One weakness in the quality at entry was that IBRD proceeded with loan signing (November 1998) before the EBRD had agreed its project conditionality with the authorities. Ultimately, the EBRD’s agreement included four triggers for disbursement of 80 percent of its US$19.2 million loan, which were not coordinated with those of the 2 See OECD Best Practice Guidelines, 1998, at http://www.oecd.org.

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IBRD. The EBRD eventually revised the triggers, but not until significant delays in procuring goods and technical assistance had occurred. The project appraisal document realistically appraised the risks the project would face. In particular, it identified as a risk the lack of sustained political will to increase tariffs and enforce payment. The document did, however, underestimate this risk as low to medium. An assessment of the environmental impact of the project identified potential risks and specified measures to mitigate any negative impacts that could arise from the project. A thorough appraisal of procurement and financial management arrangements helped to ensure that resources were used as intended. Dated covenants included in the loan agreement were appropriate, although too numerous and with unrealistic deadlines. The borrower complied with all the covenants, although with some delays. Loan effectiveness conditions—executing a subsidiary loan agreement on behalf of the Borrower and the hokimiyat of Tashkent, and executing and delivering EBRD’s loan agreement as well as fulfilling all its conditions of effectiveness—were appropriate. The inclusion of the cross effectiveness condition related to EBRD’s loan agreement ensured that the resources of both loans would be available simultaneously. QAG–No QAG at entry. 2.2 Implementation (including any project changes/restructuring, midterm review, project at risk status, and actions taken, as applicable) Implementation was generally satisfactory. All procurement arrangements for the major World Bank-financed investments were ready by the time of project effectiveness, allowing procurement to proceed smoothly. Terms of reference for the technical assistance assignments were also ready. However, EBRD’s disbursement conditions led to delays in the procurement of investments (such as trucks needed to bring waste from the transfer stations to the main landfill) needed to ensure that the project met its objectives. To minimize disruptions arising from these delays, all parties agreed to guidelines that were laid out in the “Working Document to Guide Joint Efforts in the Implementation and Supervision of the Tashkent Solid Waste Management Project” (July 1999). The World Bank also included US$4 million unallocated in the project procurement plan that could be used to cover the cost of the transfer station vehicles in the event EBRD financing would not be available. Notwithstanding the delays associated with the EBRD conditionality, the financial resources and technical assistance it provided to the hokimiyat and Spetstrans proved to be significant in upgrading the city’s solid waste management system. A midterm review prepared in September 2001 helped in addressing key issues that were slowing progress towards the project’s development objectives. For example, by showing that Spetstrans was not receiving the full revenues being collected through tariffs, it encouraged the government to thoroughly reform the process of financing solid waste services, giving Spetstrans direct responsibility for collecting solid waste tariffs. It also led to adoption of numerous measures for reducing costs and improving the operational efficiency of the solid waste management system. Several beneficiary assessments informed the project team of the extent to which the project was meeting people’s expectations for

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improved waste management services, providing important feedback for improving project effectiveness. Implementation arrangements were satisfactory. Although the project team initially planned to involve two PIUs in implementation, the decision to involve only one situated at the hokimiyat proved effective. Estimates of project costs were reasonable, given assumptions about needed system capacity that were based on Soviet norms. The project design was flexible enough to allow the savings from the application of international competitive bidding, and funds that were not needed for transfer stations or other goods and services to be used instead for vehicles and equipment to replace stock that had reached the end of its useful life. An assessment of the environmental impact of the project identified potential risks and specified measures to mitigate any negative impacts that could arise from the project. A thorough appraisal of procurement and financial management arrangements helped to ensure that resources were used as intended. 2.3 Monitoring and Evaluation (M&E) Design, Implementation, and Utilization As discussed in section 6.2, the project documents did not clearly specify a set of key outcome indicators. The project appraisal document did, however, contain a logframe with some outcome indicators that the team did track on a periodic basis. These included: • Increased public confidence and reduction in complaints • Reversal of trends in ad hoc and illegal dumping • Regular adjustment of tariffs according to increases in input cost • Operation of effective management and accounting systems. Early during implementation the team added a key outcome indicator to the project’s monitoring framework: proportion of the population satisfied with solid waste collection services. The team tracked progress with this indicator through periodic household surveys that were part of comprehensive beneficiary assessments carried out at the midpoint and completion of the project. The project team used information from the beneficiary assessments to justify financing a larger number of 1,100 liter bins than originally planned to serve the larger number of secure collection points built by the city—both of which were important improvements in the project design. Many other indicators in the logframe were not readily monitorable and were ignored. The project appraisal document also contained a separate table of monitoring indicators with baseline values and targets, most of which focused on outputs rather than outcomes. The project team reported on progress with these indicators in its semiannual progress reports and in the project supervision reports (later called implementation supervision reports). The team and city authorities used the information to address various implementation issues. For example, noting that the average days of billing for budget organizations increased dramatically in the later years of project implementation, the project team raised the issue with hokimiyat officials to understand the reasons and seek a solution. Although many of the targets are useful, others are not. For example, the targets for tariffs were not presented in real terms nor adjusted for inflation over time, so do not

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provide a useful guide for project implementers. A more useful target would have been the proportion of costs to be covered through tariffs. In addition to semiannual progress reports, a midterm review that drew on information from the M&E system proved instrumental in encouraging policy reforms to improve the operational and financial performance of Spetstrans. The use of the midterm review is described in greater detail in sections 7.2 and 8.2. 2.4 Safeguard and Fiduciary Compliance The project complied with all safeguard policies, including fiduciary aspects. An assessment of supervision by the Quality Assurance Group found supervision to be satisfactory overall, with some areas of concern that were being addressed by the time of the midterm review. 2.5 Post-completion Operation/Next Phase (including transition arrangement to post-completion operation of investments financed by present operation, operation & maintenance arrangements, sustaining reforms and institutional capacity, and next phase/follow-up operation, if applicable) Transition arrangements to regular operations have been completed. The staff of the PIU, who are civil servants, have been absorbed into the regular operation of government. Spetstrans will continue operations under the current arrangements. A proposed Community Benefit Carbon Finance Tashkent Solid Waste Composting Project, if approved, is expected to reinforce and build on the achievements of the Tashkent Solid Waste Management Project. The composting project would reduce the amount of emissions of methane gas, which would make Tashkent eligible for carbon finance revenues through the World Bank’s carbon finance business. These revenues could be used to expand the composting operation and make further improvements in the city’s solid waste management system. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design, and Implementation (to current country and global priorities, and Bank assistance strategy) The project’s overall objectives were, and remain, relevant. They reflect the importance the government and the population of Tashkent assign to improving Tashkent’s solid waste conditions. At the time the project was conceived and prepared, the country had been independent from the Soviet Union for only six years and the institutions for delivering urban services were undergoing dramatic transformation. Both the government of Uzbekistan and the hokimiyat of Tashkent (city administration) considered improving municipal solid waste management to be a priority to improve the quality of life in the city. More than half of the respondents in a citywide household survey indicated that they were not satisfied with their solid waste services and would be willing to pay considerably more for their collection service if it were improved.

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The project’s objectives also were clearly in line with the concerns of the inhabitants of Tashkent. As noted in section 6.1 above, more than half the residents surveyed considered inadequate solid waste collection to be a priority environmental problem, ahead of air pollution, sanitation, and unsafe drinking water.3 Moreover, the project’s objectives also were consistent with the Country Assistance Strategy (CAS) 1998–2000. The overall design of the project was appropriate for the country circumstances. The project focused on upgrading basic solid waste collection and disposal technologies that are well established and with which the beneficiary was familiar, rather than introducing expensive high technology approaches. 3.2 Achievement of Project Development Objectives (including brief discussion of causal linkages between outputs and outcomes, with details on outputs in annex 2) The project met its two project development objectives. Tashkent’s solid waste management system has been restored to a satisfactory level of service, greatly improving the quality of life in the city. Prior to the project, waste was accumulating in unauthorized piles around Tashkent and the solid waste management system was nearing collapse. An initial social assessment indicated that only 30 percent of households surveyed were satisfied with the waste collection services. A follow-on survey conducted as part of a beneficiary assessment at midterm review revealed that 70 percent were satisfied. At the end of the project, the beneficiary assessment showed that 60 percent of respondents overall were satisfied, while 80 percent of those receiving the highest level of service were satisfied. More than 90 percent of the respondents indicated that they are paying for their collection service. The same percentage also expressed general satisfaction with the accessibility of the collection points for household waste. The technical, financial, and institutional basis for the future operation and development of solid waste services in Tashkent has been improved. The technical basis of Tashkent’s solid waste management services has been enhanced through the provision and operation of modern vehicles, bins, and transfer stations and through upgrades in infrastructure and facilities at the city’s main landfill. The institutional and financial basis of the system has been thoroughly transformed with the support of the project. Under the Decision of the Tashkent City Hokim 596, on improvement of the solid waste management structure, issued on December 26, 2001, the hokimiyat: • Abolished Tashkent’s Sanitary Cleaning Board and its ten ordering departments

(excluding the ordering department in the Yunusabad district). Spetstrans was made responsible for collecting solid waste tariffs and depositing them into one centralized bank account.

• Transferred all equipment procured with IBRD and EBRD funding to the Tashkent Territorial Association of Communal Utilities and Spetstrans on the basis of a restructured on-lending agreement.

3 Bernstein, Janis with support from Network of Social Scientists from the Aral Sea Region. 1997. “Uzbekistan: Tashkent Solid Waste Management Project Social Assessment.” Unpublished manuscript. June.

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• Restructured the financial agreement, with Spetstrans being made responsible only for repaying the loan principal at the fixed currency exchange rate set at the date of equipment transfer, rather than for the entire loan principal and interest at the market exchange rate. The hokimiyat was made responsible for bearing the foreign exchange risk as well as interest and expenses related to the loan.

• Directed the Sanitary Cleaning Board and raion ordering departments to pay all amounts due to Spetstrans from tariff revenues, together with late penalties and other compensation for payment arrears.

• Endorsed Spetstrans’s adoption of a uniform tariff for industrial, commercial, budget, and communal clients in all districts of Tashkent.

• Authorized Spetstrans to propose increases in the tariff up to 8 percent per year for solid waste services. The local authorities did, however, retain the right to approve any tariff increases that Spetstrans proposed.

These reforms have been instrumental in increasing the reliability, frequency, coverage, and efficiency of solid waste management services in Tashkent. They have also helped to create the basis for placing Spetstrans on a sounder financial footing than previously, helping to ensure their sustainability once the project ends. One concern, however, is the unwillingness of the municipality in recent years to approve proposed tariff increases. The tariff has not been adjusted to reflect inflation since 2003 despite efforts by both the IBRD and EBRD to convince the hokimiyat of the need for an increase (the real value of the tariff eroded from 250 sum at the beginning of 2003 to 169 sum by the end of 2005). This has not yet caused financial difficulties for Spetstrans due to its success in increasing system efficiency and due to the financial relief it has received from the hokimiyat through exemptions of leasing fees and of release of responsibility for payment of principal and interest and other expenses related to the loan. However, the continued delivery of quality services in the future will require either increases in tariffs or other sources of revenue, such as budgetary allocations. The hokimiyat is aware of the challenges and has issued a letter to the IBRD laying out its plans to ensure that Spetstrans is able to mobilize sufficient resources to maintain adequate services in the future. 3.3 Efficiency (Net present value/economic rate of Return, cost effectiveness, e.g., unit rate norms, least cost, and comparisons; and financial rate of return) ECONOMIC ANALYSIS Given project investment costs of US$43.23 million, Spetstrans’s actual financial performance since 2000, net transfers from the government for debt service on the loans from IBRD and EBRD, and projections of a 10 percent real increase in revenue in 2007, the project has a net present value of US$1.1 million (assuming a discount rate of 10 percent), and an internal rate of return of 11.4 percent. The company has submitted a request to the hokimiyat for a rate increase to take effect in 2007. The key assumptions of the analysis are: (a) the capital costs are incurred between 2000 and 2006; (b) the lifetime of the project is 10 years, starting in 2000; (c) the real annual revenues of the utility rise by 10 percent in 2007 and are constant thereafter; (d) resources to service the IBRD and EBRD project loans come from government transfers rather than from internally generated funds, and (e) total operations and maintenance costs remain constant in real terms between 2006 and 2010. More on the analysis appears in annex 4.

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In addition to a collection service that households directly perceive and are willing to pay for, improved collection and safe disposal of solid waste provides important environmental benefits that people in general do not directly identify and are therefore not necessarily willing to pay for. For example, sound disposal practices prevent contamination of ground water, help people avoid contact with hazardous waste, and discourage burning of trash, which itself creates health risks. These benefits cannot be readily calculated, but certainly add to the overall benefits of the project. Payment for these services—pure public goods—is in many countries made through provision of public subsidies, rather than through tariff collection. Although the project generates a lower net present value than estimated at appraisal (US$3.6 million), the without project scenario would have been worse. The city’s solid waste management services were collapsing at the time of the intervention of the World Bank and the EBRD, and investment in equipment, operations and maintenance, and landfill construction was imperative. What would have happened without the support of the two Banks can only be speculated. What is certain, however, is that thanks to their financial resources and expertise the city was able to acquire collection vehicles at much lower cost than expected (due to the introduction of international competitive bidding), the city’s vehicle fleet operates much more efficiently than in the past (due to the construction of transfer stations and introduction of software to establish more efficient collection routes), billing systems are more effective (due to the company’s adoption of modern financial management practices), and operations and maintenance costs have fallen (due to the introduction of new vehicles and equipment). Moreover, the city’s overflowing unregulated waste dump has been closed and no longer poses a hazard to its neighbors, while an upgraded landfill located in an area with no residents living in the immediate vicinity (the residential area nearest to the landfill is more than 4 kilometers away) operates in an environmentally safe manner. FINANCIAL ANALYSIS Spetstrans has earned a net profit in only one of six years during 2000–05. However, it has earned an operating profit in three of the six years, and has improved its performance steadily since 2002. (Operating earnings represent the profit that Spetstrans generated through its main operations, before interest and taxes. Operating earnings is arguably the best measure of a company’s true performance.) Spetstrans has also consistently generated positive cash flows from its core operations, resources it is using to fund operations and maintenance, and a contribution for equipment replacement. A table with details of the financial analysis is presented in annex 4. These results are encouraging in light of the municipality’s reluctance to approve increases in tariffs for solid waste collection (which account for 88 percent of Spetstrans’s revenues), despite increases in fuel and other costs. Spetstrans’s reasonably good performance is due to two factors. The first is that the company has been able to improve its tariff collection performance (the average days of billing fell significantly for residences and industrial organizations from 2001–05, see section F in Data Sheet), and therefore to mobilize higher revenues than would otherwise have been the case. The second is that the company has been able to contain its costs by operating its vehicle fleet more efficiently. However, its ability to generate an operating profit in the future without increases in tariffs or other

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sources of revenue will become increasingly challenging, especially if oil prices remain high. Moreover, the utility will eventually need to replace its vehicles and other operating assets, which will require additional funds. The World Bank is now preparing a carbon finance project that is expected to generate adequate revenues to enable the utility to finance its operations and a significant share of its equipment replacement costs through 2015. The Emissions Reduction Purchase Agreement is scheduled to be signed in 2007. 3.4 Justification of Overall Outcome Rating (combining relevance, achievement of PDOs, and efficiency)

Rating S Achievement of the objectives of the project is rated satisfactory. The project objectives were and remain relevant. The project design is also appropriate for Tashkent. The project achieved its two development objectives, although with some delays that were linked largely to a lack of congruence between the approach of the World Bank and that of the EBRD. Although the net present value of the project is lower than estimated at appraisal, due to the reluctance of the authorities to raise tariffs on residence customers, the cost per ton of Tashkent’s solid waste management system is quite low by international standards. Satisfactory performance along all three parameters justifies an overall outcome rating of satisfactory for the project. 3.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above) None. (a) Poverty Impacts, Gender Aspects, and Social Development Taking into account concerns raised during the social assessment, the project team closely monitored the social aspects of the project during implementation to identify any emerging adverse social impacts and to recommend measures to help mitigate them. One important issue that became obvious during the upgrading of the solid waste management system was the need to provide safe working conditions for waste pickers, and to ensure that the project improvements did not negatively affect their livelihoods. Although at the time of project preparation few waste pickers were working at landfills, their numbers rose substantially during project implementation as economic conditions in the country deteriorated and unemployment increased. Shortly after the project became effective, Spetstrans’s recycling subsidiary hired approximately 80 waste pickers to recover plastic, paper, and other recyclables at the main landfill, paying them for the materials they collected according to its value. The company later provided the waste pickers with gloves and protective clothing. However, when the transfer stations started operating, and the company restricted access to the landfill as a result, many of the pickers found alternative means for earning income. Some found jobs at an adjacent recycling center, while others continued searching for recyclables at the collection points in the city, or took construction jobs with Spetstrans or other enterprises carrying out project-related construction work. Some of the pickers were able to earn a living operating a secure collection point. An additional outcome of the project was the creation of over 1,000 new jobs. The PIU reports that 950 people are employed at the secure collection points and another 80 at the transfer stations—jobs that did not exist prior to the project. Finally, the construction of

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the secured collection points led to the development of several recycling enterprises. These include enterprises producing roofing tiles, toilet paper, material for upholstered furniture (from the stuffing of old mattresses and other material), material from plastic bottles for coat linings, blankets, and pillows, and slats for wooden crates from tree cuttings. The project promoted the use of social assessments and public consultations to seek feedback on project design issues. This helped to change the relationship of the state to its citizens. See more on this in the section immediately below on institutional change. (b) Institutional change/strengthening (particularly with reference to impacts on longer-term capacity and institutional development) The project helped bring about important institutional reform. It contributed to the transformation of a nearly collapsed system of solid waste management to a reliable and efficient operation. Indeed, Tashkent’s system is now serving as a model for other countries in the region; officials from Kyrgyzstan and Tajikistan have visited Tashkent to learn from its experience. To bring about this transformation, the project supported a number of key reforms. Among the most important are: • Making Spetstrans an independent legal entity in 2002, with its own income

statement, balance sheet, and bank account. Operating independently has encouraged the company to be much more efficient in providing services. For example, it optimized the waste collection system using computer models, introduced a modern computer-based accounting system (although some weaknesses remain), and implemented an effective system for collecting tariffs.

• Making Spetstrans responsible for collecting tariff revenue, rather than the

Sanitary Cleaning Board and the raion ordering departments. Prior to this change, the district hokimiyats were using the funds for purposes other than solid waste management, undermining the financial viability of the service provider. Once Spetstrans assumed responsibility for revenue collection, its financial position improved dramatically, enabling it to provide a high level of service. However, to maintain a satisfactory level of service, tariffs will have to be increased periodically in line with inflation.

• Incorporating competitive bidding practices into its general procurement of goods

and services. Both the hokimiyat and Spetstrans were convinced of the significant benefits of this practice through experience with international competitive bidding under the project, which resulted in savings of over US$4 million on vehicles compared with the estimate at appraisal.

• Consulting with the public and responding to public concerns. This helped in not

only designing a waste management system that meets public needs, but also in changing to some extent the nature of the relationship between the government and citizens. For example, the use of consumer satisfaction surveys introduced a new outlook for the service provider, and helped in the transition away from a focus on Soviet norms to one on citizens’ views. The hokimiyat saw the value of public consultations in dealing with issues related to willingness to pay and system design

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(such as siting of transfer stations and design of collection points), and is likely to seek such consultations in the future.

• Using an M&E system for planning, accountability, and learning. The staff of the

PIU now regard indicator reporting as an important tool for project planning, for establishing accountability in project management, and for providing the feedback necessary for improving project effectiveness. Based on this positive experience, the municipal authorities are expected to introduce the practice into other areas of municipal management.

(c) Other Unintended Outcomes and Impacts (positive and negative) 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops (optional for core ICR, details in annexes) 4. Assessment of Risk to Development Outcome

Rating M The risk to development outcome is rated moderate. The hokimiyat was fully committed to the project. Although it has not approved increases in tariffs, it has worked to ensure that Spetstrans has adequate resources to provide quality services. Few other IBRD-supported projects in Uzbekistan have enjoyed this level of commitment from the responsible government entities. Moreover, the design of the system is appropriate to local conditions, so the costs of operating, maintaining, and expanding the system are not high relative to Tashkent’s municipal resources. One concern is the failure since 2003 of the hokimiyat to approve increases in tariffs for residential users, on the grounds that this action would meet with resistance from the public. The failure of the hokimiyat to raise these tariffs in line with inflation will not necessarily undermine the financial sustainability of service provision, as long as adequate funds for operations and investment can be raised through other means. Currently, Spetstrans collects rental fees from the operators of secured collection points who resell items left for disposal. Spetstrans may also benefit from a proposed composting project that is expected to generate an estimated US$4 million of carbon finance by 2015, if approved. A letter to IBRD from the hokimiyat dated June 14, 2006 lays out the means by which adequate financing of services will be ensured. Benefits of investments in capacity building and institutional strengthening are likely to be sustained. Computerization of accounting and service routing, improved tariff collection, and enhanced management practices (such as through use of an M&E system) have led to greater efficiency in service provision. Spetstrans is fully cognizant of the benefits, and is likely to sustain them. Environmental benefits are also likely to be sustained. The closure of one of the city’s unsanitary landfills and the modernization of its main landfill have substantially reduced the risks of environmental contamination due to disposal of solid waste. The landfill operators have been fully trained to operate the facility safely and in accord with

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regulations. Records of inspections indicate few violations of regulations. One aspect requiring attention is the need to introduce better monitoring of the waste being disposed of at the landfill to ensure that hazardous waste does not enter the disposal site. However, the planned Community Development Carbon Finance Tashkent Solid Waste Composting is expected to result in further improvements at the landfill that will involve improved monitoring of waste entering the landfill. 5. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues) 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry (i.e., performance through lending phase)

Rating S The Bank’s overall performance in ensuring quality at entry was satisfactory. The Bank’s performance in identification was satisfactory. Improving solid waste management in Tashkent was a priority for the central and local governments to improve the quality of life in Uzbekistan’s capital and largest city, with a population of approximately 2.2 million. The hokimiyat and municipal solid waste authorities led the process of designing the project, in close collaboration with the World Bank and the EBRD. The project design incorporated lessons learned from experience in Uzbekistan and from other countries of the former Soviet Union and elsewhere in the world. It also reflected the findings of a social assessment that showed concern of inhabitants with the poor state of their solid waste management services and their willingness to pay considerably higher tariffs for services than had previously been expected. The Bank’s performance in preparation and appraisal was satisfactory. An economic analysis was prepared. A comprehensive M&E framework was formulated. Although its outcome indicators are not well specified, the project appraisal document contained a set of appropriate quantitative indicators and targets aimed at tracking progress with implementation. Preparation was made more complicated due to the decision to enter into a parallel financing arrangement with the EBRD, which was able to secure grant funds from the European Union to finance technical assistance, but conditioned disbursement of 80 percent of its loan on the hokimiyat’s meeting triggers that proved to be difficult to meet. The Bank should have considered an alternative project design that would have made it less dependent on the EBRD’s funding decisions. Appraisal of implementation arrangements was satisfactory. The project team recognized the importance of involving a PIU with the ability to comply with the World Bank’s procurement procedures and other fiduciary requirements, and ultimately supported a PIU situated in the hokimiyat with the necessary technical assistance. Estimates of project costs were reasonable, given available data of needed capacity. The project design was flexible enough to allow funds not needed for originally specified purposes to be used for other priorities. Assessments of environmental, social, and fiduciary risks helped in highlighting issues that required special attention during project implementation.

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(b) Quality of Supervision (including of fiduciary and safeguards policies)

Rating S Bank performance in supervision was satisfactory. The Bank fielded 12 supervision missions during the project’s seven years of implementation. Missions generally took place two times a year. Missions lasted about two weeks each and typically comprised three or more members, including foreign and local consultants investigating a wide range of technical and operational issues. During the first three years of project implementation, the Bank’s supervision missions coincided with those of the EBRD. As indicated in the “Working Document,” the World Bank led supervision of the technical aspects of the project, and the EBRD led supervision of its financial aspects. In practice, the World Bank focused on all aspects of project implementation, particularly in recent years. During the early years, supervision missions focused primarily on issues of project management, procurement, financial management, reporting, and PIU staffing. They also paid attention to the plight of the growing number of waste pickers in Tashkent, and on ways to ensure that the project would not have a negative impact on their livelihoods. Later missions paid increasing attention to institutional issues identified in the reports of the EBRD-financed technical advisors, including system optimization and financial sustainability, completion of transfer stations under the turnkey contract, and completion of local construction works to comply with loan covenants. The midterm review focused on issues of financial sustainability, which led to significant reforms in the financing of solid waste services and to the adoption of numerous measures for reducing costs and improving the operational efficiency of the solid waste management system. Several beneficiary assessments informed the project team of the extent to which the project was meeting people’s expectations for improved waste management services, providing important information used in adjusting the project design. Bank supervision reports were detailed and regularly reported on trends in monitoring indicators. The World Bank’s Eastern and Central Asia Region and its Middle East and North Africa Region have used the project’s supervision reports as models in their training programs. However, targets should have been adjusted periodically to reflect new knowledge and changing country circumstances. For example the target for tariff increases should have been modified to reflect inflation (or specified in real, rather than nominal terms). In addition, some of the physical targets should have been amended to reflect new information on required system capacity, so that actual performance would not be measured against unrealistic targets. A Quality Assurance Group review of supervision conducted just after the midterm review found supervision to be satisfactory overall. The review also highlighted concerns about the financial sustainability of city’s municipal solid waste management system, due to problems at that time with Spetstrans receiving the funds it needed to operate satisfactorily. These problems were subsequently addressed. The progress was noted in a Country Portfolio Performance Review conducted in July 2004 that cited the project as one of the two top performing projects in Uzbekistan. The review mentioned several aspects of the project as being especially important to its success: the effective use of social assessment in a range of project design issues and the substantial involvement of stakeholders in both

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preparation of the project and design of aspects of the solid waste management system. An assessment of monitoring and evaluation of projects in the Bank’s Uzbekistan portfolio carried out in August 2006, commended the project’s M&E system and its regular reporting on indicators. The project development outcome and implementation was rated satisfactory at all times during implementation. A midterm review carried out in September 2001 resulted in improved implementation and faster disbursement, but no fundamental changes in project design. (c) Justification of Rating for Overall Bank Performance

Rating S The Bank’s overall performance was satisfactory. In lending, the Bank responded to the government’s request for assistance in improving Tashkent’s solid waste management services, drawing on the lessons of experiences in Uzbekistan and in other countries. It also drew effectively on the expertise and resources of the EBRD to design and implement a project that fit local capacities and needs. Supervision was thorough. The World Bank team responded flexibly to challenges and adapted readily to new information. The dedicated oversight of the World Bank’s task team leader was instrumental in keeping implementation of the project on track, despite delays in provision of complementary inputs to the project by both the EBRD and the hokimiyat. Her depth of knowledge of the technical and social issues of solid waste management was also essential to success. The expertise and dedication of other members of the project team, including those located in the country office, was also critical to success. Finally, the continuity of the task team leader and of team members, particularly those located in Tashkent, was essential in maintaining a close dialogue with the government project team and contributed to the quality of the project. 5.2 Borrower Performance (a) Government Performance

Rating MS The government’s performance in implementation was moderately satisfactory. The hokimiyat maintained its good relationship with the Bank throughout implementation. Although the hokimiyat constructed the nonsecure and secure collection points in a timely manner, it was not able to prepare the sites for the transfer stations on schedule, leading to delays in overall project implementation. Although not common practice in Uzbekistan, the hokimiyat for the first time held public consultations on a siting decision (for the transfer stations) and incorporated the findings of the periodic beneficiary assessments into their decisions on the design of the waste collection system. The siting of the transfer stations, the innovative concept of secured collection points, and the closure of the Hasanbay landfill all depended critically on stakeholder participation. However, despite the recommendations of the World Bank and the EBRD, the hokimiyat has not permitted Spetstrans to raise tariffs for residential consumers since 2003. Although this has not yet led to a decline in services,

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Spetstrans will not be able to make the capital investments necessary to maintain services in the future without additional revenues, whether from increased tariffs, budgetary allocations, or other sources. (b) Implementing Agency Performance

Rating S

Implementing Agency Performance Municipality of Tashkent S Spetstrans (service provider) S

The performance of the implementing agencies was satisfactory. The hokimiyat’s PIU staff was highly effective in implementing the project in full compliance with the Bank’s fiduciary and environmental and social safeguard polices. They managed technical and administrative matters in a highly competent manner. With a sanitation engineer as head of the PIU, the staff paid considerable attention to technical matters. The DHV management consultant provided valuable training during the early years in project management on the fiduciary and other policies of the World Bank and the EBRD. Spetstrans also performed satisfactorily. However, the quality of Spetstrans’s financial reporting, although improving throughout the project period, still needs to be enhanced to address weaknesses mentioned in several audit reports relating to the need to (a) fully meet International Accounting Standards, particularly those relating to the need to verify its inventories and to prepare both consolidated and separate financial statements; (b) improve its internal controls in sales and revenue management; and (c) improve its calculation of write-offs of inventories. These weaknesses were not considered significant enough to result in an unsatisfactory rating for the project’s financial management. The Bank also recognized that the company was not able to fully meet all expectations largely due to the inability of the EBRD to deliver planned technical assistance aimed at increasing capacity of Spetstrans for financial reporting and management. (c) Justification of Rating for Overall Borrower Performance

Rating S The overall performance of the borrower was satisfactory. The government demonstrated its commitment to the broad objectives of the project and its approach from identification to completion, and met its counterpart funding obligations. The implementing agency performed very well. It handled procurement and financial management in accordance with Bank guidelines. It also ensured compliance with the Bank’s environmental and social safeguard policies. 6. Lessons Learned (both project-specific and of wide general application) In projects involving parallel financiers, agreement on realistic project conditionality is essential for smooth implementation. The EBRD included triggers for disbursing 80 percent of its loan. These were impossible to meet and delayed implementation of EBRD-supported activities until the triggers could be revised. To avoid similar situations in the

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future, all financing partners should agree on project conditionality prior to Board approval. In the absence of agreement, a project should be designed in such a way that any delays or complete withdrawals of funding from any one financing partner does not disrupt project implementation or force fundamental changes in its design. Use of social and beneficiary assessments can improve project design and facilitate monitoring and supervision. The initial social assessment carried out during project preparation showed that inhabitants would be willing to pay four times what they had been paying for an improved solid waste collection service. This finding convinced the hokimiyat that mobilizing additional funding from beneficiaries of services was feasible. The findings also persuaded the authorities to close an in-city landfill and to design collection points that were more accessible to children and the elderly. Beneficiary assessments carried out during project implementation allowed the project team to track changes in user satisfaction with the services, and to adjust the project design to better meet expectations. The beneficiary assessments were also used for informing technical decisions (for example, the decision to build more secure collection points and fewer nonsecure collection points). To be useful, beneficiary assessments must be well designed. Key to success are (a) pairing a local social scientist with an international social development specialist to provide quality assurance, and (b) conducting a baseline survey and periodic follow-up surveys (such as at project midterm and closing) to track changes in attitudes of beneficiaries to improvements in services. Well designed monitoring and evaluation systems can be invaluable in managing projects for results. The government in collaboration with the Bank designed a project monitoring system that included quantifiable indicators and a clear plan for tracking and reporting on them. The PIU reported on progress with the indicators every six months, which allowed the hokimiyat authorities, Spetstrans, and the Bank teams to quickly spot emerging problems and raise the issues with the authorities or Spetstrans as necessary to try to resolve them. Periodic beneficiary assessments and targeted surveys, carried out by local social science firms, helped ensure that the project responded to the demands of Tashkent inhabitants. For example, when the surveys showed that secured collection points were popular with residents, project managers agreed to finance additional rolling bins to service them. In situations where information is uncertain (such as quantities of municipal solid waste generated), taking a phased approach to project implementation can help in adapting the project once better information becomes available. The first phase could finance urgently needed equipment, studies to produce accurate information to underpin the investment, preparation of a strategic municipal solid waste management plan, and a second phase investment plan. Once the studies, strategic plan, and second phase investment plan are finalized, the project would finance the remaining investments. Overburdening the municipality with large counterpart obligations can unnecessarily slow project implementation. Requiring the hokimiyat to meet a counterpart obligation of US$11 million (appraisal estimate) significantly slowed project implementation because the hokimiyat found it difficult to mobilize the funds. The Bank should have recognized that the hokimiyat was already devoting considerable resources by agreeing to borrow for solid waste management in addition to its meeting many other demands. Insisting that it

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devote even more of its scarce resources to solid waste management strained city resources and delayed project implementation. Supporting the PIU with international project management expertise can help the government develop the skills needed for successful project management. The consultants who worked with the PIU provided invaluable hands-on training and assistance to PIU staff during the first three years of the project, first as full time advisors and then through site visits every three months. Midway through the consultant assignment, the PIU staff was fully competent to take over the responsibility for implementing the project. The experience showed that having international advisors work in the offices of the project managers can be effective in transferring skills and knowledge. The consultants who visited the PIU on a periodic basis proved to be considerably less effective and never established a close working relationship with the staff. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies See annex 8. (b) Cofinanciers (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society)

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Annex 1: Results Framework Analysis Project Development Objective. The project's development objectives were to (a) return the existing municipal solid waste management system to a satisfactory level of service, and (b) improve the technical, financial, and institutional basis for its future operation and development. (a) Project Development Objective Indicators

Baseline 1998

Original Target Values

Actual Value Achieved at Completion

2006 1. Population satisfied with waste collection services

30 percent None 60 percent citywide 80 percent of those receiving the highest level of service.

2. Spetstrans accounts receivable, average days of billing:

(a) Industrial and commercial organizations 90 60 55 (b) Budget organizations 90 60 130 (c) Residential clients 90 60 27 Comments: The average days of billing rose for budget organizations, because such organizations were not receiving adequate budget allocations from the government to pay for operations, including solid waste management services.

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(b) Intermediate Outcome Indicators

Baseline 1998

Original Target Values

Actual Value Achieved at Completion

2006 Project Outputs(physical implementation) Operational collection vehicles–residential commercial/budget organization services

(a) Number of vehicles 398 475 444 (b) Availability of vehicles (%) 70 75 82 Operational collection vehicles–industrial organizations (a) Number of vehicles 35 52 40 (b) Availability of vehicles (%) 70 75 82 Transportation from transfer station to landfill (a) Number of vehicles 0 36 32 (b) Availability of vehicles (%) — 75 82 Street cleaning latrine and support services (a) Number of vehicles1 52 88 20 (b) Availability of vehicles (%) 70 75 80 Equipment and machinery for landfill operations (a) Number of vehicles 10 21 24 (b) Availability of vehicles (%) 50 75 80 Number of transfer stations in operation 0 4 3 Volume of Waste Collected (tons):2 (a) From industrial and commercial organizations 216,000 243,000 152,000 (b) From budget organizations 410,000 454,000 111,000 (c) From residential area 770,000 852,000 973,000 Waste delivered (tons) (a) Waste delivered to transfer stations by system 0 1,137,000 670,000 (b) Waste delivered to landfill by system3 1,396,000 414,000 710,000 (2005) (c) Waste delivered to landfill by other organizations 134,000 151,000 175,000 (2005) Financial Aspects Average tariff for collection waste (sum) (a) Industrial organizations 477 1,195 14,600 (b) Budget organizations 908 2,277 14,600 (c) Residential clients 25 62 250 Tariff for removal street waste 682 1,709 6,800 Tariff for street washing/latrine services 270 677 4,200 Spetstrans accounts receivable, average days of billing:

(a) Industrial organizations 90 60 55 (b) Budget organizations 90 60 130 (c) Residential clients 90 60 27 Spetstrans operation ratio 116 111 101 Institutional Development Utility accounting systems (percent implemented) — 100% 100% Notes: 1. The planned equipment was not purchased as a result of the cancellation of EBRD’s final procurement. 2. The original targets for amount of waste to be collected and delivered were based on Soviet-era norms, as the actual amount of waste being collected at the start of the project was not known. 3. The original target for waste delivered to landfills was lower than the baseline, because it was assumed a large proportion of waste would be delivered to transfer stations instead.

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Annex 2: Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal

Estimate Actual/Latest

Estimate a Percentage of

Appraisal US$ million US$ million Collection Vehicles and Support Equipment 12.77 15.68 122.8%Collection Infrastructure 13.12 7.10 54.1%Landfill Modernization 3.81 3.71 97.4%Vehicle Park Development 2.68 1.73 64.6%Landfill Closure 1.06 1.25 117.9%Transfer Stations/Transfer Vehicles 9.83 10.48 106.6%Biomedical Waste Facilities 0.72 0.15 20.8%Computer Equipment 0.34 0.57 167.6%Institutional Support 3.80 2.56 67.4%Contingencies 7.87 - - Total Costs 56.00 43.23 77.2% Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) Expenditure Category ICB Procurement

NCB Method Other b

N.B.F.a Total Cost

1. Works 0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

5.96 (0.00)

5.96 (0.00)

2. Computers, equipment and other goods 28.33 (24.00)

0.00 (0.00)

0.00 (0.00)

17.28 (0.00)

45.61 (24.00)

3. Services 0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

4.43 (0.00)

4.43 (0.00)

Total Costs 28.33 0.00 0.00 27.10 56.00 Total Financed by Bank (24.00) (0.00) (0.00) (0.00) (24.00) Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) Expenditure Category ICB Procurement

NCB Method Other b/

N.B.F.a/ Total Cost

1. Works 0.00 (0.00)

0.00 (0.00)

0.00 (0.00)

6.80 (0.00)

6.80 (0.00)

2. Computers, equipment and other goods 33.37 (21.38)

0.00 (0.00)

.512 (0.00)

0.00 (0.00)

33.88 (21.38)

3. Services 0.00 (0.00)

0.00 (0.00)

2.55 (0.00)

0.00 (0.00)

2.55 (0.00)

Total Costs 33.37 0.00 3.062 6.80 43.23 Total Financed by Bank (21.38) (0.00) (0.00) (0.00) (21.38) Note: Numbers in parentheses are amounts to be financed by the IBRD. a/ Non-Bank Funded (government contribution) b/ International and local shopping

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Project Financing (in US$ million equivalent) Source of Funds Type of

Cofinancing Appraisal

Estimate (US$ M) Actual/Latest

Estimate (US$ M) Percentage of

Appraisal Government 10.70 10.38 97%EBRD Parallel 19.20 9.54 50%EBRD Grant 2.10 1.92 91%IBRD 24.00 21.39 89%Total 56.00 43.23 77.2%

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Annex 3: Outputs by Component

Component 1: Investment The outputs of this component are satisfactory. • Collection Infrastructure. All of the planned 13,345 collection bins were

purchased and deployed. Using savings resulting from the use of international competitive bidding, the hokimiyat purchased an additional 5,950 bins to equip both nonsecure and secure collection points. In addition, the hokimiyat and Spetstrans used their own resources to construct 750 nonsecure collection points and 400 secure collection points. Based on the 2005 beneficiary assessment, 90 percent of the residents are now satisfied with the accessibility of collection points. The successful implementation of this component also resulted in the closing of the unsightly and unsanitary garbage chutes in multifamily apartment buildings, reduction in public complaints about poor service, and a substantial decline in the incidence of illegal dumping, according to the hokimiyat authorities.

The construction of the secured collection points led to the development of several recycling enterprises. These include enterprises producing roofing tiles, toilet paper, material for upholstered furniture (from the stuffing of old mattresses and other material), material from plastic bottles for coat linings, blankets, and pillows, and slats for wooden crates from tree cuttings.

• Collection Vehicles and Support Equipment. All of the 140 collection vehicles,

including 100 side-loading, 23 rear-loading, and 17 10-ton roll-off vehicles, as originally planned, were purchased under the IBRD loan. Using savings resulting from the use of international competitive bidding practices, the hokimiyat purchased an additional 50 side-loading and 50 rear-loading collection vehicles to replace equipment that were reaching the end of their service life.

• Vehicle Park Development. A central repair facility was constructed, which is fully

operational and servicing about 250 vehicles belonging to Spetstrans and the Yunosabad garage per month. The facility is also servicing compactors from other cities on a commercial basis. In addition, all large vehicles now undergo scheduled maintenance every 5,000, 15,000, or 45,000 kilometers, depending on the type of vehicle. Such regular maintenance will extend the service life of the vehicles.

• Landfill Modernization. The hokimiyat upgraded landfill infrastructure and

practices by (a) improving vehicle access to the landfill, (b) building a fence around the landfill to prevent unauthorized entry and dumping of waste, (c) closing the filled-in segment of the main landfill, (d) improving unloading pads and lighting, (e) covering the landfill, (f) organizing recycling activities, and (g) completing a staff building, vehicle storage facility, equipment washing facility, and repair workshop. It also constructed a weighbridge and a small control building at the landfill to track the quantity of waste collected, which is essential information for effective system management and capacity planning.

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• Landfill Closure. One landfill, Hasanbay, was closed and the site covered with construction waste. Spetstrans also fenced off the landfill, constructed a guard house, and is providing a guard 24 hours a day to prevent vehicles and residents from entering the territory of the landfill. Although the site does not pose a threat to the adjacent residential areas, the guard is posted to ensure that the site is not used for any type of development. Although a second landfill, Zangiota, was initially expected to be closed, it was determined to be outside the jurisdiction of Tashkent, and therefore outside the scope of the project. Nonetheless, Spetstrans stopped using the site and closed the portion it had been using.

• Transfer Stations (IBRD) and Transfer Vehicles (EBRD). Three out of the four

planned transfer stations were completed and put into operation. The commissioning of the three stations has allowed Spetstrans to optimize the use of available waste compactors, and save an average of US$298,000 per year on operations and maintenance. The hokimiyat decided not to construct the fourth transfer station during the project implementation period for several reasons. First, and most important, data from the new weighbridge revealed that the city was generating a smaller quantity of waste than had been estimated and that three transfer stations would be sufficient to handle the waste. Second, the proposed Community Development Carbon Finance Tashkent Solid Waste Composting Project, if approved, would ultimately reduce the amount of waste that would need to pass through the transfer stations. Third, the hokimiyat could not reach agreement with the contractor on a contract amendment that was needed to modify the siting, configuration, and timing of the construction of the fourth transfer station. The project purchased and deployed all 32 transfer station vehicles financed by the EBRD.

• Biomedical Waste Facilities (EBRD). Biomedical waste bins and vehicles were not

acquired under EBRD finance, as expected. The loan closed before the government procured the equipment. Instead, the hokimiyat plans to procure the equipment, construct a separate biomedical cell at the landfill, and provide related staff training using its own financial resources.

Institutional Support Component

The outputs of this component are satisfactory. • Project Management Support. The project management consulting services

financed by a grant from the EBRD effectively provided training and hands-on assistance to the PIU to build its capacity in procurement, financial management, and other aspects of project management. By midterm the PIU was fully able to carry out all project management responsibilities in a timely and efficient manner, allowing the consultant to leave the full-time position, and provide backstopping through periodic visits.

• Institutional Strengthening. Under EBRD-financed technical assistance, Spetstrans

developed a strategic municipal solid waste management plan that specifies measures required to optimize the system and identifies options for its future

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development, including measures to improve hazardous waste management, encourage waste minimization, and initiate a recycling program. The technical assistance facilitated Spetstrans’s corporatization in 2002, through which it became an independent legal entity with its own income statement and balance sheet, and its own bank account in local currency. It also helped Spetstrans to greatly improve management of services by helping it to improve its utility accounting and management information system and by introducing a computerized billing and tariff collection system. The company is collecting 90 percent of billed residential tariffs. Moreover the average number of days with bills overdue has dropped from 90 days in 1998 to less than 60 in 2005 for industrial and commercial users and to less than 30 for residences. However, the average days of billing for government institutions has risen to 160 days. Spetstrans is now covering all of its costs of operations and maintenance and part of its equipment replacement costs, consistent with expectations at appraisal. With technical assistance, the hokimiyat took a major step in 2005 to introduce private sector participation into the municipal solid waste system by privatizing one of Spetstrans’s ten district garages. The company now operates on the basis of a service contract with Spetstrans and subleases solid waste collection equipment and facilities. The experience will be evaluated at the end of the year to see if it would be feasible to privatize at least another two district garages in 2007, and its remaining garages during subsequent years. In addition, Spetstrans is leasing 280 out of 395 secure waste collection points to private operators, who recover their costs through sale of waste materials delivered to the collection point.

• The hokimiyat led public consultations during critical stages of implementation to

seek the input of the residents. In some cases, these consultations led to changes in the original plans; a notable example is the decision not to use one of the planned transfer station sites. According to the State Committee for Nature Protection, this was the first time that Tashkent residents played a significant role in a decision regarding the selection of the site of a public facility. The hokimiyat also required the transfer station contractor to hold public meetings on each of the transfer station sites. In addition, the hokimiyat, with assistance from the institutional strengthening consultants, carried out social surveys to obtain information on public reaction to the improvements in the system. On the basis of the recommendations of the landfill engineering consultants, Spetstrans upgraded its operations at the main landfill at Akhangaran through reconstruction, purchase of new vehicles and equipment, and the installation of a weighbridge with computer equipment. Finally, the technical assistance helped the PIU establish an M&E framework, which it used to regularly monitor project implementation progress. Staff of the PIU now regard indicator reporting as normal for planning, accountability, and learning.

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Annex 4: Economic and Financial Analysis Economic analysis Given project investment costs of US$43.23 million, Spetstrans’s actual financial performance since 2000, net transfers from the government for debt service on the loans from IBRD and EBRD, and projections of a 10 percent real increase in revenue in 2007, the project has a net present value of US$1.1 million, assuming a discount rate of 10 percent, and an internal rate of return of 11.4 percent. The company has submitted a request to the hokimiyat for a rate increase to take effect in 2007. The key assumptions of the analysis are: (a) the capital costs are incurred between 2000 and 2006; (b) the lifetime of the project is 10 years, starting in 2000; (c) the real annual revenues of the utility rise by 10 percent in 2007 and are constant thereafter; (d) resources to service the IBRD and EBRD project loans come from government transfers rather than from internally generated funds, and (e) the total operations and maintenance costs remain constant in real terms between 2006 and 2010. The table below compares the current estimates of net present value and internal rate of return for the project compared with the estimates made at the time of project appraisal. Cost benefit analysis: Current calculations compared with appraisal estimates (US$) Current estimates Appraisal estimate Net present value 1.1 million 3.6 million Internal rate of return 11.6 percent 13.2 percent In addition to a collection service that households directly benefit from and are willing to pay for, improved collection and safe disposal of solid waste provides important environmental benefits that people in general do not directly identify and are therefore not willing to pay for. For example, sound disposal practices prevent contamination of ground water, help people avoid contact with hazardous waste, and discourage burning of trash, which itself creates health risks. These benefits cannot be readily calculated, but certainly add to the overall benefits of the project.4 Payment for these services—pure public goods—is in many countries made through provision of public subsidies, rather than through tariff collection. Although the project generates a lower net present value than estimated at appraisal, the without project scenario would have been worse. The city’s solid waste management services were collapsing at the time of the intervention of the World Bank and the EBRD, and investment in equipment, operations and maintenance, and landfill reconstruction was imperative. What would have happened without the support of the two Banks can only be speculated. What is certain, however, is that thanks to their financial resources and expertise the city was able to acquire collection vehicles at much lower cost than expected (due to the introduction of international competitive bidding), the city’s vehicle fleet operates much more efficiently than in the past (due to the construction of transfer stations 4 Environmental benefits were estimated at appraisal on the basis of the people’s responses to surveys on willingness to pay. However, the surveys do not distinguish between people’s willingness to pay for environmental improvements versus enhanced services. This report does not attempt to quantify the value of the environmental benefits.

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and introduction of software to establish more efficient collection routes), billing systems are more effective (due to the company’s adoption of modern financial management practices), and operations and maintenance costs have fallen (due to the introduction of new vehicles and equipment). Moreover, the city’s overflowing unregulated waste dump has been closed and no longer poses a hazard to its neighbors, while an upgraded landfill located in an area with no nearby residents operates in an environmentally safe manner.

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Financial analysis Financial summary for revenue earning project entities, years ending December 31 (millions current sum)

2000 2001 2002 2003 2004 2005Income statementRevenues 1,771,625 2,708,385 3,832,048 6,421,422 6,400,753 6,081,646 Cost of goods sold 1,278,806 1,709,379 3,210,215 4,832,928 5,319,348 4,992,492 Operating income (35,798) 473,258 (496,165) (184,806) 92,591 105,279 Net income (188,531) 163,003 (568,492) (219,795) (51,122) (303,267)

Cash flow statementOperating earnings before change in working capital 3,719,036 1,042,975 Net cash flow from operating activities 215,388 581,212 3,098,205 1,425,680 Net cash flow from investment activities (3,412,659) (101,219) Net cash flow from financing activities 210,985.53 (1,317,315) Increase/decrease in cash and cash equivalents (103,470.03) 7,146 Cash opening balance 19,340 9,678 106,136 2,874 Cash closing balance 19,340 9,678 102,267 2,666 10,020

Balance sheet itemsCurrent assets 738,357 1,730,010 2,599,835 3,146,853 2,582,406 2,928,817 Fixed assets 662,119 1,641,653 10,408,458 11,362,198 10,650,340 7,885,241 Total assets 1,400,476 3,371,663 13,008,293 14,509,051 13,232,747 10,814,058

Current liabilites 591,714 608,517 1,074,398 1,626,746 704,003 1,295,158 Total long-term liabilities 929,601 1,270,536 11,300,773 11,840,883 Debt 480,003 339,133 Deferred taxes 74,537 149,874 Total equity (120,839) 1,492,610 633,122 1,041,422 12,154,205 9,114,893 Total liabilities and equity 1,400,476 3,371,663 13,008,293 14,509,051 13,412,748 10,899,058

Financial ratiosOperating income % of revenue -2% 17% -13% -3% 1% 2%Net income % of revenue -11% 6% -15% -3% -1% -5%Return on assets -13.5% 4.8% -4.4% -1.5% -0.4% -2.8%Current ratio 1.2 2.8 2.4 1.9 3.7 2.3 Debt/Equity 4% 4% SPETSTRANS FINANCIAL PERFORMANCE, 2000–2005 Spetstrans has earned a net profit in only one of six years during 2000–05. However, it has earned an operating profit in three of the six years, and has improved its performance steadily since 2002. (Operating earnings represent the profit that Spetstrans generated through its main operations, before interest and taxes. Operating earnings is arguably the best measure of a company’s true performance.) Spetstrans has also consistently generated

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positive cash flows from its core operations, resources it is using to fund operations and maintenance, debt service requirements, and a contribution for equipment replacement. Spetstrans financial ratios reveal its performance over time and provide an indication of its profitability, liquidity, and leverage. As the first three indicators in the table above show, Spetstrans’ ability to earn a profit has been improving over time. Its operating margin (the amount Spetstrans earns from its primary business), while low, has been improving since 2002 and turned positive in 2004. However, net income in relation to revenues, which measures how much Spetstrans keeps of its total revenue, remains negative, in part due to payment of income taxes. The company’s return on assets, although negative in all but one year during 2000–05, has generally improved over time. Spetstrans’s liquidity position is satisfactory. Its current ratio of greater than one signifies that it can meet its near term obligations with its short term assets. Spetstrans also has a very modest debt to equity ratio, so should have little trouble meeting its obligations to debt holders despite its low profitability. These results are encouraging in light of the municipality’s reluctance to approve increases in tariffs for solid waste collection. Spetstrans’s reasonably good performance is due to two factors. The first is that the company has been able to improve its bill collection performance (the average days of billing fell significantly for residences and industrial organizations from 2001–05, see Section F), and therefore to mobilize higher revenues than would otherwise have been the case. The second is that the company has been able to contain its costs by operating its vehicle fleet more efficiently. However, its ability to generate an operating profit in the future without increases in tariffs or other sources of revenue will become increasingly challenging, especially if oil prices remain high. The World Bank is now preparing a carbon finance project that is expected to generate adequate revenues to enable the utility to finance its operations and a significant share of its equipment replacement costs through 2015. It should be noted that although tariffs for solid waste collection are too low to cover full costs (operating and investment), the proportion of total costs recovered through tariffs are higher for solid waste services than for other communal services such as water supply, electricity, or heating.

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Annex 5: Bank Lending and Implementation Support/Supervision Processes (a) Task Team members

Names Title Unit Responsibility/ Specialty

Lending (from Task Team in PAD Data Sheet)

Roger Batstone Principal Environmental Engineer ECSSD Task Team Leader

Janis Bernstein Sr. Environmental Specialist ECSSD Social assessment

Rita Cestti Sr. Environmental Specialist ECSSD Economic analysis

Oleg Borovikov Consultant ECSIE Operations, local institutions

Rick Cooke Consultant ECSSD Environmental engineer

Johann Renkewitz Consultant ECSSD Financial analysis

Craig Leisher Consultant ECSSD Environmental writer

Supervision/ICR (from Task Team Members in all archived ISRs)

Janis Bernstein

Sr. Environmental Specialist ECSSD Task Team Leader, social and environmental issues

Oleg Borovikov Consultant ECSSD Operations, local institutions

Herbert Mascha Consultant ECSSD Landfill engineering

Johann Renkewitz Consultant ECSSD Financial analysis

John Otieno Ogallo Sr. Financial Management Specialist ECSPS Financial management

Fasliddin Rakhimov Procurement Analyst ECSPS Procurement

Wendy S. Ayres Consultant ECSSD Implementation and Results Report (main author), economic analysis, M&E

Richard Carroll Consultant ECSSD Implementation and Results Report (contributor)

Venkateswaran Rama Krishnan

Financial Analyst ECSSD Financial analysis

Igor Pogrebev Consultant ECSSD Social issues

Marina Djabbarzade Consultant ECSSD Community development

Roger Batstone Consultant ECSSD Environmental engineering

Rick Cooke Consultant ECSSD Environmental engineering

Jose Martinez Procurement Specialist ECSSD Procurement

Ulf Hindstrom Senior Banker EBRD Task Manager, financial analysis

Paul Covenden Senior Banker EBRD Task Manager, financial analysis

Rada Obinga Environmental Specialist EBRD Environmental issues

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(b) Ratings of Project Performance in ISRs

No. Date ISR Archived DO IP Actual Disbursements (USD M)

1 07/02/1998 Satisfactory Satisfactory 0.00 2 01/14/1999 Satisfactory Satisfactory 0.00 3 01/27/1999 Satisfactory Satisfactory 0.00 4 09/17/1999 Satisfactory Satisfactory 0.00 5 01/19/2000 Satisfactory Satisfactory 0.00 6 06/21/2000 Satisfactory Satisfactory 0.00 7 08/10/2000 Satisfactory Satisfactory 0.00 8 08/23/2000 Satisfactory Satisfactory 0.00 9 02/22/2001 Satisfactory Satisfactory 3.91 10 04/23/2001 Satisfactory Satisfactory 4.59 11 11/12/2001 Satisfactory Satisfactory 8.85 12 05/03/2002 Satisfactory Satisfactory 9.91 13 05/08/2002 Satisfactory Satisfactory 9.91 14 06/19/2002 Satisfactory Satisfactory 10.04 15 12/11/2002 Satisfactory Satisfactory 11.06 16 06/27/2003 Satisfactory Satisfactory 12.28 17 12/30/2003 Satisfactory Satisfactory 13.70 18 03/29/2004 Satisfactory Satisfactory 14.29 19 08/31/2004 Satisfactory Satisfactory 14.51 20 12/08/2004 Satisfactory Satisfactory 14.64 21 06/16/2005 Satisfactory Satisfactory 14.97 22 02/24/2006 Satisfactory Satisfactory 18.07 23 06/29/2006 Satisfactory Satisfactory 20.90

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(c) Staff Time and Cost

Staff Time and Cost (Bank Budget Only)

Stage of Project Cycle No. of staff weeks

USD Thousands (including travel and

consultant costs) Lending

FY97 200.40 FY98 115.77 FY99 0.00 FY00 0.00 FY01 0.00 FY02 0.00 FY03 0.00 FY04 0.00 FY05 0.00 FY06 0.00 FY07 0.00

Total: 316.17 Supervision/ICR

FY97 0.00 FY98 6.54 FY99 95.77 FY00 35 118.68 FY01 19 63.85 FY02 22 81.11 FY03 29 113.39 FY04 29 115.75 FY05 20 109.57 FY06 17 108.48 FY07 1 6.20

Total: 172 819.34

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Annex 6: Beneficiary Survey Results A local social science research firm carried out a beneficiary assessment to assist the task team in determining the extent to which the project met its objectives from the perspective of the users of the system as well as to identify any adverse social impacts that may have arisen during project implementation and to recommend measures to help mitigate them. The assessment involved a citywide household survey and in-depth interviews with waste pickers to understand how they were affected by the project-related improvements at the main landfill and at the collection points around the city. The main findings of the household survey include: (a) Overall, 60 percent of the respondents in a citywide household survey reported that

they are satisfied with their solid waste collection service. (b) Among households receiving the highest level of service, 80 percent report that

they are satisfied. However, satisfaction differs in the 11 districts of the city; households in Yunosobad District are the most satisfied.

(c) The large majority (90 percent) of respondents said that they were satisfied with the location of their collection points. By contrast, in the 1997 social assessment, less than 30 percent said they were satisfied.

(d) The most satisfied households are those with access to secure collection points and the bell system (collection vehicles ring a bell upon arriving at a block and residents bring their waste to the vehicle to be taken away).

(e) Among those households indicating that they are not satisfied with their solid waste service, about half indicated that the main reason for their dissatisfaction was the litter surrounding the bins, resulting from the activities of the increasing number of waste pickers in the city.

(f) More than 90 percent of the respondents indicate that they are paying for their collection service. On average, household payments for solid waste service account for only 0.3 to 0.7 percent of household income. This suggests that there is an opportunity to raise tariffis; an acceptable amount for developing countries and transitional economies is to pay about 1.5 percent of household income for solid waste services.

With regard to the waste pickers, the beneficiary assessment found that waste picking at the nonsecure collection points had increased, suggesting that the number of people without jobs or other sources of income in Tashkent was increasing. Income from selling materials found at the collection points was the only means of support for many of the waste pickers. While noting that the design of Tashkent’s solid waste management system was not responsible for or able to solve this situation, the project team suggested that Spetstrans consider hiring waste pickers to clean up areas surrounding the bins at the nonsecure collection points. This would allow the waste pickers to earn more income and have greater security, while improving sanitary conditions and consumer satisfaction. Currently Spetstrans’ recycling subsidiary is allowing 20 waste pickers to operate at the main landfill to recover plastic, paper, and other recyclables and paying them for the materials they collect according to its value. Many of the pickers who are no longer operating at the main

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landfill continued waste picking at the collection points in the city, or took construction jobs with Spetstrans or other enterprises carrying out project-related construction work. Some of the pickers were able to earn a living operating a secure collection point.

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Annex 7: Stakeholder Workshop Report and Results A stakeholder workshop was not carried out as part of the ICR. However, the team carried out a beneficiary assessment (see annex 5) and met with key stakeholders to discuss the results of the project (see annex 8).

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Annex 8: Summary of Borrower’s ICR and/or Comments on Draft ICR Introduction 1. The City of Tashkent (“the City”) and the government of the Republic of Uzbekistan (“government”) have received loans in the amount of US$ 43.2 million from the International Bank for Reconstruction and Development (IBRD) and the European Bank for Reconstruction and Development (EBRD) (jointly referred to as “Creditors”) in support of a program of investments to rehabilitate the municipal solid waste management system in the City of Tashkent. The program is known as the Tashkent Solid Waste Management Project, hereafter referred to as “the Project.” It consists of the following components:

(a) improvement of the waste collection system; (b) technical re-equipment of waste collection vehicles; (c) improvement of the system of maintenance and repair of vehicles; (d) construction of transfer stations; (e) closure of two city landfills; (f) modernisation of main Ahangaran landfill; (g) establishment and development of the biomedical waste management system.

Project Achievements: Tashkent Solid Waste Management Project 2. In general, it is important to note that the implementation of Tashkent Solid Waste

Management Project allowed the Tashkent City Municipality not only to restore, but also to significantly strengthen and upgrade the city’s solid waste collection system. In our opinion, the Municipality, with close assistance of the Banks, managed to achieve the following main project targets as a result of project implementation:

(a) Improved significantly the sanitary condition of residential areas of the city;

rehabilitated the system of waste collection and disposal; established a regulatory framework for recording the volumes of solid waste generation and removal; liquidated about 120–150 uncontrolled dump sites from the city area; significantly reduced disease rates of population through increases in provided waste collection services and environmental sanitation of the city. Achievement of this point fully corresponds to the project aims.

(b) Completely renovated the waste collection vehicles fleet with modern equipment and

waste compactors; increased their roadworthiness and operation ratio. Achievement of this point also corresponds to the project aims.

(c) Improved operation and maintenance of vehicles and equipment through purchase of

service equipment for district garages and central repair workshop; decreased operation and maintenance costs; with putting central repair workshop of Spetstrans into operation, regular service and maintenance of the vehicles is done with Spetstrans own efforts with lower costs; earlier these works were carried out by side organizations like «Hyundai-Invest-Center» and «Daewoo-Service-Center» at a much higher cost. Achievement of this point also corresponds to the project aims.

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(d) Through construction of three transfer stations in Hamza, Yakkasaray and Yunusabad

districts, the operation efficiency of waste collection vehicles improved significantly, their idle mileage was decreased, savings in fuel and consumables use was achieved, use of the Zangiota and Hasanbay in-city landfills was discontinued; according to calculations, the annual net profit from using each transfer station amounted to an 90–200 million sums, on average. Achievement of this point also corresponds to the project aims.

(e) Upgraded operation of the main city landfill Ahangaran through reconstruction,

purchase of new vehicles and equipment, and installation of weighbridge with computer equipment. Achievement of this point also corresponds to the project aims.

(f) Created about 1,000 additional jobs through construction of secure waste collection

points in the residential areas of the city, and established a formal system of recyclable materials separation, collection, and treatment. The volume of waste generated in the city was reduced by approximately 35-40% because of separation and recycling of secondary materials. Although waste separation was not a specific objective of the project, its achievement not only corresponds to the project’s aims, but is an especially positive benefit of the project.

3. Today, the waste management system of the city is working in a more organized manner, and can serve as a good example for the cities throughout Uzbekistan as well as in other developing countries. We and our guests who visit Tashkent speak highly of the sanitary conditions of the residential areas of the city which have improved significantly since the start of the project. 4. Through the project, the municipality managed to solve a number of serious problems, such as lack of vehicles and bins for solid waste collection, and other technical means. Besides, the government and municipality managed to rehabilitate and transfer a number of old depreciated vehicles of Russian manufacture to other cities of the country: Nukus, Samarkand, Gulistan, Andijan, and others. Thus, not only Tashkent itself received benefits from implementation of our project, but also these other cities. Institutional Development Impact Achieved Through the Project 5. An important factor for keeping sustainability of the project, maintaining the required level of service and provision of financial stability in the whole solid waste system was liquidation of useless management units and reduction of managerial costs. To achieve this, the Sanitary Cleaning Board and its 10 district sub-divisions – odering departments - were liquidated, Spetstrans district units’ bank accounts were liquidated, and tariff collection was organized into one main account. 6. In addition, 280 out of 395 secure waste collection points were leased to private persons or companies, with the purpose of reducing the operational and production costs of solid waste collection and removal. 7. One of the main project targets was introduction into the system of market relations, creation of competitive environment and private sector attraction. To this end, an

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international tender was arranged in 2003 for private sector participation in the bidding for solid waste removal services contracts in two city districts – Chilanzar and Shaihantaur. The tender failed because no company was interested in submitting an offer. 8. Despite the tender failure, the municipality continues to work towards this target. Today, three waste operators are working in the city: Spetstrans (which serves 9 city districts), Ordering Department of Yunusabad district, and limited liability company «Sergeli-Faiz-Trans». The increase in the number of waste operators in the city provides hope that given this competition, they will be more functional through a better level of service provided and striving to expand their activity in the sphere of solid waste management.

Sustainability of Project Achievements 9. During project implementation, the solid waste management system of the city became more sustainable and effective in comparison with other fields of economy. Here we have fewer failures, shortcomings, and employee turnover. Purchases within the project and use of modern and highly productive technical means allowed increasing prestige and value of personnel working in the system. With the help of the project, the municipality managed to completely renovate the waste collection vehicle fleet and establish an upgraded system of repair and maintenance which allowed it to increase the reliability and operational life of the equipment. 10. The system efficiency improvements under the project allows the municipality to serve all categories of clients in the city (population, industrial and commercial sector), which are all served equally. Presently, the municipality managed to eliminate all past problems with the lack of vehicles and bins for solid waste collection. 11. Invaluable help of the project, acquired knowledge and experience will allow us to keep and strengthen the level and quality of service in the system of solid waste management in the future. 12. Along with significant and positive results of project implementation, some difficulties with tariff collection from population and budget enterprises remain issues for the municipality. Although some progress was achieved compared to the situation at the beginning of the project, these results remain very modest and are not fully satisfactory. 13. Thus, ensuring the financial sustainability of the system, which is directly dependent on tariff collection rate from all categories of clients, remains our concern. Although the tariff collection rate in solid waste has increased significantly reaching the level of 85–90% as compared with other communal services provided such as electricity supply, heating and gas supply, the municipality will need to continue to work in this direction. 14. Special attention should be given to the necessity of developing and introducing mechanisms for establishing a reduced tariff for socially vulnerable groups of the population. In this regard, because of the general difficult economic situation, the municipality is not yet ready to follow the example of developed countries to implement

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subsidies and social support to the low-income groups of the population when paying for solid waste collection services. 15. We understand the difficult conditions experienced by the solid waste management units in the city before project start-up and receipt of donor assistance from the Banks. It cost us a lot of work and energy to bring the system up-to-date. That is why the municipality will make every effort to keep and increase the level of service without further donor assistance. 16. From the perspective of ensuring the sustainability of solid waste service, the municipality sees the following main tasks:

(a) Stimulation and support of initiatives for wide private sector participation or

attraction of foreign operators to contract for solid waste services to be provided in the city;

(b) Development and introduction of methods of social support of low-income groups of the population who find it more difficult than other residents to pay for services;

(c) Seeking of funds to carry out a census of population with the purpose of obtaining accurate data. This is important not only for solid waste operators, but for other fields of economy;

(d) Development and introduction of effective methods of collecting tariffs for solid waste services together with the payment of tariffs for electricity or gas supply;

(e) Seeking of funds to fully finance the city budget enterprises so they will be able to adequately pay for solid waste service;

(f) Development and introduction of projects financed from Carbon credits on waste composting, separation and recycling of secondary materials, selection and treatment of biogas at the landfill, and reduction of transport emissions in the atmosphere through operation of transfer stations, etc.;

(g) Creating incentives for leasing the city landfill, transfer stations, or other solid waste management facilities to private operators or foreign companies.

Efficiency of the Banks’ and Government’s Activities 17. As it is well known, the project was financed from the IBRD and ERBD loan funds. Many procedures and requirements of the Banks were similar, with only slight differences. 18. We have accumulated a very positive experience co-operating closely with both Banks during the seven years of project life. Before that, the municipality did not have any experience of working with international financial institutions, or attracting foreign consultants and experts. 19. The implementation of the project allowed our specialists to benefit from the wide experience of international foreign consultants and experts of the two Banks who are dealing with such projects in different parts of the world for a long time already. Overall support, understanding, and advice of these experts allowed our local staff to express openly their points of view, support different discussions, and prove their opinions.

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20. Before the project, our local specialists used in their daily work methods and provisions formulated during the Soviet times. They had regular meetings and shared their experience with colleagues working in the other CIS countries. However, project implementation and involvement of various international experts and consultants in the project exposed local staff to a wider range of views and expertise, which increased the qualifications and experience of local staff. 21. Efficiency of IBRD performance. We can state only the positive sides. In the opinion of the majority of our specialists, the work performed by the IBRD is estimated as HS (Highly Satisfactory). 22. We are particularly pleased in finding IBRD staff helpful even before project start-up, at the stage of its identification. The IBRD made available staff training for key specialists working toward implementation of investment projects in the future. Such an experience allowed the municipality to have qualified staff ready to work right by the start of project implementation, which excludes possible delays or mistakes in the future work of the projects. 23. In addition, during project implementation, the Bank organized regular short-term trainings, seminars, and discussions in the beneficiary countries to increase the quality of staff’s qualification and for already functioning implementing agencies. This allowed the implementing agencies to share experiences whenever they faced certain difficulties in project activities. Seeking of solutions in such situations was widely practiced via opinion exchanges, discussions, and arguments under supervision of the Bank’s experts. 24. During project implementation, our staff practically annually visited training courses, arranged by the IBRD in Tashkent, Bishkek, or Almaty, and received relevant certificates. 25. In our view, the successful outcome of project implementation was anticipated even at the times when at the initial stage of the project the draft tender documents for procurement of the main goods, works, and services were drafted and approved with assistance of the IBRD staff. As it is known, one month prior to the effectiveness of the IBRD Loan Agreement, the international tender for purchase of waste collection vehicles and bins was announced. This allowed staff to save time and resources. 26. We also benefited from independent sociological surveys of the population carried out by the IBRD before the project start-up, during its physical implementation, and upon project completion. Such a practice allows us to objectively assess the situation, introduce adjustments in a timely manner, and avoid mistakes and miscalculations in the future work. Here we were especially fortunate to have Mrs. Janis Bernstein as our Task Manager for the project who has specialized expertise in social development. 27. One of the effective points in the work of the IBRD is annual and regular supervision missions to oversee the process of project implementation. We have many times managed to solve issues, which might otherwise have led to delays, during these missions with direct participation of our Task Manager at the level of the municipality or the government. In particular, the issue of local works financing, their completion

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schedules, and contracts registration, etc. We do not remember any failure of the IBRD Mission to arrive in Tashkent, while this has been the case with EBRD supervision missions during the implementation of our project. 28. Throughout project implementation, we have not had any case when IBRD would delay answering our questions, approving tender documents, or reviewing reports and contracts. The IBRD performance was always excellent in its efficiency, accuracy, and responsiveness. We always received clear and full replies to our requests. 29. We are also grateful to the local office of the IBRD in Tashkent for success in our project, particularly the assistance and efficiency from Mr. Martin Raiser, O. Borovikov, F. Rakhimov, and other staff of the local country office. The practice of conducting quarterly Technical Group meetings with participation of the IBRD experts and representatives of PIUs and the government were most helpful and effective. Organization and arrangement of press conferences, interactive meetings and seminars, project site visits, speeches placed on the media, TV, and Internet were all a significantly positive aspect of the local country office performance. 30. In close co-operation with the IBRD for more than seven years already, we can declare with confidence that if the municipality, the government, and other international financial institutions would work as hard as the IBRD, the success of implementation of investment projects in Uzbekistan would be ensured. 31. Efficiency of the EBRD performance. We can put a less satisfactory mark here. In the opinion of a majority of our specialists, the work performed by the EBRD is estimated as L (Likely Satisfactory). 32. Looking back, we note that EBRD’s lack of efficiency in their work was followed by delays in the implementation of our project, and problems associated with the conditions of the Loan Agreement. Inclusion in the EBRD Loan Agreement of such a strong measure as Debt Service Reserve Account (in hard currency) as a protective means for the EBRD, dividing the loan into Tranches A and B with release triggers only upon achievement of certain conditions such as private sector participation, the necessity of annual Loan and LAD extensions, and other factors led to extensive delays throughout project implementation. 33. During long close co-operation with both Banks, we can compare them on different levels. This comparison would not play in the EBRD favor. Obviously, the EBRD, still being “a young bank” is lacking certain experience in different countries of the world. They might not have taken into account the peculiarities of each region, and local conditions. Further, the Bank has taken an unjustifiable strict approach toward beneficiaries, and is much inferior to IBRD with regard to efficiency and consistency. Perhaps this will sound strongly unjustified, but we would call EBRD more of a “commercial bank”. 34. We could give several examples in confirmation of the lack of efficiency from the EBRD side, and its local office in Tashkent, but we don’t think it is necessary. We believe the EBRD management and experts are aware of that and we hope they are working in this direction.

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35. By mentioning only shortcomings here, it would be unfair to belittle the considerable input of the EBRD into the success of project implementation. Thanks to the EBRD, we have modern machinery and landfill equipment, long distance trucks, computer equipment and software, and good service equipment for vehicles maintenance. The EBRD also made a large contribution through its provision of technical assistance for the institutional development program for the solid waste management system. We should also note here that the initial idea of the project was started by the EBRD. 36. Efficiency of the government’s performance. The financing of the following six project components with completion schedule until the end of 2000 was envisaged under the project from the municipality own funds, namely:

(a) Site preparation and supply of engineering communications, roads construction

at the locations of four transfer stations; (b) Construction of the turning access at the crossroads of Akhangaran highway

and access road to the Akhangaran landfill; (c) Reconstruction and upgrading of the Akhangaran landfill with a separate site

for biomedical waste disposal; (d) Closure of Zangiota and Hasanbay landfills in accordance with environmentally

acceptable requirements; (e) Upgrading of 11 city garages and the central repair workshop of Spetstrans

(initially the financing from the EBRD loan funds was envisaged under the project);

(f) Annual audit of PIU activity and other municipality units involved in the project implementation.

37. Unfortunately, due to absence of stable sources of funds with the municipality and the government, the local works completion schedule was delayed several times. Three times new schedules for financing and completion of local works were accepted during project implementation, which were later delayed due to the lack of funds. As a result, this led to substantial delays in the project implementation, adjustments, and revision of implementation completion schedules under the project. An important lesson from the project, therefore, is the need to reduce the volume of local works for future projects, especially those dealing with the performance of construction and construction-and-repair works. 38. In addition, substantial delays occurred during the stage of registration of the signed contracts with the Ministry of Foreign Economical Relations, Investments and Trade. In some cases, registration and approval of the contracts took from three to six months. It is obvious that in future projects, it is necessary to specify mechanisms, terms, and conditions of registering the contracts signed under ICBs with the concerned government authorities. Lessons Learned from Project Implementation

39. Looking back, it is necessary to point out that during the implementation of the project, which is mostly assessed as successful, a vast and positive experience was gained. This experience has already turned out to be useful for new projects undertaken by

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Tashkent municipality, such as: “Rehabilitation of Tashkent City Water Supply System” financed by the EBRD, and “Road Construction and Maintenance with Upgrading of Asphalt Plant” financed by the Islamic Development Bank. 40. As it is known, the IBRD commenced the identification and preparation of a new solid waste investment in the cities of Samarkand and Bukhara. For successful implementation of this proposed investment and the projects listed above, the implementation experience of the Tashkent Solid Waste Management Project can be considered as valuable and exemplary. In our opinion, the following aspects deserve repeating to produce good results:

(a) Preparation and coordination with beneficiaries of the draft tender documents for procurement of goods, works, and services prior to commencement of the project, and during their identification, preparation, and evaluation. This could allow reducing significantly the duration of project implementation.

(b) Preliminary assignment of key specialists of the future project implementing agencies and training them in procedures of conducting a project, procurement, and financial management.

(c) Timely adjustment of procurement plans during the implementation of projects, depending on their results of assessment of procurement plans implementation.

41. In addition to the above, some negative factors which caused delays and disruptions in the schedules of works under the project should be mentioned. First of all, it is the execution of local works, which were expected to be financed from the municipality’s own funds. Due to the lack of stable sources of funds, these works were completed with substantial delays. In the implementation of future projects, it is necessary to reduce the works which are to be financed from the beneficiaries’ own funds, especially if it involves construction, installation, and repair works at project sites. Public Awareness 42. Public contribution into the project implementation is invaluable. During project implementation, public surveys of all groups of the population were conducted with the assistance of IBRD sociologists and consultants. The first survey was carried out prior to the project start-up; the second one, in the middle of project implementation, and the third one during the stage of completion of the main components of the project. In addition, the process of implementation was regularly highlighted in the local press. Key specialists were interviewed on TV and radio; they explained to the population of the city the main goals of the project and shared the results. At the same time, public discussions with socially active members of the communities were carried out with the assistance of mahalla and district committees whose requests and wishes in the field of solid waste management were taken into consideration. 43. The municipality had plans to cooperate actively with local communities, increase public awareness, and get them involved in improving the city's sanitary conditions. However, limited funds and sometimes complete lack of funds became a significant obstacle in our way for conducting efficient and active work with the population and raising public awareness.

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Solid Waste Management Enterprises and their Current Potential 44. In the course of project implementation, the municipality has managed to strengthen the equipment and facilities as well as increase the efficiency of SWM enterprises. Renewal of the collection vehicle fleet, upgrading of the landfill through provision of modern equipment, construction of collection points and transfer stations, and provision of a stable and sufficient stock of waste collection bins allowed the enterprises to significantly increase their efficiency. 45. Before the project, due to the absence of specialized vehicles, SWM enterprises were practically not involved in removal of bulky wastes generated during construction and repair works. The procurement under the project of 17 units of large container vehicles HD-260 Arm Roll supplied with 345 pieces of 20 cubic meter containers allowed them to enlarge their scope of services. Moreover, rapidly developing private house building activity provides good business opportunities for those vehicles. Currently, the assistance of such vehicles is remarkably valuable for the construction works. The construction of secure and non- secure collection points in residential areas allowed the municipality to:

(a) create about 1,000 additional jobs; (b) stop using waste pipe chutes and waste collection cells in more than 700 multi-

story buildings, which were not designed for operation in the conditions of hot climate and thus caused poor sanitation and insect breeding (flies, mosquitoes, cockroaches);

(c) introduce, on a formal level, the system of separate collection and selection of recyclable wastes;

(d) reduce the volume of collected waste through selection of recyclable materials.

46. More exact and routine calculation of the volumes of incoming and utilized waste became possible through installation at the city landfill and transfer stations of the single type weighbridges with computer equipment, which also resulted in a more accurate planning of work. Positive Changes in Tashkent’s Solid Waste Management System 47. The successful implementation of the project in Tashkent with the population of more than 2 million people can serve as a good example for other cities of our country, with a smaller number of residents. 48. The construction of three transfer stations in Hamza, Yakkasaray, and Yunusabad districts allowed Spetstrans to increase significantly the efficiency of waste collection vehicles, minimize their idle mileage, and save on fuel and lubricants use. According to our calculations, the operation of each transfer station allows Spetstrans to save about 190–200 million sums per year. 49. For separate collection and disposal of biomedical waste, a separate cell is being allocated and equipped at the Akhangaran landfill, and procurement of two special vehicles along with 200 special bins is envisaged. In the future, more advanced systems, such as

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neutralization of waste through incineration or processing in microwave furnaces, might be quite possible. 50. The Akhangaran landfill is now functioning as the main site for disposal of the city’s solid waste after the closure of the Hasanbay landfill and discontinuing waste disposal at the Zangiota landfill. We have managed to develop its service equipment, improve the condition of the access roads, install electronic weighbridges, and create basic conditions for equipment maintenance and personnel with the help of the project. 51. Finally, 1,145 secure and nonsecure waste collection points were constructed in the city. The construction of these collection points resulted in the improvement in the sanitary conditions of the residential areas of the city, and increased the cultural level of service to the population.

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Annex 9: Comments of Cofinanciers and Other Partners/Stakeholders Hokimiyat of Tashkent. On February 2, 2006, the task team met with the key hokimiyat officials involved in project implementation to discuss the results of the project. At the meeting, Mr. Ibragimov, then Head of the Main Investments Department of the Tashkent City Hokimiyat, told the mission about the benefits that have been obtained through the project, including: (a) complete renewal of Spetstrans’ vehicle fleets, (b) construction of waste transfer stations, (c) establishment of a Central Repair Workshop, (d) modernization of the Akhangaran city landfill, and (e) improvement of Spetstrans’ operational and financial management systems, all of which resulted in substantial improvements in the quality of waste collection and disposal services as well as the sanitary and environmental conditions in the City of Tashkent. Mr. Ibragimov emphasized that this positive assessment of the results achieved under the project was completely objective, based not only on the perceptions of the Hokimiyat officials, but on the comments he was hearing from foreign visitors coming to Tashkent. More specifically, Mr. Ibragimov informed the mission that the project resulted in: (a) a more efficient and cost effective use of the renewed vehicle fleet which allowed Spetstrans to reduce the fuel and operations and maintenance costs; (b) substantial net cost savings as a result of commissioning three waste transfer stations; (c) improved tariff collection rates as a result of the transfer of responsibility for tariff collection to Spetstrans and introduction of computerized customer information and billing system; (d) reduced costs of operating the landfill due to the procurement of necessary landfill equipment and improved operational efficiencies; and (d) additional income generated by Spetstrans through recycling activities at the secure collection points. He also mentioned that in order to help ensure the financial sustainability of Spetstrans, the Tashkent City Hokimiyat assumed full responsibility for repayment of the World Bank Loan to the Ministry of Finance on behalf of Spetstrans, and exempted the company from payment of the leasing fees for the use of the new equipment. According to Mr. Ibragimov, all of the above measures allowed Spetstrans to adequately cover its operating and maintenance costs and make a marginal profit during the past two and a half years. Responding to the concern raised by the mission about the financial sustainability of the solid waste management system over the medium to longer term, Mr. Ibragimov provided assurances that the Tashkent City Hokimiyat was committed to taking all the necessary steps in this regard. For example, he explained that while there were no immediate plans to increase the tariff for households and budget-financed organizations, the financial sustainability of the system would be ensured through: (a) increases in the tariff levels for the industrial and commercial clients in the event there are increases in the cost of inputs (for example, fuel, lubricants, and labor); and (b) continued privatization of Spetstrans district garages and greater active involvement of the private sector that will help realize the benefits of competition and further reduce the system’s operations and maintenance costs. He also emphasized that while the hokimiyat did not expect a deterioration in Tashkent’s solid waste management system over the medium to longer term, it was committed to taking all the necessary measures to provide financial and other types of support to the MSWM system, should the need arise, in order to ensure the sustainability of the investments financed under the World Bank and EBRD loans.

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List of Hokimiyat Officials Met by the Bank’s ICR Mission on February 2, 2006 Mr. O. Ibragimov, Head of the Main Investment Department Mr. R. Usmanov, the First Deputy City Hokim Mr. V. Dorohov, Advisor to the Hokim Mr. B. Rakhmanov, Director of the Tashkent Territorial Association of Communal Services Mr. S. Khodjaev, Head of the Protocol Department of the Tashkent City Hokimiyat EBRD did not provide comments on the draft ICR.

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Annex 10: List of Supporting Documents Country Assistance Strategy Progress Report for Uzbekistan, for 1998-2001, February 17, 1998. Declaration of Principles for Sustainable and Integrated Solid Waste Management (SISWM), Sandra Cointreau March 2001. Loan Agreement for TSWMP, November 16, 1998. Project Agreement for TSWMP, November 16, 1998. Project Appraisal Document For a Proposed Loan in the Amount of US$24.0 to the Republic of Uzbekistan for the Tashkent Solid Waste Management Project, April 6, 1998. Quarterly Reports for the TSWMP Support to the PIU, April 2005. Social Assessment, June 1997. Sustainable Solid Waste Systems in Developing Countries, Sandra Cointreau, January 2006. Uzbekistan: Composting of Municipal Solid Waste Project, Project Idea Note, February, 2006. Working Document to Guide Joint Efforts in the Implementation and Supervision of the Tashkent Solid Waste Management Project (July 1999). Other project files, project supervision reports, aide memoires, back-to-office reports, financial audits.