Many public resource reforms, especially those relating to taxes or concessions as in the SPBL, have political and economic implications and are often difficult to undertake without strong ownership. The SPBL implementation success is attributable to (i) a good understanding of the vested interests, (ii) the institutional capacity of government agencies, (iii) effective partnership and coordination between ADB and the government, and (iv) a strong sense of appreciation for the overall benefits of the program.
This special policy-based loan (SPBL) was developed in close consultation with the government and development partners, including the International Monetary Bank and the World Bank, and was designed through a holistic approach. The experience demonstrated that a comprehensive and holistic consultation process can ensure effective diagnosis of the issues, leading to a strong, relevant policy matrix that prioritizes reform measures and sets realistic timelines in collaboration with the development partners.
While the key urban sector and executing agency for this project, the Ministry of Urban Development (MUOD), adopted a structure for GESI mainstreaming with separate budget head, this initiative faced challenges after the country’s administrative 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. Nevertheless, using the resource materials developed under this project as guide, the GESI-trained staff in the divisions can push for establishing and institutionalizing GESI in the new structure of the provinces and at the local level. This would require revising MOUD’s GESI operational guidelines 2013 to define the roles and responsibilities in all tiers of government.
Neither the ADB project team nor project coordination office could fully comprehend the financial management requirements and financial covenant issues raised during this project’s review missions. As such, they were unable to follow up on audit opinions and recurrent issues, leading to the recurrence of the same issues and delays in submitting the audited project financial statements This improved only with the inclusion of a financial management staff toward the project’s end.
Part of the project’s design innovation is the construction of modern SLS. The Nepalgunj SLS construction was successful due to continuous community engagement, cooperation among political leaders, and early implementation of a community development program targeted at communities living near the SLS. However, the SLSs in Janakpur and Siddharthanagar had to be dropped, as nearby communities did not agree to their construction. Due to haphazard operation of existing SLSs and dumping sites, there is a growing “not in my backyard” syndrome in these communities towards SWM facilities. Discord among local political leaders, inadequate coordination at inter-local level, and political misunderstanding disrupted stakeholder engagement and contributed to the two sites’ cancellation.
The initial design of this project was delayed and required modifications during implementation mainly due to the unavailability of information on existing underground utilities such as by plan profile and as-built drawings. Final designs were likewise not always comprehensive, necessitating variations for most contracts, resulting in both startup delays and contract modifications. In future, ADB should ensure that the scope of work of design consultants for urban development projects include an assessment of all existing utilities, including those underground. Also, that the consultants make every effort to meet their deliverables, comply with the agreed schedules and contract obligations, and respond to requests from client governments and ADB.
The non-achievement of some GAP targets under could have been avoided if remedial actions were done during the MTR. Specifically, the agreed relegation of the setting up of the nonrevenue water (NRW) task force to the Public Health Engineering Department and the agreed reduction of the target number of women marshals should have been formally documented or reflected in the MTR aide memoire. This lesson underscores the need to regularly monitor the GAP progress to identify unrealistic targets and for the ADB responsible gender officer or assigned consultant to participate in the MTR mission to raise corrective measures.
Three covenants related to financial management were not complied with. No APFS and AEFS were submitted for FY 2008. The APFSs for FY2018 were rejected as they included a combined audit report for all three MFF projects despite separate reports and opinions being required. Also, AEFSs for FY 2017 and prior years were combined with APFSs. These non-compliances may have been avoided if ADB monitored and followed up closely on the submissions made in line with the financial loan covenants.
While the design of projects 1–3 at appraisal was appropriate to achieve the expected outcomes and outputs, it could have considered incorporating comprehensive end-to-end solutions such as 24/7 water supply with O&M arrangements built in construction contracts. This would have maximized the benefits from the improved water supply systems and enhanced the sustainability of both the project benefits and assets.
Program implementation was hampered by procurement delays due to limited contractor interest and state capacity, on-and-off civil unrest, and the historic 100-year flooding in 2014. Prolonged recruitment of the initial PMC and DSC (15 months) and their replacements (17 months for the new PMC while the new DSC was recruited only in July 2014) also caused significant delays alongside slow-moving works contracts and the need to rebid poorly performing contracts. The new PMC and DSC performed substantially better than their predecessors. However, the delivery of their services was held back by site constraints, design changes, and delays in finalizing the drawings. In future, a realistic timeframe for consultant recruitment, detailed design development, and civil works contracts should be ensured to mitigate the risk of implementation delays.
The financial sustainability analysis conducted at MFF completion showed that there are enough state operating receipts to meet the O&M expenses of the project facilities. Given that the operating institutions did not achieve recovery of the O&M costs as envisaged at appraisal, fiscal transfers from the state and central governments need to continue to ensure the sustainability of the project assets.
All the subprojects planned at appraisal, except for tourism, were implemented. The tourism subproject, planned to be undertaken in five towns, had to be dropped because of security reasons. Also, during implementation, state capacity was found more constrained than assessed at appraisal, leading to delays in capacity building and the reform program. More careful assessment of EA/IA capacity and the local context is needed to ensure a realistic project scope and implementation period.
The overlapping implementation periods between project 1 and then-ongoing ADB Loan 2151 and other national programs, and concurrent preparation and appraisal of projects 2 and 3 of the MFF imposed a heavy burden on the ERA. Exacerbating this burden was the initially weak capacity of project implementation units (PIUs). ADB providing greater implementation support, particularly for the preparation of subsequent tranches, would help address this challenge in future MFFs. Such support would also help enhance the quality of subsequent tranches of the MFFs and mitigate the risk of implementation delays.
Safeguards implementation arrangement in the ERA was adequate. An officer with the rank of chief engineer was deputed as the director of safeguards and was supported by four environmental and resettlement experts responsible for implementing safeguard requirements. Two officers from the state revenue department were posted as land acquisition officers. These land acquisition officers provided much-needed support to the high-powered committee Divisional Level Committee established by the state government to fast-track the implementation of the resettlement plans for subprojects under projects 2 and 3. Creating a land acquisition office in the PMU to manage unavoidable involuntary resettlement may be explored in ongoing and future projects.
During the preparation of the multitranche financing facility (MFF) in 2007, only outline plans and designs were required to formulate the investment program and generate cost estimates to secure the proposed ADB financing. This meant that detailed surveys and designs had to wait after the approval of the periodic financing requests. But as the recruitment of the first project management consultant (PMC) and design and supervision consultant (DSC) took 15 months, MFF startup and the development of detailed designs for project 1 were significantly held back. By the time all contracts were awarded, and project 1 implementation went full swing, it was already past midpoint of the original implementation period for the whole program. The delay in the completion of project 1 amounted to 61 months. By contrast, although there were spillover works that needed to be finished post-MFF completion, projects 2 and 3 were both completed with minimal delays of three months each. Early preparation of the detailed designs for these projects, concurrent with the implementation of project 1, was key to the timelier completion of these projects.
This program comprised 29 policy actions: 11 for subprogram 1 and 18 for subprogram 2. The total number of policy actions was significantly large, particularly in subprogram 2, and represented a challenge in monitoring and implementation. The number of policy measures should be limited so that ADB can monitor compliance with them effectively throughout the program.
PFM and SOE reforms to ensure fiscal sustainability, like those in the program, have political and economic implications and are difficult to undertake without strong ownership. The implementation success of such policies resides in (i) a good understanding of vested interests; (ii) the government’s strong commitment; (iii) the institutional capacity of government agencies; (iv) effective partnership and coordination between ADB and the government; and (v) a strong appreciation for overall program benefits. All these were observed in the program.
This program was developed in close consultation with the government and development partners including the International Monetary Fund, World Bank, Agence Française de Développement, and United Nations Development Programme, and was designed through a holistic approach. It demonstrated that a holistic consultation process can ensure effective diagnosis of the issues, leading to a relevant policy matrix that prioritizes reform measures in collaboration with the development partners.
This program supported the preparation of the medium-term framework (MTBF) and MTBF manual, including gender-responsive budgeting tools at the MOF. Program experience has highlighted that institutionalizing change-management practices among those charged with implementing reforms requires enhancing both technical and change management competency. It is also necessary to enable the government to sustain capacity development programs beyond the life of a program for instance, by providing training experts, particularly to develop soft capacities.
This program successfully tackled a wide range of highly complex, interlinked issues. In addition to the appropriate sequencing of reforms, its success was attributable to the development of adequate capacity among key stakeholders, including the Ministry of Finance (MOF), Central Bank of Uzbekistan, and State Asset Management Agency. Capacity development was made possible by the provision of ADB technical assistance.
Although none of the 37 contracts under this project experienced any implementation delays, the performance of the contractors could have been better with respect to the quality of work and the technical specifications and construction standards. Specific issues were (i) design-related, affecting certain circuit-breakers, concrete poles for distribution lines, the size of pre-cast foundations, cross-arms, and system earthing; and (ii) construction-related, such as the stringing of transmission and distribution lines, installation of self-supporting insulated wire distribution lines, compaction of ground, installation of pre-cast foundations for steel lattice towers, anchor bolts for substation equipment, and grouting. These issues were either partially resolved or recommended for better technical specifications in future tranches of the MFF. Employing national and international best practices will be key to improving the quality and technology in future tranches. Encouraging contractors to improvise where possible and introduce new technology standards, incorporating lessons learned and issues identified in the technical specifications for the initial tranche, and prompting the project management units to be more proactive in using the project management consultant to develop the capacity of the operational staff on new technology and standards will also be helpful.
This MFF’s tranches 2 and 3 were supposed to be approved in November 2017 and March 2018, respectively. However, the restrictive approach taken by Azerbaijan to public external borrowing, which was absent at appraisal time, led to the deferment of these tranches. It might have been possible to push through with these tranches if they were processed close to the start of tranche 1, with the locations and routes identified upfront and thoroughly analyzed for potential construction and safeguard impacts. Overlapping processing and implementation of the first and subsequent tranches would have maintained the implementation momentum and maximize the benefits from the MFF.
Unaddressed comments from the executing agency (EA) for the Toktogul rehabilitation works, the Electric Power Plants (EPP) joint-stock company, left questions regarding the quality of the dam safety assessment component of this project. A report on this assessment was provided and accepted by the EA in-charge of the soft components and which also managed the assessment, the Ministry of Energy and Industry (MOEI). An unclear communications chain complicated matters, as the consultant disregarded EPP’s comments unless received via MOEI. In future, careful and adequate thought should be given to selecting the most appropriate EA, considering as well likely organizational changes that could impact implementation. For example, frequent changes in the government’s ministerial structures under this project hindered continuity and the smooth implementation of some components.
Often, not enough attention is given to developing indicators that are precise and can be easily assessed in post-project evaluations. In this project, the impact indicators of increased exports and increased domestic supply did not foresee the high growth in domestic demand that prevented the export target from being achieved. In this case, total supply, i.e., exports plus domestic supply, would have been a better indicator. Similarly, the output indicator of reducing commercial losses to 10% by the end of the project was poorly selected because KESC’s identifying losses is only the first step. The second step would be to introduce a targeted loss reduction program. It should also be noted that the design and monitoring framework wrongly categorized total distribution losses, including technical and commercial, as commercial losses. Recurrence of these shortcomings in future projects should be avoided as it could hamper and impact on the reliability of performance evaluations.
This project experienced some implementation delays and had two loan extensions. Toktogul’s rehabilitation was delayed by almost 2 years due to a lack of responsive bidders during the initial bidding. The establishment of the Kyrgyz electricity settlement center (KESC) was delayed by 3 years because of difficulties, including disagreements, in developing the implementation consultant’s TOR and incompatibility between the KESC server hardware and the metering and data acquisition software. Two lessons emerge from this experience: (i) contracts need to be carefully packaged, i.e., the initial Toktogul HEPP contract should have been broken into separate lots, while the two separate KESC packages for server hardware and metering software packages should have been combined to improve compatibility; and (ii) clear consultants’ TORs should be developed and agreed by all relevant stakeholders well before implementation, especially when there are complex issues to be resolved.