Sri Lanka: Lagging Local Authorities Infrastructure Development Project

Sovereign Project | 42459-012

Summary

The proposed project will build upon and further develop from the project design of the ongoing Local Government Infrastructure Improvement Project. In order to better cater to the needs of the lagging local authorities of the country and ensure higher effectiveness, adjustments in the implementation and financing modality are required. There are needs to analyze lessons from LGIIP and satisfy the requirements under the Safeguard Policy Statement (2009). Project preparatory support to local authorities in the lagging regions will help enhance immediate start-up of the project after the approval of the loan. The TA's outcome is to prepare the project design including the financial and institutional arrangements that the government and ADB have agreed upon.

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Project Name Lagging Local Authorities Infrastructure Development Project
Project Number 42459-012
Country Sri Lanka
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7659-SRI: Lagging Local Authorities Infrastructure Development Project
Japan Fund for Poverty Reduction US$ 700,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Water and other urban infrastructure and services - Other urban services - Urban policy, institutional and capacity development - Urban sewerage - Urban water supply
Gender Equity and Mainstreaming Effective gender mainstreaming
Description The proposed project will build upon and further develop from the project design of the ongoing Local Government Infrastructure Improvement Project. In order to better cater to the needs of the lagging local authorities of the country and ensure higher effectiveness, adjustments in the implementation and financing modality are required. There are needs to analyze lessons from LGIIP and satisfy the requirements under the Safeguard Policy Statement (2009). Project preparatory support to local authorities in the lagging regions will help enhance immediate start-up of the project after the approval of the loan. The TA's outcome is to prepare the project design including the financial and institutional arrangements that the government and ADB have agreed upon.
Project Rationale and Linkage to Country/Regional Strategy

The government's 10-year development plan (2006-2016), the Mahinda Chintana, prioritizes investment in developing basic infrastructure and services, including supply of drinking water and access roads. It further emphasizes the need to re-design the development programs to give the larger share of development benefits to the poor, through the provision of improved infrastructure and market facilities, among others. Local service deficiencies in local authorities include deteriorated roads, inadequate supplies of potable water, poor drainage and domestic sanitation, and inadequate health and market facilities. Local authorities in the North and East also face severe constraints in their capacities to effectively discharge their responsibilities. Other local authorities are likewise incapable of providing public health and environmental infrastructure services to keep pace with the increasing economic productivity of households. As the income inequality is rising and the poor areas tend to have poorer quality of and access to basic facilities and services, there is an urgent need to cater to the needs of lagging areas in the country.

ADB approved the Local Government Infrastructure Improvement Project (LGIIP) in 2005 to respond to the needs of local authorities in improving basic infrastructure and services. In alignment with the government's devolved structure, local authorities are implementing subprojects in the areas of water supply, roads, drainage and sewerage, and other municipal facilities including public libraries, health centers, and office buildings, through financing from the Local Loans and Development Fund (LLDF). While local authorities were at first reluctant to contribute 7% and borrow 33% to 53% of subproject costs, demands have gradually increased and already surpassed the allocation under the LGIIP. The LGIIP has adopted a bottom-up and demand-driven approach, where the local authorities are responsible for identifying, preparing, proposing, and implementing subprojects. As against the common practice of grant-based financing for basic infrastructure improvement, a partial-debt financing even to small local authorities has brought a paradigm shift, providing local authorities with higher ownership and strong incentives to increase revenue collection and improve the financial management, while a revolving fund from repayments created in the LLDF would enable further financing to local authorities. There are additional financing needs to respond to growing needs of basic infrastructure and services for people s better livelihood.

While lessons from the LGIIP will be analyzed in depth during project preparation, one limitation found was that some pradeshiya sabhas are unable to benefit due to their financial constraints. The loan amount is capped at two times the local authority s annual own revenue in order to ensure repayment, but this makes many poor pradeshiya sabhas ineligible to obtain financing from the LGIIP. The Ministry of Local Government and Provincial Councils (MLGPC) is going to finalize by September 2010 a set of indicators to define lagging local authorities, and the project would mainly support infrastructure development of the lagging local authorities satisfying the criteria.

The cessation of military confrontation in May 2009 brought to an end nearly three decades of internal armed conflict. A large number of development projects with significant financial resources will be or are being implemented in the North and East, including the North East Local Services Improvement Project (NELSIP) financed by the World Bank. There is a need to see the performance of local authorities under NELSIP to ensure they have the adequate absorption capacity to take up additional projects, while provision of vital social and economic infrastructure and services in these provinces remains a major challenge. Other provinces such as Sabaragamuwa and Uva recording high provincial poverty rates face a similar challenge of providing vital infrastructure and services to their citizens. Geographic focus of the project will be further discussed during project preparatory technical assistance (PPTA) implementation.

The project is in line with the second pillar'achieving socially inclusive development' and the urban sector road map of ADB's Sri Lanka country partnership strategy, by helping the government provide greater access to economic and social services for the poor and those living in conflict-affected areas.

Impact tbd
Project Outcome
Description of Outcome tbd
Progress Toward Outcome
Implementation Progress
Description of Project Outputs tbd
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Nationwide
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design Focus group discussions and workshops will be held during project preparation. Representatives of nongovernment organizations and community-based organizations will be invited to the workshops.
During Project Implementation
Business Opportunities
Consulting Services Consultant will be recruited in line with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time). The TA will require about 11 person-months of inputs from international experts and 55 person-months of inputs from national experts. Three individual consultants will be engaged to review the lessons from the ongoing Local Government Infrastructure Improvement Project and develop the project design. A team of consultants through a firm(s) will also be recruited, mainly to strengthen the capacity of the provincial councils and local authorities for project preparation and implementation, in particular with respect to preparation and implementation of financial and local improvement plans (FLIPs), using the quality- and cost-based method of selection with a standard quality-cost ratio of 80:20. A bio-data technical proposal will be used for the selection of a firm.
Responsible ADB Officer Norio Saito
Responsible ADB Department South Asia Department
Responsible ADB Division Urban Development and Water Division, SARD
Executing Agencies
Ministry of Prov'l Councils & Regional Development330 Union Place, Colombo 2
Sri Lanka
Timetable
Concept Clearance -
Fact Finding 04 Aug 2010 to 10 Aug 2010
MRM -
Approval 23 Nov 2010
Last Review Mission -
PDS Creation Date 08 Sep 2010
Last PDS Update 02 Aug 2011

TA 7659-SRI

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
23 Nov 2010 17 Dec 2010 17 Dec 2010 31 Dec 2011 31 Aug 2012 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
0.00 700,000.00 125,000.00 0.00 0.00 0.00 825,000.00 23 Nov 2010 599,393.89

Evaluation Documents

See also: Independent Evaluation

No documents found.


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