Actual Project Name : Urban Infrastructure & Project Costs (US$M US$M): Sector Board : Water Cofinancing (US$M US$M): US$M):

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1 Public Disclosure Authorized IEG ICR Review Independent Evaluation Group Report Number : ICRR Project Data: Date Posted : 06/27/2013 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Country: Bosnia and Herzegovina Project ID : P Appraisal Actual Project Name : Urban Infrastructure & Project Costs (US$M US$M): Service Delivery Project L/C Number: C3954 Loan/Credit (US$M US$M): Sector Board : Water Cofinancing (US$M US$M): Cofinanciers : Board Approval Date : 07/08/2004 Closing Date : 12/15/ /30/2011 Sector(s): Water supply (65%); Sub-national government administration (25%); Sanitation (10%) Theme(s): Other urban development (67% - P); Conflict prevention and post-conflict reconstruction (33% - S) Prepared by : Reviewed by : ICR Review Group: Coordinator : Kavita Mathur Robert Mark Lacey Soniya Carvalho IEGPS1 2. Project Objectives and Components: a. Objectives: According to the Development Credit Agreement (DCA, Schedule 2, p. 21), the objectives of the project were to: "(i) improve the availability, quality, and reliability of delivery of basic municipal services, in particular, water supply and sanitation; (ii) strengthen the ability of Cantonal and municipal governments to improve management and institutional capacity for infrastructure development through urban management development plans; and (iii) foster deeper social cohesion through improvement in overall living conditions." According to the Project Appraisal Document (PAD, p. 2) the objectives of the Project were to: "(i) improve the availability, quality, and reliability of delivery of basic municipal services, in particular, water supply and sanitation; (ii) strengthen the ability of Cantonal and municipal governments to improve management and institutional capacity for infrastructure development through Urban Management Development Plans; and (iii) where possible, foster deeper social cohesion through improvement in overall living conditions". The main difference between the DCA and PAD formulation of the objective was the use of where possible for (iii) in the latter. This ICR Review uses the DCA formulation of the objectives since it is more monitorable. On June , the Board approved Additional Financing of US$5 million. The project development objectives were unchanged. b.were the project objectives/key associated outcome targets revised during implementation?

2 No c. Components: There were five components. Budget amounts allocated to each component were not specified in the PAD. A. Institutional Strengthening (actual cost is included in component B). This component was to finance: (a) provision of, and training on financial management for institutional strengthening and capacity building; (b) support for the drafting of annual Business Plans for each Utility; (c) training on preparing Urban Management Development Plans; and (d) a study to assess and build institutional capacity of the different levels of Government; and other appropriate capacity building measures. B. Urban Management Development Plans and Investments (actual cost US$10.05 million). This component was to finance preparation of Urban Management Development Plans for selected areas to identify priorities for improving operations and maintenance to maximize investment benefits. The Plans would analyze the present levels of operational efficiency, detail the past levels of maintenance, identify the physical assets that need to be rehabilitated, and determine components in the existing systems to meet the demands of service. This component would also finance investments in selected service sectors based on the conclusions of the strategic planning process. This component would target: Banja Luka, Livno, Mostar, Sarajevo, Tuzla and Srebrenica (additional funding was expected to be secured from other donors under this component). The Additional Financing would cover the needs for Mostar. Specifically, it would support implementation of the Plan for Mostar focused on improvement of the efficiency and administration of service delivery and sub-projects that will be identified as priority investments in the Plans. C. Investments for Improved Efficiency (actual cost US$14.20 million). This component was to finance least cost priority investments for system improvement, lowering energy usage, and related investments for water supply and sanitation utilities. Because of the vast differences in institutional capacity and financial performances of the water supply and sanitation utilities, the utilities were grouped in three categories. Group A, would comprise three utilities (Banja Luka, Lukavac and Posusje) selected up front, which had benefitted from financial, institutional, technical, environmental and social work during project preparation. They would be expected to become financially viable and cover all their operating and maintenance costs by Group B utilities would be selected during the first year of project implementation, from those that have undergone the same preparation work undertaken for Group A utilities, but would be expected to reach financial viability by Group C utilities (Stolac, Srebrenica and Vares) would be in areas lacking social cohesion after being badly affected by the war and for financial, social and economic reasons, these utilities could not be expected to reach financial viability during project implementation. As a result, Group C utilities would be provided with small amounts of International Development Association credit, in addition to grant financing that the Bank would seek to attract from other donors, to perform priority investments in the water sector. The Additional Financing would cover least cost priority investments for rehabilitation of three utilities from Group C (Srebrenica, Stolac, and Vares), also targeting system improvement, lowering energy usage, investments related to rehabilitation of water supply and sanitation network, equipment and materials for the repair and maintenance of the primary distribution network.

3 D. Engineering Services (actual cost US$0.30 million). This component was to finance: planning and design; engineering for the preparation of final designs and bidding documents; and assistance with procurement and supervision of construction for investments. E. Project Implementation (actual cost US$0.45 million). This component was to finance costs related to project implementation such as incremental operating costs related to all relevant expenses, salaries, audits; guidance and training for Utilities and local governments on project implementation; and a stakeholder education campaign on linkages between improved service and willingness to pay. d. Comments on Project Cost, Financing, Borrower Contribution, and Dates: Project Costs: The cost of the project at appraisal was estimated at US$22.50 million. The actual project cost was US$28.15 million. There is discrepancy in total project costs between the ICR (Annex 1) and Project Portal. Annex 1 does not include the borrower contribution of US$3.1 million. It is not clear whether the Additional Financing was included in the cost figures in Annex 1. Financing: The originally approved credit was US$20.0 million. In 2007, an Additional Financing (AF) of US$5.0 million was approved, bringing the total credit to US$25 million equivalent. The AF was to support the implementation of the Urban Management Development Plan in Mostar and least-cost priority investments in Group C water supply and sanitation utilities for system improvement. Actual disbursements of IDA funds was US$24.8 million. There were no other sources of external financing. Borrower Contribution: At appraisal the Borrower planned to contribute US$2.50 million. When Additional Financing for the project was processed, the Borrower committed an additional US$0.65 million, bringing the total Borrower planned contribution to US$3.15 million equivalent. The actual Borrower contribution was US$3.71 million. Dates: The project was initially planned to close on December 15, However, the project closing date was extended twice, first, in June 2007 to coincide with the approval of the Additional Financing by one year to December 15, Second, in July 2010, in light of implementation and procurement delays and to enable the completion of works and achieve target outcomes especially for Mostar, the closing date was further extended by six months until June 30, Relevance of Objectives & Design: a. Relevance of Objectives: High At appraisal, the quality of services provided by municipalities was low. 47% of the population of Bosnia and Herzegovina did not have access to public water supply, 60% were not connected to the sewerage system, and only 45% of those connected had continuous 24-hour supply, and water rationing was common. The water and waste water network was in a dilapidated state: 50%-80% of the pipes needed replacement, leakage was up to 60% in some systems; energy use was high, equivalent to 50% of total operating costs in many utilities; and lack of source protection compromised water quality. These issues were further compounded by the critical financial state of municipalities due to low collection, low

4 tariffs, and lack of maintenance. The project objectives were relevant to the Bank s Country Partnership Strategy for Bosnia and Herzegovina for the period and directly respond to Pillar 2 "Improving the quality of Government spending and the delivery of public services for the vulnerable". This includes improving the delivery of municipal services and strengthening municipal finance. They are also relevant to a further strategic Bank priority of enhancing infrastructure investments and assisting municipalities to improve service delivery while supporting a community development approach, especially for the poorest municipalities. Project objectives were relevant to Government priorities. The Government's Medium Term Development Strategy (2004) aimed at improving service delivery to improve the living standards of the 80% of the population living in urban areas. The Urban Services Sector Strategy aimed to improve service quality by focusing on rehabilitation versus expansion, creating conditions of financial autonomy of utilities by increasing revenue generation to cover operational costs, through tariff adjustments. b. Relevance of Design: Modest For the first and second PDOs, the results framework linked inputs to expected outputs and outcomes in a logical causal chain. However, for the third PDO - fostering deeper social cohesion, there was no causal link developed between the project's components and the outputs and outcomes necessary for the achievement of this objective. 4. Achievement of Objectives (Efficacy): The objectives of the project were to: (i) improve the availability, quality, and reliability of delivery of basic municipal services, in particular, water supply and sanitation; (ii) strengthen the ability of Cantonal and municipal governments to improve management and institutional capacity for infrastructure development through urban management development plans; and (iii) foster deeper social cohesion through improvement in overall living condition. Each of the three parts of this objective statement are assessed separately below: 1. Improve the availability, quality, and reliability of delivery of basic municipal services, in particular, water supply and sanitation: Modest. Outputs 113 km of water and sanitation network pipes (in Posusje, Cazin, Bosanka Krupa, and Vares) were rehabilitated, surpassing the target value of 40 km. Of the three pre-identified Group A utilities, investments were made in two: Banja Luka, and Posusje. In Banja Luka, a water treatment plant was rehabilitated and a 7000m 3 treated water storage facility was built. In Posusje, major components of the water system were built including 5 km of a water supply pipeline (Tribistovo-Posusje), a water treatment plant, and a 3000m 3 water reservoir. Investments were made in the following three Group B utilities. In Pale, a leakage detection program was undertaken and related equipment was purchased for Jahorina water system (Jahorina is a village in the municipality of Pale). Remote water consumption reading equipment was installed, and sewerage main between Jahorina and Pale was rehabilitated and secondary networks extended. In Cazin, 43 km of primary water supply networks was rehabilitated and extended. In Bosanka Krupa, 22km of water supply network was rehabilitated and 9,000 water meters installed. Investments were made in the following three Group C utilities. In Sbrebrenica, various sections of

5 the water supply system and related facilities were upgraded. In Vares, 43 km of water supply network was rehabilitated, the main pumping station was upgraded, the system regulation equipment installed, and utility operational equipment procured. In Stolac, equipment was acquired for cleaning septic tanks and tools for network maintenance. Investments were made in three cantons (Tuzla, Banja Luka, and Livno) and two municipalities (Mostar and Srebrenica), based on the conclusion of the strategic planning process under the project. In Tuzla, two water treatment plants (Kalesija and Teocak) and a mechanical wastewater treatment plant for water flowing into the Zivinice reservoir were constructed. In Livno, various infrastructure works were carried out. These included: rehabilitation of water and sewerage networks, public lighting and local roads. In Banja Luka 8.7 km of locals roads were rehabilitated. In Mostar, a city-wide parking management system was implemented. In Srebrenica, five residential buildings were refurbished. To improve service quality, six utilities (Banja Luka, Posusje, Cazin, Pale, Bosanska, Krupa and Vares) established feedback mechanisms for customer service, against a target of four. Outcomes Water Supply and Sanitation Availability As a result of the project investments, 189,000 inhabitants gained access to water supply services in Banja Luka, Posusje, Bosanka Krupa, Cazin, Pale, Vares, Srebrenica, Kalesija, Teocak, Sredevici ( Canton Livno), and Glamoc (Canton Livno). No targets were specified. Quality In Posusje, Kalesija, Teocak, drinking water is in compliance with national quality standards. The ICR does not report on water quality in other municipalities/cantons. Reliability In Banja Luka, 24 hour continuous water supply was achieved for 80,000 inhabitants (27% of city population). In Vares, continuous water supply was achieved for 14,000 inhabitants. In Srebrenica, continuous water supply was achieved for 4,000 inhabitants. Reliability for other municipalities is not discussed in the ICR. In Pale for the Jahorina water system, there was reduction in water losses. Water losses decreased from from 73% to 38%, exceeding the target of 10% improvement. In Vares, reduction of losses from %45 to 30%. Roads: As a result of road improvements in Livno, 18,000 people are now connected to urban centers for the first time. 2. Strengthen the ability of Cantonal and municipal governments to improve management and institutional capacity for infrastructure development through urban management development plan: Modest. Outputs Six Urban Development Management Plans were completed for Tuzla, Banja Luka, Sarajevo, Mostar, Srebenica, and Livno; against a target of seven. A spatial development plan for Republika Srpska, and a financial reintegration report for Mostar were also prepared.

6 28 staff from six utilities were trained in municipal finance and tariff policy; 12 staff were trained in procurement; and 20 staff from seven utilities were trained in customer service program. There was no target for the number of staff to be trained The project supported 12 water utilities (Banja Luka, Cazin, Posusje, Pale, Bosanska Krupa, Vares, Stolac, Srebrenica, Teocak, Kalesija, Livno, and Kupres. Out of which seven utilities (Banja Luka, Cazin, Pale, Bosanska Krupa, Vares, Stolac, and Srebrenica), prepared annual business plans compared to the target of six. Outcomes The ICR reports that the capacity of local authorities to issue construction permits was enhanced through land use plans. However, the ICR does not provide evidence to support this. 3. Foster deeper social cohesion through improvement in overall living condition: Negligible. Outputs No project activities were designed specifically to support this objective. Outcomes The ICR reports (p. 12) that stakeholders from different entities or ethnic groups had opportunities to increase cooperation while working on physical infrastructure. For example, the Banja Luka municipality supported Srebrenica during the preparation of Urban Development Management Plans. The ICR reports that the project assisted in the reintegration of Mostar, which had been divided along three ethnic lines. It also reports that the project fostered the improvement of customer services culture within utilities. However, it does not provided evidence in support. The project did not assess the impact of social cohesion through improvement in overall living condition in the municipalities that the project supported. 5. Efficiency: No Economic Rate of Return (ERR) was calculated at appraisal. The PAD (p. 14) states that "all sub-projects are economically justified since the project generated savings in operations and maintenance costs that exceeded discounted investment costs." The ICR attempts no cost-benefit on the grounds that the original project design specified no procedures for economic analysis and subproject appraisal. As a result, project efficiency is difficult to evaluate and limited to general assessments (page 14). The ICR computed unit costs for the urban water system investments and arrived at US$95 per inhabitants (based on water investments of about US$18 million benefited 189,000 inhabitants) and concluded that the urban water system investments were "very efficient". For Kalesija and Teocak the unit costs were 75 and 121 US$ per inhabitants. However, the ICR does not provide comparative figures for similar project from other countries. The project closing date was extend by 18 months to accommodate Additional Financing and to complete sub-projects due to procurement delays. Efficiency is rated modest. a. If available, enter the Economic Rate of Return (ERR ERR)/Financial Rate of Return (FRR FRR) at appraisal and the re-estimated estimated value at evaluation : Rate Available? Point Value Coverage/Scope* Appraisal ICR estimate No No

7 * Refers to percent of total project cost for which ERR/FRR was calculated. 6. Outcome: The relevance of project objective was substantial and the relevance of design was modest. The efficacy of the first project objective to improve the availability, quality, and reliability of delivery of basic municipal services is rated modest. The performance was uneven across utilities and the ICR lacks complete evidence. The second objective -- strengthening the ability of cantonal and municipal governments to improve management and institutional capacity for infrastructure development through urban management development plans -- is also rated modest. The third objective -- foster deeper social cohesion through improvement in overall living conditions is rated negligible since no project activities or outputs were linked to it. Efficiency is rated modest, as the ICR attempted no convincing ex post analysis and there were operational inefficiencies. a. Outcome Rating : Moderately Unsatisfactory 7. Rationale for Risk to Development Outcome Rating: There is a significant risk that financial viability through gradually decreasing inefficiencies and increasing revenues to cover adequate operating and maintenance expenditures and debt service will not be achieved. Only two out of four Group A/B utilities, which were reported to be financially viable, had an operating ratio of less than 1 (i.e. operating revenues were sufficient to cover annual costs of operation, including depreciation). The risk of adequate prioritization of infrastructure development through Urban Management Development Plans (UMDPs) is assessed as low. Five out of six completed Plans have been adopted by the concerned authorities and plans for their application mainstreamed in local governance systems. At least four beneficiaries have begun implementing planned activities. a. Risk to Development Outcome Rating : Significant 8. Assessment of Bank Performance: a. Quality at entry: Since the end of the war, the World Bank remained involved in policy dialogue and investments during a time when other donor financing declined or shifted to providing only technical assistance. This project was the first Bank project in Bosnia and Herzegovina to support sub-national institutions by financing investments based on their priorities and reinforced municipalities role in service delivery. Articulating upstream planning capacity building and building priority physical investments through Urban Management Development Plans (UMDPs), the design reflected the government s strategy to shift the focus from emergency reconstruction to better planned/sustainable development. The risks were appropriately identified and mitigation measures were included in the PAD. The safeguards identification was also satisfactory. Many project interventions with water utilities and local governments were relatively low-cost/high-impact activities, justified by the expansion in the number of beneficiaries. The open-ended strategy for identifying utilities revolved around a sound selection process, which is recognized in IEG's Special Study of 2009 "Improving Municipal Management for Cities to Succeed". The selection process was: (i) flexible, enabling utilities to benefit at their convenience; (ii) inclusive, creating high-level local ownership by fostering competition among utilities; and (iii) progressive, spreading procurement efforts by the PMT over several years. The selection process was also incremental, capitalizing on early experiences and on the support provided by more advanced utilities to less developed ones. Beneficiaries with various levels of capacity and experience were selected to

8 participate in shared training events, successfully created mentoring dynamics between them. However, there were some shortcomings in the project design: (i) the results framework was incomplete, as no baseline or target values were defined, while the results chain for the social cohesion part of the PDO was missing altogether;(ii) the project lacked an elaborated rule-based financing allocation framework and criteria specifying the number of participating utilities, which are key features of a demand-driven approach; and (iii) it lacked a financial and economic analysis framework that would have enabled the setting of clear efficiency objectives and monitoring of their achievement. Quality-at at-entry Rating : Moderately Unsatisfactory b. Quality of supervision: The ICR reports(p. 16) that the Bank team performed regular supervision missions and proactively raised issues for management consideration in a timely and transparent manner and resolved problems quickly. For instance, during delays in Mostar and Lukavac (due to political issues beyond Project control), the task team initiated problem solving on how to move forward by reallocating resources and dropping Lukavac from the project. However, the Bank team could have been more pro-active in addressing weaknesses in the M&E framework so that progress towards achieving the development objectives could be more easily measured. Quality of Supervision Rating : Moderately Satisfactory Overall Bank Performance Rating : Moderately Unsatisfactory 9. Assessment of Borrower Performance: a. Government Performance: The Government's commitment to the project is reflected by its 18% higher contribution than planned. The ICR reports that cooperation with the Bank Team was good and issues were dealt with collaboratively (ICR p. 16). The Government of the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska demonstrated strong commitment to the Project by selecting a single Project Management Team for implementation. This enabled the Government to (i) concentrate capacity-building in one implementation team; (ii) simplify implementation arrangements since at Entity level (in FBiH), water sector responsibility is shared among Ministries; (iii) foster knowledge sharing among beneficiaries of both Entities; and (iv) reduce the project management burden and costs. There were difficulties in Mostar and Lukavac during implementation at the municipal government level. Lukavac was dropped and Mostar experienced implementation delays which led to the extension of the closing date. In Mostar, a political stalemate froze the city council for more than a year after local elections, delaying all Project activities in October 2008, and the Lukavac water utility lost municipal support after a political turnaround. Government Performance Rating Moderately Satisfactory b. Implementing Agency Performance: The Project was implemented under the Ministry of Foreign Trade and Economic Relations at the State level. As discussed above, a Project Management Team (PMT) was established in the Ministry

9 of Foreign Trade and Economic Relations. The PMT consisted of a PMT Head, Procurement Manager, Procurement Officer, Financial Manager and an Assistant. The PMT was responsible for all fiduciary aspects, including financial management and procurement. At the field level, 20 Project Implementation Teams (PITs) were established to handle the day-to-day implementation of the project. They were located in each of the Utilities and Cantonal Ministries. The PITs consist of a Procurement Officer and Financial Officer. The PMT pooled beneficiaries according to their capacity and readiness levels, which allowed the PMT to focus on procurement and monitoring efforts with more advanced clients before proceeding to assist the less advanced. The PMT provided close support and intensive training to all Implementation Teams. The ICR reports (p.6) that the advanced beneficiaries provided substantial support to the less advanced ones in the preparation of bidding documents, in contracts management, strategic planning, and even beyond formal project activities. Implementing Agency Performance Rating : Satisfactory Overall Borrower Performance Rating : Moderately Satisfactory 10. M&E Design, Implementation, & Utilization: a. M&E Design: There were several weaknesses in the M&E design framework: There was a disconnect in M&E design between the outcome and output targets and the nature of the investments financed. For example, water loss reduction was monitored in Banja Luka but investments focused on the treatment plant; There were no baseline or target values; The three main outcome indicators were defined in purely qualitative terms; and No methodology was provided. b. M&E Implementation: Indicators and baselines were updated with support from the Region's Portfolio Quality Unit after the selection of Group B utilities in The performance indicators were disaggregated to utility level. The target values for the first objective were not defined. With regard to social cohesion, the proposed indicator - an increase in social capital, was to be based on a social assessment study (in 2004 (baseline) and 2010). However, the indicator was not broken down for measurement purposes into any of the dimensions of social capital discussed in the study. c. M&E Utilization: The use of M&E data was limited to monitoring the progress of the project and not in measuring progress towards achieving the objectives. M&E Quality Rating : Negligible 11. Other Issues a. Safeguards: Environmental Safeguards:

10 The project was classified as an Environmental Category B. It triggered two safeguards: Environmental Assessment (OP/BP 4.01) and Projects on International Waterways (OP/BP 7.50), however an exemption was obtained for the latter. According to the PAD, Environmental Management Plans (EMPs) were prepared for the four sub-projects identified at appraisal. For sub-projects identified after appraisal, an Environmental Screening and Evaluation Procedures (ESEP) was prepared and disclosed. According to the ICR (p. 9), the project was in compliance with OP However, "minor deficiencies" were noted during the implementation of the EMPs, which were countered through additional training provided to the Project Management Team and selected utilities in 2009, in addition to the regional training on environmental compliance. The ICR does not discuss the staffing of the implementing agencies in relation to environmental monitoring. Social Safeguards: According to the ICR (p. 9) the project faced no social safeguard issues, as anticipated during project preparation, requiring land acquisition or resettlement. A resettlement policy framework was prepared even though OP4.12 was not triggered. b. Fiduciary Compliance: Financial Management: The ICR (p. 9) reports that financial management was satisfactory. International auditors were recruited as Bosnia and Herzegovina lacked local auditing firms that complied with the World Bank requirements. International auditors were costly for smaller utilities. The Bank assisted in selecting local auditors. The ICR does not indicate whether the submission of the auditors' reports was timely or if any issues were raised. Procurement: The ICR (p. 9) reports that during implementation, procurement planning, staffing, filing and actions/decisions, physical inspections were satisfactory. The ICR does not indicate whether any procurement related training was received by designated Project Management Team staff. No cases of mis-procurement were reported. c. Unintended Impacts (positive or negative): None reported in the ICR. d. Other: None reported in the ICR. 12. Ratings: Outcome: Satisfactory Risk to Development Moderate ICR IEG Review Moderately Unsatisfactory Significant Reason for Disagreement /Comments The relevance of project objectives was substantial and that of design modest. The efficacy of two of the three sub-objectives was rated modest due to lack of evidence, and the other negligible because there were no outputs or outcomes linked to the objective. Efficiency is rated modest.

11 Outcome: Bank Performance : Moderately Satisfactory Borrower Performance : Satisfactory Quality of ICR : Moderately Unsatisfactory Moderately Satisfactory Satisfactory There is a significant risk that financial viability through gradually decreasing inefficiencies and increasing revenues to cover adequate operating and maintenance expenditures and debt service will not be achieved. Only two out of four Group A/B utilities, which were reported to be financially viable, had an operating ratio of less than 1 (i.e. operating revenues were sufficient to cover annual costs of operation, including depreciation). Both the IEG and ICR rated Quality at Entry as moderately unsatisfactory and the quality of supervision is rated moderately satisfactory. The overall performance rating in such circumstances is determined by the outcome rating. There were moderate shortcomings in government performance (See Section 9a above). NOTES: - When insufficient information is provided by the Bank for IEG to arrive at a clear rating, IEG will downgrade the relevant ratings as warranted beginning July 1, The "Reason for Disagreement/Comments" column could cross-reference other sections of the ICR Review, as appropriate. 13. Lessons: The following lessons are adapted from the ICR: Projects where design focuses on a few essential core activities are more likely to succeed in fragile post conflict environments. Expanding capacity through mentoring between beneficiaries can be instrumental in fostering close partnerships between different stakeholders. If a project is suffering from design deficiencies such as a weak results chain or an inadequate M&E framework, these issues can be addressed through a level 2 restructuring. Infrastructure investments can achieve efficiency and sustainability when accompanied by appropriate policy measures to address systemic causes of sector inefficiencies. Despite significant infrastructure outputs and service improvements under the project, many utilities still faced operational and financial challenges at completion. 14. Assessment Recommended? Yes No

12 To verify the ratings and permit a closer consideration of the issues stemming from fragile institutions in post-conflict country context. Why? 15. Comments on Quality of ICR: The ICR is clearly written. Lessons are drawn from project experience. However, there are some shortcomings: (a) there is discrepancy in project costs between the ICR (Annex 1) and Project Portal; (b) Annex 1 does not include the borrower contribution of US$3.1 million; (c) it is not clear whether the Additional Financing was included in the cost figures in Annex 1; and (d) the ICR did not calculate ex-post Economic Rate of Return and the analysis of efficiency was weak. a.quality of ICR Rating : Satisfactory