India: Improving the Delivery of Urban Services in Madhya Pradesh

Sovereign Project | 43507-012

Summary

The proposed technical assistance (TA) will develop an institutional framework for transforming a PMU and/or PIU into an independent permanent organization to develop, operate and maintain urban infrastructure. The intention is to utilize existing resources and develop appropriate structures for developing and operating urban infrastructure, particularly in the water supply, sewerage and sanitation sector. Each new independent entity would have the flexibility to (a) adopt its own rules and regulations, (b) attract appropriate human resources, and (c) manage its revenues and expenditures on a cost recovery basis.

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Project Name Improving the Delivery of Urban Services in Madhya Pradesh
Project Number 43507-012
Country India
Project Status Closed
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 7748-IND: Improving the Delivery of Urban Services in Madhya Pradesh
Technical Assistance Special Fund US$ 900,000.00
Strategic Agendas Environmentally sustainable growth
Inclusive economic growth
Drivers of Change Governance and capacity development
Sector / Subsector Water and other urban infrastructure and services - Urban policy, institutional and capacity development
Gender Equity and Mainstreaming No gender elements
Description The proposed technical assistance (TA) will develop an institutional framework for transforming a PMU and/or PIU into an independent permanent organization to develop, operate and maintain urban infrastructure. The intention is to utilize existing resources and develop appropriate structures for developing and operating urban infrastructure, particularly in the water supply, sewerage and sanitation sector. Each new independent entity would have the flexibility to (a) adopt its own rules and regulations, (b) attract appropriate human resources, and (c) manage its revenues and expenditures on a cost recovery basis.
Project Rationale and Linkage to Country/Regional Strategy

ADB's urban sector operations in India support the implementation of the 74th Constitutional Amendment Act of 1992 (CAA74) which proposes to decentralize power and strengthen decision making at the local level. The CAA74 provides a framework for electing local-level governments and provides for their ''effective" functioning to ensure provision of urban services and infrastructure. It also provides the ULBs with political, functional, and fiscal empowerment for good governance. The centrally sponsored JNNURM and UIDSSMT, India's national flagship programs for urbanization, have been effective in renewing focus on the urban sector across the country. These programs have made the states aware of the range of issues to be addressed in developing urban infrastructure and have provided a comprehensive framework for improving governance. They have also encouraged ULBs to execute projects on a much larger scale than previously undertaken.

ULBs of India are the third-tier administrative divisions, responsible for providing basic infrastructure and services in cities and towns. The level of devolution of powers to the ULBs varies from state to state, and the current ULBs, particularly those in medium and small towns, have poor competencies and capacities to exercise devolved power. In addition to weak administrative and institutional structures, ULBs do not have sustainable revenue polices or adequate technical staff and implementation of large-scale urban infrastructure development by ULBs has been a challenge.

ADB's financial assistance to various urban development projects has helped to act as a first step to bring about a change in the way large infrastructure projects are implemented by the cities. Project management units (PMUs) and project implementation units (PIU) have been formed in various states for implementing ADB financed urban development projects, drawing staff from state agencies and ULBs as full-time staff. These PMUs and PIUs learn how to manage sizable funds, works contracts and consultant teams following internationally accepted procedures and policies, experiences which few state agencies have had in the past.

However, PMUs and PIUs are not permanent organizations. These are created for implementing specific projects, and dissolution of the PMUs and PIUs will result in loss of collective skills and knowledge attained during project implementation. Therefore, transforming the PMUs and PIUs into permanent organizations for the specific purpose of assisting ULB in designing, managing and implementing urban development projects is the next logical step towards achieving the ethos of CAA74 and the spirit of the Paris Declaration.

Impact Sustainable and replicable institutional structures made operational for developing and operating urban infrastructure in Madhya Pradesh
Project Outcome
Description of Outcome An independent organization specializing in developing and operating urban infrastructure legally established
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

1. An analytical report prepared on the practical options for establishing an independent organization specializing in developing and operating urban infrastructure

2. Based on the decision of the Government of Madhya Pradesh on the options to be adopted, a report prepared on step-by-step actions required to develop the independent organization.

3. A report prepared on potential PPP structures that will facilitate private sector participation in urban service delivery, including financial and structural details for two case studies.

4. All background work completed for establishing an independent organization specializing in developing and operating urban infrastructure.

5. The independent organization's operations supported.

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Business Opportunities
Consulting Services The TA will be implemented over 26 months from January 2011 to March 2013 in two phases. Phase 1 will assist the GOMP in preparing an analytical report on the various institutional options prevalent in the country and international best practice in other jurisdictions and support the formation of a suitable independent organization. This work will be undertaken by a team of individual national consultants. The team will provide, spread over 8 months, a total of 20 person-months of consulting services to analyze institutional structuring, financial and business planning, and legal and human resource matters and make recommendations. The experts for phase 1 will be an institutional structuring expert and team leader (6 person-months), legal expert on company affairs (4 person-months), financial and business planning expert (6 person-months), and human resources expert (4 person-months). The outline terms of reference for consultants is in Appendix 3. ADB will recruit the consultants as individuals in accordance with its Guidelines on the Use of Consultants (2010, as amended from time to time). Phase 2 will backstop the organization for 18 months and include the provision of basic infrastructure requirements and the preliminary implementation support described for phase 1. For phase 2, a total of 60 person-months of consulting services are estimated. National consultants having requisite international experience and exposure would be hired under the TA. The new organization will be staffed initially with personnel seconded from various GOMP departments, and the key experts not available in-house will be recruited with TA support on temporary or contractual arrangements. Subsequently, the new organization can retain the staff. Phase 2 requirements will be worked out as an outcome of phase 1. The mode of expert recruitment for phase 2, as individuals or through a firm, will be decided at the end of the phase 1. All equipment will be purchased in accordance with ADB Procurement Guidelines (2010, as amended from time to time). Upon project completion, all equipment purchased under the TA will be handed over to the independent organization. Disbursements under the TA will be in accordance with ADB's Technical Assistance Disbursement Handbook (2010, as amended from time to time).
Responsible ADB Officer Ashok Srivastava
Responsible ADB Department South Asia Department
Responsible ADB Division India Resident Mission
Executing Agencies
Urban Adm. & Devt. Dept. of the Govt. of MPRoom No. 307, Mantralya, Vallabh Bhawan
Bhopal-246 003, India
Timetable
Concept Clearance 09 Nov 2010
Fact Finding 15 Nov 2010 to 15 Nov 2010
MRM -
Approval 16 Dec 2010
Last Review Mission -
Last PDS Update 25 May 2011

TA 7748-IND

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
16 Dec 2010 - - 31 Mar 2013 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
900,000.00 0.00 225,000.00 0.00 0.00 0.00 1,125,000.00 16 Dec 2010 0.00

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