Public Disclosure Authorized SECOND URBAN ?· SECOND URBAN DEVELOPMENT PROJECT ... Md. Akhtar Zaman…

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  • BHUTANSECOND URBAN DEVELOPMENT PROJECT (Cr. 4744-BT & Cr. 543 1-BT)

    Implementation Support Mission: February 5-20, 2017Aide-Memoire

    I. An IDA implementation support mission (the Mission) visited Bhutan during February 5-20, 2017to review the status of implementation of the Bhutan Second Urban Development Project (BUDP2). TheMission' held discussions with: concerned officials of the Ministry of Works and Human Settlement(MoWHS) and the Ministry of Finance (MoF) of the Royal Government of Bhutan (RGoB); the Thimphu,Phuentsholing, Gelephu, and Samdrup Jongkhar thromdes; consultants; and contractors. The Mission alsovisited project sites in northern Thimphu as well as Phuentsholing Thromde. [A list of officials met by themission is attached as Annex 1.]

    2. The Mission would like to thank the Royal Government and officials of the concerned agencies forthe cooperation and courtesies extended. This aide-memoire reflects the mission's findings andrecommendations; a draft of the aide memoire was discussed at a wrap-up meeting chaired by the Secretary,MoWHS on February 17, 2016. The aide-memoire will be disclosed to the public, as agreed at the wrap-upmeeting.

    Overall Project Status

    3. The table below summarizes the status of the project.

    Summary of Project Status

    Key Project Data Current Ratings and Flags

    Effectiveness Date 08/24/2010 Development Moderately SatisfactoryObjectives

    08/13/2014 (AF)

    Closing Date 06/30/2019 Implementation Moderately UnsatisfactoryProgress

    Project Age 79 months Problem Flags None

    % Disbursed 77.52% (original Cr.)

    12.47% (for AF Cr.)

    38.93% (combined)

    4. Likelihood of Achieving the PDO, There continues to be steady, albeit slow, progress towardsachieving the targets for various outcome and intermediate indicators (see Annex 2: Results Monitoring

    'The mission was comprised of: Zahed H. Khan (Senior Urban Specialist), Paul Kriss (Lead Urban Specialist), RamaKrishnan Venkateswaran (Lead Financial Management Specialist), Tashi Tenzing (Senior Water Supply Engineer),Savinay Grover (Senior Financial Management Specialist), Md. Akhtar Zaman (Social Safeguards Specialist), andMs. Tenzin Lhaden (Economist),

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  • Table). Subject to timely action on the various matters discussed below, project activities are expected tobe completed by Credit closing. In view of this, achievement of the PDO continues to be rated ModeratelySatisfactory (MS).

    5. Overall Implementation Progress (IP). Implementation of key project activities has progressedwell since the July 2016 mission: civil works in Langjophakha have been completed and civil works for theLower Taba LAP are now being implemented. The first contract for the central water supply scheme wassigned in mid-February. The Royal Government had earlier informed the Bank that the extra $5 million(provided under the Additional Financing) would be utilized for two primary roads in Jungshina-Pamtshoand Hejo-Samteling LAPs and the timelines for the design and procurement for these schemes were agreedduring the mission. Overall, implementation of various activities are on the right track, but some actionsare still pending under Component 1. As such, the rating for overall implementation progress is beingretained as Moderately Unsatisfactory. The paragraphs below summarize the status of implementation ofproject components; more details are provided in Annex 3.

    6. Component 1: Municipal Finance and Management. Computerization of tax records, watercollection charges and asset registers is nearing completion in Thimphu and the computerized system isbeing used for the billing and collection of property tax and water charges. In accordance with the ActionPlan agreed during the previous mission, Phuentsholing Thromde has constituted a task force to expeditethe digitization of track records, and the task of digitizing records is progressing well. PhuentsholingThromde will start testing the upgraded system to send invoices to taxpayers latest by April 30, 2017 orafter 50 percent of the tax records have been digitized, whichever occurs first.

    7. Thimphu thromde has already published and uploaded the Thromde Performance report, whilePhuentsholing thromde is well advanced in the preparation of its performance reports. Preparation of annualfinancial statements using the computerized accounting system needs to be completed for the past financialyear and targeted training and capacity support needs to be provided to the Thromdes through the project'sCapacity Building component. In view of the apparent trouble-shooting support required, the Missionagreed in principle that the Annual Maintenance Contract (AMC) with the current vendor firm mayextended for another year.

    8. Procurement for rolling out the Component I activities to Gelephu and Samdrup Jongkharthromdeshas been expedited by the PPD (MoWHS). As such, Component-I Action Plan would be revised by PPD,MoWHS based on the findings and recommendations of this mission.

    9. Given that several actions are still pending, the rating for this component continues to beModerately Unsatisfactory (MU).

    10. Component 2: Thimphu Northern Area Development. Implementation of Component-2schemes has improved, with steady progress in the implementation of on-going civil works. TheLangjophakha LAP civil works contract has been completed and was handed over on September 9, 2016.The Lower Taba LAP civil works contract was signed on July 27, 2016 and works are ongoingsatisfactorily; the contractor has met the first milestone. The contract for the first package for the centralwater supply scheme was signed and, following payments of compensation and requisite clearances, theconstruction is expected to commence soon. Meanwhile, the notice inviting tenders for the second contractpackage has been issued and the contract award is expected to be completed by early June.

    11. As the Project closes in two years and three months, implementation needs to be carried outaccording to the schedule. The environmental clearance for the Central Water Supply Scheme needs to beexpedited so that the works can commence soon and the construction of the intake structure is completedduring the dry season. Meanwhile, during the mission, a timeline has been agreed upon to prepare the

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  • detailed designs for the proposed two primary roads in Jungshina-Pamtsho and Hejo-Samteling LAPs, withthe contract(s) to be awarded by end-October 2017.

    12. In this context, MoHWS and Thimphu Thromde need to focus urgently on improving inter-agencyand intra-agency coordination among the concerned departments in order to ensure better communicationand proper involvement of the Thromde O&M staff during construction of the facilities. The thromdes andrelated organizations need to plan for providing effective O&M training; training courses can be conductedunder Component 3. It was agreed that as a first step to identify possible systemic ways of improving watersupply and sewerage services in Thimphu thromde, a diagnostic study would be undertaken soon,

    13. Taking the above factors into account, Component 2 is rated as Moderately Satisfactory (MS)

    14. Component 3: Capacity Building. Only a few courses/programs were conducted in FY2015-16and the budget allocation for FY2016-17 has been reduced. The requisite training for personnel involvedin operating and maintaining new plants and systems in Thimphu Thromde has been overlooked in utilizingthe released budget. A needs assessment should be undertaken immediately to identify appropriate trainingand skill development courses for relevant personnel over the two remaining years of the project and thatthe capacity building program should be finalized by the Coordination Committee at MoWHS by May 31,2017. There has been good progress, however, in policy implementation support activities undertaken bythe Department of Human Settlement (DHS) of the MoWHS funded under the Additional Financing. Draftsof the Spatial Planning Act and Standards and the National Human Settlement Strategy have been finalizedby the consultants and are awaiting review and approval by the relevant bodies.

    15. Additional funds are urgently needed and MoF should now release the remaining allocation for thiscomponent which it had on hold five years ago. Taking all factors into account, implementation of thiscomponent is rated moderately satisfactory.

    Project Management

    16, Coordination of the Project and its three components needs to be further strengthened at MoWHS(DES, DHS, and PPD) as project implementation, especially for Component 1, enters a crucial stage in allfour thromdes. Project management has improved in respect of contract management and constructionsupervision for civil works, as well as for municipal reforms and management, especially in ThimphuThromde. However, more focus is required on operations and maintenance of the newly constructedinfrastructure; thromde O&M staff should be involved, along with the PIU, during construction and theO&M period of the contractor. While project monitoring and reporting has improved, MoWHS shouldfocus on monitoring the Results Framework indicators in coordination with the thromdes, and present themin the Progress Reports.

    Financial Management

    17. Financial management is rated 'Satisfactory', while FM risk remains 'Moderate'. InterimUnaudited Financial Reports (IUFRs) for the quarter ending December 31, 2016 are acceptable to the Bank.The project audit report for FY2015-16 was received prior t