Uttar Pradesh Urban Development
n Memorandum ; Country: India; Region: South Asia; Sector: Urban Environment; Major Sector: Urban Development; ProjectID: P009873



                       The Uttar Pradesh Urban Development Project, supported by Loan 2797-IN for US$20 million and Credit 1780-
               IN for US$130 million, totaling US$150 million, was approved in FY87. The Loan amount was canceled on December
               5, 1991, along with SDR7.4 million of the credit. The remaining credit was closed on schedule in FY96, at which time
               an undisbursed balance of SDR8.1 million was also canceled. The Implementation Completion Report (ICR) was
               prepared by the South Asia Regional Office. The borrower’s comments are included as an appendix.

                       The project was structured in two parts, each with its own objective. The first part (Part A) was intended to
               support improvements in urban sector management and institutional strengthening initiated by the Government of Uttar
               Pradesh and to reduce the serious deficits in urban shelter, infrastructure, and services in the state. The second part (Part
               B) was intended to assist the Central Ganga Authority to reduce pollution levels in the Ganga river. In October 1992 a
               third objective was introduced to support earthquake damage repairs in the northern hills of Uttar Pradesh. Part A of the
               project was subsequently restructured to include an earthquake reconstruction component. In total, Part A had ten
               components relating to shelter, water supply, sewerage, drainage, low cost sanitation, and municipal services. Part B
               involved interception of waste water flows at point of entry into the river, pumping to a treatment location, and disposal.
               Earthquake reconstruction targeted the rehabilitation of damaged roads, buildings, and water supplies.

                       The objectives of this large and complex project were only partially achieved. Some of the physical targets
               under Part A were met, particularly equipment and works of modest size for municipal services and slum upgrading.
               Many of the larger schemes for water supply and sites and services were not finished by closing. Earthquake repair
               works, although delayed, were largely achieved. The institutional and policy impact of Part A was negligible. The
               Ganga river pollution objectives (Part B) were not achieved due to the lack of proper evaluation of the interception
               strategy and implementation delays caused by contractual disputes and poor coordination. Pollution levels have
               continued to rise. The financial weakness of many of the responsible implementing agencies put in doubt the
               sustainability of many of the physical works undertaken.

                       OED agrees with the ICR which rates the project’s overall outcome as unsatisfactory, institutional development
               as negligible, sustainability as unlikely and Bank performance as unsatisfactory. The earthquake rehabilitation
               component was satisfactory, but constituted only a small percentage of total project costs. The generally negative
               assessment in the ICR is not shared by the borrower. The borrower’s evaluation of the Urban Development Program
               gave significantly higher ratings for most evaluation criteria and judged the project outcome as satisfactory. No
               borrower evaluation was received for the Ganga Action Program.

                        The main lessons drawn from the project are (i) the Bank must give greater attention to the scale of management
               and O&M implications of complex and multidimensional projects of this kind (ii) and ensure that the design reflects the
               scale of Bank supervision resources likely to be available. Before embarking on complex and ambitious designs, the
               Bank needs solid evidence of the longer-term commitment of Government to the project’s objectives. The lack of a
               separate legal agreement with the most important implementing agency severely reduced the Bank’s leverage in
               discussions with the borrower. Bank management should also investigate the possibility of partial suspension of
               disbursements to cover situations where some project entities are performing badly, while others are performing well
               and should not be penalized.

                          The ICR is satisfactory. It provides a sound and well-supported overview of this complex project.
               However, it does not explain the striking difference between the ratings in the ICR and in the borrower’s evaluation.

                        In view of this difference in opinion, and the large and complex nature of the project, an audit is planned.