94813 Urban Governance and Development Program: Emerging Towns Project (IDA Credit No. 4905-NP and IDA Grant No. H661-NP) Eleventh Implementation Review and Support Mission (February 10 to 20, 2015) Aide-Memoire I. Introduction 1. The eleventh Implementation Review and Support Mission of the Urban Governance and Development Program - Emerging Towns Project (UGDP-ETP) was held during the period of February 10 to 20, 2015. The objectives of the mission were to review overall implementation progress and the status of each component, with a focus on the priority actions agreed during the November 2014 mission. In particular, the review focused on: (a) implementation status of municipal sub-projects; (b) mobilization of Municipal Support Team; and (c) progress of institutional development activities, in particular the procurement of consultants for revenue billing software. 2. The IDA team1 (referred to as the “Team” hereafter) would like to thank the officials of the Government of Nepal (GoN), especially from the Ministry of Urban Development (MoUD), the Ministry of Federal Affairs and Local Development (MoFALD), the Ministry of Finance (MoF), the Department of Urban Development and Building Construction (DUDBC), the Town Development Fund (TDF), and the Project Coordination Office (PCO), as well as the project supported municipalities, for the hospitality and courtesies extended during the review. The list of people met during the review is included in Annex I. This Aide Memoire summarizes the main findings and recommendations of the Implementation Support Review. A draft Aide Memoire was discussed at a wrap-up meeting on February 20, 2015 chaired by Mr. Arjun Kumar Karki, Secretary, MoUD. As agreed at the wrap-up meeting, this Aide Memoire will be classified as a public document as per the World Bank’s Access to Information Policy. II. Key Project Data Project Performance Ratings Project Data Ratings Last Now Board Approval: May 10, 2011 Achievement of PDO MU MS Effectiveness Date: October 2, 2011 Implementation Progress MU MS Closing Date: July 31, 2016 Project Management MU MS Original Gr/Cr. Amt: USD 25 million Procurement MU MS Restructuring (Level II): February 22, 2013 Financial Management MU MU Restructuring (Level I): July 19, 2013 Safeguards MU MU Cancellation: USD 6.4 million M&E MS MS Revised Gr/Cr. Amt: USD 18.45 million Counterpart Funding S S Amount Disbursed: USD 8.68 million (as of February 12, 2015) (48.45% %) Ratings: HS=Highly Satisfactory; S=Satisfactory; MS = Moderately Satisfactory; MU= Moderately Unsatisfactory; U=Unsatisfactory; HU=Highly Unsatisfactory; NA=Not Applicable; NR=Not Rated. 1 The team comprised Elisa Muzzini (Sr. Economist/Task Team Leader), Silva Shrestha (Water and Sanitation Specialist/Co-Task Team Leader), Shambhu Uprety (Procurement Specialist), Drona Ghimire (Environment Specialist), Pradip Gautam (Consultant/Environment), Hari Prasad Bhattarai (Consultant, Social Safeguards), Yogesh Malla (Financial Management Specialist), Pradeep Shrestha (Financial Management Consultant), Pawan Lohani (Consultant/Municipal Finance), Noor Tamrakar (Consultant/Municipal Engineer), Tashi Tenzing (Consultant/Urban Development), Rajivan Krishnaswami (Consultant/Municipal Finance) and Sushila (Jessy) Rai (Program Assistant). 1 III. Achievement of Development Objectives (PDO) 3. Based on the Level I restructuring approved by the World Bank on July 19, 2013, the PDO is to improve the capacity of the participating municipalities to plan, implement and fund urban development activities. A milestone action for the achievement of the PDO was the signing of the contract with the IDA-funded Municipal Support Team (MST). This was achieved on January 16, 2015. The timeline for completing project activities remains tight given the delay in procuring MST, and activities need to be closely monitored. To fully capture project achievements, it was agreed with the PCO that a survey will be carried out in the municipalities to assess increase in municipal capacity resulting from project activities – beyond the PDO indicators – in critical areas such as improved citizen participation and awareness, increased quality of constructions works, and increased procurement and financial management capacity. Since the likelihood that the PDO indicators will be met by project closure has significantly increased following completion of the key milestone actions for the mobilization of the MST and the signing of contracts for municipal sub-projects, the rating for the achievement of the PDO is upgraded to Moderately Satisfactory. The current results framework is presented in Annex II. IV Implementation Status 4. Overall progress. Since November 2014, critical issues with regard to the procurement of the MST have been addressed and the MST consultants mobilized on January 22, 2015. It is now critical that the MST consultants provide municipalities the support required to ensure completion of municipal works and institutional development activities within the project period. All municipal sub-projects have entered the construction phase, and construction works are on track for 12 out of 16 sub-projects. MoUD has sent authorization letters to municipalities for the first and second installment of the municipal block grant; however, release of funds has been delayed because of incorrect classification of the mode of payment in the Red Book. This needs to be rectified by changing the mode of payment from direct payment to reimbursable. The critical procurement of consultants for the municipal billing software development has been completed, and the contract was signed on January 4, 2015. Because of the delays in hiring the MST, the preparation/implementation of Revenue Enhancement Plans (REPs), O&M Plans and Investment Plans is behind schedule. A plan to expedite these activities with the support of the MST has been agreed during the mission. Detailed implementation progress is presented in Annex III. Given the progress in completing the agreed milestone actions since November 2014, implementation progress rating is upgraded to Moderately Satisfactory. 5. Progress of municipal sub-projects. With the signing of the contract agreement for the Tansen Road Improvement sub-project on November 21, 2014, all 16 municipal sub-projects are now under implementation. Construction work is now on-going in 15 of the 16 sub-projects. The contractor has not yet been mobilized for the Dhankuta Hile Bus Terminal sub-project due to objections from a homeowner regarding the construction of the bus terminal building. The works need to start within a month to ensure completion of the sub-project by the closing date. There has been some improvement in construction progress and the percentage of sub-projects on track has increased from 66 percent in November 2014 to 75 percent now. Physical construction work is on track for 12 of the 16 sub-projects, while implementation progress is delayed for four sub-projects, including three out of five Track I sub-projects and one out of 11 Track II sub-projects. Issues related to non-availability of construction material affecting implementation have now been addressed. A change in design may be required for the Kheti Khola Bridge in Itahari to address the dispute regarding the high flood level and the abutment foundation. Issuance of the variation order for the Amar Narayan Temple sub-project has been further delayed, and another extension will be required to complete the works. It is now critical that the PCO (with the assistance of MST) provides municipalities with the required support to address implementation issues. Construction engineers have been mobilized for all sub-projects. 6. Progress in implementing the GAAP. The Project has institutionalized a system for handling grievances at both the municipal and central levels. Transfers of Executive Officers from the 2 municipalities continue to be an issue affecting project activities. At the central level, the Team observed that arrangements have been made to ensure smooth transition of Component Manager role when the incumbent Component Manager was promoted or transferred to another position. The Team reminded the PCO to request reports from municipalities for social audits of activities funded under the project. 7. Safeguards. There has been some progress with regard to safeguard support to the municipalities since the November review. MST has mobilized environmental and social experts to provide safeguard support to municipalities. However, the prolonged absence of safeguard experts at the PCO from June 2014 to January 2015 has affected safeguard oversight and monitoring. This has led to weaknesses and/or delays in reporting implementation of the municipal sub-projects’ Environmental Management Plans (EMPs) and delay in carrying out safeguard screening of block grant activities. A few municipalities have started to include safeguard reporting as part of the monthly progress reports submitted to the PCO, but the reporting needs improvement. It is critical that MST safeguard experts quickly get up to speed and provide technical support to municipalities to ensure timeliness and quality of safeguard monitoring and reporting and expedite the screening and field verification of FY15 block grant activities. A plan has been agreed during the mission to improve monitoring and reporting and building municipalities’ safeguard capacity. A detailed assessment of social and environmental safeguard work and agreed actions are included in Annex IV. The overall performance rating for safeguards remains Moderately Unsatisfactory. 8. Project Management. There have been significant improvements in project management since the milestone action for the procurement of the MST has been completed. With the hiring of the MST, municipalities are now provided with critical support for construction supervision, safeguards and institutional development activities. Two regional offices covering the Western and Eastern clusters are in the process of being established in Lekhnath and Itahari municipalities respectively. The MST inception report, which is due within a month of mobilization, will detail the work plan of MST; the MST was requested to ensure that the international finance advisor travel to Kathmandu at the earliest to expedite institutional development activities for the municipalities. The Team was informed that the national finance specialist mobilized by the MST will be replaced, and a short-term expert will be mobilized to ensure continuity while the new specialist is hired. The Team requested the PCO and MST to ensure that institutional development support to the municipalities is not affected by the replacement. There have been changes in the Deputy Project Director and Component Manager for the MoUD Component, as the incumbent officials were promoted. Replacements have been identified and have been oriented with sufficient overlap to ensure smooth handover. At the wrap-up meeting, Mr. Karki, Secretary, MoUD informed the Team of the decision to appoint a full-time project director for the project; the Team provided concurrence to the Ministry’s decision. The Team noted the importance of ensuring coordination among the central level agencies and regular participation of the agencies in meetings. Because of the increased support provided to the municipalities in critical areas for project implementation through the MST, the project management rating is upgraded to Moderately Satisfactory. 9. Monitoring and Evaluation (M&E). There has been progress in the project M&E system since the November mission. Efforts have been made to collect information on a regular basis from municipalities and project agencies and a monthly M&E report has been prepared and submitted to the Team for review. However, the monthly progress reports need to be improved to address gaps in information collected at the municipal level (especially block grant) and institutional development activities carried out by central agencies. The rating for M&E remains Moderately Satisfactory. 10. Project Risk Assessment. Project risk remains “Substantial”. The lack of elected local officials and the frequent change (every 6 to 12 months) of Executive Officers (EOs) in the six municipalities represent a significant risk to the achievement of the PDO. Delays in procuring the MST have significantly increased implementation risk, and the timeline for completion of project activities is very tight. 3 V. Procurement, Financial Management and Disbursement 11. Procurement. Contracts have been signed for almost all major procurements as per the procurement plan. The procurement plan has been finalized and needs to be submitted in SEPA. Progress has been made with the procurement of civil works, and all works are likely to be completed by project closure. Continuous support needs to be provided to the municipalities in the areas of contract management, and all contract variations need to be expedited to ensure sufficient time for approval and completion of works. In light of the progress made to complete procurement of critical activities, the procurement rating is upgraded to Moderately Satisfactory. 12. Financial Management. The approved budget for FY 2014/15 is NRs. 775.45 million (Recurrent NRs. 514.86 million; Capital NRs. 82.21 million; and Financing NRs. 178.38 million). Expenditure of NRs. 86.95 million (11.21% of the approved budget) has been incurred as of February 12, 2015. Reasons for slow implementation include late approval of the annual work program, delay in procurement and incorrect mode of payment (loan part) of the block grant in Red Book. The annual program needs to be revised to incorporate changes in activities. The Team has found the budget for the GoN counterpart to be sufficient. An SoE review carried out on a sample basis found that SoE-related records and documents were being maintained properly in the required format. The internal audit of FY 2013/14 reported excess payment of daily allowance and some internal control weaknesses, for which the Team suggested necessary actions for resolution. These actions include the PCO either recovering the excess daily allowance as cash refunds or adjusting from salary payments, as well as the TDF making insurance coverage of fixed assets in case of internal control weaknesses and related insurances. There are no Implementation Progress Reports (IPRs) pending, all but one of the previous agreed actions have been completed. The FY 2013/14 audit report has yet to be submitted despite a warning letter having been sent on February 24, 2015; project accounts as well as the TDF financial statements thus remain overdue. Total disbursement as of February 12, 2015 is USD8.68 million, consisting of USD 3.39 million from Credit and USD5.29 million from the Grant Account, which was about 48.45% of the total allocation. The net use of resources, excluding the Designated Account advance, was about 20.65% of the total allocation. There have been delays in submitting withdrawal applications for FY2014/15 expenses. Reimbursable expenses of NPR 64.16 million of FY 2014/15 are yet to be transferred to the government treasury. Given remaining pending issues, the performance rating for financial management remains Moderately Unsatisfactory. VI. Key Implementation Issues and Agreed Priority Actions 13. The following implementation issues were discussed and priority actions were agreed:  Municipalities need to closely monitor construction progress and make arrangements for operations and management of assets built. Municipalities, with support from the PCO/MST, need to closely supervise achievement of milestones to ensure works are completed within the project period; particular attention needs to be paid to expedite implementation of the four delayed sub-projects – Tansen Temple Conservation, Mechinagar Gate Beautification, Mechinagar Gokul Marg Road Upgrading and Dhankuta Hile Bus Park. If the contractor for the Dhankuta Hile Bus Park sub-project is not mobilized by March 15, 2015 the municipality will not have sufficient time to complete the works within the project period, and the sub-project would need to be dropped. Municipalities also need to expedite processing of variations and carefully manage extensions to ensure that there is sufficient time for processing revisions and implementation of works. Itahari municipality needs to quickly settle design issues for the Kheti Khola Bridge with support from the PCO/MST and ensure works can start before the monsoon season. The Team discussed with the municipalities the need to make timely arrangements for operation and management of assets built under the project and make arrangements to contract out services to the private sector when required. The Team reminded Dhankuta municipality to 4 start the process of contracting out the management of slaughterhouse facilities for the Dhankuta Hile Market to the private sector with support from the PCO/MST.  PCO needs to provide municipalities with the support required to implement institutional development activities that are critical for the achievement of the PDO. Limited progress has been made with institutional development activities for municipalities given the delay in hiring the MST. While Operations & Maintenance (O&M) plans for Lekhnath, Baglung and Mechinagar have been prepared, the preparation of REPs and Investment Plans in the three municipalities has been delayed. As a result, these plans could not be approved as part of the FY2016 municipal budgeting process in January 2015. A timeline was agreed to ensure that plans are finalized and Performance Agreements signed between the municipalities and the PCO at the earliest; the municipalities committed to approve the plans at the next Municipal Council meeting this FY. MST has started the process of updating the FY14 REPs, O&M plans and Investment Plans in Tansen, Itahari and Dhankuta municipalities. Due to the recent annexation of adjacent Village Development Committees (VDCs) within the municipal boundaries, the population and land area of Dhankuta, Lekhnath and Itahari municipalities has increased significantly2. Municipalities have requested technical support under the project to introduce property and business taxes in the annexed VDCs, starting from the next FY, as part of the implementation of REPs. These changes need to be reflected in the REPs and Performance Agreements. Consultants for revenue billing software development – a critical activity for the implementation of REPs – have mobilized. The timeline and implementation arrangements were agreed during the mission to ensure that the software is ready for use by the municipalities by June 15, 2015. MST will support the municipalities with the implementation of the REPs – the most urgent activities are data collection for the revenue software, tax collection, and awareness campaigns. The Team reminded the PCO of the importance of closely monitoring the implementation of activities agreed in the Performance Agreement signed by the municipalities. 14. The status of priority actions agreed during the Tenth Implementation Review is summarized in Annex VI. The following priority actions have been agreed during the Eleventh Implementation Review: Priority Action Responsible Agency Milestone Date Commence construction works for Bus Park sub- Dhankuta municipality March 15, 2015 project. Submit overdue audit reports for FY 2013/14. PCO March 31, 2015 Lekhnath, Baglung and Approve REPs, O&M Plans and Investment Plans Mechinagar municipalities, with May 15, 2015 and sign Performance Agreements with the PCO. the support of PCO/MST Ensure revenue billing software is ready for use by PCO June 15, 2015 the municipalities. 15. A summary of the actions agreed during the review is included in Annex VII. VII. Proposed Timing and Focus of Next Implementation Review 16. The next implementation support review will be carried out in May 2015. 2 The population of Itahari has increased from 77,000 to 143,000 as a result of annexation of 4 adjacent VDCs. The population of Dhankuta municipality has increased from 28,000 to 39,000 following annexation of two adjacent VDCs. The population of Lekhnath has increased from 59,000 to 69,000 due to annexation of one adjacent VDC. 5 Annex I: List of Persons Met Ministry of Urban Development Mr. Arjun Kumar Karki, Secretary Dr. Mahendra Subba, Joint Secretary Mr. Padam Kumar Mainali Mr. Navin Devkota, Senior Divisional Engineer Ministry of Federal Affairs and Local Development Mr. Tulsiram Marashine, Section Officer Department of Urban Development and Building Construction (DUDBC) Mr. Shambhu K.C., Director General Mr. Ramesh Prasad Singh, Deputy Director General/Project Director Mr. Dwarika Shrestha, Joint Secretary Mr. Chakravarti Kanth, Sr. Divisional Engineer/Deputy Project Director Mr. Tika Ram Paudel, Component Manager Mr. Sailendra Dulal, Account Officer Mr. Sabin Karmacharaya, Engineer Mr. Dhruba Dahal, M&E Specialist Mr. Yam Nath Neupane, Financial Management Specialist Mr. Shakti Shrestha, Procurement Specialist Town Development Fund (TDF) Mr. Sushil Gyawali, Managing Director Mr. Dron Pun, Manager-Environment and Social Safeguard Mr. Maniram Singh Mahat Director, PME Center Mr. Harka Bahadur Chhetri, Director Mr. Man Bahadur Gurung, Engineer Mr. Suman Mehar Shrestha, M&E Engineer Municipal Support Team Mr. Padam Bahadur Chettri, Team Leader Tansen Municipality Mr. Ramchandra Lamgade, Executive Officer Baglung Municipality Mr. Jagannath Lamichhane, Executive Officer Machinagar Municipality Mr. Krishna Prasad Panthi, Executive Officer Lekhnath Municipality Mr. Ram Chandra Paudel, Executive Officer Dhankuta Municipality Mr. Agni Prasad Adhikari, Executive Officer Mr. Mingma Dorje Sherpa, Engineer Mr. Promod Neupane, Supervision Engineer 6 Mr. Raju Guragain, Tax Officer Mr. Nush Raj Shrestha, Manager, RUPP Mr. Damber Rogu, Section Officer Itahari Sub-Metropolitan City Mr. Pashupati Khatiwada, Executive Officer Mr. Arjun Dahal, Engineer Mr. Amit Kuma Gupta, Supervision Consultant Engineer 7 Annex II: Results Framework Year 1: FY 2011/12; Year 2: FY 2012/13; Year 3: FY 2013/14; Year 4: FY 2014/15; Year 5: FY 2015/16 (Nepal Fiscal Year ending July 2015). Estimates for FY 14/15 as of January 2015. Project Development Objective (PDO): To improve the capacity of the participating municipalities to plan, implement and fund urban development activities. Base- Target and Achievement Project Development Objective line Reference Comments Indicators (Y1) Year 2 Year 3 Year 4 Year 5 Increase in Percentage Target for year 4 is likely to municipal own annual Target % 15 15 20 25 be achieved. Own source Revenue source revenues increase revenue increased by 24% in 15 statements of in the six months of Y4 compared to Actual % 18 30 municipalities participating same period of Y3. municipalities. Number of Number Target for year 4 can be participating Cumulative achieved. MST is on board to 0 3 6 6 municipalities Target support municipalities, but the with funded 0 timeline is very tight and investment and Cum. activities need to be closely 0 3 O&M plans. Achievement monitored. Municipal sub- Percentage of Target for year 4 can be projects under Component 2 Target % 0 80 80 90 achieved. Percentage is implementation Sub-projects slightly below target for year with construction 4. As of February 2015, 12 works on track as out of 16 sub-projects are on per the signed 0 track, equivalent to 75% of contracts. sub-projects. A sub-project is Actual % 0 80 on track if 50% of target is achieved by 80% of contract time, and 90% of target is achieved after that. Total number of Number Cumulative Annual program Target for year 4 is expected people benefiting 36,000 50,000 70,000 92,000 and progress to be achieved. Estimated Target from project 25000 reports submitted number of cumulative activities. Cum. by the beneficiaries by the end of 26,733 54821 Achievement municipalities Year 4 is 86,642. 8 Female Percentage Annual program Indicator on track for year 4. beneficiaries, as Sub Type Target % 35 35 35 35 and progress Estimated female percentage of Supple- 35 reports submitted beneficiaries is 44% of total total mental by the beneficiaries. beneficiaries Actual % 51 45 municipalities Disadvantage Percentage Annual program Indicator on track for year 4. groups, as Sub Type Target % 10 10 10 10 and progress Estimated beneficiaries from percentage of Supple- 10 reports submitted disadvantaged groups is 54% total mental by the of the total beneficiaries. beneficiaries Actual % 59 53 municipalities Intermediate Results Indicators Component I: Strengthening Municipal Planning Capacity for Urban Development Municipal grants Percent of Annual program Indicator for year 4 is allocated to Municipal Target % 35 35 35 35 submitted by the slightly below the target. programs Grant municipalities Municipalities revised the targeting women, allocated to annual program sent in 35 children and target groups beginning of the year and disadvantaged Actual % 35 34 34% of the grants allocated groups. target women, children and disadvantaged groups. Number of Number PCO records Target achieved for year 4. municipalities All six municipalities submitting submitted annual plans of Target n/a 6 6 6 satisfactory activities to the PCO for the annual plans for FY 2014/15 municipal block the municipal n/a grant by August 15, 2014. block grants to the MoUD by August 15 (one Actual n/a 6 6 month after the start of the FY). Number of Number PCO records Target for year 4 achieved. municipalities All six municipalities submitting n/a Target n/a 6 6 6 submitted progress reports for satisfactory the municipal block grant of 9 annual progress FY 2013/14 to the PCO by reports to MoUD September 15, 2014. for municipal block grants by September 15 Actual n/a 6 6 (two months after the end of the Fiscal Year). Component II: Capacity Building for Municipal Infrastructure Development Number of municipal Number Indicator has been achieved. infrastructure sub- Cumulative 3 13 18 18 All sub-projects have entered projects successfully Target (16%) (72%) (100%) (100%) construction phase. The total appraised and ready number of municipal sub- 0 for bidding (i.e., projects has been reduced procurement notice Cum. 3 16 16 from 18 to 16, and invitation published). Achievement (18%) (100%) (100%) notices for all 16 bids were published in FY 13/14. Percentage of funds Percent of Cumulative The target for year 4 is for municipal sub- sub- 0 20 60 100 unlikely to be met. Target projects disbursed. project's 0 Expenditure against the budget Cum. contract amount based on 0 9.8 financial progress is 14.45%. Achievement Component III: Institutional Development Policy guidelines and Text Target for year 4 is unlikely procedures for Yes Yes Yes to be met. Preparation of ToR municipalities on Target No (Imple- (Imple- has been delayed and (Updated) governance and mented) mented) consultants are yet to be hired. No budget planning Target can be achieved in updated and year 5. implemented by Actual No No MoFALD. Policy guidelines and Text Target for year 4 is expected procedures for Yes Yes to be achieved. Draft strategy Yes municipalities on No Target No (Imple- (Imple- for Nepal Urban Development (Updated) physical planning mented) mented) has been prepared and is and infrastructure expected to be finalized and 10 development implemented in year 4. developed/updated Actual No No and implemented by MoUD. TDF collection ratio Percentage TDF Data Collection ratio (86%) is Target % 80 90 meets prescribed slightly higher than the 75 thresholds. target for year 3. Actual % 78 85 Standard lending Text Target is achieved in year 3. policies and Target No Yes Yes Yes procedures applied to No all ETP municipal Actual Yes Yes sub-projects. Number of Number Target for year 4 is not likely municipalities that Cumulative to be achieved in year 4. have developed and 0 3 6 6 Specific bye-laws have been Target approved planning drafted for three norms and building municipalities, but 0 bye-laws based on finalization has been delayed the guidelines issued in the absence of MST; MST by MoUD. Actual 0 0 is now on board and can be expected to achieve the target in year 5. 11 Annex III: Implementation Progress by Component 1. This annex summarizes implementation progress for each project component. III.I Strengthening Municipal Planning Capacity for Urban Development (Component I) 2. The authorization letters for both first and second trimester installments of the FY15 block grant has been issued to all municipalities. However, municipalities were not able to receive the full amounts from the concerned District Treasury and Control Offices (DTCO) due to incorrect mode of payment as “direct payment” (instead of “reimbursable”) in the Red Book. This has delayed implementation of block grant activities for this FY. Hence, the actual expenditure under this component is very low till date. This needs to be rectified by the PCO at the earliest. It was agreed that the change in the mode of payment will be made by March 7, 2015 and revised authorization letters will be issued to the municipalities. The Team reminded the municipalities that the third tranche of block grants will only be released after the audit report is submitted by the municipalities. 3. The municipalities have allocated budget for activities benefiting the targeted population (women and disadvantaged groups) after deducting ten percent amount for administrative expenditure according to the guidelines (Table 1). The PCO had reviewed the draft annual program for FY 2014/15 to ensure that the sub-projects meet the basic requirements in terms of target beneficiaries. As per the letter issued by the PCO to Dhankuta Municipality to revise the program to allocate at least 35 percent budget to benefit women and disadvantaged groups as per guidelines, the municipality has revised the program and revised allotted budget for targeted people is 41 percent. The municipalities have submitted the first trimester report for the block grant by December 17, 2014. Table 1: Block Grant Allocation FY 2014/15 (NRs. ‘000) Block Grant Grant Allocated for Target % of Allocation for Municipality Amount Population Target Population Mechinagar 14,921 5,433 36 Itahari 26,656 8,379 31 Dhankuta (*) 10,935 4,436 41 Tansen 9,023 2,842 31 Baglung 10,041 3,165 32 Lekhanath 23,424 7,633 33 Total 95,000 31,888 34 (*) revised to meet the required allocation for target population Status of Actions Agreed during the Tenth Implementation Review of November 2014 Target Action Responsibility Status Completion Date Follow up on the status of the PCO December 15, 2014 Partially authorization and ensure that the completed. municipalities receive the release Authorization letters were issued to all municipalities, but they need to be re- issued after correcting mode of payment in the Red 12 Book. Submit revised annual program to Dhankuta December 15, 2014 Completed. MoUD and PCO for the FY 2014/15 municipality Dhankuta submitted revised program. Actions for Strengthening Municipal Planning Capacity for Urban Development Component  PCO to correct mode of payment of the budget head for the municipal block grant from “direct payment” to “reimbursable”, and issue revised authorization letters to the municipalities by March 15, 2015. 13 III.II Capacity Building for Municipal Infrastructure Development (Component II) 3. Overall progress. Contracts for all municipal sub-projects have been signed, and construction works have started in all sub-projects except the Dhankuta Hile Bus Park sub-project. The overall implementation progress of sub-projects has slightly improved, with 12 out of 16 sub-projects on track (75%) compared to 10 out of 15 sub-projects (66%) having been on track in November 2014. Implementation progress is significantly delayed for three out of 5 Track I sub-projects and one out of 11 Track II municipal sub-projects. These sub-projects need to be monitored very closely, in particular Dhankuta Hile Bus terminal sub-project which is at risk of not being completed before the project closure date if works do not start within one month. Although Itahari Bridge sub-project is currently on track, it is also at risk of delay because of the issues raised with regard to the appropriate high flood level for the bridge. The list of municipal sub-projects under implementation is presented in Table 2. The updated status of implementation of sub-projects is presented in Table 3. 4. Status of Track I sub-projects. Out of five Track I sub-projects in the construction phase, two are progressing satisfactory, while progress with three sub-projects – Tansen Amar Narayan Temple Conservation, Mechinagar Gate Beautification and Gokul Mark upgrading – has been significantly slow. Works for Dhankuta Weekly Market are progressing satisfactorily and are almost complete, having achieved 92% physical and financial progress. Implementation of the Dhankuta Hile Market Infrastructure Improvement sub-project has also picked up, but progress may not enough to complete the works within the contract period. The physical progress is about 22% after an elapse of about 60% of contract period. The implementation progress of Tansen Amar Narayan Temple Conservation sub-project has again slowed down. Though the contract has been extended for a three-month period through mid- February, the physical progress is only at 70%. The PCO and the municipality have still not been able to finalize the variation order initiated about five months ago to address the design issues involved in the wall constructed of traditional bricks. Works in the Gokul Marg sub-project re-started only recently, after the finalization of the variation order. Major efforts are required on the part of the contractor for the sub- project to be completed within the contract end date of June 5, 2015. The Mechinagar Gate Beautification sub-project has also made very slow progress and is now facing a problem while demolishing part of the structures on the sides of the main gate, which is delaying progress. The municipality has also indicated recently that it may not want to go ahead with the construction of landscaping works in Mechinagar Gate. Now that MST is in place, these sub-project related issues to should be addressed quickly and decisions should be made to ensure smooth progress for the remaining duration of the sub-projects. 5. Status of Track II sub-projects. The construction contracts for all 11 Track II sub-projects have been signed and work has started in 10 sub-projects. The Mandare Park sub-project in Lekhnath municipality is the first sub-project to have been completed. The Barah Chhetra Improvement sub-project in Lekhnath municipality has made significant progress, having achieved 70% physical progress and 43% financial progress. The Upgrading of Link Road and Construction of Bridges sub-projects in Itahari municipality are also making satisfactory progress and are on track to meet the target completion dates. The Shahid Smriti Park sub-project in Baglung has made about 40% physical progress and 10% financial progress. And with almost 10 months of the contract remaining, the Baglung Upgrading of Roads sub- project has made about 20% physical progress and 13% financial progress. The progress of works in the Tansen Shreenagar Park sub-project is satisfactory with about 20% of physical works completed. There has been problem with the construction of the Multi-purpose Building in Tansen as the space available for construction is smaller than the proposed building by about 7 m length-wise and 1 m width-wise. The consultant is revising the design of the building and the necessary retaining structures required for the site. Construction works for the road sub-projects in Tansen and Lekhnath have just started, while construction work has not yet started in the Dhankuta Hile Bus Terminal sub-project due to objection from a local house owner regarding the construction of the bus terminal building. The municipality is still working with the local house owners to solve the problem and expects to resolve it within the next 15 14 days. Dhankuta Hile Bus terminal sub-project is now in critical stage and may not be completed before project closure if the issue relating to construction of terminal building is not resolved immediately. It was agreed that if the issue is not settle and works do not start by March 15, 2015 the sub-project would be dropped. Itahari Bridge sub-project is also at risk of delay (although current implementation progress is satisfactory) because of the need to address the issue of adequacy of high flood level in Kheti Khola bridge. Revisions in the designs need to be expedited if they are required to ensure sufficient time to complete the works within the project period. 6. Construction supervision. Supervision consultants have been hired by the municipalities and have been mobilized on site. This has improved reporting to the PCO and helped speed up implementation. The two MST regional facilitators are expected to provide additional support to the municipalities for construction supervision. Municipalities need to expedite processing of variations and carefully manage extensions to ensure sufficient time for processing revisions and implementation of works. The Team also noted that some of the municipalities have not provided sub-project work schedules and performance charts to the PCO despite the requirement for contractors to provide detailed work plans before receiving the mobilization advance. 7. Management of assets built under the project. The Team discussed with the municipalities the need to timely make arrangements for operation and management of assets built under the project and contract out services to the private sector when required. For example, Dhankuta municipality is planning to mobilize a private operator to manage the Hile market including the slaughterhouse facilities. Therefore, the municipality with the support of MST needs to start procurement immediately to avoid delays in the operating of the market after completion of construction works. Other municipalities also require support to make arrangements for contracting out management of assets (e.g. markets and parks) built under the project. It is agreed that the PCO through MST will provide support to the municipalities to identify best arrangements for management of assets and prepare draft management contracts with clear procedure for procurement of private sector. See actions agreed under component 2. Municipalities will communicate plans for management of assets built under the sub-projects to the PCO/MST and based on the plans the MST will prepare plan to support municipalities. 8. Loan and grant commitments for the municipal sub-projects. All 16 sub-projects are contracted out. A provision of 15% cost overrun is estimated on the awarded contracts' amount as well as on the bid amount under the contract awarding process to estimate IDA loan and grant commitments. The IDA loan and IDA grant allocations for the municipal sub-projects are USD 3.3 and USD 4.5 million, respectively, for a total of USD 7.8 million including approved variations. The estimated IDA loan and IDA grant commitments are USD 1.9 million and USD 3.1 million, respectively; this is equivalent to about 39% to 61% loan-grant mix for the 16 municipal sub-projects. The loan-grant ratios are estimated on the basis of the loan grant agreement between the TDF and municipalities in line with the project’s loan grant policy. Loan and grant commitments are summarized in Table 4. 9. Financial progress and expenditure for municipal works. The financial progress of the sub- projects has improved and is now almost on par with the physical progress. The Dhankuta Weekly Market sub-project has achieved about 92% financial progress, while three other sub-projects – namely Lekhnath Mandare Park sub-project, Lekhnath Barah Chhetra sub-project and Amar Narayan Temple sub-projects – have achieved financial progress greater than 40%. The other sub-projects have achieved a financial progress between 28% and 0%. The financial progress of all sub-projects is presented in Table 3, while the actual and projected disbursement for each quarter of FY 2014/15 has been presented in Table 5. Though the actual expenditures for the sub-projects in the first and second quarters of FY 2014/15 is US$ 174,253 and US$ 465,405, respectively, disbursement for the two quarters is only US$ 226,891 for expenditure incurred in the last FY; this is mainly due to the long time lag between the expenditure and the submission of withdrawal application. 15 10. Contribution to PDO through municipal capacity building. Measuring capacity building is as complex as it is multi-dimensional. Sustainable capacity is built if the recipients of capacity building training internalize what is being taught. The starting point is, therefore, awareness creation. Under this project, procedures and processes for planning, designing and implementation of works have been introduced; the municipalities have been assisted to enforce more stringent and systematic requirement than they are normally accustomed to. The project has introduced the need for proper quality control of works through monitoring requirements; improved progress reporting; emphasized inter-relationship between physical progress and financial progress; and enhanced contract administration. While these may not seem new, actually having them implemented is an achievement. To assess the effectiveness of capacity building efforts under the project, it has been agreed that a survey will be carried out to study how the stakeholders – residents of the municipality, the municipal staff, the contractors and consultants involved and government staff, the private sector – view how the project has helped the municipality to enhance its capacity. This will improve understanding on whether the project been able to create awareness within the municipality. 16 Table 2: List of Municipal Sub-projects Municipality No. Sub-project Name Track I Sub-projects Tansen 1 Amar Narayan Temple Conservation Dhankuta 2 Dhankuta Weekly Market Infrastructure Improvement 3 Hile Market Infrastructure Improvement Mechinagar 4 Mechinagar Gate Beautification 5 Upgrading of Gokul Marg Track II Sub-projects Baglung 6 Sahid Smriti Park Development 7 Upgrading of Access Road to Deprived Community (Track I and Track II) Tansen 8 Upgrading of Existing Roads in Urban Areas, including: a) Bus Park to Mission Hospital; (b) Mission Hospital to Eye Hospital; (c) Gaurishanker to Holangdi; (d) Bandevi to Laxmi School; and (e) Prabash to Baghkhor 9 Multi-Purpose Building (shops and guest rooms) 10 Shrinagar Park Improvement Lekhnath 11 Barah Chhetra Improvement 12 Picnic Spots & Amusement Zone at Mandare Park 13 Upgrading of Roads in Urban and Peri urban Areas, including: (a) Oil Nigam To Rithe Pani; (b) Dahar No.3; (c) Dahar No.4; (d) Wada Sewa Kendra to Deurali Khola; (e) Buddha Tole to Dadapari; and (f) Universal Chowk to Kholako Chheu Itahari 14 Upgrading of Link Road 15 Construction of Bridges on the Link Road Dhankuta 16 Basic Service Facilities for Hile Bus Park 17 Status of Track I Municipal Infrastructure Sub-projects 11. Tansen Amar Narayan Temple Conservation Sub-project. The sub-project was signed on June 20, 2013. The contract amount is NPR 34,428,173.87, including VAT. While the start date of the sub-project was July 20, 2014, the work order was not issued by the municipality until August 17, 2014. The contract’s original end date was November 16, 2014, but it has been extended by three months until mid- February, 2015. The construction works have been significantly delayed with only about 70% of the physical work having been completed to date, with 53% financial progress. The variation in the contract initiated five months back to address the design issues relating to buildings constructed with traditional bricks, or DachiAppa has not yet been finalized. The contractor has requested for extension of contract by further 3 months. The team expressed concern for delay and PCO has agreed to expedite it to complete the works without further delay. 12. Dhankuta Weekly Market Infrastructure Improvement Sub-project. The contract was signed on July 12, 2014. The contract amount is NPR 16,310,868.92, including VAT. While the start date of the contract is August 11, 2014, the work order was only issued by the municipality on September 19, 2014. The municipality extended the original contract end date of December 18, 2014 by three months to March 18, 2015. The variation proposal for the sub-project has been approved and the municipality has issued variation order. The physical progress now is about 92% and the works for provision of electricity, water supply and finishing works are still remaining. The municipality is preparing second variation order to address cultural issues relating to Athpariya Rai Shrine of Sri Marga temple. The team advised the municipality to complete all works by the contract end date in March 2015. The financial progress of the sub-project is about 92%. 13. Dhankuta Hile Market Infrastructure Improvement Sub-project. The contract was signed on April 4, 2014. The contract amount is NPR 34,620,384.09, including VAT. The start date of the contract is May 4, 2014 and the construction period is 15 months. The sub-project has made good physical progress during the last 3 months and has co mpleted about 22% of works against the planned target of 34% by mid January. The physical progress during site visit in mid February is more than 35%. The construction of slaughter house, permanent and temporary sheds, public toilet, soak pit and septic tanks are ongoing. The team advised for some improvement in workmanship in brickwork and concreting work. The financial progress of the sub-project is about 24%. 14. Mechinagar Gate Beautification Sub-project. The construction contract for this sub-project was signed on July 15, 2014. The contract amount is NPR 12,632,810.99, including VAT. The construction period of the sub-project is 15 months. The contractor has started construction work but is facing problem in demolishing part of adjoining buildings.. The PCO and MST engineers have visited the site and are preparing revised design.. The municipality is also considering reducing the scope of landscaping work. The PCO has advised the municipality to decide on scope of landscaping works, but no decision has yet been taken. The physical progress of the sub-project is only about 5% against the planned target of 34%, and financial progress is at 12%. The team advised PCO and the municipality that the further delay would land this sub-project at risk of not completing by the project closure. 15. Mechinagar Gokul Marg Road Improvement Sub-project. The contract was signed on February 4, 2014. The contract amount is NPR 32,589,607.77, including VAT. The start date of the contract is March 6, 2014 and the construction period is 15 months. The variation order for changes in drain and road has been approved and issued to the contractor. The contractor has now started construction works but is not very likely to complete the works within the stipulated contract period unless extra efforts are made. The physical progress to date is only about 25% against the planned target of 85.5%. The sub-project is significantly delayed and is not on track. 18 Status of Track II Municipal Infrastructure Sub-projects 16. Baglung Shahid Smriti Park Sub-project. The construction contract for this sub-project was signed on June 9, 2014. The contract amount is NPR 9,319,313.82, including VAT. The contract start date is July 9, 2014 and the construction period is 9 months. Though there has been some delay in commencement of this sub-project, it has made good progress over the last three months. The physical progress of the sub-project now stands at 40%, and the financial progress at 10%. The contractor needs to make extra effort to complete the sub-project by the contract end date of April 7, 2015. The team advised PCO and the municipality to monitor progress to complete the sub-project in time. 17. Baglung Upgrading of Access Road (combined Track I and Track II) Sub-project. The construction contract for this sub-project was signed on June 16, 2014. The contract amount is NPR 112,768,983.70, including VAT. The contract start date is July 16, 2014 and the contract period is 18 months. The physical progress of the sub-project is about 20%, against the planned target of 24.5%. The new construction supervision engineer for the sub-project has recently been recruited and mobilized. The supervision engineer needs to review the issues identified in the inception report and take necessary measure to expedite the progress of the sub-project. 18. Tansen Urban Roads Upgrading Sub-project. The construction contract for this sub-project was signed on November 21, 2015. The contract amount is NPR 91,092,100, including VAT. The contract start date is December 21, 2015 and the contract period is 18 months. There have been delays in commencement of works by more than one month. This is a critical sub-project with an expected sub- project completion date of June 21, 2016, which is very close to the project closing date. So the PCO and the municipality should very closely monitor the progress of this sub-project to avoid delays and to ensure that the sub-project completion is not pushed beyond the project closing date. 19. Tansen Shrinagar Park Improvement Sub-project. The contract for this sub-project was signed on November 12, 2014. The contract amount is NPR 11,679,630.08, including VAT. The construction period is 9 months. The sub-project has made good progress and has made about 20.2% physical progress compared to planned target of 16.9%. The financial progress is about 9%. 20. Tansen Multi Purpose Building Sub-project. The contract for this sub-project was also signed on November 12, 2014. The contract amount is NPR 27,431,282.92, including VAT. The construction period is 15 months. The construction work of the building has faced problems as the construction site was found to be smaller than the proposed building. The consultant is revising the design of the building and the retaining structures to suit the available site. The masonry retaining structures are under construction. The physical progress of the sub-project is about 7.2%, compared to the planned target of 10%. The financial progress of the sub-project is at 9%. 21. Lekhnath Barah Chhetra Improvement Sub-project. The construction contract for this sub-project was signed on June 24, 2014. The contract amount is NPR 9,749,102.90, including VAT. The construction period is 12 months. The sub-project has made significant progress during the last three months and has completed about 70% of physical works against the planned target of 40%. However, the sub-project has not yet addressed the gaps in the provisions for the docking area, as identified during the November mission. Financial progress is at 43%. 22. Lekhnath Mandare Park Sub-project. The construction contract for this sub-project was signed on April 27, 2014. The contract amount is NPR 5,603,914.00, including VAT. The construction period is 9 months. The sub-project construction work is complete and has made 100% physical progress. This is the first sub-project to be completed. Financial progress, however, is significantly lower at about 58%. 19 23. Lekhnath Urban and Peri-urban Roads Sub-project. The construction contract for this sub-project was signed on November 12, 2014. The contract amount is NPR 85,132,622.50, including VAT. The construction period is 18 months, with a construction end date of June 11, 2016. The joint survey of sub- project roads has been completed. The construction of side drains of roads has just recently started. Implementation needs to be expedited as the contract end date of this sub-project is very close to the project closing date. The PCO and the municipality should closely monitor the progress of this sub- project to avoid delays that could push the contract end date beyond the project closing date. 24. Itahari Link Road Improvement Sub-project. Itahari municipality signed the construction contract with the lowest evaluated bidder on July 28, 2014. The contract amount is NPR 72,398,415.61, including VAT. The construction period is 18 months. The joint survey works has been completed. The contractor has started construction of side drains from 4 locations and has completed about 3.5 km length. The physical progress is about 16.4% compared to planned target of 27%. Financial progress is at 12%. 25. Itahari Bridges Sub-project. The contract for this sub-project was signed on October 31, 2014. The contract amount is NPR 53,569,438.29, including VAT. The construction period is 18 months. The construction end date is May 29, 2016, which is very close to the project closing date. The sub-project is making good progress with physical progress of about 4.6% compared to the planned target of 4.5%, and financial progress of 9%. The abutments for Tengra Khola Bridge are under construction with both the abutments now constructed to bearing level. The joint survey for Kheti Khola Bridge has been completed. The survey has raised two issues, which need to be verified/studied: (i) level of high flood level adopted in the design; and (ii) adequacy of soil analysis carried out for foundation design. The PCO and the consultants are conducting review of design to reach conclusions on above issues. The PCO has agreed that the review will be completed no later than March 2, 2015. The Team reminded that the delay in the start of construction could push the contract end date beyond the project closing date. 26. Dhankuta Basic Services Facilities in Hile Bus Park Sub-project. The construction contract for this sub-project was signed on November 9, 2014. The contract amount is NPR 15,180,135.81, including VAT. The construction period is 15 months. The construction work has, however, not started yet due to objection by one houseowner against construction of the two-story terminal building. They have been claiming ownership of part of proposed bus park land. The municipality has assured that the dispute will be resolved by March 5, 2015 and the construction works started by March 15, 2015. The team reminded municipality that there will not be sufficient time to complete sub-project before the project closure if construction work is not commenced by the end of March 2015. The contractor has already received mobilization advance and therefore, the financial progress is at 9%. 27. The status of actions for this component agreed during the implementation support review of November 2014 is presented in the table below. 20 Status of Actions Agreed during the Tenth Implementation Review Target Action Responsibility Completion Status Date Make available to the World Bank PCO December 15, Partially completed. Work work implementation schedule for 2014 for Track I schedules for 3 sub-projects Dhankuta Weekly Market sub- sub-projects; have yet to be submitted project, and project monitoring December 31, (Tansen Road, Lekhnath charts for all Track I & Track II 2014 for Track Road and Shahid Smriti sub-projects under II sub-projects Park in Baglung). implementation (including safeguard monitoring). Sign contracts for Tansen Road Municipalities and December 15, Completed. Contract Sub-project. PCO 2014 signed on November 21, 2014. Submit to the Team monthly PCO Starting from Completed. Monthly project implementation progress December 15, reports for the month of reports showing implementation 2014 November and December status of each sub-project, any submitted, but reports still problems related to the sub- needs some improvement. project and the actions taken to address the problem, if any. Actions for Capacity Building for Municipal Infrastructure Development Component  Make available work implementation schedule for Tansen Road sub-project, Lekhnath Road sub- project and Shahid Smriti Park Improvement sub-project in Baglung by March 7, 2015.  Dhankuta municipality and PCO to resolve the dispute on land for construction of bus terminal building by March 5, 2015 and commence construction works by March 15, 2015 (priority).  Municipality with support from the PCO and the design consultants to review design of Kheti Khola Bridge to address the issue of high flood level and the bridge foundation by March 2, 2015, and settle design for the bridge by March 30, 2015.  Municipalities to communicate plans for management of assets built to PCO under the sub- projects by March 30, 2015.  PCO/MST to share the methodology for survey of municipal staff to document capacity improvements by April 30, 2015.  PCO/MST to provide technical support to municipalities to make arrangements for management of assets under the municipal sub-projects by May 30, 2015. 21 Table 3: Status of Municipal Sub-projects under Implementation Estimated Implementation Project on Start date/ Physical Progress Financial Contract construction Target end period since Track Sub-project Work order Progress signing date period date start date (Y/N) issue date Planned Actual (%) (months) (months) Track I Tansen Amar Narayan Temple June 20, 2013 Aug 17, 2013 15 Nov16, 2014 17.0 100 70 N 53 Conservation Dhankuta Weekly Market July 12, 2013 Sep 19, 2013 15 Dec 18, 2014 15.9 98 92 Y 92 Infrastructure Improvement Mechinagar Gokul Marg Feb 4, 2014 Mar 6, 2014 15 June 5, 2015 10.4 85.5 20.5 N 28 Upgrading Dhankuta (Hile) Market April 4, 2014 May 4, 2014 15 Aug 3, 2015 8.4 32 22 Y 24 Infrastructure Improvement Mechinagar Gate Beautification July 15, 2014 Aug 14, 2014 15 Nov 13, 2015 5.0 34 5 N 12 Track II Lekhnath Mandare Park April 27, 2014 May 27, 2014 9 Feb 26, 2015 8.6 100 100 Y 58 Baglung Sahid Smriti Park June 9, 2014 July 8, 2014 9 April 7, 2015 6.3 NR 40 Y 10 Development Baglung upgrading of Access June 16, 2014 July 16, 2014 18 Jan 15, 2016 6,0 24.5 20 Y 13 Road Lekhnath Barah Chhetra June 24, 2014 July 23, 2014 12 July 22, 2015 5.8 40 70 Y 43 Improvement Itahari upgrading of Link Road July 28, 2014 August 27, 2014 18 Feb 26, 2016 4.6 27 16.4 Y 12 Itahari Bridges Construction Oct 31, 2014 Nov 30 , 2014 18 May 29, 2016 1.5 4.5 4.6 Y 9 Basic Service Facilities for Hile Nov 9, 2014 Dec 9, 2014 15 Mar 8, 2016 1.2 7.5 Work not N 9 Bus Park started Multi-Purpose Building Nov 12, 2014 Dec12, 2014 15 Mar 12, 2016 1.1 10 7.2 Y 9 Construction Shrinagar Park Improvement Nov 12, 2014 Dec 12, 2014 9 Sep 11, 2015 1.1 16.9 20.2 Y 9 Lekhnath Road Improvement Nov 12, 2014 Dec 12, 2014 18 June 11, 2016 1.1 NR Work Y 0 started Tansen Road Improvement Dec 15, 2014 Jan 15, 2015 18 July 15, 2016 0.8 NR Work Y 9 started Sub-project status as of January 15, 2015, NR indicates performance charts not received. 22 Table 4: Loan and Grant Commitments for Municipal Sub-projects Municipality Name of Sub Project Sub Project Infrastructure Financing (in USD '000) (USD 1 = NPR 95) Category Contracted IDA (TDF) IDA (TDF) GoN Municipal (U=Utility, Amount Loan Grant Grant Matching S=Social) Fund Track 1 Sub-projects Mechinagar Mechinagar Gate Beautification Project S 133 13 59 47 13 Upgrading of Gokul Marg U 334* 100 111 89 33 Dhankuta Dhankuta Weekly Market Infrastructure S 187* 19 83 67 19 Improvement Hile Market Infrastructure Improvement S 364 36 162 130 36 Tansen Amar narayan Temple Conservation S- 58%, U - 362 67 144 115 36 42% Track 2 Sub-projects Itahari Improvement of Link Road U 762 229 254 203 76 Construction of Bridges in the Link Road U 564 169 188 150 56 Dhankuta Improvement of Hile Bus Park S 160 16 71 57 16 Baglung Improvement of Shahid Smriti Park S 98 10 44 35 10 Upgrading of Baglung Access Road U 1187 356 396 317 119 Tansen Improvement of Existing Road U 959 288 320 256 96 Improvement of Shreenagar park S 123 12 55 44 12 Construction of Multipurpose Building U 289 87 96 77 29 Lekhnath Improvement of Barah Chhetra Park S 116 12 52 41 12 Improvement of Mandare Park S 59 6 26 21 6 Improvement of Existing Road U 896 269 299 239 90 All Consulting Services 293 0 264 0 29 Total 6887 1688 2623 1887 689 TDF service fee 1.5% of grant disbursement 39 0 39 0 0 Contingency @15% on contract amount 1033 253 393 283 103 Grand Total 7959 1941 3055 2171 792 Note: *Contracted amount is based on the variation order. 23 Table 5: Expenditure for Track I and Track II Sub-projects (USD) Estima- Expenditure in FY 2014-15 Contract Cumula- Track I ted Construc- Disburse- S.N. Amount Contract I Qtr. II Qtr. III Qtr. IV Qtr. tive Sub- Project Name Amount tion period ment till (US$) Date Annual (US$) (MM) June 2014 Actual Actual Estimate Estimate (2014-15) Track I Sub-projects Tansen Amar Narayan 1 397,061 362,402 20-Jun-13 15 41,597 46,765 72,106 107,335 58,359 284,565 Temple Conservation Dhankuta Market Area 2 187,853 187,151* 12-Jul-13 15 86,215 0 30,862 37,446 68,309 Improvement Dhankuta Hile Market 3 408,256 364,402 4-Apr-14 15 28,202 0 14,101 49,197 81,996 145,294 Area Improvement Mechinagar Gate 4 147,912 132,977 15-Jul-14 15 9,905 4,937 23,962 33,280 72,084 Beautification Mechinagar Gokul 5 682,311 333,939* 4-Feb-14 15 39,000 0 46,309 77,182 123,491 Marga Road Total for Track I Sub-projects 1,823,393 1,380,894 195,014 56,670 122,007 264,249 250,817 693,743 Note: *Contracted amount is based on the variation order. 24 Disburse Expenditure in FY 2014-15 Actual Estimated Construc -ment till Cumulati Track II Contract Contract S.N Amount -tion June I Qtr. II Qtr. III Qtr. IV Qtr. ve Sub- Project Name Amount Date (US$) Period 2014 Annual (US$) Actual Actual Est Est (US$) Track II Sub-projects 1 Baglung Sahid Smriti Park Development 155,956 98,098 9-Jun-14 9 8,645 0 22,072 26,486 57,204 1,187,04 2 Baglung Upgrading of Road 2,192,462 16-Jun-14 18 93,889 46,945 106,834 160,251 407,918 2 21-Nov- 3 Tansen Upgrading of Roads 1,321,322 958,864 18 0 74,932 129,167 129,167 333,825 14 12-Nov- 4 Tansen Multi Purpose Building 305,672 288,750 15 0 22,483 38,981 64,969 126,433 14 12-Nov- 5 Tansen Shrinagar Park Improvement 139,762 122,943 9 0 9,474 27,662 27,662 64,798 14 6 Lekhnath Barah Chhetra Improvement 123,681 115,963 24-Jun-14 12 8,932 35,793 20,873 26,092 91,689 7 Lekhnath Picnic Spots at Mandare Park 60,700 58,989 27-Apr-14 9 4,204 0 26,436 18,581 14,377 48,886 12-Nov- 8 Lekhnath Upgrading of Road 1,582,631 896,133 18 0 0 80,652 120,978 201,630 14 9 Itahari Upgrading of Link Road 1,229,991 762,089 28-Jul-14 18 0 58,624 68,588 102,882 230,094 10 Itahari Construction of Bridges 668,616 563,889 31-Oct-14 18 0 44,716 50,750 76,125 171,591 11 Dhankuta Basic Service Facilities Hile Bus Park 168,262 159,791 9-Nov-14 15 0 12,474 14,381 21,572 48,427 Total of Track II Sub-Projects 7,949,055 5,212,551 4,204 111,466 331,876 578,822 760,331 1,782,495 Consulting Services 292,588 293,173 47,605 6117 11,522 25,292 30,334 74,287 Total of Track I & II Sub-Projects and Consulting 10,045,530 6,886,618 246,823 174,253 465,405 868,363 1041482 2,550,525 Services 25 III.III Institutional Development Component (a) Institutional Development for the Municipalities Preparation/update of REPs, O&M Plans and Investment Plans 28. The MST will support Tansen, Dhankuta and Itahari municipalities to update the REPs, O&M Plans and Investment Plans approved in FY14. The revisions need to take into account change in municipal boundaries and increase in population due to addition of areas under the adjacent VDCs in Dhankuta and Itahari municipalities and the additional activities required as a result of this addition. In particular, municipalities requested project support to introduce property and business taxes in the annexed areas. The targets and the implementation support plans included in the Performance Agreements need to be updated to reflect the change in population and land area resulting from the additions. 29. The preparation of REPs and Investment Plans for Mechinagar, Lekhnath and Baglung municipalities has been delayed. Only O&M plans have been prepared and are ready to be discussed with the municipalities. As a result, municipalities could not approve the plans as part of the FY16 budgeting process which was completed in January 2015. The MST will support the municipalities with the preparation of REPs and Investment Plans. Based on the plans, Performance Agreements between the municipalities and the PCO will be drafted to set the targets to be achieved within the project period; the Performance Agreements will include an implementation support plan spelling out the actions that the municipalities commit to undertake and the technical support to be provided by the MST. Lekhnath municipality will also require support for introduction of property and business taxes in the annexed VDC, and these activities will need to be reflected in the implementation plan. Municipalities agreed to approve the REPs, O&M and Investment Plans off-budget at the next interim Council meeting (planned for March/April 2015) since the deadline for approval of the plans as part of the FY16 budgeting process has been missed. Implementation of Revenue Enhancement Plans 30. The main activity funded under the project for the implementation of REPs is the development of revenue billing software in the six municipalities. In FY15, while the billing software is being prepared, the MST will provide technical support to municipalities to carry out tax awareness campaigns, which are expected to contribute in the short-term to increase own-source revenue in the municipalities. The goal is to complete the development of the revenue billing software by end of FY15 so that municipalities can issue bills and accrue benefits in the last year of project implementation. It was agreed that the software would be installed in each ward to facilitate payments and reduce waiting time. The following critical actions need to be completed by the PCO/MST to support municipalities with the tax awareness campaigns and the development of billing software: (a) expedite preparation of data collection formats for revenue billing software and material for tax collection and awareness campaigns; (b) establishment of working group including MoFALD and PCO to closely and regularly monitor every two weeks progress with the development of the software and address critical issues as they arise; (c) support municipalities with the implementation of data collection and tax collection and awareness campaigns. Implementation of O&M and IPs 31. No progress has been made with the implementation of O&M and Investment Plans in Tansen, Dhankuta and Itahari municipalities following approval of the plans in FY14 because of delays in hiring the MST. It was agreed that the MST will review whether the targets included in the Performance Agreements for the implementation of the plans have been incorporated in the FY16 budgets approved by the municipalities in January, and will support the municipalities with the update of the plans. Municipalities committed to revise the FY16 budget if required following update of the plans to ensure the targets set in the Performance Agreements are met. 26 PCO/MST support and monitoring for institutional development activities of municipalities 32. The PCO needs to urgently transfer funds to municipalities for the implementation of institutional development activities; the Team also requested the PCO to expedite the mobilization of international and national municipal finance specialists at the MST. The Team reminded the PCO and the municipalities of the importance of closely monitoring progress in achieving targets set in the Performance Agreements. The PCO submitted a letter to Tansen, Dhankuta and Itahari municipalities to request them to include the targets agreed in the Performance Agreements in the FY15/16 budget. Municipalities during the mission confirmed that they have been complying with targets in the Performance Agreements when approving the FY15/16 budgeting process. It was agreed that the PCO/MST would verify whether the targets set in the Performance Agreements for Tansen, Itahari and Dhankuta municipalities have been incorporated. IT equipment for municipalities 33. The procurement of IT equipment for the municipalities and vehicle for the MST has been further delayed as the heading for the purchase of machinery items was missing in the PCO’s approved budget for FY 2014/15. The PCO has been processing for amendment of the annual program to incorporate this activity. The equipment for each municipality includes four desktops, three laptops and one server but it is likely that this activity may not be completed within this FY. Status of Actions Agreed during the Tenth Implementation Review Target Action Responsibility Completion Status Date Approve REPs, O&M Plans and Municipalities January 31, 2015 Delayed. Investment Plans as part of FY16 with support of budget process PCO Mobilize consultant for revenue billing December 31, Completed with PCO software development 2014 delay. Procure and deliver IT equipment to February 28, Delayed. PCO municipalities 2015 Actions for Institutional Development Component for Municipalities  The PCO to disburse budget allocated for institutional development activities to all municipalities by March 15, 2015.  PCO/MST in coordination with municipalities to finalize the prototype data collection format and the materials and programs for tax awareness campaigns by March 15, 2015.  Tansen, Dhankuta and Itahari municipalities with support from the PCO/MST to provide status update to the World Bank on agreed targets included in the approved Performance Agreements by March 15, 2015.  The municipalities to start tax awareness campaigns and data collection for revenue billing software with support from the PCO/MST by March 30, 2015.  Tansen, Dhankuta and Itahari municipalities with support from the PCO/MST will update the REPs, O&M plans and Investment Plans and the implementation action plans included in the Performance Agreements by April 15, 2015.  Tansen, Dhankuta and Itahari municipalities with approve the updated REPs, O&M plans and Investment Plans and revised Performance Agreements by April 30, 2015.  Mechinagar, Lekhnath and Baglung municipalities will complete the REPs and Investment Plans with support from the PCO/MST by April 30, 2015. 27  Mechinagar, Lekhnath and Baglung municipalities will approve the REPs, O&M Plans and Investment Plans and sign Performance Agreements with the PCO by May 15, 2015 (priority).  The municipalities to complete data collection for revenue billing software and tax awareness campaigns by June 15, 2015.  The PCO will ensure revenue billing software is ready for use by the municipalities by June 15, 2015 (priority).  The municipalities to complete data migration, data entry and test run for the revenue billing software with support from the PCO/MST by June 30, 2015. (b) Institutional Development for the PCO/DUDBC 34. Preparation of GIS maps in the six participating municipalities. Preparation of the GIS maps is in progress. The PCO signed the contract with the consultants on October 30, 2014, and the assignment is on track to be completed by April 30, 2015. However, due to the expansion of three municipalities following annexation of adjacent VDCs, the scope of the consulting assignment will need to be revised to cover the new areas. In case of Itahari and Dhankuta municipalities, it is not possible to cover the new areas in the current contracts, so the PCO has prepared separate Terms of References for preparation of GIS maps for the new areas of these municipalities. 35. IT equipment for GIS unit of DUDBC and municipalities. The specifications for the equipment have been agreed, but the procurement has been delayed. There is sufficient budget in the current annual program. The equipment will be procured and provided to the GIS unit of DUDBC as well as each of the six municipalities. 36. Building and planning bye-laws for three municipalities and Drainage Master Plan for Itahari Municipality. The building and planning bye-laws that were prepared by the GIZ-funded MST consultants for three municipalities – Tansen, Dhankuta and Mechinagar – will be finalized with support from the MST; the bye-laws for Dhankuta municipality needs to be revised to include the annexed VDCs. It was agreed that the MST will prepare implementation plans to identify capacity building activities required to support the municipalities with enforcement of the bye-laws. The preparation of the building and planning bye-laws for the other three municipalities (i.e. Itahari, Baglung and Lekhnath) will be initiated by the MST. The Terms of Reference for the Drainage Master Plan for Itahari municipality need to be revised to include the annexed VDCs, and the procurement process needs to be re-started based on revised scope of work. Status of Actions Agreed during the Tenth Implementation Support Review Target Completion Action Responsibility Status Date Conduct municipal capacity needs February 28, 2015 Delayed. assessment to implement the bye- PCO/DUDBC laws. Award contract for the preparation January 31, 2015 Delayed. of drainage Master Plan in Itahari, PCO and have consultant begin assignment. Start procurement process for December 22, 2014 Delayed. hardware and software for the GIS PCO unit of DUDBC and sign contract. Complete the preparation of GIS April 30, 2015 On track. PCO maps for six municipalities. 28 Actions for Institutional Development Component for PCO/DUDBC  PCO to complete preparation of GIS maps (original scope) for six municipalities by April 30, 2015.  PCO to award the contract for the preparation of the GIS maps of the new areas of Itahari and Dhankuta by May 30, 2015.  PCO/MST to ensure bye-laws for Tansen, Dhankuta and Mechinagar municipalities are approved by the Town Development Committees by June 30, 2015.  PCO/MST to prepare draft bye-laws for Itahari, Baglung and Lekhnath municipalities by June 30, 2015. (c) Institutional Development for the TDF and Business Restructuring Action Plan 35. The progress in implementing the FY 2014/15 activities was reviewed during the mission. TDF has proposed to procure consultancy services for training municipal finance officers in preparing financial operating plans in a cluster of municipalities and institutionalizing the same in 58 municipalities. The ToR was due by July 15, 2014 and the date was subsequently postponed to September 30, 2014. The ToR was received and approved in January and the training for municipal finance officers was completed on February 1-3, 2015. A total of 56 participants from 53 municipalities attended the orientation. Follow-up small group training sessions to finalize the borrowing capacity assessment will be carried out by March 15, 2015. TDF has been requested to prepare a municipal finance strategy to support implementation of the National Urban Development Strategy (NUDS). The municipal finance component is not for the NUDS itself, which has been completed but for the operationalization of the NUDS. The ToR for the proposed municipal finance strategy was approved in January 2015. Since the cost of this consultancy is expected to be higher than the allocated budget, TDF would revise the allocations under its procurement plan with PCO's concurrence. It was agreed that TDF would share the final ToR with concerned central agencies (MoUD, MoFALD and Local Body Fiscal Commission) and issue the EOI by March 15, 2015. 36. FY 2013/14 activities have been delayed. The consulting assignment for the review of TDF's financial appraisal manual was awarded on November 7, 2014, and the draft revised appraisal manual has been submitted by the consultants. TDF has agreed to review the draft and approve the manual by March 15, 2015. The brochures originally expected to be ready by September 30, 2014 have now been submitted by the consultants. TDF has agreed to approve them by March 15, 2015. The micro-banking gap analysis assignment that was also expected to be ready by September 30, 2014 and is now expected to be finalized only by end of February. Based on the findings of the gap analysis, the TDF would take further action on the software recommendations made by the consultants. Regarding the default by TDF of loans due to GON, the Team was informed that the request for rescheduling of TDF loans can now proceed since TDF has received the necessary permission from ADB. On this basis action would be taken to reschedule the TDF dues to GON by the end of this FY and would be reflected in the TDF annual statements for the next financial year. Status of Actions Agreed during the Tenth Implementation Support Review Target Completion Action Responsibility Status Date On track. ADB permission has been received and Resolve default situation with GON TDF July 15, 2015 TDF is expected to obtain GoN concurrence by 29 July 15, 2015. Completed. The TDF will make Generate financial statements by TDF February 28, 2015 additions to its using micro-banking and MIS system software after review. Prepare ToR for (a) municipal finance Completed with strategy; (b) orientation and training delay. for municipal finance officers for municipal borrowing capacity TDF December15, 2014 assessment; and (c) system automation, linking micro-banking to asset management and payroll system. Delayed. ToR has been Hire consultants for municipal finance approved and TDF January 31, 2015 strategy. TDF will issue EOI by March 15, 2015. Partially completed. Send the ToR for consultancy services Training carried for training municipal finance officers out in February in preparing financial operating plans 1-3, 2015. TDF December 15, 2014 in a cluster of municipalities and Follow-up institutionalizing the same in 58 training sessions municipalities. planned to be completed by March 15, 2015. Partially Complete the review of TDF’s completed. Draft financial appraisal manual and received from TDF February 28, 2015 training of TDF staff in financial consultants; to be analysis finalized by March 15, 2015. Partially completed. Drafts received; Complete brochures for borrowers TDF December 30, 2014 to be reviewed and finalized by March 15, 2015. Actions for Institutional Development Component for TDF  The TDF to issue EOI for the municipal finance strategy by March 15, 2015.  The TDF to review and approve the brochures by March 30, 2015.  The TDF to approve appraisal manual by April 30, 2015.  The TDF will hire consultants for the municipal finance strategy by April 30, 2015.  The TDF to obtain GON concurrence for resolving the default situation by July 15, 2015. 30 (d) Institutional Development for the MoFALD 37. The Team noted very little progress since the last implementation support review of November 2014 in the implementation of the institutional development activities of the MoFALD. While it has been reported that the policy guidelines and procedures for governance and budget planning for the municipalities have been prepared, the drafts are yet to be shared with the Team. MoFALD his yet to publish the notice for the hiring of the consultants for the Management Information System (MIS) strategy for which the ToRs were finalized in June 2014. With delay in the hiring of the consultant for the strategy, the Team feels that there may not be sufficient time within the project period to develop the MIS for MoFALD. Also, preparation of the ToRs for the Capacity Building and planning needs assessment of about 10 municipalities has also been delayed. This ToR needs to be prepared and agreed with the Team before the commencement of the activity. Status of Actions Agreed during the Tenth Implementation Support Review Target Completion Action Responsibility Date Status Prepare draft documents for Partially implementation of policy completed. guidelines and procedures for Compilation of governance and budget planning MoFALD February 15, 2015 documents completed. In the process of hiring consultants for Phase II. Hire consultant for preparation of MoFALD December 31, 2014 Delayed. MIS strategy Prepare the ToRs for “Capacity Delayed. Building and planning needs MoFALD December 15, 2014 assessment” and share with Bank team Actions for Institutional Development Component for MoFALD  MoFALD to prepare the ToRs for capacity building and planning needs assessment for 10 new municipalities and share with Team by March 15, 2015.  MoFALD to hire consultants for preparation of MIS strategy and guidelines for governance and budget planning by March 30, 2015.  MoFALD to finalize documents for implementation of guidelines and procedures for governance and budget planning by May 30, 2015. (e) Institutional Development for the MoUD 38. Consultant support was provided to MoUD under the project to support preparation of the NUDS. The draft NUDS was prepared and was discussed in a high level workshop with the members of the Development Committee of the Constituent Assembly, government representatives, and civil society members on February 16, 2015. It will be processed for formal approval after the comments from the workshop are incorporated. The program for FY 2014/15 for institutional development activities includes support for preparation of a strategy for a Management Information System (MIS) and strategy for internal communication within MoUD. Also, the program includes support for disseminating the NUDS 31 and hiring team leader for the preparation of the Nepal Urban Development Plan in accordance with the NUDS. Status of Actions Agreed during the Tenth Implementation Support Review Action Target Completion Responsibility Status Date Finalize NUDS MoUD December 30, 2014 Partially completed. The draft NUDS has been finalized, but it has not yet been approved by the MoUD. Prepare National Urban MoUD March 30, 2015 Action will be Development Plan in accordance delayed. with the NUDS Preparation of the plan has not yet started. Actions for Institutional Development Component for MoUD  MoUD to ensure formal approval of NUDS by March 30, 2015.  MoUD to hire a consultant for the preparation of the National Urban Development Plan in accordance with the NUDS by April 15, 2015. (f) Institutional Development for the UDTC 39. For FY 2014/15, UDTC is planning to develop curriculum, provide training on construction management, office management, revenue mobilization, national building code, sanitation and solid waste management, etc. and procure a generator. Contract has been awarded to develop and revise the syllabus of training offered by UDTC. However, it is still not clear the scope of the training that will be provided by UDTC under UGDP funding for this FY. The Team reiterated its request MoUD and PCO to coordinate the activities of UDTC and a site visit to UDTC by the PCO team is suggested to ensure that the activities supported under the project are relevant to the achievement of the project development objectives. Status of Actions Agreed during Tenth Implementation Support Review Target Completion Action Responsibility Status Date Coordinate with UDTC and agree Delayed. on the details of the training to be MoUD and PCO January 15, 2015 provided by UDTC for FY 2014/15 Actions for Institutional Development Component for UDTC  MoUD and PCO to meet with UDTC to discuss the FY2014/15 program implementation and FY 2015/16 planning of UDTC activities by March 30, 2015. 32 (g) M&E 40. There has been progress in the project M&E system since the November review mission. Efforts have been made by the PCO to collect information from municipalities and other project agencies on a regular basis and monthly M&E reports has been prepared and submitted to the Team for review regularly. However, the monthly progress reports need to be improved since there are still gaps in the information collected at the municipal level, especially block grant and institutional development activities and progress on institutional development activities carried out by the central agencies and municipalities. The PCO had developed and circulated a progress reporting template for institutional development activities, however, the PCO did not receive the information required to review progress of these activities in the monthly reporting. Therefore, it is agreed that the MST will provide support to municipality to fill up the progress report and municipality will send progress report as per the template on a monthly basis starting by April, 2015. Progresses in achieving targets set in the performance agreements have not been monitored. MST needs to check whether targets set in the performance agreement have been included in the budget for FY16 and targets are likely to met or not. The municipalities with the support of MST will report progress on the performance agreement by March 15, 2015. Status of Actions Agreed during the Tenth Implementation Support Review Target Action Responsibility Completion Status Date Prepare project monthly M&E Completed. Some report based on the information improvements are needed received from project agencies on the institutional December 15, and municipalities as per the PCO development component. 2014 agreed format with the Bank and submit it to the Team by the 15th of every month Prepare progress report of the Likely to be delayed. project (from FY 2011 to 2014) Activities have not yet February 28, based on the financial and PCO started. PCO with the 2015 physical progress report received support of MST will from all project agencies prepare the report. Submit quarterly progress reports Completed. Report including updated Results Starting January submitted in February PCO Framework 31, 2015 2015. Sign contract with MST (priority) Completed. Contract December 31, PCO signed on January 16, 2014 2015. Actions for M&E  The PCO to include progress on institutional development activities carried out by the central agencies and municipalities, as per the agreed progress reporting template, by April 15, 2015 and every month thereafter.  The PCO to prepare a consolidated progress report of the project (from FY 2011 to 2014), based on the progress report received from all project agencies by March 30, 2015. 33 Annex IV: Social and Environmental Safeguards 41. The Team held discussions with the PCO, TDF and communicated with municipality officers on the following key areas: (a) safeguard capacity at the PCO and municipal levels after the recent recruitment of the IDA-funded MST team; (b) safeguard compliance for the civil works funded by the municipal block grants; (c) safeguard issues relating to the municipal infrastructure sub-projects; (d) implementation, monitoring and reporting of safeguard measures including Environmental Management Plans (EMPs); (e) third-party monitoring of safeguards compliance; (f) environmental profiles of the municipalities; and (g) grievance redress mechanisms. The Team noted that compliance with the actions agreed during the Implementation Support Mission of November 2014 is varied – some actions are fully complied with, some have been partially complied with, and a few has been delayed or not complied with. A summary of the discussions and agreed actions is provided below. (a) Safeguard capacity at the PCO and municipal level 42. While it was agreed during the previous mission that safeguard consultants would be hired to support municipalities, no interim arrangement was made since an IDA-funded MST has been hired by the PCO. Environmental and social experts are thus now on board, with the MST’s safeguard specialists expected to provide increased guidance and support to the municipalities in addressing social and environmental safeguard issues and in carrying out monitoring on the basis of the ESMF and EMP. The MST will also carry out the assessment of the need for municipal safeguard staff for hands-on and practical/on-the job type training as well as expert site support. The training undertaken and further needs were not reviewed, nor was an action plan for additional safeguard training/support developed based on the needs assessment by January 30, 2015, as was previously agreed. A revised target date has now been agreed for these actions. The PCO/MST will organize a one-day training for supervision consultants and municipal staff on safeguard reporting by March 15, 2015. (b) Safeguard compliance for civil works funded by the municipal block grant 43. Safeguard mitigation measures for FY 2013/14 civil works. Though the safeguard issues of civil works funded under the municipal block grant continue to be addressed satisfactorily, the Team would like to recommend frequent due diligence on issues of indigenous peoples and vulnerable groups while implementing activities under the municipal block grant, as reflected in the Environmental and Social Management Framework (ESMF). 44. Screening and field verification for civil works funded by the municipal block grant in FY 2014/15. No progress has been made on this task since the last mission in November, 2014; the newly recruited environmental and social experts of MST will undertake screening through desk reviews and field verification for the FY2014/15 civil works proposed to be funded with the municipal block grant. The PCO has agreed to complete a desk review of the screening checklists submitted by all six municipalities by February 28, 2015 and field verification of the higher risk activities by March 15, 2015. As discussed in previous missions, the Team reminded the PCO that works for the higher risk activities should not start until field verification is successfully carried out and recommendations have been implemented, and that attention should be paid to safeguard screening and field verification of block grant activities with potential social and environmental concerns. 45. During the November mission, some of the activities selected by the municipalities for funding with the FY 2014/15 block grant were found to be in need of social and environmental attention. These include Shivaraj Khatiwada Chowk 4, 4 phase wire and transformer installation works in Mechinagar; Dakshinkali Mandir Compound Wall erection at Itahari, Belaha Painin Management/improvement in Itahari and Upgrading of access road to landfill site, preparation of master plan for developing Chuliban CF as a tourist spot in Dhankuta. During this mission, the Team was informed that activities selected by 34 the Dhankuta Municipality have been dropped and activities in other municipalities have not yet started. Safeguard screening and field verification for these activities will be carried out by the MST. The Team visited two of the activities funded with the block grant in Dhankuta municipality (the Krishna and Company Road Improvement Project, and the Construction of Municipal Building), and suggested that the drainage be constructed from the exit towards the entrance in order to avoid flooding issues in between. (c) Safeguard monitoring and reporting and safeguard issues relating to municipal sub-projects 46. The Team noted that the implementation of the EMPs for the municipal sub-projects is not being monitored. While Mechinagar and Tansen Municipalities have been submitting monthly safeguard monitoring reports regularly to the PCO, the PCO has yet to review the quality of the safeguard reporting. It has been agreed that the PCO will submit to the Team the monitoring report of social and environmental safeguards included in the monthly progress reports prepared by the municipalities by March 21, 2015 (for the month of February), and then every month thereafter. The MST will also prepare the first three-monthly safeguard monitoring report of all the ongoing municipal sub-projects (with priority given to sub-projects that are into construction for more than 3 months) by consolidating the monthly reports prepared by safeguard consultants by May 15, 2015, and then every three months thereafter. The following safeguard issued for municipal sub-projects were discussed. 47. Cultural heritage safeguard issues at Amar Narayan Temple. The PCO has prepared a status report reviewing the drawings to ensure that the DoA and heritage expert’s recommendations for the Tansen Amar Narayan Temple Conservation/Renovation work are incorporated and the works are in progress. It was agreed that the PCO will submit the report to the Team. 48. Cultural heritage issues of Athpariya Rai's Temple improvement in Dhankuta municipality. The Team visited the site and found that the agreements between Dhankuta municiplity and Athpariya Rai are being implemented. 49. Operation of slaughterhouse for Dhankuta Hile Market sub-project. The PCO has completed a review of the Hile Market project design, particularly the slaughter house operational aspects; drainage flow and access management to adjacent houses, and conditions put forward by the MoFALD’s IEE review committee and report to the PCO/ IDA. 50. Relocation of structures along the Upgrading of Access Road sub-project in Baglung. During the last mission, it was agreed that the issues of relocation of structures at Jhagin Danda along the Baglung Upgrading of Access Road would be resolved as per the provision spelled out in SMF and EMP. This action has been partially completed as an all-party meeting was held with concerned people. The affected people are now ready to remove their structure from the road’s right of way, and the municipality is ready to provide some compensation according to the LSGA. With support from the PCO/MST, the municipality will prepare minutes of the mutual agreements with the affected people and will submit them to the Team by March 30, 2015. 51. Open drains for the Upgrading of Gokul Marg sub-project. To address the risk resulting from an overly large drain constructed for the Gokul Marg in Mechinagar, Mechinagar municipality has signed an agreement with local people stipulating that the slab covers for drains at major junctions and land development areas will be constructed by the municipality while slab covers for drains in front of private buildings will be constructed by the building owners themselves. Further, the PCO mentioned that the municipality has constructed 9 slab covers at such locations and are planning to construct another 6. Similarly, locals have also started the construction of drain covers on their own. According to the PCO, the municipality does not at present think that covering the whole stretch of drain is necessary. In a similar activity with the block grant, the municipal team has assessed the risk of open drains and recommends installation of RCC slabs at critical locations. In areas where the project is unable to build 35 the slab, approval and support has been received from local residents to themselves install slabs in front of their residences. The PCO has agreed to carry out field verification of these two projects by March 12, 2015 to confirm that the allocated locations are the critical locations. 52. Itahari Link road and Bridge (Kethi Kolha) sub-projects. It was reported by Itahari Municipality that a small patch of private lands is to be acquired for implementing the Itahari Link Road sub-project. The acquisition of land will also cause damage to some structures (compound wall, tube well, etc.). The Team was informed that the owner is ready to contribute the land voluntarily provided that the structures that will be damaged be replaced and relocated. The Team advised that in order to receive private land voluntarily for the project, the provisions as specified in Social Management Framework (SMF) must be followed. Requirements include: (i) fill out the Voluntary Land Donation Agreement Form; (ii) in case Affected People (APs) are directly benefiting from the sub-project and thus are willing to voluntarily donate their land after they are fully informed about their entitlements, the municipality will assess their socio-economic status and potential impact of land donation and accept land donation only from those APs who do not fall below the poverty line after the land donation; (iii) in no case shall land donation be received from families living below the poverty line and those who are marginal or small farmers, and in case land donation involves giving away of more than 10% of the total land holding, such donation may be permitted only after confirming that such donation shall not adversely affect the future economic status of the willing donor. It was also agreed that the PCO/MST and Itahari Municipality would re-check and verify whether private land is required to construct the Kethi Kolha bridge and submit findings to the Team by March 15, 2015, and if private land is required, to follow voluntary land taking process as per the provision spelled out in SMF and EMP. 53. Dhankuta Hile Bus Park. It was noted during the field visit that there is a boundary dispute between a private land owner (neighbors of the Hile Bus Park sub-project) and Dhankuta Municipality regarding the land proposed for implementing the Hile Bus Park sub-project. The Team advised that the land ownership should be confirmed through field verification. The area required for the Bus Park needs to be demarcated in the ground through authentic land survey, and any valid concerns of the local resident need to be address through consultation and mutual agreements. With the help of PCO/MST, the municipality has agreed to resolve the issues by March 2, 2015. 54. It was agreed that the PCO would carry out verification of EMP compliance for the Dhankuta Market and Lekhnath Mandare Park sub-projects before works are completed by March 7, 2015. (d) Third-party monitoring of safeguards compliance 55. The reviewed third-party monitoring draft report and PCO’s remarks on the recommendations made by the third-party monitoring have not been shared with the Team, as was agreed in the last mission. The PCO has now agreed to share with the Team this report as well as the plan for hiring third- party monitoring for next year submitted by the consultants by March 30, 2015. (e) IEC material and information dissemination 56. The PCO has not uploaded the remaining safeguard documents (mainly 15 EMPs, 1 IEE) along with the already disclosed ESMF to the DUDBC/UGDP-ETP website, or made hard copies of the documents available at PCO and respective municipalities, as was agreed during the last mission. A revised target date of March 15, 2015 has now been agreed. (f) Environmental profiles of the municipalities 57. GIS maps are under preparation and the GIS report containing environmental profiles for each municipality is expected to be completed by April 30, 2015. 36 (g) Grievance redress mechanisms 58. Grievance committee meetings regarding two complaints related to the issue of continuous/ uninterrupted drain along both sides of the road in Gokul Marga (Mechinagar) (dated August 15, 2014 and August 29, 2014) were held on October 31, 2014 and November 2, 2014, respectively. The issues of the grievances were addressed as part of the variation order which has been approved by the PCO. A meeting was held in the municipal office with the Athpahariya Rais and their concerns and grievances on temple and shrine maintenance work were addressed satisfactorily. In response to local concerns regarding the quality of ongoing repair works of the Amar Narayan Temple in Tansen, reconstruction and maintenance to ensure quality of works have taken public grievance considerations in mind. (h) Implementation of the IP-VC framework 59. The sub-projects continue to be in different implementation stages, and activities targeted to IPs and VCs, as per the requirement of IP-VC framework of SMF have not been carried out by the municipalities. Dhankuta and Itahari Municipalities with the help of PCO/MST have agreed to plan and implement programs for IPs and VCs. They also agreed to share the plan and implementation schedule by 30 March 2015. Status of Actions Agreed during the Tenth Implementation Support Review Target Action Responsibility Completion Status Date Safeguard capacity at the PCO and Municipal Level Hire safeguard No interim arrangement was made. The December 15, consultants to support PCO action is not relevant since MST has been 2014 municipalities hired. Review the training Delayed. undertaken and further January 30, needs, and prepare action PCO 2015 plan for safeguard training/support Safeguard compliance for civil works funded by the municipal block grant Complete desk review of Delayed. MST will carry out the desk December 15, FY 2014/15 civil works PCO review. 2014 in all six municipalities Complete field January 15, Delayed. MST will carry out the field verification 2015 verification. Review the risks of open Delayed. MST will support all drains constructed under municipalities to assess risk of open the municipal block grant drainage funded with block grant for October 30, in Mechinagar PCO human safety. 2014 municipality, and explore mitigation options to ensure human safety. Safeguard issues relating to municipal infrastructure sub-projects 37 Review the Hile Market Completed. With support from MST, the project design, PCO will ensure that the MoFALD particularly the slaughter conditions are fulfilled while the project house operational proceeds. aspects; drainage flow Municipality, December 15, and access management with support 2014 to adjacent houses, from PCO conditions put forward by the MoFALD IEE review committee and report to the PCO/ IDA. Address the local Partially completed. The PCO will carry people’s complaints out verification of location selected for regarding demands for covering the drainage. Mechinagar continuous drain along December 15, municipality the both sides of the 2014 and PCO Gokul Marg road and report to the PCO and the team. Consult with wider Partially Completed. stakeholders including the Athpariya Rais regarding their concerns and grievances on temple and shrine maintenance PCO and work, and hire a heritage December 31, Dhankuta expert to explore 2014 municipality mutually agreed mitigation measures for Aath Pariya Rai Temple and shrine (Dhankuta Hile Market) maintenance. Follow up on the current Completed. PCO reviewed the drawings status of DoA and to ensure recommendations are heritage expert incorporated, and works are in progress. recommendations for Progress report has however not been December 31, Tansen Amar Narayan PCO submitted to the Team. 2014 Temple Conservation/Renovation work, and prepare a status report. Carry out first three- Delayed. MST will prepare the monitoring monthly safeguard report by consolidating the monthly monitoring of all the reports prepared by safeguard consultants. ongoing municipal sub- projects (with priority to January 15, PCO sub-projects which have 2015 already begun construction work and are into construction for more than 3 months). 38 Carry out regular Partially completed. Mechinagar, Tansen monitoring of social and Mechinagar, Municipalities have informed that they environmental safeguards Dhankuta, and have been submitting monthly safeguard for municipal sub- Tansen monitoring report regularly to PCO but it projects and submit municipalities requires review to ensure quality. monthly reports. Submit to the Team a Delayed. PCO has yet to review quality of monthly monitoring the safeguard monitoring reports included report of social and in the monthly reports. December 15, environmental safeguards PCO 2014 included in the monthly progress reports prepared by the municipalities. Resolve the issues of Partially completed. All party meeting relocation of structures at with concerned people held and the Jhagin Danda along the Municipality, affected people are ready to remove their December 15, Baglung Upgrading of with support structure from road right of way and 2014 Access Road, as per the from PCO municipality is ready to provide some provision spelled out in compensation according to LSGA. SMF and EMP. Third-Party Monitoring of Safeguards Compliance Share with the Team the Delayed. reviewed third-party monitoring report, with remarks on December 31, recommendations and PCO 2014 plan for hiring third party monitoring for next year submitted by the consultants. IEC Material and Information Dissemination As a part of the IEC Delayed. component, upload safeguard documents December 15, (mainly 15 EMPs, 1 IEE) PCO 2014 along with already disclosed ESMF to the DUDBC website. 39 Actions for Safeguards Safeguard Capacity at the PCO and Municipal Level  PCO/MST to review the safeguard training undertaken and further needs, as well as prepare an action plan for safeguard training/support by March 15, 2015.  PCO/MST to organize a one-day workshop to Municipal Supervision Consultants and municipal staff on safeguard reporting by March 15, 2015. Safeguard Compliance for Civil Works Funded by the Municipal Block Grant  PCO/MST to complete desk review of FY 2014/15 civil works in all six municipalities by February 28, 2015 and field verification to be done by March 15, 2015. Safeguard Monitoring and Issues Relating to Municipal Infrastructure Sub-projects  Municipality with the help of PCO/MST to resolve the boundary disputes and local resistance issues of the Hile Bus Park Sub-project in Dhankuta by March 2, 2015.  PCO to carry out verification of EMP compliance for the Dhankuta market and Lekhnath Mandare park sub-projects before works are completed by March 7, 2015.  The PCO to carry out field verification of 15 locations selected for drainage coverage for the upgrading of Mechinagar Gokul Marg by March 12, 2015.  The PCO to submit to the Team monitoring report of social and environmental safeguards included in the monthly progress reports prepared by the municipalities by March 15, 2015 (for the month of February) and every month thereafter.  PCO/MST and Itahari Municipality to re-check and verify whether private land is required to construct the Kethi Kolha bridge and submit findings to the Team by March 15, 2015, and if private land is required, to follow voluntary land taking process as per the provision spelled out in SMF and EMP.  Municipality, with support from PCO to send minutes of the mutual agreement between municipality and affected people for relocation of structures at Jhagin Danda along the Baglung Upgrading of Access Road by March 30, 2015, as per the provision spelled out in SMF and EMP.  Itahari Municipality with the help of PCO/MST to complete necessary processes and procedures of voluntarily land taking for Itahari Link Road Sub-project and relocation and reinstallation of the structures damaged due to project activities by March 30, 2015.  PCO/MST and Itahari Municipality to re-check and verify whether private land is required to construct the Kethi Kolha bridge and submit findings to the Team by March 15, 2015.  PCO/MST to carry out first three-monthly safeguard monitoring of all the ongoing municipal sub- projects by May 15, 2015 and every three months thereafter. Third-Party Monitoring of Safeguards Compliance  PCO to share the reviewed third party monitoring report with remarks on recommendations and plan for hiring third party monitoring for next year submitted by the consultants with the Team by March 30, 2015. IEC Material and Information Dissemination  PCO to upload safeguard documents (15 EMPs, 1 IEE) along with already disclosed ESMF to the DUDBC website by March 15, 2015. Implementation of IP-VC Framework  With the help of PCO/MST, Dhankuta and Itahari Municipalities to plan and implement programs for IPs and VCs by March 30, 2015. 40 Annex V: Financial Management Budget for FY2014/15 and Expenditures 1. A budget of NPR 775.45 million for FY2014/15 has been approved, including block grants of NPR 95.00 million to be provided under Part A by MoUD and a loan of NPR 178.38 million to be paid to municipalities through TDF under financing budget. The approved recurrent, capital and financing budgets of UGDP of the FY2014/15 are as follows: Budget Budget Budgeted amount in NPR million Head GoN IDA Grant IDA Loan IDA Total Total DUDBC Recurrent 3473163 18.04 440.11 56.71 496.82 514.86 Capital 3373164 0 77.64 4.57 82.21 82.21 Total 18.04 517.75 61.28 579.03 597.07 TDF Financing 5011645 0 0 178.38 178.38 178.38 Grand Total 18.04 517.75 239.66 757.41 775.45 2. The annual program of FY2014/15 was approved on September 23, 2014 by the National Planning Commission. The conditional grant and loan to be provided to the participating municipalities through TDF and conditional grant for institutional development to TDF have been budgeted under the recurrent budget and financing budget. The block grant of NPR 95.00 million to be provided to the municipalities has been budgeted under the recurrent budget. The PCO has not released any budget to TDF and municipalities for the FY2014/15. The budget of the block grant (loan part) has not been released because of incorrect mode of payment in the Red Book. This needs to be rectified by changing the mode of payment from direct payment to reimbursable. The annual program is to be revised for incorporating changes in activities such as purchase of vehicle and other activities. 3. Total expenses of NPR 86.95 million – consisting NPR 22.79 million from GoN and NPR 64.16 million from IDA – have been incurred in the FY2014/15 as of February 12, 2015 based on the statement of expenditures received from implementing agencies, which is about 11.21% of the approved budget of NPR 775.45 million by the following implementing agencies: Implementing Agencies Amount in NPR million DUDBC/PCO/MoFALD 2.95 TDF 64.12 Total 67.07 TDF - Financing 19.88 Grand Total 86.95 4. The SOE review was carried out on a sample basis at the PCO and TDF, noting that SOE-related records and documents are being properly maintained. 5. TDF incurred an expenditure of NPR 12.74 million in FY2013/14 under consulting services despite only NPR 9.36 million having been reported in financial reports by the PCO. This is due to reporting of expenditures within allocated budget. Further, TDF disbursed NPR 0.85 million to Lekhnath Municipality in FY2013/14; however, this draft was cancelled and reissued in FY2014/15. Due to this, TDF booked expenditures in FY2013/14 as against FY2014/15 when it was actually disbursed. It is suggested to rectify these transactions by accounting and reporting expenditures in the respective fiscal years. 41 Disbursement 6. Total disbursement as of February 12, 2015 is USD 8.68 million, consisting of USD 3.39 million from Credit and USD 5.29 million from the Grant Account, which is about 48.45% of the total allocation. The net use of resources excluding Designated Account advance is about 20.65%. The reimbursable expenses of NPR 64.16 million of FY 2014/15 is yet to be transferred to the government treasury. Financial Management 7. The PCO has maintained required ledgers such as main and subsidiary grant and credit registers, designated account ledger SOE ledger, and program ledgers. The PCO has not received the statement of expenditures for the second quarter from three municipalities and MoUD. The PCO needs to follow up regularly to obtain required information for maintaining required ledgers and reporting. 8. TDF has disbursed the mobilization advance to Baglung municipality and it was noted that the advance payment was more than the bank guarantee amounts (about 1%) submitted by the contractor of the existing road improvement sub-project. It is suggested to either obtain an additional bank guarantee or adjust the excess amount in the running bill. 9. The review team visited two municipalities, Dhankuta and Itahari. It was noted that there is weak contract monitoring at the municipal level, including expiry of the advance payment bank guarantees of two contracts in Dhankuta, expiry of one performance bond in Dhankuta, performance bond amount is less than required amount of link road improvement contract in Itahari, started construction of bridge without obtaining insurance policy in Itahari, invoices not obtained for proof of use of mobilization advance in Itahari. It is suggested that these weaknesses be rectified by obtaining all required documents at the earliest. Internal Control and Internal Audit 10. The internal FY 2013/14 audit of the PCO reported excess payment of daily allowance, for which the Team suggested necessary actions be taken to resolve the issue. The internal FY 2013/14 audit of the TDF has been conducted. A few internal control weaknesses were exposed by the internal audit report, including insurance coverage not being made of fixed assets except vehicles. Necessary actions include the PCO either recovering the excess daily allowance as cash refunds or adjusting from salary payments, as well as the TDF making insurance coverage of fixed assets in case of internal control weaknesses and related insurances. Implementation Progress Reports 11. There is no outstanding trimester progress report for FY2014/15. Status of Actions Agreed during the Tenth Implementation Support Review Action Target Responsibility Status Completion Date Rectify SOE ledger and program Completed on ledgers PCO December 15, 2014 December 16, 2014. Submit the unaudited project account Completed on of FY2013/14 PCO December 15, 2014 January 19, 2015. 42 Submit first trimester IPR of Completed on FY2014/15 PCO December 31, 2014 January 7, 2015. Submit the audited project account of Delayed. PCO January 15, 2015 FY2013/14 Conduct financial management Completed on workshop for all implementing February 4, 2015. PCO January 31, 2015 agencies and participating municipalities Audit Reports 12. All previous agreed actions for financial management have been completed except for submission of the FY 2013/14 audit report. A warning letter was sent on February 24, 2015 regarding the report, which was supposed to be submitted by January 15, 2015. However, the PCO has yet to submit the overdue report including the project accounts as well as the Town Development Fund (TDF) Board Financial Statements. Actions for Financial Management  PCO to revise annual work program for FY 2014/15 by March 7, 2015.  PCO to submit withdrawal application for FY 2014/15 expenses to date (of about USD 0.8 million) by March 15, 2015.  PCO to submit the audited project account for FY2013/14 by March 31, 2015.  PCO to submit second trimester IPR by April 30, 2015. 43 Annex VI: Status of Priority Actions Agreed during the Eleventh Implementation Support Review Target Completion Priority Action Responsible Agency Status Date Sign contract for Completed on November 21, Tansen road sub- Municipality December 15, 2014 2015. project Mobilize consultant Completed on January 4, 2015. for revenue billing PCO December 31, 2014 software development Sign contract for Completed on January 16, MST (the project 2015. will require further PCO December 31, 2014 restructuring if this action is not completed) Approve Revenue Delayed. Enhancement Plans, O&M Plans Municipalities with January 31, 2015 and Investment support of the PCO Plans as part of FY 16 budget process 44 Annex VII: Summary of Actions Area Action Agency Timeline Strengthening Correct mode of payment of the Municipal budget head for the municipal Planning Capacity block grant from “direct PCO March 15, 2015 for Urban payment” to “reimbursable”, Development and issue revised authorization (Component I) letters to the municipalities. Make available work implementation schedule for Tansen Road sub-project, Lekhnath Road sub-project and PCO March 7, 2015 Shahid Smriti Park Improvement sub-project in Baglung. Resolve the dispute on land for Bus terminal by construction of bus terminal Dhankuta municipality March 5, 2015 and building and commence and PCO construction works construction works (priority). by March 15, 2015 Capacity Building Review design of Kheti Khola Review design by for Municipal Bridge to address the issue of Municipality, PCO and March 2, 2015, and Infrastructure high flood level and the bridge design consultants settle design by Development foundation and settle design for the bridge. March 30, 2015 (Component II) Communicate plans for management of assets built to Municipalities March 30, 2015 PCO under the sub-projects Share methodology for survey of municipal staff to document PCO/MST April 30, 2015 capacity improvements. Provide technical support to municipalities to make arrangements for management PCO/MST May 30, 2015 of assets under the municipal sub-projects. Municipalities Disburse budget allocated for institutional development PCO March 15, 2015 activities to all municipalities. Institutional Finalize the prototype data Development collection format and the PCO/MST with (Component III) March 15, 2015 materials and programs for tax municipalities awareness campaigns. Provide status update to the Tansen, Dhankuta and World Bank on agreed targets Itahari municipalities March 15, 2015 included in the approved with PCO/MST 45 Performance Agreements. Start tax awareness campaigns Municipalities with and data collection for revenue March 30, 2015 PCO/MST billing software. Update the REPs, O&M plans and Investment Plans and the Tansen, Dhankuta and implementation action plans Itahari municipalities April 15, 2015 included in the Performance with PCO/MST Agreements. Approve the updated REPs, O&M plans and Investment Tansen, Dhankuta and April 30, 2015 Plans and revised Performance Itahari municipalities Agreements. Mechinagar, Lekhnath Complete the REPs and and Baglung April 30, 2015 Investment Plans. municipalities with PCO/MST Approve the REPs, O&M Plans Mechinagar, Lekhnath and Investment Plans and sign May 15, 2015 and Baglung Performance Agreements with (priority) the PCO. municipalities Complete data collection for revenue billing software and tax Municipalities June 15, 2015 awareness campaigns. Ensure revenue billing software is ready for use by the PCO June 15, 2015 municipalities (priority). Complete data migration, data entry and test run for the Municipalities June 30, 2015 revenue billing software with support from the PCO/MST. PCO/DUDBC Complete preparation of GIS maps (original scope) for six PCO April 30, 2015 municipalities. Award the contract for the preparation of the GIS maps of PCO May 30, 2015 the new areas of Itahari and Dhankuta. Ensure bye-laws for Tansen, Dhankuta and Mechinagar municipalities are approved by PCO/MST June 30, 2015 the Town Development Committees. 46 Prepare draft bye-laws for Itahari, Baglung and Lekhnath PCO/MST June 30, 2015 municipalities. TDF Issue EOI for the municipal TDF March 15, 2015 finance strategy. Review and approve the TDF March 30, 2015 brochures. Approve appraisal manual. TDF April 30, 2015 Hire consultants for the TDF April 30, 2015 municipal finance strategy. Obtain GON concurrence for TDF July 15, 2015 resolving the default situation. MoFALD Prepare the ToRs for capacity building and planning needs assessment for 10 new MoFALD March 15, 2015 municipalities and share with Team. Hire consultants for preparation of MIS strategy and guidelines March 30, 2015 MoFALD for governance and budget planning. Finalize documents for implementation of guidelines May 30, 2015 MoFALD and procedures for governance and budget planning. MoUD Ensure formal approval of MoUD March 30, 2015 NUDS. Hire a consultant for the preparation of the National MoUD April 15, 2015 Urban Development Plan in accordance with the NUDS. UDTC Meet with UDTC to discuss the FY2014/15 program MoUD and PCO March 30, 2015 implementation and FY 2015/16 planning of UDTC activities. Project Management and M&E Include progress on institutional development activities carried Starting April 15, out by the central agencies and PCO 2015, and every municipalities, as per the agreed month thereafter progress reporting template. 47 Prepare a consolidated progress report of the project (from FY 2011 to 2014), based on the PCO March 30, 2015 progress report received from all project agencies. Safeguard Capacity at the PCO and Municipal Level Review the safeguard training undertaken and further needs, as PCO/MST March 15, 2015 well as prepare an action plan for safeguard training/support. Organize a one-day workshop to Municipal Supervision PCO/MST March 15, 2015 Consultants and municipal staff on safeguard reporting. Safeguard Compliance for Civil Works Funded by the Municipal Block Grant Complete desk review of FY Desk reviews 2014/15 civil works in all six February 28, 2015; PCO/MST municipalities and field field verification verification. March 15, 2015 Safeguard Monitoring and Issues Relating to Municipal Infrastructure Sub- projects Resolve the boundary disputes Municipality, with and local resistance issues of the support from March 2, 2015 Hile Bus Park Sub-project in Safeguards Dhankuta. PCO/MST Carry out verification of EMP compliance for the Dhankuta market and Lekhnath Mandare PCO March 7, 2015 park sub-projects before works are completed. Carry out field verification of 15 locations selected for drainage coverage for the PCO March 12, 2015 upgrading of Mechinagar Gokul Marg. Submit to the Team monitoring report of social and March 15, 2015 (for environmental safeguards the month of PCO included in the monthly February) and every progress reports prepared by the month thereafter municipalities. Re-check and verify whether private land is required to PCO/MST and Itahari construct the Kethi Kolha March 15, 2015 Municipality bridge and submit findings to the Team, and if private land is 48 required, to follow voluntary land taking process as per the provision spelled out in SMF and EMP. Send minutes of the mutual agreement between municipality and affected people for relocation of structures at Jhagin Municipality, with March 30, 2015 Danda along the Baglung support from PCO Upgrading of Access Road, as per the provision spelled out in SMF and EMP Complete necessary processes and procedures of voluntarily land taking for Itahari Link Itahari municipality, Road Sub-project and relocation with support from March 30, 2015 and reinstallation of the PCO/MST structures damaged due to project activities. Re-check and verify whether private land is required to PCO/MST and Itahari construct the Kethi Kolha March 15, 2015 municipality bridge and submit findings to the Team. Carry out first three-monthly May 15, 2015, and safeguard monitoring of all the PCO/MST every three months ongoing municipal sub-projects. thereafter Third-Party Monitoring of Safeguards Compliance Share the reviewed third party monitoring report with remarks on recommendations and plan PCO March 30, 2015 for hiring third party monitoring for next year submitted by the consultants with the Team. IEC material and information dissemination Upload safeguard documents (15 EMPs, 1 IEE) along with PCO March 15, 2015 already disclosed ESMF to the DUDBC website. Revise annual work program of PCO March 7, 2015 FY 2014/15. Submit withdrawal application Financial for FY 2014/15 expenses to date PCO March 15, 2015 Management (of about USD 0.8 million). Send the audited project account PCO March 31, 2015 of FY2013/14 (priority). Submit second trimester IPR. PCO April 30, 2015 49 50