Completion Report

Project Number: 42161-013

Loan Number: 2851
Grant Number: 0284
June 2021

Nepal: Integrated Urban Development Project

This document is being disclosed to the public in accordance with ADB’s Access to Information
Policy.
 CURRENCY EQUIVALENTS

Currency unit – Nepalese rupee/s (NRe/NRs)

At Appraisal At Project Completion

4 January 2012 31 December 2019
NRe1.00 = $0.01174 $0.008787
$1.00 = NRs85.15 NRs113.80

ABBREVIATIONS
ADB – Asian Development Bank
APFS – audited project financial statements
CDP – community development program
DMF – design and monitoring framework
DSC – design and supervision consultants
DUDBC – Department of Urban Development and Building Construction
DWSMB – Dharan Water Supply Management Board
DWSS – Dharan water supply subproject
EIRR – economic internal rate of return
FIRR – financial internal rate of return
GESI – gender equality and social inclusion
GESI AP – GESI action plan
km – kilometer
MOUD – Ministry of Urban Development
MPPW – Ministry of Physical Planning and Works
NGO – nongovernment organization
NWSC – Nepal Water Supply Corporation
O&M – operation and maintenance
PCO – project coordination office
PIU – project implementation unit
PMSC – project management and support consultants
SLS – sanitary landfill site
SMC – sub-metropolitan city
SOE – statement of expenditures
SOUF – statement of utilization of funds
SWM – solid waste management
TDF – Town Development Fund
WACC – weighted average cost of capital
 NOTES

(i) The fiscal year (FY) of the Government of Nepal and its agencies ends on 16 July.
“FY” before a calendar year denotes the year in which the fiscal year ends, e.g.,
FY2021 ends on 16 July 2021.

(ii) In this report, “$” refers to United States dollars, unless otherwise stated.

Vice-President Shixin Chen, Operations 1

Director General Kenichi Yokoyama, South Asia Regional Department (SARD)
Director Sharad Bhandari, Officer-in-Charge, Nepal Resident Mission (NRM), SARD
Team Leader Laxmi P. Subedi, Senior Social Development Officer (Safeguards), NRM,
SARD
Team Members Sunila Ghimire, Project Analyst, NRM, SARD
Deewas Khadka, Associate Financial Management Officer, NRM, SARD
Bimal B. Khatri, Associate Safeguards Analyst, NRM, SARD
Sangita Rai, Operations Assistant, NRM, SARD
Deepak B. Singh, Senior Environment Officer, NRM, SARD
Suman Subba, Senior Social Development Officer (Gender), NRM, SARD

In preparing any country program or strategy, financing any project, or by making any designation
of or reference to a particular territory or geographic area in this document, the Asian
Development Bank does not intend to make any judgments as to the legal or other status of any
territory or area.
 CONTENTS
Page
BASIC DATA i
I. PROJECT DESCRIPTION 1
II. DESIGN AND IMPLEMENTATION 1
A. Project Design and Formulation 1
B. Project Outputs 2
C. Project Costs and Financing 4
D. Disbursements 5
E. Project Schedule 5
F. Implementation Arrangements 6
G. Technical Assistance 6
H. Consultant Recruitment and Procurement 6
I. Gender Equity 7
J. Safeguards 8
K. Monitoring and Reporting 8
III. EVALUATION OF PERFORMANCE 9
A. Relevance 9
B. Effectiveness 10
C. Efficiency 11
D. Sustainability 11
E. Development Impact 12
F. Performance of the Borrower and the Executing Agency 13
G. Performance of the Asian Development Bank 13
H. Overall Assessment 14
IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14
A. Issues and Lessons 14
B. Recommendations 15

APPENDIXES
1. Design and Monitoring Framework 16
2. Detailed Output Achievements per Municipality 19
3. Project Cost at Appraisal and Actual 23
4. Project Cost by Financier 24
5. Disbursement of ADB Loan and Grant Proceeds 26
6. Contract Awards of ADB Loan and Grant Proceeds 28
7. Gender Equality and Social Inclusion Plan Implementation and Achievements 30
8. Achievements and Performance Assessment of Involuntary Resettlement 47
9. Status of Compliance with Loan Covenants 51
10. Economic and Financial Analysis 64
11. Project Contribution to ADB Strategy 2030 Operational Priorities 74
 BASIC DATA

A. Loan Identification
1. Country Nepal
2. Loan number and financing source 2851 (concessional ordinary capital
resources)
3. Project title Integrated Urban Development Project
4. Borrower Government of Nepal
5. Executing agency Ministry of Urban Development
6. Amount of loan SDR28.435 million ($44.8 million
equivalent)
7. Financing modality Project loan

B. Loan Data
1. Appraisal
– Date started 24 August 2011
– Date completed 6 September 2011
2. Loan negotiations
– Date started 19 October 2011
– Date completed 20 October 2011
3. Date of Board approval 14 February 2012
4. Date of loan agreement 8 May 2012
5. Date of loan effectiveness
– In loan agreement 6 August 2012
– Actual 4 July 2012
– Number of extensions 0
6. Project completion date
– Appraisal 30 June 2017
– Actual 31 December 2019
7. Loan closing date
– In loan agreement 31 December 2017
– Actual 31 December 2019
– Number of extensions 2
8. Financial closing date
– Actual 21 September 2020
9. Terms of loan
– Interest rate 1% per annum during grace period and
1.5% per annum thereafter
– Maturity (number of years) 32 (including grace period)
– Grace period (number of years) 8
10. Terms of relending (if any)
– Interest rate 2% per annum
– Maturity (number of years) 23 years inclusive of grace period
– Grace period (number of years) 8 years
– Second-step borrower 5% per annum, repayment period of 20
years inclusive of 5-year grace period
ii

C. Grant Identification
1. Country Nepal
2. Grant number and financing source 0284 (Asian Development Fund)
3. Project title Integrated Urban Development Project
4. Borrower Government of Nepal
5. Executing agency Ministry of Urban Development
6. Amount of loan $12 million
7. Financing modality Project grant

D. Grant Data
1. Appraisal
– Date started 24 August 2011
– Date completed 6 September 2011
2. Grant negotiations
– Date started 19 October 2011
– Date completed 20 October 2011
3. Date of Board approval 14 February 2012
4. Date of grant agreement 8 May 2012
5. Date of grant effectiveness
– In grant agreement 6 August 2012
– Actual 4 July 2012
– Number of extensions 0
6. Project completion date
– Appraisal 30 June 2017
– Actual 31 December 2019
7. Grant closing date
– In loan agreement 31 December 2017
– Actual 31 December 2019
– Number of extensions 2
8. Financial closing date
– Actual 7 October 2020
9. Disbursements
a. i. Dates for Loan
Initial Disbursement Final Disbursement Time Interval
30 March 2015 11 September 2020 65.5 months

Effective Date Actual Closing Date Time Interval

4 July 2012 21 September 2020 98.7 months

a. ii. Dates for Grant

Initial Disbursement Final Disbursement Time Interval
17 December 2012 1 October 2020 93.5 months

Effective Date Actual Closing Date Time Interval

4 July 2012 7 October 2020 99.2 months
 iii

b. i.(1). Amount (SDR million) for Loan

Increased Canceled Last
Original during during Revised Amount Undisbursed
Allocation Implementation Implementatio Allocation Disbursed Balance
Category (1) (2) n (3) (4=1+2–3) (5) (6 = 4–5)
1 Civil works 24.22 1.11 0.46 24.87 24.87 0.00
and equipment
a) Water 6.56 1.11 0.00 7.67 7.67 0.00
supply system
improvement
b) Drainage 17.66 0.00 0.46 17.20 17.20 0.00
system, roads,
solid waste
management
system
improvement
2 Interest 0.89 0.00 0.38 0.51 0.51 0.00
charge
3 Unallocated 3.33 0.00 3.33 0.00 0.00 0.00
Total 28.44 1.11 4.16 25.38 25.38 0.00

b. i.(2). Amount ($ million equivalent) for Loan

Increased Canceled Last
Original during during Revised Amount Undisburse
Allocation Implementation Implementati Allocation Disbursed d Balance
Category (1) (2) on (3) (4=1+2–3) (5) (6 = 4–5)
1 Civil works 38.16 0.34 3.84 34.66 34.66 0.00
and equipment
a) Water 10.34 0.34 0.00 10.68 10.68 0.00
supply system
improvement
b) Drainage 27.82 0.00 3.84 23.98 23.98 0.00
system, roads,
solid waste
management
system
improvement
2 Interest 1.40 0.00 0.69 0.71 0.71 0.00
charge
3 Unallocated 5.24 0.00 5.24 0.00 0.00 0.00
Total 44.80 0.34 9.77 35.37 35.37 0.00

b. ii. Amount ($ million) for Grant

Increased Canceled Last
Original during during Revised Amount Undisbursed
Allocation Implementation Implementation Allocation Disbursed Balance
Category (1) (2) (3) (4=1+2–3) (5) (6 = 4–5)
Community 0.92 0.89 0.00 1.81 1.49 0.32
infrastructure
Consulting 8.01 0.00 1.63 6.38 5.84 0.54
services
Incremental 1.79 0.00 0.58 1.21 1.13 0.09
recurrent costs
Unallocated 1.28 0.00 1.28 0.00 0.00 0.00
Total 12.00 0.89 3.49 9.40 8.45 0.95
Note: Totals may not add correctly due to rounding.
iv

E. Project Data
1. Project cost ($ million)
Cost Appraisal Estimate Actual
Foreign exchange cost 18.53 6.77
Local currency cost 65.07 54.16
Total 83.87 60.93
Note: Totals may not add correctly due to rounding off while arriving at total cost under each heading.
Source: Asian Development Bank.

2. Financing plan ($ million)

Cost Appraisal Estimate Actual
Implementation cost
Borrower financed 20.57 12.05
ADB financed 56.50 43.82
Other external financing (municipality 6.49 5.06
financed)
Total implementation cost 83.87 60.93
Interest during construction costs
Borrower financed 0.00 0.00
ADB financed 1.40 0.71
Other external financing 0.00 0.00
Total interest during construction cost 1.40 0.71
Note: Totals may not add correctly due to rounding off while arriving at total cost under each heading.
Source: Asian Development Bank.

3.1 Cost breakdown by project component (for ADB Loan, $ million)

Component Appraisal Estimate Actual
1 Civil Works and Equipment 38.16 34.66
a) Water supply system improvement 10.34 10.68
b) Drainage system, roads, solid waste 27.82 23.98
management system improvement
2 Interest Charge 1.4 0.71
3 Unallocated 5.24 0.00
Total 44.80 35.37

3.2 Cost breakdown by project component (for ADB Grant, $ million)

Component Appraisal Estimate Actual
Community infrastructure 0.92 1.49
Consulting services 8.01 5.84
Incremental recurrent costs 1.79 1.13
Unallocated 1.28 0.00
Total 12.00 8.45

4. Project schedule

Item Appraisal Estimate Actual

Output 1: Reliable municipal infrastructure
developed
1.0.1 Complete land acquisition process Nov 2011–May 2012 May 2013–Mar 2017
1.0.2 Recruit design and supervision consultant Dec 2011–Jul 2012 Apr 2013–Jul 2013
Development of drainage systems
1.1.1 Prepare detailed design and bid documents Jan–Mar 2013 Mar 2014–Mar 2015
1.1.2 Award contract for civil works Sep 2013 Dec 2014– Dec 2015
1.1.3 TDF and municipalities sign subloan agreement Sep 2013 Nov 2014
1.1.4 Construction Oct 2013–Sep 2016 Dec 2014–Dec 2019
 v

1.1.5 Support for initial operation of the system Oct 2016–Jun 2017 Jul 2017–Jan 2018
Improvement
Improvement of urban roads
1.2.1 Prepare detailed design and bid documents Jan–Mar 2013 Mar 2014–Mar 2015
1.2.2 Award contract for civil works Sep 2013 Dec 2014–Dec 2015
1.2.3 TDF and municipalities sign subloan agreement Sep 2013 Nov 2014
1.2.4 Construction Sep 2013–Jun 2016 Dec 2014–Dec 2019
Improvement of solid waste management systems
1.3.1 Prepare detailed design and bid documents Jan–Mar 2013 Aug 2014–Oct 2014
1.3.2 Award contract for civil works Sep 2013 Apr 2016–Jun 2016
1.3.3 TDF and municipalities sign subloan agreement Sep 2013 Nov 2014
1.3.4 Construction Oct 2013–Mar 2016 Jul 2016–Nov 2019
1.3.5 Support initial O&M of the improved system Apr 2016–Jun 2017 May 2019–May 2020
including landfill
Improvement of Dharan water supply systems
1.4.1 Prepare detailed design and bid documents Jan–Mar 2013 Aug 2014–Oct 2014
1.4.2 Award contract for civil works Oct 2013 Dec 2014
1.4.3 TDF and municipalities sign subloan agreement Oct 2013 Mar 2015
1.4.4 Establish DWSMB Jan 2012–Mar 2013 May 2014
1.4.5 Construction Oct 2013–Dec 2016 Jul 2015–Dec 2019
1.4.6 Put DWSMB into operation Nov 2013 Dec 2014
1.4.7 Support initial O&M of the system and new Oct 2016–Jun 2017 Jan 2020–Sep 2020
connections
Output 2: Community development programs
undertaken and GESI systems strengthened
Implementation of community development
programs
2.1.1 Recruit NGO Nov 2011–May 2012 Apr 2012–Oct 2013
2.1.2 Develop technical training programs for social Oct–Dec 2012 Mar 2014–Feb 2018
development units in the project municipalities
2.1.3 Develop skills and entrepreneurship development Oct–Dec 2012 Mar 2015–Feb 2018
program for women and other disadvantaged groups
2.1.4 Undertake community awareness campaigns in Oct 2012–Dec 2016 Mar 2015–Dec 2018
solid waste management and health and hygiene
education
2.1.5 Implement various training programs for project Jan 2013–Dec 2016 Mar 2015–Dec 2018
municipalities and households in poor settlements
2.1.6 Develop small-scale community infrastructure in Jan 2013–Dec 2016 Jun 2014–Dec 2018
accordance with project priorities
Implementation of capacity development activities
for MOUD and project municipalities
2.2.1 Recruitment of GESI consultants Oct 2011–Jun 2012 Mar 2013
2.2.2 Appoint staff in MOUD to support in GESI aspects Nov 2011–Jul 2012 Mar 2013
at different level
2.2.3 Adopt GESI operational guidelines in the design May 2012–Jun 2012 May 2013–Dec 2013
implementation, and O&M
2.2.4 Develop and impart training programs on GESI for Jan 2013–Dec 2015 Mar–Dec 2014
MOUD officials
2.2.5 Develop GESI operational manual, toolkits, and Dec 2013 Jan 2014–Mar 2014
check lists for use in Ministry of Physical Planning and
Works and its departments
Output 3 Project management and administration
supported
3.1 Form PCO, GESI unit, and PIU and appoint core Oct 2011–Mar 2012 Sep 2011–Mar 2012
staff, including project director in PCO and project
manager in PIU and GESI unit
3.2 Formation of municipal project management Nov 2011–Jun 2012 Sep 2013–Jun 2013
committee
3.3 PCO and PIU fully staffed Dec 2011 Mar 2012
3.4 Recruitment of project management support Oct 2011–Jun 2012 Mar 2013
consultant
vi

3.5 Develop project performance management system Sep 2012 Oct 2013
3.6 Undertake project management and operation Mar 2012–Jun 2017 Mar 2012
3.7 Undertake project-specific evaluation survey Oct 2016–Mar 2017 No records.
Implementation of GESI plan Oct 2011–May 2017 Jul 2012–Dec 2019
DWSMB = Dharan Water Supply Management Board; GESI = gender equality and social inclusion; MOUD = Ministry
of Urban Development; PCO = project coordination office; PIU = project implementation unit; TDF = Town
Development Fund.

5. Project performance report ratings

Implementation Period Single Project Rating
From 1 Jul 2012 to 30 Sep 2012 On track
From 1 Oct 2012 to 31 Dec 2012 Potential problem
From 1 Jan 2013 to 30 Sep 2017 On track
From 1 Oct 2017 to 31 Dec 2017 Potential problem
From 1 Jan 2018 to 30 Sep 2020 On track

F. Data on Asian Development Bank Missions

No. of No. of Specialization
Name of Mission Date Persons Person-Days of Membersa
Inception 4–13 Jun 2012 3 26 a,b,c
Review 1 25–30 Nov 2012 4 12 a,b,d,e
Review 2 22–25 May 2013 3 12 a,b,f
Midterm review 9–15 Dec 2013 3 18 a,b,f
Review 3 (special review) 3–9 Feb 2014 2 12 a.b
Review 4 (project handover) 3–7 Jul 2014 2 10 a,b
Review 5 2–22 Dec 2014 4 20 b,c,f,g
Review 6 15 Feb–1 Mar 2016 5 15 a,b,c,f,h
Review 7 21–30 Dec 2016 5 9 b,c,f,h,i
Review 8 22–31 May 2017 4 9 b,c,h,j
Review 9 10–16 Oct 2017 6 6 b,c,f,g,h,k
Review 10 15–29 Aug 2018 5 12 h,i,k,l,m
Review 12 30 Mar–10 Apr 2019 2 12 c,h,k,j,n
Review 13 31 Oct–7 Nov 2019 2 14 c,h,j
Project completion review 29 Mar–8 Apr 2021 6 14 c,f,h,i,j,k
a a = senior and/or principal and/or urban development specialist; b = senior project officer and/or senior project officer

(infrastructure); c = project analyst; d = director; e = country director; f = senior social development officer (gender);
g = senior public management office; h = senior social development officer (safeguards); i = operations assistant; j
= gender equality and social inclusion consultant (staff consultant); k = senior environment officer; l = associate
project officer (infrastructure); m = senior procurement officer; n = associate safeguard analyst.
Note: Mission date is presented based on actual input days. Mission duration may differ in Aide Memoire and BTOR
due to back-to-back mission, postponement of wrap up meeting date etc.
 I. PROJECT DESCRIPTION

1. With its urban population increasing from 8.8% in 1990 to 20.25% in 2019, Nepal is one
of the world’s most rapidly urbanizing countries.1 The annual urban population growth rate
averaged 3.4% between 2001 and 2011 even as the national population growth rate was 1.4%
annually.2 This urbanization pace is driven primarily by rural–to–urban migration, thus resulting in
a declining rural population. Challenged to meet the expanding urban population’s needs,
municipalities have taken ad hoc approaches to infrastructure development. This has created
numerous problems, such as deficiencies in basic urban services, growth in poverty clusters,
recurrent waterlogging due to inadequate drainage systems, poor sanitation, intermittent water
supply, and limited vehicular access due to poorly maintained road infrastructure (footnote 2).

2. The Integrated Urban Development Project (the project) was designed to address critical
urban environmental issues by providing populations in the municipalities of Dharan, Janakpur,
Nepalgunj, and Siddharthanagar with better access to municipal infrastructure and services in a
socially inclusive manner. These municipalities were chosen for their economic growth potential,
demand for urban services, and urban management capacity. At the request of the Government
of Nepal, the Asian Development Bank (ADB) approved a loan of SDR28.435 million ($44.8
million equivalent) from concessional ordinary capital resources and a grant of $12.0 million from
the Asian Development Fund on 14 February 2012. The envisaged outcome was to provide the
populations inclusively better access to improved municipal infrastructure and services. The
outputs were (i) reliable municipal infrastructure developed; (ii) community development programs
(CDPs) undertaken, gender equality and social inclusion (GESI) capacity strengthened; and (iii)
project management and administration supported.

II. DESIGN AND IMPLEMENTATION

A. Project Design and Formulation

3. The project design was relevant at appraisal and remains so today. It was aligned with
Nepal’s context and consistent with the government’s policies and priorities recognizing the
importance of urban infrastructure and services in improving living standards of urban dwellers.
The project was formulated based on the National Urban Policy 20073 and the government’s 12th
Periodic Plan (FY2011–FY2013),4 which gave strategic directions to the government’s efforts to
improve urban services in strategically important municipalities. The 12th Plan places
municipalities at the core of the urban development agenda and supports strengthening of local
bodies to help them in implementing urban development plans and mobilizing local resources.
The National Urban Policy aimed to achieve a balanced national urban structure by improving the
quality of urban life through creating clean, safe, and environment friendly cities. The project
continued to be relevant after implementation in accordance with the government’s 2017 national
urban development strategy,5 given that the project had laid a foundation for livable cities with
emphasis on developing sustainable, inclusive, resilient, and green cities.

4. The project design was aligned with ADB’s Strategy 2020 commitment to achieving
sustained and equitable development, with a focus on urban infrastructure development such as

1 The World Bank. 2019. World Development Indicators. Washington, DC.

2
ADB. 2012. Report and Recommendation of the President to the Board of Directors. Proposed Loan and Grant
Nepal: Integrated Urban Development Project. Manila.
3 Ministry of Urban Development (MOUD). 2007. National Urban Policy. Kathmandu.
4 National Planning Commission. 12th Periodic Plan (FY2011–FY2013). Kathmandu.
5
MOUD. 2017. National Urban Development Strategy. Kathmandu.
2

water supply, waste management, and urban transport.6 The project was part of ADB’s country
partnership strategy for Nepal, 2010–2012, which included water supply and other municipal
infrastructure and services as key investment sectors.7 The project continued to be relevant for
ADB’s succeeding 2013–2017 country partnership strategy, which listed urban services as one
of its priorities.8 The project is also relevant to ADB’s Strategy 2030, which supports investing in
cities to make them more livable through integrated solutions and participatory urban planning.9

5. The project was designed based on lessons from similar ADB interventions and in
consultation with the relevant stakeholders involved in urban development.10 It complements the
urban development activities of such other donors as Japan International Cooperation Agency,
United Nations Development Programme, the World Bank, and the Government of Finland.11
Coordination among development partners ensured complementarity of interventions and
prevented overlap. The project design was finalized after key stakeholder consultations and
evaluations from a project preparatory technical assistance team.12 CDPs were introduced to
improve living standards of people residing in municipal poverty clusters who may not benefit
directly from a main subproject (footnote 2). Outcomes and outputs of the design and monitoring
framework (DMF) were logical, and the stated risks and assumptions were relevant. The project
activities were designed to optimize intersectoral linkages and promote integrated development.
Innovative features included a targeted approach to poverty clusters for reducing social
inequalities, focused activities mainstreaming GESI, and involvement of nongovernment
organizations (NGOs) in the project design. The project lending modality was deemed
appropriate, given the defined subproject scope and geography.

B. Project Outputs

6. The project had 3 outputs with 15 targets. At completion, the project exceeded 6 targets,
achieved 8 targets, and partially achieved 1 target. Appendix 1 summarizes the project’s actual
achievements at project completion compared to those envisaged in the DMF at appraisal. No
changes were made to the DMF in the 2013 midterm review.

6
ADB. 2009. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020. Manila
7
ADB. 2009. Country Partnership Strategy: Nepal, 2010–2012. Manila.
8 ADB. 2013. Country Partnership Strategy: Nepal, 2013–2017. Manila. The strategy was designed for a 5-year term

(2013–2017) and extended in 2017 until 2019.

9
ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific.
Manila.
10 Similar ADB projects were the Urban and Environmental Improvement Project, Kathmandu Urban Development

Project, Second Water Supply and Sanitation Project, and Secondary Towns Integrated Urban Environmental
Improvement Project.
11 The donors’ projects were Kathmandu Valley Urban Road Development – Improvement of the Kathmandu Bhaktapur

Road (2008–2011), Public–Private Partnership for Urban Environment (2002–2012), Urban Governance and
Development Program: Emerging Towns Project (2011–2016), and Regional Waste Management Project (2010–
2014).
12 ADB. 2010. Project number 42161-012: PPTA 7727: Preparing Integrated Urban Development Project. Manila.
 3

1. Output 1: Reliable municipal infrastructure developed.

7. Of the 6 targets in this output, 3 were exceeded, 2 were achieved, and 1 was partially
achieved. The project rehabilitated 120.5 kilometers (km) of drainage lines, exceeding the target
of 107 km. It constructed 32.7 km of new drainage lines against the target of 49 km. A total 153.2
km of drainage lines were thus rehabilitated or newly constructed in project municipalities, which
is marginally lower than the target of 156 km. The project improved 72.4 km of roads, exceeding
by 100% of the 36 km target (Appendix 2). Road and drainage rehabilitation works were added
in Dharan to restore road and drainage damaged while laying water supply pipes. The third target
aimed to construct sanitary landfill sites (SLSs) with resource recovery facilities for solid waste
management (SWM) in Janakpur, Nepalgunj, and Siddharthanagar. The project was only able to
construct the SLS in Nepalgunj and that facility has been in operation since May 2019.13 It has a
design service life of about 20 years. The construction was delayed due to a land acquisition issue
and other external factors (para. 14). Although some actions were taken to construct SLSs in
Janakpur and Siddharthanagar, these could not be built because of the site’s inaccessibility due
to local residents’ objection. This resulted in the indicator’s partial achievement.14 The lack of
benefit sharing—the project aimed to serve one municipality while waste was planned to be
transferred to another—was one reason, among others, behind the cancellation of the SLSs in
Janakpur and Siddharthanagar.

8. The fourth target was to develop a modality for private sector participation in SWM.
Accordingly, the Nepalgunj SLS was constructed and operated by a private sector contractor for
1 year. Since handover, the municipality has engaged NGO and private sector operators for waste
collection in seven wards. The municipality manages the collection in 16 wards and SLS
operations. The fifth target was to serve 5,000 new households with improved water services and
serve another 12,000 households by interconnecting the water supply system of the Nepal Water
Supply Corporation (NWSC) with a system that was newly constructed by the project. The target
was exceeded significantly. New connections were provided to 8,600 households and improved
services to 18,159 households. Also exceeded was the sixth indicator of 90 km of new water
pipes, as 440.42 km of new supply pipelines were installed, including transmission and distribution
networks in Dharan.

2. Output 2: CDP undertaken, and GESI capacity strengthened.

9. Of the output’s 5 targets, 2 were exceeded and 3 were achieved. Outputs were achieved
by implementing CDPs in the project municipalities and through capacity development activities
for GESI mainstreaming in the Ministry of Urban Development (MOUD), its departments, and the
project municipalities.15 NGOs were engaged to assist in CDP implementation, and consultants
were engaged for staff’s capacity development. CDPs were implemented in 96 poverty clusters
of 84 poor settlements, thereby exceeding the first indicator, which aimed to benefit 100% of poor
settlements (79) in four municipalities. The numbers of poverty clusters rose in all municipalities
due to the new areas added to the municipalities as a result of the adoption of a federal structure
13 The Nepalgunj municipality’s commitment to area development activities before sanitary landfill site (SLS)
construction was one of the factors in its successful completion.
14 At Siddharthanagar, the local community raised concerns that dumping of waste would negatively affect water quality

of the Rohini River, impact the weekly market, and affect two temples at the northern and southern parts of the
proposed site. In the case of Janakpur, the SLS location had to shift three times due to objections from locals. In both
municipalities, there was an absence of targeted development activities at the SLS locations to provide benefit
sharing and this also contributed to the cancellation to construct SLS.
15 At appraisal, the Ministry of Physical Planning and Works was the executive agency. During implementation, the

ministry was split into the Ministry of Physical Infrastructure and Transport and the Ministry of Urban Development
(MOUD). The project execution responsibility rests with MOUD.
4

of government. The second indicator was to ensure 33% women’s representation on committees
established for CDPs. Eighty-four such committees were formed with 442 (52.24%) of 846
members being women, thus exceeding the target. The third target was to engage at least 50%
women as participants in skills and entrepreneurship development programs. Of 1,774 people
participating in skills and entrepreneurship development training, 896 (50.51%) were women, thus
meeting the target (Appendix 2). The fourth target to develop GESI operational manuals, toolkits,
and checklists and to use these in MOUD and its departments was reached.16 MOUD included a
separate budget heading and allocated annual budget for GESI operations, as targeted in the fifth
indicator.

3. Output 3: Project management and administration supported.

10. Of this output’s 4 targets, 3 were achieved and 1 exceeded. The Department of Urban
Development and Building Construction (DUDBC) established a central project coordination office
(PCO) and project implementation units (PIUs) in all four project municipalities. The PCO and
PIUs were fully staffed except during the initial period of project implementation. There were
frequent changes of project directors during the latter half of the project. However, this was due
to the restructuring of the country, staff retirements and promotions, and nonadherence to the
project’s staff transfer policy. The capacity development activity helped to improve project
management skills and efficiency, resulting in reduced bid evaluation time and efficient contract
management. The second target was timely submission of quarterly, safeguard, and audit reports,
among others. Though the PCO submitted all reports, delays ranging from 1 to 53 months were
observed for the submission of audited project financial statements (APFS) in 2019 and 2020 and
the statements of utilization of funds (SOUF) in 2017 and 2018. The submission of safeguard
monitoring reports was also delayed till 2013. The quality of these reports was satisfactory. The
third target related to timely project implementation and doing so within budget. The project’s
implementation was delayed but it was within budget. Because the delay was due to external
factors (earthquake and trade embargo) and the project was able to achieve most anticipated
outputs and outcomes, the target is regarded as achieved.

C. Project Costs and Financing

11. At appraisal, the project’s estimated cost was $83.86 million to be financed by a $12.0
million grant and $44.80 million (equivalent) loan from ADB, $20.57 million contribution from the
government, and $6.49 million from municipalities and beneficiaries. The foreign currency cost
was financed by ADB. Local currency cost was shared by ADB and the government. At
completion, the actual project cost was $60.93 million. About 24.5% of the actual cost was
financed by the government, 53.4% by ADB loan, 14.3% by ADB grant, and 7.7% by the
municipalities. Actual ADB financing was $43.82, lower than the $56.80 million estimated at
appraisal due in part to the depreciation of the Nepalese rupee and lower actual cost.17 The grant
savings were in consulting services, recurrent cost, and unallocated category. Savings in loan
proceeds were due to cancelling the SLSs in Janakpur and Siddharthanagar. Loan and grant
allocations were revised twice, in November 2017 and June 2020. Loan was reallocated to meet
increased civil works and water supply costs. Grant was reallocated for CDP to support additional

16 MOUD. 2018. Targeted GESI Activity Completion Report under Grant 0284. Kathmandu.
17 The Nepalese rupee depreciated by about 33% against the dollar, from NRs85.15 to the dollar at project appraisal
in January 2012 to NRs113.80 per $1 at completion in December 2019. That resulted in a $5.19 million reduction.
Partial cancellation of loan of $3.00 million and grant of $2.60 million was made through ADB’s spring cleaning
missions to support earthquake emergency efforts on 21 November 2017 and coronavirus disease (COVID-19)
response on 29 June 2020. Unused loan of $1.27 million and grant of $0.95 million were cancelled at financial closing
in October 2020.
 5

poverty clusters. Appendix 3 details the appraisal and actual costs and Appendix 4 project costs
by the financier.

D. Disbursements

12. As per financing agreement, an imprest account for grant proceeds was established at the
Nepal Rastra Bank with a ceiling of $0.30 million. Grant and loan proceeds were disbursed in
accordance with ADB’s Loan Disbursement Handbook, (2015 as amended time to time).
Statement of expenditures procedure (SOE) was used for reimbursement, replenishment, and
liquidation of funds. DUDBC fully liquidated the imprest accounts before financial closing of the
project. The loan account was closed on 21 September 2020, and the grant account on 7 October
2020. Disbursement at completion totaled $35.37 million (equivalent) from the loan and $8.45
million from the grant. Contract award and disbursement were not in accordance with original
projections, mainly due to (i) the occasional delay in budget allocation by the government; (ii) slow
performance of NGOs, consultants, and contractors; (iii) delay in detailed design and contract
award; (iv) the 2015 earthquakes; and (v) a trade embargo. Contract award and disbursement
projections were revised at the midterm review accordingly. Appendix 5 shows projected and
actual disbursement, and Appendix 6 shows annual and cumulative contract awards.

E. Project Schedule

13. The project became effective on 4 July 2012 with an original closing date of 30 June 2017.
It required two extensions for 24 months and a revised closing date of 31 December 2019 for both
the grant and the loan.18 The first extension was required to complete drainage and road
improvement works at Janakpur, improvement of the Dharan water supply subproject (DWSS),
and SLS contracts in Siddharthanagar and Nepalgunj. Even after one extension, the project could
not successfully complete the SLS construction and DWSS. The second extension enabled
successful completion of one SLS in Nepalgunj, essential improvements for sustained road and
drainage system in all municipalities, and DWSS. This could have been avoided or minimized had
there been a proper situation analysis of NWSC and Dharan’s institutional strength, as well as
deeper stakeholder analysis during detailed design.

14. The project had both start-up and implementation delays. The initial delays were in
procuring project management and support consultants (PMSC), design and supervision
consultants (DSC), and NGOs. The major causes of initial delay were (i) delay in appointing and
mobilizing project managers in the municipalities; (ii) inadequate fulfillment of staff in the PCO;
and (iii) PIUs’ inadequate understanding and knowledge of ADB requirements. As a result, the
preparation of detailed engineering design reports and timely procurement of civil contractors
were delayed. Shortage of fuel and construction materials on site because of earthquakes and a
trade embargo from May 2015 to January 2016 adversely affected construction progress. The
project was also behind the original schedule due to delayed implementation of the SWM
component (para. 8), problems in interconnection between NWSC and new water supply system
because of delay in handing over assets and liabilities, and delay in constructing Janakpur
drainage and road improvement works due to initial design issues.

15. Drainage and road improvement civil works could not meet the agreed schedule due to
parallel activity and interagency coordination issues within the municipalities. These resulted in
multiple variations in civil work contracts that could have been avoided or minimized had there
been a more in-depth analysis of the municipal road improvement plans that could have improved

18
The first extension date was approved on 23 January 2018, the second on 26 December 2018.
6

the selection process. Ownership shown by the project implementing agency nevertheless helped
to recover from these delays. The winding-up period was extended by 2.33 months to 10 July
2020 due to delay in receiving SOE documents from the municipalities. Withdrawal applications
were all submitted within the extended winding-up period, but the SOE review from ADB’s
controller department was affected by lockdown measures taken by the government to mitigate
the COVID-19 pandemic. Financial closure was delayed as a result of poor documentation and
PIUs’ submission delays.

F. Implementation Arrangements

16. MOUD was the project executing agency. It worked through the PCO established at
DUDBC. A project steering committee was established at the central level in August 2012. It
provided policy guidance to the PCO and municipalities in project implementation. Fifteen steering
committee meetings were held during the project period. The PMSC supported the PCO to review
design, procurement, implementation, progress monitoring, and reporting. The PCO supported
municipalities in implementing project activities and monitoring progress and achievement. Four
project municipalities were implementing agencies. A PIU was established in each municipality
and was responsible for implementing project activities in that municipality. A municipal project
management committee was formed in each municipality representing stakeholders (including
community members at municipal level). Committee meetings were held regularly to support the
elected bodies in resolving project-related issues and obtaining necessary support and
guidance.19 MOUD’s social coordination section was responsible for GESI mainstreaming
activities in the ministry and its departments. The project collaborated with NGOs to implement
the CDP. Overall, the implementation arrangements were adequate to deliver the project outputs
and achieve the outcome.

G. Technical Assistance

17. Project preparatory technical assistance approved on 10 December 2010 was used to
prepare the project. Its objective was to conduct a scoping study, design project components,
undertake stakeholder consultation, and recommend it to ADB for financial assistance. This
assistance contributed to conducting a due diligence study, project scoping, properly designing
the project, and setting realistic performance targets (footnote 12).

H. Consultant Recruitment and Procurement

18. Consultants. The overall performance of contractors, consultants, and suppliers at

completion was assessed as satisfactory. Consultants were selected according to Guidelines on
the Use of Consultants by ADB and its Borrowers (2010, as amended from time to time) by quality-
and cost-based selection (80:20) and with simplified technical proposal. The project engaged
1,501 person-months of national consultants against the planned input of 1,298 person-months,
the additional input being required to complete the project. A firm was mobilized to facilitate
gender mainstreaming in MOUD with 3 person-months of international and 261 person-months
of national consultants’ input. The consultants were mobilized to support the PCO and PIUs in
project management. DSC performance was affected by unavailability of underground services
information, which also caused initial and implementation delays. Consultants also enhanced
capacity of municipality staff. ADB engaged one individual international SWM expert to assist in

19 Elected bodies were in place from July 2017 in Dharan, Nepalgunj, and Siddharthanagar and from September 2017
in Janakpur.
 7

preparing SWM subprojects, including landfill design to fill an SWM expert gap in Nepal. Three
individual consultants were also mobilized and provided 36 person-months of input.

19. Nongovernment organizations. Four NGOs were mobilized to implement CDPs. They
facilitated awareness campaigns, health and hygiene education, social mobilization, skills and
entrepreneurship training, and community infrastructure. NGO performance was satisfactory for
Siddharthanagar and Nepalgunj, partly satisfactory for Janakpur, and unsatisfactory for Dharan.
NGO performance for Dharan was rated unsatisfactory due to the NGO’s weak internal
governance in mobilizing consultants and faulty site selection for community infrastructure.
Janakpur NGO performance was partly satisfactory as the NGO could not complete the work
within the proposed time. The Siddharthanagar and Nepalgunj NGO performance was rated as
satisfactory, as all activities were implemented successfully. After terminating the Dharan NGO’s
contract in July 2015, the CDP was implemented through the municipality’s social development
section with DSC assistance.

20. Contractors and suppliers. The project procured 6 civil work contracts by international
competitive bidding and 84 users’ contracts for CDP through community participation methods.
Particularly for Nepalgunj and Siddharthanagar, integrated SWM packages were designed for
international bidding. No major issues were encountered in procuring suppliers and their
deliveries to intended sites. The civil works contracts were completed, and quality project outputs
and outcomes delivered were within the revised schedule and costs.

I. Gender Equity

21. The project was categorized effective gender mainstreaming because of its potential to
improve women’s and socially excluded people’s access to municipal infrastructure and services.
Activities of the GESI action plan (GESI AP) aimed to (i) improve access of women and socially
excluded groups to municipal urban infrastructures and services; (ii) increase their participation
in decision-making processes; and (iii) develop MOUD’s capacity in GESI mainstreaming. GESI
AP implementation is assessed successful for delivering intended gender equality results based
on (i) 93% (14/15) of activities completed; (ii) 90% (9/10) of quantitative targets fully met; and (iii)
sex-disaggregated data on beneficiaries provided to support the level of achievement. Key GESI
AP activities included (i) constructing community infrastructures selected based on the needs of
women and excluded groups; (ii) skills and entrepreneurship development programs, with a target
of 50% women participants; (iii) participatory adult learning activities, with a target of 50% women
participants; (iv) employment of local labor, including women, in constructing community
infrastructures; (v) formation and allocation of budget for GESI units in MOUD and its
departments; and (vi) capacity development of MOUD and its departments in GESI
mainstreaming through staff training and development of GESI operational manuals, toolkits, and
a database. Appendix 7 presents the achievements of the GESI AP.

22. A GESI steering committee was formed within MOUD to develop MOUD’s GESI
guidelines. A Social Coordination Section was established to implement those guidelines. The
PCO coordinated with the Social Coordination Section on all GESI-related capacity development
activities. In each municipality, a GESI technical working group, headed by the planning section
chief and with the municipal social development officer as a member secretary, was formed to
oversee and support the implementation of the GESI AP. The NGOs and DSC provided support
in implementing the GESI AP in coordination with the GESI technical working group. Three
members of the municipal project management committee represented local disadvantaged
communities, NGOs, and women’s groups. These structures facilitated adequate implementation
of the GESI AP and the preparation of progress reports.
8

J. Safeguards

23. Environment. The environmental safeguards performance was assessed satisfactory.

The project was designated category B at appraisal and remained the same at completion in
accordance with ADB's Safeguard Policy Statement 2009. An initial environmental examination
with environmental management plan for each of the four municipalities and an environmental
assessment and review framework for small community infrastructures were prepared following
ADB and government safeguard requirements. A safeguard desk and grievance redress
mechanism were established in each municipality. No environment-related grievances were
recorded, because issues were promptly addressed at field level. The project organized training
on health and sanitation for the municipal staff, local NGOs, and community-based organizations,
and it monitored compliance through the PMSC environment specialist. None of the contractors
submitted site-specific environmental management or health and safety plans or assigned
safeguard staff (except in Janakpur) as required by the project. All 13 environment-related project
covenants were complied with. Altogether 208 trees were cleared, and 4,056 trees were planted
as compensatory plantation with 70% survival rate. With support of the PMSC environment
specialist, the PCO provided an environmental management plan assurance checklist to the
contractors and monitoring checklist to DSC with safeguard orientation. The absence of a full-
time DSC environment consultant and passive response by the municipalities lowered the quality
of safeguard monitoring and compliance. Contractors nevertheless followed the environmental
management plan requirements and DSC engineers monitored the compliance. No unanticipated
impacts were recorded from project work.

24. Involuntary resettlement. The project was classified as category B at appraisal and
remained the same at completion. A resettlement framework and three resettlement plans were
prepared at appraisal for Janakpur, Nepalgunj, and Siddharthanagar municipal subprojects.
These plans were updated after detailed design, and one resettlement plan for DWSS was
prepared during implementation. The project’s resettlement framework was followed for
screening, assessing impacts, land acquisition, and design mitigation measures while updating
and preparing resettlement plans to ensure compliance with ADB’s safeguard policy. The
assessment ensured that none of the subprojects resulted in significant involuntary resettlement
impact by loss of 10% or more of productive assets, physical displacement, or both, of 200 or
more people. Grievance redress committees were established in the municipalities by November
2013 to receive and resolve complaints and grievances. There are no outstanding grievances
under the project. Ten households with 50 members were impacted. NRs43.90 million was paid
to affected households as compensation for 13.59 hectares of land. The living standard of the
affected households has improved compared to pre-project level. This confirms that the objective
of the resettlement framework and plan has been achieved (Appendix 8).

25. Indigenous people. In accordance with ADB’s safeguard policy, the project was classified
as category C at both appraisal and completion. All subprojects were screened carefully to assess
likely impacts on indigenous people. No such impacts were noted during implementation.
Indigenous peoples living in the project area were consulted throughout the project cycle despite
there being no such impact on them.

K. Monitoring and Reporting

26. The status of compliance with covenants was regularly tracked, reported in quarterly
reports, and monitored during missions. The project had 51 major covenants. Of these, 45 were
complied, and 6 were partly complied. Covenants related to submitting APFS, retaining project
staff, and submitting safeguard monitoring reports were among pending actions or delayed
 9

compliance. Appendix 9 details each covenant and its compliance status. The project
performance management system was established in October 2013 and the project website
developed in December 2013.

27. The PCO submitted the APFS and SOUF, except that these were delayed in 2017 and
2018. Audit opinions for the APFS and SOUF received were unqualified for all years except
FY2016, when qualified opinions were issued. The required additional opinion on the imprest
account and use of loan proceeds and SOE were also obtained. The Town Development Fund
(TDF) was unclear about the SOUF requirement, and consequently, the SOUFs for all prior years
were obtained in FY2018. Several delays were noted regarding TDF’s submission before FY2018.
In addition, TDF submitted audited entity financial statements with qualified opinions for FY2017
and FY2018. The opinions for other years in TDF’s case remained unqualified. The subsidiary
loan agreement between the Ministry of Finance and TDF was found satisfactory. ADB spot-
checked and reviewed financial documents. Random sampling selected samples with focus on
CDPs and recurrent expenditures. Adequate supporting documents were maintained in the
accounting software. The municipality maintained a separate bank account for the project and
reconciled it every month. The quarterly progress reports were regularly submitted. Altogether 10
social and 12 environmental semiannual safeguards monitoring reports were submitted and
disclosed on ADB’s website.

III. EVALUATION OF PERFORMANCE

A. Relevance

28. The project is assessed relevant at appraisal, during implementation, and at completion.
It was aligned with policies, strategies, and development priorities of the government and ADB
(paras. 3–4). Project components were designed with the overall goal of realizing the vision of
Nepal’s Local Self Governance Act 1999, which requires municipalities to provide such basic
services as roads, drinking water, and other minimum urban facilities to urban dwellers.20 The
project addressed drinking water shortage in Dharan, improved drainage system to reduce
waterlogging problems in three municipalities, upgraded roads for improved traffic, introduced a
cycle track in Janakpur, promoted greenery with tree plantation, and established a sanitary landfill
in Nepalgunj for proper solid waste management. The project intervention is expected to support
Sustainable Development Goal 11 (i.e., to make cities and human settlements inclusive, safe,
resilient, and sustainable). The government categorized this as a Priority-1 project. The
stakeholder consultations were adequate except for the SWM component. The project lending
modality was appropriate (para. 5). The DMF had strong logical linkages and its indicators were
realistic and measurable. Implementation arrangements were deemed adequate (para. 16). The
project addressed GESI issues by implementing the GESI AP and mainstreaming in MOUD. It
responded to social and poverty issues by enhancing participation and provision of project
benefits to women and to poor and disadvantaged groups in the project areas, thereby
strengthening the project’s relevance. The project followed Nepal’s and ADB’s requirement for
social and environmental safeguards and resettlement. Similar investments by the government
and development partners in improving urban environment and services point to the project’s high
relevance (footnote 11). Part of the project’s design innovation is the construction of modern SLS.
This was a novel initiative in the country and eventually served as a demonstration site for other
municipalities (para. 39). Overall, the assessment showed the project design to be adequate in

20 Ministry of Federal Affairs and General Administration. 1999. Local Self-governance Act, Ministry of Federal Affairs
and Government Administrations, Kathmandu.
10

providing urban services and improving the living standards of people in the project municipalities,
and no change in scope was required during implementation.

B. Effectiveness

29. The project was assessed effective in achieving the intended outcomes and outputs
(Appendix 1). Of 5 outcome performance indicators, 2 were exceeded, 2 achieved, and 1 partly
achieved. Constructing and operating stormwater drainage systems has dramatically reduced the
waterlogging problem and related hygiene and public health concerns. Flooding duration at the
time of heavy rain dropped from about 5 hours to less than 1 hour in Janakpur, from 8 days to
less than 1 hour in Nepalgunj, and from 5 hours to less than 1 hour in Siddharthanagar, thus
achieving the envisaged outcome indicators. The project addressed the drinking water scarcity
problem in Dharan by providing services to more than 95% of households. Water generation in
Dharan increased to at least 23 million liters per day in 2020 from 10.9 million liters in 2010.
However, the target of water supply to households for 16 hours a day was not met.21 Project
activities such as community health and hygiene awareness, distribution of waste collection
machines and equipment, and establishment of an SLS facility have led to expanded household
waste collection coverage in the project municipalities. As a result, that coverage has expanded
to 90% in core city areas of Janakpur, 95% in Nepalgunj, and 95% in Siddharthanagar, thus
achieving the targets envisaged at appraisal. The project also focused on improving basic service
delivery in poor settlements living adjacent to the city areas. Basic service delivery improved in
100% of poor settlements, as envisaged during appraisal. Several awareness activities on waste
segregation and on reduce, reuse, and recycle of solid waste were conducted in poor settlements
under the CDP activities. Hygiene, sanitation, and waste disposal practices were thus improved,
achieving the project outcome target. The project successfully adopted GESI mainstreaming
structures in MOUD, two departments, and regional and divisional offices. This resulted in
effective GESI mainstreaming in MOUD’s overall structure.

30. Out of 15 performance indicators set for the outputs, the project exceeded 6, achieved 8,
and partially achieved 1 (paras. 8–12). The project adequately addressed environmental and
social safeguard measures (paras. 25–27). It prepared and satisfactorily implemented a
resettlement plan in compliance with ADB requirements. The affected persons’ livelihoods were
maintained or improved in comparison to pre-project levels.

31. The GESI AP was implemented successfully with 14 of 15 activities (93%) completed and
9 of 10 (90%) of the combined quantitative targets in the GESI AP and DMF achieved. These
achievements brought practical and strategic benefits to women and socially excluded groups.
Practical gender benefits relate to the construction of small community infrastructures selected
on the basis of identified needs of women, the poor, and excluded groups in four sub-metropolitan
cities (Appendix 2). Practical gender benefits also relate to gender equality in human
development, as the project ensured representation of women and socially excluded groups in all
project activities. Of 36,155 participants in project activities, 17,904 (49.5%) were women and
32,050 (89%) were from socially excluded groups. The strategic gender benefit relates to
women’s employment in construction work, which is traditionally associated with men and hence
served to challenge traditional norms. Women laborers received wages equal to those of men for
work of equal value. Of the 459,704 construction workers, 69,907(15%) were women.

21 An additional 9,659 households receive water services compared to the originally targeted 17,000, whereas water
generation is at par with project design. To meet the requirement for increased households DWSMB is providing
water on a morning and evening shift basis. Although groundwater generation is at full capacity, reduction of water
discharge from surface water sources during dry season also contributed to underachieving the target.
 11

Construction of community buildings helped to achieve strategic gender benefits by enabling

women to meet, organize themselves, discuss their common needs and problems, plan collective
actions, run their organization’s programs and training events, and be involved in decision making
and leadership in their communities (Appendix 7). Given these achievements, the GESI AP is
assessed relevant and its implementation effective.

C. Efficiency

32. The project was efficient in achieving outcomes and outputs. The economic analysis
evaluated all subprojects under output 1. No economic analysis was conducted for output 2. The
economic internal rate of return (EIRR) of the DWSS at completion is estimated to be 18.86%,
which is slightly lower than the appraisal estimate (21.90%). This is due to delay in project
completion. The EIRR of Nepalgunj SWM is 18.45%, which is lower than at appraisal (34.76%).
The decrease in EIRR of Nepalgunj SWM is mainly due to the reduced benefit (50% reduction in
disability adjusted life years as healthcare cost savings) assumed at completion in comparison to
appraisal. The EIRR of drainage and road system improvement is 15.78% in Janakpur, 14.29%
in Nepalgunj, and 14.62% in Siddharthanagar. Drainage and road improvement for all towns
produced EIRRs lower than those computed at appraisal due to higher construction costs during
implementation. Overall, the EIRRs at completion exceed the 12% opportunity cost of capital,
indicating the project’s economic viability. A sensitivity analysis concluded that the project’s
economic viability is preserved even after adverse changes of 10% in operation and maintenance
costs and in benefits. Appendix 10 details the EIRR reevaluation.

33. The project was delayed by 24 months, mainly due to external factors (such as the trade
embargo, fuel shortage, and the earthquake) but also internal (interconnection problems between
NWSC and the new water supply system; NWSC’s reluctance to hand over; site inaccessibility
due to objections by locals; and the PIUs’ project management capacity). Despite the delays, the
extensions had no impact on cost overruns and counterpart financing, given that the actual cost
at completion was 27% less than the appraisal estimates. Although the project faced start-up
delays, due diligence and countermeasures were taken to expedite project implementation (para.
16). The extensions mainly were due to external factors faced by all projects in Nepal. In addition,
the EIRR recalculation captures any cost overrun due to delay. Hence, the project is efficient.
Safeguard and GESI measures contributed substantially to achieving the intended outcomes and
output targets.

D. Sustainability

34. The project outcomes are likely sustainable. The urban infrastructure constructed by the
project is strategically important. The project is managed and owned by the municipalities that are
its actual beneficiaries. Annual revenues collected in 2019 by Janakpur municipality total NRs434
million, by Nepalgunj municipality NRs717 million, and by Siddharthanagar municipality NRs419
million. A provision in law provides that a municipality can allocate 20% of revenue to maintenance
activities. The trend of the past 3 years’ spending on maintenance confirmed the municipalities’
practice of maintenance and budget allocation as required. The estimated operation and
maintenance cost of urban infrastructure, including the loan repayment, of Janakpur municipality
is NRs37.85 million, of Nepalgunj municipality is NRs60.81 million, and of Siddharthanagar
municipality is NRs28.58 million. That is less than 10% of the total revenue that a municipality can
spend at its discretion (Appendix 10, Table A10.14–A10.16). In addition, municipalities began
allocating maintenance budget based on the local governments’ self-assessment. The
municipalities have also implemented integrated property tax policies that include a maintenance
tax. In addition to regular municipal spending on maintenance, the Roads Board Nepal (RBN)
12

also provides a maintenance fund to the municipalities based on historical performance. Trend
analysis of the past 3 years shows that RBN is providing an average NRs15 million–NRs20 million
budget annually to the municipalities. Further, it has been increasing maintenance budget to the
municipalities annually. An assessment of maintenance requirements and budget availability
indicated that maintenance of urban infrastructure created by the project will be fully met.
Constructed infrastructures are reasonably maintained and in good condition, but maintenance
budget needs to be increased in the medium to longer term to meet rising operating costs and
replacements of infrastructure. Moreover, the elected representatives are highly motivated, fully
accountable, and committed to taking suitable measures to sustain the project outputs and
outcomes. GESI structure in MOUD is functioning, and with the adoption of a federal structure by
the country, municipalities are responsible for mainstreaming GESI in all functions. Development
partners such as GIZ, SNV (Netherlands Development Organization), ADB, and the World Bank
have been supporting urban infrastructure development and maintenance in the project
municipalities. The government is implementing intensive urban development projects on its own
in several municipalities while adopting the project approach. All these indicate that the project
outputs and outcomes are likely to be sustainable.

35. Nepalgunj municipality has continued private sector participation in waste collection.
Currently, the private sector provides door-to-door services in seven wards to collect waste and
charges NRs50 per household per month as a service fee. Revenue raised from resource
recovery and service fees will help in sustainably operating and maintaining the SLS. A declining
trend in waste segregation at the SLS and increased practice of dumping waste directly on the
cells has been observed. This is likely to reduce the service life of the SLS. The municipality plans
to resume waste segregation and strictly prohibit direct dumping to the cells.

36. The financial internal rate of return (FIRR) is estimated for the DWSS, following the
appraisal, while regarding it as a revenue-generating subproject. The estimated FIRR at
completion is 1.43%, which exceeds the estimated weighted average cost of capital (WACC) of
1.04% (Appendix 10). DWSMB is mobilizing personnel for maintenance and is committed to
continue allocating O&M resources. It is working to reduce nonrevenue water as a source to
increasing revenue. TDF is providing and committed to provide necessary future support for
institutional capacity development at DWSMB. As the FIRR exceeds the WACC and DWSMB is
capable to mitigate material operational risk, the subproject is assessed likely sustainable.

E. Development Impact

37. The project’s development impact was assessed satisfactory. Such activities as road and
drainage improvement, raising awareness on health and sanitation, and construction for solid
waste management contributed greatly to improve urban environments. Achievements in DMF
development impact indicators also indicate improved urban environment. Compared to 2011, the
project aimed a 10% reduction of incidence of waterborne and hygiene-related diseases by 2020.
The prevalence of diarrhea (a proxy for waterborne and hygiene-related diseases) decreased by
48% in Janakpur, 6% in Nepalgunj, and 65% in Siddharthanagar, thus achieving the targets. The
project planned to achieve open defecation free status in Janakpur, Nepalgunj, and
Siddharthanagar by the end of 2017 and to maintain that status in Dharan. Open defecation free
status was achieved in Janakpur on 13 September 2019, in Nepalgunj on 11 July 2018, and in
Siddharthanagar on 6 January 2018. In Dharan that status is maintained. Awareness raising and
toilet construction contributed to achieving the target. Project municipalities’ performance
measures have improved from their levels in 2010. The project contributed to seven operational
priority indicators of ADB’s Strategy 2030 (Appendix 11). This will contribute to transforming the
municipalities to be ranked as livable cities based on urban development indicators.
 13

38. Better health and sanitation, improved air quality, wide and black-topped roads, well-
drained sewers and minimized flooding, cleaner cities with proper SWM, and promotion of
nonmotorized transportation (cycle and footpath) have contributed to increased economic activity
and land values in the municipalities. For example, the value of land has gone up in
Siddharthanagar, Khajahana Path from NRs70,000 per dhur to NRs100,000 per dhur (Appendix
6). Similar changes were observed in all project municipalities. In addition to helping address
drinking water supply scarcity issues in Dharan, the project has positively impacted land pricing
while boosting hotels and shops due to the increased supply of water. Overall, the environmental
improvement in the municipalities is expected to catalyze economic development, which can
contribute in turn to employment-centric, equitable, and inclusive growth.

39. The project produced long-term positive environmental impacts by bringing

transformational changes in the overall urban environment, sanitation, and public health. Proper
drainage and less waterlogging have reduced the mosquito populations and the spread of
diseases they transmit. Improved solid waste management prevents flooding of wastewater,
facilitates systematic waste collection, and helps in managing haphazard sewage disposal. The
SLS in Nepalgunj has attracted other municipalities to visit the facility and learn for implementing
similar systems in their cities. Project support enhanced institutional strengthening of project
municipalities, revenue mobilization, financial management, and urban development in
accordance with the government’s and ADB’s sector strategy.

F. Performance of the Borrower and the Executing Agency

40. The borrower’s and executing agencies’ performance was satisfactory. MOUD and
DUDBC as executing agencies and the municipalities as implementing agencies had full
ownership, gave the project high priority, and provided adequate resources throughout
implementation. Executing and implementing agency staff were responsive and participated in all
review missions and progress review meetings. The review missions’ recommendations were well
taken. Staff members were open to discuss project issues and agree to corrective actions. The
executing agencies submitted good-quality periodic progress reports as well as separate
assessments of GESI AP implementation on time. Despite the need to enhance the quality of the
borrower’s project completion report, it served as good source of information for project
achievements. Environmental safeguard assurance had gaps due to passive response by the
municipalities. Contract management was less than satisfactory due to a lack of experienced staff
engaged in the project (paras. 23 and 41). The PIUs led by municipality staff performed well. The
borrower provided adequate counterpart funds and was flexible to reallocate costs and provide
extensions in line with project needs. The borrower’s performance on meeting loan and grant
covenants and safeguards was satisfactory, but financial management was less than satisfactory
due to delayed submission of APFS by TDF and inability to address issues raised in management
letters.

G. Performance of the Asian Development Bank

41. ADB’s performance was satisfactory. It coordinated closely with project stakeholders and
provided adequate support. It responded to the borrower’s needs and demonstrated flexibility to
better utilize savings, reallocate funds, and make minor adjustments in scope of works. ADB
fielded 13 review missions to monitor progress and resolve issues. It closely monitored activity
milestones to avoid delays. ADB provided continuous guidance to the PCO and PIUs through
review missions, consultations, and meetings. The PCO acknowledges support provided by ADB
for smooth construction of the modern SLS, given this was a new initiative in the country. ADB
14

processed the payments in a timely manner if appropriate procedures were followed. This resulted
in a relatively high percentage of disbursements. ADB reviewed in a timely manner and facilitated
quick clearances in bidding process and other reports. ADB promptly approved contract variations
as needed. It provided technical, financial, procurement, and safeguard training through a
capacity development resource center and onsite coaching to project staff. ADB’s resident
mission staff provided support to overcome the lack of environmental expertise in the DSC and
PIUs. Overall, ADB’s supervision and support contributed substantially to achieving outcomes
and outputs. Its monitoring of financial management was improved only after financial
management staff’s involvement in review missions. Although some improvements were noted
and commitments to future reforms were received, the issues could not be fully resolved within
the project timeline. Thus, ADB’s performance on financial management was less than
satisfactory. In addition, it would have been better had ADB done better due diligence on NWSC’s
and Dharan’s institutional strength and pursued deeper community consultation and stakeholder
analysis at project design.

H. Overall Assessment

42. Overall, the project is rated successful given its relevance, effectiveness, efficiency, and
sustainability. The project was rated relevant from design to completion, as it was aligned with
government and ADB strategy and policy. It was effective in delivering targeted outputs and
outcomes. It improved municipal infrastructure and services and helped to reduce flooding
duration. The project expanded water supply coverage to 95% of households in Dharan. Solid
waste collection coverage increased in all municipalities. These activities have led toward clean,
hygienic, and vibrant towns. The project is rated efficient, as the recalculated EIRR is higher than
ADB’s recommended 12% discount rate for all subprojects. Overall outcomes are likely
sustainable given the institutional arrangement of municipalities and government’s urban
infrastructure maintenance and operation and the FIRR of DWSS.

Overall Ratings
Criteria Rating
Relevance Relevant
Effectiveness Effective
Efficiency Efficient
Sustainability Likely sustainable
Overall Assessment Successful
Development impact Satisfactory
Borrower and executing agency Satisfactory
Performance of ADB Satisfactory
ADB = Asian Development Bank.
Source: Asian Development Bank.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS

A. Issues and Lessons

43. In future, project design consultant’s scope of work should include assessment of
background and technical information for underground existing utilities. The project had
initial design delays and design modifications during implementation mainly due to unavailability
of existing utilities’ underground information such as by plan profile and as-built drawing. Final
DSC designs were not always comprehensive. This required variations for most contracts,
resulting in both start-up delays and contract modifications. ADB should be vigilant and ensure
the consultant makes every effort to meet the scope of services, comply with the schedule and
contractual obligations, and be responsive to the government and ADB.
 15

44. Continuous community consultation, benefit sharing, and interagency coordination

are vital to create social acceptance for SLS construction. The Nepalgunj SLS construction
was successful due to continuous community engagement, cooperation among political leaders,
and early implementation of a community development program targeted to community living near
the SLS. The SLSs in Janakpur and Siddharthanagar had to be dropped, however, as nearby
communities did not allow their construction. Due to haphazard operation of existing SLSs and
dumping sites, there is growing NIMBY (not in my backyard) syndrome among the public towards
SWM facilities. Discord among local political leaders during implementation, inadequate
coordination at inter-local level, and political misunderstanding disrupted stakeholder
engagement and contributed to the two sites’ cancellation.

45. Financial management staff’s inclusion in review missions will be key to ensuring
improved financial performance of future projects. Neither the ADB project team nor PCO
could decipher financial management requirements and covenant quantifications due to the
absence of financial management staff in review missions. The team failed to follow up on audit
opinions and recurrent issues, leading to recurrence of the same issues and delays in submitting
the APFS. This improved only after inclusion of a financial management staff toward the end of
the project.

46. The country’s restructuring affected GESI institutional structure adopted through
GESI operational guidelines and requires revision of GESI operational guideline to align
with federal structure. Although MOUD has instituted GESI operationally, other structures do
not exist after restructuring of MOUD and its department to align with the country’s new federal
structure. Moreover, because the scopes of MOUD’s GESI operational guideline 2013 do not
include institutional roles at province and local levels, this guideline shall be revised to define roles
and responsibilities for all tiers of government.

B. Recommendations

47. SLS location should be finalized during project design and include main
infrastructure and a community development program around the SLS location. This
recommendation is applicable to both government and ADB for similar project design in future.

48. ADB’s continued engagement in the sector. Given increasing urbanization and growing
urban population, the demand for urban infrastructure and investments is high. ADB’s continuous
engagement in the sector is required to bring international practices and ensure financing
guarantee. Its future investments should focus on developing green and self-sustaining cities by
promoting nonmotorized transport and greenery. Current practice of project readiness, provision
of advance procurement, and retroactive financing should be continued to shorten implementation
periods and minimize delays.

49. Longer contract period for SLS operation and maintenance. Although the construction
contractor successfully operated the SLS facility in Nepalgunj for a year before handing over to
the municipality, since handover operation of modern features installed in the SLS, including
waste segregation, is slowly declining. It is recommended to include provision for operating and
maintenance responsibility for 3–5 years into the construction contracts in future projects
designed both by ADB and the government.

50. Timing of the project performance evaluation report. The report should be prepared
in 2024 or later so that the impact of the project can be better assessed.
 16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Performance Indicators and Targets Project Achievements

Design Summary with Baselines (At completion)
Impact
Improved urban environment By 2020, incidence of waterborne and Achieved: The prevalence of diarrhea (proxy
in the municipalities of hygiene related diseases in the of waterborne and hygiene related diseases)
Dharan, Janakpur, municipalities decreased by 10% from decreased by 48% in Janakpur, 6% in
Siddharthanagar and 2011 levels. Nepalgunj and 65% in Siddharthanagar.a
Nepalgunj

ODF status achieved in Janakpur, Achieved. ODF status achieved in Janakpur

Siddharthanagar and Nepalgunj by the on 13 September 2019, in Siddharthanagar
end of 2017, and maintained in Dharan. on 6 January 2018, in Nepalgunj on 11 July
2018; and Dharan ODF status is maintained.

Project municipalities scores for Achieved. Project municipalities scores for

performance measures improved by performance measures in improving trends
FY2017 from their levels in 2010. from their levels in 2010. The score of 2016 is
(baseline in 2010- a. Dharan- Score-76, a. Dharan- Score-78, b. Janakpur- Score- 50,
Rank-11; b. Janakpur- Score- 53, Rank- c. Siddharthanagar- Score-80, d. Nepalgunj-
33; c. Siddharthanagar- Score-58, Score 63. After the municipality election in
Rank- 19; d. Nepalgunj- Score 56, Rank 2017, the municipalities discontinued
27) recording of performance measures. So, no
project municipalities scores are available.
Outcome
Population in project (A) Stormwater drainage
municipalities/ SMCs have
inclusively better access to Flooding duration in heavy rain Exceeded. Flooding duration decreased in
improved municipal decreased in 95% of the town from: 95% of town. A study of 3 years flooding data
infrastructure and services (i) Janakpur 5 hours to <1 hour records flooding duration in all three towns
(ii) Nepalgunj 8 days to <3 hours reduced to less than one hour.
(iii) Siddharthanagar 5 hours to <1 hour

(B) Water Supply

Water generation in Dharan increased Partially Achieved. Water generation in

to 23.0 million liters per day in the dry Dharan increased to 23 million liters per day
season (baseline 10.9 MLD/day), in 2020. Coverage service reached to more
coverage of services increased to 95% than 95% but hours of supply is less than 16
(baseline 83%), and hours of supply hrs per day.b
increased to 16 hours per day (baseline
4 hours/day).

(C) Solid Waste Management

Household collection coverage Exceeded. Household collection coverage

increased to 90% in Janakpur (baseline increased to 90% in core city areas of
41%), Siddharthanagar (baseline 79%) Janakpur, 95% in Siddharthanagar, and 95%
and Nepalgunj (baseline 63%) and non- in Nepalgunj. Non-recyclable waste disposed
recyclable waste disposed of in the of in the landfill site in Nepalgunj with
landfill site. successful construction of landfill site.

Basic service deliveryc improved in Exceeded. Basic service delivery improved in

100% of identified poor settlements. 100% poor settlement: Janakpur-30, Dharan-
Hygiene, sanitation, and waste disposal 14, Siddharthanagar-20, Nepalgunj-20.
practices improved in poor settlements Hygiene, sanitation, and waste disposal
of project municipalities. (baseline practices improved in poor settlements of
identified poor settlement: Janakpur-29, project municipalities.
Dharan-13, Siddharthanagar-17,
Nepalgunj-20)
 Appendix 1 17

Performance Indicators and Targets Project Achievements

Design Summary with Baselines (At completion)
GESI structure and mechanisms Achieved. GESI structure and mechanism
established in MOUD and its established in MOUD and its departments
departments (DWSS and DUDBC). GESI units established
in all 35 Divisional, 70 Sub-Divisional Offices,
5 Regional Offices of DWSS and 8 Projects
Offices.

Outputs
1. Reliable municipal 107 km drainage lines rehabilitated, and Achieved. 120.53 km drainage lines
infrastructure developed. 49 km new drainage lines constructed rehabilitated, and 32.67 km new drainage
in Janakpur, Nepalgunj and lines constructed.
Siddharthanagar.

36 km. of new or upgraded roads and Exceeded. 72.41 km of new or upgraded

lanes improved in Janakpur (16.5 km), roads and lanes improved in Janakpur (14.58
Siddharthanagar (9 km) and Nepalgunj km), in Siddharthanagar (14.06 km), in
(10.5 km). Nepalgunj (22.30 km) and in Dharan (21.47
km).

Sanitary land fill facilities with a service Partially Achieved. One sanitary land fill
life of about 15 years with resource facility with resource recovery facility with a
recovery system developed in service life of about 20 years constructed and
Janakpur, Siddharthanagar and is in operation in Nepalgunj. The facility could
Nepalgunj. not be constructed as planned in Janakpur
and Siddharthanagar because of
inaccessibility of site due to objection by
locals.
Modality for private sector participation
in SWM assessed by 2015. Achieved. A study carried out to recommend
modality of private sector participation. The
study recommended to include provision of
SWM management operating the ISWM
system by the contractor for a year before
handing over to the municipality.

5,000 households are newly served with Exceeded. 8,600 households are newly
and 12,000 households are receiving served with new connection and 18,159
improved water services in Dharan. households receiving improved water
services by inter-connecting NWSC’s water
supply system and newly constructed system
by the project.

90 km. of new water supply pipes Exceeded. 440.42 km of new water supply
installed or upgraded in Dharan. pipes installed in Dharan (407.02 km HDPE
pipe, 33.34 km of DI pipe).

2. Community development 100% of poor settlements in the project Exceeded. 100% of poor settlements in the
programs undertaken and municipalities benefit from the project municipalities benefitted from the
GESI capacity strengthened. community development program. community development program.

Total poor settlement 79 Total poor settlement 84

Dharan 13 Dharan 14
Nepalgunj 20 Nepalgunj 20
Siddharthanagar 17 Siddharthanagar 20
Janakpur 29 Janakpur 30

At least 33% of representatives on Exceeded. A total of 84 committees for

committee established for community community development program formed with
development programs are women. 846 members, of which 442 were women
(52%).
 18 Appendix 1

Performance Indicators and Targets Project Achievements

Design Summary with Baselines (At completion)
Achieved. A total of 1,774 persons
50% of participants in skills and participated in skills and entrepreneurship
entrepreneurship development development training programs, of whom 896
programs are women. were women (50.51%).

Achieved. GESI operational guidelines

GESI operational manuals, toolkits and finalized. GESI operational guideline-based
checklists developed and used in manual, toolkits and checklists developed
MOUD and its departments. and being used in MOUD and its
departments.

Budget for GESI operation allocated in Achieved. Budget for GESI operation
MOUD separately from the project. allocated in MOUD through its regular budget
planning.

3. Project management and PCO and PIUs are fully staffed on time. Achieved. PCO and PIUs are fully staffed.
administration supported.
Quarterly progress reports and audits Achieved. Quarterly reports, safeguards
reports are of satisfactory quality and report, audit reports and other reports as per
submitted on time. ADB’s requirements are submitted on time
except for the delayed submission of
APFS/SOUF for the years 2013 to 2018.
Reports are satisfactory in quality.

Project is implemented on time and Achieved. Due to earthquake and trade

within budget. blockade imposed by India, there was a delay
in the smooth implementation of the project.
Although the project is implemented within
budget, the project has been extended twice
for 24 months from December 2017 to 31
December 2019.

Staff skills on GESI upgraded through Exceeded. Seven trainings on GESI

at least five trainings for municipal staff mainstreaming and TOT for municipal staff
(target of 20% female participants) conducted. GESI mainstreaming training
included 122 municipal staff: 33 (27.05%)
women, GESI TOT included 102 municipal
staff with 31 (30.31%) women.

DUDBC = Department of Urban Development and Building Construction; DWSS = Department of Water Supply and
Sewerage; GESI = Gender Equality and Social Inclusion; ISWM = Integrated Sanitary Waste Management; MOUD =
Ministry of Urban Development; ODF = Open Defecation Free; PCO = Project Coordination Office; PIU = Project
Implementation Unit; SMC = Sub-Metropolitan City; SWM = Sanitary Waste Management.
a
Nepal Demographic Health Survey (NDHS) 2011 and 2016. Ministry of Health and Population, Nepal. The prevalence of
diarrheal disease in Janakpur, Siddharthanagar and Nepalgunj is proxied by prevalence of diarrheal disease by
Dhanusha, Rupandehi and Banke, respectively. Consultant estimation.
b Although the Dharan Water Supply Management Board is not likely to release the water 16 hours a day, water released

by the board for certain hours a day will be stored by the household in the tank which is available to households 24 hours
a day.
c Basic service includes easy access to municipal services, easy access to market, facilities related to hygiene, sanitation,

and waste disposal.

Source: Government PCR 2020, Asian Development Bank consultant report 2020.
 Appendix 2 19

DETAILED OUTPUT ACHIEVEMENTS PER MUNICIPALITY

Table A2.1: Infrastructure constructed/upgraded under the project.

Infrastructure Janakpur Siddhartha Nepalgunj Dharan Total

nagar
Sanitary Landfill Site
- - 1 - 1
Construction
Drainage
Main subproject drainage lines
upgraded (km) 23.67 31.39 44.11 6.83 106.00
Main subproject new drainage
lines constructed (km) 7.75 5.54 13.17 1.21 27.67

Drainage lines upgraded under

0.45 1.58 10.30 2.2 14.53
CDP (km)
Drainage lines constructed
0.00 1.00 4.00 0.00 5.00
under CDP (km)
Roads and Lanes
Urban roads and lanes
12.70 10.39 8.00 20.07 51.16
constructed/improved (km)

Urban roads and lanes

constructed/improved (km) 1.88 3.67 14.30 1.4 21.25
under CDP
Water supply
Water supply pipes (km) - - - 440.42 440.42
GI pipe installation under road
18.72 7.38 0.87 8.58 35.55
improvement (km)
CDP = Community Development Program; km = kilometer.
Source: Government Project Completion Report, 2020.
20 Appendix 2

Table A2.2: Livelihood support training provided by the project

Dharan Janakpur Siddharthanagar Nepalgunj Project Total

Training Type
F M T F M T F M T F M T F M T
Mushroom Cultivation 22 5 27 22 5 27
Welding 0 11 11 0 11 11
Cook 2 1 3 2 1 3
Beauty Parlor 28 0 28 30 0 30 31 0 31 89 0 89
Plumbing 0 9 9 0 20 20 0 20 20 0 49 49
Computer Hardware 23 10 33 8 22 30 2 23 25 0 33 55 88
Light Vehicle Driving 0 5 5 0 30 30 6 82 88 7 53 60 13 165 178
House Wiring 10 20 30 0 25 25 0 40 40 10 85 95
Adv. Sewing & Cutting 30 0 30 0 40 0 40 70 0 70
Mithila Art 25 5 30 0 0 25 5 30
Off Season Vegetable
12 18 30 0 0 12 18 30
Production
Tile Marble Fitting 0 30 30 0 0 0 30 30
Hand
30 0 30 0 40 0 40 70 0 70
Embroidery/Boutique
Doll Making 30 0 30 0 0 30 0 30
Mobile Repairing 0 30 30 0 2 18 20 2 48 50
Basic Sewing & Cutting 30 0 30 33 0 33 0 63 0 63
Pickle Making 0 20 0 20 20 0 20
Mudha Making 0 19 1 20 19 1 20
Total 75 41 116 205 155 360 72 150 222 128 132 260 480 478 958
 Appendix 2 21

Table A2.3: Capacity building and awareness raising training provided by the project

Dharan Janakpur Siddharthanagar Nepalgunj

Event type Grand
F M T F M T F M T F M T
Total
Capacity building
training
TLO management
14 14 28 0 314 293 607 635
training
Entrepreneurship training 85 95 180 202 174 376 128 132 260 816
Saving credit training 18 14 32 106 104 210 56 4 60 302
Two days GESI
15 26 41 12 28 40 0 6 35 41 122
mainstreaming orientation
TOT on GESI 15 13 28 9 16 25 2 20 22 5 22 27 102
TOT on REFLECT 29 21 50 15 9 24 74
Account Keeping 69 51 120 50 41 91 22 38 60 271
Two days GESI training 38 20 58 0 0 0 58
Leadership training 24 23 47 0 0 57 3 60 107
Total 209 205 414 398 373 771 81 82 163 603 536 1139 2487
Awareness raising
training
One day health workshop 45 25 70 0 0 0 70
Health camp and clinic 492 270 762 0 0 0 762
Personal health and
15 14 29 1235 567 1802 33 56 89 895 372 1267 3187
hygiene
Environment day program 147 55 202 0 0 0 202
Safe motherhood/women
150 0 150 82 22 104 0 254
day celebration
REFLECT class 507 3 510 223 177 400 834 369 1203 2113
National exposure visit on
2 16 18 0 30 89 119 0 137
GESI
SWM related campaign
1026 1192 2218 2218
and orientation
3R awareness 0 0 1523 3017 4540 617 701 1318 2004 955 2959 8817
Total 701 380 1081 3415 3587 7002 2011 2237 4248 3733 1696 5429 17760
Grand Total 980 585 1495 3813 3960 7773 2092 2319 4411 4336 2232 6568 20247
F = Female; GESI = gender equality and social inclusion; M = Male; REFECT = Regenerated Freirean Literacy through Empowering Community Techniques; SWM
= solid waste management; TLO =Tole Lane Organization; TOT = training of trainers; T = Total.
Source: Government Project Completion Report.
22 Appendix 2

Table A2.4: Status of community infrastructure built by the project

Dharan Janakpur Siddharthanagar Nepalgunj TOTAL

Infrastructure type
Number km Number km Number km Number km Number km
Drainage 7 2.2 25 0.45 17 2.58 87 14.3 136 17.33
Road Improvement 4 1.4 25 1.88 17 3.67 87 14.3 133 19.85
Community Building 4 2 6 0
Culvert 3 3 0
Public Toilet 1 3 4 0
Private Toilet 20 288 308 0
Mobile Toilet 4 4 0
Tubewell 4 4 0
Tree Plantation 1193 1193 0
km = kilometer.
Source: Government Project Completion Report.
 Appendix 3 23

PROJECT COST AT APPRAISAL AND ACTUAL

($ Million)
Appraisal Estimate Actual
Foreign Local Foreign Local
Item Exchange Currency Total Cost Exchange Currency Total Cost
A. Investment Costs
1. Civil works 13.72 35.26 48.99 5.29 39.57 44.87
a. Water supply expansion 5.93 8.02 13.95 5.29 8.29 13.59
b. Solid waste management, storm drainage, 7.72 26.11 33.83 0.00 29.27 29.27
and roads improvement
c. Community infrastructure 0.07 1.13 1.20 0.00 2.01 2.01
2. Environment and Social Mitigation 0.00 1.30 1.30 0.00 0.39 0.39
3. Consultants 0.72 8.09 8.81 0.00 5.85 5.85
4. Taxes 0.00 10.73 11.70 0.77 6.40 7.17
Subtotal (A) 14.44 55.38 70.80 6.06 52.20 58.26
B. Recurrent Costs (B) 0.45 3.07 3.52 0.00 1.95 1.95
Total Base Cost 14.89 58.45 74.32 6.06 54.15 60.22
C. Contingencies (C) 2.23 6.61 8.14 0.00 0.00 0.00
D. Financing Charges During Implementation 1.40 0.00 1.40 0.71 0 0.71
Total Project Cost (A+B+C+D) 18.53 65.07 83.87 6.77 54.15 60.93
Note: Total may not add correctly due to rounding off.
Source: Asian Development Bank estimates and actual figures.
 24 Appendix 4

PROJECT COST BY FINANCIER

Table A4.1: Project Cost at Appraisal by Financier

Government ADB Loan-Grant ADB Loan-Loan ADB Grant Municipalities Total Cost

% of % of % of % of % of Taxes
Tax Non Cost Cost Cost Cost Cost and
Tax Amount Category Amount Category Amount Category Amount Category Amount Category Duties
Item
A. Investment Costs
1. Civil Works 9.07 5.10 14.17 24.4% 26.27 45.2% 11.89 0.92 1.60% 4.80 8.30% 58.06

a. Water supply expansion 3.00 1.07 4.07 24.0% 4.41 26.0% 5.93 35.0% 0.00 0.0% 2.54 15.0% 16.95
b. Solid waste 5.91 4.02 9.94 25.0% 21.86 55.0% 5.96 15.0% 0.00 0.0% 1.98 5.0% 39.74
management, storm
drainage and roads
improvements
c. Community infrastructure 0.16 0.01 0.16 11.8% 0.00 0.0%5 0.00 0.0% 0.92 68.0% 0.27 20.0% 1.36
2. Environment and Social 0.00 1.04 1.04 80.0% 0.00 0.0% 0.00 0.0% 0.00 0.0% 0.26 20.0% 1.30
Mitigation
3. Consultants 1.21 0.80 2.01 20.1% 0.00 0.0% 0.00 0.0% 8.01 80.0% 0.00 0.0% 10.01
Subtotal (A) 10.27 6.94 17.22 24.8% 26.27 37.9% 11.89 17.1% 8.93 12.9% 5.06 7.3% 69.37
B. Recurrent Costs (B) 0.09 0.90 0.99 28.1% 0.00 0.0% 0.00 0.0% 1.79 50.9% 0.73 20.8% 3.52

Total Base Cost (A+B) 10.36 7.84 18.20 25.0% 26.27 36.0% 11.89 16.3% 10.73 14.7% 5.79 7.9% 72.88
C. Contingencies (C) 1.43 0.94 2.37 24.7% 3.59 37.5% 1.64 17.1% 1.27 13.3% 0.70 7.3% 9.58
D. Financial Charges During 0.00 0.00 0.00 0.0% 1.40 100.0% 0.00 0.0% 0.00 0.0% 0.00 0.0% 1.40
Implementation (D)
Total Project Cost 11.80 8.77 20.57 24.5% 31.26 37.3% 13.54 16.1% 12.00 14.3% 6.49 7.7% 83.87
(A+B+C+D)
% Total Project Cost 24.5% 37.3% 16.1% 14.3% 7.7%
Note: Numbers may not sum precisely because of rounding.
Source: Asian Development Bank estimates.
 Appendix 4 25

Table A4.2: Project Cost at Completion by Financier

Government ADB Loan-Grant ADB Loan-Loan ADB Grant Municipalities Total Cost

% of % of % of % of % of Taxes
Non Cost Cost Cost Cost Cost and
Tax Tax Amount Category Amount Category Amount Category Amount Category Amount Category Duties
Item
A. Investment Costs
1. Civil Works
a. Water supply expansion 1.99 1.55 3.54 23% 5.23 34% 5.45 35% 0.00 0% 1.35 9% 15.57
b. Solid waste
management, storm
drainage improvement and
roads improvements 4.27 2.31 6.58 20% 18.95 56% 5.03 15% 0.00 0% 2.99 9% 33.55
c. Community infrastructure 0.00 0.34 0.34 17% 0.00 0% 0.00 0% 1.49 74% 0.18 9% 2.01
2. Environment and Social
Mitigation 0.00 0.35 0.35 90% 0.00 0% 0.00 0% 0.00 0% 0.04 10% 0.39
3. Consultants 0.85 0.00 0.83 12% 0.00 00% 0.00 0% 5.84 87% 0.02 00% 6.69

Subtotal (A) 7.11 4.20 10.46 20% 24.18 47% 10.48 20% 1.49 3% 4.52 9% 51.13
B. Recurrent Costs (B) 0.06 0.33 0.39 19% 0.00 0% 0.00 0% 1.13 56 % 0.49 24 % 2.01
Total Base Cost (A+B)
C. Contingencies (C) 0.00 0.00 0.00 00% 0.00 0.00 0.00 0% 0.00 0% 0.00 0% 0.00
D. Financial Charges During 0.00 0.00 0.00 00% 0.71 100% 0.00 0% 0.00 0% 0.00 0% 0.71
Implementation (D)
Total Project Cost 7.17 4.88 12.05 24.89 10.48 8.45 5.06 60.93
(A+B+C+D)
% Total Project Cost 20% 41% 17% 14% 8%
Note: Numbers may not sum precisely because of rounding.
Source: Asian Development Bank estimates.
26 Appendix 5

DISBURSEMENT OF ADB LOAN AND GRANT PROCEEDS

Table A5.1: Annual and Cumulative Disbursement of ADB Loan Proceeds

($ million)
Annual Disbursement Cumulative Disbursement
Amount Amount
Year ($ million) % of Total ($ million) % of Total
2015 6.27 18% 6.27 18%
2016 9.44 27% 15.70 44%
2017 7.20 20% 22.91 65%
2018 6.44 18% 29.35 83%
2019 3.93 11% 33.28 94%
2020 2.09 6% 35.37 100%
Total 35.37 100.0% 35.37 100%
ADB = Asian Development Bank.
Source: Asian Development Bank.

Figure A5.1: Projection and Cumulative Disbursement of ADB Loan Proceeds

($ million)

Projection and Cumulative Disbursement of ADB Loan Proceeds

Cumulative Disbursement ($ million)

45.00
40.00
35.00
30.00
25.00
20.00
15.00
10.00
5.00
0.00
2012 2013 2014 2015 2016 2017 2018 2019 2020
Year
Projection Actual

Source: Asian Development Bank.

 Appendix 5 27

Table A5.2: Annual and Cumulative Disbursement of ADB Grant Proceeds

($ million)
Annual Disbursement Cumulative Disbursement
Amount Amount
Year ($ million) % of Total ($ million) % of Total
2012 0.30 4% 0.30 4%
2013 0.83 10% 1.13 13%
2014 1.76 21% 2.89 34%
2015 1.02 12% 3.91 46%
2016 0.95 11% 4.86 57%
2017 1.35 16% 6.21 73%
2018 0.92 11% 7.12 84%
2019 0.49 6% 7.61 90%
2020 0.84 10% 8.45 100%
Total 8.45 100% 8.45 100%
ADB = Asian Development Bank.
Source: Asian Development Bank.

Figure A5.2: Projection and Cumulative Disbursement of ADB Grant Proceeds

($ million)
Projection and Cumulative Disbursement of ADB Grant Proceeds
12.00
Cumulative Disbursment

10.00
($ Million)

8.00

6.00

4.00

2.00

0.00
2012 2013 2014 2015 2016 2017 2018 2019 2020
Year
Projection Actual

Source: Asian Development Bank.

28 Appendix 6

CONTRACT AWARDS OF ADB LOAN AND GRANT PROCEEDS

Table A6.1: Annual and Cumulative Contract Awards of ADB Loan Proceeds
($ million)
Annual Contract Awards Cumulative Contract Awards
Amount Amount
Year ($ million) % of Total ($ million) % of Total

2014 12.31 36 % 12.31 36%

2015 19.21 55 % 31.52 91%
2016 2.89 8% 34.41 99%
2017 0.25 1% 34.66 100%
Total 34.66 100.0% 34.66 100%
ADB = Asian Development Bank.
Source: Asian Development Bank.

Figure A6.1: Projection and Cumulative Contract Awards of ADB Loan Proceeds
($ million)
Projection and Cumulative Contract Award of ADB Loan Proceeds
45.00
Cumulative Contract Award

40.00

35.00
($ million)

30.00

25.00

20.00

15.00

10.00

5.00

0.00
2012 2013 2014 2015 2016 2017
Year

Projection Actual

Source: Asian Development Bank.

 Appendix 6 29

Table A6.2: Annual and Cumulative Contract Awards of ADB Grant Proceeds
($ million)
Annual Contract Awards Cumulative Contract Awards
Amount Amount
Year ($ million) % of Total ($ million) % of Total
2012 0.00 0% 0.00 0%
2013 5.95 70% 5.95 70%
2014 0.41 5% 6.36 75%
2015 0.28 3% 6.65 79%
2016 0.51 6% 7.15 85%
2017 0.74 9% 7.89 93%
2018 0.06 1% 7.96 94%
2019 0.20 2% 8.16 97%
2020 0.29 3% 8.45 100%
Total 8.45 100% 8.45 100%
ADB = Asian Development Bank.
Source: Asian Development Bank.

Figure A6.2: Projection and Actual Cumulative Contract Awards of ADB Grant Proceeds
($ million)
Cumulative Contract Awards ($ million)

12.00

10.00

8.00

6.00

4.00

2.00

0.00
2012 2013 2014 2015 2016 2017 2018 2019 2020

Year
Projection Actual

Source: Asian Development Bank.

30 Appendix 7

GENDER EQUALITY AND SOCIAL INCLUSION PLAN IMPLEMENTATION AND

ACHIEVEMENTS

A. Introduction

1. The Integrated Urban Development Project aimed to provide the population in the
municipalities of Dharan, Janakpur, Nepalgunj, and Siddharthanagar with better access to
municipal infrastructure and services in a socially inclusive manner.1 The project was conceived
in the context of Nepal’s rapid urbanization during 2001–2011 with an urban population growth
rate of 3.4% per annum compared with the national population growth of 1.4% per annum. In
2011, an estimated 17% of the population lived in urban areas, up from 9.2% in 1991 and 13.9%
in 2001. Numerous problems increased with uncontrolled and haphazard urban growth. Most
municipalities in Nepal lacked properly engineered and operated sanitary landfills. They had
limited and intermittent water supply services, poorly maintained road infrastructure, and
inadequate drainage systems that cause recurrent waterlogging problems, mainly in the Terai
(low land region in Nepal). These problems significantly impacted urban living, such as poor
health caused by the poor urban environment and depleted economy due to reduced labor
productivity and educational attainment. Disease resulted in economic burden, and premature
death disproportionately affected the poor and vulnerable most. People in municipal poverty
pockets experienced discrimination based on gender, caste, and ethnicity, and multiple
exclusions constrained their progress and access to services. Lack of access to information and
resources limited their participation in community activities.

2. The project design considered the priorities of each municipality with drainage systems,
solid wastewater management facilities, and urban roads in Janakpur, Nepalgunj, and
Siddharthanagar municipalities, and water supply development subproject in Dharan municipality.
These issues and the project’s objective were considered to have significant relevance to and
impact on women’s and socially excluded people’s access to municipal infrastructure and
services. Hence the project was categorized effective gender mainstreaming (EGM). As such, the
project was designed to undertake community development programs (CDP), focusing primarily
on poverty pockets in the municipalities and communities that may not benefit directly from major
infrastructure improvements. Gender equality and social inclusion (GESI) action plan was
prepared to mainstream GESI in all subprojects in the municipalities and develop the capacity to
address GESI in the Ministry of Urban Development’s (MOUD) overall activities by establishing
appropriate institutional structures and mechanisms.

3. The project was consistent with ADB’s Nepal country partnership strategy,2 which focused
on broad-based economic growth and inclusive social development. It was also consistent with
the National Urban Policy, specifically with one of its priorities—improvement of quality of life of
urban inhabitants through the creation of a clean, safe, and developed urban environment—and
the government’s Three-Year Plan (FY2011–FY2013). Then Three-Year Plan placed
municipalities at the core of the urban development agenda and supported strengthening local
bodies for effective implementation of urban development plans and mobilization of local
resources.

1 ADB. 2012. Report and Recommendation of the President to the Board of Directors: Proposed Loan, Grant, and
Administration of Grant to the Government of Nepal for the Integrated Urban Development Project. Manila.
2 ADB. I. Manila. The urban sector roadmap in the strategy emphasized ensuring (i) access by the urban population
to infrastructure; and (ii) delivery of services that are sustainable and of good quality.
 Appendix 7 31

B. Gender Equality and Social Inclusion Issues

4. Existing urban infrastructure and facilities tended not to fully recognize social differences
in the needs of women, the poor, and excluded groups. Deficiencies in municipal infrastructure
and access to services extended across the entire municipality with more concentration in
particular areas disproportionately inhabited by people from disadvantaged groups. The social
and gender issues, which were identified through the socio-economic and poverty assessment,
were the following:
 Women were excluded from municipal decision-making processes despite the
government’s various acts to ensure women’s representation.3 Lack of political
commitment had resulted in women’s representation not being ensured.
 Women being the users and managers of domestic water and community sanitation
suffered more than men due to poor access to and quality of services (water supply,
sanitation, and solid waste management).
 The absence or less meaningful participation of women in decision-making resulted
mostly in their needs and interests not being incorporated in service programs.
 Women from poor households had even less access to such services.

C. Gender Equality and Social Inclusion Features

5. In response to the identified social and gender issues, the project supported improving the
quality of life of women and socially excluded by enhancing their access to and the quality of basic
urban services and ensuring their participation in decision making relating to the management
and use of these services. The GESI action plan included specific targets for (i) the participation
of and provision of project benefits to women, focusing on poor and disadvantaged groups in the
subproject areas; and (ii) for GESI institutional capacity building of the Ministry of Urban
Development (MOUD). It incorporated activities under CDP that comprised REFLECT4 classes,
reduce, reuse and recycle (3R) awareness activities, skills and entrepreneurship training, and
small community infrastructure construction. Activities to support GESI mainstreaming within
MOUD’s overall structure included (i) establishing structures and mechanisms for GESI
mainstreaming in MOUD and its departments; (ii) preparing GESI operational manuals, toolkits,
and checklists for water supply and sanitation, and urban development operations; (iii) conducting
technical training programs for MOUD staff and departments, and project municipalities; and (iv)
reviewing and revising policies and regulations relevant to sectors under the jurisdiction of MOUD
for GESI integration. Among the performance indicators and targets of the project design and
monitoring framework (DMF) and GESI action plan that ensured the benefit of women and socially
excluded from the project outputs were:
 At least 33% women in committees established for community development programs
(CDP) in the project municipalities.
 20% households (HHs) of each tole lane organization (TLO) or ward citizen forum
(WCF) in the project areas participate (target: adequate representation of socially

3
Local Self-Governance Act 1999, Section 78 guaranteed 20% representation of women in each municipal ward
committee, and these members are represented in the Municipal Council. The Parliament that was reinstated after
April 2006 adopted a resolution to ensure 33% female representation in all state agencies. The Interim Constitution
of 2007 contained major provisions on women’s rights and gender equality. Further, the Civil Service Act 2007 also
included a reservation policy of 45% for women, Dalit, Janajati and Madhesis.
4 Regenerated Freirean Literacy through Empowering Community Techniques (REFLECT) is an innovative approach
to adult learning and social change which fuses methods of participatory rural appraisal and transformative
educational theory.
32 Appendix 7

excluded and at least 33% of participants are women including those from affected
families)
 50% of participants in skills and entrepreneurship development programs are women
with at least 60% utilizing their skills.
 50% women participated in REFLECT circles and were involved in actions implemented.
 GESI operational manuals, toolkits, and checklists developed and used in MPPW and its
departments.
 Budget for GESI operation allocated in MOUD separately from the project.
 Staff skills on GESI upgraded through at least five training events for municipal staff
(target of 20% female participants).

D. Implementation, Monitoring, Reporting Arrangements

6. Project Coordination Office (PCO) was established in the Department of Urban

Development and Building Construction (DUDBC) under MOUD. For the implementation of the
project activities, Project Implementation Units (PIUs) were established in respective
municipalities. The project steering committee provided policy guidance to the PCO and the
municipalities in implementing project activities, ensuring effective coordination among the
individual institutions. The Social Coordination Section with GESI function was established in the
MOUD headed by an undersecretary and supervised by a joint secretary to support the
implementation of the GESI guideline of the MOUD. PCO coordinated with the Social
Coordination Section of MOUD on all GESI related capacity development activities in the project
municipalities. At DUDBC, the head of the planning section was the GESI focal. A GESI steering
committee, established to develop the GESI operational guidelines, guided the social coordination
section throughout the project implementation. GESI technical working group was formed in each
municipality headed by the Planning Section Chief. The Social Development Officer of the
municipality stood as a member secretary for the group.

7. In each municipality, a municipal project management committee (MPMC) was

established to discuss project implementation issues, enhance collaboration among relevant
departments and organizations, and expedite decision-making processes. Three members of the
MPMC represented local disadvantaged communities, NGOs, and women’s groups. The
municipalities engaged the NGOs to assist in CDP implementation, and the MOUD engaged the
consultants5 for capacity development of the MOUD and its departments. The Design and
Supervision consultants assisted in the institutional strengthening of project municipalities on
GESI issues.

E. Gender Equality and Social Inclusion Achievements

8. Of the total, 93% activities (14/15) of the GESI action plan were completed, and 90% of
the combined quantitative GESI targets in the GESI action plan and DMF (9/10 targets) were
achieved. Hence, the overall implementation of the GESI action plan is rated successful. The
following is a summary of the practical and strategic gender benefits of these achievements:

5 A total input of 3 person-months for international consultant and 261.5 person-months for national consultants were
provided for GESI works over the project period.
 Appendix 7 33

F. Practical Gender Benefits

9. Small GESI-sensitive community infrastructures constructed based on identified needs of

women, poor and, the excluded in all four sub-metropolitan cities (SMCs).6 Developed community
infrastructures included roads, drainage, culvert, community toilet, individual toilet, community
building, and small water supply works. Sex-segregated toilets were constructed in community
and public places.

10. Gender equality in human development: The project ensured the representation of socially
excluded and at least 33% women, including those from affected families, in community
awareness campaigns and project consultations. Of the total 36,155 participants, 17,904 (49.5%)
were women and 32,050 (89%) were from socially excluded groups.7 REFLECT classes were
organized in 60 poor settlements with 2,373 participants, of whom 1,737(73%) were women, and
2,167(91%) were from socially excluded groups.8 Of the 1,774 people who received skill and
entrepreneurship development training (EDP),9 896 (50.5%) were women, and 475(27%) were
from socially excluded groups. Of the trained 896 women, 520 (58%) utilized their skills for income
generation. Women participants of a focus group discussion shared that they earned from their
use of their acquired skills (e.g., tailoring, boutique particularly embroidery, and pickle making)
and that their earning was higher during festival season. They used their income for their
household and personal needs and to buy raw materials for their new business. While the women
were not able to scale up their businesses due to financial and socio-cultural limitations, most of
them mentioned that they were interested to continue their work in the future.10

11. GESI mainstreaming training was conducted for 122 municipal staff, of whom 33 (27%)
were women. Likewise, GESI training of trainers (TOT) was conducted for 102 municipal staff
with 31 (30%) women staff. Hema Thalung, GESI focal person of Dharan SMC, shared that all
the staff of social development unit, TLO members and social mobilizers benefited from GESI
TOT course. She mentioned that “the training supported them to understand GESI-responsive
planning, budgeting and monitoring, and GESI mainstreaming in projects. It also assisted them in
preparing the draft Gender Policy for Dharan SMC and planning GESI TOT for newly elected local
representatives.”11

G. Strategic Gender Benefits

12. Women’s economic empowerment: The project encouraged local employment and
provided equal work opportunities to women in construction work, traditionally associated with
men. Women laborers received equal wages as men for work of equal value. Of the total 459,704
construction workers, 69,907 (15%) were women workers. Also, the NGOs, which implemented
the CDP in project municipalities, recruited social mobilizers from local areas representing poor,
women, and socially excluded. Of the 16 social mobilizers, 15 (94%) were women.

6 22 in Dharan Sub Metropolitan City (SMC), 23 in Janakpur SMC, 21 in Siddharthanagar Municipality and 28 in
Nepalgunj SMC.
7 10,277 (28%) were Dalits, 9,577 (26%) were Janajati, 4,910 (13.6%) were Muslims and 7,286 (20%) were other

backward castes.
8 669 (28%) were Dalits, 467 (20%) were Janajatis, 615 (26%) were Muslim and 416 (18%) were OBCs.
9
Skills training includes training duration of 3 months or 90 days, while EDP are short courses less than 3 months – 1
week to 1 month duration.
10 Interview taken with women beneficiaries in March 2021 during PCR mission (virtual) and during focus group

discussion (FGD) during review mission in April 2019.

11
Interview taken with GESI focal person, Dharan SMC during review mission in November 2019.
34 Appendix 7

13. Gender equality in decision making and leadership: The project engaged TLOs in project
areas to raise awareness on project objectives, activities, and implementation processes. The 84
TLOs had 846 total members, of whom 442 (52%) were women. During consultations and
management committees, these women participated in the selection of community infrastructure
based on their needs and interests, which contributed to the transformation of gender-biased
norms and empowerment of women. The story of Ram Kala Rai, the secretary of Sangam
Women’s Group, shows how the process of selecting, building, and using the community
infrastructure enabled the women in her community to meet, organize themselves, discuss their
common needs and problems, plan collective actions, run their organization’s programs and
training events, and be involved in decision-making and leadership in their community.12

“The Dharan SMC informed us, women of our Tole (area), about the CDP, and we learned that
the CDP could help build small community infrastructure as per our need. We had no place to
hold meetings, so we identified community building as our need. The CDP also held awareness
raising activities on sanitation, health and hygiene, and 3R every week. The weekly meetings
helped us organize the women and built our confidence to register as a women’s group with 32
members. Women were engaged in the construction of the building. Women were also oriented
on GESI and received different skills training, such as on pickle making and tailoring. Our
women’s group also started a savings and credit program, which helped the women to save
and access loan when in need. Many women took loan for piggery, poultry farming, and running
small groceries and tea shops. I have personally benefited from this program. The awareness
programs, training, and women’s group helped me to be literate on health and hygiene, and
financial matters and to access loan. Before this program, my family lived in rented space, and
I was financially dependent on my husband. Then, CDP developed my self-confidence and
helped me to get a loan to start a small grocery shop. With my monthly income of NRs35,000
from my small grocery and tea shop, I built our own house, supported my daughter’s education,
and bought a family life insurance. The CDP has empowered me with skills and knowledge and
helped me be part of a strong network of women in our Tole. With our community hall, we can
gather more often, discuss different issues, learn to speak, and acquire more knowledge and
skills. The benefits have enabled us to become important persons in our household and
community.”

H. Mainstreaming Gender Equality and Social Inclusion within MOUD’s overall

Structure

14. The MOUD approved the GESI operational guideline in 2013 that provided directions for
GESI institutionalization in the Ministry’s structure and operation, its departments and division
offices. The MOUD established a dedicated section for GESI, which has been included in MOUD’s
organogram as a permanent section. It has a clear job description and separate budget head and
was run by 4 staffs led by an undersecretary. It provides technical advice on the GESI policy and
programs of MOUD. It also coordinates with the ministry’s gender focal and other organizations
for GESI dialogue. GESI units were also established in DUDBC and DWSS, and in 5 regional and
75 division offices all over country. In DWSS, it was placed under existing community mobilization
section. GESI units were also formed at Central Level Organizations (Melamchi Water Supply
Development Board, High Powered Committee for Integrated Development of the Bagmati
Civilization, Solid Waste Management Technical Support Center, Kathmandu Upatyaka
Khanepani Limited, Project Implementation Directorate, Kathmandu Valley Development

12 Interview with Ms Ram Kala Rai, Secretary of Sangam Mahila Samuha Dharan SMC, ward 17 in March 2021 during
PCR mission (virtual).
 Appendix 7 35

Authority, Nepal Water Supply Corporation, and Rural Water Supply and Sanitation Fund
Development Board) under MOUD. The section and unit staffs were trained to implement GESI
guidelines. A TOT was organized for 25 trainers. The project provided high technical inputs to
strengthen the new structures to enable them to implement GESI mainstreaming.

I. Challenges

15. While the overall GESI action plan implementation was satisfactory, the project
encountered challenges during implementation. For instance, the skills and entrepreneurship
training conducted under CDP did not include mandatory skills certification test, which led to many
trainees not taking the certification test. Those who took the tests later were not able to pass and
be certified due to longer gap between training and certification test. Exposure visits and technical
trainings organized as project targets were not able to ensure a minimum target of women
participation. Though NGOs were mobilized with inclusive teams to implement CDP, the
performance of NGO in Dharan SMC was not satisfactory leading to its termination. Despite these
challenges, the project and DSCs worked in coordination to fill the gaps and deliver the targeted
outputs. The project teams discussed and coordinated with training providers to encourage skills
and entrepreneurship trainees of few sectors to take certification test. Likewise, PIU in Dharan
implemented the CDP through the Social Development Section of the Dharan SMC with DSC’s
assistance.

16. While MOUD adopted a structure for GESI mainstreaming within its overall structure with
separate budget head, this initiative faced challenges after the country’s restructuring. There were
no division offices and GESI units in the districts, and the sociologist’s position that used to
support GESI activities was removed from the departments. However, the GESI trained staff of
the units of the divisions, using the developed resource materials as guide, can be used as
resources in establishing and institutionalizing GESI in the new structure of the provinces and
local levels.
36 Appendix 7

Table A7: Gender Equality and Social Inclusion Achievements Matrix

Activities Achievements Assessment

Output 1: Reliable municipal infrastructure developed
Activity 1. Conduct baseline socio-economic The completed baseline socio-economic survey in identified 84 poor Completed
survey of project areas and poverty clusters with settlements in four cities for CDP (14 in Dharan, 30 in Janakpur, 20
indicators to identify poor and socially excluded in Siddharthanagar, and 20 in Nepalgunj). Other data gathered
householdsa and women household heads were:
(FHHs).b  Total Households: 5,852
 Women-headed HHs: 886 (15.14%)
 Poor socially excluded and FHHs as  Total Population: 36,155
defined identified in project area. o Women: 17,904 (49.52%); Men: 18,251(50.48%)
o Dalits:10,277(28.43%); Women 5,097; Men 5,180
 Data disaggregated by o Janajati: 9,577 (26.49%); Women 4,787; Men 4,790
sex/caste/ethnicity/regional identity o Muslims: 4,910 (13.58%); Women 2,503; Men 2,407
collected, on access to municipal o Other Backward Caste: 7,286 (20.15%); Women 3,476;
resources and representation in Men 3,810
governance. o Others: 4,105(11.35%); Women 2,041; Men 2,064
Activity 2. Conduct regular community  20% HHs (1,170 of 5,852 HHs) of each TLO/WCF in the project Completed
awareness campaigns and consultations areas participated in community awareness campaigns and
through Tole Lane Organizations (TLO) and/or consultations. Suitable actions on suggestions received during
WCFc within project areas to build awareness on consultations were taken. These actions included improving the
project objectives, activities, and implementation sanitary living condition of the people in the poor settlements
processes. and finalizing the proposed sites for development of sanitary
Target 1. 20% HHs of each TLO/WCF in the landfill, public toilets, paving lanes, and building community
project areas participate (Target: adequate water taps as suggested during consultations. Target 1 achieved
representation of socially excluded and at least
33% of participants are women including those  The participants were the 846 members of 84 TLOs, 442 (52%)
from affected families); suitable action taken on women and 404 (48%) men;d 290 Dalits (women 157; men
the suggestions/comments received from all 133); 296 Janajatis (women 152; men 144); 42 Muslims (5%)
groups and followed up on actions. (women 19; men 23); 127 OBC (women 57; men 70) and 91
from other groups (women 57; men 34).

a
Socially excluded are groups who are systematically and historically disadvantaged because they are discriminated against on the basis of caste, sex, ethnicity,
disability or religion or an overlapping combination of these.
b
For the project, households headed by women (FHHs) refer to families without adult males. They belong to households of widows, separated/divorcee, unmarried
women and women whose husbands migrated abroad for long-term jobs. This will include both de jure and de facto FHHs.
c
Tole lane organizations (TLOs) are community groups formulated to work for local development and poverty alleviation at the grass-root level. Ward citizen forums
(WCFs) are supposed to be formed in each ward according to Ministry of Local Development’s GESI Policy 2009.
d
Total members from Dharan were 180, Janakpur 288, Siddharthanagar 182, and Nepalgunj 196.
 Appendix 7 37

Activities Achievements Assessment

Activity 3. Include clauses on gender and social  Gender and social inclusion-specific clausese on core labor Completed
inclusion among core labor standards in the standards included in bidding documents and all six contracts.f
bidding documents and conditions of contract  Compliance of GESI clauses as mentioned above were
and monitor their implementation. monitored by DSC and PIU. Labor law mentions that the
contractor shall also comply with all applicable labor laws and Target 2 achieved
Target 2. Relevant gender and social inclusion-
core labor standards on equal pay for equal work of equal value
specific clauses on core labor standards
regardless of gender, ethnicity or caste. PIU, DSC, contractors
included in bidding documents of all contracts
and labors were oriented on gender related aspects during
(100 percent) and application of these clauses
project review missions, project meetings and GESI related
monitored by DSCs; and PIU, DSC, contractors
trainings.
and laborers oriented on gender related aspects
of core labor standards.
Activity 4. Encourage employment of local  Local employment encouraged with bidding document clause Completed
people as laborers and/or supervisors with requiring contractors to comply with all applicable labor laws
preference given to those living in poor areas and core labor standards on equal pay for equal work of equal
with equal opportunity to women. value regardless of gender, ethnicity or caste.
 Equal opportunity provided to women as  Equal opportunities provided to women as supervisors and /or
supervisors and/or laborers depending on laborers depending on the required skills sets. This was done
the required skill sets. by encouraging contractors to employ local women, orienting
 Women laborers receive equal wages as them on GESI specific labor laws, and monitoring the
men for work of equal value. application of these GESI specific clauses.
 Women laborers received equal wages as men for work of
equal value.g
o Total construction workers: 459,704
o Women: 69,907 (15.22%); Men: 389,992 (84.78%)
o Dalits: 62,981 (13.72%); Women17,629; Men 45,352
o Janajatis: 182,349 (39.73%); Women 21,577; Men
160,772
o Muslims: 22,573 (4.92%); Women2,777; Men 19,796
o Others: 188,932 (41.16%); Women 27,849; Men 161,083
o OBC: 49 (0.01%); Women 16; Men 33
o Indian: 2,107 (0.46%)

e Examples are equal pay for equal value of work regardless of gender, caste/ethnicity, safe working conditions and sanitation facilities for men and women workers
and health and safety programs for workers.
f Water supply (Dharan), road and drainage (Janakpur, Siddharthanagar and Nepalgunj), and integrated solid waste management (Siddharthanagar and Nepalgunj).
g
Wage of unskilled labor—both men and women—was NRs600; wage for skilled labor (also for both women and men) was NRs800.
38 Appendix 7

Activities Achievements Assessment

Output 2: Community development programs undertaken and GESI capacity strengthened
Activity 5. Mobilize inclusive NGO team for  NGO team was mobilized for community development program Completed
community development program to facilitate in project town. Social mobilizers were selected from local area
dialogue with more focus on the poor, women, representing poor, women and socially excluded. NGO TORs
and socially excluded households. included clauses for 33% of social mobilizers to be women
Target 3. At least 33% of social mobilizers in the and/or representative of local social groups.
Target 3 achieved
NGO team are women and/or representatives of  16 social mobilizers were mobilized of whom 15 (94%) were
local social groups, and these clauses are women.
included in NGO ToRs.
Activity 6. Implement community development  REFLECT classes for 64 Community Awareness Centers Completed
program in poor areas in gender-responsive (CAC) of 60 poor settlements organized. CDP activities
way. (REFLECT classes) have been completed in all four
municipalities.
Target 4. 50% women participate in REFLECTh  Total Participants: 2,373; Women 1,737 (73%); Men 636 (27%)
circles and involved in actions implemented. Target 4 achieved
o Dalits: 669 (28%); Women 565; Men 104
o Janajatis: 467 (20%); Women 328; Men 139
o Muslim: 615 (26%); Women 408; Men 207
o OBC: 416 (18%); Women 287; Men 129
o Others: 206 (8.68%); Women 149; Men 57
Target 5. Women equally represented (at least Women equally represented (at least 33%) in community Target 5 achieved
33%) in community infrastructure selection infrastructures selection consultations and in management
consultations and in management committees, committees and were trained. There were 84 TLOs in four
and are trained as skilled workers for the municipalities with 846 members, of whom 442 (52%) were women
infrastructure sector. and 404 (48%) men. The TLO members were oriented on small
Aligned with DMF Output 2.2: At least 33% infrastructure identification, design, operation and maintenance, and
representation of women in committees contract management. The TLO members were also trained as
established for community development masons who worked in construction of small infrastructure for in-kind
programs. contribution. Skills trainings were not only limited to infrastructure
sector.

Target 6. 50% of participants in skills and  Skills and entrepreneurship development trainingi (EDP) (e.g. Target 6 achieved
entrepreneurship training are women and at mushroom cultivation, welding, cook training, beauty parlor
least 60% of them are utilizing skills. training, driving, house wiring, plumbing, computer hardware)
were conducted.

h Footnote 4
i
Skills training includes training duration of 3 months or 90 days, while EDP are short courses less than 3 months – 1 week to 1 month duration.
 Appendix 7 39

Activities Achievements Assessment

Aligned with DMF Output 2.3: 50% of  Total Participants:j 1,774; Women 896 (50.51%); Men 78
participants of skills and entrepreneurship (49.49%)
development programs are women. o Dalits: 240 (24.92%); Women 115; Men124
o Janajatis: 291 (30.34%); Women 160; Men 131
o Muslim: 136 (14.18%); Women 48; Men 88
o OBC: 78 (8.14%); Women 38; Men 40; Others: 214
(22.31%); Women 120; Men 94
 Of the 896 women participants of skills and EDP trainings, 520
(58%) applied their skills.k They were either working outside for
income generation such as job/contract and getting paid or
working at home using learned skills to make money such as
preparing bottle pickle, mushroom farm, and tailoring.
Activity 7. Construct community infrastructure  Small community infrastructures (roads and drainage, culvert, Completed
based on identified needs of women, poor and community toilet, individual toilet, community building and small
the excluded with specific standards. water supply works construction), based on needs of women,
 Small community infrastructures built to poor and the excluded that were identified through consultative
address needs of women, poor and the process in all four SMCs, were completed according to specific
excluded of the area after need identification standards.l
through consultative process.  339 private toilets were built, and 4 mobile public toilets
 Public facilities built by the project have operated since 23 January 2019 at core city areas of Nepalgunj
separate toilets for men and women. SMC.
Activity 8. Subprojects on 3R activities are  3R awareness campaign with community participation in all Completed
conducted with community participation. poor settlements conducted by NGOs.
 3R activities undertaken in partnership with  1,858 participants: Women 1,259 (67.76%); Men 599 (32.24%)
women’s group. o Dalits: 568 (30.57%); Women 397; Men 171
o Janajatis: 385 (20.72%); Women 241; Men 144
o Muslims: 379 (20.40%); Women 269; Men110
o OBC: 266 (14.32%); Women 183; Men 83
o Others: 260 (13.99%); Women 169; Men 91
 Personal health and hygiene awareness campaigns were also
conducted with 2,496 participants:
o Women 1,733 (69.43%); Men 763 (30.57%)
o Dalit 943 (37.78%); Women 673; Men 270

j Dharan: 296 (16.69%); Siddharthanagar: 222 (12.51%); Janakpur: 736 (41.49%); Nepalgunj: 520 (29.31%).
k Information collected through phone survey by project GESI consultant in September 2018.
l 22 in Dharan Sub Metropolitan City (SMC), 23 in Janakpur SMC, 21 in Siddharthanagar Municipality and 28 in Nepalgunj SMC.
40 Appendix 7

Activities Achievements Assessment

o Janajatis: 173 (6.93%); Women 104; Men 69
o Muslims: 526 (21.07%); Women 356; Men 170
o OBC: 588 (23.56%); Women 443; Men 145
o Others: 266 (10.66%); Women157; Men 109
Activity 9. Adopt institutional structure for GESI  Institutional structure for GESI mainstreaming within MOUD’s Completed
mainstreaming within MOUD’s overall structure. overall structure was adopted.
 GESI Units in MOUD and its departments  GESI unit in MOUD was functional. Social Development Section
formed with necessary human resources and Social Mobilization Section under DUDBC and DWSS
including similar provisions in regional established which are responsible to implement GESI activities.
directorate and divisional offices.  GESI Units at Central Level Organizations (MWSDB, HPCIDBC,
SWMTSC, KUKL, PID, KVDA, NWSC and RWSSFDB)
established and functioning.
 GESI Units at 5 Regional Offices of DWSS established.
 35 GESI Units at all Division Offices of DUDBC established and
functioning.
 70 GESI Units at all Division and Sub-division Offices of DWSS
established and functioning.
 GESI Unit established in UN Park Development Committee,
International Convention Centre and Nepal Rastriya Aawas
Company.
 However, after the country’s restructuringm, MOUD’s GESI
structure changed as division offices and GESI units in the
districts no longer existed, and the position of sociologist that
supported GESI activities in the departments was removed.
Social Coordination Section still existed in MOUD with allocation
of budget for implementing GESI activities.
Activity 10. Allocate government budget for  The Social Unit under MOUD has separate budget for GESI Completed
GESI Units and for GESI mainstreaming institutionalization.
program in MOUD.  The Social Coordination Section under MOUD worked to
allocate separate budget for GESI institutionalization within
 Budget for GESI institutionalization within MOUD and separate budget from concerned Departments
MOUD allocated under separate budget during budget planning session for Fiscal Year (FY2071/072).
head. o GESI mainstreaming budget from MOUDn for FY2072/73–

mThe promulgation of the new constitution in 2015 introduced a three-tier governance system with national, provincial and local levels of governance which came
into existence only after elections was held from September to December 2017.
n
FY 2071/72: Not allocated, FY 2072/73: NRs0.5 million, FY 2073/74: NRs0.5 million, FY 2074/75: NRs0.5 million, FY 2075/76: NRs0.5 million.
 Appendix 7 41

Activities Achievements Assessment

Aligned with DMF Output 2.5: Budget for GESI FY 2075/76 was NRs2 million.
operation allocated in MPPW separately from o GESI mainstreaming budget from DUDBCoFY 2071/72–FY
the project. 2074/75 was NRs5.3 million.
o DUDBC allocated NRs2 million for 35 Division offices for FY
2074/75.
Activity 11. Apply and institutionalize GESI  MOUD approved GESI operational guidelines in 2013, which Completed
operational guidelines in the design, planning, have been effective since 2013 in Ministry, Departments and
implementation, monitoring and O&M and GESI Division Offices and Central Level Organizations (CLO).
approaches at all levels in MOUD operations.  14 MOUD related Guidelines, Acts, Byelaws, Policies, and
 Sectoral and other related policies of MOUD Formation Orders were reviewed and submitted to the
reviewed and revised to be aligned with concerned offices for comment and feedback. Sectoral and
MOUD‘s GESI operational guidelines; other related policies of MOUD were revised to be aligned with
Planning, programming, budgeting, M&E & MOUD’s GESI operational guidelines.
reporting systems of MOUD and its  Database with GESI disaggregated data and information
departments amended with GESI available in and used by MOUD/Departments for planning and
integration; Database of GESI sensitive monitoring. GESI operational manual, toolkits and checklists
disaggregated data and information developed for use in water supply and sanitation and urban
available in and used by development operations.
MOUD/Departments for planning and
monitoring; and GESI operational manual,
toolkits and checklists developed for use in
water supply and sanitation, and urban
development operations.
Aligned with DMF Output 2.5: GESI
operational manuals, toolkits, and checklists
developed and used in MPPW and its
departments.
Activity 12. Capacity building program on GESI  A GESI operational guideline for GESI mainstreaming was Completed
for MOUD and departments developed for the finalized by the MOUD and orientation/training provided to the
project period and implemented. Ministry and central level projects/organizations and
 GESI Unit staff and other officials of MOUD, departments.
departments, regional directorate, divisional  Capability building programs conducted:
offices are trained on application of MOUD‘s o Steering committee meeting (3 times): 54 participants:
GESI Operational Guidelines and Manual. Women 14 (26%); Men 40 (74%); 20 (37%) Janajatis:
(Women 8; Men 17); 1 Muslim Woman, and 25 (46%)

o FY 2071/72: NRs1.3 million, FY 2072/73: NRs1.4 million, FY 2073/74: NRs1.1 million, FY 2074/75: NRs1.4 million
42 Appendix 7

Activities Achievements Assessment

others (Women 2; Men 23)
o Orientation/ workshop on GESI (DWSS, DUBCC): 368
participants: Women 57 (15%); Men 311 (85%); 118 (32%)
Janajatis (Women 31; Men 87); 8 (2%) Muslims (1 Woman;
7 Men); 1 Dalit Man; 4 OBC Men; Others: 236 (64%)
(Women 25; Men 211)
o GESI TOT and other Trainings (KVDA, Division Offices
including DLPIU and DUDBC): 315 participants: Women
154 (49%); Men 161 (51%); Janajatis: 123 (39%); Muslim:
7(2%); Dalit: 5 (1.6%); OBC: 8 (2.5%); Madhesi: 6 (2%);
Others: 166 (53%)
o One day Dissemination workshop on GESI for external
development partners held at Trade Tower on April 21st,
2016: 27 participants (Women 10; Men 17); 2 Dalit Men; 12
Janajatis (Women 7; Men 5); 1 Muslim Man; 12 others (3
Women; 9 Men)
o One day Experience Sharing workshop with WPE
related organizations on September 01, 2017 at DUDBC
hall, Babarmahal, Kathmandu: 33 participants (Women 8;
Men 25); 2 Janajati Men, 1 Muslim Man, 1 Madhesi Man, 8
Newar (3 Women; 5 Men), 21 Brahmin and Chhetri (5
Women; 16 Men)
o One day follow up training conducted on May 4, 2018 at
Sap Falcha, Babarmahal, Kathmandu: 30participants: 13
Women; 17 Men
o Short orientation on GESI and GESI Operational
guidelines, 2013 for the Division Chiefs and GESI Unit
members and other staffs during the monitoring visit to 15
Division Officesp under DUDBC and for the chiefs and
staffs of five Division Officesqunder DWSS during another
monitoring visits.
 GESI Project team met the GESI Unit of National Reconstruction
Authority on September 6, 2017 and shared the overall
experience in mainstreaming GESI in MOUD operation. NRA
requested further support for GESI Project, which the team

p 15 Division Offices of Kathmandu, Dolakha, Ramechhap, Sindhuli, Dhading, Tehrathum, Dhankutta, Saptari, Rupandehi, Arghakhanchi, Gulmi, Palpa,
Sindhupalchok, Rasuwa and Nuwakot.
q
Five Division Offices in Bhaktapur, Sindhuli, Ramechhap, Dolakha and Dhading
 Appendix 7 43

Activities Achievements Assessment

immediately accepted.r

Activity 13. Ensure that all technical training National exposure visits and observation visits for solid waste Not completed
and exposure visits will have a minimum target management had 148 participants from four SMCs, of whom 33
of women staff. (22%) were women staff. 33% women participation was not
achieved due to low number of women staff. Target 7 not
Target 7. 33% target of women participation
achieved
from MOUD, Department and Regional
Directorate staff in all trainings and national and
international exposure visits.
Activity 14. Form GESI technical working team GESI technical working team, consisting of municipalities’ staff Completed
in each municipality to enhance GESI headed by a social development unit, was formed to enhance GESI
mainstreaming. mainstreaming in each municipality.s Social Development officer,
 GESI technical working team headed by who was involved throughout the project cycle (planning,
social unit head and comprising programming and monitoring), was selected as a focal person of the
representatives from relevant sections of technical team.
municipality formed and made functional in
each municipality in planning, programming,
monitoring.
Activity 15. Facilitate GESI integration in The DSC team facilitated the integration of GESI components and Completed
annual plans of municipalities and monitoring budget allocation in annual plans of all four municipalities.
formats.
Target 8. Annual plans of 4 municipalities have Target 8 achieved
GESI components and budget allocation
implemented and monitored.
Activity 16. Develop project-specific detailed Project-specific detailed GESI implementation plan developed, and Completed
GESI implementation plan for 4 municipalities. revised implementation plan (after review) submitted to PCO. All
 Implementation plan based on project GESI GESI activities were aligned with the project GESI action plan.
action plan developed in project
municipalities.

r Also, in the visit to Makawanpur (from September 10 to 12, 2017), GESI project team had the meeting with Deputy Mayor of Hetauda Sub-Metropolitan City,
Chairperson and Vice Chairperson including executive committees of Bhimphedi and Indrasarobar rural municipality and discussed to integrate GESI in their
annual plan and program. GESI project team visited Jumla, Kaski, Kailali, Banke division offices from October to December 2017 and provided short orientation
on GESI Operational Guidelines, 2013 to GESI unit members and other staff.
s
Total members: 47; Women: 10 (21.28%); Men: 37 (78.72%); Dalits: 3 (6.38%); Janajatis: 17 (36.17%); Muslim: 1 (2.13%); OBC: 2 (4.26%); Others: 24 (51.06%)
44 Appendix 7

Activities Achievements Assessment

Output 3: Project management and administration supported
Activity 17. Recruit GESI consultants for Skilled GESI consultant team with four members from MOUD and Target 9 achieved
MOUD, PCO and four municipalities and ensure two departments, one GESI consultant in PMSC; one GESI
conducive and functional working environment. consultant in each DSC were in recruited to ensure conducive and
Target 9. Skilled GESI consultant team (4) for functional working environment.
MOUD and three departments, one GESI
consultant in PMC; one each in DSC are in
place.
Activity 18. Orient and train PCO, PIU, PMC, Skills of officials from PCO, PIU, PMSC, DSC team strengthened Completed
DSC annually for mainstreaming GESI. through 28 orientations, training events, and workshopst to
 Skills of government officials and consultants recognize and respond to gender and social inclusion issues in their
strengthened to recognize and respond to functions. There were 800 participants with 246 (30.75%) women
gender and social inclusion issues in their participants.
functions.
Activity 19. GESI technical training programs  GESI mainstreaming and GESI TOT were completed in four Completed
for GESI responsible staff in four project project municipalities. The sessions included contents on GESI
municipalities imparted. responsive planning, budgeting and monitoring and GESI
Target 10. At least 100 municipal staff trained mainstreaming in infrastructure projects.
(including 25 for TOT) on GESI through at least  GESI mainstreaming training included 122 municipal staff: 33 Target 10 achieved
5 training events such as specific sessions on (27%) women and 89 (73%) men.
GESI-responsive planning, budgeting and  GESI TOT included 102 municipal staff with 31 (30%) women
monitoring, and GESI mainstreaming in and 71 (70%) men.
infrastructure projects (women target: 20%).
Aligned with DMF Output 2.5: Staff skills on
GESI upgraded through at least five trainings for
municipal staff (target of 20% female
participants)
Activity 20. Collect and report data Sex, caste, and ethnicity disaggregated data were collected through Completed
disaggregated by sex and caste/ethnicity and socio-economic survey and reflected in the survey report of the
poor household data in project monitoring and NGO. Disaggregated data are presented in quarterly and annual
evaluation following the actions/indicators progress reports with information on the implementation of the GESI
outlined in GESI action plan. action plan. Periodic monitoring and evaluation conducted through
 Sex, caste, and ethnicity disaggregated data progress reports.
including data on poor households collected,
compiled, and reported in quarterly and

t
There were 18 orientations, trainings and workshops at central level, 6 at regional level and 4 at divisional level.
 Appendix 7 45

Activities Achievements Assessment

annual progress reports with information on
the implementation of the GESI action plan
Overall Assessment: Successfulu
DMF = design and monitoring framework; DSC=design and supervision consultant; DWSS = Department of Water Supply and Sanitation; HPCIDBC = High Powered
Committee of Integrated Development Bagmati Civilization; KUKL = Kathmandu Upatyaka Khanepani Limited; KVDA = Kathmandu Valley Development Authority;
M&E = monitoring and evaluation; MOUD = Ministry of Urban Development; MWSDB = Melamchi Water Supply Development Board; NGO = nongovernment
organization; NWSC = Nepal Water Supply Corporation; OBC = Other Backward Caste; PCO = Project Coordination Office; PIU = Project Implementation Unit;
PID = Project Implementation Directorate; PMSC = Project Management Support Consultants; RWSSFDB = Rural Water Supply and Sanitation Fund Development
Board; SMC= Sub Metropolitan City; SWMTSC = Solid Waste Management Technical Support Center, ToR = terms of reference; TOT = training of trainers; TLO
= tole lane organizations; WCF = ward citizen forum, WPE = women, poor and excluded.

u
19/20(95%) activities completed, and 9/10 (90%) targets achieved.
46 Appendix 7

J. Conclusion and Lessons

17. The project’s GESI objectives, with specific targets in the DMF and GESI-AP, were
designed to align with the government’s National Urban Policy, specifically with one of its priorities
to improve of quality of life of urban inhabitants through the creation of a clean, safe, and
developed urban environment and Three-Year Plan Approach Paper (FY2011–FY2013) and is
consistent with ADB’s Nepal country partnership strategy (CPS 2010–2012),13 which focuses on
broad-based economic growth and inclusive social development. The implementation of project’s
GESI action plan contributed to women’s economic empowerment and gender equality in human
development, leadership, and decision making. Overall GESI action plan implementation was
successful, however, the challenges highlighted in the para. 15 accentuate the need to be revisit
the encountered issues in future projects. Institutionalization of GESI mainstreaming in MOUD as
summarized in para. 16 also indicates that sustainability is likely only if the created human
resources, tools and mechanisms are reflected at the provincial and local levels. One step would
be to revise the MOUD GESI Operational Guidelines to make it compatible with the new federal
structure and to conduct extensive capacity development on GESI in the urban development
sector to strengthen the GESI knowledge and skills of newly appointed provincial and local
government representatives.

13 The urban sector roadmap in the CPS emphasizes ensuring (i) access by the urban population to infrastructure, and
(ii) delivery of services that are sustainable and of good quality.
 Appendix 8 47

ACHIEVEMENTS AND PERFORMANCE ASSESSMENT OF INVOLUNTARY

RESETTLEMENT

1. Overall categorization. At approval, the project was classified as category “B” for
involuntary resettlement and, and “C” for indigenous people in accordance with ADB’s Safeguard
Policy Statement 2009 (SPS). The project’s social safeguard category remains the same at
completion.

2. Involuntary Resettlement. Three resettlement plans were prepared at appraisal for

Janakpur, Siddharthanagar and Nepalgunj municipal subprojects covering road, drainage, and
solid waste management components. The plans were updated after detailed design. One
resettlement plan for the Dharan water supply subproject was prepared during implementation.
The resettlement framework of the project was followed to screen and assess impacts of land
acquisition with mitigation measures while updating and preparing resettlement plans to ensure
compliance with ADB's Safeguard Policy Statement 2009. The assessment ensured that none of
the subprojects resulted in significant involuntary resettlement impact either by loss of 10% or
more of productive assets, or physical displacement or both of 200 or more peoples.

3. Indigenous People. All subprojects implemented under the project were screened
carefully to assess likely impacts on indigenous people. No such impacts were noted during
implementation as envisaged at appraisal. Although there were no impacts on indigenous people,
those living in the project area were consulted throughout the project cycle. In Dharan water
supply project, IP raised concern on planned construction of reservoir tank (RVT) of capacity 600
m3 at Panchakanya forest area claiming that the forest area is religious and a historical place of
indigenous group. With several round of consultations an agreement was reached with indigenous
groups to allow construction. The agreement highlighted consultation, preparation of indigenous
people plan, and investment in conservation of historical importance of the forest area. The 18
points agreement was signed between Dharan Municipality, and various indigenous peoples
organizations; Kirat Yakthung Chumlung, Kirat Rai Yayokkha, Kirat Yakkha Chumma and
Sunuwar Sewa Samaj to address indigenous peoples’ concerns. Following agreement an
Indigenous Peoples Plan was prepared and implementation begun, but a few groups remained
unsatisfied with the agreement and continued to raise concerns. Considering project completion
period, the project decided to revise the design of the subsystem to avoid land claimed by the
indigenous peoples. With these changes there was no impact on these people and the project
indigenous peoples categorization remains the same as appraisal.

4. Institutional Arrangement, Capacity Building and Project Management. The

Department of Urban Development and Building Construction (DUDBC) under Ministry of Urban
Development (MOUD) was the Executive Agency, and responsible for project execution and
overall supervision. Project Coordination Office (PCO) was overall responsible for project
management including safeguards. A safeguard desk was established in PCO comprising
technical person, PCO’s safeguard focal, and safeguard specialist of Project Management
Support Consultant (PMSC). The PMSC provided overall guidance, support, and capacity building
training to project municipalities on managing social safeguard risks and mitigation measures.
Project Implementation Unit (PIU) in each municipality were responsible for implementation,
updating safeguard plans, supervision of safeguards activities, and management at local level. At
all PIUs, Safeguard Desk was established, and responsible for implementation and monitoring of
social safeguards instruments including assessing the safeguards compliance performance as
guided by RP, and preparation of Social Monitoring Reports (SMRs). The PMSC at PCO, Design
and Supervision Consultant (DSC), non-governmental organization (NGO) and individual
consultants provided social safeguards related expertise to PCO and PIUs. The PMSC provided
48 Appendix 8

input of 19.43 safeguard specialist person month compared to estimated 15 person-months, and
four DSC provided input of 60.04 pm compared to estimated 55.75 pm. The frequent change of
safeguard specialist from the consulting firm was an issue during implementation. Some
consulting contracts were terminated due to poor performance of the consultant, and individual
consultants were mobilized. Similarly, quality of the consultant provided by the firms was an issue
and caused frequent change.

5. The institutional arrangement designed at appraisal was instrumental to ensure safeguard

compliance during project implementation. The consultant support arrangement provided great
help for safeguard compliances, monitoring report preparation, supervision, and community
consultation. The Performance of the borrower and executing agency (EA) / implementing agency
(IA) were satisfactory in implementation of safeguard plans, meeting safeguards requirements
and covenants, and managing budget. The EA/IA’s ownership on safeguard document,
understanding of safeguard requirement and adhere with covenants, and submission of
safeguard monitoring report increased later part of the project implementation. However, their
capacity on implementation and reporting of safeguard measures seems to be reinforced.

6. Land acquisition and involuntary resettlement impact. The project civil works scope
includes road and drainage improvement and construction of sanitary landfill site in Janakpur,
Nepalgunj and Siddharthanagar municipalities, and water supply improvement component in
Dharan. All road and drainage improvement in three town were implemented using existing right
of way and no impact were observed except one case in Nepalgunj. The solid waste management
(SWM) component required land in all three towns. The land was acquired for SWM in Nepalgunj
and Siddharthanagar, but the SWM site could not be finalized, and land acquisition process did
not initiate due to objection from the local residents in Janakpur. Construction of water supply
system in Dharan required land for reservoir tank (RVT) construction at one of 5 systems.
Resettlement Plan was prepared and implemented during implementation. At completion, the
project acquired 13.59-hectare land, which affected 10 households with 50 persons (Table A6).

Table A8: Compensation amount for impact on land (NRs million)

Figures as per approved RP Figures at completion
S Land (ha) No.
Municipality Compen No. of Land Compen No. of
N of
Original Updated sation HHs (ha) sation HHs
APs
1 Dharan 0.00 0.07 5.12 3 16 0.07 5.12 3
2 Siddharthanagar 5.41 5.81 42.29 1 5 4.46 13.46 1
3 Nepalgunj 7.41 9.06 46.16 6 29 9.06 25.33 6
4 Janakpur* 9.00 0 1.10 0 0 0 0 0
Total 21.82 14.94 94.67 10 50 13.59 43.90 10
Note: * At appraisal a RP was prepared covering road, drainage, and sanitary landfill site construction. Only sanitary
landfill site (SLS)was required land. The SLS was proposed to utilize public open land under guthi ownership located
at ward no. 5 in Fulgama VDC, about 9 km southwest of the city, but the plan was not implemented due to cancellation
of the SLS.
Source: Resettlement Plans and Government PCR 2020.

7. The land was acquired following provisions of land acquisition act 1977 and entitlements
were provided as per resettlement plan. The compensation determination committee adopted
replacement cost principle while valuating land and affected assets. As per resettlement plan the
sum of compensation was NRs94.668 million, of which NRs43.898 million was paid to affected
person. The remaining balance was not required to pay as the total cost includes estimate of
Janakpur SWM impact, but the project area dropped during implementation and budget allocated
for like assumed temporary impact, which was not recorded at implementation. All compensation
 Appendix 8 49

and/or entitlements were provided on time and deed of ownership of 23 plots transferred to the
project. Though the original RP reported possibility of temporary impact on vendor/hawker during
construction. No impact on vendor/hawkers reported at constructions. The Municipalities
managed appropriate alternative locations for vendor/hawkers to avoid impact. From the
alternative location provided, the vendors could continue their work without interruption.

8. Livelihood restoration. Affected persons (APs) were benefitted from livelihood

restoration measures including livelihood initiatives, project employment opportunities and other
community development activities (CDP). Total 22 APs participated in life skill training for
livelihood restoration. Training found effective to restore sources of income and livelihood
strategy. After training, average monthly income is NRs20,000 (range is NRs15,000–NRs35,000)
compared to before training as NRs12,000 (range is NRs7,000–NRs15,000). The income
generated from livelihood training and employment created by the project contributed to
improvement in livelihood strategy. Total of 59% and 41% of trainees are self-employed and
engaged with other entrepreneurs, respectively. Similarly, the value of land has been gone up (in
Siddharthanagar, Khajahana Path, price of land increased from NRs70,000/dhur to
NRs100,000/dhur) sharply in project towns after project completion.

9. Consultations and Information Disclosure. Throughout the project cycle, a total of 75

consultation meetings were organized in which 1,165 people were participated. The discussion
was focused on project features, likelihood of involuntary resettlement impacts and other impacts,
possible mitigation measures, provision of compensation, entitlements and other assistance,
process of assessing resettlement impacts and designing of RP, provisions of GRM.
Stakeholder's consultations were often found effective to finalize the subprojects' safeguard
related issues. The relevant information was also provided through posters and pamphlets,
verbal commination, radio/FM, etc. throughout the project cycle. A copy of RP was placed at each
PIU and summary of RP in Nepali language was made available to APs. RPs published into EA’s
and ADB website for public disclosure. During implementation 10 social monitoring report
submitted and disclosed in ADB website.

10. Grievance redress mechanism. Municipality level Grievance Redress Committee (GRC)
to activate grievance redress mechanism (GRM) was formed. Total seven grievance registered,
and all were resolved. Many informal grievances were well addressed through meaningful
consultation and settled down. GRM was satisfactory, culturally appropriate and gender
responsive, and involved IP institutions in the local level.

11. Social monitoring reporting. The EA prepared and submitted 10 semiannual safeguard
monitoring reports (SMRs) to ADB which were disclosed on ADB website. Based on the project
effectivity date, the EA was supposed to prepare 15 semiannual SMRs until the project completion
period. The MTR recorded that the first semi-annual SMR for the period covering up to June 2013
was submitted on 1 November 2013. However, there was gap in submission of SMR until 2015.
This gap was fulfilled after 2016 onwards which is result of more guidance and follow-up from
ADB and enhanced capacity in EA’s end. In addition, there was also gradual improvement in the
quality of SMRs through incorporation of standard templates, data related to involuntary
resettlement and suggested corrective measures.

12. Issues. In Janakpur and Siddharthanagar, ISWM subproject was dropped due to lack of
timely, inclusive, and meaningful consultation with community and stakeholders. It was
challenging to convince the stakeholders. In Dharan, overseeing the proper IP safeguard
assessment in appraisal, lack of consultation with IP’s organization from the beginning, and lack
50 Appendix 8

of interagency coordination between Nepal Water Supply Corporation (NWSC), Branch office
Dharan and DSC/PIU delayed in detailed engineering survey work.

13. Lessons. Design, timely and effective consultation, and information disclosure including
project impact, public concerns, entitlements, and benefit of the sub/project are vital while
constructing the sanitary landfill sites. Proper site selection including alternative potential landfill
sites to be considered. In Siddharthanagar, landfill site was on the bank of Rohini River and
nearby religious temple, and communities rejected the site. IP and/or communities consultation
involving their institutions and social leaders are important for project’s ownership, timely
completion, and sustainability. Interagency coordination accelerated the project implementation.

14. Recommendation. Design, consultation, and dissemination should be properly on time.

Identification of potential sites, and proper, inclusive, and massive consultation needs to be
followed. Possibilities of wider interagency coordination, and proper safeguards assessment
should be ensured to overcome different issues for smooth project implementation.
 Appendix 9 51

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Covenant Reference in Status of Compliance

Financing
Agreement
The Beneficiary shall and shall cause TDF and Section 4.02. Partially complied.
DUDBC to (i) maintain, or cause to be maintained, (a), Article IV
separate accounts for the Project, including separate DUDBC submitted audited project
accounts for the Loan and the Grant; (ii) have such financial statement (APFS) on time as
accounts and related financial statements audited per the loan covenant except for the
annually, in accordance with appropriate auditing delayed submission in the year 2013,
standards consistently applied, by independent 2017 and 2018. Audit opinions issued
auditors whose qualifications, experience and terms of on APFS received were unqualified for
reference are acceptable to ADB; (iii) furnish to ADB, all years except for FY2016. The
as soon as available but in any event not later than 9 required additional opinion on the
months after the end of each related fiscal year, imprest account, use of the loan
certified copies of such audited accounts and financial proceeds and statement of
statements and the report of the auditors relating expenditures were also obtained
thereto (including the auditors' opinion on the use of However, TDF was not clear about the
the Loan proceeds and the Grant proceeds and requirement of the Statement of
compliance with the financial covenants of this Utilization of Funds (SOUF),
Financing Agreement as well as on the use of the consequently, the SOUFs for all the
procedures for imprest account and statement of prior year were obtained in FY2018. In
expenditures), all in the English language; and (iv) addition, TDF also submitted the
furnish to ADB such other information concerning audited entity financial statements,
such accounts and financial statements and the audit which had qualified opinion for FY2017
thereof as ADB shall from time to time reasonably and FY2018. The opinion for the other
request. years remained unqualified.

The final APFS from MOUD remains

outstanding as of PCR date. The
APFS received an extended deadline
due to the COVID-19 situation.
Accordingly, the new official date for
submission is on 15 July 2021,
however, since the project has closed,
the project has been asked to submit
the final APFS within the deadline.
Based on the unaudited excel report
received on 23 April 2021, the
Cumulative disbursement matches
with the Mainframe records.
A) Cumulative USD grant, 0284:
$8,448,843.70, both as per unaudited
report and as per main frame records
B) Cumulative loan, 2851:
$35,373,290.52 and equivalent
SDR25,383,761.03, both as per
unaudited report and as per main
frame records

The final AEFS for TDF is also

outstanding. Please refer to Schedule
5, para. 21 of this appendix for more
details.
 52 Appendix 9

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Financing
Agreement

The Beneficiary shall enable ADB, upon ADB's Section 4.02. Complied with.
request, to discuss the Beneficiary's and TDF’s (b), Article IV
financial statements for the Project and the financial Discussions on financial statements of
affairs of each of them related to the Project from time the Project and the financial affairs of
to time with the auditors appointed by the Beneficiary the Beneficiary’s and TDF, related to
pursuant to subparagraph (a) hereinabove, and shall the Project, was done with the relevant
authorize and require any representative of such authorities as and when needed.
auditors to participate in any such discussions
requested by ADB, provided that any such discussion
shall be conducted only in the presence of an
authorized officer of the Beneficiary or TDF,
respectively, unless the Beneficiary shall otherwise
agree.
The Beneficiary shall enable, and shall cause TDF to Section 4.03., Complied with.
enable, ADB's representatives to inspect the Project, Article IV
the Goods and Works, and any relevant records and The beneficiary and TDF allowed
documents. ADB's representatives to inspect the
Project, the Goods and Works, and
any relevant records and documents.
The inspection was done occasionally
during review missions.
The Beneficiary shall take all action which shall be Section 4.04., Complied with.
necessary on its part to enable each of TDF and the Article IV
Municipalities to perform its obligations under this TDF and the Municipalities performed
Financing Agreement, the Project Agreement, the its obligations as per the Financing
Subsidiary Loan Agreement, the Subproject Agreement, the Project Agreement, the
Agreements, and the On-lending Agreements, and Subsidiary Loan Agreement, the
shall not take or permit any action which would Subproject Agreements, and the On-
interfere with the performance of such obligations. lending Agreements.
The Beneficiary shall exercise its rights under the Section 4.05. Complied with.
Subsidiary Loan Agreement and shall cause TDF to (a), Article IV
exercise its rights under the Subproject Agreements The Beneficiary exercised its rights
and On-lending Agreements in such a manner as to under the Subsidiary Loan Agreement
protect the interests of the Beneficiary and ADB and and caused TDF to exercise its rights
to accomplish the purposes of the Loan and the under the Subproject Agreements and
Grant. On-lending Agreements to protect the
interests of the Beneficiary and ADB
and to accomplish the purposes of the
Loan and the Grant.
No rights or obligations under the Subsidiary Loan Section 4.05. Complied with.
Agreement or the Subproject Agreements or the On- (b), Article IV The right or obligations under the
lending Agreements shall be assigned, amended, or Subsidiary Loan Agreement or the
waived without the prior concurrence of ADB. Subproject Agreements or the on-
lending Agreements remained
unamended and un-waived throughout
the project.
Imprest Account; Statement of Expenditure

(a) Except as ADB may otherwise agree, the Schedule 3, Complied with.
Beneficiary shall establish or cause to be established para. 6 Imprest account was established on 11
immediately after the Effective Date, a Grant Imprest July 2012 for grant proceed
 Appendix 9 53

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Financing
Agreement
Account at Nepal Rastra Bank. The Grant Imprest immediately after loan and grant
Account shall be established, managed, replenished effectiveness date of 4 July 2012. This
and liquidated in accordance with the Loan account was established managed,
Disbursement Handbook, and detailed arrangements replenished, and liquidated in
agreed upon between the Beneficiary and ADB. The accordance with ADB’s Loan
Grant Imprest Account shall only be used for the Disbursement Handbook.
purposes of the Project. The currency of the Grant
Imprest Account shall be Dollar. The ceiling for the
Grant Imprest Account shall not exceed the lower of
(i) the estimated expenditure to be financed from the
Grant Imprest Account for 6 months of Project
implementation, or (ii) $300,000.
Complied with. SOE procedure was
(b)The statement of expenditures procedure may be used for reimbursement of eligible
used for reimbursement of eligible expenditures and expenditure for loan and to liquidate
to liquidate advances provided into the Grant Imprest advances provided into the Grant
Account, in accordance with Loan Disbursement Imprest Account within approved
Handbook and detailed arrangements agreed upon ceiling.
between the Beneficiary and ADB. Any individual
payment to be reimbursed or liquidated under the
statement of expenditures procedure shall not exceed
the equivalent of $100,000.
Notwithstanding any other provision of this Financing Schedule 3, Complied with. Withdrawals was made
Agreement and except as ADB may otherwise agree, para. 8 from the Loan Account:
no withdrawals shall be made from the Loan Account
for Works and Goods with respect to Part 1 of the a) After Subsidiary Loan Agreement
Project until: between MOF and TDF was done
in a satisfactory manner to ADB,
a) the Subsidiary Loan Agreement, in form and and was made effective and legally
substance satisfactory to ADB, shall have been duly binding on the parties thereto in
executed and effective between MOF and TDF and accordance with its terms; and
legally binding on the parties thereto in accordance
with its terms; and b) the standard form of On-lending
Agreement was finalized by TDF in
(b) the standard form of On-lending Agreement shall coordination with ADB.
have been finalized by TDF in form and substance
satisfactory to ADB.
Condition for Announcement of Bid for Works Schedule 4, Complied with.
Contracts: para. 7
Notwithstanding any provision in this Financing Advertisement for invitation to bids for
Agreement, no announcement or advertisement of an Works contracts was done after
invitation to bid for Works contracts excluding that for signing and executing the Subproject
prequalification in relation to any Subproject under Agreement between the TDF and the
Part 1 of the Project shall be made until the relevant respective municipality in form and
Subproject Agreement has been executed in form and substance satisfactory to ADB and
substance satisfactory to ADB, specifying the became fully effective and legally
proposed amount of contribution from each party, and binding.
the proposed level of tariffs, taxes and/or other
charges to be collected by the relevant Municipalities,
and shall have become fully effective and legally
binding on the parties thereto in accordance with their
terms.
 54 Appendix 9

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Financing
Agreement
The Beneficiary shall ensure that MPPW does not Schedule 4, Complied with.
award any Works contracts for a particular Subproject para. 8
under Part 1 of the Project until the On- lending MPPW awarded works contract for all
Agreement relating to the relevant Subproject shall subprojects after the On- lending
have been executed in form and substance Agreement relating to the subproject
satisfactory to ADB. was duly signed and executed in
satisfactory manner to ADB.

Conditions for Award of Contract

The Beneficiary shall not award any Works contract Schedule 4, Complied with.
for a Subproject which involves environmental impacts para. 9
until the MPPW has:

(a) approved of the IEE or, in the event required under (a) All contracts were awarded after
the Beneficiary’s environmental laws and regulations, approval of IEE by ADB and
obtained the approval of the MOE for the EIA; and MOUD, and EIA by MOE.

(b) incorporated the relevant provisions from the EMP (b) Awarded contracts incorporated
into the Works contract. the relevant provisions of the EMP
including cost for implementation
of the EMP.
The Beneficiary shall not award any Works contract Schedule 4, Complied with.
involving involuntary resettlement impacts for a para. 10
Subproject until the Beneficiary has prepared and All works contracts and their variation,
submitted to ADB the final RP for such Subproject if any, were awarded only after ADB’s
based on the Subproject's detailed design and clearance of resettlement plan
obtained ADB's clearance of such RP. prepared based on the detailed design.
A total of four resettlement plans were
cleared.
Consulting Services: Schedule 4, Complied with.
The Beneficiary shall recruit the individual consultants para. 12
in accordance with procedures acceptable to ADB for The project recruited individual
recruiting individual consultants. consultants following procedures
acceptable to ADB.
Industrial or Intellectual Property Rights

The Beneficiary shall ensure that all Goods and Schedule 4., Complied with.
Works procured (including without limitation all para. 13 (a)
computer hardware, software and systems, whether Goods and works were procured under
separately procured or incorporated within other the project following ADB’s standard
goods and services procured) do not violate or bidding documents and contact
infringe any industrial property or intellectual property documents. Hence, they adhered to
right or claim of any third party. non-violation or infringement of any
industrial property or intellectual
property right or claim of the third
party.
The Beneficiary shall ensure that all contracts for the Schedule 4., Complied with.
procurement of Goods and Works contain appropriate para. 13 (b)
representations, warranties and, if appropriate, ADB’s standard bidding documents
indemnities from the contractor or supplier with and contract documents were followed
for bidding and procuring all contract
 Appendix 9 55

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Financing
Agreement
respect to the matters referred to in subparagraph (a) packages under the project. Therefore,
of this paragraph. all works, and goods contracts
included appropriate representations,
warranties and, where appropriate,
indemnities from the contractors or
suppliers.
The Beneficiary, MPPW and TDF shall ensure that all Schedule 4., Complied with.
ADB-financed contracts with consultants contain para. 14
appropriate representations, warranties and, if ADB’s standard document was used
appropriate, indemnities from the consultants to for recruitment of consulting firms and
ensure that the Consulting Services provided do not awarding contracts under the project
violate or infringe any industrial property or intellectual complying with these provisions.
property right or claim of any third party.
ADB's Review of procurement Decisions: Schedule 4., Complied with.
Contracts procured under international competitive para. 15
bidding procedures and contracts for Consulting All six major works contracts and all
Services shall be subject to prior review of ADB, nine consulting service contracts
unless otherwise agreed between the beneficiary and procured under the project followed
ADB and set forth in the procurement plan. ADB’s prior review and approval
process.
Implementation Arrangements

The Beneficiary shall ensure and shall cause TDF and Schedule 5, Complied with.
the Municipalities to ensure that the Project is para. 1
implemented in accordance with the detailed Project was implemented in
arrangements set forth in the PAM. Any subsequent accordance with the provisions of the
change to the PAM shall become effective only after PAM.
approval of such change by the Beneficiary and ADB.
In the event of any discrepancy between the PAM and
this Financing Agreement, the provisions of this
Financing Agreement shall prevail.
The Beneficiary including through MPPW and MLD Schedule 5, Partially complied.
shall undertake best efforts to ensure that the same para.2
qualified persons will continue to be assigned for a Municipal level key positions like
reasonable period of time of at least 2 years to executive officer of the municipality
positions of executive officers of the Municipalities and PIU manager generally continued
concerned and key positions in the PCO and PIUs with the project for reasonable time.
including, without limitation, the Project director of the However, Project director of the PCO
PCO and Project managers of the PIUs. got replaced frequently, with six PDs
during implementation.
Environment

The Beneficiary shall ensure or cause MPPW to Schedule 5, Complied with.

ensure that the preparation, design, construction, para.3 The project duly followed all applicable
implementation, operation and decommissioning of beneficiaries’ laws and regulations
the Project, each Subproject and all Project facilities relating to environment, health, and
comply with (a) all applicable laws and regulations of safety; the environments safeguards
the Beneficiary relating to environment, health and and EARF provisions of the project.
safety; (b) the Environmental Safeguards; (c) the Similarly, it complied with all measures
EARF, for Subproject under Part 2 of the Project; and and requirements set forth in the
(d) all measures and requirements set forth in the respective EIA/IEE, the EMP, and
respective IEE, the EMP, and any corrective or corrective or preventative actions
recommended in the semiannual
 56 Appendix 9

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Financing
Agreement
preventive actions set forth in a Safeguards Environmental Safeguards Monitoring
Monitoring Report. Reports of the project.
Resettlement

The Beneficiary shall ensure or cause MPPW and Schedule 5, Complied with.
MLD to ensure, that all land and all rights-of-way para.4
required for the Project, each Subproject and all The project duly followed relevant
Project facilities are made available to the Works Beneficiaries’ laws, regulations,
contractor in accordance with the schedule agreed relating to land acquisition and
under the related Works contract and all land involuntary resettlement; the
acquisition and resettlement activities are Involuntary Resettlement Safeguards;
implemented in compliance with (a) all applicable laws the RF for the and all measures and
and regulations of the Beneficiary relating to land requirements set forth in the RP, and
acquisition and involuntary resettlement; (b) the corrective or preventive actions
Involuntary Resettlement Safeguards; (c) the RF, for identified in the semiannual Social
Subproject under Part 2 of the Project; and (d) all Safeguards Monitoring Reports.
measures and requirements set forth in the RP, and
any corrective or preventative actions set forth in the
Safeguards Monitoring Report.

Without limiting the application of the Involuntary Schedule 5,

Resettlement Safeguards, the RF or the RP, the para.5 Complied with.
Beneficiary shall ensure or cause the MPPW to
ensure, that no physical or economic displacement a) Compensation was provided in
takes place in connection with the Subprojects until: accordance with the RP. Cost for
(a) compensation and other entitlements have implementation of the RP was
been provided to affected people in borne by the borrower and relevant
accordance with the RP, the cost of which municipality.
shall be borne by the Beneficiary and the
relevant Municipality; and b) Life skills training was provided to
(b) a comprehensive income and livelihood restore income and livelihood of
restoration program has been established in affected person of each subproject
accordance with the RP. in accordance with the RP.
Indigenous Peoples

The Beneficiary shall ensure or cause MPPW to Schedule 5, Complied with.

ensure that the Project does not have any Indigenous para.6
Peoples Safeguards impact. In the event that the Due diligence was carefully carried out
Project does have any such impact, the Beneficiary to ensure the project did not impact
and MPPW shall take all steps required to ensure that negatively on the indigenous people.
the Project complies with the applicable laws and The activities potentially affecting
regulations of the Beneficiary and with SPS. indigenous people were excluded from
the project financing.
Human and Financial Resources to Implement
Safeguards Requirements

The Beneficiary shall make available or cause MPPW Schedule 5, Complied with.
to make available necessary budgetary and human para. 7
resources to fully implement the EMP, the RP and any The MOF and the executing agency
indigenous peoples’ plan. provided required financial and human
resources to fully implement the EMP
and the resettlement plan.
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Financing
Agreement
Safeguards – Related Provisions in Bidding
Documents and Works Contracts

The Beneficiary shall ensure or cause MPPW to Schedule 5, Complied with.

ensure that all bidding documents and contracts for para. 8
Works contain provisions that require contractors to: The project complied with all relevant
(a) comply with the measures relevant to the provisions mention from (a) to (e) of
contractor set forth in the IEE, the EMP, the RP and the covenant through preparation and
any indigenous peoples’ plan (to the extent they implementation of the resettlement
concern impacts on affected people during plan and EMP for the subprojects.
construction), and any corrective or preventative
actions set forth in a Safeguards Monitoring Report; All social and environmental
semiannual monitoring reports were
(b) make available a budget for all such environmental submitted and disclosed. The
and social measures; corrective measures reported in
monitoring reports were generally
(c) provide the Beneficiary with a written notice of any addressed.
unanticipated environmental, resettlement or
indigenous peoples risks or impacts that arise during
construction, implementation or operation of the
Project that were not considered in the IEE, the EMP,
the RP or any indigenous peoples’ plan;

(d) adequately record the condition of roads,

agricultural land and other infrastructure prior to
starting to transport materials and construction; and
(e) fully reinstate pathways, other local infrastructure,
and agricultural land to at least their pre-project
condition upon the completion of construction.
Safeguards Monitoring and Reporting

The Beneficiary shall do the following or cause MPPW Schedule 5, Partly complied with.
to do the following: para.9

(a) submit semi-annual safeguards monitoring reports a) The project submitted only 10 Social
to ADB and disclose relevant information from such and 12 environmental semiannual
reports to affected persons promptly upon safeguards monitoring reports to ADB
submission. out of required 15 reports. These are
disclosed in ADB’s web site.
(b) if any unanticipated environmental and/or social
risks and impacts arise during construction, b) The project reported to ADB on
implementation or operation of the Project that were unanticipated environmental and/ or
not considered in the IEE, the EMP, the RP or any social risks and impacts arose during
indigenous peoples’ plan, promptly inform ADB of construction, implementation or
the occurrence of such risks or impacts, with operation of the subprojects that were
detailed description of the event and proposed not considered previously together
corrective action plan; and with the corrective action plan.

(c) report any actual or potential breach of c) No breach of compliances occurred,

compliance with the measures and requirements any problems were reported as
set forth in the EMP, the RP or any indigenous required.
peoples’ plan promptly after becoming aware of
the breach.
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Financing
Agreement
Prohibited List of Investments

The Beneficiary shall ensure or cause MPPW to Schedule 5, Complied with.

ensure that no proceeds of the Loan and Grant are para.10 MOUD/the then MPPW ensured no
used to finance any activity included in the list of proceeds of the Loan and Grant were
prohibited investment activities provided in Appendix 5 used to finance any activity included in
of the SPS. the list of prohibited investment
activities.
Health; Labor Standards

The Beneficiary shall ensure that Works contracts and Schedule 5, Complied with.
bidding documents under the Project include specific para.11 All bidding documents and works
provisions requiring contractors to comply with all (a) contracts under the Project included
applicable labor laws and core labor standards on (i) specific provisions requiring the
prohibition of child labor as defined in national contractors to comply with (a) all
legislation for construction and maintenance activities, applicable labor laws and core labor
(ii) equal pay for equal work of equal value regardless standards and (b) the requirement of
of gender, ethnicity or caste, and (iii) elimination of information dissemination on STDs
forced labor; and (b) the requirement to disseminate and HIV/ AIDS to employees and local
information on sexually transmitted diseases (STDs) communities surrounding the Project
including HIV/AIDS to employees and local sites.
communities surrounding the Project sites.

Gender and Development

The Beneficiary shall ensure that GESI Action Plan is Schedule 5, Complied with.
effectively implemented, including addressing the para. 12
needs of women, the poor, and the excluded and GESI action plan was implemented
when implementing Subprojects, making MPPW and successfully with 14 of 15 activities
its departments and the Municipalities more gender (93%) completed and 90% (9 of 10
responsive and socially inclusive, and creating an targets) of the combined quantitative
enabling environment for gender equality and social targets in the GESI action plan and
inclusion and empowerment within the scope of the DMF achieved.
Project.
Counterpart Support

The Beneficiary shall ensure that all counterpart funds Schedule 5, Partly Complied with.
for the Project implementation are provided on a para. 13
timely and regular basis. Occasional delay was observed on
timely release of the counterpart
budget.
Governance and Anticorruption

The Beneficiary, MPPW, TDF and the Municipalities Schedule 5, Complied with.
shall (i) comply with ADB’s Anticorruption Policy para. 14
(1998, as amended to date) and acknowledge that (i) the project complied with ADB’s
ADB reserves the right to investigate directly, or Anticorruption Policy and
through its agents, any alleged corrupt, fraudulent, acknowledged ADB’s right to
collusive or coercive practice relating to the Project; investigate any alleged corrupt,
and (ii) cooperate with any such investigation and fraudulent, collusive, or coercive
extend all necessary assistance for satisfactory practice relating to the Project; and (ii)
completion of such investigation. the project cooperated and assisted
 Appendix 9 59

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Financing
Agreement
fully for the satisfactory completion of
such investigations.
MPPW and Municipalities shall ensure that the Complied with.
anticorruption provisions acceptable to ADB are Schedule 5,
included in all bidding documents and contracts, para. 15 Required provisions acceptable to
including provisions specifying the right of ADB to ADB were included in all bidding
audit and examine the records and accounts of all documents and contract documents
contractors, suppliers, consultants, and other service under the Project.
providers as they relate to the Project.
Within 2 months after the Effective Date, DUDBC shall Complied with.
create a project website to disclose key project-related Schedule 5,
information, including costs, safeguards, procurement para. 16 A separate web site
such as the list of participating bidders, name of the (iudp.dudbc.gov.np), in English
winning bidder, basic details on bidding procedures language was created by the
adopted, amount of contract awarded, and the list of DUDBC/EA to disclose the required
goods/services procured. The website shall also key project related information.
include general Project information, Project progress,
and contact details for the Project Executing Agency’s Project Executing Agency through
counterpart staff in Nepali and English languages, and ADB’s project team support ensured all
shall link to ADB's Integrity Unit website at Project staff are fully aware of ADB’s
http://www.adb.org/ Integrity/complaint.asp for procedures through relevant face to
reporting to ADB any grievances or allegations of face training/workshops and interaction
corrupt practices arising out of the Project and/or with relevant ADB’s units and/or staff.
Project activities. The Beneficiary shall cause the
Project Executing Agency to ensure that all Project
staff are fully aware of ADB’s procedures, including,
but not limited to, procedures for implementation,
procurement, use of consultants, disbursements,
reporting, monitoring, and prevention of fraud and
corruption.
Within 12 months from the Effective Date, the PCO Schedule 5, Complied with.
shall prepare a grievance redress mechanism, para. 17
acceptable to ADB, and establish a special committee PCO prepared GRM acceptable to
to receive and resolve complaints/grievances or act ADB. Following the GRM, it
upon reports from stakeholders on misuse of funds established separate GRC in Dharan,
and other irregularities, including grievances due to Janakpur, Siddharthanagar and
safeguards issues. The special committee shall (i) be Nepalgunj municipalities. Similarly,
independent of and has no conflict of interest with the Central level GRC was established to
Municipalities, (ii) make public of the existence of this resolve the cases/grievances which
grievance redress mechanism, (iii) review and could not get resolved at the municipal
address grievances of stakeholders of the Project, in level GRC.
relation to either the Project, any of the service
providers, or any person responsible for carrying out
any aspect of the Project; and (iv) proactively and
constructively responding to them.
The Beneficiary shall ensure or cause each of the Schedule 5, Complied with.
Municipalities to ensure that citizen charter shall be para. 18
displayed at the Municipalities’ office and public audit Citizen charter was displayed at the
shall be organized through regular and effective visible location of each project
meetings at the community level with an NGO’s municipal office. Public audit of the
support. activities carried out in each project
municipality was organized at the
community level though NGO hired for
 60 Appendix 9

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Financing
Agreement
implementation of Small-scale
Community Infrastructures component
of the project.
The Beneficiary shall ensure or cause MPPW to Schedule 5, Complied with.
ensure that the PCO hires technical auditors affiliated para. 19
with the national vigilance center to carry technical Technical audit carried on random
audit of Subprojects on random basis. The technical basis for the selected subprojects.
auditor will share the report with MPPW and ADB on
confidential basis. Contractors shall be made to Contractors generally disclosed basic
disclose basic information of contracts in each information of contracts at each
construction site through a display board. construction site in display boards.
ADB’s project review mission ensured
compliance with this requirement
during site visits.
Financial Sustainability

MPPW shall ensure that TDF will be responsible for Schedule 5, Complied with.
the financial sustainability of the Subprojects. TDF para. 20
shall (a) examine the Subproject costs of the detailed TDF examined the subprojects and
design in connection with the repayment capacity of provided Subloan to the municipalities
the Municipalities in coordination with the PCO; (b) complying with the requirements of this
review the Subproject proposal submitted by the covenant.
relevant Municipalities with respect to financial and
economic viability; (c) provide Subloans to
Municipalities on the condition that TDF considers the
Subproject and the planned collection of repayments
to be financially feasible.
MPPW shall ensure that TDF maintains its own Schedule 5, Partly complied.
financial sustainability by (a) making adequate para. 21
provisions for nonperforming assets, (b) maintaining a TDF has recently prepared its reports
debt service coverage ratio of at least 1.1 times, and based on NFRS, loan loss provisions
(c) instituting and observing such other due diligence have been booked and assets were
and good banking practices as required for a prudent tested for impairment and measured at
financial institution. their fair value. However, the audit
report for FY2019 suggests that loan
loss provisions were not booked as per
the project agreement for KFW TDP III
project. Likewise, the audit report also
suggests that the TDF has not been
receiving the audited financial
statements from the Municipalities
within 4 months from the end of the
fiscal year as required, which shows
inadequate due diligence for an entity
in a financial intermediary business.
The debt service coverage ratio has
been complied in all years. However,
independent audit assurance on the
same were only received during the
later years of the project.

The final AEFS for FY2020 submitted

is in Nepali. The TDF advised to
 Appendix 9 61

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Financing
Agreement
submit in English translated version by
15 July 2021.
Without prejudice to the foregoing, the Beneficiary will Complied with.
undertake to TDF in the Subsidiary Loan Agreement Schedule 5,
to cover defaults by the Municipalities under the On- para. 22 The Subsidiary Loan agreement
lending Agreements through funds otherwise between the Beneficiary and TDF
designated for the Municipalities by the Beneficiary, included the provision to cover defaults
and the Municipalities shall agree to such deduction. by the municipalities under the On-
lending Agreements through funds
otherwise designated for the
municipalities by the Beneficiary.
Water Supply Subproject in Dharan Complied with.

MPPW shall ensure that DWSMB is established Dharan Water Supply Management
before works contract for the water supply Subproject Schedule 5, Board (DWSMB) was established on 2
in Dharan is awarded. DWSMB shall be in charge of para. 23 May 2014 with cabinet decision prior to
O&M of the water supply facilities, including, setting civil works contract signed on 25
and collecting adequate tariffs to ensure sustainable March 2015 and is in operation.
O&M of the water facilities in Dharan. No later than a) assets and liability report and
one year prior to the scheduled completion of the transfer of the NWSC to DWSMB
construction work for the Dharan water supply approved by the cabinet on 16 July
Subproject, the Beneficiary shall approve (a) an asset 2018; b) regulation for DWSMB
and liability transfer agreement, (b) a regulation for operation finalized; c) staff regulation
DWSMB operation, (c) staff regulation, and (d) a finalized incorporating comments from
business plan for the initial three years of the DWSMB public service commission; and d) a
including a staff development and transfer plan. three-year business plan including staff
development and transfer plan has
been prepared together with tariff
structure for the water supply. All these
activities completed one year prior to
the scheduled contract completion as
contract closes by 31 December 2019.
MPPW shall further ensure that Dharan Municipality Complied with.
develops a non-revenue water reduction program Schedule 5,
during detailed design stage and promptly implement para. 24 The municipality developed non-
the program. revenue water reduction program and
is under implementation.
Operation and Maintenance

MPPW shall ensure that, during detailed design stage, Schedule 5, Partially complied.
Janakpur, Nepalgunj and Siddharthanagar para. 25
municipalities will adequately assess the possibility of In Nepalgunj solid waste management
an appropriate modality for engaging the private unit established and functioning for
sector in O&M of the solid waste management system O&M of ISWM system. SWM facility
including landfill, which may include the drainage could not get completed in
system, from the viewpoint of effective and efficient Siddhathanagar and Janakpur.
system operation, and reflect the findings in the However, each of the municipality
bidding documents as appropriate. The Beneficiary established a responsible unit under
shall additionally ensure that no later than 12 months their regular program.
prior to the scheduled completion of the construction
work for the relevant Subproject, each Municipality
selects or establishes a unit responsible for the solid
waste management system, roads, and the drainage
 62 Appendix 9

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Financing
Agreement
system, assign an adequate number of staff, and
ensure their training to a level and degree
commensurate with the roles and functions of each
Municipality in O&M.
Project Performance Management System

Within 6 months from Effective Date, DUDBC shall Schedule 5, Complied with.
establish a project performance management system para. 26
(PPMS) satisfactory to ADB. DUDBC shall further PPMS was established within six
ensure, within 12 months from Effective Date, that months from effectiveness date.
baseline data corresponding to indicators and targets Baseline data corresponding to the
set out in the design and monitoring framework, DMF’s indicators and targets
disaggregated by sex, caste, and ethnicity, where disaggregated by sex, caste, and
appropriate, will be augmented through a benchmark ethnicity were augmented through the
survey as part of design and supervision consultants’ benchmark survey by the DSCs.
work.
Reports

The Beneficiary shall ensure that MPPW, DUDBC, Schedule 5, Complied with.
TDF and the Municipalities coordinate among para. 27
themselves as appropriate and ensure that the Consolidated quarterly report and
quarterly and other reports to be prepared by the other reports e.g., semiannual
Municipalities, TDF and GESI unit of MPPW are safeguards monitoring reports of the
consolidated with the reports to be prepared by project submitted by the PCO/DUDBC.
DUDBC.

Subprojects

The Beneficiary shall ensure or cause MPPW to Schedule 5, Complied with.

ensure, that Subprojects under Part 2 of the Project para. 28
are selected in accordance with the agreed selection All the subprojects under Part 2 of the
criteria described in the PAM and are implemented in Project were selected as per the
a manner satisfactory to ADB. criteria of the PAM and implemented
satisfactorily.
Municipalities

MPPW shall ensure that the Municipalities and TDF Schedule 5, Complied with.
agree on the proportion of cost-sharing for each para. 29
Subproject, as set forth in detail in the PAM. MPPW Municipalities and TDF agreed on the
shall further ensure that the Municipalities secure proportion of cost-sharing for each
budget allocation to recover at least repayment of the Subproject, as set forth in the PAM.
Subloan to TDF and O&M expenditures, through tariff Municipalities are securing budget
collection for water supply, and increases in revenue allocation to recover repayment of the
generation whether through changes in tax Subloan to TDF and O&M
arrangements and/or use of charges and/or other expenditures, through tariff collection
measures. in case of Dharan water supply
subproject and increases in revenue
generation whether through changes in
tax arrangements and/or use of
charges and/or other measures
The Beneficiary shall ensure that the Municipalities Complied with.
develop a sanitation action plan, which includes
 Appendix 9 63

Covenant Reference in Status of Compliance

Financing
Agreement
septage management plan to improve regular Schedule 5, All municipalities developed sanitation
cleaning of septic tanks and safe disposal of septage, para. 30 action plan including septage
during the detailed design stage and shall promptly management plan. The plan is being
implement the plan. implemented.

Within 6 months of the Effective Date, the Complied with.

Municipalities shall have approved the comprehensive Schedule 5,
financial management improvement plan that has para. 31 Municipal board of the respective
been developed by the Municipalities and ADB, and municipalities approved CFMIP and it
shall implement the first year revenue enhancement is under implementation.
measures as specified in the plan within 18 months of
the Effective Date.
Others

The Beneficiary shall ensure that the Municipalities Schedule 5, Complied with.
and other entities responsible for the O&M of the para. 32
systems developed or improved under the Project will Project municipalities ensured O&M of
secure and allocate adequate funds for proper O&M the system developed or improved
of the systems, by providing necessary technical and under the project by establishing a new
financial support. unit or assigning the O&M
responsibility to the relevant existing
unit within the municipality by providing
needed technical and financial support.
The Beneficiary shall ensure that there will be Complied with.
complementarity and no overlap of activities between Schedule 5,
Subprojects and project funded by other development para. 33 There was no overlapping of the
partners. activities between the Subprojects and
the project funded by other
development partners.
The Beneficiary shall ensure that budget allocation is Schedule 5, Complied with.
made for institutionalization of GESI structure and para. 34
mechanism in MPPW under a separate budget head GESI structure established in MOUD
from fiscal year 2012. (the name of ministry changed to
MOUD from MPPW). Budget allocation
for institutionalization of GESI structure
ensured from 2012. In addition, there
is mechanism of assuring gender
responsive budget in all ministries
through National planning commission
monitoring.
64 Appendix 10

ECONOMIC AND FINANCIAL ANALYSIS

1. Background. The Integrated Urban Development Project (IUDP) aims to (i) prevent
waterlogging situation in three Terai municipalities (Janakpur, Siddharthanagar and Nepalgunj);
(ii) improve integrated solid waste management system (ISWM) in three municipalities (Janakpur,
Siddharthanagar and Nepalgunj); and (iii) increase coverage of Dharan water supply system from
83% (baseline) to 95% of households at project completion. The analysis at project completion is
based on actual data provided by the implementing municipalities, Department of Urban
Development and Building Construction (DUDBC), and the Town Development Fund (TDF). The
methodology applied for the re-evaluation was based on Asian Development Bank (ADB)
guidelines for financial and economic analysis of project.1 Any discrepancies in the results at
appraisal and at project completion are discussed.

A. Economic Reevaluation

2. Scope of the economic analysis. During project preparation, the economic cost–benefit
analysis was assessed for sub-projects related to Output 1 i.e., Municipal Infrastructure
Improvement.2 No economic analysis was conducted for Output 2 i.e., Community Development
and GESI Strengthening. Wherever relevant, economic analysis at completion applies the
assumptions made at appraisal.

3. Economic costs and assumptions used: Economic costs are estimated using domestic
price numeraire and at 2020 constant prices. The actual financial costs incurred from 2012 to
2020 are converted to 2020 price by adjusting domestic price inflation.3 The costs comprised of
civil works, consulting services, vehicles and equipment and incremental recurrent costs. All
financial costs were converted to economic costs after excluding transfers such as taxes and
duties. For example, financial investment costs, and operation and maintenance (O&M) costs
were derived into economic costs using Shadow exchange rate factor (SERF) of 1.22 for tradable
goods, 4 Shadow wage rate factor (SWRF) of 0.7 for unskilled labor, 1.0 for skilled labor, and
simple conversion factor of 1.0 for non-tradable goods. O&M costs are disaggregated into fixed
and variable costs where applicable. The opportunity cost of the water used for water supply
subproject is assumed to be zero as the system was constructed using extracted ground water
and the formal uses of the ground water for other economic activities is insignificant. The
subproject activities were implemented on the available land that was already occupied by the
subproject itself. Therefore, the opportunity cost of the land is assumed to be zero. The analysis
covers 20 years. The discount rate is at 12%, consistent with the appraisal assumption.

4. Water supply system improvement. Economic cost benefit analysis of water supply
system improvement in Dharan was conducted using the methodology and benefit assumptions
at the project appraisal (Table A10.1). The project aimed to increase water supply capacity from
10,000 cubic meter (CuM) per day in 2011 to 19,300 CuM per day in 2016. The economic benefits
include (i) time saved by not collecting water; (ii) health care cost savings, valued using disability
adjusted life years (DALYs); (iii) incremental water sales benefits, valued at willingness-to-pay
price; and (iv) nonrevenue water sales. At appraisal, health benefit in water supply was estimated
at 2 percent of the economic value of a DALY, based on the World Health Organization (WHO)

1 ADB. 2017. Guidelines for the economic analysis of projects, Manila. ADB. 2005. Financial Management and Analysis
of Projects. Manila.
2
Nepal: Integrated Urban Development Project. 2013. Project Administration Manual
3 Capital investment before 2020 are converted to 2020 price by adjusting domestic inflation rate published by the
Economic Survey of Government of Nepal, MoF.
4
SERF was computed based on ADB guidelines and international trade data of last five years (FY2014/15 to 2018/19).
 Appendix 10 65

report indicating that the annual economic value of a DALY5 is equivalent to GNI per capita.6 The
WHO also suggest that 3.7 percent of the burden of disease is attributable to unsafe water.7 We
assume that 2% benefit value still holds at reevaluation. Proportion of the non-revenue water is
derived from the differences between the total water produced and the total water sold. After the
completion in 2020, water supply per day reached 17,070 CuM. Standard conversation factor
(SCF) of 0.82 is used to derive economic value of incremental water sales.

Table A10.1: Economic benefit of water supply

Benefit Assumptions
Time saved from collecting water — Time savings per day - average of total HHs: 40 minutes
(only 51.5% the saved time is assumed to be devoted in
economic activities)
— Value of time: NRs385 per day
Healthcare cost savings — DALYs valued at NRs127,401 per year.
— Savings: 2% of DALY
— Non-incremental water quantity: 58% of total water
supply.
Incremental benefit — Incremental water: 7,218 CuM per day
— Average WTP: NRs90.33 per CuM (WTP price per CUM
= with-project tariff + (1/2 (without-project cost - with-
project price)).
Non-revenue water — Non-revenue water: 15% of water production
— Price: NRs90.33 per CuM (valued as incremental water,
thus, at WTP price).
CuM = cubic meter , DALY = disability-adjusted life year, WTP = willingness-to-pay.
Source: ADB PCR mission estimates, 2021.

5. The EIRR of the water supply project at completion is estimated to be 18.86%, which is
slightly lower than the EIRR at appraisal (21.9%) (Table A10.4). This is mainly due to delay in
project completion. Based on the results, efficiency of the subproject is rated highly efficient.

6. Solid waste management. Solid waste management (SWM) subprojects were

envisioned in Janakpur, Siddharthanagar and Nepalgunj at appraisal. However, at completion the
SWM was constructed only in Nepalgunj. For rest of the towns, the SWM sub-projects were
dropped during its implementation phase due to social issues raised by the community living close
to the proposed land fill site. In Nepalgunj, the sub-project was estimated to cover 63% of
estimated population in 2017. Economic benefits of the sub-project considered were health
benefit in terms of savings in Disability Adjusted Life Years (DALYs), value of compost sales and
revenue from recyclable materials. Although, 2 percent of the economic value of a DALY is
considered as health benefit for SWM sub-project at project appraisal, only 1% of the economic
value of DALY is considered at completion. Drainage and roads subproject, and SWM subproject
were implemented in same city and each subproject complements benefits. Hence, for drainage
and road 2% of economic value of DALY is considered and 1% of economic value of DALY is
considered for SWM to avoid double counting of benefits. The SWM serves all the population
covered by drainage subproject in addition to the population who are not receiving drainage

5 DALYs were first conceptualized in work carried out with the World Health Organization and the World Bank: C.
Murray and A Lopez. 1996. The Global Burden of Disease: a comprehensive assessment of mortality and disability
from diseases, injuries and risk factors in 1990 and projected to 2020. Cambridge, MA: Harvard School of Public
Health.
6 Commission on Macroeconomics and Health. 2001. Macroeconomics and Health: Investing in Health for Economic
Development. Report of the Commission on Macroeconomics and Health, Chaired by Jeffrey D. Sachs. Presented
to Gro Harlem Brundtland, Director-General of the World Health Organization, on 20 December 2001.
7
WHO. 2002. World Health Report 2002. Reducing Risks, Promoting Healthy Life. Geneva, World Health Organization.
66 Appendix 10

facility.8 The Integrated Solid Waste Management (ISWM) system in Nepalgunj started operations
in May 2019. Value of the compost and recyclable materials are estimated based on willingness
to pay. Problems in source segregation, household produced recyclable materials collected by
private scrap dealers, and changes in composition of waste resulted in reduced volume of
recyclable materials to less than 40% as assumed at appraisal. Likewise, production of compost
from 40% of raw biodegradable waste at appraisal could not be realized due to poor waste
segregation and organic waste generated by hotel and vegetable market being used in
agricultural farm as compost manure.9 Benefit areas identified at appraisal and at completion is
same for reevaluated cost benefit analysis (Table A10.2).

Table A10.2: Economic benefit of Solid Waste Management

Benefit Assumptions
Production of compost — WTP: NRs4.88 per kg
— 3000 kg per year (Based on actual production of 8
months - April to November 2020)
Production of recyclable materials — WTP: Average NRs8.17 per kg
— 3000 kg per year (Based on actual production of 8
months - April to November 2020)
Healthcare cost savings — DALYs valued at NRs127,401 per year.
— Savings: 1% of DALY
DALY = disability-adjusted life year, kg = kilogram.
Source: ADB PCR mission estimates, 2021.

7. The EIRR of Nepalgunj SWM sub-project is estimated at 18.45% (Table A10.5). The lower
EIRR at project completion in comparison to appraisal estimate (34.76%) was mainly due to
assumption of 50% reduction in DALYs as healthcare cost saving and low production of compost
and recyclable materials.10 Increased household coverage (about 80% of the population of the
city area) after operation of SWM system is one of the major contributors for economic benefit.
Although the EIRR is slightly higher than 18%, ISWM sub-project in Nepalgunj is rated efficient
considering persistence issue of source segregation, recycling, and low production of compost
materials.

8. Drainage and roads system Improvement. Separate economic analysis was conducted
for roads and drainage at appraisal. However, at implementation, there was single contract
package combining roads and drainage works and separate cost information was not available
for roads and drainage. Therefore, cost benefit analysis at completion is conducted by combining
benefits of roads and drainage assumed at appraisal. Economic benefits for drainage include (i)
reduced income loss resulting from yearly flooding; (ii) road maintenance cost saving; (iii) property
maintenance cost saving; and (iv) health benefits in terms of savings in DALYs. Economic benefits
for roads include (i) vehicle operating costs saving; and (ii) time savings. Based on the assumption
at appraisal, 2 percent of the economic value of a DALY is considered as health benefit in
drainage sub-project. Among the total registered cases in Outpatient Department (OPD) in
FY2017/18, incidence of communicable food/water borne diseases was found to be 24% in
Janakpur, 6% in Siddharthanagar and 11% in Nepalgunj. In 2018/19, such incidences were
recorded to be 22% in Janakpur, 2% in Siddharthanagar and 10% in Nepalgunj. This declining
trend in water/food borne diseases is expected to further decline in the future. Diarrhea, acute

8 Beneficiaries of SWM service in 2019 is estimated 76,787 by the Nepalgunj municipality, which is 30% more than the
estimated beneficiaries of Drainage service.
9 The information explained in the text was based on the field observation and interview with the ISWM operation team

by the PCR technical team in December 2020.

10 At appraisal quantity of composting and recycle materials were estimated total weight of 40% raw bio-degradable

waste and recyclable waste.

 Appendix 10 67

gastro-enteritis, typhoid, intestinal worms, and amoebic dysentery were the common incidences
under food/water borne diseases.11

9. The catchment areas of the drainage sub-project cover entire city core area of all three
cities.12 Before the project, the International Roughness Index (IRI) of paved urban roads in flat
terrain was assessed to be of 10. IRI of roads after the project intervention is estimated to be 6.
Travel time saving is estimated based on the differences in travel time estimated by the RED13
model (HDM-414 module calibrated to Nepali condition) used for economic analysis of roads
project for the Nepal Rehabilitation and Reconstruction Program (NRRP) in 2018. Average vehicle
operating cost is estimated based on the estimate derived by the same module and converted to
2020 price by adjusting domestic inflation rate. Most of the road stretches are constructed in the
city core area and all of them are interconnected. Each day about same number of vehicles
operates in the city. So, traffic survey was not conducted but the estimated number of vehicles
operating in the city were collected from the municipality records. It is assumed that a vehicle will
run in one-half of a road in a day for two-way traffic. The assumed growth of the vehicles used in
the assumption for completeness of information. The number of vehicles is estimated to increase
in proportion to the population growth of the city.

Table A10.3: Economic Benefit of Drainage and Roads

Benefit Assumptions
Savings in income loss during — Daily income: NRs627 per day (unskilled labor cost)
flooding each year — Income loss average: 7 days
Savings in road maintenance costs — Road maintenance cost is estimated at NRs42,408 per
KM based on the appraisal estimates.
Savings in property maintenance — Average damage to houses due to flood is estimated at
costs NRs7,922 in flood prone areas.
Healthcare cost savings — DALYs valued at NRs127,401 per year.
— Savings: 2% of DALY
Time savings — Savings: NRs0.41 per person per kilometer
Vehicle operating cost savings — Savings: NRs1.60 per vehicle per kilometer
— Estimated number of vehicles operating per day:
Janakpur-2000, Nepalgunj-1500, Siddharthanagar-800
DALY = disability-adjusted life year.
Source: ADB PCR mission estimates, 2021.

10. The weighted EIRR of combined roads and drainage sub-projects at appraisal ranged
from 17.43% in Nepalgunj to 28.49% in Janakpur (Table A10.6). Combined EIRR at completion
14.29% in Nepalgunj, 14.62% in Siddharthanagar, and 15.78% in Janakpur. Since the EIRR is
less than 18% but exceeds 12%, the drainage and roads system improvement sub-projects in all
three towns is rated as efficient.

11. Sensitivity analysis. The sensitivity analysis was conducted to examine robustness of
the estimated EIRRs for future increase in operation and maintenance (O&M) cost of the
infrastructure and decrease in expected benefits to the society. The benefits also include savings
from vehicle operating cost, DALY, time savings etc. Three cases considered in the sensitivity
analysis are O&M cost increase by 10%, benefit decrease by 10% and the combined case of cost
increase by 10% and benefit decrease by 10%. The subprojects are not sensitive to the adverse

11
Department of Health Services, Government of Nepal, 2019 and 2020. Annual Report.
12 Based on the information provided by the municipality, population benefited by the drainage improvement in 2018 in
Siddharthanagar is 50,481 Nepalgunj is 57,535 and Janakpur is 71,880.
13 Roads Economic Decision Model.
14
Highway Design and Maintenance Standards Model, the World Bank.
68 Appendix 10

changes as EIRR still exceeded 12% (Table A10.9–Table A10.11). Therefore, sensitivity analysis
indicates that the subproject EIRRs remain robust under adverse conditions.

12. The switching value is evaluated for each subproject considering important parameters.
The switching value for Nepalgunj SWM subproject shows that it can absorb about 89% increase
in O&M costs and 21% reduction in benefits. Sensitivity indicator shows that reduction in benefit
(4.8) is more sensitive than increase in O&M costs (1.1) (Table A10.8). For road and drainage
subproject, the switching value of O&M cost is estimated to be 397% in Janakpur, 108% in
Nepalgunj and 252% in Siddharthanagar. Likewise, switching value of benefit reduction is
estimated to be 25% in Janakpur, 14% in Nepalgunj and 16% in Siddharthanagar. Sensitivity
indicators reveals that the subprojects are more sensitive to reduction in benefits in comparison
to increase in O&M cost in all cities (Table A10.9–Table A10.11). The switching value for water
supply subproject in Dharan indicates that the project will remain economically viable even with a
222% increase in O&M costs, and a 39% decrease in benefits. Sensitivity indicator shows that
reduction in benefit (2.4) is more sensitive than increase in O&M costs (0.4) (Table A10.7).

B. Financial Reevaluation

13. Scope of the financial analysis. During project preparation, all subprojects were
categorized as non-revenue earning project except for Dharan water supply improvement
subproject for which a financial cost–benefit analysis was carried out. For the other subprojects,
fiscal sustainability assessment was conducted to assess the corresponding municipal
government capacity to provide funds to cover project debt service obligations and O&M needs.
The same approach to financial analysis is applied at reevaluation.

14. Assumptions for Dharan water supply system financial cost benefits analysis. The
financial cost–benefit reevaluation undertaken for the Dharan water supply subproject included
the actual cost incurred and actual tariff rates set after handing from Nepal Water Supply
Corporation (NWSC) system to Dharan Water Supply Management Board in March 2021.
Following assumptions were made: (i) an evaluation period of 20 years from full operation (2020);
(ii) O&M cost is estimated based on actual cost incurred after one month of operation of combined
water supply system; (iii) meter connection charge of NRs15,000; (iv) tariff rate of NRs130 up to
10 CuM consumption, NRs30 per CuM up to additional 20 CuM consumption and NRs45 per
CuM for more than 20 CuM consumption; and (v) use of 2020 constant prices.15 Weighted
average cost of capital is updated based on existing interest rate of government funds and
average inflation rate from last five years (Table A10.12).

15. Reevaluation of Dharan water supply system. The analysis shows that the financial
internal rate of return (FIRR) of the Dharan water supply subproject at completion is 1.43%, which
is higher than the estimated weighted average cost of capital (WACC) of 1.04%. At appraisal, the
WACC was estimated at 0.30% and FIRR was estimated at 0.26% (Table A10.13). There were
two water supply systems managed by two entities,16 during field visit in December 2020.
Following the government decision to hand over property and management of Nepal Water
Supply Corporation (NWSC) Dharan branch to Dharan Water Supply Management Board, both
organizations are now formally merged, and Dharan Water Supply Management Board started to
operate the merged system from a single window from March 1, 2021. Actual cost and revenue
situation after integration is taken for financial analysis. Sensitivity analysis shows that the FIRR

15 Actual financial investment cost till 2019 are converted to 2020 constant price by using domestic inflation rate.
16 The old water supply is managed by the Nepal Water Supply Corporation Dharan branch and new water supply
system established by the project is managed by Dharan Water Supply Management Board.
 Appendix 10 69

(0.58%) is less than WACC when revenues decreased by 10%. Similarly, the FIRR (0.99%) is
less than WACC when O&M costs increased by 10%. Since the FIRR is higher than the WACC
in base case, and Dharan Water Supply Management Board is under the leadership of mayor of
the Dharan Sub-metropolitan City who is responsible to mitigate material risk occurring in
operation, the Dharan water supply subproject is rated likely sustainable.

16. Financial sustainability of the municipal subprojects. All the municipalities contributed
their counterpart financing to implement the subprojects. As of November 2020, there were no
overdue of sub loan repayment to the TDF. Municipal financing capacity is analyzed to assess
the capacity to pay back subloan to the TDF and support the O&M cost of the solid waste
management, drainage, and roads subprojects (Table A10.14–A10.16). The municipality needs
to utilize about 1.88% to 2.9% of the funds under the municipal discretion to pay back TDF
subloan. The municipality has permanent staff to maintain and operate the drainage, roads
maintenance etc. Although the municipality does not allocate fixed budget in advance to maintain
and operate the public infrastructure services, the historical data shows that about 10% of the
public infrastructure budget is allocated for operation, maintenance, and improvement of existing
public infrastructure. Operation and maintenance needs of the infrastructure established by the
project is estimated within the range of 17.60% to 46.76% of the O&M expenditure of the
municipalities. It shows that the cost of O&M needs and repayment of the subloan is considered
within the affordability limit of the municipalities for sustainable operation of the subprojects.

Table A10.4: Economic Internal Rates of Return of Water Supply System Improvement
Sub-project at Appraisal and Completion
Subproject Appraisal Completion Level of Efficiencya
(2011) (Dec 2020)
Dharan Water Supply System 21.9 18.86 Highly efficient
Improvement
a An economic internal rate of return (EIRR) >=18% is rated highly efficient; an EIRR >=12% efficient; an EIRR < 12%
less than efficient; and an EIRR < 6% is inefficient (based on ADB Guidelines for the Evaluation of Public Sector
Operations, 2016).
Sources: ADB. 2012. Report and Recommendation of the President: Proposed Loan and Grant Nepal: Integrated
Urban Development Project. Manila (appraisal, original results), and the project completion review mission (other
results).

Table A10.5: Economic Internal Rates of Return of Solid Waste Management (SWM) Sub-
project at Appraisal and Completion
Subproject Appraisal (2011) Completion Level of
(Dec 2020) Efficiencya
Janakpur SWM 39.50 Dropped Not applicable
Nepalgunj SWM 34.76 18.45 Highly efficient
Siddharthanagar SWM 31.22 Dropped Not applicable
SWM = Solid Waste Management.
a
An economic internal rate of return (EIRR) >=18% is rated highly efficient; an EIRR >=12% efficient; an EIRR < 12%
less than efficient; and an EIRR < 6% is inefficient (based on ADB Guidelines for the Evaluation of Public Sector
Operations, 2016).
Sources: ADB. 2012. Report and Recommendation of the President: Proposed Loan and Grant Nepal: Integrated
Urban Development Project. Manila (appraisal, original results), and the project completion review mission (other
results).
70 Appendix 10

Table A10.6: Economic Internal Rates of Return of Drainage and Roads System
Improvement Sub-project at Appraisal and Completion
Subproject Appraisal (2011) Completion Level of
Drainage Roads Weighted17 (Dec 2020) Efficiency a
Janakpur DRSI 37.41 14.82 28.49 15.78 Efficient
Nepalgunj DRSI 18.04 14.63 17.43 14.29 Efficient
Siddharthanagar DRSI 24.75 15.73 22.91 14.62 Efficient
DRSI = Drainage and Roads System Improvement.
a An economic internal rate of return (EIRR) >=18% is rated highly efficient; an EIRR >=12% efficient; an EIRR < 12%

less than efficient; and an EIRR < 6% is inefficient (based on ADB Guidelines for the Evaluation of Public Sector
Operations, 2016).
Sources: ADB. 2012. Report and Recommendation of the President: Proposed Loan and Grant Nepal: Integrated Urban
Development Project. Manila (appraisal, original results), and the project completion review mission (other results).

Table A10.7: Sensitivity Analysis of the Economic Returns of Dharan Water Supply
System
ENPV Switching Sensitivity
EIRR
Cases (NRs Values % Indicators
(%)
million)
Base case 1243.89 19.38 - -
Adverse variations
Operation and maintenance cost increased by
1192.51 19.01 -242 -0.4
10%
Benefits reduced by 10%, costs unchanged 939.21 17.81 41 2.4
Operating cost increased by 10%, benefits
887.83 17.44 - -
decreased by 10%

Table A10.8: Sensitivity Analysis of the Economic Returns of Nepalgunj SWM

ENPV Switching Sensitivity
Cases (NRs EIRR (%) Values % Indicators
million)
Base case 89.85 18.45 - -
Adverse variations
Operation and maintenance cost increased
79.73 17.78 -89 -1.1
by 10%
Benefits reduced by 10%, costs unchanged 46.47 15.44 21 4.8
Operating cost increased by 10%, benefits
36.36 14.72 - -
decreased by 10%

Table A10.9: Sensitivity Analysis of the Economic Returns of Roads and Drainage in
Nepalgunj
ENPV Switching Sensitivity
EIRR Values % Indicators
Cases (NRs
(%)
million)
Base case 172 14.29 - -
Adverse variations
Operation and maintenance cost increased by
155.73 14.09 -108 -0.9
10%
Benefits reduced by 10%, costs unchanged 49.20 12.68 14 7.1
Operating cost increased by 10%, benefits
33.27 12.46 - -
decreased by 10%

17
Weighted average EIRR is computed based on estimated investment and EIRR of Roads and Drainage subprojects.
 Appendix 10 71

Table A10.10: Sensitivity Analysis of the Economic Returns of Roads and Drainage in
Janakpur
ENPV Switching Sensitivity
EIRR
Cases (NRs Values % Indicators
(%)
million)
Base case 348.41 15.78 - -
Adverse variations
Operation and maintenance cost increased by
339.63 15.69 -397 -0.3
10%
Benefits reduced by 10%, costs unchanged 210.67 14.37 25 4.0
Operating cost increased by 10%, benefits
201.89 14.28 - -
decreased by 10%

Table A10.11: Sensitivity Analysis of the Economic Returns of Roads and Drainage in
Siddharthanagar
ENPV Switching Sensitivity
EIRR
Cases (NRs Values % Indicators
(%)
million)
Base case 152.83 14.62 - -
Adverse variations
Operation and maintenance cost increased by
145.81 14.52 -252 -0.4
10%
Benefits reduced by 10%, costs unchanged 57.93 13.03 16 0.7
Operating cost increased by 10%, benefits
51.91 12.92 - -
decreased by 10%

Table A10.12: Weighted Average Cost of Capital

Item ADB Loan ADB Government Municipal Total
Converted Loan Grant b Contributionc
to Grant Convert
to TDF
Loan a
A. Weight 26% 35% 24% 15% 100%
B. Nominal Cost 1.50% 5.00% 9.00% 9.00%
C. Tax Rate 13.00% 13.00% 0.00% 0.00%
D. Tax Adjusted Nominal Rate 1.31% 4.35% 9.00% 9.00%
E. Inflation Rate d 1.50% 6.18% 6.18% 6.18%
F. Real Cost -0.19% -1.72% 2.66% 2.66%
G. Weighted Component of WACC 0.00% 0.00% 0.64% 0.40% 1.04%
Weighted Average Cost of Capital (Real) 1.04%
ADB = Asian Development Bank; TDF = Town Development Fund; WACC = weighted average cost of capital.
a Nominal cost of ADB loan converted to TDF loan is equal to TDF on landing interest rate to the Municipality.
b Nominal cost of Government of Nepal (GON) funds is based on citizen saving bond 2082 issued by the Central Bank

of Nepal (May 14, 2020).

c
Nominal cost of municipal contribution is equal to the GON fund.
d Domestic inflation factor is based on the average of last five years (2014/15–2018/19).
72 Appendix 10

Table A10.13: Financial Internal Rates of Return and Net Present Value of Dharan Water
Supply Subproject
Item Appraisal (2011) Completion (Dec 2020)
NPV (NRs FIRR NPV (NRs FIRR
million million
Base Case (5.17) 0.26% 161.96 1.43%

FIRR = financial internal rate of return; O&M = operation and maintenance; NPV = Net Present Value.
Note: A financial internal rate of return (FIRR) substantially exceeds the WACC is rated most likely sustainable; a
FIRR exceeds the WACC with probability of any material risks occurring is moderate and they are largely mitigated is
rated likely sustainable, a FIRR below WACC and positive effect below expectation with no majors to mitigate
negative impacts is rated less likely sustainable, and a FIRR substantially lower the WACC is rated likely
unsustainable.
Sources: ADB. 2012. Report and Recommendation of the President: Proposed Loan and Grant Nepal: Integrated
Urban Development Project. Manila (appraisal, original results), and the project completion review mission (other
results).

Table A10.14: Municipal Financial Situation Assessment for Sustainability of Project

infrastructure – Siddharthanagar Municipality (In NRs million)
2018/19 2019/20 2020/21
Items
(Actual) (Actual) (Budget)

Revenues under Municipal Discretion18

Own source revenues 72.50 119.50 162.00
Revenues from revenue sharing 130.77 113.16 137.46
Equalization grant from GON 176.38 186.17 183.31
Total 379.65 418.83 482.77
Expenditure on Public Works (Excluding IUDP) 158.81 200.6 441.36
Approximate Expenditure for O&M of Public
15.88 20.06 44.13
Infrastructure (10%)
O&M Costs and Loan Repayment for Project
Estimated
Infrastructure
O&M cost for drainage and roads 15.54
Sub-loan repayment to TDF 13.04
% of Revenue under Municipal Discretion for
2.70%
Loan Repayment
% Project O&M Requirement to Total Estimated
17.60%
O&M
GON = Government of Nepal; IUDP = Integrated Urban Development Project; O&M = operation and maintenance; TDF
= Town Development Fund.
Source: Revenue and expenditure statement of FY2018/19 and 2019/20 and Budget Book of FY2020/21,
Siddharthanagar Municipality.

Table A10.15: Municipal Financial Situation Assessment for Sustainability of Project

infrastructure – Janakpurdham Sub-metropolitan City (In NRs million)
2018/19 2019/20 2020/21
Items
(Actual) (Actual) (Budget)

Revenues under Municipal Discretion19

18 All conditional grants and loans received are excluded to determine revenues under municipal discretion.
19
All conditional grants and loans received are excluded to determine revenues under municipal discretion.
 Appendix 10 73

Own source revenues 109.80 85.44 97.33

Revenues from revenue sharing 136.98 246.24 292.63
Equalization grant from GoN 327.70 349.60 338.40
Total 574.48 681.28 728.36
Expenditure on Public Works (Excluding IUDP) 134.67 223.91 258
Approximate expenditure for O&M of Public
13.46 22.39 25.80
Infrastructure (10%)
O&M Costs and Loan Repayment for Project
Estimated
Infrastructure
O&M cost for drainage and roads 24.13
Sub-loan repayment to TDF 13.72
% of Revenue under Municipal Discretion for
1.88%
Loan Repayment
% Project O&M Requirement to Total Estimated
46.76%
O&M
GoN = Government of Nepal, IUDP = Integrated Urban Development Project, O&M = operation and maintenance, TDF
= Town Development Fund.
Source: Revenue and expenditure statement of FY 2018/19 and 2019/20 and Budget Book of FY 2020/21,
Janakpurdham Sub-metropolitan City.

Table A10.16: Municipal Financial Situation Assessment for Sustainability of Project infrastructure
– Nepalgunj Sub-metropolitan City (In NRs million)
2018/19 2019/20 2020/21
Items
(Budget) (Actual) (Budget)

Revenues under Municipal Discretion20

Own source revenues 111.41 160.21 140.84
Revenues from revenue sharing 238.52 241.82 215.86
Equalization grant from GON 301.65 314.80 312.53
Total 651.58 716.83 669.23
Expenditure on Public Works (Excluding IUDP) 335.12 493.02 322.87
Approximate Expenditure for O&M of Public
33.51 49.30 32.28
Infrastructure (10%)
Solid Waste Management Expenditure 26.00 12.38 23.40
O&M Costs and Loan Repayment for Project
Estimated
Infrastructure
O&M cost for drainage and roads 19.37
O&M cost for solid waste management 35.00
Sub-loan repayment to TDF 16.44
% of Revenue under Municipal Discretion for
2.46%
Loan Repayment
% Project O&M Requirement to Total Estimated
30.00%
O&M
GON = Government of Nepal; IUDP = Integrated Urban Development Project; O&M = operation and maintenance, TDF
= Town Development Fund.
Note: The Municipality has fulfilled Solid Waste Management expenditure gap by mobilizing private sectors in SWM
collection form FY2020/21.
Source: Revenue and expenditure statement of FY2018/19 and 2019/20 and Budget Book of FY2020/21,
Janakpurdham Sub-metropolitan City.

20
All conditional grants and loans received are excluded to determine revenues under municipal discretion.
74 Appendix 11

PROJECT CONTRIBUTION TO ADB STRATEGY 2030 OPERATIONAL PRIORITIES

Table A11.1: Contribution of Project to ADB Strategy 2030 Operational Priorities

OP Achievement
OP Indicator Methods/Remarks
No.
36,155 poor and vulnerable Vulnerable from 84 poverty
Poor and vulnerable people
OP peoples living standard cluster get increased
with improved standards of
1.3 improved opportunity for basic urban
living
services and infrastructure
84 committees with 846
members for CDP was
formed of which 442
OP Women represented in
(52.24%) were women.
2.3 decision-making structures
1,774 persons participated in
and processes.
skill development training, of
which 896 (50.51%) were
women.
Women from 26,659
OP Women and girls with households in Dharan get
2.4 increased time savings improve piped water, which
reduces water fetching time
Improved road, drainage, solid Project constructed/rehabilitated
Pollution control enhancing waste management, tree 120.53 km drainage, 72.41 km
OP
infrastructure assets plantation reduced carbon road,1 sanitary landfill site, 329
3.3
established or improved footprint reported in appendix 2 community infrastructure and
4,056 tree plantations.
People benefiting from 27,500 beneficiary
OP
improved services in urban households from road project
4.1
areas
8600 new households served
with water supply
72 km urban roads
built/upgradeda
153 km drainage lines
OP Urban infrastructure assets rehabilitated/constructed
4.1.2 established or improved 440 km new water supply
pipes installed
1 sanitary land fill facility
constructed
Entities with improved urban
OP Four municipalities and
planning and financial
4.2 DUDBC.
sustainability
Comprehensive financial
management improvement plan
Measures to improve prepared helped to increase own
OP
financial sustainability Four municipalities. source revenue, support on
4.2.2
supported in implementation strengthening urban planning
through preparation of building
and planning by laws
Improved water quality in one
Zones with improved urban municipality, improved SWM in
OP environment, climate one municipality, green house
4.3 resilience, and disaster risk and carbon emission reduced
management through improved transport
efficiency, increased city green
 Appendix 11 75

OP Achievement
OP Indicator Methods/Remarks
No.
areas through roadside
plantation in four municipalities
and park construction in one
municipality.

With implementation of large

contract requiring modern
Enhanced governance and
OP technology helped to enhance
institutional capacity for
6.2 municipal capacity, the
service delivery
disclosure requirement of the
project enhanced governance
ADB = Asian Development Bank; km = kilometer; OP = operational priority.
a
14.58 km in Janakpur, 22.30 km in Nepalgunj, 14.06 km in Siddharthanagar, and 21.47 km in Dharan.
Source: Asian Development Bank.