Document o f The World Bank

This document has a restricted distribution and may be used by recipients only in the performance o f ~ their official duties. I t s contents may not otherwise be disclosed without World Bank authorization.

Report No: 28967-KG

FOR OFFICIAL USE ONLY

PROJECT APPRAISAL DOCUMENT

ON A

PROPOSED IDA GRANT

IN THE AMOUNT OF SDR 4.7 MILLION (US$6.9 MILLION EQUIVALENT)

TO THE

KYRGYZ REPUBLIC

FOR A

DISASTER HAZARD MITIGATION PROJECT

May 17,2004

Socially and Environmentally Sustainable Development (ECSSD) Central Asia Country Unit Europe and Central Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective April 2004)

Aiyl Okmotu BCR CAS DEMFMTM

DHMP D P M EIA EIRR EMP ERC EU FMR GDP GEF GPN GPS IAEA IAS IBRD ICB ICR IDA IF1 ISA I S D S JEP JSC K P I LCS

CurrencyUnit = Som S o m l = US$O.O23 U S $ l = Som43

FISCAL YEAR January 1 - December 31

ABBREVIATIONS AND ACRONYMS

Village Administration Benefit Cost Ratio Country Assistance Strategy Department o f Emergencies Monitoring and Forecasting and Mining Tailings Management Disaster Hazard Mitigation Project Disaster Preparedness and Monitoring Environmental Impact Assessment Economic Internal Rate o f Return Environmental Management Plan Emergency Response Center European Union Financial Management Report Gross Domestic Product Global Environmental Facility General Procurement Notice Global Positioning System International Atomic Energy Agency Intemational Accounting Standards Intemational Bank for Reconstruction and Development Intemational Competitive Bidding Implementation Completion Report Intemational Development Association Intemational Financial Institution Intemational Standards on Auditing Integrated Safeguards Data Sheet Joint Environmental Program (EU) Joint Stock Company Key Performance Indicators Least Cost Selection

FOR 0FlFICJA.L USE ONLY

LLNL M&E MEE MOF M T R NCB NEAP NEHAP NEMC NMRP NPRS NPV OCSE O&M PHRD PIP PIU QCBS SA SBD SDR SER SOE UMTR4 UMWP UNDP

Lawrence Livennore National Laboratory Monitoring and Evaluation Ministry o f Ecology and Emergencies Ministry o f Finance Mid-Term Review National Competitive Bidding National Environmental Action Plan National Environmental Health Action Plan National Emergency Management Committee National Management and Response Plan National Poverty Reduction Strategy Ne t Present Value Organization for Security and Cooperation in Europe Operation and Maintenance Japan Policy and Human Resources Development Fund Project Implementation Plan Project Implementation Unit Quality and Cost Based Selection Social Assessment Standard Bidding Document Special Drawing Rights State Environmental Review Statement o f Expenditure Uranium M i l l s Tailing Remedial Action Program Uranium Mining and Wastes Isolation and Protection United Nations Development Programme

Vice President: Shigeo Katsu Country Director: Dennis de Tray

Sector Manager: Joseph Goldberg Task Team Leader: Joop Stoutjesdijk

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed without Wor ld Bank authorization.

KYRGYZ REPUBLIC DISASTER HAZARD MITIGATION

CONTENTS

A . STRATEGIC CONTEXT AND RATIONALE ................................................................. 1 1 . Country and Sector Issues ...................................................................................................... 1

2 . Rationale for Bank Involvement ............................................................................................ 4 3 . Higher level objectives to which the project contributes ....................................................... 5

B . PROJECT DESCRIPTION ................................................................................................. 6 1 . Lending instrument ................................................................................................................ 6 2 . Project development objective and key indicators ................................................................ 6

4 . Lessons learned and reflected in the project design ............................................................ 10

5 . Alternatives considered and reasons for rejection ............................................................... 11

C . IMPLEMENTATION ........................................................................................................ 12 1 . Partnership arrangements ..................................................................................................... 12 2 . lnstitutional and implementation arrangements ................................................................... 13

4 . Sustainability ....................................................................................................................... 15

6 . Loadcredit conditions and covenants .................................................................................. 18

APPRAISAL SUMMARY ................................................................................................. 19 1 . Economic and financial analyses ......................................................................................... 19

3 . Fiduciary .............................................................................................................................. 21 4 . Social ................................................................................................................................... 23

3 . Project components ................................................................................................................ 7

................................................................... 3 . Monitoring and evaluation o f outcomes/results 14

5 . Critical risks and possible controversial aspects .................................................................. 16 . .

D .

2 . Technical .............................................................................................................................. 20

......................................................................................................................... 5 . Environment 25 6 . Safeguard policies ................................................................................................................ 26 7 . Policy Exceptions and Readiness 28 ........................................................................................

ANNEXES ................................................................................................................................... 29 Annex 1: Country and Sector or Program Background ............................................................ 29

Annex 2: Major Related Projects Financed by the Bank and/or other Agencies ..................... 37 Annex 3: Results Framework and Monitoring ........................................................................ 39 Annex 3-a . Arrangements for monitoring o f key performance indicators .............................. 43 Annex 3-b . Monitoring and Evaluation Plan ........................................................................... 46 Annex 4: Detailed Project Description ..................................................................................... 50 Annex 5: Project Costs ............................................................................................................. 67 Annex 6: Implementation Arrangements .................................................................................. 69 Annex 7: Financial Management and Disbursement Arrangements ........................................ 71 Annex 8: Procurement .............................................................................................................. 75 Annex 9: Economic and Financial Analysis ............................................................................. 82 Annex 10: Safeguard Policy Issues .......................................................................................... 88 Annex 1 1 : Project Preparation and Supervision ....................................................................... 92 Annex 12: Documents in the Project File ................................................................................. 94

Annex 13: Statement o f Loans and Credits ....................................................................... ; ...... 96 Annex 14: Country at a Glance ................................................................................................. 97

MAPS IBRD 33219 . Landslide Areas

IBRD 33220 . Mailuu-Suu Area: Tailings. Waste Dumps. and Landslides

KYRGYZ REPUBLIC

DISASTER HAZARD MITIGATION PROJECT

PROJECT APPRAISAL DOCUMENT

EUROPE AND CENTRAL ASIA

ECSSD

Date: May 17,2004 Clountry Director: Dennis N. de Tray Sector Manager: Joseph R. Goldberg

Team Leader: Joop Stoutjesdijk Sectors: Mining and other extractive (50%); Central government administration (30%); Sub-national government administration (20%)

Project ID: PO83235

Themes: Pollution management and environmental health (P); Natural disaster management (P); Other environment and natural resources management (S) Environmental screening category: Partial Assessment Safeguard screening category: Limited impact Lending Instrument: Specific Investment

Grant -

Project Financing Data [ ] Loan [ ] Credit [XI Grant [ ] Guarantee [ ] Other:

For Lo ans/Cr edi t s/O ther s : Total Bank financing: SDR 4.7 mill ion (US $6.9 mill ion equivalent) Proposed terms:

VULNERABLE COUNTRIES JAPAN PHRD GRANT 0.74 1.21 1.95 FINANCING GAP (Proposed to GEF) 0.42 0.58 1 .oo Total: 6.55 5.21 11.76

Recipient : The Kyrgyz Republic

Responsible Agency: Ministry o f Ecology and Emergencies Bishkek, Kyrgyz Republic Tel: 996-312-547985 "ecd.blshkek.aov.ka

Estimated disbursements (Bank FY/US$m) ;Y I 2005 I 2006 I 2007 1 2008 I 2009 I 2010 1 h u a l hmulat ive

0.53 1.52 1.79 1.54 1.22 0.30 0.53 2.05 3.84 5.38 6.60 6.90

Expected effectiveness date: September 30, 2004 Expected closing date: March 31,2010

[ ]Yes [XINO Does the project depart from the CAS in content or other significant respects? Re$ PAD A.3 Does the project require any exceptions from Bank policies? Re$ PAD D. 7 Have these been approved by Bank management? [s approval for any pol icy exception sought from the Board? Does the project include any critical r isks rated “substantial” or “high”? Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D. 7

[ ]Yes [XINO

[XIYes [ ] N o

[XIYes [ ] N o

Project development objective Re$ PAD B.2, Technical Annex 3

The project development objective i s to: (a) minimize the exposure o f humans, livestock, and riverine flora and fauna to radionuclides associated with abandoned uranium mine tailings and waste rock dumps in the Mailuu-Suu area; (b) improve the effectiveness o f emergency management and response by national and sub-national authorities and local communities to disaster situations; and (c) reduce the loss o f l i fe and property in key landslide areas o f the country.

These objectives wil l be accomplished through key mitigation measures designed to: (i) isolate and protect abandoned uranium mine tailings and waste dumps from disturbance by natural processes such as landslides, floods, and from leaching and dispersal processes associated with ground- and surface-water drainage; (ii) create a disaster management and response system that can be administered effectively by national and sub-national authorities, and local communities; and (iii) develop a system to detect and w a m against active landslide movements in key hazard areas.

Project description [one-sentence summa y of each component] Re$ PAD B.3.a, Technical Annex 4

Component 1 - Uranium Mining Wastes Isolation and Protection (US $7.43 million). The component wil l finance interventions in the Mailuu-Suu area to increase the condition o f abandoned uranium tailings and waste dumps, and decrease the instability o f large landslide areas.

Component 2 - Disaster Preparedness and Monitoring (US $3.38 million). The component will: (i) carry out a program o f capacity building to improve the national system for disaster management, preparedness and response that can be administered effectively by national and sub-national authorities, as well as local communities; (ii) establish real-time monitoring and

If feasibility studies to be carried out under the project wil l conclude that the preferred option for the long-term solution for tailing no. 3 i s re-location o f the material, a full scale Environmental Assessment wil l be carried out in compliance with the Bank’s Operational Pol icy (OP) 4.01 - Environmental Assessments, and a Panel o f Independent Experts will be established as appropriate under the Bank’s said OP 4.01 and OP 4.37 - Safety o f Dams. The composition and terms o f reference o f the Panel will be the responsibility o f the Recipient, but will be established

I in close cooperation with and subject to approval by the Association.

A. STRATEGIC CONTEXT AND RATIONALE

1. Country and Sector Issues

The Kyrgyz Republic is a mountainous country where the risks associated with natural disasters (landslides, earthquakes, floods, etc.) are high. In addition, uranium mining operations in the Mailuu-Suu River Valley have created significant manmade hazards, including abandoned uranium tailings (residues o f a milling process that may include process water, process chemicals, and portions o f unremoved minerals and chemical compounds) and waste rock dumps (miscellaneous waste from mining, especially mined rock that i s considered o f too low quality to be processed for ore extraction, but that can s t i l l contain significant mineralization) in an area where natural hazards are also high. Economic and environmental damages, as well as loss o f l ife, have been significant in areas where disaster hazards are multiple and interact. The Ministry o f Ecology and Emergencies (MEE) estimates that the full impact o f disaster hazard related events in the Kyrgyz Republic i s around U S $35 mi l l ion o n average per annum. IDA has already assisted Government with a Flood Emergency Project (P062682; FY99, closed March 3 1,2004) to increase the safety o f populations and infrastructure against damaging floods along the major rivers in southern Kyrgyzstan. The current project i s expected to address significant remaining hazards in the country, both natural and manmade.

Landslides. Extensive areas o f the Kyrgyz Republic are characterized by the presence o f very large landslide hazards. Some 15,000 km2 (or 7.5 percent o f the territory o f the country) are potentially under the threat o f landslides. There are about 5,000 potentially active landslide sites, about 3,500 o f which are in the southem part o f the country. Stability o f most landslides is satisfactory in dry conditions. Landslides are typically activated due to temporary development o f significant groundwater pressures along the slip planes. Such conditions are l ikely to occur following significant rainstorms and snowmelt. Furthermore, seismic forces large enough to displace landslides may develop during strong motion earthquakes that are rather common in Kyrgyzstan. None o f the major landslide areas that threaten villages are equipped with monitoring and waming instrumentation, so their populations are vulnerable to landslide hazards.

Landslides are cause o f concern to the Kyrgyz authorities, as both the population and infrastructure are potentially at risk, and dramatic losses may occur in case o f sudden landslide instability. Actual mass displacement can be initiated within minutes or hours o f activation. Every year landslides cause damage to buildings, roads, power lines, and water supply, heating supply, and sewerage systems, as wel l as the death o f tens o f people and thousands o f heads o f livestock. On average, about 700 houses are damaged or destroyed per year. Several major landslide disasters occurred during the past years. On April 20,2003, a landslide near Uzgen in Osh Oblast k i l led 38 people, while 84 families lost their houses and had to move to a new location, where government built houses for the affected people. On April 17,2004, a landslide k i l led 5 children in the Kara-Suu Raion o f Osh Oblast. On April 26, 2004, a landslide buried seven houses in the Budalyk Village o f the Alay Raion in Osh Oblast and 33 people were reported dead in the incident.

Seismic Events. The Tien Shan Mountains represent one o f the largest seismically active areas in the world. Within the territory o f Kyrgyzstan, the greatest incidence o f earthquake epicenters

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falls within the Northern Tien Shan and Southern Tien Shan (Gissar-Kokshaal) seismic zones. The national system o f seismic monitoring registers from 2,000 to 5,000 earthquakes each year. Among them, 5 to 10 per year are considered strong (felt, but no major damage), while a destructive earthquake (causing infrastructural damage) takes place every 3 to 5 years, and a catastrophic one (causing infrastructural damage and death) every 35 years, on average. During the 20th century more than 500 earthquakes were registered in Kyrgyzstan with a magnitude greater than 5 o n the Richter scale. The most recent destructive catastrophic earthquake (Magnitude 7.3) occurred o n August 19, 1992 in the Northern Tien Shan Mountains. Direct economic damage from the resulting catastrophe was estimated at U S $75 million, 53 people were killed (including 14 who died because o f the earthquake induced landslide in Toluk), and 9,000 houses were damaged, affecting 60,000, mainly rural, people. The ability o f the Institute o f Seismology and MEE to measure and analyze seismic events has been reduced in recent years due to antiquated equipment that has gradually gone out o f order.

Mine Tailings. With Independence in 1991, the Kyrgyz Republic inherited a legacy o f environmental damage caused by many years o f output-focused mining development, with little regard to either economic viabi l i ty or environmental impact. There are f ive significant locations in the country with o ld mine tailings and waste rock dumps. The National Environmental Action Plan (NEAP; 1995) identified as a major environmental issue the poor maintenance o f tailings and dumps, causing heavy metals and other toxins to leach into the environment. The most serious o f these legacies constitute an ongoing threat to the well-being o f the population, not only within the immediate area o f location, but also in many instances over a broader geographic region. The economic costs could be measured in terms o f lost revenues from wasted resources, and potential health damages from exposure to toxic mine wastes. Because o f lack o f detailed investigations, there is no f i l l clarity o f the potential toxins in the tailings and dumps, and monitoring o f the sites has been rather l imited during the past decades due to lack o f resources. However, there i s enough evidence that they cause pollution and expose the populations to health r isks. Until such time as these environmental hazards are remediated, they act as a constraint on local economic development.

Mailuu-Suu Uranium Mine Tailings, Waste Rock Dumps and Landslide Hazards. A particularly dangerous location is Mailuu-Suu - an impoverished town o f about 23,000 people, including about 6,000 in surrounding villages - near the Uzbekistan border, upstream o f the densely populated and highly productive Ferghana Valley. There was active uranium mining in Mailuu- Suu from 1946 until 1968. A State-owned company carried out mining, with the ore being used in national defense programs and power plants. Left behind are 23 radioactive tailings and 13 waste rock dumps. The tailings and waste rock dumps were constructed conveniently near the mill plants and are mostly within the flood plain o f the Mailuu-Suu River, which is a tributary o f the Naryn River (which f lows into the Syr Darya). The total tailings volume is about 1.96 mi l l ion m3. The total waste rock dump volume i s 0.8 mi l l ion m3.

Slow release o f radionuclides and other hazardous wastes l ike heavy metals and arsenic occurs to the ground- and surface-waters o f the Mailuu-Suu area, due to continued drainage and seepage from tailings and waste rock dumps. High levels o f radioactivity have occasionally been observed in water and sediment samples f rom the Mailuu-Suu River. Typically, however, values of uranium concentrations in water are close to drinking water standards, due to the dilution

2

effect o f large volumes o f r iver water. For sediments the concentrations o f radium and total alpha are below the limits for soil used for agricultural purposes, while the uranium concentrations mostly exceed the limit. While these conditions have existed for some years, no action now would allow continuous expansion o f the contaminated area, with attendant health and environmental impacts. Some o f the tailing dams also appear to be unstable now due to lack o f routine maintenance.

Being mountainous, the Mailuu-Suu area i s prone to floods and landslides, and is in a seismically active area. There are more than 200 places around Mailuu-Suu where potentially active slippage areas are home to historically-active landslides. During the last 10 years an increase in landslide activity has been observed, possibly due to a cycle o f wet weather and a large number o f seismic events. Several hundred'buildings have reportedly been damaged or destroyed and nine people have died as a result. Two o f these landslide areas, named Tectonic and Koi-Tash, currently present a high potential for further activation and slippage down the valley slopes.

These two landslides also threaten the integrity o f a number o f mine tailings. In fact, a few tailings have earlier been slightly damaged by landslides and also r iver erosion. I t i s difficult to predict landslide behavior, but it is clear that a major landslide could seriously damage tailings or push them into the Mailuu-Suu River, which could then wash the dangerous substances through Mailuu-Suu town, and possibly further downstream to the Ferghana Valley, with over 6 mi l l ion people in three countries, as wel l as major rice and cotton irrigation areas. Landslides also threaten to block the river, which could submerge tailings and cause major flooding in Mailuu- Suu. Any such event could cause long-term downstream contamination, potentially preventing the use o f r iver water for drinking and irrigation, and could cause potential damage to the socio- economic structure o f the upper part o f the Ferghana Valley. Government and a number o f international organizations have recognized the urgency o f interventions in this area.

Institutional Setup for Disaster Hazard Management and Emergency Response. The Ministry o f Ecology and Emergencies is responsible for disaster hazard management and emergency response. MEE has established departments responsible for preparedness, mitigation, response, and recovery. There is the understanding within government and MEE for the need to focus on hazard mitigation efforts designed to reduce the loss o f l i fe and injuries, and the economic and social impacts o f future events. A detailed set o f risk maps has been developed and potential disasters have been classified. The outline o f a declaration process was developed to define when each successive level o f government becomes involved if a disaster event occurs. Government is, however, anxious to improve the practical effectiveness o f its emergency management and response efforts, and there are a number o f critical issues that must be addressed and resolved in order to successfully build o n the current foundation.

Since Independence in 1991, the technical capacity o f MEE has been reduced considerably and it currently does not have adequate and modem operational procedures in place, or sufficient levels o f resources allocated to carry out its mandates. Emergency intervention criteria have not been developed in detail, and there is no well-defined system o f functions and responsibilities between the various departments in MEE and regional and local administrations to allow for quick and effective intervention in case o f emergencies. Also, staff has not received necessary training to

3

adequately respond to emergencies, and most local communities have not been involved in disaster response training thus far.

Legislation and Strategies. Several pieces o f relevant legislation have been approved in the Kyrgyz Republic. Some o f the important ones are the Law on Tailings and Waste Rock Dumps, the Law on Radiation Safety o f the Population o f the Kyrgyz Republic, the Law o f the Kyrgyz Republic on Protection o f the Population and Territories from Natural and Man-Caused Emergency Situations, and the L a w o f the Kyrgyz Republic on C iv i l Defense. The legislation i s generally acceptable, as i t defines authorities, roles and responsibilities at a l l levels o f government and in the private sector. Current issues relate to a lack o f regulations to support the primary legislation and the lack o f coordination, technology, and resources to implement necessary measures.

The National Environmental Health Action Plan (NEHAP, 1997) includes a chapter o n natural and industrial disasters. The objectives o f the Plan regarding disaster hazards are: (i) to limit the consequences o f natural disasters, to prevent the occurrence and limit the consequences o f major industrial and nuclear accidents, and to ensure that effective arrangements are in place for emergency preparedness and for response to natural and manmade disasters; and (ii) to ensure that the appropriate levels o f government and the relevant public services, as wel l as members o f the public, are fully informed o f the probability and potential risks o f disaster hazards, so that they can put those r isks into perspective and understand the action required o f them in an emergency. In order to achieve these objectives, NEHAP anticipates the fol lowing actions: (i) restoring the monitoring network for natural and manmade hazards as an integral part o f environmental monitoring; and (ii) developing and implementing effective measures to prevent and mitigate damage caused by natural calamities and industrial catastrophes.

The Kyrgyz Government increasingly sees the National Strategy for Sustainable Human Development, adopted in M a y 1997, as the appropriate framework for r isk management o f disaster hazards. The broad objective o f government pol icy in this area i s to reduce the vulnerability o f the population and the economy to hazardous processes. In this respect, five specific goals have been set: (i) to provide timely warning to the public o f the threat o f natural and manmade disasters; (ii) to reduce and mitigate human and material losses from disasters; (iii) to establish a single monitoring system to ensure safety o f the population; (iv) to improve disaster preparedness by training the population; and (v) to improve rescue preparedness against disasters.

2. Rationale for Bank Involvement

Government is concerned about the impact o f various disaster hazards o n the economy and the population. As described above, various pieces o f legislation and strategies have been prepared, but lack o f technical and financial resources has not allowed their comprehensive implementation. Major disasters could affect growth in agriculture, mining, tourism, and other sectors, and subsequently derail poverty reduction, which is the overarching theme o f the Country Assistance Strategy (CAS, Report No. 25708; approved on M a y 15,2003). The CAS objectives are closely l inked to the priori ty objectives o f the National Poverty Reduction Strategy (NPRS). Due to the country’s topography and geology, natural hazards such as landslides are often hard to prevent, but Government i s interested as a minimum in improving the capacity to

4

monitor and predict potential disasters, and in improving its ability to provide rapid warning against potential hazard events. The Government is also committed to improving the situation in the Mailuu-Suu area and mitigating major environmental and health hazards with respect to radioactive contamination, thereby alleviating current and potential risks to the local population.

There is currently l i t t le country experience in dealing with natural disasters and tailings rehabilitation in an adequately coordinated and comprehensive manner. IDA has established a history o f assisting in environmental management activities, and developing natural disaster reconstruction and mitigation programs. I t has the ability to focus not only on the physical, but also the institutional, economic, and social aspects o f disaster mitigation. IDA’S expertise and financial assistance can stimulate the leverage o f resources from other international financial institutions and bilateral donors. I t i s we l l placed to coordinate this possible assistance from other donors and can facilitate the access to international expertise (e.g. f rom the IAEA and the EU Radiation Unit) and internationally recognized best practice, aimed at properly addressing compliance issues.

3. Higher level objectives to which the project contributes

Development of an Effective State. The National Poverty Reduction Strategy o f the Kyrgyz Republic emphasizes, among other categories, development o f an effective state. The overall vision in the NPRS is for a smaller and more professional state apparatus that works in an inclusive, decentralized manner, adjusting itself according to the feedback from c iv i l society and the private sector. Most areas critical to good governance are covered, including the need to address local capacity and resource constraints that may emerge from the decentralization process. A need i s also foreseen to eliminate overlapping functions and to improve coordination among the different agencies. The drive for disaster hazard mitigation, including necessary capacity building, f i t s comfortably here.

Providing Essential Services. Another key priority within the NPRS i s to build a fair society. Within this i s the need to help stem deterioration in key infrastructure and social services. The country inherited reasonably developed, if basic, infrastructure and social services systems which have been slowly deteriorating since Independence. The country cannot afford to delay rehabilitation in key areas. Disaster events can undermine these efforts by consuming scarce resources in the repair o f damaged infrastructure.

Poverty Reduction. Government i s committed to poverty reduction. About 60 percent o f the Kyrgyz population lives below the poverty line, and 72 percent o f these l ive in rural areas. Natural disasters often cause structural destruction and derail growth at local level, thereby reducing the quality o f l i fe even further than caused by the unfavorable economic situation in the country. The tailings and waste rock dumps in Mailuu-Suu threaten the environment and human health. In turn this has an impact o n growth in the town, as many people move away for fear o f being affected by the mine legacies. Government i s therefore committed to reduce the vulnerability o f rural populations against current and potential hazards. This in tum should have a positive effect on the willingness o f people to continue working and living in rural areas.

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B. PROJECT DESCRIPTION

1. Lending instrument

The lending instrument i s an IDA Specific Investment Grant, as part o f support to debt vulnerable countries.

2. Project development objective and key indicators

Within the context o f the country’s longer-term interests in disaster hazard mitigation, the development objective o f the proposed Disaster Hazard Mit igation Project (DHMP) i s to: (i) minimize the exposure o f humans, livestock, and riverine flora and fauna to radionuclides associated with abandoned uranium mine tailings and waste rock dumps in the Mailuu-Suu area; (ii) improve the effectiveness o f emergency management and response by national and sub- national authorities and local communities to disaster situations; and (c) reduce the loss o f l i fe and property in key landslide areas o f the country.

These objectives will be accomplished through key mitigation measures designed to: (i) isolate and protect abandoned uranium mine tailings and waste rock dumps from disturbance by natural processes such as landslides and floods, and from leaching and dispersal processes associated with ground- and surface-water drainage; (ii) create a disaster management and response system that can be administered effectively by national and sub-national authorities, and local communities; and (iii) develop a system to detect and warn against active landslide movements in key hazard areas.

The main outcome indicators include (see also Annex 3):

Evidence that applicable parameters are below hazardous thresholds for humans, livestock, and riverine flora and fauna in samples o f soil, water and air f rom monitored sites in the Mailuu-Suu area; Evidence o f high satisfaction rates among the local population in the Mailuu-Suu area; Evidence that a disaster hazard monitoring, warning, and response system i s f inct ioning and being used effectively by cooperating national, oblast, and raion authorities, and local communities; Evidence o f high satisfaction rates among national and sub-national authorities and the public living in hazard areas regarding disaster preparedness operations and benefits; and Evidence that real-time landslide monitoring and warning systems are hnctioning and being used effectively by local communities.

The information to determine the progress with the achievement o f the outcome indicators, as wel l as input and output indicators, will be collected mainly through technical and social audit studies, to be carried out especially before the mid-term review and Implementation Completion Report (ICR) stages o f the project.

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The primary target beneficiaries differ somewhat by component, but include the people, livestock, and riverine flora and fauna o f the Mailuu-Suu area that are currently exposed to radionuclides associated with abandoned uranium mine tailings and waste rock dumps (Component l), and people living near potential disaster hazard areas, including those living near some o f the major landslide areas in the country (Component 2).

In the absence o f the project, disturbance o f the uranium mine wastes and rocks in the Mailuu- Suu area by major landslides or floods could result in serious regional contamination downstream, which means that many people living in the upper Ferghana Valley (of Uzbekistan) should be considered secondary beneficiaries.

3. Project components

The proposed Disaster Hazard Mit igation Project wil l provide grant assistance under two major components, with a third smaller component providing project management support. The project will receive co-financing from a Japan PHRD grant for capacity building (US $1.95 million), while a request has been submitted to GEF for a U S $1 mi l l ion Medium-Sized Project grant.

Component 1 - Uranium Mining Wastes Isolation and Protection (UMWIP) (US $7.43 million). The component wil l finance works, goods, and services for interventions to isolate and protect abandoned uranium mining wastes and rocks in the Mailuu-Suu area from disturbance by natural processes such as landslides and floods, and leaching and dispersal by ground- and surface-water drainage. This wil l be done through a number o f activities that have been clearly defined and can be implemented with l imited remaining preparatory and design work. All f ive tasks wil l contribute to the prevention o f an environmental disaster. In parallel, investigations and designs wil l take place to determine larger mitigation measures o f some o f the most dangerous tailings and/or landslides.

The five early activities, with an estimated aggregate cost (inclusive o f price and physical contingencies) o f U S $3.34 mi l l ion for investigations, designs, and construction works, include:

(0

(ii)

Tectonic Landslide Unloading (US $0.7 million). Removal o f the unstable top on the south side o f the landslide (referred to as ‘Tectonic Triangle’) to reduce the risk o f impact on uranium Tail ing No. 3 in case o f movement o f the soil mass. The activities to be financed include surveys, design, and removal o f a soil mass o f about 70,000 m3. The most dif f icult design task wil l be to determine the safe method o f soil removal. I t has to be avoided that the works themselves trigger a landslide, which may impact Tai l ing No. 3, and may also cause injury to workers involved in the removal works;

Tailings and Waste Rock Dumps Inspection and Rehabilitation (US $1.22 million). Inspection o f a l l 23 tailings and 13 waste rock dumps, and development and implementation o f required interventions. Based o n the results o f the preparatory work, it i s likely that interventions wil l include improving surface drainage around the perimeters o f tailings and waste rock dumps, improving covers o f tailings and waste rock dumps to reduce radiological exposure, moving o f two small waste dumps that are located in the center o f the small village o f Kara-Agach, immediately north o f

7

Mailuu-Suu town, and reducing the contact o f rain and river water with contamination sources in two waste rock dumps that are bordering the river bed o f the Kulmen-Sai River;

Koi-Tash Landslide - Diversion o f Surface Water Runof f (US $0.25 million). Design and construction o f a surface water drainage system around the upper boundary o f the Koi-Tash Landslide to capture and remove water runoff, so as to reduce the r isk o f landslide reactivation;

Landslide Monitoring and Early Waming Systems (US $0.49 million). Installation o f Global Positioning Systems (GPS), piezometers, extensometers, and seismic monitoring stations o n Tectonic and Koi-Tash Landslides, and linkage through radio systems to central early warning system in Mailuu-Suu and surrounding villages; and

Riverbank Strengthening along Aylyampa-Sai and Mailuu-Suu Rivers (US $0.68 million). Design and construction o f river bank protection works along priority sections o f the Aylyampa-Sai and Mailuu-Suu Rivers to prevent erosion o f tailings, in particular Nos. 1,2,4, 5, 8 and 18.

In parallel to the above interventions that wil l show an early visible impact, investigations and a feasibility and design study wil l be undertaken o f options to provide a solution to the major risk o f Tailing No. 3 and other nearby tailings. The investigations and designs, including a risk analysis o f probability o f failure and associated consequences to compare options, will enable the preferred intervention options to be determined, based on technical, socio-economic and environmental considerations. The study wil l consider options for stabilizing Tailing No. 3 in- situ and minimizing the potential impact o f the Tectonic Landslide in addition to the works carried out under activity (i) described above, or moving Tai l ing No. 3 and other nearby small tailings to a new secure disposal location, using modem hazardous waste technologies. In this case the study will include site selection and a full environmental impact assessment. The preferred options wil l then be implemented under the project. The init ial cost estimate for the implementation o f any o f the l ikely options i s not exceeding U S $2.8 million, which i s the amount that has been allocated f rom the available project funds.

The same study team will also consider options to either stabilize the Koi-Tash Landslide or constructing a flank bypass o f the Mailuu-Suu River to minimize the impact o f a natural dam that could block the river as a result o f a landslide. An Emergency Preparedness Plan wil l be prepared. The study will also include consideration o f possible new alignments for the valley road north o f Kara-Agach. Based on the prioritization as a result o f the study and the remaining funds some o f the priori ty works o n the Koi-Tash Landslide could be implemented. At this stage, about U S $0.5 m i l l i on has been allocated to implement priori ty activities. Studies to design necessary additional long-term remedial options for other tailings (e.g. tunneling o f the Mailuu-Suu River, or putting in safe location other tailings) will be carried out as well. Government could use the results o f the studies to attract additional financing from donors.

A team o f intemational and national consultants wil l carry out investigations, surveys, studies, and designs for al l activities described above. The same consulting team will be responsible for construction supervision. The intemational consulting team will integrate i t s work to the

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maximum extent possible with local scientific, research, and design institutions, along with government agencies. This wil l lead to maximum participation o f local experts in project implementation, and will ensure transfer o f knowledge and training o f local specialists in the preparation o f modem state-of-the art designs and in modem construction supervision methods. Funding o f the consultants will be provided through a Japan PHRD co-financing grant for capacity building.

If the feasibility and design study to be carried out for Tailing No. 3 wil l conclude that the preferred option for the long-term solution i s re-location o f the material, a Panel o f Independent Experts will be established, to review the results and recommendations o f the study. The Panel composition will depend on the results o f the study, but is l ikely to include as a minimum a geotechnical specialist and a tailing safety specialist.

Component 2 -Disaster Preparedness and Monitoring (DPM) (US $3.38 million). The component wil l provide works, goods, and services (mainly financed by the Japan PHRD grant) to: (i) improve the national system for disaster management, preparedness, and response that can be administered and implemented effectively by national and sub-national authorities, and local communities; (ii) establish real-time systems to detect and warn against active landslide movements in key hazard areas, and provide equipment for seismic measurements; and (iii) set up a monitoring system in Mailuu-Suu. In particular, the project will include:

(i) Capacity Building (US $2.44 million). A program o f capacity building will be implemented to strengthen the ability o f the MEE, administrations at various levels, and local communities to fulfill better their duties and functions, create better awareness, and be better prepared in case o f disasters. Spreading knowledge o n disaster preparedness and encouraging government agencies and local communities within the project areas (especially Mailuu-Suu and villages near the selected landslides) to work together wil l be important, as the best results are achieved when there is effective cooperation between citizens, c iv i l society groups, and regional and local authorities. The activities to be implemented include preparation o f regulations and a National Management and Response Plan (NMRP). Training and awareness programs wil l be developed and implemented, and equipment will be provided for more effective communication and emergency response systems within MEE at central and regional level. A limited number o f study tours wil l be conducted. Technical, social and environmental audits to assess project performance wil l be carried out;

(ii) Landslide Monitoring and Warning Systems and Seismic Measurement Equipment (US $0.43 million). About 20 large landslides that could cause major human disasters in case o f unloading have been identified, especially in Jalal-Abad and Osh Oblasts. They will be equipped with real-time monitoring and warning systems. Seismic measurement and forecasting equipment, earthquake detectors, and a mobile seismic assessment station wil l be provided, in order to improve the monitoring and assessment o f potentially damaging seismic events; and

(iii) Monitoring System in Mailuu-Suu (US $0.5 1 million). A comprehensive monitoring system covering climatic, seismic, hydrological, geo-chemical, and environmental

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parameters in Mailuu-Suu wil l be developed and implemented to support and complement Component 1 interventions, determine the baseline situation, and measure project outcomes. The interventions wil l include a weather station, a river f low gauging station, water quality monitoring devices, and radon capture devices. A program to better understand the exposure and health risks associated with radionuclide dispersal in the Mailuu-Suu area will also be included. Typically, people do not respond rationally to r isks involving radiation. I t i s therefore important that the project can provide the necessary information to distinguish between perceived risks and real risks.

Component 3 - Project Management (PM) (US $0.95 million). This component wil l provide funding for the staffing and operation o f a Project Implementation Unit (PIU), so that project implementation can be carried out in a timely and effective manner. Sufficient vehicles and office equipment wil l be provided. Incremental operating costs (operation and maintenance o f vehicles, travel and subsistence o f PIU staff, office and computer supplies, and other miscellaneous costs) will be paid for by project funds. This component will also finance the independent audit o f proj ect accounts.

Component

(Amounts in U S '000)

Amount YO Amount YO Total IDA

1. Uranium Mining Wastes Isolation and Protection 7,434.6 63.2 4,700.1 68.1 2. Disaster Preparedness and Monitoring 3,376.7 28.7 1,435.4 20.8 3. Project Management 950.0 8.1 770.6 11.1

Total Project Costs 11,761.2 100.0 6,906.2 100.0

4. Lessons learned and reflected in the project design

Experience from recent project implementation in Kyrgyzstan and other Central Asian countries has shown that: (i) rigorous technical, economic, and environmental criteria should be applied in project design and implementation; (ii) it is important to maintain continuity o f a skilled and committed project management team throughout implementation, having the freedom to make decisions without interference f rom senior management o f ministries, and to include adequate procurement, and financial management personnel; (iii) timely provision o f counterpart funding i s necessary; (iv) provision o f t imely and adequate technical assistance is essential; and (v) local institutions need to be fully involved in project design and implementation.

The project has taken these lessons into account by: (i) hiring national and international consultants to undertake thorough technical, economic, environmental, and social analyses, and vetting their conclusions during consultations and workshops; (ii) having a PIU in place already during project preparation; (iii) assuring that government is fully committed to this project through continuing interaction with senior govemment officials during project preparation, and minimizing the need for counterpart funding, as wel l as planning for a relatively long project implementation by taking into account l o w annual counterpart provisions; (iv) having obtained

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grant funding f rom the Japanese government for the recruitment o f various technical assistance teams for the development o f state-of-the-art engineering designs and capacity building; and (v) integrating local counterparts with foreign consultants during project preparation, and ensuring that local consultants will work closely with the intemational consultants during project implementation.

The Bank’s previous experience with post-disaster assistance to a number o f countries worldwide has shown the need for a more pro-active approach, and the importance o f mitigation activities, intended to reduce the impact o f future disasters. Many Bank operations in the past were mostly designed as a response to disasters, with a main objective to contribute to reconstruction and recovery efforts. Considering the region’s vulnerability to natural and manmade disasters, the new approach includes: (i) promoting and supporting hazard mitigation activities at the national and local level; (ii) strengthening the institutional capacity for disaster management; and (iii) assisting in minimizing environmental, social, and economic impacts o f catastrophic events through disaster mitigation and emergency preparedness. The proposed project therefore follows the current Bank pol icy o n disaster management, and introduces mitigation and preparedness measures, and disaster management instruments as major project activities.

Other lessons learned f rom a number o f recent disaster mitigation projects can be summarized as follows. I t is f i rs t o f a l l important to have the government’s commitment at the highest levels. Early and continued involvement o f stakeholders and transparency in communications by the implementing agency i s important to allay init ial mistrust and apprehension. Activities should include a clearly defined and targeted communication strategy to gamer buy-in and support from the public. Taking these lessons into account, the project will have a major activity on involving stakeholders, and awareness creation and training.

Experiences also show that project design o f a remediation program should provide for flexibility, and also have adequate physical cost contingencies. The implementation schedule should be conservative for an implementing agency with l i t t le or no experience in Bank procedures. Project uncertainties require a flexible contracting approach. The project design has flexibility, with certain implementation decisions s t i l l to be made during the project, while a relatively long five-year project has been designed.

An “after-care” program is an essential element o f any project. Maintenance and monitoring requirements after rehabilitation should be specified clearly and as much as possible upfront. The project wil l design and implement durable works that will require minimum finds for maintenance. During design, the required maintenance funds will be calculated. Through continuing interaction with MEE and Ministry o f Finance (MOF) during supervision missions, stressing the importance o f adequate maintenance, i t i s hoped that sufficient funds wil l be made available for future maintenance.

5. Alternatives considered and reasons for rejection

The “do nothing” approach was considered and rejected. The uranium tailings that are present in Mailuu-Suu contain materials that are radioactive and chemically toxic, containing relatively high levels o f uranium decay products, including hazardous substances such as thorium,

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uranium, radium, selenium, and lead, which have the potential to cause serious long-term pollution and health hazards. Although some o f the tailing sites currently present only a low- level threat, a serious danger arises if their contents are disturbed and widely dispersed into the environment. Sudden dispersion o f pollution from some o f the tailings could make the Mailuu- Suu River water unfit to drink and use for irrigation purposes. Without action, there is a high risk that uranium tailings could be displaced into the river within the next few years by earthquake, landslide, or flood events, with resulting major contamination concems in and around Mailuu-Suu, and downstream in neighboring Uzbekistan. The “do nothing” altemative i s not a viable option for the area’s problems.

Due to the complex nature o f the problems in the Mailuu-Suu region, including the interaction o f manmade and natural hazards (i.e. uranium mine tailings and landslides/floods), a range o f altematives were considered for implementation within the project. Sufficient resources are not available to solve al l the potential risks. However, rather than waiting with a project until al l the possible activities have been fully prepared and sufficient funds have been made available from various interested donors, i t was decided to start the assistance as soon as possible. The main thrust o f the project is therefore separated into short-term actions that can be implemented quickly and more long-term solutions that require further feasibility investigation to confirm optimum utilization o f available resources under the project and to prepare documentation to attract additional donor funds. Despite the fact that not al l issues are l ikely to be solved with the available project funds, at the completion o f the activities proposed within this project the high likelihood risks will have been significantly reduced and the institutional capacity to deal with disaster management will have improved.

The altemative to focus narrowly o n technical issues in Mailuu-Suu was considered and rejected. Landslide hazards are not restricted to the Mailuu-Suu area, but are a countrywide problem. Besides technical issues, i t was deemed important to consider institutional development and capacity building as well. A more comprehensive framework approach was found to be more suitable, as this would help the MEE and other agencies to operate better in future. A more common platform for al l major types o f emergencies i s the need for effective disaster management, which the project strives to enhance through a number o f support measures.

C. IMPLEMENTATION

1. Partnership arrangements

Project preparation benefited from an earlier EU/TACIS funded study o n ’Remediation o f Uranium Mining and Milling Tailings in Mailuu-Suu District’. The project team will, to the extent possible, stay in regular informal contact with the TACIS technical team during implementation, in order to benefit from its knowledge and experiences.

The project has received a U S $1.95 mi l l ion Japanese PHRD Co-financing Grant for Capacity Building. This is blended funding, that has been fully incorporated in the project design. The PHRD funds wil l be used for consulting services for preparation o f the feasibility study related to Tailing No. 3, design and construction supervision, and institutional development and capacity building, as described in other sections o f this PAD.

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The project has submitted a proposal for a U S $1 mi l l ion Medium-Sized Project (MSP) grant from GEF, which would also be fully blended into the project. The funds would be used for works, goods, and services related to reducing water contamination in the Mailuu-Suu River, increasing water, sediment, and soil monitoring capabilities, as well as implementing cross- boundary awareness and training programs. The funding would especially be used for cofinancing o f works on the waste rock dumps along the Kulmen-Sai River as described in Component 1 (ii), and o f works, goods and services related to monitoring in the Mailuu-Suu area, as described in Component 2 (iii) above.

Other donors, in particular the Asian Development Bank (ADB) and United Nations Development Programme (UNDP), are showing interest to assist the govemment o f the Kyrgyz Republic in disaster management. The ADB’s assistance will l ikely focus o n reducing the vulnerability o f the poor to natural disasters. UNDP’s Country Program for the period 2005- 2010 i s being finalized, which i s expected to include some (pilot) activities on disaster management and community mobilization. UNDP has indicated some interest to work in Mailuu-Suu to enhance the people’s awareness and broaden their view o f disaster management. The project team wil l work closely with these and other donors in order to ensure that there i s full cooperation between the various donors and that the available funds are used as effectively as possible.

The involvement o f the International Atomic Energy Agency (IAEA) during project implementation, as a minimum in an advisory role, would be beneficial. There have already been contacts with the IAEA and one specialist participated in the preparation studies. The project i s expected to continue drawing o n the available expertise within the Agency.

2. Institutional and implementation arrangements

A National Emergency Management Committee (NEMC) will be established under the project, with representatives f rom relevant ministries and agencies with a role in emergency management and hazard mitigation, under the chairmanship o f the Ministry o f Ecology and Emergencies. The N E M C will serve as the Steering Committee for the duration o f the project with the responsibility for overseeing the project implementation and resolving any issue related to inter- govemmental agency coordination o f the project activities.

The key government institution responsible for the establishment and implementation o f environmental pol icy as we l l as natural disaster management in Kyrgyzstan i s the Ministry o f Ecology and Emergencies, which will be the implementing agency for the project. MEE has main offices in Bishkek and Osh, and branches in each o f the seven oblasts. The ministry has delegated the overall responsibility for the project implementation to the Department o f Emergencies Monitoring and Forecasting and Mining Tailings Management (DEMFMTM). The Department’s main functions are to monitor and provide prognosis o f potential emergency situations and monitor abandoned mine tailings. The project will also work closely with the C iv i l Defense Department.

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The responsibility for a l l day-to-day project implementation tasks wil l be delegated to a Project Implementation Unit that has already been established within MEE, attached to DEMFMTM and reporting to its director. The PIU wil l have direct responsibility for the daily management, administration, and coordination o f the proposed project, including procurement, financial management and disbursement, monitoring and evaluation (M&E) o f project performance indicators (monitoring o f disaster hazards wil l continue to be done by DEMFMTM), and reporting. In particular, the PIU wil l be responsible for developing and updating the Project Implementation Plan (PIP), ensuring that project activities are implemented according to the PIP, reporting on project progress to government and the Association, ensuring that procurement o f goods and services i s done in a timely manner and in accordance with Wor ld Bank guidelines, managing project funds, maintaining accounts, getting the accounts audited, ensuring adequate budget provisions for the project in the national budget, facilitating the work o f consultants, and reviewing consultant outputs. The PIU wil l comprise, as a minimum, a director, design engineer, construction engineer, procurement specialist, accountant/financial management specialist, monitoring and evaluation specialist (also in charge o f the environmental monitoring), and a translator. In order to gain the necessary experience to manage the project, the PIU will be assisted for up to one year by an internationally recruited management consultant, with experience in managing IFI-funded projects.

3. Monitoring and evaluation of outcomes/results

Monitoring and evaluation activities related to the project will be the responsibility o f the PIU, contracting out these hnct ions when appropriate. Monitoring project progress and achievements wil l entail a process for reviewing continuously and systematically the various project implementation activities. The objectives o f the M&E activities are to: (i) measure input, output and outcome indicators (see Annex 3); (ii) provide information regularly o n progress toward achieving desirable results and facilitating reporting to the government and IDA; (iii) alert managers, both in government and IDA, to actual or potential problems in implementation so that adjustments can be made; (iv) determine whether the potential beneficiaries are responding as expected and intended by the project; and (v) provide a process whereby the PIU can reflect and improve o n performance.

The results o f relevant M&E activities wil l be reflected in the quarterly and annual progress reports. The progress reports will cover the progress with the works, the institutional activities, training and studies, performance indicators, and Financial Management Reports (FMR). A section o f the progress reports will be devoted to issues identified during project implementation and strategies and actions to be taken to resolve such issues that affect progress. The fourth quarterly report o f each year will be an annual report, providing information o f the progress during the past year and an annual work plan and budget for the new year.

Lawrence Livermore National Laboratory (LLNL) in the U S A i s assisting MEE to put together a database and website where a l l available regional material about mine tailings issues and knowledge and experiences for mitigation o f negative impacts o f these tailings wil l be posted. LLNL will likely be able to host the English-language version o f such a website. A mirror-site is planned for Bishkek, supported by the project, to aid in capacity building and transparency. I t i s intended that monitoring data, e.g. o f water quality in the Mailuu-Suu River, wil l also be stored in the database and wil l be available on the website. The development o f a database will be a

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long-term activity that wil l hopefully not only benefit the Kyrgyz Republic, but also neighboring countries.

4. Sustain ability

There is support for the project at the highest level in government. There have been requests for IDA support for several years, including twice in 2003 from the Prime Minister o f the Kyrgyz Republic. Government not only envisages benefits from the project for the environment around Mailuu-Suu, but also views the project as a vehicle to provide improved relations with the riparian countries. Government also sees the importance o f mitigation o f disaster hazards as a cost-effective way to reduce emergency, recovery, and reconstruction expenditures. It is therefore interested in achieving improved institutional effectiveness.

Capacity building in the area o f risk mitigation and emergency preparedness is a critical part o f the project, targeting a variety o f stakeholders, including governmental entities (MEE, Ministry o f Health, Ministry of Finance, etc.), public and private institutions, local administrations, and local communities. The creation o f new institutional l i n k s can be expected to strengthen the sustainability o f the project interventions. National experts wil l be fully involved during project implementation, and by the end o f the project effective use should be made o f staff skills that have been developed, and the experts should be able to replicate internationally endorsed practices. Monitoring and other equipment wil l remain in place beyond the end o f project implementation to continue the operations that started under the project. The program to encourage public participation in the project, wil l make it more l ikely that project-financed interventions will develop a favorable dynamic and continue to run beyond the end o f implementation.

Operation and maintenance (O&M) o f project investments is typically a substantial r i sk in Kyrgyzstan, because o f the limited budgetary allocations. The project will try to minimize this by designing and implementing structures and systems that require minimal funds for maintenance. During the design phase a detailed calculation o f the O&M costs o f each intervention will be made, so that MEE and MOF can plan adequately for the necessary budgets. The required commitment f rom government to provide the necessary funding for long-term O & M will be an important discussion point during IDA supervision missions.

The funds available for emergency response, mainly collected through a 1.5 percent emergency tax, are currently distributed over a number o f ministries and agencies. The use o f these funds, amounting up to Som 850 mi l l ion per year, i s not always done in a transparent way and not fully effective. Financial sustainability will be key to the success o f any emergency management and response program, which will require a more transparent system o f management o f emergency hnds, with clear accountabilities. As part o f the National Management and Response Plan that will be prepared under the project, i t i s intended that the funds wil l be administered fully by MEE and provided to other ministries and agencies when they actually participate in emergency response and reconstruction. This should improve the use and accountability o f the scarce emergency funds.

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5. Critical risks and possible controversial aspects

Critical Risks

T o project development objective 0 Controversy could develop surrounding measures designed to isolate humans and livestock from hazardous radioactive wastes;

A major disaster will occur before the project can organize to mitigate it;

0 Unsatisfactory O&M budgetary allocations;

0 National and local authorities do not work together to solve hazard mitigation problems;

0 Local population unconcerned, and unwilling to support hazard mitigation activities in project areas;

Risk Mitigation Measure

An experienced group o f international and local experts wi l l be enlisted to investigate the hazards in the Mailuu-Suu area and suggest viable measures to accomplish the project’s objectives;

The project wil l carry out urgent mitigating measures as soon as possible, that should reduce the possibility o f a disaster;

implement structures and systems that require l imited maintenance funds. Detailed O&M estimates wil l be made during the project to allow MEE to plan adequately for the necessary budgetary allocations;

The project wil l design and

0 The project wil l allocate considerable effort to the involvement o f national and local stakeholders in order to gain their active and willing participation;

0 The project wil l conduct awareness raising activities locally in order to gain the population’s active and willing involvement;

Risk Rating with Mitigation

M

S

S

M

M

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T o project outputs Counterpart funds are not

available in a timely manner;

Implementation structure i s not put in place with capable staff;

0 Local government interference in project activities;

0 Local communities not responsive to awareness and training programs;

Cost overruns during project implementation;

Capable contractors cannot be attracted to carry out the c iv i l works contracts;

Overall risk rating

Possible Controversial AsDects

0 Project design minimizes the need for counterpart funds, except for taxes;

qualified staff have been recruited. Remuneration i s adequate to retain staff;

P I U i s already in place and

0 Regular interaction with local administration officials will take place;

Develop innovative ways o f introducing information and training programs;

0 Physical and price contingencies have been included in cost estimates, yet uncertainties remain;

0 Civ i l works contractors have benefited from earlier IDA projects;

S

N

M

M

S

M

Although the project i s designed to improve the situation compared to the baseline conditions, activities to isolate and protect hazardous radioactive wastes in the Mailuu-Suu area from humans and livestock, and from natural processes (e.g. landslides and floods) that might disturb them, can be controversial. There i s no indication at present that controversy exists or that i t may develop, but a possibility remains that controversy could develop at some time in the future surrounding the adequacy o f the measures that are proposed and subsequently undertaken. Due to lack o f funds, the project does not permanently solve the Mailuu-Suu hazardous waste problem for the next 10,000 years or so, which might be required for the uranium wastes to degrade to minimum safe levels. The project i s expected, however, to significantly reduce the hazard r isks for the next 50 years, by which time: (i) better, lower-cost technologies may be available to address waste problems for a longer period, and (ii) the financial and administrative capabilities o f the Kyrgyz Republic to address the issue in a longer-term manner should be much greater.

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6. L o a d c r e d i t conditions and covenants

Management:

Throughout the implementation o f the project, the PIU wil l be maintained with a sufficient number o f staff, adequate resources, and terms o f reference satisfactory to the Association.

Proi ect Implementation:

Financial Covenants. The Recipient, through the PIU, wil l maintain an adequate financial management system and furnish to IDA quarterly FMRs on the financial, monitoring, and procurement management activities. FMRs wil l be submitted to IDA within 45 days after the end o f each quarter. Independent external auditors will audit, under terms o f reference acceptable to IDA, the Project Financial Statements, the Special Account and disbursements made o n the basis o f Statement o f Expenditures (SOE), and submit the audit report to IDA no later than six months after the end o f each year audited;

Rehabilitation and construction works wil l be carried out in accordance with environmental standards and procedures set out in: (i) the international and regional arrangements to which the Kyrgyz Republic is a party; and (ii) national and local environmental laws and standards;

Compliance o f the project with the Environmental Management Plan;

If the long-term solution for Tailing No. 3 is relocation o f the material, a full-scale Environmental Impact Assessment will be carried out in compliance with the Bank’s Operational Policy (OP) 4.01 - Environmental Assessments, and a Panel o f Independent Experts will be established as appropriate under the Bank’s said OP 4.01 and OP 4.37 - Safety o f Dams. The composition and terms o f reference o f the Panel will be the responsibility o f the Recipient, but wil l be established in close cooperation with and subject to approval by the Association;

A National Emergency Management Committee, to be established under the project by December 3 1,2005, will serve as the Steering Committee for the duration o f the project with the responsibility for overseeing the project implementation and resolving any issue related to inter- governmental agency coordination o f the project activities;

MEE will, not later than October 3 1 o f each year, prepare and submit to the Association, for its review, a work program and budget for activities to be carried out during the fol lowing calendar year; and, within 14 days after the approval o f the State budget finalize said program, also taking into consideration the Association’s comments;

Training and study tours shall be carried out according to a training plan, which the PIU wil l revise on an annual basis and submit to the Association for approval prior to implementation; and

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Incremental Operating Costs as a result o f project implementation will be disbursed on the basis o f an annual budget to be agreed with the Association.

Monitoring, Review and Reporting:

Government wi l l maintain policies and procedures adequate to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to the Association, the carrying out o f the project and the achievement o f the project’s objectives;

Quarterly progress reports wil l be submitted to government and IDA not later than 45 days after the end o f each quarter; and

Government wil l prepare, under terms o f reference satisfactory to the Association, on or about March 3 1 , 2007, a report integrating the results o f the monitoring and evaluation activities and setting out the measures recommended to ensure the efficient completion o f the project and the achievement o f i t s objectives and review the report with the Association by June 30,2007 during a Mid-term Review Mission.

D. APPRAISAL SUMMARY

1. Economic and financial analyses

The project i s economically and financially viable. The project benefits represent the monetary estimate o f the avoided losses as a result o f project interventions. The project trims down the distribution o f the probabilities o f the most costly failures (in present value terms), using the most cost-effective interventions f rom the set o f technically feasible solutions. The framework for economic and financial analysis has been structured around expert estimates o f the probabilities o f landslides, floods, and failures o f radioactive tailings and waste rock dumps, together with the assessment o f the absolute impact on these probabilities f rom the engineering solutions available (see Annex 9 for more details). The overall budget constraint has been used to establish the most cost effective composition o f both individually and collectively justified project interventions.

Considering al l project investments, the economic and financial rates o f retum are, respectively, 14 percent and 12 percent, with the difference reflecting the economic valuation o f labor and foreign exchange adjustments made towards tradable commodities. The analysis follows a conservative approach taking very l o w estimates o f the probabilities o f failure and the impacts o f these failures as a result o f the project. The possible loss o f l i f e has not been included in the economic analysis. The project’s Ne t Present Value (NPV) is about U S $0.8 million, composed mainly o f the reduction in the annual probability o f losses from tailings, and to a lesser extent from floods. More than two thirds o f a l l benefits are the estimates o f the annualized short-term costs o f disaster management, consisting o f emergency rehabilitation costs as we l l as the resultant impact on the regional economy.

The project’s economics show reasonable resilience towards increases in capital costs, permitting at least 10 percent increase in total costs while s t i l l maintaining a positive NPV. The Economic

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Intemal Rate o f Return (EIRR) is relatively insensitive to changes in the assumed reduction o f probability o f failure o f landslides. The EIRR is marginally more sensitive to changes in the assumed reduction o f the probability o f failure o f tailings, but even a 25 percent reduction o f the assumed level leads to l i t t le change in project benefits. The overall conclusion i s that although the levels o f with- and without-project probabilities o f failure assumed in this analysis wil l certainly not be 100 percent accurate, only a serious and consistent under-estimate o f the without-project probabilities o f failure would jeopardize the level o f economic return.

The immediate activities proposed fal l into two groups. The key interventions that have been selected under the project (e.g. river bank protection and repair o f tailings) are low-cost focused activities that give good rates o f return. Other activities such as the early warning and monitoring system and the movement o f waste rock dumps are not necessarily financially attractive activities, but are efficient at saving lives, the former f rom injury from landslide and flood events, the latter from long-term sickness caused by radiological contamination.

The feasibility studies in the project do not directly save financial damage or loss o f life. The studies are, however, essential precursors to making strategic decisions to define and expand the feasible set o f cost-effective future investments to mitigate disasters. Neither an accurate assessment o f the without-project baseline risk, nor an estimate o f the with-project residual r isk is possible without more detailed investigations o f both tailings and landslides, followed by design and costing o f a range o f mitigation measures. The init ial indications are that al l are highly appropriate interventions to reduce the impact o f disasters o n a weak, vulnerable economy. Even with the inclusion o f the long-term measures as currently perceived, the project remains viable.

2. Technical

The project has been designed to make a start with finding practical solution to potential disasters threatening the country and the Mailuu-Suu area in particular, concentrating on the priority risks to maximize the benefits for the investments. The methodologies proposed are based on proven technologies used throughout the world. Where possible, low-technology, yet modern solutions have been recommended to maximize the ability to harness local resources and use local labor and expertise to maximize the f low o f benefits to the local region and enhance local capacities. There are a number o f specialized national institutes that have retained qualified staff with a long history o f working o n the issues that the project is concerned with. Necessary intemational consultants, to bring in modem knowledge and practices, wil l supplement this local expertise.

The project wil l support to the maximum extent modem technology and equipment in such areas as remediation measures for mining tailings and waste rock dumps, emergency response, communications and information management systems networks, and water pollution monitoring. Applicable norms and standards will be used. In this respect, the national norms and standards wil l be reviewed by consultants to make sure that they confirm to proper intemational standards, such as complying with radiological guidelines for occupational and public exposure.

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Costing o f the init ial phase o f the project has a high reliability with respect to costs and also the outcomes desired. Pricing i s contingent on the utilization o f local labor, with specialist expertise and management being used where necessary. A 10 percent physical contingency has been added to the base costs. Price contingencies have been added as well. Longer-term solutions, such as the implementation o f the long-term solution for Tailing No. 3 (relocation, or in-situ stabilization and landslide unloading) have a higher uncertainty with regards to cost. Therefore a phased project is to be implemented with first o f a l l studies to be carried out to determine the optimum solution and to provide accurate costing. The current costing o f these possible long- term solutions should be considered as best estimates prior to more detailed analysis. To account for current uncertainties, a 15 percent physical contingency was added.

3. Fiduciary

Procurement. The Bank finalized the country procurement assessment for the Kyrgyz Republic in December 2002. As a result o f the findings o f this assessment, the Kyrgyz Republic has been ranked as a high-risk category country from the public procurement point o f view. Training programs to train public officials in procurement according to the law are not wel l developed and implemented. The process o f procurement in the country i s not totally transparent, tenders are not advertised properly, and frequently the procurement conducted by tender committees i s not consisted with the provisions o f the law. There have been instances o f publ ic officials’ interference in the procurement process. As a result, the general economic environment in the Kyrgyz Republic is not yet fully conducive to transparent, economic, and efficient procurement. Improvements are expected from 2005 onwards, as Parliament i s currently discussing new procurement provisions.

The MEE does not have a permanent procurement department. Procurement financed from the State budget resources i s conducted through a permanent Tender Committee composed o f MEE staff. There i s no experience in the ministry with World Bank procurement organization and cycle. Given this, as we l l as the unfavorable public procurement environment in the country, the project has been placed in the high-risk category.

During the preparation o f the project a procurement capacity assessment o f the PIU was carried out. The PIU has already recruited a procurement specialist, with extensive experience in Bank related procurement, to reduce the effect o f the lack o f experience with procurement within MEE. The procurement officer will continue to receive training in international procurement, especially through Bank-organized seminars. The PIU wil l also designate a suitable staff member (most l ikely the PIU Director or Design Engineer) to receive training in procurement to serve as back-up procurement officer. In order to clarify roles and responsibilities, the PIU has prepared an operational manual. This manual also describes the procurement arrangements and contract approval and administration procedures. A s part o f the project start-up, the Association will organize a one-day procurement seminar for the officials o f the PIU and MEE. Finally, the PIU will hire an international management consultant for up to one year to assist in the implementation o f the project in the early stages and train al l PIU staff, including the procurement officer. This consultant will have as one o f his tasks to assist in the development o f a l l necessary procurement documents and an adequate procurement monitoring system.

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Procurement under the proposed project wil l include Works (ICB, NCB, and Shopping), Goods (ICB and Shopping), and Consultants Services (QCBS , Consultants Qualifications, and Individual Consultants). The PIU will maintain up to date procurement records. For this purpose, i t will open a f i le for each contract package and al l procurement correspondence and other relevant documents such as draft and final bidding documents, minutes o f bid opening, evaluation reports, minutes o f contract negotiations, draft RFPs, and draft and final contracts wil l al l be kept together in the folder. This wil l not only make the implementation work more efficient but also allow IDA staff and independent auditors to conduct their functions o f supervision and audit more efficiently.

Financial Management. An assessment o f the financial management arrangements at the Project Implementation Unit was carried out in April 2004, to determine whether the financial management arrangements are acceptable to the Association, and to monitor the process o f strengthening the financial management system (FMS). The financial management arrangements include the systems o f accounting, financial reporting, auditing, and intemal controls. The PIU has installed a stand-alone project accounting system, based on 1-C accounting software, that i s currently being used for the PHRD-financed preparatory activities. The 1 -C software is widely used in the country, and i s capable o f generating Financial Monitoring Reports, and i s acceptable to the Association. The accounting system for the project has been tested, and i s used to prepare sample Financial Monitoring Reports, based on the PHRD-financed preparation activities. A financial manager has been hired in the PIU, with knowledge and experience in relevant procedures for disbursement and financial management, having worked before in another IDA-financed project. The first version o f a manual o f financial procedures has been prepared, that wil l guide the financial management functions o f the project and establish key intemal control mechanisms on the application and use o f project funds.

Taking into consideration the fact that an acceptable project accounting system has been installed, a suitably skilled and experienced financial manager has been appointed, and the manual o f financial procedures i s substantially completed, the financial management arrangements for the project, as currently implemented, will be capable o f recording al l transactions and balances, supporting the preparation o f regular financial statements, and safeguarding the project’s assets. The current financial management staffing i s considered adequate at the moment. Staffing requirements wil l be reviewed during the early phase o f project implementation. I t i s expected that the financial management function wil l need to be strengthened within six months after project effectiveness, by hiring an accountant/disbursement specialist to support the financial manager.

About U S $100,000 o f grant funds can be paid retroactively. This will allow the Recipient to start the most urgent c i v i l works, maintain the staffing o f the PIU, after the closing o f the Japan preparation grant, f rom June 15,2004 until project effectiveness, and allow the payment o f incremental operating cost for the upkeep o f the PIU during the same period.

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4. Social

A social assessment (SA) was undertaken during project preparation that encompassed al l communities and segments o f the local population in and around Mailuu-Suu. The objective o f the S A was: (i) to adapt the project to local realities, by gaining a better understanding o f local expectations and clarifying the perspectives and interests o f different stakeholders; (ii) to understand the extent to which people’s domestic and economic activities exposed them to risks that the project will address; (iii) to assess their understanding o f the nature and magnitude o f the risks; and (iv) to determine their understanding o f which institutions should be responsible for managing the r i sks and their confidence in the effectiveness o f institutions and officials to fulfill their responsibilities. Findings o f the SA were incorporated in project components, especially the selection, design and implementation modalities adopted for technical interventions.

Six major findings emerged from the SA:

Except for obvious risks o f landslides, residents in the Mailuu-Suu area know little about the nature or magnitude o f ecological risks they face and their linkages to health; moreover, although most people are aware o f studies that have been undertaken, the results are never shared with them;

Local residents are unaware o f any disaster preparedness activities;

Household incomes are increasingly dependent o n livestock and, because o f the acute shortage o f grazing land, many graze animals in and around tailings and landslide- prone areas;

Residents in upstream villages are dependent o n the valley road that has been subject to landslides and may be subject to disruption for physical works;

There i s a marked difference between rural residents and urban residents regarding the importance o f various risks and the viability o f different mitigation measures; and

Whi le al l residents understand that they face ecological risks, other high priorities for interventions also relate to basic infrastructure to which they became dependent during the time when Mailuu-Suu was prosperous and vibrant.

The ways in which these issues are to be addressed in the project are discussed in the following paragraphs .

Glaring deficiencies in information about ecological risks and their linkage to health discovered among the local population will be addressed through information and awareness campaigns tailored to the distinct challenges besetting respective communities. Drawing on the SA’S findings, public meetings and TV will primarily be resorted to as the most effective outreach modalities. Also learned was the fact that while government officials and consultants have visited the area many times and some monitoring o n risks i s regularly carried out, results are rarely shared with the public. There are opportunities for the project to change this. Local

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capacities, now restricted to testing for biological contamination will be upgraded to permit more regular monitoring o f radiological r isks about which there i s so much concern in the area. A monitoring specialist, who will be a member o f the PIU, wil l be assigned to actively promote and supervise these activities.

Major weaknesses discovered in disaster preparedness and response wil l also be addressed, with a focus on strengthening early warning capacities, communication linkages and organization, particularly among outlying villages. This will not only be done in Mailuu-Suu, but also in other areas with major landslides.

Perhaps the most fundamental insights gained through the S A had to do with the ways poverty and infrastructural deficiencies both exposed people to ecological risks and impeded local people’s ability to respond to them. With both crop and grazing lands in such extremely short supply in Mailuu-Suu, any project-imposed restrictions in access or use would be regarded locally with particular sensitivity. Rural residents highly reliant on livestock for their basic subsistence were found to have virtually no other option but to graze their animals on or around tailings. Heightened awareness o f this issue gained through the S A has steered project planners away from endorsing any blanket re-institution o f strict access restrictions to tailings areas. Instead, as needed, tailings will be re-capped and vegetation reintroduced wherever technically or economically feasible. A thorough study o f radiological r isks and repair requirements for al l the tailings and waste dumps will clarify precise interventions appropriate for each, based on safety and other considerations.

Also emerging from the assessment was the degree to which local residents’ economic well- being, particularly those in upstream villages, is linked to unimpeded access along the single road connecting them to Mailuu-Suu town. Any disruptions associated with physical works wi l l be minimized through careful selection o f work sites, the construction o f temporary access roads, and traffic management in connection with possible major uranium tailings or other earth moving activities.

A pre-project public meeting in Mailuu-Suu attended by about 300 people in February 2004 provided a forum for outlining proposed project components and for the public to openly voice i t s opinions and concerns. Other measures as the project moves forward will include the setting up o f a locally-based project coordinating committee with an over-representation o f rural interests, something merited in light o f evidence from the SA o f wide discrepancies in interests and outlooks o f urban and rural residents. During the project’s design and implementation phases, the current once per year public meetings held between local authorities and the population wil l be increased in frequency to once every two months o n average, with additional meetings possible in response to special issues arising in particular communities. Minutes o f such meetings wil l be recorded. Response to specific issues raised will be tracked and followed up on until they are satisfactorily resolved. Local officials and project staff will also be trained in participatory techniques. Project area residents wil l be informed about the land rights advocacy and information resources available through the Kyrgyz Land and Agrarian Reform Project, which has an office in Osh and can provide seminars o n the full range o f land r ights related issues. Grievance procedures and mechanisms will be introduced to ensure that complaints are recorded and followed up in a timely and transparent manner.

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On the whole, project activities are unlikely to have any long-term negative impact. Any impacts wi l l be b r ie f and directly affect only a small number o f families. Mitigation o f any potentially negative social impacts wil l be achieved through close consultation with local communities and through the introduction o f procedures ensuring accountability and responsiveness to issues that arise in the course o f project design and implementation.

Budget constraints limit what the project can do to directly address some o f the more pressing infrastructural, health, and economic concerns that preoccupy local residents. Efforts have already been launched, to be continued during project implementation, to draw additional funds and donors to the project area and to leverage the demonstrated social capital o f local residents in marshalling themselves to address pressing needs through self-help measures.

5. Environment

The majority o f areas subject to the proposed interventions are currently degraded, either by current and historical anthropogenic activity, e.g. industrial waste, mine tailings, waste rock dumps, deforestation, and overgrazing, or by natural processes, e.g. landslides, mudslides, and large-scale slumping. In particular, the Mailuu-Suu area is characterized by natural risks from landslides, severe soil erosion from deforestation and overgrazing, industrial dereliction, radiological contamination, chronic health problems, and socio-economic decline. MEE has classified the Mailuu-Suu area as a hazard zone o f environmental pollution.

The project aims at ameliorating disaster hazards, including environmental disasters in Mailuu- Suu. Therefore, the Environmental Impact Assessment (EM) concentrated primarily o n the environmental issues that could potentially arise from the technical interventions and the methods by which they are to be implemented. A scoping procedure identified potential impacts of the proposed interventions. This involved defining the intervention location, the associated tasks and activities, and determining the likelihood o f an impact (adverse or beneficial) that could occur under each o f the relevant environmental parameters (air quality, water quality, etc.) without any mitigation measures. The impacts were grouped under three general categories, namely physical, biological, and socio-economic. Construction and operational phase impacts were considered separately. The review also addressed potential environmental enhancement measures and any additional considerations as warranted.

The EIA report describes the necessary environmental management procedures and technical prerequisites for maintaining good environmental practices regarding the proposed interventions at the project sites. Each major technical design wil l be subject to the applicable environmental procedures o f the Kyrgyz Republic, which currently includes an environmental permit procedure and, for most activities, an environmental impact assessment (known as State Environmental Review, or SER).

The project i s expected to result in significant environmental and community benefits, including: (i) reduction in r isk o f landslides and failure o f tailings impoundments; (ii) strengthening o f tailing dams to prevent river erosion and radionuclides f rom entering the r iver system; (iii) associated benefits such as reduction in exposure to radionuclides (water, foodstuffs, direct

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radiation from tailings); (iv) improved road and water supply infrastructure within the Mailuu- Suu valley, as required to fulfill the project’s objective; and (v) improved public awareness o f the radiological hazards and measures the local community should take to reduce the health risks. The project w i l l seek to provide temporary job opportunities for the local population during construction works. I t w i l l also provide a mechanism for community consultation and improved dissemination o f information to the public.

Ensuring that the contractors follow good management practice w i l l minimize potential negative impacts during construction, such as soil erosion, discharge o f sediment and waste to the river, and community disturbance from dust, noise and traffic diversion. Socio-economic issues during construction such as temporary loss o f pasture for grazing livestock, road access, and public safety w i l l be addressed during final design o f the interventions. Measures are proposed to ensure so that tailing areas are rehabilitated in sequence, after which they are returned to the local community for safe grazing.

6. Safeguard policies

Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.0 1) [XI [ I Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [ I [XI Cultural Property (OPN 11.03, being revised as OP 4.11) [XI Involuntary Resettlement (OPBP 4.12) [ I [XI Indigenous Peoples (OD 4.20, being revised as OP 4.10) [XI Forests (OP/BP 4.36) [I [XI Safety o f Dams (OPBP 4.37) [XI [ I Projects in Disputed Areas (OP/BP/GP 7.60) E l [XI Projects on International Waterways (OP/BP/GP 7.50) [XI [ I

[I

[ I

The project i s not expected to result in any potential large scale, significant and/or irreversible environmental or negative socio-economic impacts. The environmental screening category for the project i s ‘By. An EIA and Environmental Management Plan (EMP) were prepared during project preparation, financed by the EU-funded Joint Environmental Program (JEP). IDA received the final draft reports on February 19,2004. The EIA and EMP reports have been translated into Russian and are publicly available in MEE. IDA was informed in a letter from the Minister o f MEE dated March 30,2004 that the EIA report has been approved by the Environment Department o f the Ministry and can be submitted to the Bank’s InfoShop, which was done on April 6,2004.

The EMP establishes a framework for the identification and implementation o f environmental protection, mitigation, and monitoring and institutional strengthening measures to be taken during project implementation to avoid or eliminate negative environmental and social impacts. The EMP includes the following elements: (i) environmental mitigation and monitoring plan; (ii) monitoring measures to be taken during project implementation; (iii) institutional arrangements for implementing the EMP; (iv) implementation schedule and cost estimate; (v) contractor

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requirements for EMP implementation; and (vi) guidelines for environmentally sound construction practices.

The EMP i s considered part o f overall project implementation and will be annexed to the Project Implementation Plan. The Development Grant Agreement has a covenant requiring execution o f the EMP by the Recipient, which has been fully budgeted. Oversight o f the implementation o f the EMP will be the responsibility o f the Recipient. The PIU wil l act o n behalf o f the Recipient and will have an environmental specialist for the duration o f the project. Implementation o f mitigation measures (e.g. pol lut ion prevention, protection o f natural resources, and worker and public safety) will be passed o n to contractors who wil l be required to fo l low guidelines for environmentally sound construction practices. These requirements wil l be included in bidding documents and meeting them will be a contractual requirement o f the works, to be supervised by construction supervision consultants under oversight o f the PIU construction supervisor and environmental specialist. Monitoring o f environmental and social indicators wil l allow the PIU to determine the direct and indirect environmental and social impacts o f project activities and, where necessary, take appropriate actions or make corrections to project activities in order to prevent or lessen any adverse impacts detected. The PIU wil l report o n EMP implementation in i t s regular project reporting to government and IDA, and supervision missions wil l evaluate progress in i t s implementation.

The project addresses tailing dams safety, therefore OP 4.37 - Safety o f Dams applies. The preparation team included the necessary expertise (including geo-technical, r isk management, hydrology, and seismic) to review the tailing dams, which was done in sufficient depth for the preparation phase. Included in the preparation team was a member o f the International Atomic Energy Agency to strengthen expertise with regard to broader r isk management associated with the hazardous nature o f the tailings.

If the long-term solution for Tai l ing No. 3 i s relocation o f the material, a full-scale EL4 wil l have to be carried out. A Panel o f Independent Experts wil l be established as appropriate under the various Bank Operational Policies (OP 4.01 and OP 4.37). The composition and terms o f reference o f the Panel will depend o n the final solution with regard to Tai l ing No. 3. The International Atomic Energy Agency will be requested to participate in the Panel as well.

The project triggers OP 7.50 - Projects o n International Water ways, as the Mailuu-Suu River flows into the Naryn River, which is an international waterway as defined by Paragraph 1 (a) o f the OP. Potential changes in water f low or deterioration in water quality during the construction works will be mitigated through implementation o f the EMP. I t is considered that the project interventions wil l not materially affect the quality or quantity o f water flows to downstream riparian states. During the past few years there have been a number o f meetings o n the Mailuu- Suu issues with participation f rom politicians and specialists from the riparian countries. As good practice, a notification letter was nevertheless sent in February 2004 to Kazakhstan, Tajikistan, and Uzbekistan to inform these riparian states about the proposed interventions. Tajikistan and Uzbekistan have responded in writing, and have reiterated their support to the project activities. The governments are interested to continue this information sharing during project implementation.

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The project does not trigger OP 4.12 - Involuntary Resettlement, as there will be no land acquisition, relocation or restrictions o n access to resources, except for some temporary situations, such as capping o f tailings. Nonetheless, a Process Framework was prepared to establish a participatory mechanism by which members o f potentially affected communities take part in: (a) the design o f project activities and identification o f the related restrictions o f access that wi l l be appropriate for achieving the objectives o f the project; (b) the determination o f necessary measures to help mitigate the adverse impacts associated with such restrictions; and (c) the implementation and monitoring o f relevant project activities.

Two consultation hearings took place during project preparation, one in Mailuu-Suu and another in Bishkek, organized jo int ly by MEE and the environmental and socio-economic preparation teams. Approximately 300 persons attended the Mailuu-Suu public hearing and 60 people attended the one in Bishkek (see also part 5 o f this Section).

7. Policy Exceptions and Readiness

There are no pol icy exceptions, as the project complies with al l applicable Bank policies. The project i s ready for implementation. Among other aspects, the PIU i s operational with the core staff. Performance indicators have been agreed and a data collection (M&E) strategy is in place. The project implementation plan for the first year has been agreed upon. The PIU team i s preparing bidding documents, expected to be ready before project effectiveness, for selection o f a team o f design and supervision consultants, and for the equipment for the PIU. Design o f the first interventions in Mailuu-Suu i s ongoing.

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ANNEXES

Annex 1: Country and Sector or Program Background KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

Introduction. The Kyrgyz Republic, a small and land-locked country, has a population o f about 5 million, o f whom 65 percent l ive in rural areas. The economy is predominantly agricultural, accounting for about 40 percent o f GDP, and almost ha l f o f total employment. Rural poverty remains pervasive, with some 62 percent o f al l rural households having consumption levels below the poverty line, and 28 percent in extreme poverty (2001 data). Regional differences in poverty are large. Naryn Oblast has the highest incidence o f poverty, followed by Talas, Issyk- kul, Jalal-Abad, and Osh Oblasts. About 50 percent o f the Kyrgyz population lives in the latter two oblasts. As the distribution o f the poor across the oblasts reflects the share o f the total population in each oblast, these two oblasts have also more than 50 percent o f the poor.

The country i s very mountainous, with more than 90 percent o f i t s total territory o f 198,000 km2 over 1,000 m above Baltic Sea Level. M u c h o f the rural population lives at the foot o f mountains and hills, immediately above the flat agricultural lands. Natural disasters (landslides, earthquakes, floods, etc.) pose serious risks o f causing human, economic, and environmental damage in the country. MEE estimates that the full impact o f disaster hazard related events in the Kyrgyz Republic i s around U S $35 mi l l ion on average per annum. Jalal-Abad and Osh Oblasts have a proportionally high number o f natural disaster events. IDA has already assisted Government with a Flood Emergency Project (P062682; FY99, closed March 31,2004) to increase the safety o f populations and infrastructure against damaging floods in some o f the major rivers in southem Kyrgyzstan.

Landslides. Extensive areas o f the Kyrgyz Republic are characterized by the presence o f very large landslide hazards. There are an estimated 5,000 potentially active landslide sites in the country, about 3,500 o f which are in the southem regions. Some 15,000 km2 (or 7.5 percent o f the territory o f the country) are potentially under the threat o f these landslides. Evidence o f landslide slope instability and movement can be readily seen throughout the mountainous areas o f the country, where mil l ions o f cubic meters o f unstable material are present.

Landslides and slope instability are caused by complex interactions between a number o f endogenic and exogenic factors within the general geological setting including: (i) relief; (ii) nature o f surficial deposits; (iii) structural geology; (iv) meteorology and climate; and (v) vegetation and land use. Typically landslides occur at an elevation between 700 m and 2,000 m, representing the weakly consolidated sediments below transition into the high mountains. Stability o f most landslides i s satisfactory in dry conditions. Landslides are typically activated due to temporary development o f significant groundwater pressures along the slip planes. Climatic conditions in the country favor intensive water saturation o f loose sediments on mountain slopes with the result that soils gain plasticity. Such conditions are l ikely to occur in spring following severe rainstorms in addition to snowmelt. Furthermore, seismic forces, large enough to displace landslides, may develop during strong motion earthquakes that are rather common in most o f Kyrgyzstan. None o f the major landslide areas in the country are equipped

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with monitoring and warning instrumentation, so the population o f many villages are continuously endangered by landslide hazards.

The landslides are cause o f concern to the Kyrgyz authorities, as both the population and the infrastructure located in the nearby valleys are potentially at risk, and may suffer dramatic losses in case o f sudden landslide instability. Movement can happen even within minutes or hours after activation. Every year landslides cause damage to buildings, roads, power lines, and water supply, heating supply, and sewerage systems, as wel l as the death o f tens o f people. About 700 houses are damaged or destroyed every year. Several major landslide disasters occurred during the past years. On April 20,2003, a landslide near Uzgen in Osh Oblast k i l led 38 people, while 84 families lost their houses and had to move to a new location, where government built houses for the affected people. On April 17,2004, a landslide killed 5 children in the Kara-Suu Raion o f Osh Oblast. On April 26,2004, a landslide buried seven houses in the Budalyk Village o f the Alay Raion in Osh Oblast and 33 people were reported dead in the incident.

Seismic Events. Most o f the Kyrgyz territory i s occupied by the Tien Shan Mountains. This 2,500 km long and 500 km broad intra-continental mountain belt consists o f a series o f east-west trending sub-parallel mountain ranges (4,000 - 7,000 m altitude), separated by intra-mountain basins (1,000-2,000 m altitude). The Tien Shan developed mainly during the Neogene and Quaternary, between the Kazakh platform in the north and the Tar im Basin in the southeast. Central Asia i s part o f the active collision zone between the Eurasian and the Indian Plates. The seismic area o f the young Tien Shan Mountains is one o f the largest in the world, and includes most o f the Kyrgyz Republic, including the area surrounding the Ferghana Valley.

The national system o f seismic monitoring registers from 2,000 to 5,000 earthquakes each year. Among them, 5 to 10 per year are considered strong (felt, but n o major damage), while a destructive earthquake (causing infrastructural damage) takes place every 3 to 5 years, and a catastrophic one (causing infrastructural damage and death) every 35 years on average. During the 20th century more than 500 earthquakes were registered in Kyrgyzstan as having a magnitude greater than 5 on the Richter scale. The majority o f earthquakes occurring along the Kyrgyz portion o f the Tien Shan Mountains strike at a depth o f 5-30 km. The most recent destructive earthquake (Magnitude 7.3) occurred on August 19, 1992 in the Northern Tien Shan Mountains. Direct economical damage from the resulting catastrophe was estimated at U S $75 million, 53 people were killed (including 14 who died because o f a subsequent landslide in Toluk), 9,000 houses were destroyed, and 60,000 people were affected by the disaster.

The ability o f the Institute o f Seismology to measure and analyze seismic events has reduced due to antiquated equipment that is gradually getting out o f order. With the assistance o f the U S government, several new seismic monitoring stations have been installed in northern Kyrgyzstan, but little has been done in the southern region o f the country.

According to the Kyrgyz map o f seismic zoning, Mailuu-Suu belongs to the zone with seismicity o f 9 points M K S (Russian Unit), which corresponds to the magnitude o f M = 7 o n the Richter scale, with a possibility o f re-occurrence o f such earthquake intensity o f once in about 500 years. The most recent earthquake o f significance in Mailuu-Suu occurred o n M a y 15, 1992, with a magnitude o f 6.2 Richter. On July 7 o f the same year part o f the Tectonic landslide collapsed.

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Worrisome i s that the ability to determine accurately the peak ground accelerations that would occur during earthquake events i s not available. This makes it for example problematic to properly carry out tailing dam stability analyses.

Mine Tailings. With Independence, the Kyrgyz Republic inherited a legacy o f environmental damage caused by many years o f output-focused development, with little regard to either economic viabi l i ty or environmental impact. The most serious o f these legacies constitute an ongoing threat to the well-being o f the population, not only within the immediate area but also in many instances over a broad geographic region. There are five abandoned mine locations in the country with radioactive mine tailings and waste rock dumps. The NEAP (1995) identified as a major environmental issue the poor maintenance o f mine tailings and dumps, causing heavy metals and other toxins to leach into the environment. Because o f lack o f detailed investigations, there i s no full clarity o f the potential toxins in the tailings and dumps, and monitoring o f the sites has been rather l imited during the past decades due to lack o f resources. However, there is enough evidence that they cause pollution and expose the populations to health risks. Until such time as these environmental hazards are remediated, they act as a constraint o n local economic development.

Mailuu-Suu Uranium Mine Tailings, Waste Rock Dumps and Landslide Hazards. A particularly dangerous area i s Mailuu-Suu, an impoverished town o f about 23,000 people, including about 6,000 in surrounding villages, near the Uzbekistan border upstream o f the densely populated and highly productive Ferghana Valley. There was active mining in Mailuu-Suu from 1946 until 1968. A State-owned company carried out uranium mining, and the ore was mined for the Soviet government for use in national defense programs and power plants. The total uranium production has been estimated at 10,000 tons. The former production combine consisted o f four underground uranium mines and one coal mine (room and pi l lar method, depth from surface up to 500 m), two mills, one water plant, one power station, and sanitary and social installations. A total o f around 5,000 employees l ived at the combine. During these years the population o f Mailuu-Suu (maximum o f 50,000 inhabitants) benefited from a preferential status. In 1968, mining and milling ended because o f exhaustion o f reserves. When the production was phased out, the underground mines, 23 tailings, and 13 waste rock dumps were subject to closure proceedings, according to environmental standards that were applicable and known during those days. Most o f the tailings are situated close to the former mill plants and several are within the flood plain o f the Mailuu-Suu River, which is a tributary o f the Naryn River. The total tailings volume is 1.96 mi l l ion m3, with an area o f approximately 44 ha, and with volumes o f individual tailings ranging from 1,000 m3 (Tailing 17) to 600,000 m3 (Tailing 7). The total waste rock dump volume is 0.8 mi l l ion m3.

Since the closure o f the mine, the underground mine workings, processing mills and residues from mining and milling have been largely abandoned, but some l imited maintenance took place until the late 1980s. With the demise o f the Soviet Union, accompanied by economic, institutional and organizational problems, the responsibility for the tailings was given over time to several agencies, including the Kara Balta M ine Conglomerate and since a few years ago the MEE. Necessary regular repair and maintenance o f the tailings was neglected since 1991 due to the lack o f a committed owner and scarcity o f funds. Some o f the tailing dams appear now to be

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unstable due to this lack o f routine maintenance, while surface areas o f tailings show signs o f erosion and surface drainage systems are getting out o f order.

Radionuclides and heavy metals within tailings and waste dumps located close to the river are leaking into the Mailuu-Suu River and i t s tributary streams, with the result that elevated radiation levels have occasionally been observed in river water and sediment samples. Heavy metals and arsenic have also been measured in the ground- and surface-waters o f the Mailuu-Suu area. Field measurements show that several waste rock dumps have currently a larger river water contamination effect than the tailings. Some waste rock dumps are actively eroding into the local watercourses, which requires attention. Typically, however, values o f hazardous waste concentrations in water are usually within the allowable drinking water standards, because o f the dilution effect within the large volumes o f river water. I t is nevertheless believed that no-action now with regards to both tailings and dumps would allow continuous expansion o f the contaminated area, with attendant health and environmental impacts.

Radiological monitoring (gamma exposure, radon) carried out by the EU/TACIS team showed that dose rates over the tailings, while elevated in isolated areas, were with few exceptions s t i l l at a level not requiring restriction o n temporary access to the tailings areas (e.g. walking over, br ief temporary halts, grazing). However, any fill time occupancy o f the tailing sites, or actions such as digging or agriculture, should be prevented, to avoid exposure to high doses o f gamma and radon. Livestock frequently graze o n the tailings and possibly transfer toxic substances to the food chain. Several waste rock dumps, due to their close proximity to residents, also represent a considerable radiation r isk. Whi le the local population has refrained from habitation o n or near tailings, there appears to be l i t t le concern about the waste rock dumps, as some people l ive and cultivate on or near the dumps.

The Mailuu-Suu area i s prone to earthquakes, floods, and especially landslides, which enforce the r isks o f the tailings and waste rock dumps. There are more than 200 places in the Mailuu- Suu area that are historically active landslides. During the last 10 years an increase in landslide activity has been observed, possibly due to a cycle o f wet weather and a large number o f seismic events. Several hundred buildings have reportedly been damaged or destroyed and nine people have died as a result. Two o f these landslide areas, Tectonic and Koi-Tash, present a high potential for activation and sliding down the valley slopes. These landslides also threaten the integrity o f a number o f mine tailings. In fact, a few tailings have already been slightly damaged by small landslides, events that are l ikely to reoccur with certainty, despite the fact that i t is difficult to predict landslide behavior. A major landslide could push one or more tailings into the Mailuu-Suu River, which could then wash away the dangerous substances. Other potential landslides threaten to block the river, which would not only submerge tailings, but could also cause major flooding in Mailuu-Suu.

In summary, there are thus concerns that slow release o f radioactive material and other hazardous waste may occur in the air, and aquifers and rivers in the Mailuu-Suu area due to continued release from tailings and waste dumps. I t i s important to note that the level o f dilution i s an important factor and that currently the release from tailings to surface water and air is generally enough diluted not to be o f a main concern. A larger concern i s that a major disaster could occur as a result o f landslides. Such a major event could cause long-term contamination o f

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water and soil, and damage the socio-economic structure o f the upper part o f the Ferghana Valley, with over 6 mil l ion people in three countries, as wel l as major rice and cotton irrigation areas.

Institutional Setup. The Ministry o f Ecology and Emergencies i s the government body with main responsibility for emergency response and management. Other Government Bodies dealing with disaster management include the Ministry o f Transport, Ministry o f Health, various Scientific, Research and Design Institutes, the State Agency for Geology and Mineral Resources, and Local Administrations.

The major aims and purposes (according to KR Governmental Provision No. 523, dated August 3,2002) o f MEE are to:

0 Exercise State control over environment protection, and development and implementation o f a common pol icy in the field o f hydrometeorology, environment protection, and nature management; Develop and implement a common policy in the field o f prevention and elimination o f emergency situations; and Provide control and licensing in the field o f industrial safety and mining.

0

0

The ministry comprises o f 11 major organizational units, o f which the fol lowing five are directly involved in emergency management activities (the remaining units focus o n ecology issues):

0

0 Department o f Hydrometeorology; 0 Department o f C i v i l Defense; 0

0

Department o f Emergencies Monitoring and Forecasting and Mining Tailings Management;

Department o f Prevention and Recovery from Emergency Situations (Bishkek based); and South Regional Department o f Prevention and Recovery f rom Emergency Situations (Osh based).

The Department o f Emergencies Monitoring and Forecasting and Mining Tailings Management i s responsible for monitoring and forecasting o f dangerous natural disaster hazards and the supervision and treatment o f suspended tailings and waste dumps. This unit also prepares r isk maps and plans for mitigation actions.

The Department o f Hydrometeorology’s main activities include regular supervision o f data o n meteorological, hydrological, and agro-meteorological conditions, the status o f pasture plants and agricultural structures, pol lut ion o f surface waters, soils, atmospheric air, including radioactive situation, and collection, analysis and dissemination o f this information.

The Department o f Civil Defense is an administrative body o f the Prime Minister o f the Kyrgyz Republic, who i s the head o f the Civil Defense. The Department coordinates the activities o f ministries, state committees, administrative agencies, c iv i l defense services, territories bodies,

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enterprises and establishments irrespective o f forms o f ownership, in the area o f c iv i l defense. I t conducts preparedness activities and manages the government response to disaster events.

The two Departments o f Prevention and Recovery from Emergency Situations manage actual recovery in response to disaster events and disaster mitigation projects planned and designed by the Department o f Emergencies Monitoring and Forecasting and Mining Tailings Management.

There are numerous issues that must be addressed to further enhance the country’s emergency management capacity. Since Independence in 1991, the capacity o f MEE has reduced considerably, although it s t i l l has capable manpower. I t does not have a sufficient level o f resource allocation necessary to carry out i t s mandates, and there i s lack o f accountability o f resources. There i s not a well-defined system o f modern operational procedures, functions, and responsibilities in place, and there is lack o f coordination among ministries, and even within MEE departments. Regional and local administrations appear to inhibit the ability at al l levels to respond quickly and effectively to disaster events. Specialists lack necessary training and up-to- date knowledge to adequately carry out their hazard mitigation functions and thereby reduce the impact o f potential disaster events.

Communications among government entities as wel l as f i om government agencies to the local populations concerning emergency management issues and actions, including evacuation planning, i s weak and must be significantly upgraded. Citizens appear to be unaware o f government r isk profiles for their communities and have not been consistently notified or involved in preparedness planning, and in particular evacuation planning for their communities. Another weakness identified exists at the Aiyl Okmotu level, where there is almost non-existent communication. Lack o f modem communication technologies and the remoteness o f many villages appear to be the most critical problems in communicating emergency management and risk messages to the population.

Early warning i s restricted at the moment for lack o f appropriate technologies (seismic and landslide monitoring equipment) l inked up with lack o f information collecting, analyzing and disseminating. MEE has an uncompleted Emergency Response Center (ERC). The space is available in the Bishkek office, but the required technologies have not been acquired. Such a center would significantly facilitate the collection, analysis and dissemination o f disaster information. I t could also be used by the Department o f Emergencies Monitoring and Forecasting and Mining Tailings Management to better monitor r isks and forecast h t u r e events, and design and plan hazard mitigation actions. In addition, i t could serve as the nerve center during disaster response activities.

Legislation and Strategies. Several pieces o f relevant legislation have been approved in the Kyrgyz Republic. Some of the important ones are the L a w o n Tailings and Rock Waste Dumps (#57, July 26,2001), the Law o n Radiation Safety o f the Population o f the Kyrgyz Republic (#58, June 17, 1999 and #48, February 28,2003), the L a w o f the Kyrgyz Republic o n Protection o f the Population and Territories f i o m Natural and Man-Caused Emergency Situations (#45, February 24,2000), and the L a w o f the Kyrgyz Republic o n C i v i l Defense (#39, February 14, 2000). The legislation i s generally acceptable, as it defines authorities, roles and responsibilities at a l l levels o f government and in the private sector. The issues relate to lack o f regulations to

34

support the primary legislation and the lack o f coordination and resources to implement the legislation.

The National Environmental Health Action Plan (NEHAP, 1997) includes a chapter on natural and industrial disaster hazards. The objectives o f the Plan regarding disaster hazards are: (i) to limit the consequences o f natural disasters, to prevent the occurrence and limit the consequences o f major industrial and nuclear accidents, and to ensure that effective arrangements are in place for emergency preparedness and for response to natural and manmade disasters; and (ii) to ensure that the appropriate levels o f government and the relevant public services, as well as members o f the public, are fully informed o f the probability and potential risks o f disaster hazards, so that they can put those r isks into perspective and understand the action required o f them in an emergency. In order to achieve these objectives, NEHAP anticipates the following actions: (i) restoring the monitoring network for natural and manmade hazards as an integral part o f environmental monitoring; and (ii) developing and implementing effective measures to prevent and mitigate damage caused by natural calamities and industrial catastrophes.

The Kyrgyz Govemment increasingly sees the National Strategy for Sustainable Human Development, adopted in May 1997, as the appropriate framework for r isk management o f natural disasters. The broad objective o f government pol icy in this area i s to reduce the vulnerability o f the population and the economy to hazardous processes. In this respect, five specific goals have been set: (i) to provide timely warning to the public o f the threat o f disaster hazards; (ii) to reduce and mitigate human and material losses from disasters; (iii) to establish a single monitoring system to ensure safety o f the population; (iv) to improve disaster preparedness by training the population; and (v) to improve rescue preparedness against disasters.

Since Independence in 1991 , the Kyrgyz Republic has demonstrated i ts commitment to widening international cooperation in environmental protection, including the commitment to ensure the safe rehabilitation o f uranium mine tailings, and strengthening o f pol lut ion monitoring and control systems, the sustainable use o f natural resources, and the resolution o f trans-boundary issues, notably water sharing. The Kyrgyz Republic has signed eleven international conventions in the environmental field.

A number o f regional Central Asia agreements regarding cooperation in management and conservation o f natural resources, as wel l as dealing with trans-boundary matters concerning natural disasters, including uranium mine tailings, have been signed. The two most relevant to the project are as follows:

0 Agreement between the Government o f the Kyrgyz Republic, the Government o f the Republic o f Kazakhstan and the Government o f the Republic o f Uzbekistan o n joint efforts to rehabilitate areas o f tailings and waste rock dumps that have trans-boundary impact (signed in Tashkent o n April 5, 1996). A joint program o f action to rehabilitate tailings on the territories o f the countries o f the Central Asian Economic Community was prepared and adopted on June 17, 1999 by the Heads o f Govemment o f the three countries; and

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0 Declaration between the Government o f the Kyrgyz Republic, the Government o f the Republic o f Kazakhstan, the Government o f Tajikistan, and the Government o f the Republic o f Uzbekistan concerning cooperation and collaboration on uranium legacy issues (signed in Bishkek on October 10,2003).

The last-mentioned Declaration arose out o f a workshop held in Bishkek on October, 9 and 10, 2003, entitled Follow-up Workshop to Report on the Progress o f the Mailuu-Suu International Database and to Exchange Views on Other Regionally Important Uranium Mine Tailings. At this workshop it was acknowledged that the Mailuu-Suu uranium tailings represent a significant trans-boundary threat to the Ferghana Valley. There is intent between the parties to continue cooperation in the characterization, rehabilitation planning and rehabilitation activities, including the sharing o f technical data.

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Annex 2: Major Related Projects Financed by the Bank and/or other Agencies KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

Flood Emergency Project - IDA The Association has assisted the Kyrgyz Government with a Flood Emergency Project (FEP; U S $14 million) that has constructed around 30 km o f river bank levees to improve the safety against flooding o f a number o f villages along rivers in southern Kyrgyzstan. The project started in April 1999, and was closed on March 31,2004. The Project’s LP as wel l as DO were rated Satisfactory in the last Project Status Report.

Flood Emergency Rehabilitation Project - Asian Development Bank This U S $5 mil l ion project was prepared at the same time as the FEP. I t was implemented between 1999 and 2003, and focused o n the rehabilitation o f flood damaged public infrastructure, such as roads, bridges and electricity lines, in Jalal-Abad and Osh Oblasts.

Remediation of Uranium Mining and Mining Tailings in Mailuu-Suu District, Kyrgyzstan

This two-year project funded by TACIS was implemented from 2001 and 2003. The objective o f the project was to identify risks (radiological and others), evaluate measures needed to reduce radiological exposure o f the population and to prevent environmental pol lut ion by radionuclides and heavy metals in case o f loss o f tailing impoundment tightness by landslides, and to propose sustainable remedial options. The end product o f this project i s a comprehensive report that provided a good basis for the preparation o f the proposed project, as it contains a lot o f background data and other relevant information.

- EU/TACIS

Strengthening the Capacity of the Government for Disaster Mitigation and Preparedness - UNDP This U S $300,000 project was implemented from 1998 to 2000. I t focused o n the preparation and dissemination o f training and awareness material and equipped MEE with some office and communication equipment. I t conducted a number o f workshops throughout the country and also assisted MEE with the preparation o f a pi lot regional disaster reduction plan for Issyk-kul Oblast.

Remote Sensing - GeoForschungsZentrum (GFZ) Potsdam Scientific investigations, using remote sensing and GIS techniques, o f factors causing landslides have been the subject o f collaboration during the last five years between the Remote Sensing Section o f GFZ Potsdam and MEE. The proposed project intends to build o n the capacity that was created in the GIS office o f MEE.

Awareness Creation Activities in Kyrgyz Republic - European Union The European Union’s Humanitarian Aid Office i s currently funding two small projects, implemented by Mercy Corps and the Netherlands Red Cross, in several disaster prone villages in the southern region o f the country. These projects train communities in disaster preparedness and efficient emergency reaction procedures, as well as launch pi lot reforestation trials in Osh

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Oblast aimed at slowing erosion. The projects are s t i l l ongoing and applicable training material and lessons leamed wil l be used during the implementation o f DHMP.

Workshops - Organization for Security and Cooperation in Europe (OSCE) The OSCE has funded several international workshops and conferences on uranium tailings, as a way o f improving regional cooperation. Early 2004, a public awareness campaign entitled ‘Life Safety in Mailuu-Suu’ was launched in partnership with the GeoPribor scientific engineering center and the Kyrgyz National Academy o f Sciences. The city’s administration, schools and the local medical college were presented with brochures, explaining the dangers o f radioactive waste and offering preventive advice.

Kadji-Sai Tailing Rehabilitation Project - U S Department of State The primary hazard at Kadji-Sai is the potential collapse o f an uranium tailing impoundment, i t s incorporation into a flash flood, and the subsequent transport o f radioactive sludge to Issyk-kul Lake. The project wil l develop and demonstrate the capabilities and technologies required to address the Kadji-Sai tailing issues. This includes analyzing the risks associated with radioactive tailings in a particular geomorphic setting, prioritizing activities, developing cost-effective solutions to these r isks that are tailored to the local situation, and organizing, budgeting, planning, and executing the plan to solve these problems. This small two-year U.S. Department o f State financed project has recently started. I t i s executed by the U S Department o f Energy through experts o f the Lawrence Livermore National Laboratory. Applicable lessons from implementation will be incorporated in the DHMP.

Emergency Rehabilitation - Asian Development Bank The proposed project will rehabilitate public infrastructure that was damaged by severe landslides and floods that occurred in the country in the spring and summer o f 2003. The public infrastructure that wil l be targeted under the project includes: (i) roads and bridges; (ii) power distribution lines; (iii) schools; and (iv) municipal infrastructure. The U S $5 mil l ion project wil l be implemented in Chui, Issyk-kul, Jalal-Abad, and Osh Oblasts between mid-2004 and 2008.

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Annex 3: Results Framework and Monitoring

KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

Results Framework

Hierarchy of Objectives ~~

Sector-related CAS Goal:

Development o f an effective state (under the NF'RS);

Providing essential services;

Poverty Reduction.

Key Performance Indicators

Sector Indicators:

Evidence o f improved institutional effectiveness among relevant state institutions;

Evidence o f proper targeting and delivery o f essential services among potential users, including the poor;

Evidence that population l iving in disaster hazard areas does not get poorer and that population does not decline more than in other areas.

Means of Verification

Sector 1 Country Reports:

ESWreports (occasional);

Government reports (annual);

Poverty studies (occasional).

Critical Assumptions

(from Goal to Bank Mission

Continued economic growth wi th equity.

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Project Development Objective (PDO)

1. minimize the exposure o f humans, livestock, and riverine flora and fauna to radionuclides associated with abandoned uranium mine tailings and waste rock dumps in the Mailuu-Suu area;

2. improve the effectiveness o f emergency management and response by national and sub-national authorities and local communities to disaster situations;

3. reduce the loss o f l i f e and property in key landslide areas o f the country.

Outcome I Impact Indicators:

1. (i) Evidence that applicable parameters are below hazardous thresholds for humans, livestock, and riverine flora and fauna in samples o f soil, water and air from monitored sites in the Mailuu- Suu area (via technical audit reports); (ii) evidence o f high satisfaction rates among the local population in the Mailuu- Suu area regarding project outputs via sample surveys (in preparation for the ICR stage);

2. (i) Evidence that a disaster hazard monitoring, warning and response system i s functioning and being used effectively by cooperating national, oblast, and raion authorities, and local communities (via technical audit reports); and (ii) evidence o f high satisfaction rates among national and sub- national authorities and the public living in hazard areas regarding disaster preparedness operations and benefits (via brief sample surveys in preparation for ICR stage);

3. (i) Evidence that real-time landslide monitoring and warning systems are functioning and being used effectively by local communities (via technical and social audit reports).

Project Reports:

b Technical and ;ocial audit reports; B Samplesurvey .eports; B Project progress :eports; b Supervision nission reports; B Evaluation :eports (MTR and [CR stages).

:From Objective to Purpose)

8 Continued high level political and budgetary support for the development o f an effective state and poverty reduction (under NPRS);

General macroeconomic stability;

Implementation o f sister projects for the development o f an effective state and the provision o f essential services.

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Output from each component:

1. Uranium Mining Wastes Isolation and Protection (UMWIP): Abandoned uranium mining wastes in the Mailuu-Suu area have been isolated and protected from disturbance by natural processes such as landslides, floods, and leaching and dispersal by ground- and surface-water drainage;

2. Disaster Preparedness and Monitoring (DPM): A disaster monitoring, management and response system has been (and i s being) administered effectively by national and sub-national authorities; and landslide hazards have been (and are being) monitored in key hazard areas;

3. Project Management (PM): Project implementation conducted in a timely and effective manner.

Dutput Indicators:

I. Evidence o f improved isolation and protection, as per design, o f uranium mining wastes f rom disturbance b y natural processes such as landslides, floods, and leaching md dispersal by ground- and surface-water drainage in the Mailuu-Suu area (verify via technical audit studies);

2. (i) Evidence o f improved Zapacity for timely and appropriate response to disasters by cooperating national and sub-national authorities (monitored via technical audit studies); (ii) Evidence o f high satisfaction rates among national and sub-national authorities regarding D P M system capabilities (monitored via sample surveys); and (iii) Evidence that completed landslide monitoring systems passed initial testing, and their effectiveness was verified by technical and social audit teams;

3. Evidence o f proactive and effective management o f emerging problems, and timely and honest reporting o f progress and concerns (monitored via IDA mission reports).

'roject Reports:

1 Project eporting (quarterly); 1 Technicaland ocial audit reports in preparation for yITR and I C R Itages); 1 Supervision nission reports; 1 M T R a n d I C R :valuation mission .eports; I Samplesurvey .eports, as required.

from Outputs to Objective)

Significant :ontroversy does not develop surrounding Component 1 measures to isolate hazardous radioactive wastes from humans and livestock; 1 A major disaster w i l l not occur before he project can organize o mitigate it; 0 Allocation o f satisfactory O&M budget by government;

National and local Zovemment authorities work together to mitigate lisaster hazards; D Local population sufficiently concerned and willing to support hazard mitigation activities in project areas.

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Project Components/Sub- components:

1. Uranium Mining Wastes Isolation and Protection (UMWIP) Component;

2. Disaster Preparedness and Monitoring (DPM) Component;

3. Project Management (PM) Component.

Inputs: (budget for each component)

1. US $7.43 million;

2. US $3.38 million;

3. US $0.95 million.

Project Reports:

P I U administrative and financial records;

Progress reports (quarterly); 0 Disbursement reports; 0 Audit reports (annual); 0 Supervision mission reports; a Evaluation mission reports (MTR and ICR) .

(From Components to Outputs)

Counterpart f inding i s available in a timely manner;

Implementation structure i s put in place with capable staff;

No political interference by local government in project activities; 0 Local communities are responsive to awareness and training programs;

No significant cost overruns during project implementation; 0 Capable contractors are attracted to carry out the c iv i l works contracts.

42

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Annex 3-b. Monitoring and Evaluation Plan KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

The basic purpose o f the monitoring and evaluation plan i s to outline the way in which planned outputs and expected outcomes o f the project wil l be verified. K e y performance indicators (KPIs) provide general specificity in this regard, and a l i s t o f K P I s i s found above. Several o f these rely on expert judgment for verification o f results, and such decisions have been allocated to independent technical and social audit consultants.

The project implementation phase has envisaged the need for a number o f further investigations to better understand (prior to detailed design o f works) the nature and extent o f the disaster hazards that wil l be mitigated under the project. Because o f the need for these technical investigations, i t i s not possible at this time to specify a complete l i s t o f parameters (and relevant threshold levels) that wil l be used as part o f the technical and social audits. A preliminary outline o f the approach can be provided, however, based o n investigations that have been carried out during the preparation phase.

Component 1 - Uranium Mining Wastes Isolation and Protection

Verification o f the successful delivery o f outputs from Component 1 would focus o n the evidence o f improved isolation and protection o f uranium mining wastes f rom disturbance by natural processes such as landslides and floods, and leaching and dispersal by ground- and surface-water drainage in the Mailuu-Suu area v ia technical audit studies. Among other things, this would involve having a technical audit team verify that the intervention measures have been completed, and that relevant design specifications have been met.

Leaching and dispersal o f radionuclides f rom abandoned uranium mine tailings and waste rock dumps have been identified as hazards. These may be created as ground- and surface-water drainage comes into contact with the mine tailings or waste rock dumps, chemically leaching the rock to produce radionuclides such as radon gas. Based o n samples taken during preparation studies (it i s noted that sampling was l imited and these are preliminary conclusions), it can be stated that seepage water f rom tailings exceeds the maximum admissible limits for most o f the toxic and radioactive elements. Surface and groundwater are affected as we l l and show locally high concentrations, e.g. the uranium concentration downstream o f the waste dumps on the Kulmen-Sai River.

Radon cannot only be dissolved into water and be transported to the surrounding environment v ia seepage and drainage, i t can also escape slowly to the surface as a gas through the interstitial air passageways between soil and rock particles, or it can migrate more rapidly as a gas along tectonic fault lines. Houses located on or near tailing areas or o n tectonic faults may experience elevated levels o f radon. Few houses near waste rock dumps in Kara-Agach village were identified by the EU/TACIS team as having unacceptable radon levels. Also, soil samples taken in Kara-Agach exceeded the l imi ts for uranium and radium.

The challenge of Component 1 is to design interventions that will effectively isolate and protect the tailings and rock dumps in order to significantly reduce the transport o f radionuclides through

46

the air and water o f the Mailuu-Suu area. Achievement o f output-level results would be documented by a significant reduction in the escape o f radionuclides to the waters o f the Mailuu- Suu River, and to the air o f the surrounding environment. Depending upon sampling programs to be recommended by consultants hired under the project, proxy measures to detect leaching o f radionuclides in water may be utilized, such as pH (measure o f acidity or alkalinity), conductivity, redux potential, and salinity.

Documentation o f outcomes from Component 1 would need to demonstrate reduced exposure o f man, livestock, and riverine flora and fauna to radionuclides. This can be shown following the completion o f Component 1 interventions by measuring radon levels in samples o f soil, water, and air taken at relevant sampling sites in the Mailuu-Suu area. If the intervention i s successful, radon levels are expected to be below recommended threshold levels for hazardous exposure. Relevant threshold levels to be met at the end o f implementation will be suggested by consultants that undertake the baseline studies.

Component 2 - Disaster Preparedness and Monitoring

Under Component 2, national efforts for disaster hazard mitigation envisage a need for: (a) improved response time; and (b) effective cooperation among relevant and local authorities, in order to mount a meaningful response in times o f disaster. This applies generally to al l disaster situations, such as landslides, floods, earthquakes, forest fires, and even aircraft accidents. In addition, Component 2 includes the development o f real-time monitoring and warning systems to detect the active movement o f landslides in about 20 key landslide areas o f the country.

Documentation o f outputs from Component 2 requires: (i) evidence o f improved capacity for timely and appropriate response to disasters by cooperating national and sub-national authorities; (ii) evidence of high satisfaction rates among national and sub-national authorities and especially local communities (at the moment almost 70 percent o f the population in and around Mailuu-Suu feel inadequately informed about r isks in their areas and how to respond in the event o f a major disaster) regarding DPM system capabilities; and (iii) evidence that the completed landslide monitoring systems passed init ial testing, and that their effectiveness was verified by technical and social audit teams.

Verification o f expected outcomes from Component 2 include verification that management and warning systems for disaster response have been (and are being) administered effectively by national and sub-national authorities, and that landslide hazards have been (and are being) actively monitored in real t ime in key hazard areas.

Component 3 -Project Management

Component 3 includes the relatively standard project management activities being carried out in the PW, operating as part o f the implementing agency. Documentation o f outputs from Component 3 require evidence o f proactive and effective management o f emerging problems by the PIU, and timely and honest reporting o f progress and concerns (verified by IDA staff in mission reports). Success within Component 3 would require demonstration that project implementation was conducted by the PIU in a timely and effective manner.

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Monitoring Capacity of the Implementing Agency

The PTU is situated within the Ministry o f Ecology and Emergencies and will be responsible for project-related monitoring and evaluation activities. Although discharge o f these responsibilities may easily require that some, if not most, o f the work be contracted out to consultants or to other arms o f government. Within MEE, potential roles in monitoring and reporting o f project activities might be envisaged for the fol lowing departments:

(i) Department ofEmergencies Monitoring and Forecasting and Mining Tailings Management. This department has extensive capabilities with respect to the mapping o f disaster hazards and disaster-related events. A two-person staff uses a GIS mapping system to compile and publish some impressive work on hazards using aerial photography, topographic base maps, and other available data sources for locational information (e.g. active landslide areas, flooding, water logged areas, mud flows, seismic events, dam hazards, and mine tailings). An annual report has been published since 1993 o n monitoring and forecasting o f hazards, with color maps and extensive commentary on the year’s events. This department also cooperates with the Seismological Institute, the Cartographic Agency, and other government agencies involved in multi-year data collection.

(ii) Ecology & Nature Management Department. This department has two sections that carry out the following functions: (i) analytical control o f wastes and land resources; and (ii) analytical control o f water resources. The department is involved in air, water and soi l management, as wel l as radiometric evaluation. I t has been receiving some support f rom ADB under the auspices o f the Kyrgyz Republic’s Environmental Management Capacity Building Project (TA#3499- KGZ). A case study o f the Mailuu-Suu area was conducted under this project as part o f training activities, and a report was published in 2002. Staff capabilities in the area o f environmental hazard investigation appear to have been strengthened by this ADB project. Laboratory facilities are available within the department, although equipment is rather basic and largely outmoded.

(iii) Hydrometeorology Central Management. This department forecasts weather and dangerous hydrological events (e.g. hazardous weather, avalanches, and floods). I t has l inks to similar agencies in neighboring countries, and to the World Meteorological Organization (WMO). Weather data i s collected day and night from a network o f 32 weather stations. Data from the Kyrgyz Republic, as wel l as four other countries, i s submitted to the regional weather data center in Tashkent. Staff in the department number about 550 persons, which is down from the 1500 staff that were available during the Soviet period. N o stations are located in the Mailuu-Suu area, except for one previously operating in Uzbekistan (but now closed). Occasional surveys were carried out in the Mailuu-Suu area during the Soviet period.

Data on river water quality and f low were previously gathered at 54 water quality sampling sites and 30 quality parameters were measured during the Soviet period. Now budgets are very limited and do not allow for travel to collect samples except in nearby Chui Oblast. Hydrological gauging stations are present at 75 sites on the country’s major rivers. Local observers record the data on a daily basis and send i t to Bishkek. Gauging stations, laboratory equipment and facilities are old, outmoded and not always reliable.

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As mentioned elsewhere, further investigations are envisaged under the project to better understand the nature o f the hazards being faced, as wel l as more details on the baseline conditions in the Mailuu-Suu area before the larger interventions are undertaken. The detailed requirements for monitoring and reporting, and the implications for water quality sampling wil l become clearer once these are underway and the baseline study i s completed.

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Annex 4: Detailed Project Description KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

The proposed DHMP will provide financial assistance to reduce the potential negative impact o f landslides and uranium tailings in Mailuu-Suu through the implementation o f a set o f early physical interventions, necessary investigations and studies to decide on major works under the project, implementation of these major works, and development o f a monitoring system. All the activities are aimed at decreasing the contamination risks o f mine tailings and waste rock dumps, and decreasing the risks o f potentially damaging landslides in Mailuu-Suu. In addition, there wil l be development o f several landslide monitoring and warning systems in some o f the most dangerous landslide areas in the country, and institutional development o f MEE and other agencies, as wel l as communities within the project areas. These activities are aimed at improving in general the disaster hazard management and response capacity in the country and decrease the risks to the population o f a number o f villages that l ive under the threat o f major landslides.

Component 1 - Uranium Mining Wastes Isolation and Protection (UMWIP) (US $7.43 million)

Early Activities

During project preparation a number o f activities were identified that will reduce the potential impact o f uranium tailings, waste rock dumps, and landslides in Mailuu-Suu. These activities wil l require only l imited surveys and designs and can be implemented relatively quickly. They wil l show the population o f Mailuu-Suu that concrete action i s f inal ly taken to reduce the contamination risks. The f ive early activities, with an estimated total cost o f U S $3.34 million for investigations, designs, goods, and works, include:

Tectonic Landslide Unloading (US $0.7 million). Tectonic Landslide is located o n the left bank o f the Mailuu-Suu River, 1.2 km upstream o f the urban area o f Mailuu-Suu. The direction is east-west, and i t has an average slope o f 34 percent, a length o f about 1,000 my and top width o f 450 m and bottom width o f 700 my for an approximate total surface o f about 300,000 m2. The first movement appeared in 1954 in the form o f two small landslides o n the upper part. Heavy rainfall occurred in the years 1969, 1972, and 1978, and in these years relevant movement and indications o f instability, such as cracks and small mudflows, appeared on the slope, In 1990, a first major collapse o f about 0.5 mi l l ion m3 took place o n the lower part o f the landslide mass, with the destruction o f a few tens o f meters o f the road and the partial obstruction o f the river course. In August 1992, a massive collapse o f approximately 1 mi l l ion m3 occurred. The complete obstruction o f the river caused the overflow o f the upstream areas and subsequent damage to houses, roads, communication and electricity lines, water supply facilities, and heating and sewage systems. In 1994, 1998, and 2002, smaller activations o f the landslide occurred. At the moment there is a soi l volume o f 0.5 to 0.7 m i l l i on m3 potentially unstable, evident by constant appearance of new cracks, enlargement o f o ld ones, and deformation o f the surface area. A mass o f about 70,000 m3, confined to the upper edge o f the landslide appears particularly unstable (Tectonic Triangle), and activated soi l may hit and damage Tailing No. 3.

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Tailing No. 3 has been identified as the one that causes some o f the highest r i s k for river water contamination and that i s threatened seriously by this Tectonic Triangle. Therefore the unstable landmass from the top o f Tectonic Landslide wil l be unloaded in order to put Tailing No. 3 in a safer condition. The operation appears to be mandatory for either the eventual relocation o f the tailing or i t s stabilization in-situ. In case o f relocation o f the tailing it i s necessary to ensure safe conditions for the foreseen operations, and in case o f stabilization o f the tailing it is essential to stabilize the soil creep, because an eventual collapse o f this soil mass would induce the instability o f the tailing.

A preliminary f ield analysis o f the situation and stability calculations have shown that i t is possible to improve considerably the stability o f the Tectonic Landslide by unloading and reshaping the Triangle. As indicated, the quantity to be removed i s approximately 70,000 m3. A suitable site for the accumulation o f the excavated soil has been located about three km from the landslide area. The unloading requires extensive landmasses to be excavated, transported and disposed, which will l ikely be done using excavators and heavy trucks. Excavation wil l be difficult and a state-of-the-art engineering approach is important, which will be developed during the final investigations and designs. The design has to consider especially the method o f excavating soil and the proper use o f machinery o n an unstable soil mass.

Tailings and Waste Rock Dumps Inspection and Rehabilitation (US $1.22 million). The deposition o f mine waste and rocks, covering an area o f approximately 44 hectares and with an estimated volume o f 3 mi l l ion m3, was carried out in a moderate mountainous terrain and in gently sloping alluvial areas, often in close proximity to the Mailuu-Suu, Kara-Agach, Kulmen- Sai, and Aylyampa-Sai Rivers. Staff o f the mining industrial complex conducted supervision and maintenance o f the tailings areas. This involved inspection o f the sites, controlled security access to the industrial area, along with maintenance o f the site fencing, tailings containment structures, and the surface drainage systems. Some l imited maintenance work continued after the closure o f the mine in 1968, but was stopped in 1991 with the collapse o f the Soviet Union. Current concerns include:

0 The ore-mining, ore-processing and waste-disposal facilities have been sited and installed without any consideration o f environmental consequences or impact on the health o f the local population, and there has not been any substantial maintenance for the past 15 years; Drainage works around tailings and waste rock dumps are often damaged, tailing caps are often inadequate, and depressions have formed that encourage ponding and seeping o f rainwater; Some tailings are damaged by river floods; Some o f the tailing dams are unstable and their structural engineering may not be adequate for the amount and physical properties o f the material stored behind them. This is reinforced by high water content in some o f the tailings and the r isk o f damage by landslides and seismic events; There are no warning signs or fences, and free access is possible to a l l dumps and tailings and to some o f the mine adits. Many o f the tailings are being used for grazing livestock with the result that radionuclides can enter the food chain;

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Plans o f the mine workings and shaftdadits (required to assess risks o f sub-surface tunnels) have not yet been declassified; The local Kyrgyz population in villages downstream o f Mailuu-Suu town (several thousand persons) are at risk from contaminated well/river water for drinking and irrigation purposes (the residents o f Mailuu-Suu have a piped water supply from the upper catchment); There i s no regular monitoring o f environmental media (air, water, foodstuffs) for radioactive or other toxic substances; and Most waste rock dumps are not stabilized or re-vegetated. Some dumps are frequently cut by streams (e.g. two dumps in the Kulmen-Sai River), with a result that radioactive materials are transported and dispersed downstream. Other waste dumps are located within Kara-Agach Village, causing a health risk to the villagers.

There i s a need for the urgent implementation o f monitoring, surveillance and maintenance o f tailings and waste rock dumps and other legacy issues from the mining and milling operations. The scope o f work i s to identify areas o f concern which can affect the short-term stability o f structures (i.e. 4 0 years) and to perform such rehabilitation as i s practicable to prevent or reduce impacts. The works would not include major works or building o f structures for longer term protection. The proposed activities will reduce impact o f the tailings and dumps o n nearby population by reducing the diffusion o f radon, the direct exposure to gamma radiation, the dispersal o f radioactive airborne particulates, and the water borne transport o f radioactive constituents, thereby improving the quality o f water for drinking and irrigation. I t wil l also allow safe cattle grazing on top o f tailings.

A detailed inspection o f a l l tailings and waste rock dumps will take place, as wel l as stability studies on specific identified tailings. Recommendations wil l include required l o w cost maintenance and rehabilitation, and identification o f potential risks due to instability. Examples o f works to be covered are erosion protection works, covering o f areas o f high radiation dose rate, the blocking o f mine shafts to prevent entry and subsequent radiation exposure, and the moving o f waste rock dumps or isolating river water away from dumps. The inspections will be carried out by two experienced consultants (experienced engineer in uranium tailings inspection and tailings geotechnologist), with local participation, so that a secondary outcome wil l be practical training o f Kyrgyz representatives in best practice monitoring and surveillance.

Capping and re-vegetation will be needed on a number o f tailings. Fencing or covering the tailings surface with a layer o f gravel and large rocks have been considered, but fences are l ikely to be stolen and both methods will prevent alternative land use, in particular access to cattle for grazing. Many o f the tailings have been covered with soil and are n o w vegetated, and used extensively as pasture, currently with potential health risks to some (it i s noted that not al l tailings do present a serious health r isk from grazing livestock). The project will a im at restoration o f some tailings with a suitable capping system to allow safe use as pasture. Other tailings wil l only require localized leveling o f tailing surfaces to remove depressions.

A wide variety o f such capping systems have been developed for restoration o f former uranium tailing sites. These include measures to promote erosion resistance, control radon and infiltration, and limit bio-intrusion. Experience developed in overseas uranium mining

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restoration programs (e.g. the U S UMTRA program, and Australian Ranger Mine) could be used to develop suitable vegetative restoration cover for selected tailings at Mailuu-Suu. A typical rehabilitated tailing would comprise the following sequence: (i) vegetation cover (native uranium and heavy metal tolerant grass species); (ii) topsoil with rooting medium (15-30 cm); (iii) gravel drainage layer (30-40 cm; acting as the capillary break layer); and (iv) clay layer (barrier for rainfall infiltration and radon diffusion).

Adequate storm water diversion and drainage around the boundaries o f the tailings are essential to prevent runoff entering the tailings areas and causing surface erosion, outwash o f contaminated sediment during heavy rains and contributing to seepage and risk o f dam failure. Storm water drainage generally follows a “horseshoe” outline with water inflows diverted around the sides o f the tailings and discharging through pipes or channels to nearby watercourses. Many o f the drainage structures are in a poor state o f repair or were never adequately engineered. The project wil l rehabilitate existing tailings drainage structures, including cleaning and repair to concrete channels, drop structures to decrease and control the discharge velocity, and provision o f safe release o f drainage water to the river, or implement additional drainage where there is insufficient capacity to meet peak flows. Materials applied in the country will be used to the maximum extent possible, such as gabions and Reno mattresses (box shaped cages o f steel wire mesh, f i l led with rocks and connected to one another to form gravity retaining structures), and rock rip-rap.

Some o f the waste rock dumps have potential for radiological exposure to the local population. This i s because the waste rock has effectively been left where it was dropped, totally uncovered and with none o f the restrictions which have been in place at the tailings areas. Although the waste rock is inherently not as radiologically dangerous as tailings (not ground up, not chemically leached), several waste rock dumps in Mailuu-Suu have actually a high radioactivity.

Typically, waste rock dumps should not be a major radiological concern providing people do not spend too much time immediately o n or near them, and do not cultivate a substantial proportion o f their foodstuffs on them. For short duration passage (e.g. walking across them) or grazing on them as part o f a bigger area, i t is highly unlikely that radiological doses wil l reach the level where intervention i s justified. However, some people have constructed houses o n waste rock, have constructed buildings out o f waste rock, or are growing a proportion o f their food on or near the dumps, which means that high exposures are likely. The construction o f a residence on a waste rock dump i s particularly bad, as the people would have both a high direct gamma dose from the rock, but also high radon levels inside the dwelling. The worst location in this respect i s Kara-Agach Village, where the local population lives in close proximity to a number o f waste rock dumps, the nearest one being dump V, with a volume o f rock o f about 15,000 m3, which i s located within the village. Under the project, the waste rock will be removed from the village and placed under benign cover f rom the unloading o f the Tectonic Triangle. Few houses on top o f the waste rock dump will be temporarily removed and rebuilt later. An added advantage wil l be that the road from the village to the main road will have to be rehabilitated as part o f the works contract to allow movement o f trucks.

Erosion o f waste rock dumps by river water i s also occurring, giving rise to dispersal o f mineralized material such as is occurring on the Kulmen-Sai River where dumps I and I1 are

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located. Results o f preliminary measurements indicate that the river water i s highly saline and at times carries large amounts o f uranium (and o f soluble daughters). For dump I, the project is expected to: (i) construct a 150 m long concrete-lined tunnel in order to avoid the direct contact o f the dump material with the river water; (ii) construct a cut-off drainage system around the upstream perimeter o f the dump; and (iii) provide for an impervious layer (thickness about 0.5 m), covered by an anti-erosive layer made by gravelly material (thickness about 0.3 m). The surface should have a gentle slope (max 10’) with direction upstream in order to discharge the water runoff in the drainage system. For dump 11, the project i s expected to: (i) construct a 150 m long open channel with Reno mattresses and four drop structures; (ii) construct a cut-off drainage system; and (iii) provide for an impervious layer (as for dump I).

For other dumps, the most practical solution i s to restrict development and cultivation, using local authorities in the area. Notification o f this needs to be provided to the local population and strict penalties should be imposed, such as destruction o f crops grown o n dumps. Inspection on at least an annual basis should ensure that activities are identified and discouraged. Fences to restrict access have been considered, but these are unlikely to last.

Koi-Tash Landslide - Diversion of Surface Water Runoff (US $0.25 million). The Koi-Tash Landslide has an average slope o f 28 percent, a length o f 875 my top width o f 310 my and bottom width o f 630 m. The approximate total surface area is 336,000 m2. The average thickness o f the unstable material is 15 m (maximum i s 40 m), and the approximate total volume o f the landslide i s about 5 mi l l ion m3. The unstable soil masses are composed partly o f loess-like loam, a large proportion o f which consists o f slightly l o w plasticity silt, with high porosity and apparent cohesion. There are also some rock fa l l deposits with large limestone blocks. In March 1993, the last major subsidence occurred, and the landslide contour got roughly to i t s present shape. At the moment movements are observed o n the upper edges o f the landslide. For the period 1996 - 2001 the constant activity o f the landslide mass was monitored by a continuous radio geocontrol system that detected a continuous displacement o f 1-5 “/day.

As much as possible storm water f rom the catchment area above Koi-Tash should be diverted so as to prevent large volumes o f water f rom infiltrating into the soil, which i s considered to be one o f the major causes o f landslides. If implemented successfully, a water drainage system wil l reduce the water content in the potential landslide area and thereby aid in stabilizing the slope. The purpose o f this project activity i s to canalize runoff and divert i t away f rom the vulnerable area. The challenge will be to design a system that wil l minimize breakages as a result o f soil movements. The channeling work can be done using manual labor or light excavators if this i s possible o n steep slopes. Donkeys can be used for transporting the materials o n steep slopes. The interventions include the fol lowing activities: (i) surveys and design o f the drainage system; and (ii) excavation and lining o f the drainage channels around parts o f the upper perimeter o f the landslide and pipelines to lead the drainage water to the river. I t i s estimated that a water volume o f approximately 0.4 to 0.5 m i l l i on m3/year can be diverted away from the landslide area.

Landslide Monitoring and Early Warning Systems (US $0.49 million). This project intervention will install real-time landslide monitoring and early waming systems o n Koi-Tash and Tectonic Landslides. The monitoring system proposed is based on the measurement o f surficial displacements and groundwater levels in boreholes. The scope o f the monitoring system i s to

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keep under watch the displacements o f the landslide bodies and soil-moisture conditions (including pore pressure in the soil mass) in order to provide an early warning in case o f incipient failure. The authorities and the local population would be informed immediately when a serious risk i s imminent, so that an emergency plan (e.g. evacuation) could be activated. In the real-time decision-support system, data wil l be automatically compared with alert threshold values, related to pre-established risk scenarios performed for each unstable area, making it possible to automatically identify emergency situations. In addition, storing o f long-term data will also help in the prediction and forecasting o f future landslide failure (for example, movements in response to seasonal precipitation patterns can be measured), and the system can be used to assess the effectiveness o f landslide control works. The recording system wil l also be linked up with the proposed weather station in Mailuu-Suu.

A preliminary stability analyses o f the two landslide areas was carried out during project preparation. I t was found that a drastic reduction o f the current factor o f safety occurs (with values approaching one) as the water level increases within the soil mass. For this reason it i s considered appropriate to install a combined system consisting of: (i) a Global Positioning System (GPS) for the displacement monitoring (minimum two stations o n Koi-Tash, and one on Tectonic); (ii) piezometer systems for monitoring pore pressure and water table in soil mass (minimum three o n Koi-Tash, and one on Tectonic); (iii) two extensometer o n each landslide, with real-time radio transmission o f data; and (iv) a seismic monitoring system on Koi-Tash, to measure the amplitude o f vertical and horizontal acceleration coefficients for use in future design works. The final selection o f the instruments wil l consider easy installation, and they have to be weatherproof, durable, and maintenance-friendly. They wil l be powered by solar energy, connected via a phone, radio or satellite data transmission system to a computer and to the local authorities with responsibility for emergency situations.

Remote-sensing satellite aided systems have not been used extensively before in the country, but appear the most adequate for the prevailing conditions. In particular, the use o f GPS for control o f unstable slopes i s providing good results in other countries in terms o f efficiency and cost saving, giving the possibility to operate under severe environmental condition, where i t is nearly impossible to work with traditional survey techniques. The experience gained in the control o f unstable slopes with static GPS measurements in many countries over the last decade has shown that GPS i s particularly suitable for the study o f large complex landslides (e.g. deep-seated landsides) and the control o f traditional topographic network reference points. Compared with traditional geotechnical instrumentation, GPS gives the possibility to obtain a 3D control o f the evolution o f unstable slopes and the possibility to correlate local measurements in the same reference system.

Riverbank Strengthening (US $0.68 million). Almost al l the tailings in Mailuu-Suu are situated within the flood plain o f rivers. River flows are greatly swelled in spring by heavy rain and melting snow. The integrity o f tailing impoundments can be severely affected by river erosion during heavy flash floods. This can result in loss o f retaining structures and wash out o f material. Tailings 8 and 18 are located adjacent to the Mailuu-Suu River. They have previously been protected by rock gabions, which are deteriorated and wil l eventually fail. The river course has also been modified during the collapses o f the Tectonic Landslide in 1992, 1994 and 2002, which has worsened the potential impact o f floods on these tailings. Tailings 1,2, and 4 are

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situated very close to the Aylyampa-Sai River f lood plain and are also at risk. The river is actually in progressive erosion. The foot o f the tailings were in the past strengthened by anti- erosive gabions. These gabion structures are partially damaged and wasted away, and this condition, in the medium term, could cause the instability o f the tailings dams. Riverbank strengthening has therefore been proposed to provide protection o f the most seriously affected tailings.

About 1,000 m o f the Mailuu-Suu River, between Tailings 5 and 8, will be strengthened. I t i s proposed to use gabions and Reno mattresses, protected by rocks to avoid abrasion. About 300 m o f the Aylyampa-Sai River course geometry has to be fixed. This will be done with an estimated five drop structures in the river and levees along the banks. Some minor repairs o f the tailings’ drainage systems for runoff control into the rivers are also needed. Sections o f the unlined channels to discharge water into the river have been partially damaged. In order to stabilize this, drop structures and small stilling basins wi l l be constructed with gabions and Reno mattresses. These materials are characterized by flexibility and good behavior in river training, and for which there i s already experience in their utilization in the country.

Tailings’ Relocation versus In-situ Stabilization

In parallel to the above interventions that wil l show an early visible impact, a feasibility and design study will be undertaken o f options towards providing a long-term solution to the major tailing and landslide r isks in the Mailuu-Suu area.

As indicated, o f particular concern i s Tailing No. 3, located o n the left bank o f the Mailuu-Suu River, in a small depression. The deposit (some 110,000 m3) was produced largely from the leaching o f high-grade uranium ore. I t is considered to present the highest risk because o f i t s intrinsic instability and the real threat o f the Tectonic Landslide which overhangs it. Investigations and studies are required to ensure the safety o f this containment. There are two main options which are applicable: relocation or in-situ stabilization.

Relocation would involve the excavation o f a l l the material in Tail ing No. 3 (and possibly No. 18 and part o f 8) and transfer to an alternative site. Required engineering studies to quantify this option would include a site selection study and a detailed design. Should the relocation option be the preferred solution, further work would include an environmental impact assessment and commissioning o f a suitable radiation monitoring program, Costing for the option is heavily dependent on the selection o f an acceptable disposal site, with nearby sites being cheaper. The nearest potential site i s Tailing No. 6, less than a km from No. 3. Infrastructure for relocation would also be required, including upgrading o f roads and potential bridges, which would provide long-term benefits for the villagers living north o f Mailuu-Suu town.

The advantages o f relocation would be that i t is a permanent solution to the problem, with the tailings physically removed from the danger area. This would be a quantifiable reduction o f the risk, with no further uncertainty with respect to the success. At the same time it would also include interventions to enhance the safety o f the disposal site, at least for the next decades. A major weakness o f the relocation option may be to find an alternative site which i s economically, environmentally, and socially acceptable. Other weaknesses include the uncertainty in costs

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depending on the disposal site and the need for a strong site management o f the relocation process.

Relocation o f former uranium tailings i s a major undertaking with potentially serious environmental problems and worker/public health risks, primarily from escape o f or exposure to radioactive materials. Yet relocation o f tailing material has been safely executed many times before around the world, for example, in the City of Cordoba (Argentina) and at Grand Junction, Colorado, U S A (under the UMTRA project). The process requires a high degree o f planning, detailed design and technological control, and the use o f experienced contractors during operations to minimize the risks. Various options for moving will be considered during the studies, including using trucks and a combination of trucks, conveyor belts, and aerial tramways. The attendant risks o f this operation are magnified considerably in a remote part o f Kyrgyzstan with limited equipment, infrastructure and specialist skills.

Stabilization in-situ of Tailing No. 3 would require substantial redesign o f the shape o f the tailing, and potentially measures to decrease water retention and increase the strength o f surrounding structures. This option would also require careful planning and design. Work that would l ikely be needed includes the removal and reshaping o f cover material. Active water extraction, either o f tailing pore water or o f inf lowing groundwater may also be required. Finally there may be a need for reinforcing columns for the walls and/or some form o f groutinghnjection to increase stability. Further reshaping o f Tectonic Landslide would also be needed, subject to investigation o f the feasibility o f this operation, to minimize the risk o f destruction and displacement o f Tailing No. 3 into the Mailuu-Suu River by reactivation o f the southern part o f the Tectonic Landslide. The advantages o f in-situ stabilization are that there would be no need to disturb the tailing and there i s no need for an alternative disposal site. Radiation protection issues will be comparatively minor and disruption to the area would be smaller. The major disadvantage is that there wil l st i l l remain an element o f r i s k associated with the structure and the public perception may be that funds were not used fully effectively with the tailing s t i l l at some risk.

As there are areas o f uncertainty with both options, further studies are deemed to be essential before the best solution can be determined, based on technical, socio-economic, and environmental considerations. Consultants wil l be recruited (financed f rom the PHRD grant funds) to carry out investigations and prepare a feasibility study that will evaluate al l relevant aspects, including the physical and chemical characterization o f the priority tailings, the need to dewater the tailings before removal (especially Tailing N o 3; if feasible given the fine granulometry), technical, safety and cost effectiveness considerations in excavation and transport, and the selection o f the disposal site. At the same time, investigations o f Tectonic Landslide will take place, as we l l as stability analyses and outline designs o f the required interventions. An environmental r isk assessment i s to be an integral part o f this study. The feasibility study will describe in detail: (i) the evaluation o f potential sites for tailings relocation, including short-listing o f sites and more detailed evaluation o f the preferred site(s); (ii) final recommendations on the preferred site with detailed justification for selection; (iii) considerations o f economic, social, and environmental factors and overall assessment o f suitability in l ine with current best practice; (iv) recommendation o f conceptual design o f the containment structure and consideration o f holding capacity; and (v) documentation o f

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stabilization methodology for Tectonic Landslide, projected lifespan o f the stabilization works and assessment o f residual risk, all o f which can be done close to final design level. If the relocation o f the tailings is selected, the consultants wil l work out the final details o f the design o f the removal methodology and the new tailing containment, as wel l as a transport corridor study, baseline monitoring (radiological and chemical), operational monitoring program, and a detailed EM. The selected option wil l then be implemented under the project. An amount o f U S $2.8 mi l l ion has been reserved under the project to implement the preferred option that wi l l reduce the hazard r isk considerably for the next generations. This amount was determined during project preparation as a reasonable amount for the works to be carried out on either the relocation o f the Tai l ing No. 3 and other priority tailings, or stabilization o f tailings and Tectonic Landslide in-situ.

Study and Implement Priority Long-term Improvements to Koi-Tash Landside

The same consultants wil l also consider options to stabilize the Koi-Tash Landslide or reduce the r i s k o f a natural dam from this landslide blocking the Mailuu-Suu River valley, causing possible destructive inundation o f Tailings No. 5 and 7. Subsequently, collapse o f the dam would generate a f lood wave that could wash out tailings downstream (Nos. 3, 8,9, 10, 18, 19,20,21, and 22), cause flooding in Mailuu-Suu and other settlements, and cause extensive downstream damage and potential radiological contamination within the Ferghana Valley.

First o f all, the type o f collapse will be identified and the geometry o f the potential river damming phenomenon wil l be quantified, in order to perceive the real r isk o f damaging Tailings No. 5 and 7. This will be achieved by means o f proper mathematical models. In case o f recognized danger, the study will consider the following options: (i) stabilization o f the landslide, including development o f a subsurface drainage system o f underground boreholes (it is realized that the landslide i s very large and may be difficult to stabilize, except for smaller zones. The consultants will have to determine whether there i s a possible stabilization solution with respect to the tailings safety); (ii) realization o f a 450 m flank bypass o f the damming body (either a short tunnel in the right r iver bank rock mass or a concrete or metal culvert inserted in the right bank); and (iii) a bypass tunnel (3 km) positioned in the rock mass along one o f the Mailuu-Suu River banks. If the study wil l demonstrate the partial collapse o f the landslide and a geometry o f damming with no danger for the safety o f the tailings, the construction o f a bypass system would not be necessary. The study would also include consideration o f a possible new alignment for the valley road north o f Mailuu-Suu, which i s considered by the villagers as a main constraint. I t i s anticipated that the road wil l be extensively used during the project and therefore needs to be at least partly rehabilitated and maintained.

Based on the results o f the studies and the remaining funds some o f the priori ty works on Koi - Tash wil l be implemented. About U S $0.50 mi l l ion has been earmarked for the priority works. Government can also use the results o f the studies to attract additional financing from donors for additional long-term remedial options for the Mailuu-Suu tailings.

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Consultants Services

Since Independence in 199 1 , the MEE and related design agencies have lost much o f their design and implementation capacity. A team o f multi-disciplinary international and national consultants wil l be financed to provide capacity and training for the design o f state-of-the-art modem solutions for the activities that have been discussed above. The consultants will assist in conducting a range of technical surveys and investigations and determine a l l possible alternatives for priori ty hazard mitigation, before design o f the preferred solutions. The consultants will also help carry out, as necessary, the environmental assessment o f the selected solutions and provide knowledge and skills in construction supervision. The team is expected to include a tailings specialist, civi l engineer, geotechnical specialist, hydrogeologist, geomorphologist, geologist, and environmental specialist. In particular, the team wil l focus on:

Technical Standards Related to Emergency Activities. Designers continue to operate according to Soviet norms regarding technical standards and benchmarks. Many o f these norms have been updated during the past decade and are o f good quality. Other norms are outdated. The consultants wil l review al l relevant standards and norms and, together with staff o f the MEE and related agencies, will assist with updating the standards and norms in l ine with international ones, and train the Kyrgyz specialists in understanding these.

Investigations. In order to review altemative interventions and 'design preferred options o f urgent remediation works and long-term works on tailings and landslides, the consultants wil l help carry out necessary f ield surveys and investigations (e.g. topographic, drilling, geomorphologic, seismic, and hydrological). They will also develop the capacity o f personnel o f MEE and design agencies in internationally accepted best-practice methodologies for investigation, r isk analysis, and identification o f the various urgent priori ty issues to be addressed under the project.

Design Option and Parameter Studies. The large scope within the Kyrgyz Republic for disaster preparedness projects contrasts markedly with the l imited resources available for investments. In order to maximize the use o f the scarce resources, the consultants will provide knowledge and ski l ls to counterparts in the review o f design options for the various priori ty interventions planned under the project (civi l works, installation o f monitoring equipment, etc.) and with the assessment o f design parameters, design options, and costs.

Design and Construction Supervision. Consultants wil l introduce to counterparts modem design methods. They will also build capacity o f counterparts to prepare environmental assessments for the major interventions planned under the project. The consultants will provide skills development to counterparts in construction supervision to ensure that construction follows design specifications.

The outputs o f this consultancy wil l include: (i) a set o f modern norms and standards to be used for the design and implementation o f works and goods related to disaster management and mitigation; (ii) modem state-of-the-art designs for each o f the interventions planned under the project that are environmentally viable, cost effective, and will provide maximum protection for

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the population; and (iii) supervision reports, reflecting the progress with construction works according to the approved designs, norms and specifications.

Component 2 -Disaster Preparedness and Monitoring (DPM) (US $3.38 million)

The component wil l assist the Ministry o f Ecology and Emergencies with goods, works, and services to assist with institutional development to improve the preparedness o f the Ministry to predict, analyze and respond to disasters, develop and implement awareness and training programs, and develop and implement a monitoring and warning program at important potential disaster hazards sites throughout the country, including Mailuu-Suu. Adequate institutional capacity wil l limit the consequences o f natural disasters, wil l prevent the occurrence and limit the consequences o f major industrial accidents, and will ensure that effective arrangements are in place for emergency preparedness and for response to natural and manmade disasters. I t will also ensure that the appropriate levels o f government and other relevant public services, as wel l as members o f the public, are fully informed o f the probability and potential risks o f natural and manmade hazards, so that they can put those risks into perspective and understand the actions required o f them in an emergency.

Capacitv Building (US $2.44 million)

This sub-component wil l include services, training, and provision o f equipment to provide a more effective emergency management and response system. A program o f capacity building wil l be carried out to strengthen the ability of MEE, administrations at various levels, and local communities within the project areas to better fulfill their duties and functions related to disaster hazard management and response, and create better awareness for and preparedness in case o f disasters. Lack o f coordination and diffusing responsibilities among ministries and local administrations are issues that appear to inhibit the ability o f the government at a l l levels to respond quickly and effectively to disaster events. The staff also lack regular training and exercise programs. Communications among government entities, including the various offices o f MEE, and between govemment agencies and the population i s weak, and must be significantly upgraded. There i s no operational Emergency Response Center (ERC) and only limited communication facilities with the seven oblasts and raion offices o f MEE. Close relationships with local entities and the population in remote areas are lacking, and there are limited awareness and training programs. Any program will have to be tailored to foreseeable budgets, which should be explicitly projected. Given weak fiscal prospects, maximum use must be made o f voluntary self-interested efforts o f communities.

A team o f international and national consultants with varying expertise (including institutional specialist, training specialist, seismic specialist, geotechnical specialist, GIS specialist, and lawyer) wil l be recruited for the development o f improved disaster hazard preparedness, management, and response capacity in the Kyrgyz Republic. This will be done through institutional strengthening activities at various administrative levels to increase planning, analysis, and training capabilities, and to promote public awareness and preparedness at local community levels to lessen the impact o f disaster hazards. In particular, the consultants will:

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(i) Review the current functions o f MEE and other national and regional administrative agencies involved in disaster hazard management and response;

(ii) Develop a comprehensive National Management and Response Plan that clearly defines how national government entities and assets are made available to support local administrations to properly respond to emergencies. The Plan will describe management, organizational, administrative, and functional programs and processes aimed at creating more effective entities. The plan wil l specify the operational procedures o f MEE before and during emergencies, including alerting, warning, activation, and emergency declaration standards;

(iii) Review existing legislation and regulations governing disaster affairs and c iv i l defense, and support the drafting o f necessary legislation, if necessary, and regulations for the implementation o f the National Management and Response Plan;

(iv) Assist with the establishment o f a National Emergency Management Committee, comprised o f representatives from al l relevant ministries and agencies, including private sector ones, with a role in emergency management and disaster mitigation, and establishment o f an emergency team in MEE with representatives from each o f MEE's relevant departments;

(v) Develop and implement a comprehensive training and exercise program to increase the institutional capacity and enhance coordination and communication between responders at a l l levels o f government, including emergency management officials and rescue service personnel, and among NGOs and private enterprises. Training i s also needed to ensure the effectiveness o f disaster preparedness equipment and monitoring and early warning systems that will be provided under the project;

(vi) Develop and provide training in a robust public education and hazard awareness program, an essential element o f any emergency management program. The aim i s to inform residents regarding the nature o f r i sk and appropriate actions to be taken before, during, and after disasters. This wil l be done through the development o f a national public awareness strategy and awareness material. The information wil l be made available through a variety o f media, as we l l as direct to population at risk within the project areas, and targeted for specific populations. Also, a manual on 'Essential Principles o f Comprehensive Emergency Management' wil l be produced to summarize good practices and lessons learned for the use by officials and local communi ties;

(vii) Design procedures and systems for the collection and analysis o f seismic, landslide, and other disaster data and develop dissemination systems;

(viii) Assist in the preparation o f two study tours for government staff at technical level with prime responsibility for disaster hazard management and response. One study tour could take place in Europe and a second one in the U S A and Japan. These tours

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would help to improve the understanding o f modern management and response systems; and

(ix) Assist in the acquisition o f communication and other technologies at central, oblast and about ten key raion offices o f MEE, as wel l as the equipping o f a proper GIS Center and Emergency Response Center in Bishkek, for use in both disaster response and recovery efforts and in planning and designing hazard mitigation projects. MEE has an uncompleted ERC. The space i s available in the Bishkek office, but the required technologies have not been acquired. A well-equipped center wil l significantly facilitate the collection, analysis, and dissemination o f disaster information. I t wil l also be used as the nerve center for disaster response and i t will be used by the Department o f Emergencies Monitoring and Forecasting and Mining Tailings Management to monitor risks and forecast future events and design and plan hazard mitigation actions.

The main outputs o f al l these activities will be: (i) creation o f a comprehensive emergency National Management and Response Plan, and staff o f MEE trained in emergency management; (ii) development o f planning and management practices in MEE for medium- and long-term mitigation activities to intemational best-practice standards; (iii) training and workshops held for officials and communities at national, regional, and village levels, aimed at improving coordination between and awareness at the various administrative levels in emergency situations, and empowering vulnerable communities to participate in disaster response actions in the event o f a disaster; and (iv) GIS and ERC offices functioning in MEE to collect the disaster hazard data and information and analyze and disseminate the information, a l l aimed at better prediction and handling o f disaster occurrences.

Landslide Monitoring and Waminrz Systems (US $0.43 million)

A number o f villages are under serious threat o f very large landslides. They are cause o f concern by MEE and local authorities as both the population and the properties located in the nearby valleys are potentially at risk, and human losses may occur in case o f sudden landslide instability. A major concern i s also related to the fact that the Kyrgyz territory i s seismically active, and strong motion earthquakes can trigger failure o f marginally stable soil masses. In case o f an earthquake the losses due to building collapse and other typical seismically induced damage may increase very significantly due to the combined effects o f earthquake and landslide collapse. A series o f activities are proposed to investigate and propose effective and economically sustainable monitoring measures for some o f the most critical large landslides. The proposed activities include the fol lowing stages:

(i) General screening study, to identify the most critical landslides in terms o f hazard and risk for the adjacent settlements. During preparation, about 20 areas were identified, but the locations and number may change somewhat after this screening study. The most critical landslides will be identified based on the fol lowing criteria: (i) stability level o f the landslides (hazard); (ii) risk level for adjacent settlements which may be hit by the soil mass in case o f failure (direct risk); and (iii) risk level which may be caused by interruption o f infrastructures, lifelines, or rivers (indirect risk). Depending

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(ii)

(iii)

(iv)

o n the nature o f the landslide and on the potential damage associated with a landslide failure, a monitoring and early-waming system could be preferred to more costly landslide stabilization works (the systems wil l be financed by the project; see below). In cases where abrupt failure mechanisms may take place with no possibility o f reliable prediction (high hazard), and/or in cases where extensive losses may derive f rom landslide collapse (high risk), the system alone may not be satisfactory and therefore stabilization works are mandatory. The study will be shared with other donors, who m a y finance stabilization works o n some o f the most serious landslide areas. In the worst case, the study may conclude that for several landslide areas the best solution may be to resettle the population living under the threat o f such landslide. The project could then serve as a catalyst for the involvement o f other donors to address the issue o f resettlement and compensation;

Investigation and design o f monitoring and early-warning systems for the selected landslides. The purpose o f the investigations mentioned above is to establish al l the parameters required for the design o f the monitoring and early warning systems and o f remedial actions for landslide stabilization. It wil l include geodetic surveys to define the geometry o f the landslides and geotechnical and geophysical surveys, to obtain the relevant geotechnical parameters and landslide characteristics. Geotechnical instrumentation such as automatically recording piezometers and extensometers will be designed, with direct transmission to a base station, linked to a warning system. In general, the scope o f the proposed monitoring systems is to keep under control displacements o f the landslide body and pore pressure in the soil mass in order to provide an early waming in case o f incipient failure. Authorities and the local population will be informed when a serious r isk is imminent, which will activate immediately an emergency plan (e.g. evacuation);

Construction and installation o f the monitoring and early-warning systems for the selected landslides; and

Development o f local reaction capacity to enable inhabitants to prepare themselves for future disasters. Local population wil l receive training to ensure that waming systems wil l be understood and recognized, so that communities take the necessary precautions in good time.

Seismic events are also a regular occurrence in the country. Many o f the seismic monitoring stations are out o f operation, and few buildings are equipped with earthquake detectors. The ability o f MEE to assess buildings for earthquake worthiness has also diminished for lack o f equipment. The project will assist with the procurement o f equipment to improve the capacity o f the MEE in seismic monitoring and response. The equipment to be procured will include seismic measurement stations, earthquake detectors for public buildings that will provide early waming by detecting an earthquake's sound wave before the earthquake's destructive shear wave strikes and sets o f f an alarm, and a mobile station that will allow measurements to aid in the estimation o f the resistance o f buildings to seismicity, which i s important for the development o f adequate emergency procedures.

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Monitoring Svstem in Mailuu-Suu (US $0.5 1 million)

Based o n a l imited number o f samples collected during preparation, i t can be preliminary concluded that seepage water from tailings regularly exceeds the maximum admissible international limits in toxic and radioactive elements, but also that surface water and groundwater are affected as wel l and exhibit locally high concentrations.

A comprehensive monitoring system covering hydrological, geo-chemical, and environmental parameters is being planned in Mailuu-Suu to support and complement the interventions carried out under Component 1 , to determine the baseline situation, and to measure impact o f project interventions. The interventions wil l include a weather station, a r iver f low gauging station on the Mailuu-Suu River (at Kara-Agach), sampling selected wells and springs, water quality monitoring stations, and a small laboratory.

Baseline maps o f contamination wil l first o f al l be prepared, and stream transport and movement o f tailing material will be determined and modeled. A better understanding o f water quality will provide information on the chemical dispersion o f pollution, while knowledge o f sediments will provide information for physical dispersion. The area potentially most at risk from deposition o f contaminated sediments are the Mailuu-Suu River f lood plain and irrigated areas immediately upstream and downstream o f the Uzbek border.

Three automated stations for water monitoring wil l be installed near places with the most contaminated waters along the Kulmen-Sai and Mailuu-Suu Rivers (upstream o f the town and close to the border). The parameters to be permanently monitored should be pH, temperature T, redux potential, and conductivity. If major changes in the level o f one or more o f these parameters are detected, which means there is a change in water composition, water sampling for radium, uranium, certain heavy metals and arsenic will be done by the local staff o f MEE. Some o f the measurements can be done in-situ, some in the small laboratory to be established with project funds in Mailuu-Suu, and some sampling will take place in more specialized laboratories in Bishkek. The laboratory caretaker in Mailuu-Suu will also be responsible for the maintenance o f the monitoring equipment, and recording and dissemination o f a l l information to the appropriate authorities in Mailuu-Suu and Bishkek. Based o n procedures to be designed under the project, the Director o f DEMFMTM will issue a waming to the Mailuu-Suu and Uzbek authorities if there are problems with water quality.

At the moment, the average annual effective radiological dose (in mSv) i s not very high in Mailuu-Suu, exceeding the average global exposure (2.4 mSv) by not more than a factor 3, which i s lower than found in many areas o f typically elevated exposure l ike operational mines. There are, however, certain areas in Mailuu-Suu around tailings and waste dumps with isolated very high exposure rates which require definitely interventions. Radon capture devices to monitor radon exposure f rom tailings will be installed early o n to measure the impact o f interventions o n the tailings and waste rock dumps.

A small program to better understand the health impact o f the tailings will be implemented. There i s data in the Mailuu-Suu hospital, but it i s not segregated by age, village, etc., which made it difficult during project preparation to make conclusions o n the impact o f tailings and waste dumps on the health of the local population. There have been no epidemiological studies

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over the last 15 years, neither has there been any blood testing o f persons at risk from exposure to tailings. Lung X-rays (e.g. for early detection o f malignant cancer tumors) have not been regularly provided.

Based on a preliminary review o f morbidity and mortality statistics, the Mailuu-Suu area is characterized by a variety o f diseases, the most prevalent o f which are congenital abnormalities, goiter, and diseases o f the organs. A study by the Institute o f Oncology revealed that out o f 1,246 children and 3,266 adults surveyed in Mailuu-Suu, about 600 are suffering from incipient cancer problems, 23 o f which have a high likelihood o f cancer. The most prevalent cancers are stomach, followed by skin and lung. According to data from the Institute, the incidence o f cancer in Mailuu-Suu i s at least two times higher than in Jalal-Abad City.

I t i s in general difficult to make a direct link between health and mining, especially when dealing with closed mines, and it has to be acknowledged that any impact o n health is very long-term. It i s difficult to draw a direct link between the current state o f poor health and i t s contamination sources in the area. There are many factors that may underlie the reportedly poor state o f health, including the prevalence o f former underground uranium miners in the population, poverty, and poor infrastructure. A s i t is not clear whether any increase in cancer incidence i s due to the actual radioactivity levels in environmental media, the study wil l have to consider such other parameters as well. The project will carry out l imited research to get better health data, and also develop a system to improve the record keeping and provide data to the public through a transparent system of data dissemination. The project will also try to seek donor assistance to carry out more comprehensive monitoring o f the health situation in Mailuu-Suu, including epidemiological and other studies.

Kutman-Kol Lake is located in the upper part o f the Mailuu-Suu River valley, 50 km upstream o f Mailuu-Suu town. The lake i s 1,400 m long, has a width o f some 300 m and a maximum depth o f 35 m. The water volume i s about 4 mi l l ion m3. The lake has been formed as consequence o f a massive rock fall, probably several thousand years ago. Although inspections show that there does not seem to be an imminent threat o f collapse, a topographic and geological survey wil l be included in the project, and if deemed necessary some monitoring equipment, in order to get a better understanding o f the condition o f the impoundment wall.

Through al l these activities, i t is expected that a clear picture wil l emerge o f the situation in the river basin, and current and future contamination from the tailings and waste rock dumps, and allow the design and implementation o f better information campaigns and assist in the design o f fbture interventions to reduce the risk o f disasters.

Component 3 - Project Management (PM) (US $0.95 million)

This smaller component will provide funding for the staffing and operation o f a Project Implementation Unit. The PIU will comprise a minimum o f seven professional staff (see Annex 6), and few support staff (drivers and secretary). An experienced international management consultants wil l be recruited early o n for up to one year to assist the PIU staff in the implementation o f the project and provide on-the-job training to PIU staff. This will improve the

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knowledge and experience o f the staff and should enable them to quickly take full charge o f project implementation in a satisfactory way.

Sufficient vehicles and office equipment wil l be procured to facilitate the operation o f the PIU. Minor office renovation wil l take place in Bishkek, Osh, Jalal-Abad, and Mailuu-Suu. Incremental operating costs (operation and maintenance o f vehicles, travel and subsistence o f PIU staff, office and computer supplies, and other miscellaneous costs) will to a large extent be paid for by project funds. Several technical and social audits will take place during project implementation to measure progress with project implementation and the achievement o f performance indicators. This component will also finance the annual independent audit.

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Annex 5: Project Costs

KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

Kyrgyz Republic Disaster Hazard Mit igat ion Project YO YO To ta l Components Project Cost Summary (US% '000) Foreign Base

L o c a l Foreign To ta l Exchangc Costs

1. Uranium Mining Wastes Isolation and Protect 3,568.5 2,777.6 6,346.0 44 63 2. Disaster Preparedness and Monitor ing 1,314.4 1,524.4 2,838.8 54 28 3. Project Management

To ta l B A S E L I N E COSTS Physical Contingencies Price Contingencies

To ta l P R O J E C T COSTS

25 8 5,515.9 4,510.4 10,026.2 45 100

-- 633.1 208.4 841.5

344.3 294.0 638.3 46 6 37 11

6,555.0 5,206.3 11,761.2 44 117 -- 694.8 401.9 1,096.7

Kyrgyz Republic Disaster Hazard Mitigation Project Project Components by Year (incl. Contingencic (US $lOOO) Totals Including Contingencies

A. Disaster Hazard Mitigation Project 2004 2005 2006 2007 2008 2009 Total ------

1. Uranium Mining Wastes Isolation and Protect - 1,549.2 2,055.9 1,635.2 1,716.5 477.8 7,434.6

105.8 402.7 109.4 136.0 118.4 77.7 950.0 3. Project Management Total PROJECT COSTS 105.8 3,369.1 3,351.7 2,194.0 2,167.8 572.8 11,761.2

2. Disaster Preparedness and Monitoring - 1,417.2 1,186.4 422.9 332.9 17.3 3,376.7 -------

Kyrgyz Republic Disaster Hazard Mitigation Project Local Project Componentiby Financiers --- Govt. IDA PHRD G m Total (Excl. Duties &

A. Disaster Hazard Mitigation Project Amount Amount Amount Amount Amount % For. Exch. Taxes) Taxes ------- (US$ '000)

1 . Uranium Mining Wastes Isolation and Protect 1,252.9 4,700.1 963.8 517.7 7,434.6 63.2 3,192.3 2,989.4 1,252.9 2. Disaster Preparedness and Monitoring 477.9 1,435.4 983.1 480.2 3,376.7 28.7 1.783.8 1,122.7 470.1

179.4 770.6 - 950.0 8.1 230.2 585.5 134.3 ----- ---- 3. Project Management Total Disbursement 1,910.2 6,906.2 1,947.0 997.9 11,761.2 100.0 5,206.3 4,697.6 1,857.3

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Kyrgyz Republic Disaster Hazard Mitigation Project Disbursement by Financiers Govt. IDA PHRD GEF(?) Total (US$ l000) Amount Amount Amount Amount Amount YO

A. Civil Works

B. Goods

C. Consultant Services

Civi l Works 873.3 4,359.0 - 589.8 5,822.1 49.5

Goods 19.0 1,303.1 - 266.2 1,588.3 13.5

Consultants for Capacity Building 526.8 267.1 983.1 104.3 1,881.4 16.0 PIU consultants, audit firm, etc. 52.7 298.9 - 351.6 3.0 Design & Supervision Consultants 374.8 - 963.8 - 1,338.6 11.4

Subtotal Consultant Services 954.4 566.0 1,947.0 104.3 3,571.7 30.4 D. Training and Study Tours

Training programs - 371.5 - 371.5 3.2 Study Tours and Conferences - 80.8 - 37.5 118.4 1.0

Subtotal Training and Study Tours - 452.4 - 37.5 489.9 4.2 E. PIU Incremental Operating Costs

Office Renovation 4.5 25.7 30.3 0.3 Support Staff Salaries 6.1 34.8 41.0 0.3

Social Charges - 26.9 26.9 0.2

F. ERC Incremental Operating Costs 7.8 43.9 51.7 0.4 Total 1,910.2 6,906.2 1,947.0 997.9 11,761.2 100.0

P IU Operating Costs 45.1 94.3 - 139.4 1.2

Subtotal PIU Incremental Operating I 55.8 181.8 - 237.5 2.0

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Annex 6: Implementation Arrangements KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

The key government institution responsible for the establishment and implementation o f environmental pol icy as wel l as natural disaster management in Kyrgyzstan i s the Ministry o f Ecology and Emergencies, which wil l be the implementing agency for the project. MEE has main offices in Bishkek and Osh, and is also represented in al l seven oblasts and more than 50 raions in the country.

The Ministry has delegated the overall responsibility for the project implementation to the Department o f Emergencies Monitoring and Forecasting and Mining Tailings Management. The Department, in turn, will delegate the daily management, administration and coordination o f the project to a Project Implementation Unit that has already been established, attached to DEMFMTM and reporting to its director. In particular, the PIU will be responsible for developing and updating the Project Implementation Plan (PIP), ensuring that project activities are implemented according to the PIP, reporting o n project progress to government and the Association, ensuring that procurement o f goods and services i s done in a timely manner and in accordance with Wor ld Bank guidelines, managing project funds, maintaining accounts, getting the accounts audited, ensuring adequate budget provisions for the project in the national budget, facilitating the work o f consultants, and reviewing consultant outputs.

The PIU wil l comprise, as a minimum, a director, design engineer, construction engineer, procurement specialist, financial management specialist, monitoring and evaluation specialist, who will also be in charge o f the environmental monitoring, and a translator/office manager. Most o f the professional staff will be based in Bishkek, but i t i s expected that at least the construction engineer will be based in Jalal-Abad. All staff will have to spend extensive periods o f time on f ield trips, especially in Mailuu-Suu.

Details o f al l tasks and responsibilities for the various PIU staff have been prepared at the time o f drawing up contracts, and wil l also be described in the operations manual. In summary, the PTU director wil l have overall day:to-day responsibility for implementation o f the project and the management o f the project staff. The director wil l also have overall responsibility for the preparation o f progress reports and annual workplans, which wil l include an estimate o f the annual budget and procurement and financing plans. The design engineer will ensure that the technical aspects o f the engineering investigations, surveys and designs are carried out professionally, and provide supervision o f the design consultants. The construction engineer wil l have responsibility for contract management and construction supervision and will ensure that the consultants that provide construction supervision carry out their tasks in compliance with agreed contracts. The procurement specialist will be responsible for a l l procurement activities, including preparation o f tender documents, bid evaluation reports, and communication with bidders. The financial management specialist will have direct responsibility for project financial management, including project accounting, reporting, administration o f the Special Account, and auditing arrangements. The monitoring and evaluation specialist wil l be in charge o f establishing the project monitoring and evaluation system that will al low the P I U to track the progress o f the project and identify bottlenecks in a t imely manner. He/she will also be responsible for the preparation o f the quarterly progress reports, including the compilation o f the

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Financial Monitoring Reports. In addition, he/she wil l be responsible for the coordination o f the Environmental Management Plan and the monitoring o f environmental parameters.

A National Emergency Management Committee will be established under the project, with representatives from relevant ministries and agencies with a role in emergency management and hazard mitigation, under the chairmanship o f the Ministry o f Ecology and Emergencies. The N E M C wil l serve as the Steering Committee for the duration o f the project with the responsibility for overseeing the project implementation and resolving any issue related to inter- governmental agency coordination o f the project activities.

A number o f other agencies may be involved in some o f the project activities. This wil l include:

The Ministry of Health controls the standards for radiation protection, concentrations o f toxic substances in air, water and food, and protection o f the public against adverse effects o f radiation and toxins from waste handling and storage. They may provide guidance and contribute to the health studies and the monitoring o f parameters in Mailuu-Suu.

The State Sanitary-Epidemiological Department (under the Ministry o f Health) was founded by Government Ordinance No. 229 o f M a y 29, 1997. Its main remit i s to implement sanitary, hygiene, and anti-epidemic measures aimed at preventing and eliminating environmental contamination, improving working conditions, welfare and recreation o f the population and reducing morbidity rates. I t operates a network o f regional stations. They may also be able to contribute to the health studies, and provide guidance for monitoring studies.

The Ministry of the Interior executes the State’s policies on environmental protection. I t also supervises compliance with safety standards in the transport o f wastes. If a decision is made to move a tailing, the Ministry would be involved in supervision.

The State Agency for Geology and Mineral Resources i s responsible for implementing the Government’s mineral sector policies. I ts key functions include conducting national geological surveys, administering the minerals sector (licensing and exploration), and protecting the national mineral resources. In this context i t has a program for surveying levels o f natural radioactivity in soil and groundwater in and around existing mine areas. Their knowledge may be used for monitoring o f some o f the contamination parameters in the Mailuu-Suu area.

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Annex 7: Financial Management and Disbursement Arrangements KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

Country Financial Management Issues. Weak public financial management capacities and high perceived levels o f institutional corruption are serious challenges facing the country. However, the government appears committed to change the way i t s institutions work, and there is strong support for the initiatives included in the Govemance Structural Adjustment Credit and Govemance Technical Assistance Credit operations which support wide-ranging reforms in public administration, the c i v i l service, and public expenditure management.

Overall, the standard and capacity o f accounting profession in the country are low. In 2002, the government promulgated Intemational Accounting Standards (IAS) as the ruling standards in the Kyrgyz Republic. However, these standards are not widely used due to lack o f experience with IAS. Most project implementing entities use the cash basis o f accounting, which is not in accordance with IAS, but which in many cases i s sufficient for proper accounting. Intemal audit i s only found in a few institutions. External audit i s practiced by individuals and a small number o f audit f i rms. Most audits required by international organizations traditionally have been performed by the Big Four firms, Deloitte & Touche, Emst & Young, KPMG, and PricewaterhouseCoopers, mostly with staff based in Almaty, Kazakhstan. Audit f i r m s are now required to obtain Kyrgyz audit licenses before being allowed to conduct audits in the Kyrgyz Republic, and to-date 3 o f the Big 4 audit firms have been issued with licenses to practice in the country. In M a y 2003, the Bank conducted a review o f locally-based audit firms to determine their acceptability to audit IDA-financed projects. Two firms have been pre-qualified, and one firm was conditionally pre-qualified. Audit reports o f IDA-financed projects in the country have typically been received o n time, and have been generally satisfactory. T o minimize financial risk there has been the need to “ring fence” financial resources in IDA projects in order to provide the appropriate fiduciary safeguards.

Implementation Arrangements and Staffing. On a day to day basis, project activities wil l be implemented by the Project Implementation Unit. The PIU consists o f full-time staff hired as consultants o n competitive basis, and includes a financial manager. Given that the PIU i s new there are no significant strengths that provide a basis for reliance on the project financial management system. However, a good project accounting system has been installed, and the financial manager has gained experience with previous IDA-financed projects. The PIU i s currently implementing preparation activities financed by a PHRD grant, and has developed version one o f the financial management manual that is expected to guide the financial management functions o f the project and establish key internal control mechanisms on the application and use o f project funds. The spreadsheet-based accounting system for the preparation phase has been replaced by an accounting software that will ensure a fully automated project accounting, capable o f producing Financial Monitoring Reports. The current financial management staffing is considered adequate for the project. Staffing requirements will be reviewed during the early phase o f project implementation. I t is expected that the financial management function wil l need to be strengthened within six months after project effectiveness, by hiring an accountant/disbursement specialist to support the financial manager.

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Accounting Policies and Procedures. Accounts and records for the project wil l be maintained by the PIU, which will operate and maintain a financial management system (FMS) capable o f producing Financial Monitoring Reports in accordance with formats agreed with IDA. Books o f accounts for the project will be maintained based on Intemational Accounting Standards. The financial management manual describes the accounting policies and procedures to be used by the PlU. The financial manager will be responsible for overall project financial management, maintenance o f books and accounts for the project, preparation and dissemination o f financial statements and FMRs, and timely audits o f the project. The PIU wil l generate and maintain accounting vouchers and supporting documentation for expenditures on al l activities o f the project, and maintain an accounting transaction information flow. Payments will be made for eligible expenditures either directly from the Grant Account or from the Special Account.

Financial Reporting and Monitoring. Accounting software has been installed. The software, 1 - Cy is used for many IDA-funded projects in the country and i s supported by various local companies. The PIU will maintain project accounts and will ensure appropriate accounting o f the funds provided. The financial management system will be capable o f recording al l transactions and balances, supporting the preparation o f regular financial statements, and safeguarding the project’s assets. It wil l prepare FMRs o n a quarterly basis. The FMRs include: (a) Project Sources and Uses o f Funds; (b) Uses o f Funds by Project Activity; (c) Special Account Statement plus Local Bank Account Statement; (d) SDR Reconciliation, including reconciliation o f exchange rates movement and total grant not spent and not committed; (e) Physical Progress Reports; and (0 Procurement Reports. These FMRs wil l be submitted to IDA within 45 days o f the end o f each quarter. The f i rst FMRs will be submitted after the end o f the f i rst full quarter fol lowing init ial disbursement. Formats o f the annual financial statements and the FMRs have been incorporated in the financial management manual.

Planning and Budgeting. The PIU wil l prepare annual budgets in l ine with the Project Implementation Plan, and these budgets wil l form the basis for spending and requesting funds from the government for counterpart contribution. These budgets, prepared in accordance with the FMR format (disbursement categories, components and activities, financiers, account codes, and by quarter), will establish physical targets to ensure a proper comparison between actual and budgeted performance. The financial management manual prescribes the appropriate manner for preparing budgets to satisfy both govemment and good financial management requirements. A detailed budget for the f i r s t full year o f project implementation, broken down by quarter, wil l be prepared before the Grant becomes effective.

Audit Arrangements

Internal Audit. Internal audit function is not envisaged, and intemal control wil l be provided by a management structure that ensures checks and balances and compliance with the manual o f financial procedures.

External Audit. There will be comprehensive annual audits o f the project financial statements, covering al l aspects o f the project. The audits wil l be performed by independent private auditors acceptable to IDA, and in accordance with International Standards o n Auditing (ISA) and the World Bank’s guidelines on auditing as stated in the guidelines o n Annual Financial Reporting and Auditingfor World Bank-financed Activities (June 2003) and other guidance that might be

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provided by IDA. Auditors were recruited in M a y 2004 for the audit o f the PHRD preparation grant by the end o f 2004. The contract with these auditors can be extended for the audit o f the project financial statements, subject to satisfactory performance during the audit o f the PHRD preparation grant. The tasks o f the auditors wil l include both the audit o f financial transactions and an assessment o f the operation o f the financial management system, including a review o f the internal control mechanisms. The annual audit reports wil l include an opinion on the financial statements o f the PIU, incorporating the project financial statements, including Special Account Reconciliation, and Statement o f Expenditures (SOE) Withdrawal Schedule, as well as a management letter. The audit reports will be submitted to IDA no later than six months after the end o f the fiscal year to which they relate (Le. by June 30 o f each year). The cost o f the audits wil l be eligible for financing from the IDA Grant. The P I U wil l provide the auditor with full access to project-related documents and records and with the information required for the purpose o f the audit.

Flow of Funds

IDA funds wil l f low from the Grant Account to either the Special Account or directly to suppliers o f goods and contractors and consultants. Funds from the Special Account wil l be used to pay for works, goods, consultant services, and incremental operating costs. In order to pay for local expenses, funds may be transferred from the Special Account to a local currency transit account o n a need basis, with only minimal balances being retained in this account. There wil l be separate project accounts for counterpart funds, provided by the Grant Recipient, from which payments wil l be made for the various disbursement categories. The Recipient confirmed during Negotiations its commitment to provide counterpart financing as required, representing mostly taxes and a portion o f the incremental operating costs. The Government intends to include budget to pay taxes into the Public Investment Program from 2005 onwards in order to improve transparency, rather than to rely o n tax-offsetting. The Recipient has also stressed that i t i s committed that grant funds will not be used to pay taxes. As the project i s co-financed by other donors, including a Japan PHRD grant, there wil l be separate Special and Project Accounts for these grants.

Disbursement Arrangements

The proceeds o f the IDA Grant will be disbursed over a period o f five years. Withdrawals from the Grant Account wil l be requested in accordance with the guidance provided in the Disbursement Letter. Disbursements will fol low the transaction-based method, i.e. the traditional Bank procedures (reimbursements with hll documentation, Statements o f Expenditures, direct payments and special commitments). Reimbursement o f funds wil l be made available to the PTU through deposits into the Special Account. Report-based disbursement (disbursements based o n quarterly FMRs) is not considered feasible in the Kyrgyz portfolio at present. Minimum size o f application for direct withdrawals and issuance o f letters o f Special Commitments from the IDA grant account will be 20 percent o f the in i t ia l amount and wil l be increased to 20 percent o f the Authorized Allocated amount once SDR 1.5 m i l l i on i s disbursed.

Withdrawal applications will be signed by an authorized representative o f the Recipient (Ministry o f Finance), and a representative o f the implementing agency or the PIU Director, with written delegated authority o f the Ministry o f Finance. The financial manager will ensure

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completeness and accuracy o f al l withdrawal applications and will append hisher signature as part o f the intemal control procedures. The PIU wil l be responsible for keeping supporting documentation for al l project expenses, especially those reported through SOEs, and for making them available to IDA supervision missions as well as to the external auditors.

Special Account. To facilitate timely disbursements for eligible expenditures o n works, goods, services, training, and incremental operating costs, the Government will establish, maintain and operate, under terms and conditions acceptable to IDA, a Special Account in U S dollars in a bank acceptable to IDA. The PIU will be responsible for the appropriate accounting o f the finds deposited into this account, for reporting on the use o f these funds, and for ensuring that they are included in the audits o f the financial statements. The PIU wil l also report o n the status o f this account with any request for disbursement submitted to IDA. The authorized allocation o f the Special Account wil l be U S $500,000, but the initial deposit to the Special Account wil l be limited to U S $250,000 until the aggregate disbursements and sum o f al l outstanding special commitments under the Grant have reached the level o f SDR 1.5 million, at which time the deposit wil l be increased to U S $500,000. The PIU wil l be responsible for submitting replenishment applications o n a monthly basis, or when 20 percent o f the init ial ly deposited funds have been used, whichever occurs first, and replenishment applications wil l be supported by appropriate documentation, including detailed bank reconciliation statements.

Statements of Expenditures. SOE procedures wil l be used for contracts for: (i) goods costing less than U S $100,000 equivalent; (ii) services o f consulting firms costing less than U S $100,000 equivalent, and individual consultants costing less than U S $25,000; (iii) works contracts valued at less than U S $1,000,000; (iv) training; and (v) incremental operating costs, a l l under such terms and conditions as the IDA shall specify. The required supporting documentation wil l be retained by the PIU, until at least one year after the Association has received the audit report for the fiscal year in which the last withdrawal from the Grant Account was made. The documentation wil l be made available for review by the external auditors and by visiting IDA staff upon request. All disbursements for expenditures above the SOE thresholds will be made against presentation o f full documentation.

Supervision Plan. The Association will conduct risk-based financial management supervision, at appropriate intervals, to monitor progress o f project implementation. The financial management supervision wil l pay particular attention to: (i) disbursements and financial management arrangements, that may include review o f SOEs; (ii) review o f Financial Monitoring Reports and audited financial statements; and (iii) review o f implementation o f progress o f remedial actions recommended in the Auditors Management Letters.

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Annex 8: Procurement KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

General. Procurement o f a l l goods and works wil l fol low the Procurement Guidelines “Procurement under IBRD Loans and IDA Credits” published in January 1995, revised January and August 1996, September 1997, January 1999, and M a y 2004. Procurement o f consulting services will fo l low the Consultants Guidelines “Selection and Employment o f Consultants by World Bank Borrowers” published in January 1997, revised in September 1997, January 1999, May 2002, and M a y 2004. The Recipient wil l use the Bank’s standard bidding documents for goods and works, as we l l as standard evaluation reports. For consulting services, the Bank’s standard Request for Proposals and forms o f consultants’ contracts will be used.

Notification of Business Opportunities. A General Procurement Notice (GPN) has been published in the UN Development Business (UNDB) Online and in paper form in UNDB Issue No. 630 o f M a y 16,2004. The GPN will be updated annually.

Procurement Management. The Bank carried out a Country Procurement Assessment in 2002. As a result o f the findings o f this assessment, f rom the public procurement point o f view, the Kyrgyz Republic has been ranked as a high-risk category country. The process o f procurement in the country i s not totally transparent, tenders are not advertised properly, frequently the procurement conducted by tender committees is not consistent with the provisions o f the law, and the procurement law itself includes ambiguous provisions that do not promote transparent and fair procurement. There have been instances o f public officials’ interference in the procurement process. Training programs to train public officials in procurement according to the law are almost non-existent. As a result, the general economic environment in the Kyrgyz Republic i s not conducive to transparent, economic and efficient procurement. Improvements are expected from 2005 onwards, as Parliament i s discussing new procurement provisions. Nevertheless, for the t ime being, given the current unfavorable public procurement environment in the country, the project has been placed in the high-risk category, which means that regular procurement supervision will take place.

The Project Implementation Unit within the Ministry o f Ecology and Emergencies wil l have overall responsibility for implementing the project and for conducting procurement. An experienced procurement specialist, with relevant experience gained under other IDA projects, has already been recruited. H i s procurement knowledge wil l be upgraded, as necessary, through training in international procurement in Bank-organized seminars. The PIU has also designated the PIU director to serve as back-up procurement officer. I t may be decided at a later stage that the yet to be recruited Design Engineer may serve as back-up procurement specialist. The designated staff member will also receive training in procurement. The PIU wil l receive ad hoc support from staff o f the Department o f Emergencies Monitoring and Forecasting and Mining Tailings Management in conducting procurement and from MEE’s Legal Department for dealing with contractual issues.

The PIU shall maintain up to date project and procurement records. For this purpose, i t will open a f i le for each contract package. All procurement correspondence and other relevant documents such as draft and final bidding documents, bids, minutes o f bid opening, evaluation

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reports, minutes o f contract negotiations, draft RFPs, and draft and final contracts, shall be kept together for each contract package in a folder. This will not only make the implementation work more efficient, but also allow IDA staff and independent auditors to conduct their functions o f supervision and audit more efficiently.

The IDA Task Team wil l organize before Grant effectiveness a one day procurement seminar for staff o f the PIU and officials o f MEE Departments that will be involved in implementation o f the proposed project.

Procurement Methods. The project wil l finance the procurement o f goods, works, and consulting services. The project components, their estimated cost and procurement methods are summarized in Table A1 and the consultant selection arrangements in Table A2. The procurement methods and prior review thresholds are in Table B. The fol lowing methods o f procurement wi l l be used:

(a) Goods and Technical Sewices

(i) International Competitive Bidding (ICB) wil l be used for goods contracts estimated to cost U S $100,000 or more per contract. Bidding documents for I C B will be prepared in accordance with the Bank Standard Bidding Documents (SBD) for procurement o f goods; and

(ii) Shopping shall be used by the Implementing Agency for goods contracts estimated to cost less than U S $100,000 per contract.

(b) Works

(i) International Competitive Bidding (ICB) wil l be used for works contracts estimated to cost U S $1,000,000 or more per contract. Bidding documents for I C B will be prepared in accordance with the Bank Standard Bidding Documents for procurement o f smaller works;

(ii) National Competitive Bidding (NCB) wil l be used for works contracts estimated to cost more than U S $50,000 and less than U S $1,000,000 per contract; and

(iii) Shopping (Works) wil l be used for works contracts estimated to cost less than U S $50,000 per contract.

(e) Consulting Sewices

(i) Quality and Cost Based Selection (QCBS) will be the preferred method for contracting consulting firms for assignments estimated to cost more than U S $1 00,000 equivalent per contract;

(ii) Consultant’s Qualifications (CQ) will be the preferred method for contracting consulting f i r m s for assignments estimated to cost less than U S $100,000; and

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(iii) Individual Consultants will be hired in accordance with Section V o f the Consultant Guidelines. Individual consultants will be used for small assignments o f short-term duration and will be selected based on the qualification o f the consultants.

The audit firm for the PHRD preparation grant wi l l likely be contracted to carry out the Grant audits as well. The contract will be renewable every year subject to satisfactory performance. In case the Implementing Agency opts not to renew the contract, subject to agreement with IDA, the Consultants Qualifications method wil l be used for the recruitment o f new auditors.

Training and study tours will be carried out according to a training plan with budget estimates, which the PIU will revise o n an annual basis and submit to IDA for approval prior to implementation.

The project wil l finance incremental operating costs o f the PIU and the Emergency Response Center, incurred as a result o f project implementation. These costs will include: (i) operation and maintenance o f office and f ield equipment used by the PIU and ERC, and vehicles used by the PIU; (ii) travel and subsistence allowances paid to PIU staff; (iii) PIU office supplies and communications; (iv) salaries o f PIU support staff; (v) eligible social charges; and (vi) bank charges and other miscellaneous expenditures. The PIU will prepare an annual budget to be agreed with the Association. Government wil l fully finance the rent for the PIU office and consultant staff working in the MEE building and related expenditures o f utilities.

Procurement Plan. The procurement plan was discussed and agreed during Negotiations. Changes to the plan may be incorporated after an official request in writing from the Recipient and the Association's no objection to those changes. In any case, the procurement plan has to be updated not later than 12 months after the date o f the preceding procurement plan, and should cover at least the next 18 months o f Grant implementation.

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A, Works

B. Goods Equipment and Vehicles

Table Al: Project Costs by Procurement Arrangements (US$ mi l l ion equivalent)

Procurement Method I / Intarnational National Competitive Competitive

Bidding Bidding Other21 N.B.F. Total 2,847.4 2,974.7 30.3 ~ 5,852.4

(2.420.3) (1,938.7) (25.7) (4,384.7)

551.5 1,036.8 1,588.3 (551.5) (751.6) - (1,303.1)

C. Consultant Services 1. PIU National Professional Staff 296.4 296.4

(251.9) (251.9)

2. Technical Assistance Consultants for Capacity Building 1,365.5 (0.0)

3. Technical Assistance Consultants (PIU TA. PoE, Env. Studies) 515.9 515.9 (267.1) (267.1)

4. Audit Services 55.2 55.2 (47.0) (47.0)

5. Design and Supervision Services 1.338.6 (0.0)

6. Training 489.9 489.9 (452.4) (452.4)

D. Recurrent Costs 1. ERC Operating Costs 51.7 51.7

(43.9) (43.9)

2. support staff 41 .O 41.0 (34.8) (34.8)

3. PIU Operating Costs

Total

166.3 166.3 (121.2) ( I 21 2 )

6,103.1 2,974.7 2.683.6 - 11,761.3 (2,971 .a) (1,938.7) (1,995.5) - (6,906.1)

'Figures in parentheses are the amounts to be financed by the IDA Grant. Al l costs include contingencies.

'Includes civ i l works (2 contracts) and goods (15 contracts) to be procured through shopping, technical assistance services (5 Individual Consultant contracts), services o f contracted staff o f the project management office (7 Individual Consultants contracts), training, audit services (sole source, extension o f contract), and incremental operating costs related to managing the project and operating the ERC.

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Table A2: Consultant Selection Arrangements (US$ million equivalent)

Selection Method ~~ ~~~~ ~~~

Total QCBS QBS SFB LCS CQ Other N.B.F. Cost,

A. Firms 2.70 0.00 0.00 0.00 0.00 0.06 0.00 2.76 (0.00) (0.00) (0.00) (0.00) (0.00) (0.05) (0.00) (0.05)

B. Individuals 0.00 0.00 0.00 0.00 0.00 0.81 0.00 0.81 (0.00) (0.00) (0.00) (0.00) (0.00) (0.52) (0.00) (0.52)

Consultant Services Expenditure Category

Total 2.70 0.00 0.00 0.00 0.00 0.06 0.00 3.57 (0.00) (0.00) (0.00) (0.00) (0.00) (0.05) (0.00) (0.57)

Prior Review. The procurement plan that was discussed during Negotiations indicates the contracts that wil l be subject to prior review by the Association, summarized as follows:

(i) All contracts awarded through ICB. For these contracts, bidding documents shall not be issued and contracts will not be awarded until the Association’s no-objection is obtained;

(ii) The f i rst two Shopping contracts for goods;

(iii) The f i rst two N C B contracts for works;

(iv) The f i rs t Shopping contract for works;

(v) All terms o f reference for consulting services, irrespective o f the contract value;

(vi) Contracts with consulting firms for contract value exceeding U S $100,000 per contract and contracts with al l individual consultants costing U S $25,000 or more per contract; and

(vii) Single source or direct contracting i s subject to full justification, prior to issuing a contract.

Ex-post Review. All other contracts are subject to the Association’s ex-post review. Periodic ex- post review by the Association will be undertaken during regular supervision missions, but at least once per year, or more often at critical points during project implementation. Procurement documents, such as bidding documents, bids, bid evaluation reports, and correspondence related to bids and contracts will be kept readily available for IDA’S ex-post review during supervision missions or at any other point in time.

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Table B: Thresholds for Procurement Methods and Prior Review

Contract Value Contracts Subject to Expenditure Category Threshold Procurement Method Prior Review

(US$ thousands) (US$ millions) 1. Works >1,000 I C B 2.85

4,000 N C B

2. Goods >loo I C B 4 0 0 Shopping

3. Services Firms (>loo) QCBS Individuals I C

Audit Services sss

<50 Shopping (Works) 0.71 0.01 0.55 0.08 2.70 0.81 0.06

Total value o f contracts subject to prior review: U S $ 7.77 mi l l ion

Overall Procurement Risk Assessment: High

Frequency o f procurement supervision missions proposed: One every 12 months (includes special procurement supervision for post-review/audits).

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Allocation of Grant Proceeds

Expenditure Category

Works

Consultant Services & Audits

Training

Incremental Operating Costs

Unallocated

Total Project Costs with Bank Financing

Total

Amount in US$ million

4.10

1.20

0.55

0.42

0.13

0.50

6.90

6.90

Financing Percentage

85 percent

100 percent o f foreign expenditures; 100 percent o f local expenditures (ex-factory cost); and 85 percent o f local expenditures for

other items procured locally

85 percent o f expenditures for services o f consultants domiciled

within the territory o f the Recipient; 100 percent o f eligible

social charges for such consultants; and 72 percent o f expenditures for

services o f foreign consultants

100 percent

100 percent o f eligible social charges and 85 percent o f other

expenditures

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Annex 9: Economic and Financial Analysis KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

Summary of Project Flows (Present Value)

Fiscal Present Value o f Flows* imnact Economic Financial Analysis Analysis Taxes

Project Costs Uranium Mining Wastes Isolation and Protection Strengthening the Institutional and Technical Capacity for Disaster Preparedness and Monitoring Support for Project Management Contingencies Total Costs

Project Benefits Reduction in Annual Probability o f Loss from:

Direct losses from floods Direct losses from landslides Direct losses from tailings Direct losses from waste dumps Rehabilitation costs from floods Rehabilitation costs f rom tailings failure Indirect losses from floods Indirect losses from landslides Indirect losses from tailings failure

Total Avoided Losses

3,913,956 4,751,776 1,3 15,657

1,978,766 2,205,600 428,777 571,101 654,955 137,07 1 465,606 560,331 135,737

6,929,429 8,172,662 2,017,241

5 86,594 68,907

1,755,111 596,215 238,908

3,697,380 715,970 119,437

1,924,741

586,603 68,914

1,770,188 6 10,946 252,173

3,88 1,446 743,353 119,453

2,015,079

7,735,382 8,010,327

Ne t Present Value o f Benefit Stream 805,953 -162,335

Note: * Discounted at 12 percent.

The economic and financial return to the proposed project i s shown in the Table below (undiscounted). The project gives positive economic and neutral financial benefits. I t is also expected to save life, which are not included in the calculation o f direct project benefits.

Total Cost IRR B:C NPV Economic 10,092,32 1 14% 1.12 805,953 Financial 1 1,760,000 12% 0.98 -162,335

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Summary of benefits and costs

Floods

Project benefits (avoided losses) are summarized in the Table below. They are expressed as the annual probability o f avoided loss in financial 2004 U S Dollars. Project benefits largely depend on the without- and with-project probabilities o f failure o f landsides and tailings, and the probability o f flooding. The estimates o f probabilities are discussed further in the section on sensitivity analysis below.

Waste Landslides Tailings dumps Floods Tailings Floods Landslides Tailings

REDUCTION IN BACKGROUND R I S K WITH-PROJECT (US $ per Annum) Direct damage I Rehabilitation costs 1 Indirect damage

I $73,500 I $8,600 I$269,800 I $76,500 1$31,600 1 $576,900 1$93,100 I $15,000 I$307,100 I Project costs are summarized in the Table below. They have been estimated by specialists during project preparation and are l ikely to be accurate or over-bound. However, an important uncertainty i s the cost o f moving Tailing No. 3, the cost o f which wil l depends on the distance between the present and new site. Incremental recurrent costs are low, estimated at 1 or 2 percent o f the investment costs.

(‘000 USD 2004 Financial Prices) Uranium Mining Wastes Isolation and Protection A. Early Interventions in Mailuu-Suu 1. Tectonic Landslide Unloading 2. Tailings and Waste Dump Inspection and Rehabilitation 3. Koi-Tash Land Slide - Diversion o f Surface Water Runof f 4. Landslide Monitoring and Early Warning Systems in Mailuu-Suu 5. Aylyampa-Say River Bank Strengthening 6. Mailuu-Suu River Bank Strengthening B. Major Activities o n Tailings and Landslides Total

Strengthening the Institutional and Technical Capacity for Disaster Preparedness I. Investment Costs A. Capacity Building B. Landslide Monitoring and Warning Systems C. Monitoring Systems in Mailuu-Suu 11. Recurrent Costs ERC Total

Support for Project Implementation I. Investment Costs A. Project Implementation Unit 11. Recurrent Costs

700.7 1,224.8

25 1.4 491.7 265.2 411.4

4,089.3 7,434.5

2,388.0 430,O 510.0 51.7

3,379.7

810.6

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A. PKJ Operating Costs Total

139.4 950.0

Grand total 1 1,764.2

Main Assumptions

Methodology. The cost-benefit analysis is based on the principle o f “annual probability o f loss” (APL), which i s the sum of the losses from every expected disaster event multiplied (or weighted) by the probability o f i t s occurrence. In general bigger losses are weighted downwards because they have a l ow probability o f occurrence, and the converse with smaller losses. The annual probability of avoided loss i s the difference between background risk without and with specified project interventions (stabilization o f landslides and rehabilitation or movement o f tailings and waste dumps) and can be compared against project costs in a net benefit stream using the usual methods o f costhenefit analysis. Human l i f e i s not valued, but and attempt has been made to calculate the annual probability o f loss o f l i f e in un i t s o f l i fe in exactly the same way.

Without- and With-Project Probabilities of Failure of Landslides, Floods and Tailings. Without- and with-project probabilities o f failure o f landslides assumed in the model are shown in the next Table. Orders o f magnitude o f failure were taken from the Risk Assessment Working Paper, prepared during project preparation.

Summary of Probability o f Landslide Failure and Floods (Without- and With-Project) YEARS WITHIN WHICH FAILURE EXPECTED

Koi-Tash Tectonic 0.5mm3 lmm3 1.5mm3 0.5mm3 lmm3

Landslide Without project 17 25 50 15 44 With project (surface drainage) failure 21 31 63 37 111 With project (unloading) failure 42 63 125

Koi-Tash Tectonic 5 m 10 m 20 m

Flood resulting from uncontrolled breach, with varying dam height Without project 33 50 100 no flood expected With project (surface drainage) failure 42 63 125 With project (unloading) failure 83 125 250

The expected direct damage from flooding was calculated with reference to an uncontrolled failure o f a 20-meter high blockage o f the Mailuu-Suu River by the Koi-Tash Landslide, the without-project probability o f which i s estimated as 1 : 100. I t was estimated that such a catastrophic flood could cause damage o f U S $5.3 mil l ion. Other predicted f lood events have higher probability but are expected to cause less damage.

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The expected damage f rom landslides was calculated with reference to a 1.5 mi l l ion m3 failure o f Koi-Tash, which i s assumed to cause U S $0.6 mi l l ion in direct damage and have a without- project probability o f 1:50.

The project i s assumed to reduce the probability o f failure o f Tailings No. 3 and 18 from an expected failure within the next five years to zero probability o f failure. The project i s also assumed to reduce marginally the probability o f failure o f 12 other tailings dams by between 10 and 1 percent. The expected direct damage from tailings failures was calculated by apportioning by tailing mass damage calculated for a major tailings failure affecting defined proportions o f the population, livestock, building stock, gardens, crops, fish and drinking water supplies in four impact areas, namely Mailuu-Suu area, Nooken, below the irrigation headworks in Kyrgyzstan, and beyond the Uzbekistan border.

Indirect losses were calculated by adjusting Gross Regional Product (GRP) in the Mailuu-Suu valley by sector for assumed economic impact over three years after the disasters described above. Assumed rehabilitation costs (costs to government for providing emergency services) were added. The estimates o f other tangible benefits, such as “spin offs” f rom project interventions resulting in new roads or j ob creation, increased value o f assets as a result o f post- disaster construction activities have been included in the adjustment o f expected GRP in post- disaster situations.

The Early Warning System is expected to be in place by 2006 and i ts benefits come on stream from that year. Early interventions are expected to be carried out between 2005 and 2007, with benefits starting to accrue from 2006. Major activities are completed by 2009, with benefits starting to accrue from 2008.

Economic Pricing

The approach followed was:

For Project Costs, take the financial cost estimate provided in the COSTAE3 tables, subtract taxes, and multiply foreign exchange costs by the foreign exchange premium.

For Project Benefits.

0 Divide between traded goods, non-traded goods, skilled and unskilled labor, local taxes, project avoided direct losses (health costs, buildings, personal effects, public services, agricultural production) and indirect losses (GRP by sector, temporary water supply, removal o f contaminated sediment and material); Calculate a standard conversion factor, based o n a foreign exchange premium for the purchase o f traded goods; Estimate a shadow wage rate; and Estimate an economic conversion factor for each avoided loss.

0

0

0

A foreign exchange premium was calculated using Kyrgyzstan’s foreign trade data for 2002. Import and export duties collected were calculated by type o f good and country o f source.

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Import duties as a percentage o f imports were about 23 percent, export duties as a percentage o f exports were 10 percent. This allowed the estimation o f effective exchange rates for imports and exports. Assuming equal weights between different types o f imports and exports as a proportion o f total trade, a shadow exchange rate (SER) o f Som 50 per U S $1 was calculated. Weighting types o f imports and exports by total trade gave an SER o f Som 55 per U S $1. Since the Kyrgyz economy is the subject o f long term reform and increasing openness, the lower estimate was chosen. A shadow wage rate has not been derived. It was noted that in one or two recent World Bank appraisal documents related to Kyrgyzstan a conversion factor o f 0.6 for unskilled labor had been used, and this was adopted for this project as well. The economic value o f skilled labor was valued at pari ty with financial wages.

Cost-effectiveness Indicators. The annual probability o f loss (background risk) without-project is U S $3.85 million. I t i s therefore straightforward to calculate the maximum amount o f money worth spending to reduce it to zero. To achieve an NPV o f the net benefit stream (avoided annual probability o f loss o f U S $3.85 mi l l ion minus costs) o f zero over a 30 year period at 12 percent discount rate would justify project costs o f U S $34 mil l ion. The financial cost o f the proposed project i s U S $1 1.9 million, or 35 percent o f the maximum worth spending. With- project, the annual probability o f loss is reduced by U S $1.3 million, or 34 percent, and the annual probability o f loss o f l i fe is reduced by 39 percent. So the proposed project achieves a reduction in financial risk o f 34 percent for 35 percent o f the costs worth spending to reduce risk to zero. This suggests that the project i s reasonably wel l targeted. At the same time, i t i s l ikely that the reduction o f risk achieved per unit o f expenditure may fal l as the level o f risk i s reduced. Further risk-expenditure trade-offs are expected to be defined as feasibility and engineering studies are completed in the course o f the project implementation.

Sensitivity Analysis

Sensitivity to Cost Changes. Overall, an increase o f about 10 percent o f the total costs assumed in the analysis can be accommodated to s t i l l give acceptable economic rates o f return. The economic indicators are less sensitive to an increase in the cost o f moving Tailing No. 3 and stabilizing the Koi-Tash Landslide. A maximum increase o f 25 percent o f the budgeted cost o f US $4.1 mi l l ion would s t i l l give an acceptable economic return.

Sensitivity to Delays in Implementation. The economic and financial analysis was phased over a six year period (2004-2009), with al l Phase 1 - Immediate Actions completed by 2007, and the benefits starting to come on stream in 2006. Phase 2 is assumed to be carried out between 2007 and 2009 and the incremental benefits are assumed from 2008 onwards. Assuming benefits from Phase 2 are delayed until 2010, project economic returns would slightly fa l l below the discount rate o f 12 percent. The EIRR would then be only 11.8 percent and the B C R would be 0.98.

Sensitivity to Private Decision Making. The Joint Stock Company (JSC) Electrical Bulb Plant, the majority o f shareholders o f which reside outside Kyrgyzstan, accounts for over 90 percent o f the volume o f production o f industrial goods and 60 percent o f employment in Mailuu-Suu, and industrial production accounts for 72 percent o f the average GRP o f the city. I t was estimated that the JSC Electric Bulb Plant would reduce production by 40 percent in the event o f a catastrophic flood (factored down for smaller floods) and by 90 percent reduction following a

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major tailings disaster. The sensitivity analysis shows that the assumption o f level o f JSC Electric Bulb Plant production fol lowing a catastrophic flood has little effect o n the IRR, because this event has a l o w probability and flood damage is a relatively small part o f the background risk at Mailuu-Suu. The IRR i s somewhat sensitive to the assumed level o f disinvestments following a major tailings accident. The economic success o f the project will be relatively independent o f decisions made by private investors, even one as dominant as the JSC Electric Bulb Plant.

Sensitivity to Value of Capital Assets. The cost o f buildings and contents destroyed or damaged makes up 55 percent o f direct flood losses, 45 percent o f direct landslide losses, and 15 percent of tailings failure losses, so the correct valuation o f this i tem i s important to the accuracy o f the analysis. However, the economic indicators are insensitive to property values because direct losses are only about 33 percent o f total losses. IRR is therefore insensitive to the value assumed for property.

Sensitivity to Assumed Probabilities of With- and Without-Project Failure of Tailings and Landslides. If the assumed probability o f without-project failure o f both tailings and landslides i s over-estimated by 20 percent, then the EIRR o f the proposed project increases to 24 percent. However, if both have been underestimated by 25 percent, then the EIRR will fal l to 10 percent. The economic indicators are relatively insensitive to assumptions o f with-project probabilities o f failure.

Distribution of Benefits

It i s estimated that without-project about seven people per year will die in the area from landslides, floods, and sickness caused by radiation. The project will reduce this to about five deaths per year. Over 60 percent o f these lives wil l be saved in the valley above the city, as a result o f interventions to reduce landslides and cover waste dumps. The remainder o f lives wil l be saved in Mailuu-Suu ci ty and below, as a result o f interventions to reduce flooding and risk o f tailings failure.

The project wi l l reduce direct losses to personal and public property throughout the Mailuu-Suu valley, and into the Ferghana Valley. This reduction in direct losses averages about U S $428,000 per year, out o f which private individuals save 90 percent and the Government saves 10 percent.

The project wil l reduce the cost o f providing emergency services such as drinking water and civ i l defense after disasters, which is a cost the administration wil l avoid and i s estimated to be about U S $577,000 per year, mostly accounted for by clean-up costs and the costs o f providing temporary drinking water downstream o f Mailuu-Suu city in the event o f a tailings disaster. Indirect losses are expected to be avoided mostly by industry and services in Mailuu-Suu city. Taking al l the avoided losses together, the distribution o f avoided losses by sector i s expected to be: (i) government administration - 44 percent; (ii) agriculture - 24 percent; (iii) industry - 23 percent; (iv) housing - 5 percent; and (v) infrastructure - 4 percent.

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Annex 10: Safeguard Policy Issues

KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

The Project triggers Wor ld Bank OP 4.01 (B rating), thus an Environmental Impact Assessment (EIA) was undertaken. The objective o f this framework EIA i s to ensure that any adverse environmental or social impacts arising from the proposed immediate interventions in Mailuu- Suu and other project sites are identified and, where possible, eliminated or minimized through appropriate design and mitigation. Another key aim was to provide a mechanism for community participation and information dissemination.

Baseline. The majori ty o f areas subject to the proposed interventions are currently degraded, either by current and historical anthropogenic activity, e.g. industrial waste, mine tailings, waste rock dumps, deforestation, and overgrazing, or by natural processes, e.g. landslides, mudslides, and large-scale slumping. In particular, the Mailuu-Suu area is characterized by natural r isks from landslides, severe soi l erosion from deforestation and overgrazing, industrial dereliction, radiological contamination, chronic health problems, and socio-economic decline. MEE has classified the Mailuu-Suu area as a hazard zone o f environmental pollution. Hazardous substances from the tailings and waste rock dumps can migrate to local groundwater, be released downstream along the Mailuu-Suu River, or be dispersed downwind by the prevailing wind (dust and radon gas). Accordingly, the project area for environmental examination purposes i s defined in general terms as the area adjacent to the proposed intervention sites and the area downstream o f these sites.

Benefzts. The project aims at ameliorating the risk o f environmental disasters. Therefore, the Environmental Impact Assessment (EIA) concentrated primari ly o n the environmental issues that could potentially arise f rom the technical interventions and the methods by which they are to be implemented. The EL4 report describes the necessary environmental management procedures and technical prerequisites for maintaining good environmental practice regarding the proposed interventions at the project sites. Each major technical design and implementation activity wil l be subject to the construction permit procedure o f the Kyrgyz Republic, which includes an environmental permit procedure and, in most cases, an environmental impact assessment (known as State Environmental Review).

The project is expected to result in significant environmental and community benefits, including: (i) reduced risk o f landslides and failure o f tailing impoundments; (ii) strengthening o f tailings banks to prevent r iver erosion and radiological pollution o f the r iver system; (iii) associated benefits such as reduction in exposure to radionuclides (water, foodstuffs, direct radiation from tailings); (iv) improved road infrastructure within the Mailuu-Suu valley; and (v) improved public awareness o f the radiological hazards and measures the local community should take to reduce health risks. The project will seek to provide temporary j o b opportunities for the local population. It will also provide a mechanism for community consultation and improved dissemination o f information to the public.

The project wil l not result in any significant and/or irreversible environmental or socio-economic disbenefits. Ensuring the contractors fol low good management practice will minimize potential

88

negative impacts during construction such as soil erosion, discharge o f sediment to the river, and community disturbance from dust, noise and traffic diversion. Socio-economic issues during construction such as temporary loss o f pasture for grazing livestock, road access, and public safety will be addressed during final design o f the interventions. Measures are proposed to ensure that tailing areas are rehabilitated in sequence, after which they are returned to the local community for safe grazing.

Aspect Objectives

Traffic Management potential impacts, including

Properly manage traffic and its

safety and accidents;

The scoping exercise showed that during the construction works the main negative environmental impacts are related to: (i) surface water pollution (suspended sediments); (ii) erosion o f slopes (run-off erosion and damaged vegetation cover); and (iii) socio-economic impacts e.g. noise, dust and traffic interruption from bulldozers, excavators and trucks on public roads and construction sites. As the overall aim o f the project i s to reduce the r i sks from landslides and release o f dangerous substances through failure or seepage from tailings, i t i s expected that when completed, the project will significantly ameliorate the health and safety situation o f the local population.

Scope

0 Traffic management; Access route selection;

0 Driver training;

Mitigation and Monitoring Plan. A comprehensive Environmental Management Plan has been developed for the project to mitigate and monitor potential adverse impacts during construction. The E M P establishes a framework for the identification and implementation o f environmental protection, mitigation, and monitoring and institutional strengthening measures to be taken during project implementation to avoid or eliminate negative environmental and social impacts. The EMP includes the fol lowing elements: (i) environmental mitigation and monitoring plan; (ii) monitoring measures to be taken during project implementation; (iii) institutional arrangements for implementing the EMP; (iv) implementation schedule and cost estimate; (v) contractor requirements for EMP implementation; and (vi) guidelines for environmentally sound construction practices.

Implementation o f mitigation measures (e.g. covering pollution prevention, protection o f natural resources, and worker and public safety) will be passed o n to the contractors who will be required to fol low guidelines for environmentally sound construction practice. These requirements (summarized in the next table) will be included in bidding documents and wil l be a contractual requirement o f the works. The EMP will cover monitoring requirements during construction and ongoing operation o f the project. Oversight o f implementation o f the EMP will be the responsibility o f the Recipient.

Purpose and Scope of Environmental Construction Guidelines

0 Road and vehicle maintenance; 0 Community safety and liaison;

89

Pollution I Ensure that polluting emissions 10 Protection o f surface and and disturbance are prevented or mitigated;

Prevention Groundwater; 0 Erosion control; 0 D u d a i r emission control; 0 Noise control:

Infrastructure and Services

Minimize disruption and negative impact associated with infi-astructure, natural resources, households and

roads, and irrigation; Ensure implementation of best practice waste management procedures;

Ensure that areas affected by works are properly reinstated o n completion;

community assets, e.g. land,

Waste Management

0 Protection o f services; 0 Reinstatement o f infrastructure; 0 Compensation for affected

private properties; Community liaison;

0 Waste handling procedures; 0 Waste reuse/recycling/treatment; 0 Waste disposal; 0 Waste documentation; 0 Soil management;

Ecological restoration o f landscapes;

Reinstatement

Emergency Response

Community Liaison

0 Site clean-up; Ensure that incidents (e.g. fire, 0 Emergency response plan; spillage o f fbel, landslides) are Fire control; Properly managed during both 0 Spil l control and clean-up; construction and operation; Foster positive community 0 Project information; relations including safety of Community health and safety; communities during the phased Complaints procedure; interventions;

Other Safeguard Policies Triggered. The project triggers two other Bank safeguard policies (Dam Safety and International Waterways). The preparation team included the necessary expertise (including geo-technical, risk management, hydrology, and seismic) to review the tailing dams. If the feasibility and design study to be carried out for Tai l ing No. 3 will conclude that the preferred option for the long-term solution is relocation o f the material, a Panel o f Independent Experts will be established, to review the results and recommendations o f the study. The Panel composition will depend on the results o f the study, but i s l ikely to include as a minimum a geotechnical specialist and a tailing safety specialist.

The Mailuu-Suu River f lows into the Naryn River that is an international waterways as defined by Paragraph l(a) o f OP 7.50. It i s considered that the project interventions will not materially affect the quality or quantity o f water flows to downstream riparian states. During the past few years there have been a number o f meetings on the Mailuu-Suu issues with participation from politicians and specialists f rom the riparian countries. As good practice, a notification letter was nevertheless sent in February 2004 to Kazakhstan, Tajikistan, and Uzbekistan to inform these

90

riparian states about the proposed interventions. Tajikistan and Uzbekistan have responded in writing, and have reiterated their support to the project activities. The governments are interested to continue this information sharing during project implementation.

The project does not trigger OP 4.12, Involuntary Resettlement, as there wil l be no land acquisition, relocation or restrictions on access to resources, except for some temporary situations, such as during capping o f tailings. Nonetheless, a Process Framework was prepared to establish a participatory mechanism by which members o f potentially affected communities take part in: (a) the design o f project activities and identification o f the related restrictions o f access that wil l be appropriate for achieving the objectives o f the project, (b) the determination o f necessary measures to help mitigate the adverse impacts associated with such restrictions, and (c) the implementation and monitoring o f relevant project activities.

Public Consultation. Two consultation hearings took place during project preparation, one in Mailuu-Suu and another in Bishkek, organized jo int ly by MEE and the environmental and socio- economic preparation teams. Approximately 300 persons attended the Mailuu-Suu public hearing and 60 people attended the one in Bishkek. A record was taken o f workshop participants, meeting minutes, and verbal and written comments received during the sessions. A summary o f the findings i s included in the EIA.

91

Annex 11: Project Preparation and Supervision KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

Planned Actual PCN review October 28,2003 October 28,2003 Initial PID to PIC October 15,2003 October 15, 2003 Initial ISDS to PIC October 15,2003 October 15,2003 Appraisal April 19,2004 April 18,2004 Negotiations April 26,2004 April 26,2004 Board approval June 15,2004 Planned date o f effectiveness October 2004 Planned date o f mid-tenn review June 10,2007 Planned closing date March 31,2010

Key institutions responsible for preparation o f the project:

Ministry o f Ecology and Emergencies, through a Project Implementation Unit within the Department o f Emergencies Monitoring and Forecasting and Mining Tailings Management.

The Ministry was assisted by a team o f intemational and national experts, financed from a Japanese PHRD grant (US $478,000), including: tailings specialist, geologist, geotechnical specialist, seismologist, geochemist, r isk assessment specialist, hydrologist, hydrogeologist, radiation specialist, economist, and social scientist.

A team o f two international and two national consultants conducted the EIA, financed by a grant of U S $148,000 from the EU through the Joint Environmental Program.

Bank staff and consultants who worked on the project included:

Name Title Unit Joop Stoutjesdijk Task Team LeaderEenior ECSSD

Joseph Goldberg Jyldyz Wood Ainura Kupueva Hiwote Tadesse Stan Peabody Anarkan Akerova Charles Chandler Rita Klees Bekzod Shamsiev Naushad Khan Nurbek Kunnanaliev

Irrigation Engineer Sector ManagedQuality Control Junior Professional Associate Operations Officer Senior Program Assistant Lead Social Scientist Counsel M&E and Logfi-ame Senior Environmental Specialist Economist Lead Procurement Specialist Procurement Analyst

ECSSD ECSSD ECSSD ECSSD ECSSD LEGEC ECSPS ECSSD ECSSD ECSPS ECCKG

Hannah Koilpillai Finance Officer L O A G l

92

John Ogallo Senior Financial Management ECSPS

Taalaibek Koshmatov Financial Management Analyst ECCKG Specialist

Bank funds expended to date o n project preparation: 1. Bank resources: US$168,000 (May 17,2004)

Estimated Approval and Supervision costs: 1. Remaining costs to approval: U S $10,000 2. Estimated annual supervision cost: U S $100,000

93

Annex 12: Documents in the Project File KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

A. Technical Reports

a

a

0

a

a

a

a

0

0

a

a

a

a

National Environmental Action Plan, Ministry o f Environment o f the Kyrgyz Republic, Bishkek, 1995;

National Environmental Health Action Plan (NEHAP) o f the Kyrgyz Republic, Ministry o f Health and Ministry o f Environment o f the Kyrgyz Republic, Bishkek, 1997;

Hazard Ranking and Remedial Action Plan For the Uranium Tailings Impoundments In the Republic o f Kyrgyzstan - The World Bank, Industry and Mining Unit (by Clifton Associates Ltd., December 1998);

Technical Review o f Mailuu-Suu Landslides and Tailings Problems and Options for Remediation, World Bank Mission Report (by ECSSD Technical Mission Team, March 2002);

Final Report of EC-TACIS Project on Remediation o f Uranium Mining and Mining Tailings in Mailuu-Suu District Kyrgyzstan, (Consortium SCK-CEN-Gester-Quarch, M o l Belgium, May 2003);

United Nations Disaster Assessment and Coordination ( W A C ) Mission Report to the Kyrgyz Republic, May 2003;

Environmental Assessment (by Jacobs Gibb & HGG Helsinki, December 2003 - updated March 2004);

Social Assessment (Consultant Report, December 2003 - updated March 2004);

Economic and Financial Cost-Benefit Analysis (Consultant Report, December 2003 - updated February 2004);

Geotechnical Report (Consultant Report, December 2003 - updated February 2004);

Technical Report on Tailings (Consultant Report, December 2003 - updated March 2004);

Report on the Geochemistry and Radiochemistry at Mailuu-Suu in the Framework o f the Disaster Hazard Mitigation Project (Consultant Report, December 2003);

Risk Assessment Report (Consultant Report, December 2003);

94

The Water Component to Risk, Monitoring, and Rehabilitation (Consultant Report, December 2003 - updated February 2004);

The Report on Seismological Group Activity (Consultant Report, December 2003);

Assessment o f Radiological Hazards Regarding the Decommissioning o f the Mailuu-Suu Uranium Mining and Mi l l ing Combine (Consultant Report, January 2004); and

Institutional Assessment (Consultant Report, February, 2004).

B. Bank Staff Assessments

0 Various Aide Memoires and Back-to-Office Reports;

0 Procurement Assessment (by Procurement Specialist, November, 2003 - updated March 2004);

0 Financial Assessment Report (by the Financial Management Specialist, April 2004); and

0 Website o f the Project at www.worldbank.ordmailuu-suu

95

Annex 13: Statement of Loans and Credits KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

Difference between expected and actual

disbursements Original Amount in US$ Millions

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d

PO71063 2003 PO71061 2003 PO36977 2002 PO51372 2001 PO50719 2001 PO35810 2001 PO49719 2000 PO49723 2000 PO69814 2000 PO64585 1999 PO62682 1999 PO46042 1998 PO40721 1998 PO08519 1996

GOV TA

GOV SAC RURAL WS & SAN HEALTH 2 URBAN TRANWMAMT.

CONSOLIDATION SAC LAND REGISTRATION ON-FARM IRRIGATION

CONSLD TA RUR FIN 2 FLOOD EMERGENCY IRRIGATION REHAB

ASSP POWER & DIST HEAT

0.00 7.78 0.00 0.00 0.00 7.95 0.01 0.00 0.00 20.00 0.00 0.00 0.00 15.45 -0.60 0.00 0.00 15.00 0.00 0.00 0.00 16.07 4.29 0.00 0.00 15.00 0.00 0.00 0.00 10.22 -5.79 0.00 0.00 22.00 0.00 0.00 0.00 6.88 -15.48 0.00 0.00 35.00 0.00 0.00 0.00 17.66 17.75 17.75 0.00 9.42 0.00 0.00 0.00 5.74 3.09 0.00 0.00 20.00 0.00 0.00 0.00 18.47 6.13 0.00 0.00 5.00 0.00 0.00 0.00 3.20 1.76 0.00 0.00 15.00 0.00 0.00 0.00 4.91 2.79 0.00 0.00 10.00 0.00 0.00 0.00 0.03 0.43 0.05

0.00 35.00 0.00 0.00 0.00 10.30 6.63 0.00 0.00 14.98 0.00 0.00 0.00 7.86 7.39 0.71 0.00 20.00 0.00 0.00 0.00 16.00 1.96 18.39

Total: 0.00 244.18 0.00 0.00 0.00 140.74 30.36 36.90

KYRGYZ REPUBLIC STATEMENT OF IFC’s

Held and Disbursed Portfolio In Millions o f U S Dollars

Committed Disbursed

FY Approval Company

IFC IFC

Loan Equity Quasi Partic. Loan Equity Quasi Partic

1996197 Demirbank Kyrgyz 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

200 1 FINCA 0.00 1 .oo 0.00 0.00 0.00 0.16 0.00 0.00 1995 Kumtor Gold 0.00 0.00 10.00 0.00 0.00 0.00 10.00 0.00 200 1 SEF Akun Ltd. 1.40 0.00 1 .oo 0.00 0.40 0.00 1 .oo 0.00 1999 SEF Altyn-Ajydar 0.18 0.00 0.00 0.00 0.18 0.00 0.00 0.00

2000 SEF KICB 0.00 1.40 0.00 0.00 0.00 1.40 0.00 0.00

Total portfilio: 1.58 2.40 11.00 0.00 0.58 1.56 11.00 0.00

Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partic.

2003 Demirbank Kyr R I 0.00 0.00 0.00 0.00

Total pending committment: 0.00 0.00 0.00 0.00

96

Annex 14: Country at a Glance KYRGYZ REPUBLIC: DISASTER HAZARD MITIGATION

-Exports --c---lrrports -5.6 -13 -aoa 0 .o I-do1 .. -4.0

14 .. -5.7 -a8 53.4 - -

POVERTY and SOCIAL K w y z Republ ic

2002 Population, mid-year (millions) 5.0

290 15

GNI per capita (Atlas method, US$) GNI (Atlas method, US% billions)

Average annual growth, 1996-02

Population (%) 12 Laborforce (%) 2.0

M o s t recent est imate ( la tes t year available, 1996.02)

Poverty (% o f population belownatio nal PO vettyline) 64

Life expectancyat birth (years) 65 54 11

77

0 1 Male a 3 Female a0

Urban population (%of totalpopulation) 34

infant mortality (per IOOOiive bitths) Child malnutrition (%of children under 5) Access to an improved water source (%ofpopuiation) llliteracy(%of population age 759 Gross primary enro llment 1% o f scho oi-age population)

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1982 1992

GDP (US$ biiilons) 2.1 Gross domestic investment/GDP .. 8.9 Exports of goods and sewiceslGDP .. 35.6 Gross domestic savings/GDP .. 7.9 Gross national sav1ngslGDP .. a.8

Current account baiance/GDP Interest payments/GDP .. 0.0 Total debtlGDP .. 0.3 Total debt sewice/exports .. 0.0 Present value of debt/GDP Present value of debt/exports

1982-92 1992-02 2001 (average annual growth) GD P 1.3 0.7 5.3 GDP per capita -0.6 -0.4 4.5

Europe & Central Low-

As ia income

476 2,160 $030

0.1 0.4

63 69 25

91 3

0 2 a 3 a 1

2001

15 B.0

36.7 n.7 16.8

-13 2.9

18.2 29.8 87.0

223.1

2,495 430

1,072

19 2.3

30 59 81

76 37 95 a 3 87

2002

1.6 B.1

38.6 n .4 n .SI

15 18.7 24.2

2002 2002.06

-0.5 -15

STRUCTURE o f the ECONOMY

(%of GDP) Agriculture Industry

Services

Private consumption General government consumption Imports of goods andservices

Manufacturing

(average annual growth) Agriculture Industry

Services

Private consumption General government consumption Gross domestic Investment Imports of goods and services

Manufacturing

l Development diamond'

~

Life expectancy

I

I 1 mi Gross

capita enrollment primary

I >

i Access to improved water source

-Kygp Republic

Low-income group

Economic rat ios '

Trade

Indebtedness

-Kyrgp Republic ~ Lowincomegroup

1982 1992

.. 39.0

.. 37.8

.. 33.7

.. 23.2

.. 70.7

.. 214

.. 47.6

1 G rowth o f inves tment and GDP (%)

n.5 8 .9 37.0 42.3 - -GDI +GDP

1982-g2 1992-02 1 G rowth o f exports and impor t s (%) I 0.5 4.5 7.3

-3.5 -3.5 .. -0.7 -3.0 3.1

6.4 -0.7 3.3 4.2

.. -3.2 2.2 -aoa

P I

97

Kyrmz Republic P R I C E S and G O V E R N M E N T F I N A N C E

D o m e s t i c p r i c e s (%change) Consumer prices Implicit GDP deflator

Government f inance (%of GDP, includes current grants) Current revenue Current budget balance Overall surplus/deficit

1982

T R A D E

(US$ millions) Total exports (fob)

Electricity Go id Manufactures

Total imports (cif) Food Fuel and energy Capital goods

Export price index (895=?JO) Import price index (895=XIO) Terms of trade (895=X)O)

B A L A N C E o f P A Y M E N T S

(US$ millions) Exports of goods and services Imports of goods and services Resource balance

Net income Net current transfers

1982

1982

Current account balance

Financing items (net) Changes in net reserves

M e m o : Reserves including gold (US$ mi//iOnS) Conversion rate (DEC, local/US$)

E X T E R N A L D E B T and RESOURCE FLOWS

(US$ millions) Total debt outstanding and disbursed

1982

IBRD IDA

Total debt service IBRD IDA

Composition of net resource flows Official grants Official creditors Private creditors Foreign direct investment Portfolio equity

World Bank program Commitments Disbursements Principal repayments

1992

830.2

1992

1992

400 -115

0 22

127

0.4

1992

6 0 0

0 0 0

0 4 0 0 0

0 0 0

2001

6.9 7.3

20.3 -t7 -5.8

2001

480 47

225 0 6

472 36 PI 58

0 4 95 10

2001

561 565

-5

-66 51

-20

36 -B

285 48.4

2001

17 Q 0

389

f77 0 3

35 88

-78 5 0

15 27

0

2002

2.1 2.3

22.6 -0.6 -5.2

2002

501 22 6 3 Q5

590 47 151 114

2002

630 691 -61

-57 66

-34

3 11 46.1

2002

1839 0

454

154 0 3

73 -n

15 33

0

I n f l a t i o n (Oh) I

20

10

/ O

I 97 98 99 00 01

-GDPdeflator -CPI

I Expor t a n d I m p o r t leve ls (US$ mill.)

O2 I I 98 87 88 e9 00 01

I I Exports c Inports

Cur ren t a c c o u n t ba lance t o G D P (%)

: o m p o s l t l o n o f 2002 debt (US$ mi l l .

G: 19

D: 434

4 - IBRD E- Bilateral 3 ~ IDA D - Other rmitilaterai F - Rivate :-IMF G- Short-ta

98

MAP SECTION