Completion Report

Project Numbers: 41598-013 and 41598-023 MFF Number: 0044 Loan Number: 2660 July 2018

India: National Capital Region Urban Infrastructure Financing Facility This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011.

CURRENCY EQUIVALENTS

Currency unit – Indian rupee/s (₹)

At Appraisal At Project Completion (18 July 2010) (12 December 2017)

₹1.00 = $0. 0214 $0.0155 $1.00 = ₹46.78 ₹64.34

ABBREVIATIONS ADB – Asian Development Bank CAGR – compound annual growth rate CMA – counter magnet area DMF – design and monitoring framework DPR – detailed project report EGM – effective gender mainstreaming EIRR – economic internal rate of return EOCC – economic opportunity cost of capital ESMS – environmental and social management system GAP – gender action plan IPPMS – investment program performance monitoring system km – kilometer MFF – multitranche financing facility NCR – National Capital Region NCRPB – National Capital Region Planning Board NCRUIFF – National Capital Region Urban Infrastructure Financing Facility O&M – operation and maintenance PCR – project completion report PFR – periodic financing request PHED – Public Health Engineering Department PMC – project management consultant PMU – project management unit PPMS – project performance monitoring system PPP – public–private partnership PSMG – project sanctioning and monitoring group SGE – some gender elements SPS – Safeguard Policy Statement TA – technical assistance

NOTES

(i) The fiscal year (FY) of the National Capital Region Planning Board and the Government of India begins on 1 April and ends on 31 March. “FY” before a calendar year denotes the year in which the fiscal year starts, e.g., FY2017 begins on 1 April 2017 and ends on 31 March 2018.

(ii) In this report, “$” refers to United States dollars.

Vice-President Wencai Zhang, Operations 1 Director General Hun Kim, South Asia Department (SARD) Director Sekhar Bonu, Director, Urban Development and Water Division, SARD Team leader Luca Di Mario, Urban Development Specialist, SARD Team members Saswati Belliappa, Safeguards Specialist, SARD

Bebedel Fabe, Project Officer, SARD Emma Rita Ramona Nava, Senior Operations Assistant, SARD

Ashok Srivastava, Senior Project Officer (Urban), SARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

CONTENTS Page

BASIC DATA i

I. PROJECT DESCRIPTION 1

II. PROJECT DESIGN 2

A. History 2 B. Scope of Operations 2 C. Relationship with ADB and Other Lenders 3 D. Project Design and Formulation 4 E. Technical Assistance 6

III. PROJECT IMPLEMENTATION 6

A. Lending Policies 6 B. Characteristics of Subloans 6 C. Implementation and Internal Operations of Subprojects 7 D. Organization and Operations of National Capital Region Planning Board 8 E. Portfolio of National Capital Region Planning Board 9 F. Financial Statements and Ratios 10 G. Covenants 11

IV. SUBLOAN IMPLEMENTATION 11

A. Loan Appraisal 11 B. Implementation 12

V. EVALUATION OF PROJECT PERFORMANCE 12

A. Relevance 12 B. Effectiveness 13 C. Efficiency 13 D. Sustainability 14 E. Development Impact 15 F. Performance of National Capital Region Planning Board 15 G. Performance of ADB 16 H. Overall Assessment 16

VI. ISSUES, LESSONS, AND RECOMMENDATIONS 16

A. Issues and Lessons 16 B. Recommendations 18

APPENDIXES

1. Design and Monitoring Framework – Facility 19

2. Design and Monitoring Framework – Project 1 22

3. Economic Analysis 26

4. Status of Compliance with Loan Covenants 37

5. Sustainability of Subprojects Implemented under Project 1 47

6. Loans and Financial Performance of National Capital Region Planning Board 49

7. Safeguards 53

BASIC DATA A. Loan Identification

1. Country2. Loan number and financing source

- Facility- Project 1

3. Loan title

4. Borrower5. Name of financial intermediary6. Amount of loan

- Facility- Project 1

7. Project completion report number

B. Loan Data

1. Appraisal– Date started– Date completed

India Ordinary capital resources M0044 LN2660 National Capital Region Urban Infrastructure Financing Facility National Capital Region Planning Board National Capital Region Planning Board

$150,000,000 $78,000,000 1693

4 March 2010 17 March 2010

2. Loan negotiations– Date started– Date completed

23 June 2010 24 June 2010

3. Date of Board or Managementapproval(Facility)(Project 1)

10 August 2010 18 August 2010

4. Date of loan agreement(Project 1) 17 March 2011

5. Date of loan effectiveness(Project 1)– In loan agreement– Actual– Number of extensions

14 June 2011 29 June 2011 1

6. Terminal date for commitments– In loan agreement– Actual– Number of extensions

Not applicable

7. Loan closing date(Project 1)– In loan agreement– Actual– Number of extensions

31 December 2014 31 December 2014 None

8. Financial closing date(Project 1)– Actual 31 May 2017

9. Terms to the borrower– Interest rate Sum of London interbank offered rate

(LIBOR) and 0.60% as provided by Section 3.02 of the Loan Regulations, less

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– Maturity (number of years) – Grace period (number of years) – Free limit – Repayment terms

a credit of 0.40% as provided by Section 3.03 of the Loan Regulations 25 5 None Payable semiannually on 1 February and 1 August of each year in accordance with Schedule 1 of the loan agreement

10. Terms of relending (if any) Each subloan will carry interest at an appropriate rate and will be made on terms whereby the borrower will obtain, by a written agreement with the qualified subborrower in form acceptable to ADB, rights adequate to protect the interests of ADB and the borrower.

11. Interest rate for subloans – Original – Revised

Linked to rates of 10-year government securities prevailing on the date of sanction of the project (actual ranged from 7.00% to 8.25%), excluding incentive of up to 0.25% interest rate reduction toward timely payment of principal and interest Not applicable

12. Disbursements

a. Dates

Initial Disbursement 31 May 2012

Final Disbursement 23 December 2014

Time Interval 31

Effective Date 29 June 2011

Actual Closing Date 31 December 2014

Time Interval 42

b. Amount ($ million)

Component

Original Allocation

(1)

Increased during

Implementation (2)

Cancelled during

Implementation (3)

Last Revised

Allocation (4=1+2-3)

Amount Disbursed

(5)

Undisbursed Balance

(6 = 4 – 5)

Infrastructure Investments (Subloans) 75.000 2.635 (18.000) 59,635 59,635 0

Implementation Support 3.000 (2.635) 0 0.365 0.365 0

Total 78.000 0 (18.000) 60.000 60.000 0

( ) = negative.

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Subloan

Original Allocation

(1)

Increased during

Implementation (2)

Cancelled during

Implementation (3)

Last Revised

Allocation (4=1+2-3)

Amount Disbursed

(5)

Undisbursed Balance

(6 = 4 – 5)

Jhajjar Roads 21.886 3.477 18.409 18.409 0 Sonepat Roads

16.581 8.139 8.442 8.442 0

Badli Bypass 4.035 0.888 3.147 3.147 0 Pataudi Water Supply

0.668 0.311 0.357 0.357 0

Nuh Water Supply

2.856 2.109 0.747 0.747 0

Sonepat Drainage

0.798 0.099 0.897 0.897 0

Gohana Lakhanmajara Bhiwani Road

5.754 1.197 6.951 6.951 0

Gurgaon Chandu Badli Road

8.357 0.844 7.513 7.513 0

Sonepat Gohana Road

6.855 6.318 13.173 13.173 0

Total ($ equivalent)

67.790 7.614 15.768 59.635 59.635 0

Total (₹) 3,498.264 3,498.264 0

Notes:

1. Amounts are actual United States dollar equivalent (rounded off). 2. Amount of each subloan was adjusted based on eligible expenditures incurred within the loan period and up

to the ADB loan amount.

C. Implementation Data

1. Number of subloans – nine

2. Sector distribution of subloans

Sector Projected Actual

Urban transport, regional connectivity, and other economic growth infrastructure

5 6

Water supply and sanitation 1 3 Total 6 9

Projects were to be taken up in phases across different periodic financing requests.

3. Size of subloans (actual) ($ million)

Range (specify amounts) Number of Subloans Aggregate Amount

Up to $5 million 4 5.148 From $5 million to $10 million 3 22.906 From $10 million to $20 million 2 31.582 Over $20 million 0 0.000

4. Other breakdown of subloans – Not applicable

5. Subloans above free limit – Not applicable

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6. Project performance report ratings

Implementation Period Single Project Rating

From 29 June 2011 to 31 December 2011 On track From 1 January 2012 to 31 December 2012 Potential problem From 1 January 2013 to 31 December 2013 Actual problem, On track From 1 January 2014 to 31 December 2014 On track From 1 January 2015 to 31 December 2015 From 1 January 2016 to 31 December 2016 From 1 January 2017 to 31 May 2017

On track On track On track

D. Data on Asian Development Bank Missions

Name of Mission Date No. of

Persons

No. of Person-

Days Specialization of Members

Fact finding 4–17 March 2010 6 60 a, b, c, d, e, f

Loan inception 28 Nov–2 Dec 2011 2 10 g, h Loan review 1 17–19 Sept 2012 2 6 g, i Loan review 2 27 Nov 2012 2 2 g, j Safeguards review 1 4–8 Feb 2013 2 10 k, l Midterm review 13–17 May 2013 3 15 g, h, m Loan review 3 27 June–2 July 2014 3 11 k, l, m Safeguards review 2 25–27 March 2015 8 12 c, f, j, k, m, n, o, p

Safeguards review 3 6 May 2015 2 3 j, m

Project completion review 23–27 April 2018 5 23 a, h, q, r, s

a = urban development specialist, b = urban transport specialist, c = counsel, d = economist, e = procurement specialist, f = social safeguards specialist 1, g = project officer 1, h = project analyst, i = project administration unit head, j = sector director, k = social safeguards specialist 2, l = environment safeguards consultant and/or specialist, m = project officer 2, n = India Resident Mission country director, o = India Resident Mission senior country specialist, p = senior external relations officer, q = project management consultant, r = financial management consultant, s = social safeguards consultant.

E. Related Loans (to some financial intermediaries): Not applicable

I. PROJECT DESCRIPTION 1. The National Capital Region Urban Infrastructure Financing Facility (NCRUIFF) is a multitranche financing facility (MFF) of up to $150 million extended to a financial intermediary, the National Capital Region Planning Board (NCRPB), and approved by the Asian Development Bank (ADB) in 2010.1 The first MFF tranche (project 1) of $78 million was signed in March 2011 and no further tranches were approved under the NCRUIFF. The facility supported the NCRPB, a government-owned regional planner and financier, in implementing its Regional Plan 2021.2 The plan aimed to facilitate economic growth, and balanced, inclusive, and sustainable urbanization in India’s National Capital Region (NCR)—one of the fastest growing urban agglomerations in the country, including the capital Delhi and counter magnet areas (CMAs)3 in three other states.4 2. The NCR is one of the world’s largest urban agglomerations, with a population of 46 million (2011) that is projected to increase to 64 million by 2021.5 It covers the National Capital Territory of Delhi and parts of Haryana, Uttar Pradesh, and Rajasthan. The NCR is at the forefront of India’s economic transformation, attracting service and manufacturing industries and contributing to nearly 7%–8% of the country’s gross domestic product (fiscal year [FY] 2009–2010).6 Urbanization is at 62.5% (2011), with Delhi having the highest rate of 97.5%. Like the rest of urban India, the development of urban infrastructure in the NCR has not kept pace with the rapid demographic growth and migration from rural to urban areas.7 Water supply and sanitation, drainage, solid waste management, and transport infrastructure are becoming deficient in responding to increasing pressure from population and economic demands on services.8 While Delhi is making rapid strides in urban development, other parts of the NCR and its CMAs are lagging in infrastructure and service provision, with a negative impact on growth, competitiveness, and environmental sustainability. 3. The facility’s rationale was to address systemic constraints to urban infrastructure development in the NCR, mostly resulting from domestic debt market limitations and weak capacity in project development and execution.9 This was to be achieved by (i) providing longer term low-cost debt; (ii) providing support to sub-borrowers in urban and regional planning, and complex project development and implementation; (iii) identifying and supporting the structuring of bankable projects, including private sector investment; and (iv) improving urban service provision by encouraging partnership with the private sector.

1 ADB. India: National Capital Region Urban Infrastructure Financing Facility. 2 Government of India, National Capital Region Planning Board. 2005. Regional Plan 2021: National Capital Region.

Delhi. 3 Counter magnet areas or cities are those that can be developed as alternative centers of growth and attract

immigration to them rather than Delhi. 4 The NCR is a unique example of interstate regional planning for development of a region with a capital at its core. At

appraisal, the NCR covered about 33,578 square kilometers (km2) including the National Capital Territory of Delhi and parts of the states of Haryana, Uttar Pradesh, and Rajasthan. In 2012 and 2015, additional districts were added, and the present area of the NCR is about 53,817 km2.

5 Government of India, National Capital Region Planning Board. 2017. Annual Report 2016–17. Delhi. 6 KPMG. 2017. Urbanisation in the National Capital Region: Overcoming challenges to improve live-ability. 7 McKinsey Global Institute. 2010. India’s urban awakening: Building inclusive cities, sustaining economic growth.

Delhi. 8 Only 64% of India’s urban population has individual water connections; water supply is mostly intermittent (1–6 hours

a day); only 5% of cities have any kind of sewerage system; 18% of urban households defecate in the open; and only 21% of wastewater generated is treated. Government of India, High Powered Expert Committee. 2011. Report on Indian Urban Infrastructure and Services. New Delhi.

9 For example, the maximum maturity for infrastructure was limited to 10 years (footnote 1).

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4. The program’s envisaged impact was to improve the quality of life and well-being of urban residents in the NCR and its CMAs. The facility’s expected outcome was that urban residents use improved growth-supporting, public health, and environmental urban infrastructure services in the intervention cities of the NCR and CMAs in accordance with the priorities of the regional plan. The NCRUIFF had three outputs: (i) high-quality urban public health and environmental infrastructure created; (ii) high-quality economic growth-related regional and urban infrastructure created; and (iii) strengthened capacity of the NCRPB and its sub-borrowers to scale up urban infrastructure and improve basic urban services.

II. PROJECT DESIGN A. History 5. The NCRPB is a statutory body under the Ministry of Urban Development. It was established in 1985 by an Act of Parliament and confirmed by the legislatures of Haryana, Rajasthan, and Uttar Pradesh to provide a regional approach to the NCR, minimizing functional and geographic fragmentation while promoting a balanced and harmonized regional development. One of its core functions is to oversee the financing of selected development projects through central and state plan funds and other sources (footnote 1). 6. Regional Plan 2021. In 2005, the NCRPB published the regional plan for the NCR, which aims to achieve balanced development by developing economic activities and urban infrastructure in priority towns. The plan focuses on the core sectors of transport, water and sanitation, solid waste, and power, with an investment requirement of ₹1,937.5 billion (footnote 2). The NCRPB was committed to increase investments in lagging areas of the NCR, setting up a project development fund in 2009 as well as improving the supply side and access to capital markets by the NCRPB and its sub-borrowers. In 2014, the regional plan was revised following a wide consultative process.10 The revised plan includes a three-pronged implementation strategy to enable the NCRPB to play a meaningful role in ensuring balanced growth of the NCR: (i) advocacy for promotion of the investment climate in the region, and for building new and smart cities in the NCR; (ii) capacity building of urban local bodies and other service-providing agencies and authorities; and (iii) interstate project coordination. 7. Transforming into a financier of relevance. In 2009, the NCRPB was repositioning itself as a financier of relevance for the NCR and a planner of significance for regional entities. This entailed moving away from unlimited liability, administered credit pricing, and low leverage, while filling an institutional vacuum in urban infrastructure planning and development to address the challenges of scaling up urban infrastructure investment in the NCR and CMAs. The NCRPB raised additional funds of ₹5 billion in 2010–2011 through bonds, and received credit lines of $150 million from ADB in 2010 and €100 million from German development cooperation through KfW in 2012. By 31 March 2017, the NCRPB had provided ₹135.20 billion in financial assistance to 299 infrastructure projects (footnote 5). B. Scope of Operations 8. The NCRPB is both a regional planner and financier. As planner, it develops, updates, and promotes the implementation of the regional plan, in consultation with the state governments. As financier, it funds comprehensive development projects in the NCR and CMAs consistent with the regional plan. These projects are identified by the NCRPB, state governments, and their

10 The NCRPB has the mandate to review the regional plan every 5 years.

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implementing agencies—urban local bodies, development authorities, housing boards, industrial development corporations, or other state government agencies or government-sponsored special purpose vehicles. The NCRPB provides local currency loans for up to 75% of the estimated project cost, with the state government and their implementing agencies contributing the balance. The major sectors for which loans are granted are water supply, sewerage and solid waste, power, and transport. Besides loans, the NCRPB does not provide other financial support except an equity stake in the NCR Transport Corporation acquired in 2014.11 9. Funding operations. The NCRPB’s sources of finance are non-lapsable grants from the Government of India and the government of the National Capital Territory Delhi as well as interest income earned from loans. Additional sources include market access through bonds. The NCRPB rating is IND AAA,12 with stable outlook, equivalent to sovereign bonds. In 2015–2016, the Ministry of Urban Development contributed ₹800 million plus ₹40 million for salaries, allowances, and other office expenses. C. Relationship with ADB and Other Lenders 10. Relationship with ADB. As part of its support for urban infrastructure development and capacity building, ADB approved two technical assistance (TA) grants in 2008 to strengthen the NCRPB’s capacity in urban infrastructure planning and project development, appraisal, and implementation. The long-term vision was to transform the NCRPB into a full-fledged financial intermediary and a catalyzer of urban infrastructure in the region. The first TA focused on improving the NCRPB’s business process and skills to accelerate planned urban infrastructure development in the NCR and CMAs,13 while the second TA aimed to strengthen the NCRPB’s capacity in safeguards, priority investments identification, and lending program design according to the regional plan’s vision and road map.14 Both TA projects recommended substantial changes in (i) human resources management and staff; (ii) project development, approval, and appraisal; (iii) lending practices; (iv) financial management; (v) treasury operations; (vi) data management; (vii) risk mitigation; and (viii) capacity building. 11. ADB approved the NCRUIFF, an MFF of up to $150 million to the NCRPB from ADB’s ordinary capital resources, for financing infrastructure in the NCR and its CMAs. The facility’s Project 1 of $78 million was approved in August 2010 and signed in March 2011. Project 1 has a 25-year repayment period, including a grace period of 5 years, with interest rates determined in accordance with ADB’s London interbank offered rate (LIBOR)-based lending facility, a commitment charge of 0.15% per year, and such other terms and conditions set forth in the loan agreement (footnote 1). The NCRPB requested a cancellation of $18 million from Project 1 in 2013 to avoid commitment charges on the undisbursed amount, with the balance of works on the loan closing date to be funded under Project 2 (if approved) or by the NCRPB.15 The canceled amount replenished the overall facility. This followed the decision by the Department of Economic Affairs not to extend the original loan closing date of 31 December 2014 for Project 1. No other tranches were processed under the NCRUIFF because of delays by the NCRPB’s sub-borrowers

11 The NCR Transport Corporation is the holding company for the design and implementation of the regional rail

transport system. 12 The bonds are rated IND AAA and have a maturity of 10 years, with a call option after 7 years. 13 ADB. India: Capacity Development of the National Capital Region Planning Board (TA 7055-IND, approved in

January 2008 for $2.0 million financed by the ADB TA Special Fund). 14 ADB. India: Preparing the National Capital Region Planning Board Project. Manila (TA 7114-IND, financed by the

Japan Special Fund and approved in August 2008 for $0.7 million). 15 ADB. (Department of Economic Affairs, Ministry of Finance). 2013. L2660-IND: MFF-National Capital Region Urban

Infrastructure Financing Facility-Project 1- Cancellation of Loan Amount. Fax Message. 3 September (internal).

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in deciding remedial actions, consistent with ADB’s Safeguard Policy Statement (SPS, 2009), to address unanticipated land ownership issues that emerged during the implementation of Project 1 (para. 27). 12. Relationship with other lenders. The NCRPB signed a €100 million loan and €1 million grant with KfW in 2012 to develop environmental infrastructure (water supply, sewerage, drainage, and solid waste management) and urban transport projects. The terms of the loan are (i) a repayment period of 15 years, with a 5-year moratorium on the repayment of the principal; and (ii) a fixed interest rate of 1.83% per year (footnote 5). D. Project Design and Formulation 13. The facility was built on a strong rationale to (i) transform the NCRPB into a more effective infrastructure financing institution; (ii) strengthen sub-borrowers’ capacity to design and implement high-quality infrastructure; (iii) enable private sector participation and public–private partnerships (PPPs) in urban infrastructure; (iv) introduce best practices in infrastructure planning and execution and operations; and (v) enable geographical and sectorial inclusiveness, directing more investments into public health and environmental infrastructure. The successful transformation of the NCRPB was envisioned as a model for other urban development institutions in India. The project focused on assisting the NCR in achieving balanced growth and urbanization coherently with the regional plan’s road map. 14. The program was aligned with (i) ADB’s Strategy 2020, with its focus on infrastructure-led growth, environmental protection, and institutional strengthening;16 (ii) ADB’s country partnership strategy, 2009–2012 for India;17 and (iii) India’s Eleventh Five-Year Plan, 2007–2012.18 The NCRUIFF complemented the sector strategy and parallel initiatives in PPPs and capital markets, which contribute to an enabling environment for long-term financing of infrastructure development. The ADB India country partnership strategy, 2009–2012 emphasized infrastructure development while the country operations business plans over this period focused on water, energy, and transport. 15. During the design and formulation of the facility, ADB coordinated closely with the Jawaharlal Nehru National Urban Renewal Mission,19 KfW, and the Cities Development Initiative for Asia. The scope of coordination with development partners included (i) the subproject pipeline of the NCRPB; (ii) TA and establishment of a project development facility; (iii) a financial management assessment; and (iv) the environmental and social management system (ESMS) for the NCRPB. The project team held several harmonization meetings with KfW to discuss developing a common ESMS that satisfied the requirements of the government and development partners, and mapping out issues relating to capacity development in the NCRPB. 16. The facility design stressed strengthening the NCRPB’s capacity in financial intermediation for urban and regional infrastructure development. Apart from more prudential financial management norms, a stronger subproject approval flow and additional staffing

16 ADB. 2008. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008-2020. Manila. 17 ADB. 2009. Country Partnership Strategy: India, 2009-2012 Abridged Version. Manila. 18 Government of India, Planning Commission. 2008. Eleventh Five Year Plan, 2007-2012 Inclusive Growth. Volume

1. Delhi. 19 This was a national flagship scheme for urban modernization launched by the Ministry of Urban Development in 2005

and closed in 2014. The mission supported urban infrastructure development in cities, the provision of basic services to the urban poor, and wide-ranging urban sector reforms to strengthen municipal governance in accordance with the 74th Constitutional Amendment Act, 1992. Its estimated budget was $20 billion.

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(para. 29) were key project features. The project included mitigation strategies (such as a project management consultant and trainings) related to sub-borrowers’ capacity to prepare and implement high-quality infrastructure in line with ADB requirements, while pushing for the introduction of innovative contract arrangements and private sector participation through extended operation and maintenance (O&M) contracts. The risk of limited interest in debt-based environmental infrastructure development was also adequately identified by the project. 17. Environmental and social safeguards management system. ADB was the first development partner to provide lending support to the NCRPB. As part of the facility formulation and building on previous ADB-supported capacity development TA (footnote 13), the NCRPB established an ESMS in April 2010. The ESMS was developed under the guidance of ADB’s safeguards specialist and was consistent with ADB’s SPS and applicable national laws and regulations.20 It clarifies the NCRPB’s environmental and social policies and operational guidelines, safeguard screening and categorization, review procedures, and oversight during project implementation. It also includes development of the NCRPB’s institutional capacity to manage social and environmental issues. The ESMS was endorsed by KfW and is still effective. The NCRPB created an additional position (assistant director of safeguards) in its organizational structure (and as part of the facility’s project management unit [PMU]) to ensure and monitor subprojects’ compliance with the ESMS. An environmental (24 months) and social safeguards (20 months) specialist, recruited under the project management consultant (PMC), supported the facility. 18. The facility impact, outcome, and outputs have logical links, and most of its design and monitoring framework (DMF) indicators are clear and measurable except for three (out of four) impact and one outcome indicators, which resulted to be not applicable, vague or difficult to measure (Appendix 2).21 These DMF weaknesses were not revised during implementation. The Project 1 design and monitoring framework (DMF) was not part of the project design since it was not required when the project was approved. It was included in 2011 during ADB’s retrofitting exercise for the eOperations system implementation,22 but presented design issues as it stated each subproject identified in periodic financing request (PFR) 1 as its outputs without providing flexible targets for subproject implementation (e.g., water supply infrastructure developed). Given the replacement of some subprojects, the DMF had to be revised (para. 23). 19. Gender. At approval, the facility was categorized effective gender mainstreaming (EGM).23 In 2011, after the reassessment by the Regional and Sustainable Development Department (now the Sustainable Development and Climate Change Department), the gender categorization was downgraded to some gender elements (SGE). This decision, agreed by the South Asia Department, was made considering that most of the gender-related indicators in the DMF and related gender action plan were not specific, measurable, or time-bound.

20 ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Multitranche Financing

Facility to India for the National Capital Region Urban Infrastructure Financing Facility. Financial Intermediary: Environmental and Social Management System (accessible from the list of linked documents in Appendix 2). Manila.

21 For example, women’s drudgery for fetching water reduced by 10%. 22 ADB (Central Operations Services Offices). 2011. Good Project Implementation Practice – Retrofitting Ongoing

Projects Financed by Loans and/or Grants into eOperations Project. Memorandum. 3 February (internal). 23 ADB. 2009. Project Classification System. Manila. Updated version: ADB. 2012. Gender Mainstreaming Guidelines

and Tip Sheet 1 Understanding and Applying Gender Mainstreaming. Manila. Categories mention including gender equality and social inclusion (GESI) design features in at least 50% of project outputs; and DMFs with at least one GESI indicator and target in more than 50% of outputs, with at least three gender features in each output.

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E. Technical Assistance 20. Project preparatory TA of $700,000 was approved in 2008 and completed in January 2011 (footnote 14). The TA supported the facility through (i) an institutional assessment of the NCRPB and its sub-borrowers, and recommendations for strengthening the NCRPB’s institutional capacity, including in safeguards; (ii) a review of the road map for development of the NCR as laid out in the regional plan, and assessment of priority investments; and (iii) initial due diligence of subprojects.

III. PROJECT IMPLEMENTATION A. Lending Policies 21. The NCRPB extended loans of 10 years’ maturity with a 2- to 5-year moratorium on principal and a fixed interest rate of 7.00%–8.50% per year, with rebates based on performance indicators (e.g., 0.25% on timely repayments). In 2016, the interest rate was reduced from 7.50% to 7.00% per year for priority infrastructure (e.g., water supply, sewerage and drainage, sanitation, and solid waste management) and transport projects, and from 9.25% to 8.50% per year for other projects.24 Maturity for priority projects was increased from 10 to 15 years, including a 3-year moratorium, while the maturity of transport projects was extended up to 20 years. To encourage water, sewerage, and drainage infrastructure development in the NCR and CMA towns, the NCRPB also introduced grant-in-aid up to 15% of the project cost. The NCRPB is considering shifting to floating interest rates, moving toward a market-based intermediary (footnote 24). 22. Eligibility for National Capital Region Planning Board’s assistance. Only subprojects in the following sectors were eligible for support under the NCRUIFF: (i) water supply; (ii) wastewater and drainage; (iii) waste management; (iv) urban transport, multimodal terminals, and regional transport and connectivity; (v) slum development; (vi) other economic growth infrastructure such as industrial estates; and (vii) capacity building and institutional development.25 Subprojects also needed to (i) be consistent with the NCR’s regional plan (road map),26 (ii) be part of the subsector or city master plan, (iii) have in place all necessary central and state government approvals, and (iv) demonstrate financial and institutional sustainability (5-year horizon business plan with 100% O&M). Subprojects also had to satisfy technical, financial, economic, social, and environmental criteria at appraisal, which were reviewed and approved by ADB through subproject approval reports. B. Characteristics of Subloans 23. Subloans were extended under the NCRUIFF to a range of subprojects subject to the submission of the PFR by the NCRPB and the execution of related loan agreements. ADB received an indicative list of six subprojects under the first (and only) PFR for a total of $78 million: one water supply and sanitation and five transport (urban and regional connectivity) projects.27 At

24 Government of India, NCRPB. 2016. Circular: Revision of Rate of Interest and Terms & Conditions on Loan

Assistance Given by NCR Planning Board. Delhi. 25 ADB. 2010. Report and Recommendation of the President to the Board of Directors: Proposed Multitranche

Financing Facility to India for the National Capital Region Urban Infrastructure Financing Facility. Framework Financing Agreement (accessible from the list of linked documents in Appendix 2). Manila.

26 A list of tentative subprojects for the facility and Project 1 was attached to the facility’s report and recommendation of the President to the Board of Directors and Project 1 PFR.

27 The first PFR also included PPP transaction advisory support to five projects: (i) Gaziabad Solid Waste Management, (ii) Pataudi Water Supply, (iii) Panipat Water Supply, (iv) Nuh Water Supply, and (v) bus stand and parking lots in Gaziabad. Projects were to be taken up in phases across different PFRs.

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completion, three water supply and sanitation and six transport projects were implemented. Table 1 shows the difference in subloan distribution at appraisal and at closure. No substantial difference is observed in the sector distribution of subloans. The sector share of the facility’s total investments at appraisal and completion remained consistent—about 20% for water supply and sanitation and 80% for transport.

Table 1: Subloan Distribution at Appraisal and Closure

Sector At Appraisal At Closure

Water supply and sanitation

(i) Panipat water supply (i) Pataudi water supply (ii) Nuh water supply (iii) Sonepat drainage

Urban transport, regional connectivity and other economic infrastructure

(ii) Multi Modal Transit Centre Sarai Kale Khan

(iii) Multi Modal Transit Centre Annad Vihar

(iv) Development of state highways in Jhajjar district

(v) Development of roads in Sonepat district

(vi) Construction of Badli bypass

(iv) Development of state highways in Jhajjar district (rehabilitation of 9 roads in Jhajjar district)

(v) Development of roads in Sonepat district (vi) Construction of Badli bypass (vii) Gohana–Lakhan Majra–Meham–Bhiwani

road (viii) Sonepat–Gohana road (ix) Bahadurgarh–Badli and Gurgaon–Badli

roads

Source: ADB. India: National Capital Region Urban Infrastructure Financing Facility.

24. As part of prudential norms promoted through the NCRUIFF’s assistance, the NCRPB tries to balance sectors and state exposure as a self-regulatory measure.28 Although most of the total loan amount approved by the NCRPB remains concentrated in one state (Haryana), there has been a substantial geographical redistribution as the total loan exposure in the state decreased from 70.0% (FY2009)29 to 51.4% (FY2017) (footnote 5). C. Implementation and Internal Operations of Subprojects 25. The oversight committee under the facility, the Project Sanctioning and Monitoring Group (PSMG) of the NCRPB, was responsible for subproject approval. A PMU was created and was responsible for screening and monitoring the day-to-day implementation of subprojects, including ensuring compliance with ADB policies and requirements on environmental and social safeguards, financial management, and procurement. The PMU was supported by the PMC, funded by the facility, and recruited in November 2012. Sub-borrowers (implementing agencies) managed subproject implementation, usually with the support of the design and supervision consultants engaged at their cost. 26. Implementation had initial delays because of (i) the slow recruitment of PMU staff and the PMC, (ii) delays in obtaining clearances from statutory bodies, and (iii) sub-borrowers’ decision to replace three projects initially identified under the Project 1. The NCRPB and sub-borrowers required close guidance on procurement and safeguards, especially at the start, as it was their first ADB-assisted project.30 With the NCRPB receiving and imparting capacity development support to sub-borrowers in procurement and safeguards, the overall implementation improved toward the end and the Project 1 amount was fully disbursed by December 2014.

28 As a planning body, the NCRPB does not come under the regulatory oversight of the Reserve Bank of India, although

all loans are secured by state government guarantees. 29 Government of India, National Capital Region Planning Board. 2010. Annual Report 2009–10. Delhi. 30 All subprojects appraisal reports have been reviewed by ADB.

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27. Safeguards. The NCRPB operationalized and mainstreamed the ESMS for all subprojects before implementation as a facility requirement (para. 17). Environmental safeguards were implemented satisfactorily under the facility, in line with the ESMS and ADB’s SPS (Appendix 7). All subprojects were environment category B following the ADB SPS. Sub-borrowers and NCRPB prepared initial environmental examination reports and submitted them to ADB for review and disclosure. Annual environmental audits were also conducted. Involuntary resettlement impacts were assessed category B at appraisal, as impacts were not deemed significant. Implementation issues involving road widening occurred in three of the nine subprojects with involuntary resettlement impacts. In all three cases, the NCRPB and sub-borrowers did not adequately verify land ownership during appraisal. Land was assumed to be government-owned, mainly because of the right-of-way of existing roads, which was disputed and required a reassessment of affected persons, an updating of resettlement plans, and payment of compensation. Where dispute settlement involved court cases, the NCRPB could not finance subprojects because of the time required to resolve legal cases (Appendix 7). Reassessment led to a change in the involuntary resettlement categorization for one of the subprojects from category B to category A. The issues identified were eventually addressed through full and updated documentation, and implementation of corrective action plan, as evidenced by semiannual safeguard monitoring reports (Appendix 7). No resettlement impacts issues emerged in the remaining six out of nine subprojects which were satisfactorily implemented, in accordance with the ESMS and SPS. Resettlement plans were prepared, impacts were reassessed, and the plans were updated based on the detailed design and submitted to ADB for review. The NCRPB and sub-borrowers regularly submitted semiannual social safeguard monitoring reports. 28. This was the first ADB-funded project handled by the NCRPB and sub-borrowers, who took some time to fully understand the ESMS and ADB requirements. Delays occurred in staffing the PMU and engaging the PMC. Institutional capacity constraints took time to resolve, affecting resettlement plan updating, implementation, and safeguard compliance by sub-borrowers. The NCRPB appointed external auditors for the ESMS in 2014 for 3 years. The ESMS is now functional and institutionalized, and the NCRPB is adequately equipped to deal with safeguard issues. D. Organization and Operations of National Capital Region Planning Board

1. Organization, Management, and Staffing 29. The NCRPB—headed by the member secretary—is organized in two functional areas: (i) planning, led by the chief regional planner; and (ii) administration and finance, led by its director, who was also the project director of the NCRUIFF. Both departments support project development, preparation, and appraisal of the NCRPB’s financial intermediary role. Five additional specialists were recruited in the PMU to strengthen the NCRPB’s financial intermediary capacity. These included experts in (i) engineering and project development, (ii) project management and monitoring, (iii) finance and procurement, (iv) environmental and social safeguards, and (v) financial management. The PMU’s project development, appraisal, monitoring, and marketing functions, including the ESMS, have been mainstreamed in the NCRPB’s overall lending operations. Overall, the NCRPB has 17 senior officer staff, of which four positions are vacant (footnote 5).

2. Personnel Administration 30. As a unit of the Government of India, the NCRPB’s staffing is governed by national policies and the staff in the PMU are on a contractual basis (not permanent). Only two of the five PMU

9

staff positions remain functional, and efforts to recruit additional staff have not yielded positive results because remuneration is not competitive with the market and the appointments have a short tenure. The PMU staff underwent several capacity building programs (e.g., project monitoring and award, safeguards, treasury, and risk management), supported by the ADB and KfW lines of credit and TAs.

3. Lending Operations 31. Requests for NCRPB financing are usually routed through state-level NCR planning and monitoring cells.31 Subproject review and approval follow a two-stage process: (i) after initial screening, the PSMG evaluates the subproject to seek approval in principle, based on eligibility criteria including technical, financial, and social and environmental aspects; and (ii) on completion of the detailed project reports (DPRs) and other requirements, the subprojects are proposed for PSMG approval after due diligence. The typical time frame for loan approval is 1–3 months from the submission of DPRs. 32. The NCRPB adopts a three-tier system for assessing risk, creditworthiness, and credit enhancement, although its clients include local governments, parastatals, and state departments, which are backed by state guarantees. Besides a technical review, subprojects are reviewed for (i) safeguard compliance, (ii) economic and financial viability, and (iii) assessment of the financial capacity of the borrowing entity and the fiscal responsibility and budget management limits.32 The maturity of the subloans is 10–20 years, depending on the sector. The planning and finance wings of the NCRPB are responsible for monitoring subproject implementation. Loans are disbursed after the submission of the NCRPB inspection reports, sub-borrowers’ compliance with covenants, and any observation of the NCRPB.

4. Other Operations 33. The NCRPB invested ₹50.00 million as equity of the NCR Transport Corporation in 2014.

E. Portfolio of National Capital Region Planning Board 34. The NCRPB’s lending operations almost doubled from 2010 to 2017 (Table 2). By March 2017, it had extended 299 loans for ₹135.20 billion of total approvals covering six major sectors: (i) transport, (ii) water supply, (iii) land development, (iv) power, (v) sewerage, and (vi) others. At appraisal in 2010, the transport sector had the highest share of the loans (31%), followed by land development (23%), power (20%), water supply (13%), sewerage (5%), and others (8%). By 2017, the share of loans increased significantly to 45% for transport and 12% for sewerage, while the share to water supply rose marginally to 14%.33 Details of the sector distribution of subloans are in Appendix 6. The NCRPB had no bad debt from 2010 to 2017, as it relies on state guarantees as a security mechanism. All loan installments are being recovered, so no provision for bad debt is needed.

31 The NCR cells aim to ensure coordination between state-level multisector programs and the NCRPB’s regional,

subregional, and functional plans. They work under the administrative control of the state governments and their main roles include (i) preparing sector (e.g., water supply, sewerage), district, and subregional master plans; (ii) planning and monitoring of NCRPB-funded projects; and (iii) ensuring coordination with the regional plan.

32 When state departments or any subnational entity borrows on the strength of state guarantees, the state provides guarantees only if it is within its fiscal responsibility and budget management limits.

33 Sewerage’s share of total loan approvals increased from 4% in 2016 to 12% in 2017 because of a ₹10.98 billion project approved in January 2017.

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Table 2: National Capital Region Planning Board Portfolio 31 March 2010 31 March 2017

Loans approved (₹ billion) 76.62 135.20 Loans released (₹ billion) 48.71 88.72 Number of projects 252.00 299.00

Source: Government of India, National Capital Region Planning Board. 2017. Annual Report 2016–17. Delhi.

F. Financial Statements and Ratios 35. Balance sheets. The NCRPB’s audited balance sheets for 2009–2017 (analysis period) reveal that34 (i) the net worth of the NCRPB grew over the years, reaching ₹44.51 billion in 2017 from ₹20.34 billion in 2009; (ii) market borrowings grew at a compound annual growth rate (CAGR) of 13.6%, amounting to ₹12.90 billion in 2017;35 and (iii) current assets grew from ₹25.12 billion in 2009 to ₹58.43 billion in 2017, mostly because of a ₹25.12 billion increase in cash and bank balances and a ₹6.57 billion increase in loans to sub-borrowers. Therefore, the NCRPB’s balance sheet improved considerably (Appendix 6). 36. Income statements. The NCRPB’s income and expenditure over the analysis period show that (i) interest income from loans to borrowers increased from ₹1.32 billion in 2009 to ₹1.58 billion in 2017; and (ii) annual interest earned on bank deposits grew significantly at a CAGR of 52% and amounted to ₹2.28 billion in 2017 from ₹80.20 million in 2009. Thus, the sources of income shifted significantly from interest on the loan portfolio to interest from bank deposits. The NCRPB earned profit in all the years of the analysis period. Profit grew at a CAGR of 16.8% during the analysis period and reached ₹3.84 billion in 2017. Movements in income and expenditure details from 2009 to 2017 are in Appendix 6. 37. Cash flow statements. Cash flow analysis of the NCRPB over the analysis period shows that (i) interest received on bank balances and deposits increased significantly from ₹93.8 million in 2009 to ₹2.53 billion in 2017; (ii) interest received on loans from sub-borrowers was ₹1.33 billion in FY2017 compared with ₹1.25 billion in FY2009; (iii) the NCRPB borrowed ₹3.52 billion from ADB, ₹4.23 billion from KfW,36 ₹9.00 billion from the market through NCRPB bonds, and ₹1.00 billion in short-term bank borrowings; while during the same period the NCRPB repaid ₹106.00 million to ADB, redeemed ₹6.00 billion of NCRPB bonds, and repaid ₹1.00 billion to banks; and (iv) yearly disbursement of loans to state governments and agencies for infrastructure projects was the highest at ₹16.55 billion in 2017. Movement in the receipts and payments account (cash flow) during the analysis period is in Appendix 6. 38. Key ratios. The NCRPB’s financial performance was steady from 2009 to 2017. No bad debt was incurred during the analysis period and all loan installments were regularly recovered. The NCRPB has high liquidity, with a current ratio of 46.5 (2017). However, its debt–equity ratio is low at 0.29:1.00 (2017), indicating low leverage and capacity to raise substantial debt in the future.37

34 Government of India, National Capital Region Planning Board. Annual Accounts. Delhi. 35 This increase is mainly due to additional market borrowings through the NCRPB’s taxable bonds in 2011 besides

loans from ADB and KfW. The NCRPB redeemed unsecured taxable bonds (2019) Series-1, amounting to ₹2.65 billion in February 2016, Series II amounting to ₹1.35 billion in August 2016, and unsecured taxable bonds (2018) amounting to ₹2.00 billion in February 2015 by exercising a call option. The repayments were met from the Bond Redemption Reserve of the NCRPB.

36 Transactions denominated in foreign currency are accounted at the exchange rate prevailing at the date of the transaction. Foreign currency loans (i.e., loans from ADB/KfW) are converted at the exchange rate prevailing at the year end, and the resultant gain or loss is considered revenue.

37 Typical financial intermediaries, such as nonbanking financial companies, leverage their own funds at least five to eight times.

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G. Covenants 39. The NCRPB complied with all the facility’s covenants, except Schedule 3, para. 7, which was partially complied with (Appendix 4). The NCRPB and ADB’s intervention and state government actions ensured that corrective action plans were prepared and implemented in compliance with ADB’s SPS. Some initial delays occurred in (i) finalizing and submitting the investment program performance monitoring system (IPPMS) and project performance monitoring system (PPMS) for Project 1; and (ii) submitting the NCRPB and subloans’ audited annual agency and project financial statements.

IV. SUBLOAN IMPLEMENTATION A. Loan Appraisal

1. Distribution of Subloans 40. The distribution of subloans did not change significantly during the implementation of Project 1 (para. 23). The reasons behind the replacement of subloans were (i) delays and slow progress by implementing agencies in finalizing the detailed design and bidding documents, and obtaining clearance from statutory bodies (as in the two multimodal transit centers dropped in 2013); and (ii) the implementing agency withdrawing subprojects to access a grant-based government scheme instead of borrowing the capital cost (as in the Panipat Water Supply project, where the Public Health Engineering Department [PHED] Haryana decided to fund the project under the Urban Infrastructure Development Scheme for Small and Medium Towns, a public scheme promoted by the Ministry of Urban Development).38 These were unforeseen decisions by sub-borrowers beyond the NCRPB’s control. 41. Despite the delays, the NCRPB managed to achieve the water supply and sanitation, and transport infrastructure targets in terms of the share of total loans approved. Such distribution is appropriate for achieving the development target of the NCRPB as envisaged at appraisal. As project 2 was dropped, the indicative project pipeline for the facility could not be completed despite consistency with the regional plan and NCR’s investment priorities.

2. Covenants 42. The subloan covenants remain relevant and should be retained.

3. Quality of Appraisal 43. The facility did not duplicate or clash with state or government investment programs, but complemented their efforts in priority sectors such as transport and water supply and sanitation (para. 15). It was structured on the investment needs for the region in coherence with the regional plan and had an extensive list of eligible subprojects. The appraisal factored in the impact of ongoing national programs (e.g., the Urban Infrastructure Development Scheme for Small and Medium Towns and Jawaharlal Nehru National Urban Renewal Mission) and the facility mitigated risks and remained relevant in a relatively competitive (grant-based) context. This was also due to the high growth environment in the NCR and demand for urban and growth-oriented

38 Government of India, National Capital Region Planning Board. 2013. Quarterly Progress Report submitted to ADB.

Delhi.

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infrastructure. While the facility’s design offered flexibility in selecting subprojects, it ensured consistency with sector priorities through comprehensive and relevant selection criteria. B. Implementation 44. The NCRPB has shown sectoral and regional diversity in its lending and has improved its products. It has (i) initiated marketing measures such as monthly meetings with borrowers and potential borrowers; (ii) created a project development facility to support project design;39 (iii) introduced incentives (e.g., grants) for environmental sanitation as well as timely and cost efficient performance of projects; (iv) moved to sector-specific lending rates and maturity; (v) ensured periodic monitoring of subprojects; and (vi) taken an equity position in the transport corporation, though quite small. The strength of the NCRPB, besides its flexibility in access to finance, is the competitive long-term maturity offered. 45. While the NCRPB remains a financier of relevance in the NCR, its control on institutional reforms and subloan implementation is limited. It needs to continue its transformation into a fully scaled financier and partner of sub-borrowers in conceptualizing projects, offering a diversified set of financial products (loan, grant and equity), and addressing implementation risks. Risks could be mitigated through the assessment and rating of sub-borrowers’ performance and capacity, and additional long-term technical staff such as engineers or safeguard specialists to enhance the NCRPB’s due diligence, advise sub-borrowers, and strengthen capacity.

V. EVALUATION OF PROJECT PERFORMANCE A. Relevance 46. Overall, the facility is rated relevant. It was and remains highly aligned with India’s development priorities and ADB’s country and sector strategies at appraisal and completion (para. 14). The facility is the first provided by ADB to an urban-focused financial intermediary in India, supporting infrastructure development consistent with a growth-oriented, systematic, and inclusive regional urbanization plan. The provision of longer-maturity debt, capacity development, and support for planning, project development, and implementation to sub-borrowers was and remains an important step in moving away from reactive, city-centric, and grant-focused urban infrastructure development toward more proactive, well-planned, and high-leverage paradigms. 47. The MFF modality was and remains highly appropriate as the facility (i) is structured around the road map provided by the NCR regional plan, (ii) has a clear project pipeline and investment requirements (para. 6), (iii) is linked with the NCR’s policy framework and the NCRPB’s transformation toward a financier of relevance, and (iv) is consistent with the NCRPB’s strategic mandate of planning and supporting financing for regional development in the NCR and CMAs. The facility managed to remain competitive in a highly grant-based context (para. 43). 48. As the first program from an international development partner, and in consultation with major stakeholders (para. 15), the facility design focused on strengthening project approval flows and institutional structures with additional technical roles for improved due diligence, institutional capacity, and governance (para. 16). It also established and operationalized an ESMS in line with ADB’s SPS (para. 17). The facility design incorporated significant and highly relevant lessons

39 This is not a formal facility, but the NCRPB supports project development provided the agency contributes to its share

of development, includes the development costs as part of the project cost, and the NCR builds this cost as part of its incentive scheme.

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from the successful urban financial intermediary, the Tamil Nadu Urban Development Fund, and ADB’s financial intermediary loan experiences with the India Infrastructure Financial Corporation Limited (footnotes 13 and 14). This resulted in the NCRPB’s improved ability to attract another line of credit from a development partner (KfW). 49. The elements described above would justify a highly relevant rating for the facility. However, the capacity constraints of the NCRPB and sub-borrowers, the small DMF design flaws (para. 18), new ESMS (para. 28), and the unmaterialized project 2 (para. 11 and 51) decrease the rating of the facility from highly relevant to relevant. 50. Project 1 is also rated relevant. Its design and subproject alignment to ADB and country priorities are the same as those of the facility. The project demonstrated flexibility in responding to infrastructure demand and catalyzing financing in the water supply and sanitation and transport sectors. However, its DMF did not reflect this flexibility and was not well designed, listing as its outputs each subproject submitted under the PFR 1 instead of providing more adaptive and smart indicators (para. 18). The DMF was not revised during implementation even through three subprojects (outputs) were replaced, potentially lowering the relevance of the project’s design. As this did not affect Project 1 delivering its intended results (para. 52), its rating remains relevant. B. Effectiveness 51. The facility is rated less than effective. It did not achieve two of its four outcome targets, which were related to the use of multimodal transport and improved access to sewerage infrastructure. This is mainly linked to two missed (out of three) outputs: (i) high-quality urban public health and environmental infrastructure created; and (ii) strengthened capacity of the NCRPB and sub-borrowers to scale up urban infrastructure and improve basic urban services. The facility was not able to provide sufficient investment in urban waste management, including sewerage, and multimodal transport infrastructure, as projected at approval.40 This was mainly because Project 2 did not materialize, as the facility’s indicative list of subprojects included sewerage and multimodal transport projects. 52. Project 1 is rated effective. It was able to achieve two of its three outcome (related to an increase in investments in the water and transport sectors) targets and substantially achieve the third, as the institutional improvement of the NCRPB is yet to be completed (Appendix 2). Only three of the 18 output targets were not achieved, and these were mostly related to the third outcome. Project 1’s DMF had to be updated at completion to reflect changes in subprojects (para. 23) that were not incorporated during implementation.41 The total length of roads, water pipeline, and volume of water reservoirs constructed is more than the appraisal projections. C. Efficiency 53. The facility is rated less than efficient. Despite the high economic internal rate of return (EIRR) of Project 1 (para. 51), the facility did not use the funds allocated efficiently, with only

40 Although the facility achieved the output “high quality economic growth-related regional and urban infrastructure

created,” and its target “Investments by NCRPB in intercity regional roads and multimodal transport facilities increased by 5 percentage points by December 2016” was achieved, this was mostly due to increased investments in the road transport subsector, with no effect on multimodal transport.

41 Two outputs (out of six) were revised and one added to the DMF. Four out of 18 output indicators had to be modified. The revision was based on the targets at subproject appraisal, minimizing modification of the nature of the indicator and/or target in the original DMF.

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$60 million disbursed out of $158 million. The availability period of the facility was extended by 1 year (from almost 7 to 8 years) to allow the implementation of Project 2.42 However, Project 2 did not materialize because of delays by the NCRPB’s sub-borrowers in deciding remedial actions, consistent with ADB’s SPS, to address unanticipated land ownership issues that emerged during the implementation of Project 1 (para. 28 and Appendix 7). The facility also had substantial delays in establishing a full PMU and hiring the PMC. 54. Project 1 is rated efficient. The economic analysis (Appendix 3) concludes that the EIRR is comparable to the appraisal estimates, with subproject EIRRs of 11.30%–40.82% and a combined EIRR of 30.5% at completion, significantly exceeding the economic opportunity cost of capital (EOCC) of 12%.43 Transport projects had the highest EIRR (sector combined EIRR 32.1%), compared with water supply and drainage subprojects (sector combined EIRR 18.2%). Subprojects were generally completed on time except in three roads and one water supply project, where the completion of works was delayed by 6–12 months.44 Delays also occurred in engaging the PMC and PMU. Closing of Project 1 loan account prolonged because of delays in finalizing the safeguards corrective action plan and submitting audited project financial statements. These bring the rating of Project 1 to efficient, despite a high EIRR. D. Sustainability 55. The facility is likely sustainable. The number of subprojects and total loan amount approved by the NCRPB continue to grow steadily (para. 37). The NCRPB’s business goals articulated at approval were achieved, with significant additional support provided to water supply, sanitation and drainage, and transport infrastructure. Although all the NCRPB’s loans are guaranteed by state governments, the rigorous appraisal and follow-up mechanism has been effective in ensuring disbursements and loan recovery, leading to zero defaults. No bad debts, excellent credit ratings, improved internal procedures, and controls (e.g., subproject approval flow and the ESMS) indicate that the support provided by the facility is likely sustainable. 56. The steady growth in profit between FY2010 and FY2017, the NCRPB’s double mandate of planner and financier in a high-growth region, and the regular update to its regional plan indicate a good pipeline and the capacity to respond to changing circumstances and sustain its business in the future. The NCRPB’s credit ratings and low debt–equity ratio (para. 38) demonstrate the capacity to tap low-cost credit in the future. However, the facility cannot be rated most likely sustainable as the NCRPB’s institutional reforms toward a full-fledged financial intermediary are not yet completed and further support from development partners may be required. Skills such as marketing, staff retention capacity, and higher leverage should be strengthened to improve the NCRPB’s sustainability in the long term. This will require further support in capacity building and the provision of low-cost, long-term debt. 57. Project 1 is rated likely sustainable. This completion report does not present any financial analysis as the subprojects are not revenue-generating and were financed on the strength of state guarantees. However, several elements provide solid ground for positive sustainability prospects: (i) sustainability criteria at subproject appraisal required sub-borrowers or asset owners to clarify

42 ADB (South Asia Department). 2014. MFF 0044: Request for Extension in Availability Period. Memorandum. 17

November (internal). 43 At subproject approval (2009 and 2013), an EOCC of 12% was adopted following ADB’s Guidelines for the Economic

Analysis of Projects (1997). Only one subproject (Nuh water supply) out of nine has an EIRR (11.3%) lower than the EOCC (12%).

44 The Gohana–Lakhanmajra Bhiwani road, Gurgaon–Chandu–Badli–Bahadurgarh road, and Sonipat roads.

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O&M arrangements and confirm sufficient budget provision after the project; (ii) subprojects have a 1- or 2-year defect liability period; (iii) annual O&M budget is allocated (transfers) for roads developed under the project;45 (iv) some roads supported by Project 1 have been declared national (priority) highways; (v) water supply projects have 5-year O&M contracts and adequate O&M allocation is available in the PHED budget (covered through a mix of tariff and transfers from central government) specifically for subprojects;46 and (vi) a regular tariff is collected for water supply and customers are incentivized to install meters. The owners of the assets created are institutions with sufficient technical staff, such as PHED and Haryana State Roads and Brides Development Corporation Ltd., which have the capacity to manage and operate the projects. From field observations of a road and a water supply project during the project completion review mission, the schemes are operational, and the quality of work and equipment was assessed as satisfactory (Appendix 5).47 E. Development Impact 58. The development impacts are less than satisfactory for the facility and satisfactory for Project 1. The facility contributed to build the long-term capacity of NCRPB as financial intermediary and supported transport and water and sanitation infrastructure, improving quality of life and economic well-being of urban residents in the NCR and CMAs. However, its development impacts are below expectations because of missed DMF outputs and outcomes (para.51). Project 1 achieved the expected development impacts for transport and exceeded water and sanitation targets (Appendix 2), although it failed to develop multimodal public transport. These improved connectivity and quality of water supply, through distribution infrastructure and household connections, with significant benefits from time and cost savings, and health (Appendix 2 and 3). Project 1 successfully contributed to ADB Results Framework through: (i) 263 km of roads built or upgraded; (ii) 84.9 km of water supply pipes installed or upgraded; and (iii) 18,658 households with new or improved water supply connections. F. Performance of National Capital Region Planning Board 59. The overall performance of the NCRPB is rated satisfactory for the facility and Project 1. It exhibited strong leadership with the placement of senior officers in key project positions, mainstreaming the ESMS, reducing the project loan processing time, adjusting lending rates, and incentivizing priority investments such as water and sanitation sector investments and efficiency in project completion. The quality of appraisal was generally satisfactory, and the NCRPB demonstrated a strong sense of ownership and helped resolve critical issues during project implementation, such as the completion of corrective action plan. The NCRPB has also been proactive in promoting innovation and project sustainability, e.g., through extended O&M contracts, and ensuring sufficient budget allocation from the owners of the assets created. Except for one partial achievement, all covenants were complied with.

45 The annual O&M allocation for the two sample subprojects analyzed during the project completion review mission is

(i) Sonepat–Gohana, ₹900,000 in 2017 and ₹2.9 million for 2018; and (ii) Gohana–Sisana, ₹600,000 in 2017. 46 For example, PHED Haryana in Pataudi has a 5-year O&M contract with the construction contractor of the water

supply scheme. PHED allocates annual O&M budget and pays the contractor every two months. In 2016–2018, the budget allocation from O&M of the scheme was ₹20 million, which is about 13% of the capital cost.

47 The mission also randomly interviewed three project beneficiaries in Pataudi, who confirmed benefits resulting from the improved availability, pressure, and quality of water services. Water is supplied twice a day for a total of 4 hours at a minimum pressure of 7 meters. Water supply increased from 110 liters per capita per day (unsafe and from borewells) to 135 liters per capita per day. PHED performs water quality monitoring every week at different points across the distribution scheme. The asset owner of the second water supply subproject has similar O&M arrangements.

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G. Performance of ADB 60. The performance of ADB is rated satisfactory for the facility and Project 1. ADB provided continuous support and assisted the client from project preparation to closure. Good analytical work at preparation provided a sound design and high-quality documents, including loan agreement and covenants. ADB provided sufficient support during loan signing and effectiveness, although approval to effectiveness took about 10 months. Timely guidance and regular monitoring helped to expedite project implementation and recover the initial delays in the PMU and PMC recruitment and in reporting. Careful subproject appraisal review and continuous focus on capacity issues was also provided. ADB assisted the implementing and executing agencies to overcome key implementation issues and provided quality support, especially in ensuring compliance with safeguard policies. Adequate review missions guaranteed the successful implementation of project 1 and timely responses to client needs. ADB also frequently inspected project sites to ensure a high quality of work and speedy implementation. H. Overall Assessment 61. The facility is rated less than successful overall (Table 3). It was not able to deliver the expected results and use the available funds efficiently. However, the facility design was relevant and contributed to the broader development of the NCR in line with its regional plan and the NCRPB’s transformation into a stronger and more sustainable urban financial intermediary. 62. Project 1 is rated successful overall (Table 3). All four core criteria have positive ratings, as the project was able to deliver the expected results efficiently, with positive sustainability prospects and in line with India’s development priorities and ADB’s country and sector strategies.

Table 3: Overall Ratings

Criteria

Rating

Project 1 Multitranche Financing Facility

Relevance Relevant Relevant

Effectiveness Effective Less than effective

Efficiency Efficient Less than efficient

Sustainability Likely sustainable Likely sustainable

Overall Assessment Successful Less than successful

Development impact Satisfactory Less than satisfactory

Performance of NCRPB Satisfactory Satisfactory

Performance of ADB Satisfactory Satisfactory

ADB = Asian Development Bank, NCRPB = National Capital Region Planning Board. Source: Asian Development Bank.

VI. ISSUES, LESSONS, AND RECOMMENDATIONS

A. Issues and Lessons 63. The following issues remain relevant:

(i) Limited capacity to attract and retain qualified staff. Attracting and retaining qualified staff remains an issue for the NCRPB. Although the most critical position (additional director of safeguards) of the PMU is filled, three other positions (out of five) remain vacant because of the short-term nature of the contract and noncompetitive remuneration compared to the market. This is an important issue and constraint for high-quality project preparation support, due diligence, and administration (para. 26).

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(ii) Scaling up. The NCRPB remains a traditional financier of infrastructure with limited financial products (mainly debt), fixed interest rates, and low leverage of capital. Given the high and growing demand for infrastructure in the NCR, the NCRPB needs to scale up its operations facilitating alternative forms of infrastructure support such as equity provision, and structures to attract private sector capital and efficiency.

(iii) Grant-based mindset in urban infrastructure development. Grant-based mindset in urban development remains a constraint in focusing on fiscal discipline and rigorous appraisal and implementation. This prevents many projects from being bankable and limits the possible interest of private sector involvement in financing.

64. The facility and Project 1 implementation offer the following lessons:

(i) Financial intermediary and capacity. The financial intermediary modality has significant potential to support infrastructure development more efficiently and to leverage private capital while building strong institutions. However, building strong financial intermediaries, especially in the urban sector, is complex, slow, and may prove inefficient in the initial phases. The NCRPB and ADB worked closely to address safeguard compliance issues. ADB had to review and supervise the subprojects closely, as the ESMS was new to the NCRPB and sub-borrowers. Addressing pending safeguard issues required significant effort and time. Although the facility provided capacity building support, the experience shows that institutional capacity develops over time, with direct implementation exposure. For new financial intermediaries, a phased approach should be adopted, and more complex subprojects (from a safeguards perspective) should be scheduled after the institutions (including sub-borrowers) gain experience in handling safeguards.

(ii) Engaging specialists and key staff on time. Delays in recruiting the PMC and PMU staff affected the quality of appraisal and effective monitoring during the initial period of Project 1. Long-term contracts and more competitive remuneration should be provided to attract and retain highly competent staff.

(iii) Full understanding of safeguards requirements. Limited understanding of the required safeguard policies and the ability to identify safeguard risks and mitigation strategies—especially at the initial project preparation, appraisal, and implementation—led to issues during implementation, some of which remain under judicial consideration. This created delays and resulted in Project 2 not materializing. Addressing new clients’ capacity constraints early in the project cycle, and more rigorous due diligence in the initial stages, can help in identifying and addressing risks in a timely manner. The focus needs to shift from reporting of checklists or requirements to proactive approaches such as participatory and meaningful consultations, periodic joint compliance reviews, and improved understanding and resolution of critical issues and follow-up actions. Sub-borrowers’ awareness and capacity on safeguard issues needs to be strengthened periodically.

(iv) Rigorous sub-appraisal process. Rigorous sub-appraisal process incorporating important bankability criteria is crucial. Excluding the subprojects where safeguards issues emerged, the subprojects implemented under the facility demonstrated satisfactory effectiveness, efficiency, and sustainability. This was the result of a rigorous subproject appraisal that pushed for high-quality design, sustainability, and O&M contracts that may last in the long term.

(v) Updating the design and monitoring framework across the project life cycle. The Project 1 DMF, approved in 2011, should have been updated following new

18

guidelines for easier measurability during the project completion review. Following up regular target reporting by the executing agency is also important, as it facilitates evaluation at project completion.

B. Recommendations

65. The efforts of the NCRPB in revisiting its regional plan and the growing demand in the region, also promoted by central government schemes such as the Smart Cities Mission, offer an excellent opportunity for the NCRPB to scale up its support to new initiatives while complementing urban development needs. The NCRPB will need to continue its transformation toward a full-fledged financial intermediary, offering a variety of project development and loan products (e.g., interest rate regime), enhancing its leverage and marketing. Important recommendations are:

(i) The NCRPB should be adequately staffed with regular or long-term specialists to manage programs under the overall guidance of the director of administration and finance. Mandatory designation and addition of specialized staff to manage future programs or projects should also be a precondition for effectiveness. Back up support from PMC and staff redundancy for key positions during initial implementation period, could also mitigate staff turnover risks.

(ii) Continuous capacity building for staff and an induction program for first-time borrowers should be conducted to ensure understanding and compliance with the facility (especially safeguard) requirements. This should be part of the project timeline, in the form of periodic orientation and capacity development programs.

(iii) Institutional processes need to be reviewed regularly. To minimize delays and issues, safeguard compliance—such as management of disclosure, grievance redressal mechanisms, and resettlement plan implementation (review and follow-up)—should be reviewed regularly and during missions, especially during the initial implementation period.

(iv) A full-fledged project development facility will be necessary to improve project preparation and bankability. This would mean additional skilled staff in or in support of the NCRPB (e.g., long-term consultants), product marketing, focus on risks and risk management measures, and incentives for priority sector projects.

(v) The NCRPB will need further support from development financing partners (including ADB) to continue its transformation into a full-fledged urban financial intermediary, adding specialized skills in project development and management. Further TA would also help strengthen skills.

66. Covenants. Facility covenants should be maintained, as the issue is not their formulation, but their review and monitoring in relation to the quarterly progress reports to flag issues and enable corrective actions. Private sector participation, while desirable, need not be a covenant given the limited private sector interest in urban infrastructure financing in India. The focus could be on efficiency or performance-based project implementation, such as design–build–operate or extended management contracts, to ensure quality service levels. 67. Further action or follow-up. Not applicable. 68. Timing of the project performance evaluation report. The project performance evaluation report should be done about 1 year from the completion of this report. This would give sufficient time to further understand the performance of O&M arrangements, subprojects and NCRPB’s sustainability, and assess if lessons learnt from the facility and subprojects implementation are applicable over the long term or should be revised.

Appendix 1 19

DESIGN AND MONITORING FRAMEWORK – FACILITY

Table A1: Design and Monitoring Framework of the Facility Design Summary Performance Targets/Indicators Achievements/Assessment

Impact Improved quality of life and economic well-being of urban residents in the NCR and CMA

(i) Waterborne diseases are

decreased by 10% by 2019 compared to 2010

(ii) Residents in areas assisted by the facility show increased satisfaction with urban basic services compared to base line

(iii) Economic growth in NCR is commensurate to the expectations of Eleventh Five Year Plan of India

(iv) Preference for public transportation increased by 10% by 2019 compared to 2010

(i) NOT measured. This indicator is

also weakly linked to outcomes as water supply interventions should be coupled with sanitation improvement and hygiene

(ii) NOT measurable (indicator is vague and there is no baseline)

(iii) Achieved. In NCR the GDP growth outpaced the expectations of Eleventh Five-Year Plan

(iv) NOT applicable. No public transportation subproject implemented under the facility

Outcome Urban residents use improved growth-supporting, and public health and environmental urban infrastructure services in the intervention cities of NCR and CMA in accordance with Regional Plan 2021 priorities

In the cities supported by the Facility in NCR and CMA, specific to the urban infrastructure support: (i) Intercity road movement increased

by 10% from the baseline by 2016 (ii) Use of multimodal public transport

increased by 10% from the baseline

(iii) Piped water supply connections increased by 10% by 2016

(iv) Population with improved access to sewerage increased by 10% by 2016

(v) Women's drudgery for fetching water reduced by 10% by 2016

(i) Achieved. Average annual daily

traffic increased by 8% every year (ii) NOT Achieved – no multimodal

public transport infrastructure supported by the facility

(iii) Exceeded. In Nuh Town piped water supply connections increased by 477% (7,399 new connection from 2010 baseline of 1,550). In Patudi, piped water supply connections increased by 270% (11,259 new connections from 2010 baseline of 4,158)b

(iv) NOT Achieved – No sewerage projects supported by the facility

(v) NOT Applicable (gender related indicators reporting is not applicable given the facility gender categorization was changed from EGM to SGE)c

Outputs 1. High quality urban public health and environmental infrastructure created

1.1 Increase in investments for urban waste management and water supply in the overall portfolio of NCRPB by 5 percentage points by 2016 from 2010

1.1 NOT Achieved – investments for urban waste management and water supply increased by 2% (additional ₹1.57 billion over ₹76.62 billon overall NCRPB portfolio in 2010)d

1.2 NCRPB's concessional lending to public health and environmental urban infrastructure introduced by December 2011

1.2. Achieved – NCRPB introduced a 15% grant subsidy for public health and environmental infrastructure subprojects in 2016 (endnote d)

1.3 Gender targets in the GAP achieved by December 2016

1.3. NOT Applicable – (gender related indicators reporting is not applicable given the facility gender categorization was changed from EGM to SGE [endnote c])

20 Appendix 1

Design Summary Performance Targets/Indicators Achievements/Assessment

1.4 NCRPB mainstreams gender-inclusive and pro-poor environmental and social safeguards by December 2016

1.4. Achieved – NCRPB has mainstreamed ESMS (gender related indicators reporting is not applicable given the facility gender categorization was changed from EGM to SGE [endnote c])e

2. High quality economic growth related regional and urban infrastructure created

2.1 Investments by NCRPB in intercity regional roads and multimodal transport facilities increased by 5 percentage points by December 2016

1.1 Achieved – investments for intercity regional roads and multimodal transport facilities by 6% (additional ₹4.59 billion over ₹76.62 billon overall NCRPB portfolio in 2010) (endnote d)

2.2 Gender targets in the GAP achieved by December 2016

2.2 NOT Applicable (gender related indicators reporting is not applicable given the facility gender categorization was changed from EGM to SGE [footnote 3])

2.3 NCRPB mainstreams gender-inclusive and pro-poor environmental and social safeguards by December 2016

2.3 Achieved – NCRPB has mainstreamed ESMS (gender related indicators reporting is not applicable given the facility gender categorization was changed from EGM to SGE [footnote 3])

3.Strengthened capacity of NCRPB and sub-borrowers to scale-up urban infrastructure and improve basic urban services

3.1. NCRPB becomes more effective in executing its scaled-up mandates: (i) At least one pooled municipal fund

facility arranged by NCRPB by December 2016

(ii) Strengthening of project management unit of NCRPB by December 2011

(iii) Capacity building of sub-borrowers including, among others, web-based tools available: December 2013

(iv) NCRPB strengthens risk, treasury, project management processes: December 2011

3.1 Partially Achieved (only 50% indicators met): (i) NOT Achieved – no pooled fund

facility was established (ii) NOT Achieved – 3 out of 5 PMU

staff positions are vacant (iii) Achieved – capacity building

programs and web-based tools implemented

(iv) Achieved – processes strengthened

3.2. Inclusive and balanced geographical and sector infrastructure development enabled: (i) At least 5 DPRs that will enable

higher investments at city level, especially in Uttar Pradesh prepared: December 2013

(ii) Social and gender-relevant processes and practices institutionalized through capacity development of relevant stakeholders: December 2016

3.2. Partially Achieved (only 50% indicators met): (i) NOT Achieved – however 3 DPRs

prepared under KfW (ii) Achieved – incorporated as part of

contracts. NCRPB and sub-borrowers trained on gender issues

Appendix 1 21

Design Summary Performance Targets/Indicators Achievements/Assessment

3.3. Urban infrastructure projects are executed effectively: (i) Subproject readiness assessed

and sub-borrowers provided technical support for better project readiness: Introduced by June 2010

(ii) Project Management Consultants hired: April 2011

(iii) Systematic and regular progress monitoring of financial, physical, social and gender related impacts of subprojects introduced by NCRPB: June 2011

3.3. Achieved: (i) Achieved; (ii) Achieved – PMC hired in

November 2012; (iii) Partially achieved – regular

reporting but some audit reports delayed (gender related indicators reporting is not applicable given the facility gender categorization was changed from EGM to SGE [endnote c])

3.4. Increased private sector participation in urban infrastructure development and urban basic service provision: (i) Checklist for private sector

participation/public-private partnership PSP/PPP introduced: January 2011

(ii) Lending and non-lending incentive scheme for PSP/PPP introduced by NCRPB: December 2011

(iii) At least one urban infrastructure project to be structured and executed within PSP/PPP framework: December 2016

3.4. NOT Achieved: (i) Achieved – checklist introduced; (ii) NOT Achieved – no incentive

scheme for PSP/PPP introduced (iii) NOT Achieved – no project was

structured within the PSP/PPP framework

CMA = counter magnet areas, DPR = detailed project report, EGM = effective gender mainstreaming, ESMS = environmental and social management system. GAP = gender action plan, GDP = gross domestic product, NCR = National Capital Region, NCRPB = National Capital Region Planning Board, PMC = project management consultant, PMU = project management unit, PPP = public-private partnership, PSP = public sector participation, SGE = some gender elements. a Government of Haryana, Town and Country Planning. 2014. Sub-regional Plan for Haryana Sub Region of NCR

2021. Delhi. b National Capital Region Planning Board. Sub-project completion report or certificates submitted by respective sub-

borrowers to National Capital Region Planning Board. Unpublished. c ADB. 2009. Project Classification System. Manila. Updated version: ADB. 2012. Gender Mainstreaming Guidelines

and Tip Sheet 1 Understanding and Applying Gender Mainstreaming. Manila. Categories mention including gender equality and social inclusion (GESI) design features in at least 50% of project outputs; and DMFs with at least one GESI indicator and target in more than 50% of outputs, with at least three gender features in each output..

d Government of India, National Capital Region Planning Board. 2017. Annual Report 2016-2017. Delhi. e

National Capital Region Planning Board. 2015. Completion Report: National Capital Region Urban Infrastructure Financing Facility. Delhi.

22 Appendix 2

DESIGN AND MONITORING FRAMEWORK – PROJECT 1a

Table A2: Design and Monitoring Framework of Project 1 Design Summary Performance Targets

and Indicators Revised Targets and Indicatorsb

Achievement /Assessment

Impact Urban residents use improved urban infrastructure services in the intervention cities of NCR and CMA in accordance with Regional Plan 2021 priorities

By 2016: (i) Intercity road

movement increased by 10% from the baseline

(ii) Use of multimodal

public transport increased by 10% from the baseline

(iii) Piped water supply

connection increased by 10% from baseline

(iv) Women’s drudgery for fetching water reduced by 10% from baseline

(i) Achieved - Average

annual daily traffic increased by 8% every yearc

(ii) NOT Achieved – no multimodal public transport infrastructure supported by the facility

(iii) Exceeded - In Nuh Town piped water supply connections increased by 477% (7,399 new connection from 2010 baseline of 1,550). In Patudi, piped water supply connections increased by 270% (11,259 new connections from 2010 baseline of 4,158)d

(iv) NOT Applicable– (gender related indicators reporting is not applicable given the facility gender categorization was changed from EGM to SGE)e

Outcome By end 2014: By end 2016 Improved transport system and connectivity in NCR, and access to safe drinking water in subproject cities

(i) NCRPB investment in the road subsector increased by 5%

(i) Achieved – NCRPB investments in road subsector increased by 20% (additional ₹4.6 billion1 from ₹22.66 billion in 2010)

(ii) NCRPB investment in the Water Supply subsector increased by 5%

(ii) Achieved - NCRPB investments in water and sanitation subsector increased by 12% from 2010 baseline (₹1.59 billion from 13.42 billion in 2010 e

(iii) Improved project planning and execution capacities of NCRPB / subproject implementing agencies-

(iii) Substantially Achieved – NCRPB strengthened its institutional structure and approval processes; adopted and disseminated toolkits for project preparation; and

Appendix 2 23

Design Summary Performance Targets and Indicators

Revised Targets and Indicatorsb

Achievement /Assessment

preparation of toolkits and dissemination; introduction of best practices for safeguards, monitoring and procurement systems

mainstreamed ESMS

Outputs 1. Road network improved in Jhajjar and Sonepat Districts

1.1 78.7 km for nine regional roads in Jhajjar District.

1.1 Achieved - 87.09 km completed for nine regional roads in Jhajar district + 20.8 km of road completed in Jhajar and Gurgaon District

1.2 68.5 km for three regional roads in Sonepat District are widened and improved as per design and quality standards;

1.2 Achieved - 47.97 km for three regional roads + 62.32 km for additional two regional roads

1.3 ADT annual growth rate of 7%-8% on those roads

1.3 Achieved - ADT average annual growth rate is 8% from 2010

2. Traffic diverted from Badli city center

2.1 5.7 km bypass built, and 1.3 km road improved around Badli town, as per design and quality standards

2.1 Achieved - 5.7 km bypass built, and 1.3 km road improved around Badli town, as per design and quality standards

2.2 30% of existing city traffic to shift to bypass

2.2 Achieved – data not available, but traffic is substantially diverted from the city due to introduction of bypass

3. MMTC developed in Anand Vihar and Sara Kale Khan

Subproject and output dropped and replaced with: 3. Road network improved in Gohana-Lakhan Maira-Meham Bhiwani are of Rothak district

3.1 10% of construction of two MMTC completed as per design and quality standards

Revised. 3.1 37.7 km for three regional roads in Rothak district are widened and improved as per design and quality standards.

3.1 Achieved - 37.7 km of roads widened and improved as per design and quality standards

24 Appendix 2

Design Summary Performance Targets and Indicators

Revised Targets and Indicatorsb

Achievement /Assessment

3.2 ADT annual growth rate of 7%-8% on these roads

3.2 Achieved - ADT annual growth rate is 8% - substantial traffic movement increase as result of link roads completion

4. Provision of safe drinking water and water supply coverage increased in Panipat city Subproject and output dropped and replaced with: 4. Provision of safe drinking water and water supply coverage increased in Nuh Nulhar Gurugaon

4.1 90% of length of pipeline increased (from 285 km to 540 km)

Revised 4.1 90% of length of pipeline increased and 32 MLD water treatment plant constructed

4.1 Achieved – 100% 62.9 km increase (no pipeline, tubewell-based supply) + 32 MLD water treatment plant constructed.

4.2 Increase in storage capacity by 100%

Revised 4.2 Increased storage reservoir capacity of 26 ML (clear water reservoir 15.75 ML, Intermediate Reservoir of 1.25 ML and hillock reservoir of 9 ML)

4.2 Achieved – 3 water reservoirs completed for a total of 26 ML

4.3 Bulk metering at source and at zonal reservoirs

4.3 Achieved – bulk meters installed at source and reservoirs

5. Provision of safe drinking water and water supply coverage increased in Pataudi

5.1 50% increase in pipeline length

5.1 Achieved -146% Increase in pipeline length (from 15 km to 37 km)

5.2 Increased storage capacity by 100%

5.2 Achieved - 490% increase in storage capacity (from 1.36 ML to 6.95 ML)

5.3 Bulk metering at source

5.3 Achieved - Bulk metering at source installed

6. Project management and capacity building

6.1 Project PMC hired on time

6.1 NOT Achieved – PMC hired with 1 year delay (November 2012)

6.2 PMU strengthened with five additional staff

6.2 Partially Achieved – PMU strengthened with five additional staff (however 3 out of 5 are vacant)

6.3 Systematic and regular progress monitoring of financial, physical, social and gender related impacts of subprojects introduced – preparation and submission of periodic reports on time

6.3 Achieved – NCRPB regularly monitors monitoring of financial, physical, social and gender related impacts of subprojects (e.g., through ESMS)

Appendix 2 25

Design Summary Performance Targets and Indicators

Revised Targets and Indicatorsb

Achievement /Assessment

6.4 Introduction of web-based tools to build capacity

6.4 Achieved – web-based tools introduced and functional

ADDITIONAL OUTPUT/ SUBPROJECT 7. Provision of improved sanitation and environmental health through storm water drainage services in Sonepat town

No original indicator. Revised: 7.1 Coverage of Storm water drainage network increased by 21 km

7.1 Substantially achieved - 16.2 km added and completed

ADT = annual diverted traffic, CMA = counter magnet areas, EGM = effective gender mainstreaming, ESMS = Environmental and Social Management System, km = kilometer, ML = million liters, MLD = million liters per day, MMTC = Multi-modal Transit Centers, NCR = National Capital Region, NCRPB = National Capital Region Planning Board, PMC = project management consultant, PMU = project management unit, SGE = some gender elements. a The design monitoring framework (DMF) was not part of approved RRP/PFR (only the facility DMF was required in

2010 at the time of approval) and it was developed during project implementation. b However, the DMF was not revised during implementation to reflect changes in subprojects during implementation. c Government of Haryana, Town and Country Planning. 2014. Sub-regional Plan for Haryana Sub Region of National

Capital Region 2021. Delhi. d National Capital Region Planning Board. 2017. Project document files of water supply schemes implemented under

National Capital Region Urban Infrastructure Financing Facility. Delhi. e ADB. 2009. Project Classification System. Manila. Updated version: ADB. 2012. Gender Mainstreaming Guidelines

and Tip Sheet 1 Understanding and Applying Gender Mainstreaming. Manila. Categories mention including gender equality and social inclusion (GESI) design features in at least 50% of project outputs; and DMFs with at least one GESI indicator and target in more than 50% of outputs, with at least three gender features in each output.

Sources: 1. National Capital Region Planning Board. 2010 and 2017. Annual Report 2009-2010 and Annual Report 2016-2017.

Delhi. 2. National Capital Region Planning Board. 2013. Regional Plan 2020 for National Capital Region. Delhi. 3. National Capital Region Planning Board. Functional Plan on Transportation for National Capital Region. 4. National Capital Region Planning Board. Sub-project completion report or certificates submitted by respective sub-

borrowers to National Capital Region Planning Board. Unpublished. 5. Audit reports of subprojects as submitted to National Capital Region Planning Board.

26 Appendix 3

ECONOMIC ANALYSIS

A. Introduction

1. The National Capital Region Urban Infrastructure Financing Facility (NCRUIFF) is a multitranche financing facility (MFF) of up to $150 million extended to a financial intermediary, the National Capital Region Planning Board (NCRPB), and approved by the Asian Development Bank (ADB) in 2010.1 The first MFF tranche of $78 million was signed in March 2011. In 2013, NCRPB requested a cancellation of $18 million out of Tranche 1 and no further tranches were approved under NCRUIFF. The facility supported NCRPB, a government-owned regional planner and financier, in implementing its Regional Plan 2021 which aimed to facilitate growth and balanced, inclusive, and sustainable urbanization in India’s National Capital Region (NCR), one of the fastest growing urban agglomerates in the country including the capital Delhi and counter magnet areas (CMAs) in three other states.2

2. The periodic financing request (PFR) 1 under NCRUIFF had indicative subprojects list comprising one water supply and sanitation and five transport (urban and regional connectivity) projects. During implementation (in 2013), one water supply and two transport subprojects in the initial PFR list were dropped due to slow progress in preparing bid documents and withdrawal from implementing agencies and replaced with two water supply, one drainage and three transport subprojects. At completion, Project 1 of NCRUIFF supported two water supply, one drainage, and six transport subprojects for a total of $60 million.

3. An economic analysis was conducted at appraisal for all subprojects submitted to ADB. Appraisal year was 2009 for subprojects under the original PFR 1 list and 2013 for the six new subprojects.3 With this background, an economic analysis at completion (2017) is conducted for all subprojects implemented under Project 1 to reevaluate their economic efficiency based on actual data. This follows ADB’s Guidelines, including Guidelines for the Economic Analysis of the Projects. B. Approach

4. The economic analysis at completion updates the subproject analysis carried out at appraisal with actual data on implementation (e.g., cost, benefits, project phasing, project coverage, beneficiaries). This is based on the parameters and projections used in the earlier economic analysis at appraisal and updated information from the (i) engineering, environmental, social, financial and other details collected at project completion; and (ii) the project cost distribution and implementation period gathered from the project management unit (PMU). Data collected includes:

(i) actual capital costs of subprojects; (ii) annual operating and maintenance (O&M) costs of the improved infrastructure; (iii) updated forecasts of demand for/usage of infrastructure services; and (iv) updated supply characteristics of infrastructure networks and services delivery

on completion stage. 5. The analysis at completion adopts the same analysis period assumed at appraisal and

1 ADB. India. National Capital Region Urban Infrastructure Financing Facility. 2 At appraisal, the NCR spread over an area of about 33,578 sq. km of area covering the National Capital Territory of

Delhi and parts of the States of Haryana, Uttar Pradesh and Rajasthan. In the years 2012 and 2015 additional districts were added, and the present area of NCR is about 53,817 sq. km.

3 As requirement of the subproject appraisal report.

Appendix 3 27

revisits the construction period as observed from actual performance as follows: (i) a 20-year analysis period from the base years (2009 and 2013) for all roads; and (ii) 23-years analysis for all drainage and water supply subprojects. Though most of the subprojects were completed on time, three of them were delayed resulting in a reduced operation. The analysis is based only on measurable benefits that would arise from the subprojects and does not include other positive but unquantifiable effects that would be generated by the project interventions. C. Economic Cost

6. The economic costs of capital works and annual O&M were calculated from the observed actual financial cost on the following basis:

(i) Price contingencies are excluded but physical contingencies are included because they represent real consumption of resources;

(ii) Import duties and taxes are excluded because they represent transfer payments. For this the shadow exchange rate factor (SERF) worked out (1.03)4 was used;

(iii) The existence of unemployment and under-employment for unskilled workers within the Indian economy means that the opportunity cost of unskilled labor can be lower than its wage rate – a conversion factor of 0.835 of the market wage rate for unskilled labor in Haryana State was used to estimate the shadow wage rate;

(iv) The market wage rate for skilled labor and the acquisition cost of land are considered to represent opportunity costs, as both factors are in demand;

(v) In alternative to the detailed economic cost estimation using SERF, Shadow Wage-rate Factor, tax component, the simplified method using the standard conversion factor (SCF) of 0.9 was used for road subprojects, as followed for

4 Shadow Exchange Rate Factor (₹ in billion)

Details 2012-13 2011-12 2010-11 2009-10 2008-09 2007-08 2006-07 2005-06

Exports - Govt. of India 16,353 14,660 11,429 8,455 8,408 6,559 5,718 4,564 Imports - Govt. of India 26,732 23,455 16,835 13,637 13,744 10,123 8,405 6,604 Customs Duties - Govt. of India

1,155 1,056 976 602 692 720 628 466

Standard Conversion Factor

0.974 0.973 0.967 0.973 0.970 0.959 0.957 0.960

Standard Exchange Rate Factor

1.03 1.03 1.03 1.03 1.03 1.04 1.04 1.04

Calculation Method based on ERD Technical Note Series No. 11, February 2004, 'Shadow Exchange Rate for Project Economic Analysis', ADB. Source: Reserve Bank of India, Hand Book of Statistics on Indian Economy, 2012-13.

Shadow Wage-rate Factor (Y)

Unskilled labor cost (₹ per day)* ( L) 170 Minimum Wages in India w.e.f July 1, 2013 (₹ per day)** (M) 205.44 Shadow Wage-rate Factor (Y); Y = L/M 0.83

*Normal wage rates practiced for construction labor in project towns in Haryana State. **https://paycheck.in/main/salary/minimumwages/haryana/haryana-minimum-wages-w-e-f-july-1-2013-to-

december-31-2013 (Wage rate suggested for Construction workers).

5 Shadow Wage-rate Factor (Y)

Unskilled labor cost (₹ per day)* ( L) 170 Minimum Wages in India w.e.f July 1, 2013 (₹ per day)** (M) 205.44 Shadow Wage-rate Factor (Y); Y = L/M 0.83

*Normal wage rates practiced for construction labor in project towns in Haryana State. **https://paycheck.in/main/salary/minimumwages/haryana/haryana-minimum-wages-w-e-f-july-1-2013-to-

december-31-2013 (Wage rate suggested for Construction workers).

28 Appendix 3

road projects in India; and (vi) All costs are valued using the domestic price numeraire, to enable an easier

comparison with the information used to measure benefits (e.g., a significant component of benefit is the savings in resources, which would be used in the without project situation).

7. Though implementation of three roads subprojects was planned to finish in 2011-2012, their completion was delayed between 6-12 months. Remaining three road subprojects and drainage subprojects were completed in 2015, while two water supply subprojects in 2017 as planned during appraisal stage. Actual subproject expenditure during their implementation period collected from project management unit was used to update the project cost and its phasing in the analysis. Using the wholesale price index (WPI) for selected commodities groups, the year wise actual disbursement was discounted to the base year. Three road subprojects assessed during the project preparatory technical assistance stage had considered 2009 as base year and the remaining subprojects had considered 2013 as base year. Same base years were considered for the present analysis. Table 1 shows the updated financial cost of the roads and drainage subprojects along with their discounted cost using the WPI. Table 2 gives the arrived economic cost used for the analysis. 8. Actual subproject expenditure during their implementation period collected from PMU was used to update the project cost and its phasing in the analysis. Year wise actual disbursement was discounted to the base year using the WPI for selected commodities groups.6 Table 1 shows the updated financial cost of the roads and drainage sub-projects along with their discounted cost using the WPI. Table 2 gives the arrived economic cost used for the analysis.

Table A3.1: Subprojects Cost (₹ million)

Year

Projects implemented by HSRDC Projects implemented by PHED Total

Estimated Cost

during Processing

Actual Cost

Discounted Cost Phasing

Estimated Cost

during Processing

Actual Cost

Discounted Cost Phasing

Discounted Cost Phasing

2009 0.00 0.00 0.00 0.0% 0.00 0.00 0.00 0.0% 0.00 0.00%

2010 3,084.36 0.00 0.00 0.0% 0.00 0.00 0.00 0.0% 0.00 0.00%

2011 104.28 0.00 0.00 0.0% 0.00 0.00 0.00 0.0% 0.00 0.00%

2012 415.16 2,615.50 2,528.95 32.9% 0.00 156.25 156.25 8.6% 2,685.20 28.26%

2013 2,080.52 1,558.85 1,646.04 21.4% 404.86 548.84 535.83 29.4% 2,181.87 22.96%

2014 3,120.78 2,979.52 2,906.94 37.9% 448.30 453.69 438.53 24.0% 3,345.47 35.21%

2015 0.00 0.00 594.45 7.7% 629.01 718.67 694.45 38.1% 1,288.90 13.57%

2016 0.00 0.00 0.00 0.0% 542.13 0.00 0.00 0.0% 0.00 0.00%

Total 8,805.10 7,153.88 7,676.38 100.0% 2,024.29 1,877.46 1,825.06 100.0% 9,501.44 100.00%

HSRDC = Haryana State Roads and Bridges Development Corporation Ltd., PHED = Public Health Engineering Department Notes: 1. The contract value of Sonipat roads has been revised as one road Kharkhoda Assaundha ₹296.33 million

has been excluded from the scope of the Project. 2. The estimated cost of Pataudi and Nulhar has been revised by Public Health Engineering Department Haryana

by integration of schemes with common water treatment plant. 3. Road projects (Jhajjar district roads, Sonepat district roads and Badli Bypass) implemented by Haryana State

Road Development Corporation were discounted to 2009 price. Remaining projects cost are discounted to 2013 prices. These are in tune with the feasibility analysis carried out during the loan processing stage.

4. Whole sale price index published by Government of India is used to discount the project cost to the base year. Source: National Capital Region Planning Board sub-project completion certificates (unpublished) and Asian Development Bank estimates.

6 Construction related group is in the WPI used for discounting the actual cost to the base year (2004-2005).

Appendix 3 29

Table A3.2: Subproject Costs (₹ million)

No. Subproject

Length

(Km)

Total Cost

Approved by

Project Sanctioning

and Monitoring

Group Committee 2

Actual Cost

Discounted to

Base Year 3

Economic

Cost

Economic

Cost

Conversion

Factor

A. Projects in PFR1 (2009)

1. Roads in Jhajjar District

i Jharli Mohanbari Approach Road 3.24 50.21 51.91 46.72 0.9

ii Jhajjar, Talao, Chhucha 13.46 267.58 276.63 248.96 0.9

iii Beri Rohtak Road 8.56 125.57 129.82 116.83 0.9

iv Badli Durnia Via Ladpur Munimpur 11.43 178.49 184.52 166.07 0.9

v Badli Pela Sondhi Yakubpur Road 9.8 156.49 161.78 145.60 0.9

vi Subana(SH22) Sarola Ahri Road 6.64 94.43 97.62 87.86 0.9

vii Patauda (MDR 132) Dhani Saniyan

Kahari Machroli (NH71)

10.08 122.63 126.78 114.10 0.9

viii Jhajjar Farruknagar Road (SH15A)

Mubarakpur Ismailpur Mundakhera

(MDR136) up to Dist. Border

11.76 216.22 223.53 201.18 0.9

ix Gawalision (VT) Kheri Hosdarpur

Karodha Raiya (SH22) Salodha

Gijrodh (NH71)

15.02 260.08 268.87 241.99 0.9

Subtotal 89.99 1,471.70 1,521.45 1,369.31

2. Roads in Sonepat District

i Gohna - Sisana 28.56 395.30 440.32 396.29 0.9

ii Sonipat - Farmana 21.88 297.20 331.05 297.95 0.9

Subtotal 50.45 692.50 771.37 694.24

3. Badli bypass 39.45 629.20 474.36 426.93 0.9

B. New Projects approved in 2013

4. Gohana Lakhanmajra Bhiwani road

up to district Rohtak boundary road

74.83 997.70 1,226.06 1,103.45 0.9

5. U.P. border Sonepat Gohana road

up to District Sonepat boundary

132.20 1,762.60 1,857.82 1,672.04 0.9

6. Gurgaon-Chandu-Badli

Bahadurgarh Road

183.08 2,441.00 1,825.31 1,642.78 0.9

7. Sonepat Drainage Scheme 16.29 217.20 194.00 170.23 0.9

8. Pataudi Water Supply

411.50 293.63 257.66 0.9

9. Nulhar Medical College and Nuh

town

1,500.00 1337.44 1173.60 0.9

Total 586.29 10,123.40 9,501.44 8,510.23

Km = Kilometer, SH = State Highways, MDR = Major District Roads, VT = Viceroy Territory, NH = National Highways, PFR = periodic financing request. Notes: 1. Water supply subprojects in Pataudi & Nuh are considered with revised cost. 2. Detailed project report cost approved by the project sanctioning and monitoring group Committee of NCRPB. 3. Discounted to the base year (2009 or 2013) using the actual project cost disbursement, with WPI Index. 4. In some of the subprojects, the present value of project cost was found to less than the PSMG Committee approved

cost for the following reasons: (i) change in the scope, (ii) bidded contract cost was less to the approved cost, and (iii) delay in implementation and actual expenditure will result in reduced net present value of the project cost.

Source: National Capital Region Planning Board sub-project completion certificates (unpublished) and Asian Development Bank estimates.

30 Appendix 3

D. Project Beneficiaries

9. Subproject components and beneficiaries did not change during loan implementation. All subprojects, except one cancelled road in Sonepat district, were completed within the project implementation period. Project beneficiaries amount to about (2016 estimates): (i) 167,000 people in Sonepat drainage subproject; (ii) 215,000 road users and 66,000 vehicles per day in the six road subprojects; and (iii) 120,000 people in the two water supply subprojects.

E. Valuing Economic Benefits

10. The project completion report evaluation assumes the same assumptions in project benefits estimation considered at appraisal stage (2009 or 2013): (i) 20-year analysis period including 2 years construction period for road projects; (ii) 23-year analysis period, including the 3 years construction period and 20 years operation period for road projects; (iii) 24-year analysis period, including the 4 years construction period and 20 years operation period for road projects; (iv) unit rates for benefits estimations pertained to appraisal base years (2009 or 2013); and (v) reduction in the operation periods due to the delayed construction period were considered as per the actual information collected during the completion stage. Details of project benefits considered including the assumptions and approaches followed for different subprojects are discussed below.

11. Road subprojects. The major economic benefits for road projects comprise (i) vehicle operating cost savings to traffic on the project roads with improved surface and capacity, and (ii) travel time savings to all traffic with improved speeds. Other benefits are envisaged to accrue with better access but have not been quantified. Based on the road, traffic and vehicle characteristics under ‘without’ and ‘with’ project scenarios, the economic benefit streams over the analysis period were worked out using the Highway Development Management-4 (HDM-4) model. All benefits are valued in monetary terms and expressed in economic prices to avoid distortions in the input prices of labor, materials, equipment and foreign exchange due to market imperfections. The savings in vehicle operating cost and time costs were calculated separately for each individual road and through HDM-4 model. The input values used for recent road sector studies in India have been used.

12. Drainage subproject. The benefits arising from improved storm water drainage results in improved environmental and living conditions and public health in the project town. Quantifying environmental and health benefits is difficult given the need for data to establish the magnitude of impacts. However, the following quantifiable economic benefits are considered for the drainage components for which the major inputs were drawn from the ‘Baseline Socio-economic Survey (2009)’ conducted in the project town by project preparatory consultant:

(i) Reduction in flooding related expenditure and earning lost for the people benefitting from the storm water drain project: with of ₹1,000 average annual flood related maintenance cost and ₹1,481 as income loss during flooding days (₹329 of average household daily income x 4.5 working days lost) for slum households and ₹1,500 average annual flood related maintenance cost and ₹1,439 as income loss during flooding days (₹479.8 of average household daily income x 3 working days lost) for non-slum households;

(ii) reduction of household medical expenditure cost due to flooding related disease and earning lost due to illness; with average annual health benefit of ₹373 per slum household (₹44 as heath expenditure avoidance for water borne diseases due to drainage + ₹329 as earning lost due to waterborne related sickness); and average annual health benefit of ₹544 per non-slum household (₹64 as heath expenditure

Appendix 3 31

avoidance for water borne diseases due to drainage + ₹480 as earning lost due to waterborne related sickness); and

(iii) reduction in urban road maintenance due to less damage, with 50% reduction in road the average road maintenance (₹0.35 million/kilometer) on the drainage improved road network of 12.94 km length, annual saving was estimated at ₹2.26 million.

13. Water supply subprojects. Benefits considered for the analysis are similar to the data collected at appraisal by project preparatory consultant, include:

(i) Water Collection Avoidance Costs. With assumption of 80% of savings from the baseline daily household water collection time (60 minutes in Nuh Town) due to the household connections with an average time value estimated for non-working hours of ₹16.83, and the project coverage-based household beneficiaries, water collection avoidance cost was estimated;

(ii) Resource Cost Savings. The average piped water supply in two subprojects ranged from 10-30 liters per capita per day (lpcd) due to high nonrevenue water (NRW) and inadequate source, against present consumption of about 70-80 lpcd and the national standard of 135 lpcd to towns and 70 lpcd for rural areas. For the additional water, most households have depended on costly or other unhealthy sources including bottled water, dug and/or bore well, and springs, etc. The difference between the existing water supply and consumption is considered as ‘non-incremental’ benefits and the water supply beyond consumption up to the proposed supply is treated as ‘incremental’ benefits;

(iii) Health Benefits. with average annual health benefit of ₹1,481 per slum household (₹156 as heath expenditure avoidance for water borne diseases due to water supply + ₹1,325 as earning lost due to waterborne related sickness); and average annual health benefit of ₹2,836 per non-slum household (₹368 as heath expenditure avoidance for water borne diseases due to water supply + ₹2,468 as earning lost due to waterborne related sickness) the health-related benefits were estimated for Nuh Town. Similar approach was followed for Patudi water supply project; and

(iv) Opportunity Cost for Diverted Water from other uses (negative benefit). Proposed water supply projects envisage of changing the water supply source from ground water to surface water from the nearby canal. This process will reduce the supply of canal water available for irrigation purpose. Hence, the opportunity cost of the water diverted from agricultural purpose was estimated and the same was treated as negative benefit to the project. For the opportunity cost, the reduction in the agriculture produce due to the diverted water was considered.

14. Exclusions. In addition to the direct economic benefits quantified in the estimate of the economic internal rate of return, the subprojects also generated many unquantifiable and indirect benefits. The following benefits of road, water supply and drainage subprojects were not quantified for lack of adequate data and quantification techniques. These qualitative benefits along with the quantifiable benefits discussed above, the proposed road, water supply and drainage subprojects will tend to provide better living condition in the project town.

(i) Public cost of treating water borne diseases due to poor environmental sanitation; (ii) reduced emissions due to better level of service; (iii) improved road safety; and (iv) effects on tourism and tourist-related businesses.

32 Appendix 3

F. Economic Cost-Benefit Analysis

15. This section summarizes the results of the economic evaluation and the sensitivity analysis. Each subproject component completed was compared to the ‘without project’ scenario using the discounted cash flow technique and economic opportunity costs of capital (EOCC) of 12%, as assumed at appraisal and recommended by ADB’s Guidelines for the Economic Analysis of the Projects (1997).7

16. Table 3 presents the results of the main economic evaluation for all the subprojects. All values in the following tables are expressed in base year prices (2009 for road subprojects in PFR1 and 2013 for the remaining subprojects, as they were assessed during loan implementation). This is to facilitate the comparison of PCR economic results with the earlier economic analysis.

Table A3.3: Results of Economic Analysis

No. Subproject Length (Km)

Project cost (₹ million)–

2009 or 2013 1, 2

Economic Net Present Value at 12%

discount (₹ million)

Economic Internal Rate

Return %

1. Roads in Jhajjar District

i Jharli Mohanbari Approach Road 3.24 51.91 30.16 23.56%

ii Jhajjar, Talao, Chhucha 13.46 276.63 434.69 37.08%

iii Beri Rohtak Road 8.56 129.82 93.57 25.14%

iv Badli Durnia Via Ladpur Munimpur 11.43 184.52 157.27 23.12%

v Badli Pela Sondhi Yakubpur Road 9.8 161.78 115.05 25.00%

vi Subana(SH22) Sarola Ahri Road 6.64 97.62 73.65 25.76%

vii Patauda (MDR 132) Dhani Saniyan Kahari Machroli (NH71)

10.08 126.78 122.97 29.12%

viii Jhajjar Farruknagar Road (SH15A) Mubarakpur Ismailpur Mundakhera (MDR136) up to Dist. Border

11.76 223.53 115.50 22.42%

ix Gawalision (VT) Kheri Hosdarpur Karodha Raiya (SH22) Salodha Gijrodh (NH71)

15.02 268.87 92.28 23.89%

2. Roads in Sonepat District 40.82%

i Gohna - Sisana 28.56 440.32 1241.03 45.13%

ii Sonipat - Farmana 21.88 331.05 607.41 36.51%

3. Badli-bypass 39.45 474.36 397.41 30.02%

4. Gohana Lakhanmajra Bhiwani road up to district Rohtak boundary road

74.83 1,226.06 1,269.00 22.93%

5. U.P. border Sonepat Gohana road up to District Sonepat boundary

132.2 1,857.82 4,435.00 33.05%

6. Gurgaon-Chandu-Badli Bahadurgarh Road

183.08 1,825.31 3,821.00 36.87%

7. Sonepat Drainage Scheme 16.29 194.00 74.03 19.01%

8. Pataudi Water Supply 293.63 644.29 37.26%

9. Nulhar Medical College and Nuh town Water Supply

1,337.44 (-)58.21 11.28%

EIRR = Economic Internal Rate of Return, Km = Kilometer, MDR = Major District Roads, NH = National Highways, SH = State Highways, VT = Viceroy Territory, (-) = Negative. Notes: 1. Actual cost discounted to base year. 2. Discounted to the base year (2009 or 2013) using the actual project cost disbursement, with WPI. Source: National Capital Region Planning Board sub-project completion certificates (unpublished) and Asian Development Bank estimates.

7 At subproject approval (2009 or 2013), an EOCC of 12% was adopted following previous ADB’s Guidelines for the

Economic Analysis of Projects (1997). EOCC was changed to 9% by the revised guidelines published in 2017. Only one subproject - Nuh Water supply – out of nine has an EIRR (11.3%) lower than EOCC (12%).

Appendix 3 33

Table A3.4: Combined Economic Analysis Results - NCRPB Project Completion Summary of Economic Analysis Results – National Capital Region Planning Board Project Completion

All Sub Projects Combined

Transport Sub Projects

Combined

Water Supply & Drainage Sub

Projects Combined

Total Economic Cost - INR Million 9,280.0 7,253.5 2,026.5

Total Economic Benefits - INR Million 83,067.0 75,497.7 7,569.3

Net Economic Benefits - INR Million 73,786.9 68,244.2 5,542.8

NPV of Net Economic Benefits at 12% - INR Million

9,252.1 8,885.8 366.3

NPV of Net Economic Benefits at 9% - INR Million 15,271.8 14,490.4 781.5

Economic Internal Rate of Return % 30.5% 32.1% 18.2%

Notes: 1. All the sub projects were with different base year and analysis periods. 2. For Combined Analysis, a single analysis period of 2009- 2036 was considered. 3. Economic Internal Rate of Returns and Economic Net Present Values were calculated for the combined analysis

period of 2009- 2036. 4. Due to change in the analysis period, results of Economic Internal Rate of Return and Economic Net Present

Value for the combined one may have difference to the individual sub projects analysis reported earlier. Source: Asian Development Bank estimates.

17. Sensitivity Analysis. Sensitivity analysis was conducted to test the robustness of the economic results are summarized in Table A3.4. Results show that:

(i) All the subprojects remain economically viable in each individual sensitivity test; and

(ii) When the combination of changes is tested, the overall component for the subprojects remain economically viable.

34 Appendix 3

Table A3.5: Results of Sensitivity Analysis

No. Subproject

Length

(Km)

Economic Internal Rate of Return % Switching Value

Base

Case

Increase

in Cost

by 20%

Decrease

in Benefit

by 20%

Increase in Cost by

20% & Decrease in

Benefit by 20%

One year

Delay in

Construction

Increase

in Cost

Decrease

in Benefit

A. Projects in PFR1 (2009)

1. Roads in Jhajjar District

i Jharli Mohanbari Approach Road 3.24 23.6% 20.1% 19.4% 16.3% 23.2% 146.3% 59.4%

ii Jhajjar, Talao, Chhucha 13.46 37.1% 32.4% 31.5% 27.3% 36.9% 349.2% 77.7%

iii Beri Rohtak Road 8.56 25.1% 21.6% 20.8% 17.6% 24.7% 165.6% 62.3%

iv Badli Durnia Via Ladpur Munimpur 11.43 23.1% 19.6% 18.9% 15.8% 22.7% 134.6% 57.4%

v Badli Pela Sondhi Yakubpur Road 9.8 25.0% 21.6% 20.9% 17.8% 24.5% 178.4% 64.1%

vi Subana(SH22) Sarola Ahri Road 6.64 25.8% 22.2% 21.4% 18.2% 25.4% 177.8% 64.0%

vii Patauda (MDR 132) Dhani Saniyan

Kahari Machroli (NH71)

10.08 29.1% 25.2% 24.3% 20.8% 28.8% 217.4% 68.5%

viii Jhajjar Farruknagar Road (SH15A)

Mubarakpur Ismailpur Mundakhera

(MDR136) upto Dist. Border

11.76 22.4% 19.1% 18.4% 15.4% 22.0% 134.4% 57.3%

ix Gawalision (VT) Kheri Hosdarpur

Karodha Raiya (SH22) Salodha

Gijrodh (NH71)

15.02 23.9% 20.3% 19.6% 16.4% 23.5% 144.7% 59.1%

Subtotal 89.99 27.1% 23.3% 22.6% 19.2% 26.8% 192.4% 65.8%

2. Roads in Sonepat District

i Gohna - Sisana 28.56 45.1% 40.5% 39.5% 35.3% 45.0% 646.4% 86.6%

ii Sonipat - Farmana 21.88 36.5% 32.5% 31.7% 28.1% 36.3% 422.7% 80.9% Subtotal 50.45 41.6% 37.3% 36.3% 32.4% 41.5% 549.3% 84.6%

3. Badli-bypass 39.45 30.0% 30.0% 25.5% 24.5% 20.6% 145.5% 59.3%

B. New Projects approved in 2013

4. Gohana Lakhanmajra Bhiwani road

up to district Rohtak boundary road

74.83 22.9% 20.1% 19.5% 22.7% 22.7% 177.9% 64.0%

5. U.P. border Sonepat Gohana road

upto District Sonepat boundary

132.20 33.0% 33.0% 29.6% 28.8% 32.8% 471.2% 82.5%

6. Gurgaon-Chandu-Badli

Bahadurgarh Road

183.08 36.9% 36.9% 32.4% 31.5% 36.8% 392.9% 79.7%

7. Sonepat Drainage Scheme 16.29 19.0% 16.0% 15.1% 12.0% 18.9% 56.0% 34.0%

8. Pataudi Water Supply

37.3% 32.5% 30.3% 26.3% 37.2% 41.0% 25.0%

9. Nulhar Medical College and Nuh

town

11.3% 8.9% 10.8% 8.1% 11.0% 8.0% 93.0%

Km = Kilometer, MDR = Major District Roads, NH = National Highways, PFR = periodic financing request, SH = State Highways, VT = Viceroy Territory.

Appendix 3 35

G. Conclusion

18. The evaluation shows that all completed road, water supply and drainage subprojects are economically viable, with revised EIRR at completion exceeding the economic opportunity cost of capital of 12%. The combined subprojects EIRR is 30.5%. Only Nuh water supply subproject is found to be marginally unviable with an EIRR of 11.3% in the ‘base case’ (Table 3) because of the 25% increase in the project cost during implementation (discounted actual cost is ₹1,337 million vs. ₹1,056 million at approval). The sensitivity analysis demonstrates the robustness of the results, with all subprojects economically viable even when the combination of changed assumptions were tested, except for Nuh water supply subproject. 19. In comparison to the economic analysis results at appraisal (2009 or 2013) with the completion stage (2017), the average EIRR marginally decreased at PCR (Table 6). This decrease in viability results can be assigned to the following reasons:

(i) many subprojects were found with time overrun; (ii) though many subprojects were found with reduction in project cost, two major

road subprojects and one water supply project together had project cost increase from the DPR cost approved by project sanctioning and monitoring group; and

(iii) there were few changes in the project design for some subprojects. However, no change in project coverage and project beneficiaries.

36 Appendix 3

Table A3.6: Comparison of Subprojects Performance during Implementation Stage

No. Road Section

Base Case Economic Internal Rate of Return

(%)

Processing Stage

(2009 or 2013)

Completion Stage

(2017)

1. Roads in Jhajjar District

i Badli Pela Sondhi Yakubpur road 25.51% 25.0%

ii Badli to Durina 33.07% 23.1%

iii Beri - Rohtak 27.92% 25.1%

iv Gwalision 15.42% 23.9%

v Jhajjar Farrukhnagar road 22.15% 22.4%

vi Jhajjar - Talao 39.92% 37.1%

vii Jharli - Mohanbari 23.39% 23.6%

viii Patauda 32.75% 29.1%

ix Subana Sarola Ahri road. 28.33% 25.8%

2. Roads in Sonepat District

i Gohana - Sisana 57.45% 45.1%

ii Sonepat - Farmana 49.24% 36.5%

3. Badli Byepass 25.20% 30.0%

4. Gohana Lakhanmajra Bhiwani road up to district Rohtak

boundary road

26.44% 22.9%

5. U.P. border Sonepat Gohana road up to District

Sonepat boundary

33.57% 33.0%

6. Gurgaon-Chandu-Badli Bahadurgarh Road 29.54% 36.9%

7. Sonepat Drainage Scheme 16.80% 19.0%

8. Pataudi Water Supply 16.91% 37.3%

9. Nulhar Medical College and Nuh town 13.30% 11.3%

Note: Subprojects from item 1 to 6 were assessed in 2009 and items 4 to 9 were assessed in 2013. Source: Asian Development Bank estimates.

H. Distribution of Project Effects and Poverty Reduction Impact

20. Distributional analysis, which leads into calculation of the poverty impact ratio i.e., the proportion of project net benefits accruing to the poor from the completed subprojects together are presented below. 21. The analysis shows that the poverty impact ratio for the road subprojects is 24%, 23% to 24% for water supply projects and 25% for one drainage subproject. Considering the below poverty line population of about 20% in Haryana State where all the subprojects were implemented, the contribution of Tranche 1 subprojects to poverty reduction is found to be considerable.

Appendix 4 37

STATUS OF COMPLIANCE WITH LOAN COVENANTS

A4.1: Status of Compliance with Loan Covenants Schedule Para Description Compliance Report/

Issues Type

3 1 Except as otherwise agreed with ADB, the Borrower as the Project Executing Agency shall ensure that the Project is implemented in accordance with the detailed arrangements set forth in Schedule 3 to the FFA.

Complied with. Others

3 2 The Borrower shall ensure that each Qualified Sub borrower and Qualified Subproject shall satisfy at all times the selection criteria and approval procedures as set out in Schedule 4 to the FFA.

Complied with. Others

3 3 (a) Without limitation to Section 3.03 of the Loan Agreement, except as ADB may otherwise agree, the Borrower shall ensure that all Qualified Subprojects are submitted to ADB for prior review and approval all in accordance with the requirements set out in Schedule 4 to the FFA.

Complied with. All subprojects under ADB line of credit have been submitted to ADB for prior review and approval.

Others

(b) If any non-compliance is found during ADB's review of the documents, ADB shall request a corrective action plan, which shall be prepared by the Borrower and submitted to ADB for approval and implementation.

Complied with

3 4 (b) The Borrower shall ensure adequate staff and expertise to implement the ESMS, and shall submit annual reports on the implementation status of the ESMS. Corrective action plans (CAP) shall be agreed on by the Borrower and ADB if the ESMS is not functioning properly. The Borrower shall also ensure implementation of any agreed CAP.

Complied with. An officer from NCRPB was designated to ensure implementation of ESMS. Annual ESMS reports (2011-2012, 2012-2013, 2014) submitted. External ESMS auditors recruited and ESMS audit reports submitted. CAPs prepared and agreed with ADB but there were delays in implementation. Sub-borrower filed cases for disputed stretches under two road subprojects, thus social safeguards issues on these subprojects are subjudice.

Social

3 4 (a) The Borrower shall ensure that all Qualified Subprojects are in compliance with the applicable national and state policies, laws and regulations relating to environment, resettlement, and indigenous peoples and ADB's Safeguard Policy Statement (July 2009, as amended from time to time), the FFA, and as set out in the ESMS in form and substance acceptable to ADB.

Complied with. Corrective action plans developed and implemented for projects with safeguard compliance issues.

Social

38 Appendix 4

Schedule Para Description Compliance Report/ Issues

Type

3 5 The Borrower shall adopt the ESMS before ADB's first disbursement for the financing of Qualified Subprojects. The Borrower shall ensure that each Qualified Subproject is screened in accordance with the ESMS and any subproject causing significant (Category E1/S1) environment, IR, or IP impacts shall be referred to ADB early in the due diligence process. For such subprojects ADB will assist the Borrower in its appraisal and clearance of the environmental impact assessment, resettlement plan, and/or IP plan (IPP) as applicable, prior to approval of the Qualified Subproject.

Complied with. ESMS established by NCRPB 1 Apr 2010. All qualified subprojects identified in PFR1 have been screened in accordance with ESMS and with approval of ADB. ESMS implemented in consultation with ADB wherever required.

Social

3 6 The Borrower shall ensure that the following documents are made publicly available (i) the draft environmental impact assessment report at least 120 days before approval of the Qualified Subproject, and (ii) draft RP and draft IPP as applicable, before the approval of the Qualified Subproject.

Complied with. Initial environmental examinations and resettlement plan of subprojects updated and uploaded on NCRPB and implementing agencies websites after ADB approval; EMP is part of bidding documents.

Social

3 7 The Borrower shall ensure that Qualified Sub borrower ensures that (a) all land and rights-of-way required for Qualified Subprojects are obtained in a timely manner; (b) the provisions of the EMP, RP and/or IPP are implemented in accordance with the requirements of the ESMS; (c) all compensation and resettlement assistance is given to the affected persons prior to their dispossession and displacement and commencement of civil works; (d) EMP, RP, and/or IPP are updated upon completion of the detailed design and submitted to the Borrower for approval prior to commencement of civil works; (e) adequate staff and resources are committed to supervising and monitoring implementation of the EMP, RP, and/or IPP; and (f) if a subproject causes significant (Category E1/S1) environment, IR, or IP impacts in accordance with the ESMS, a qualified and experienced external expert acceptable to ADB and the Borrower is engaged by the Qualified Sub borrower to monitor and evaluate results of implementation of EMP, RP, and/or IPP and forward semi-annual reports to ADB and the Borrower.

Partially complied with. All complied, except (c) due to land ownership under verification and resolution by the court.

Social

Appendix 4 39

Schedule Para Description Compliance Report/ Issues

Type

3 8 The Borrower shall require Qualified Subborrowers to ensure that civil works contracts under the Qualified Subprojects follow all applicable national and state labor laws and that these further include provisions to the effect that contractors: (i) carry out HIV/AIDS awareness programs for labor and disseminate information at worksites on risks of sexually transmitted diseases and HIV/AIDS as part of health and safety measures for those employed during construction; (ii) do not use children as labor; and (iii) follow legally mandated provisions of labor (including equal pay for equal work), health, safety, sanitation, welfare and working conditions. The contracts will also include clauses for termination in case of any breach of these provisions by contractors.

Complied with. Incorporated in bidding documents/contracts and reported.

Social

3 9 The Borrower shall ensure gender mainstreaming as included in the Gender Action Plan as referred to in Schedule 3 to the FFA along with the detailed provisions therein.

Complied with. The GAP with gender mainstreaming features was in place, and regular reports on GAP submitted to ADB up to 2015. The gender categorization was downgraded from EGM to SGE in 2011.

Social

3 10 NCRPB shall ensure that accountability and transparency are maintained in its operations through stakeholder meetings and publication of progress reports throughout the duration of the Project, and internal procedures and controls are instituted, maintained, and complied with to prevent any corrupt, fraudulent, collusive, or coercive practices and to ensure conformity with ADB's Anticorruption Policy (1998, as amended to date). NCRPB shall ensure that all contracts financed by ADB in connection with the subprojects specify the right of ADB to review and examine the records and accounts of the sub-borrowers, suppliers, and contractors as they relate to the subprojects. Consistent with its commitment to good governance, accountability, and transparency, ADB reserves the right to examine and review any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Qualified Projects.

Complied with. ADB right to review incorporated in bidding documents & subloan agreements.

Others

Sec. 5.07. The Borrower shall enable ADB's representatives to review and examine any Qualified Sub borrower, any Qualified Subproject, the Goods and Works financed out of the proceeds of the Loan, and any relevant records and documents maintained by the Borrower.

Complied with. Incorporated in bidding documents/subloan agreements.

Others

3 11 (a) The Borrower shall ensure that by no later than December 2011, the PMU staffing is reinforced with additional positions as indicated in Schedule 3 (Appendices 2 and 3) to the FFA.

Complied with. Delayed. Five PMU staff recruited, out of those three persons have left the organization.

Others

40 Appendix 4

Schedule Para Description Compliance Report/ Issues

Type

3 11 (b) The Borrower shall undertake capacity building measures as detailed and in accordance with Schedule 3 (Appendix 4) to the FFA.

Complied with. NCRPB has taken capacity building measures like development of toolkits for urban infrastructure planning on website and PMIs. Also NCRPB is organizing capacity building workshops to build capacity of implementing agencies.

Others

3 12 Without limiting the generality of Section 5.06, the Borrower, shall establish and maintain separate records for works, goods, and services financed out of the Sub loan proceeds and shall maintain separate accounts according to GAAP for all expenditures incurred for the Qualified Subprojects, whether out of Sub loan proceeds or from other sources and record in a transparent manner all funds received from ADB or other sources. These records shall form part of the audited accounts included under Section 5.06 of the Loan Agreement.

Complied with. Sub-borrower/ Implementing Agencies are maintaining separate records for sub projects. NCRPB is receiving regular statements of Physical/Financial Progress from the sub-borrowers.

Financials

3 13 The Borrower shall submit QPRs in the format acceptable to ADB. Complied with. Except for initial delays, QPRs submitted.

Others

3 13 (a) The Borrower shall establish an IPPMS acceptable to ADB no later than 3 months from the signing of the Facility (in the case of the Investment Program); and similarly a PPMS within 3 months from date of the Loan Agreement. The IPPMS and PPMS shall monitor the performance of the Facility and the Project, respectively. For this purpose, the Borrower will first select a set of clearly measurable performance monitoring indicators relating to implementation and improvements and institutional development and capacity building milestones, as well as safeguards implementation, goals, purposes and outputs of each Qualified Subproject in reference to those in the DMF included in Schedule 2 to the FFA. The Borrower shall establish the baseline data for each of the selected indicators within 6 months of Effective Date. The results of the analyses, comments, and conclusions on the performance of the Facility and the Project respectively, and the Qualified Subprojects will be incorporated in the Borrower's quarterly reports to ADB.

Complied with. Delayed. PPMS and IPPMS prepared and approved in May 2014 by ADB. For population of a few baseline data and some post completion data, request for proposal for hiring survey agency prepared but not completed.

Others

3 13 (b) The Borrower shall submit to ADB a PCR and Facility completion report within 3 months of the completion of the Project and the Facility respectively.

Complied with. PCR prepared and submitted to ADB.

Others

3 14 ADB shall periodically, as required, conduct reviews of the management, financial, and operational performance of the Borrower and Qualified Subprojects. The review shall include procurement procedures used by the Qualified Subprojects.

Complied with. Carried out during Missions. Prior review done for procurement of subprojects.

Others

Appendix 4 41

Schedule Para Description Compliance Report/ Issues

Type

3 15 The performance of the Facility and the Project shall be reviewed periodically at 3 levels: by the Borrower (through the PMU on a quarterly basis), semi-annually by the Borrower's Board of Directors, and annually by ADB. The performance review for each quarter by the PMU shall be completed by the 15th day of the month following the quarterly review. The Borrower's PSMG shall review the performance semi-annually and forward the related progress reports to ADB by the 30th day of the month following the semi-annual review. ADB shall review the QPRs and semi-annual reports during the annual review missions and during the tripartite reviews chaired by the Guarantor.

Complied with. Progress reports submitted to ADB quarterly. PSMG regularly monitored the progress of projects under ADB line of credit.

Others

3 16 FFA Sched. 6, para. 1: Sector

(i) NCRPB remains committed to the implementation of the Regional Plan 2021. In the event of any change in the Plan, the Government, NCRPB and ADB will assess the potential impact on the Facility and evaluate any change in scope, amendment, or continuation, as appropriate, of the Facility;

Complied with. NCRPB is committed to the provisions of NCRPB Act 1985 and investments reflect plan priority.

(iii) NCRPB complies, at all times, with the prudential norms as made applicable to it by the Government, including capital adequacy, income recognition, classification, and provisioning of nonperforming assets;

Complied with. All parameters within limit as prescribed by the Government. No NPA and therefore no provisioning made.

(iv) NCRPB will maintain a debt service coverage ratio of at least one and will have no arrears in the repayment of its current debt obligations;

Complied with. NCRPB has no arrears in the repayment of its current debt obligations.

(v) The on-lending rates to sub-borrowers are adequate to cover all costs and risks associated with on-lending including any foreign exchange risk;

Complied with.

(vi) The sub-borrowers use appropriate procurement procedures that involve competitive bidding promoting economy, efficiency, fairness and transparency;

Complied with. Prior review of procurement done by ADB. Minor issues in contracts received and were resolved early on by NCRPB and ADB.

(vii) A sub loan to a sub-borrower is made for only such subprojects that involve procurement of goods, works, and consulting services from ADB's member country; and

Complied with. Incorporated in bidding documents.

(viii) All NCRPB sub loan agreements appropriately reflect the obligations assumed by NCRPB and the respective sub-borrowers under the Facility.

Complied with.

3 16 FFA Sched. 6, para. 1: Complied with. Sector

42 Appendix 4

Schedule Para Description Compliance Report/ Issues

Type

(ii) NCRPB will implement on a timely basis the Road Map for NCRPB to Achieve Prudential Norms of a Financial Intermediary as referred in Appendix 1 to Schedule 1 to the FFA.

As of now Norms are self imposed and adhere to industry norms.

3 16 FFA Sched. 6, para. 5: Complied with. Outsourcing of O&M is being promoted. All new sub projects in PHED have been provided with 5 years O&M built in the contract. O&M budget is not a constraint in PHED, Haryana. At present adequate budget is being allocated for O&M in PHED, Haryana. In case of PHED the contract is year on year for five years by the same contractor. For road subprojects, HSRDC provides annual O&M budget allocation (transfers).

Sector

NCRPB shall cause its sub-borrowers to ensure that adequate resources are allocated as part of budget process to ensure proper operations and maintenance of assets and also shall explore as the first option possibilities of outsourcing of operations and maintenance.

3 16 FFA Sched. 6, para. 8: Complied with. Five PMU staff recruited, out of those three position are again vacant, despite NCRPB effort in filling the positions.

Sector

NCRPB shall strengthen its human resources of the project management unit. NCRPB shall throughout and after the Facility completion maintain the enhanced capacity of the PMU with appropriate budgeting, human resources, capacity building, among others, to implement ESMS.

3 16 FFA Sched. 6, para. 7: Complied with. Accounts audited by C&AG, placed before parliament and published in its website.

Sector

NCRPB will take measures to enhance its corporate governance to ensure transparency, integrity, openness, performance orientation, responsibility and accountability, mutual respect, and commitment to the organization.

3 16 FFA Sched. 6, para. 6: Complied with. Sector

Appendix 4 43

Schedule Para Description Compliance Report/ Issues

Type

NCRPB shall ensure that: (i) sub-borrowers include in the bidding documents for the subproject, and in all contracts financed by ADB in connection with the subproject the provisions specifying the right of ADB to audit and examine the records and accounts of PMU and sub-borrower, and all contractors, suppliers, consultants and other service providers as they relate to the subproject; (ii) periodic inspections of the contractors' activities related to fund withdrawals and settlements under the subproject are carried out; and (iii) the subproject auditors have the right to conduct random or spot audits for contract implementation activities under the subproject. The cost of this auditing will be borne by the sub-borrower; and (iv) cause sub-borrowers to maintain and update its website to present information on externally-funded subprojects, including the relevant subproject. With regard to the subproject, the website shall provide information on the financial and management reforms required, results of annual reviews and adjustments, adopted procurement procedures, progress of procurement activities, and details on the contracts awarded.

Complied with. Incorporated in bidding documents and subloan agreements

3 16 FFA Sched. 6, para. 9: Sector

NCRPB shall enable public-private partnerships (PPP) and private sector participation (PSP) in urban infrastructure and urban basic service delivery, among others, by:

Complied with. Attempts were made during preparatory phase but subprojects dropped by implementing agency.

(i) Exploring and implementing innovative lending and nonlending products to enable PSP and/or PPP;

Complied with. NCRPB has in place PPP toolkit prepared under ADB TA. The sub project submitted for loan to NCRPB are screened using PPP checklist from the toolkit.

(ii) Screening projects for PSP and/or PPP potential, and assisting subborrowers to structure projects to enable PSP and/or PPPs;

Complied with. Wherever possible Board has been advising sub-borrowers.

(iii) Coordinating with central and state government agencies with mandates for PSP and/or PPP, and collaborating with relevant governments schemes; and

Complied with. Wherever possible Board has been advising sub-borrowers.

(iv) Giving priority for PSP and/or PPP projects under the Facility. Complied with. Water supply subprojects with 5-year O&M component including 1-year defect liability period.

3 16 FFA Sched. 6, para. 4: Complied with. Sector

44 Appendix 4

Schedule Para Description Compliance Report/ Issues

Type

NCRPB and its sub-borrowers will make adequate annual budget allocations and release in a timely manner the counterpart funds and other resources, as shall be necessary or required, in addition to the proceeds of the loan, for the successful implementation of the subprojects.

3 16 FFA Sched. 6, para. 2: Complied with Sector

NCRPB will ensure that the sub-borrowers will provide adequate staff for execution of the subprojects. NCRPB shall ensure that the sub-borrowers submit procurement plans and implementation schedules as part of the request for financing.

3 16 FFA Sched. 6, para. 3: Complied with. Attempts made by NCRPB, Being State wide bodies, subject to political acceptance by the State. However, PHED ensures adequate O&M allocations from the State Budget. PHED collects tariff on water supply.

Sector

In the case of water supply and sewerage subprojects, the sub-borrowers will ensure (i) that tariff plan is prepared for annual tariff settings that take into account the service costs including inflation and other reform actions as agreed to by the sub-borrower as part of national programs, and (ii) that progress is achieved towards recovery of full operating costs.

Sec. 5.08a. The Borrower shall, promptly as required, take all action within its powers to maintain its business existence, to carry on its operations and to acquire, maintain and renew all rights, properties, powers, and privileges which are necessary in the carrying out of the Project or in the conduct of its business.

Complied with Others

Sec. 5.08b. The Borrower shall at all times in accordance with governing laws and regulations, conduct its business in accordance with sound administrative, technical, financial, environmental, developmental, and business practices, and under the supervision of competent and experienced management and personnel.

Complied with Others

Sec. 5.08c. The Borrower shall not sell, lease or otherwise dispose of any of its assets, except in the ordinary course of its business and which in the opinion of ADB will or may adversely affect the carrying out of the Loan Agreement.

Only central government has the power to dispose the assets. Others

Sec. 5.05a. The Borrower shall furnish to ADB all such reports and information as ADB shall reasonably request concerning the Qualified Subborrowers, the Qualified Subprojects and the Subloans as part of the reports and information referred to in Section 7.04(a) of the Loan Regulations.

Complied Others

Appendix 4 45

Schedule Para Description Compliance Report/ Issues

Type

Sec. 5.01a. The Borrower shall carry out the Project with due diligence and efficiency and in conformity with sound, technical, developmental, administrative, financial, engineering, environmental and business practices.

Complied with. Others

Sec. 5.05b. The Borrower shall include information on the execution of the Qualified Subprojects and their costs as part of the report referred to in Section 7.04(d) of the Loan Regulations.

Complied with. Others

eOps Established, Staffed, and Operating PMU or PIU Complied with. Three staff have moved out. Others

Sec. 5.06 a. The Borrower shall have its accounts and financial statements (balance sheet, statement of income and expenses, and related statements) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and shall, promptly after their preparation but in any event not later than six (6) months after the close of the fiscal year to which they relate, furnish to ADB (i) Certified copies of such audited accounts and financial statements, and (ii) the report of the auditors relating thereto (including the auditors’ opinion on the use of the loan proceeds and compliance with the loan covenants, as well as on the use of the procedures for imprest account and statement of expenditures), all in the English language. The Borrower shall furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request.

Complied with. (e.g., Annual Audited financial statements of NCRPB for FY2015 was submitted to ADB in November 2016) APFS for FY2015 for PMC and three road packages were submitted after more than a year’s delay in October 2016; APFS for four packages submitted in Apr 2017 and for the last package in May 2017.

Sec. 5.06b The Borrower shall enable ADB, upon ADB's request, to discuss the Borrower's financial statements and its financial affairs from time to time with the auditors appointed by the Borrower pursuant to Section 5.06(a), and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower.

Complied with. No request made by ADB.

Financials

Sec. 5.04 The Borrower shall maintain records and accounts adequate to record the progress of each Qualified Subproject (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, the operations and financial condition of the Borrower, as part of the records and accounts referred to in Section 7.03 of the Loan Regulations.

Complied with. Separate accounts maintained per subproject; monthly progress report received/monitored

Financials

46 Appendix 4

Schedule Para Description Compliance Report/ Issues

Type

Sec. 5.03 The Borrower shall not make a Sub loan to any Qualified Sub borrower unless such Qualified Sub borrower has at its disposal, or has made appropriate arrangements to obtain as and when required, all local currency funds, including adequate working capital, and other resources which are required by such Qualified Sub borrower for the carrying out of its Qualified Subproject in respect of which the Sub loan is to be made.

Complied with. NCRPB finances maximum up to 75% of the Project Cost. NCRPB releases the second or subsequent loan instalment only after receiving and inspecting the utilization certificate of the previous instalments. NCRPB checks that Implementing Agencies have spent 133% of the Loan instalment.

Financials

Sec. 5.02 The Borrower shall at all times make adequate provision to protect itself against any loss resulting from changes in the rate of exchange between Indian Rupees and the currency or currencies in which the Borrower's outstanding money obligations will have to be met.

Complied with. No risk at present

Financials

eOps Fielding of Consultants PMC Consultants mobilized. Lag of almost a year. Others

eOps = eOperations.

Appendix 5 47

SUSTAINABILITY OF SUBPROJECTS IMPLEMENTED UNDER PROJECT 1 1. Roads. Implementation of the project roads financed under the National Capital Region Urban Infrastructure Financing Facility (NCRUIFF) was carried out by Haryana State Roads and Bridges Development Corporation Limited (HSRDC) – which is a company established under the Companies Act, 1956. HSRDC’s staff comprises of staff on deputation from the Public Works Department (PWD) Buildings & Roads (B&R), a Government of Haryana (GOH) department. Completed roads under NCRUIFF were handed over to the PWD (B&R) – the asset owner - after the defect liability period (DLP) and extended operation and maintenance (O&M) period. PWD B&R has good experience and technical staff for road maintenance. 2. Two sample subproject roads were analyzed during project completion review (PCR) mission to assess sustainability at completion: (i) Sonepat to Gohana; and (ii) Gohana to Sisana. HSRDC handed over the projects to PWD (B&R) after DLP. The Sonepat to Gohana road was completed in 2015 and returned to the PWD (B&R) in 2016 after one year of DLP (with no extended O&M period).1 The Gohana to Sisana road construction was completed in 2013 and the asset was handed over to PWD (B&R) in 2017, after completion of two years of DLP and two years of O&M period. Other road subprojects have similar implementation and O&M arrangements. GOH allocates annual budget to PWD (B&R) for roads O&M. Annual O&M allocation for the two sample subprojects analyzed are: (i) Sonepat to Gohana, ₹900,000 in 2017 and ₹2.9 million for 2018; and (ii) Gohana to Sisana, ₹600,000 in 2017. The DLP in contracts, annual budget allocation and PWD technical staff indicate likely sustainability of the roads implemented by the project.

3. Water. Public Health Engineering Department (PHED), GOH, is responsible for the construction and O&M of water supply and wastewater systems in the State. Tariffs prescribed by GOH are collected from consumers and deposited at central level. The Government then transfer O&M budget back to districts or schemes. Since 2012, non-conversion to metered connections entails a penalty of 100% of unmetered monthly charge. 4. Two sample water supply schemes supported by NCRUIFF were analyzed to assess prospects for sustainability: (i) Pataudi and (ii) Haily Mandi. Design included construction of one water treatment plant (32 million litres per day capacity) besides increase in reservoir capacity, additional distribution system and metering. Three towns – (i) Pataudi & Haily Mandi; (ii) Nuh (another project town); and (iii) Farukh Nagar, will source water from this common water treatment plant. The project became operational in September 2017. The number of water connections in Pataudi is 3,889 and 4,528 in Haily Mandi, of which 50% are metered. Since completion the projects supply around 135 liters per capita per day of potable water to households. Random interviews with households served by the sample subprojects analyzed revealed satisfaction with quality, quantity and pressure of the service. Water quality is regularly tested at four stages: (i) at water treatment plant; (ii) at booster pumping stations; (iii) at clear water reservoirs; and (iv) along distribution line. Water is supplied for a duration of 2 - 3 to hours in the morning and 2 - 3 hours in the evening. Construction contracts include a one-year DLP after project completion and a 5-years O&M period after DLP. 5. The GOH allocates annual budget (transfer) to PHED for O&M. Annual O&M budget allocation for the two schemes analyzed was: (i) Pataudi was ₹20.9 million in 2017, and ₹22.2 million in 2018 and (ii) Haily Mandi was ₹17.9 million in 2017 and ₹19.6 million in 2018. Water

1 In 2017, the road was declared as a National Highway, due to its connectivity importance and increase in traffic.

48 Appendix 5

tariffs last notified by GOH for urban centers in 2006 comprised of both volumetric and flat monthly tariffs. Revenue from tariffs collected as a percentage of annual budget allocation of O&M costs were (i) in Pataudi - 6.7% in 2017 and 8.3% in 2018 and, (ii) in Haily Mandi 11.7% in 2017 and 6.5% in 2018. Although O&M recovery from tariff is low, the projects are likely sustainable given the sufficient/dedicated budget transfer from central government and asset ownership by PHED, which is a specialized agency with technical staff for adequate O&M of water supply schemes.

Appendix 6 49

LOANS AND FINANCIAL PERFORMANCE OF NATIONAL CAPITAL REGION PLANNING BOARD

Table A6.1: Sector-wise Infrastructure Projects Financed in Terms of Loan Approved (as at 31st March) Sector 2010 2011 2012 2013 2014 2015 2016 2017

%

Transport 31 30 28 33 33 33 48 45

Water Supply 13 13 18 17 19 19 15 14

Land Development 23 23 21 19 18 18 14 13

Power 20 20 19 18 17 17 13 11

Sewerage 5 5 6 5 5 5 4 12

Others 8 9 8 8 8 8 6 5

Total 100 100 100 100 100 100 100 100

Source: National Capital Region Planning Board Annual Reports. http://ncrpb.nic.in/annualreports.html

50 Appendix 6

Table A6.2: National Capital Region Planning Board Balance Sheets, Income & Expenditure and Cash Flow Statements NCRPB - Financial Performance Analysis ₹ Million

Balance Sheet as at 31 March 2017 2016 2015 2014 2013 2012 2011 2010 2009

Corpus / Capital Fund & Liabilities

1. NCRPB Fund (Capital Fund/ Corpus) 40,724.4 36,063.6 31,833.1 27,694.9 26,255.5 24,539.7 23,173.8 21,589.2 20,052.3

2. Bond Redemption Reserve 3,790.0 4,109.1 5,085.7 5,535.8 4,191.3 3,111.7 2,155.6 570.0 285.0

3. Earmarked/ Endowment Funds 0.0 -9.6 8.3 8.3 10.5 9.7 0.0 26.8 0.0

4. Market Borrowings 12,899.4 11,746.5 14,037.1 14,651.0 13,092.6 11,000.0 11,000.0 7,000.0 4,651.0

Total Liabilities 57,413.8 51,909.7 50,964.2 47,890.0 43,549.8 38,661.0 36,329.4 29,186.1 24,988.3

Assets

5. Fixed Assets 7.3 8.2 7.9 9.0 9.2 9.5 9.8 11.0 11.3

6. Investments of PF/NPS 183.9 172.5 117.2 105.7 21.8 19.0 17.3 15.5 13.3

Investment – Equity - NCR Transport Corporation

50.0 50.0 50.0 50.0

7. Current Assets, Loans & Advances

A. Loans to Borrowers 28,925.9 17,128.0 21,379.4 25,131.1 27,254.2 28,748.1 27,966.3 26,961.4 22,353.9

B. Cash & Bank Balances 27,346.1 34,125.7 28,675.9 21,774.9 15,693.6 9,486.7 8,049.6 1,110.8 1,818.3

C. Income Accrued 1,481.5 1,516.5 1,518.6 1,441.8 1,122.6 960.1 674.3 604.2 330.9

D. Other Advances etc. 675.2 537.0 414.0 232.6 161.5 107.4 125.9 699.8 619.9

Current Assets 58,428.7 53,307.2 51,987.9 48,580.4 44,231.9 39,302.2 36,816.0 29,376.3 25,123.0

Less: Current Liabilities 1,256.1 1,628.3 1,198.8 855.0 713.0 669.8 513.6 216.7 159.3

Net Current Assets 57,172.6 51,678.9 50,789.1 47,725.4 43,518.8 38,632.5 36,302.4 29,159.5 24,963.7

Total Assets 57,413.8 51,909.7 50,964.2 47,890.0 43,549.8 38,661.0 36,329.4 29,186.1 24,988.3

NCR = National Capital Region, NCRPB = National Capital Region Planning Board, NPS = New Pension Scheme, PF = Provident Fund. Source: National Capital Region Planning Board Annual Accounts. http://www.ncrpb.nic.in/annualaccounts.html

Appendix 6 51

Table A6.3: National Capital Region Planning Board Balance Income & Expenditure Account (Consolidated) for the year ended March 31 (₹ million)

INCOME 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 CAGR

1. Interest earned from Loan Portfolio

1,584.5 1,571.1 1,943.7 2,187.2 2,312.3 2,481.7 2,283.8 1,787.2 1,321.5 2.3%

2. Other Interest Earned 2,281.3 2,689.8 2,228.5 1,567.5 1,032.6 494.5 147.7 72.4 80.2 52.0%

3. Grant in Aid from MOUD 44.0 40.0 39.0 34.4 30.0 30.0 25.0 29.5 23.5 8.2%

4. Other Income 623.9 44.8 71.2 17.3 19.8 5.2 53.5 8.6 10.7 66.2%

Total 4,533.8 4,345.7 4,282.4 3,806.4 3,394.7 3,011.3 2,509.9 1,897.7 1,435.9 15.5%

EXPENDITURE

5. Expenditure on Borrowings

347.0 1,245.8 851.7 1,357.0 1,026.6 980.5 873.2 506.8 217.7 6.0%

6. Other Expenditures 224.0 113.7 137.6 123.9 122.8 44.1 40.8 40.6 59.3 18.1%

7. Provisions / Prior period expenditure

121.1 532.3 405.0 141.5 - 164.8 -1,074.2 29.4 50.6 11.5%

Total 692.1 1,891.8 1,394.3 1,622.4 1,149.4 1,189.4 160.3 576.8 327.6 9.8%

Surplus / (Deficit) 3,841.7 2,454.0 2,888.1 2,184.0 2,245.4 1,821.9 2,670.2 1,321.0 1,108.3 16.8%

8. Transfer to Bond Redemption Reserve

1,029.9 1,674.4 1,549.9 1,344.5 1,079.6 956.1 1,585.6 285.0 285.0 17.4%

9 Transfer to NCRPB Corpus 2,811.8 779.6 1,338.2 839.4 1,165.8 865.8 1,084.6 1,036.0 823.3 16.6%

CAGR = compound annual growth rate, MOUD = Ministry of Urban Development, NCRPB = National Capital Region Planning Board Source: National Capital Region Planning Board Annual Accounts. http://www.ncrpb.nic.in/annualaccounts.html

52 Appendix 6

Table A6.4: Receipts and Payments Account (Cash Flow, ₹ million)

Particulars 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09

Opening Balance 4,770.4 1,621.2 1,858.1 1,506.1 4,377.8 5,895.9 548.6 1,535.8 730.4

Grant received 568.2 840.0 839.0 635.9 582.6 613.6 556.4 583.2 1,023.5

Income on investments 0.0 2.5 9.2 2.0 1.3 1.3 0.8 1.2 1.1

Interest received on loans to State Government / Agencies

1,333.8 1,702.0 2,067.0 2,183.0 2,338.5 2,236.6 2,245.6 1,522.3 1,251.0

Interest on savings bank & deposits 2,530.5 2,562.9 1,967.7 1,243.7 842.8 446.7 116.1 63.3 93.8

Other Income 0.2 3.6 0.2 34.9 11.8 54.6 1,752.5 7.6 9.4

Amount borrowed (ADB) 0.0 0.0 1,296.3 1,227.9 996.4 0.0 0.0 0.0 0.0

Amount borrowed (KfW) 2,861.6 23.1 258.2 0.0 1,084.5 0.0 0.0 0.0 0.0

Amount borrowed (NCRPB Bonds) 0.0 0.0 0.0 0.0 0.0 0.0 5,000.0 1,349.0 2,651.0

Short term loan from Banks 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1,000.0 0.0

Loan repayments by state govt/ agencies

4,747.0 5,902.9 6,130.8 5,677.5 5,678.9 5,355.5 4,983.3 3,538.0 2,588.4

Other maturity receipts & recoveries 102,305.2 49,311.5 37,804.7 39,866.6 32,731.2 6,174.2 3,298.4 404.0 2,000.6

Total Receipts 119,116.9 61,969.6 52,231.1 52,377.6 48,645.9 20,778.4 18,501.8 10,004.2 10,349.3

Payments

Establishment Expenses 84.6 58.0 55.0 80.5 68.3 37.7 31.3 25.4 24.5

Administrative Expenses 19.6 69.0 13.8 11.7 13.7 14.6 14.3 38.4 18.4

Expenditure on Market Borrowings 653.2 936.9 1,091.8 1,049.5 991.7 976.8 588.7 479.7 186.9

Loans disbursed to state government/ agencies

16,544.8 1,651.5 2,379.1 3,554.4 4,1,85.1 6,136.5 5,987.8 8,145.6 7,230.6

Investment & Deposits made 94,575.6 51,644.2 44,931.7 45,701.8 41,761.6 9,122.5 4,880.6 677.5 1,290.9

Fixed assets expenditure 1.7 0.5 1.5 0.2 1.0 0.2 1.2 0.1

Refund of surplus money / loans to Gov 0.0 0.0 0.0 0.0 0.0 1.5 0.0 0.0

Loans and advances to staff 1.8 3.1 3.1 3.9 4.3 2.7 1.4 4.6

Redemption of National Capital Region Planning Board bonds / Bank loan

1,349.0 2,651.0 2,000.0 0.0 0.0 0.0 1,000.0 0.0 0.0

Repayment of Loan Principal (ADB) 71.9 33.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Other Payments 110.6 151.4 134.9 117.0 115.4 107.2 98.9 86.4 57.6

Closing Balance 5,707.7 4,770.4 1,621.2 1,858.1 1,506.1 4,377.8 5,895.9 548.6 1535.8

Total Payments 119,116.9 61,969.6 52,231.1 52,377.6 48,645.9 20,778.4 18,501.8 10,004.2 10,349.3

ADB = Asian Development Bank, NCRPB – National Capital Region Planning Board. Source: National Capital Region Planning Board Annual Accounts. http://www.ncrpb.nic.in/annualaccounts.html

Appendix 7 53

SAFEGUARDS A. Environmental Safeguards 1. Subproject categorization. The nine subprojects implemented under Project-1 were categorized as Environment category E2 environmental and social management system, equivalent to category B of Asian Development Bank’s Safeguard Policy Statement (2009). On the basis of this classification and ESMS, initial environmental examination (IEE) reports for the subprojects were prepared after meaningful consultations and disclosed on ADB’s and NCRPB websites (see Table 1). IEE assessed physical components proposed in the project with respect to the potential impacts during the project planning and implementation, and measures were formulated to minimize/mitigate those to acceptable levels through an environmental management plan (EMP). EMP also clearly delegated the responsibility of implementing mitigation measures to relevant stakeholders involved in the project implementation (e.g., implementing agency and contractors). 2. No archaeological, historical, or protected heritage monuments; natural habitats or ecological reserves; or reserve, protected, or unclassified forest areas are situated within 5 kilometer of the subprojects. The assessment also indicated that (i) the environmental impacts would be only during construction or temporary and reversible, and (ii) mitigation measures could be easily incorporated into design and construction. Implementing agencies had incorporated the standard EMP in their bidding document for civil works. The contractors included costs for EMP measures in their bill of quantities. Adequate drainage measures were incorporated in the project design and constructed to ensure that the drainage was efficient and there was no water logging. Assisted by the project management consultant (PMC), the implementing agencies monitored the implementation of the environmental mitigation measures. 3. Implementation. ADB missions’ back-to-office report and Aide Memoires confirmed generally satisfactory compliance with ESMS on environmental safeguards.1 National Capital Region Planning Board’s and implementing agencies’ staff or appointed consultant regularly review environmental implementation. ADB has also fielded several review missions, which visited all the subprojects without reporting substantial issues on environmental safeguards. No complaints on environmental safeguards emerged and no outstanding issues are pending. ADB and NCRPB consultants provided several trainings on ESMS requirements to NCRBP’s and the implementing agencies staff. NCRPB regularly submitted to ADB Environmental Monitoring Reports on ESMS and subprojects implementation, which were disclosed on ADB’s website. 4. The ESMS Audit Report on Environmental Safeguards2 submitted to ADB in December 2014, confirmed projects subprojects’ categorization as B, with no category A, with no critical issues during implementation requiring corrective actions. The audit, however, recommended several improvement measures including: (i) speeding up the recruitment of Environmental and Social safeguards specialist in the PMC;3 (ii) improving capacity of project proponents, implementing agencies and contractors in addressing environmental impacts and EMP; (iii) improving records of grievance redressal committee formation, procedures and capacity building; (iv) improving public information and dissemination, including IEE in local language and contractor

1 ADB’s Back to Office Report. L2660-IND Safeguards Review Mission (4-8 February 2013). September 2014 Aide

Memoire for Fact-Finding Mission of Tranche 2. 2 ABD. 2014. Environmental and Social Management System Audit Report – Environmental Safeguards. Manila.

https://www.adb.org/sites/default/files/project-document/181045/41598-023-ecar-01.pdf. 3 Assistant Director Safeguards, in charge of ESMS, joined NCRPB in August 2012 but quit in September 2014. At the

time of the audit the position was still vacant.

54 Appendix 7

monitoring reports, and structured public disclosure meetings; and (v) NCRPB to improve observation and comments to reports submitted by implementing agencies. B. Social Safeguards 5. Subprojects categorization at approval and revisions. At appraisal, all the nine subprojects were categorized as involuntary resettlement category S-2 (ESMS) equivalent to category B of ADB’s SPS (2009). On the basis of this classification and ESMS, 10 resettlement plans were prepared and updated for the subprojects.4 However, involuntary resettlement categorization of one subproject was subsequently revised to S-1, equivalent to category A of ADB’s SPS, indicating inadequate due diligence at initial stages. This led to a change in the overall project categorization. There were no impacts on indigenous people in subprojects financed by project 1. 6. Implementation. Involuntary resettlement impacts on three road widening subprojects5 were not fully identified at appraisal due to initial capacity constraints to conduct satisfactory due diligence on involuntary resettlement impacts during project preparation. The land ownership status of the right-of-way (claimed by the government) was not adequately assessed and disputes over land ownership between government and local landowners arose during project implementation. This affected the preparation of updated resettlement plans and delayed payment of compensation. 7. ADB fielded several missions to support NCRPB and sub-borrowers Haryana State Roads and Bridges Development Corporation Ltd. to ensure compliance with SPS 2009. The missions suggested resubmission of updated resettlement plans with full documentation of ownership of the entire width and length of the roads, with details of public consultations and results. The following options were discussed for inclusion in the resettlement plans: (i) HSRDC resumes land acquisition process and pays compensation to affected people where HSRDC cannot demonstrate ownership; (ii) HSRDC proactively brings to the court, claiming its land ownership of sections where their ownership is not established; or (iii) HSRDC reaches an agreement with every affected person who has titles per revenue records (negotiated settlement). 8. ADB and NCRPB assisted sub-borrowers to prepare corrective action plans with remedial actions to address the following issues: (i) status of land acquisition, (ii) compensation prior to displacement, and (iii) community consultation and participation. In March 2017, NCRPB communicated to ADB that HSRDC had initiated the process of legally resolving the mutation (transfer of legal title) issues pertaining to the road subprojects, thereby complying with corrective action plan recommended by ADB Missions. 9. The weaknesses identified have been addressed, especially towards the end of the project, as evident from the semiannual safeguards monitoring reports. The corrective action plans prepared have been implemented. External auditors for ESMS were appointed in 2014 for three years. Institutional capacity issues have been addressed. The NCRPB now has adequate staff to deal with safeguards issues. The ESMS is now institutionalized and functional and adequately equipped to deal with safeguards issues and is being used for a KfW project. NCRPB and sub-borrowers’ capacity to implement complex projects from social safeguards perspective

4 Two resettlement plans were prepared for different road sections under one subproject. 5 Gohana-Lakhan Majra-Meham-Bhiwani Road, Gurgaon-Chandu-Badli Road and Development of Roads in Sonepat

District

Appendix 7 55

is enhanced. They are now equipped to deal with social safeguards issues and have the necessary institutional structures and mechanisms in place to handle such responsibilities.

56 Appendix 7

Table A7.1: Summary of Safeguards Categorisation and Implementation of Subprojects

Environmental Safeguards Social Safeguards

Subproject Scope Cat.a Sensitive Areas b Documentation

Disclosure on ADB website Reference Categorization Documentation

Disclosure on ADB website Referencec

1. Rehabilitation of 9 Roads in Jhajjar District

Widening and strenghening of 9 road stretches total of 89.98 km. Total 29.04 acres of land aquired in this project

E2 No IEE and EMP Feb-12 1 S2 resettlement plan

Oct-14 10

2. Development of Roads in Sonepat District

Widening and strenghening of 2 roads in Sonipat from single/ intermediate lane to two lanes. Total length 50.42 km and total 9.312 acres (excluding area where court cases is filed) acquired.

E2 No IEE and EMP Mar-11 2 S2 resettlement plan

Jul-11 11

3. Construction of Badli-bypass

Construction of 5.68km long by-pass. Total of 25.8 acres acquired.

E2 No IEE and EMP Mar-11 3 S2 resettlement plan

Jul-12 12

4. Gohana-Lakhan Majra-Meham-Bhiwani Road

Widening & Strengthening of the Gohana - Lakhan Majra- Meham - Bhiwani Road

E2 No IEE and EMP May-13 4 S2 resettlement plan

Feb-14 13

5. Sonepat - Gohana Road

Widening and strengthening of 62.40 km length of existing road of dual two lane in Km 11/6 – 23/0 and two lane with paved shoulder in Km 23/0 – 74/0 lane to two-lane

E2 No IEE and EMP May-13 5 S2 resettlement plan

Mar-13 14

Appendix 7 57

Environmental Safeguards Social Safeguards

Subproject Scope Cat.a Sensitive Areas b Documentation

Disclosure on ADB website Reference Categorization Documentation

Disclosure on ADB website Referencec

6. Bahadurgarh-Badli and Gurgaon-Badli Roads

Widening and strengthening of 18 km roads and upgrade of Badli-Gurgaon Road in Jhajjar/Gurgaon districts (Km 18.100 to Km 39.000). The land to be aquired 25.825 acres

E2 No IEE and EMP May-13 6 S1 (initially S2) resettlement plan

Sep-13 15

Apr-14 16

7. Sonepat Drainage

Open drains and close drains.

E2 No IEE and EMP Aug-13 7 S2 resettlement plan

Jul-11 17

8. Pataudi Water Supply

32 MLD water treatment plant, pumping station, distribution reservoir, transmission main and distribution.

E2 No IEE and EMP Apr-13 8 S2 resettlement plan

Jan-09 18

9. Nuh Water Supply

Pumping station, distribution reservoir, transmission main and distribution.

E2 No IEE and EMP Apr-14 9 S2 resettlement plan

Apr-14 19

EMP = environmental management plan, IEE = initial environmental examination, km = kilometer, MLD = million liters per day

a In National Capital Region Planning Board's environmental and social management system - E2 and S2 are equivalent to category B and S1 to category A of Asian Development Bank's Safeguard Policy Statement (2009)

b None of the project interventions as part of these proposed road improvements are proposed within locations in or near sensitive and valuable ecosystems, including protected areas and forests c References: 1. Asian Development Bank. 2011. National Capital Region Urban Infrastructure Financing Facility Project 1: Environmental Assessment for Rehabilitation of 9 Roads in

Jhajjar District. Manila. https://www.adb.org/sites/default/files/project-document/60021/41598-023-ind-earf.pdf.

2. Asian Development Bank. 2011. National Capital Region Urban Infrastructure Financing Facility - Project 1: Initial Environmental Examination for Sonepat District. Manila. https://www.adb.org/projects/documents/ind-ncr-urban-infrastructure-financing-facility-p1-sonepat-district-iee.

3. Asian Development Bank. 2011. National Capital Region Urban Infrastructure Financing Facility Project 1: Initial Environmental Examination – Badli Bypass. Manila. https://www.adb.org/sites/default/files/project-document/158235/41598-023-iee-09.pdf.

4. Asian Development Bank. 2013. National Capital Region Urban Infrastructure Financing Facility Project 1: Initial Environmental Examination – Gohana-Lakhan Majra-Meham-Bhiwani Road Subproject. Manila. https://www.adb.org/sites/default/files/project-document/77201/41598-023-ind-iee-03.pdf.

58 Appendix 7

5. Asian Development Bank. 2013. National Capital Region Urban Infrastructure Financing Facility Project 1: Initial Environmental Examination for Sonepat Gohana Road Subproject. Manila. https://www.adb.org/sites/default/files/project-document/77202/41598-023-ind-iee-04.pdf.

6. Asian Development Bank. 2013. National Capital Region Urban Infrastructure Financing Facility Project 1: Initial Environmental Examination for Bahadurgarh-Badli Road Subproject. Manila. https://www.adb.org/sites/default/files/project-document/77296/41598-023-ind-iee-01-draft.pdf.

7. Asian Development Bank. 2013. National Capital Region Urban Infrastructure Financing Facility Project 1: Initial Environmental Examination for Sonepat Drainage. Manila. https://www.adb.org/sites/default/files/project-document/78601/41598-023-ind-iee-06.pdf.

8. Asian Development Bank. 2013. National Capital Region Urban Infrastructure Financing Facility Project 1: Initial Environmental Examination for Pataudi Water Supply Subproject. Manila. https://www.adb.org/sites/default/files/project-document/77200/41598-023-ind-iee-02.pdf.

9. Asian Development Bank. 2014. National Capital Region Urban Infrastructure Financing Facility Project 1: Initial Environmental Examination for Nuh Water Supply Subproject. Manila. https://www.adb.org/sites/default/files/project-document/80692/41598-023-iee-02.pdf.

10. Asian Development Bank. 2014. National Capital Region Urban Infrastructure Financing Facility Project 1: Resettlement Plan for Rehabilitation of 9 Roads in Jhajjar District. Manila. https://www.adb.org/sites/default/files/project-document/111054/41598-023-rp-04.pdf.

11. Asian Development Bank. 2011. National Capital Region Urban Infrastructure Financing Facility Project 1: Resettlement Plan for Construction of various roads in Sonepat District. Manila. https://www.adb.org/sites/default/files/project-document/158231/41598-023-rp-09.pdf.

12. Asian Development Bank. 2012. National Capital Region Urban Infrastructure Financing Facility Project 1: Resettlement Plan for Construction of Badli Bypass. Manila 13. https://www.adb.org/sites/default/files/project-document/73589/41598-023-ind-rp-01.pdf.Asian Development Bank. 2014. National Capital Region Urban Infrastructure

Financing Facility Project 1: Resettlement Plan for Gohana-LakhanMajra-Meham-Bhiwani Road Subproject. Manila. https://www.adb.org/sites/default/files/project-document/80923/41598-023-rp-02.pdf.

14. Asian Development Bank. 2013. National Capital Region Urban Infrastructure Financing Facility Project 1: Resettlement Plan for Bahadurgarh-Badli Road Subproject.

Manila https://www.adb.org/sites/default/files/project-document/79225/41598-023-ind-rp-03.pdf.

15. Asian Development Bank. 2014. National Capital Region Urban Infrastructure Financing Facility Project 1: Resettlement Plan for Badli-Gurgaon Road. Manila. https://www.adb.org/sites/default/files/project-document/80926/41598-023-rp-03.pdf.

16. Asian Development Bank. 2013. National Capital Region Urban Infrastructure Financing Facility Project 1: Resettlement Plan for Sonepat Drainage. Manila. https://www.adb.org/sites/default/files/project-document/79347/41598-023-rp-01.pdf.

17. Asian Development Bank. 2014. National Capital Region Urban Infrastructure Financing Facility Tranche 1: Resettlement Plan for NUH Water Supply. Manila. https://www.adb.org/sites/default/files/project-document/80358/41598-023-rp-01.pdf.