Doeumentof The World Bank FOR OFFICIAL USE ONLY EMERGENCY PROJECT PAPER ONA PROPOSED GRANT IN THE AMOUNT OF US$18.4 MILLION TO THE. REPUBLIC OF LmERIA

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Doeumentof The World Bank FOR OFFICIAL USE ONLY EMERGENCY PROJECT PAPER ONA PROPOSED GRANT IN THE AMOUNT OF US$18.4 MILLION TO THE REPUBLIC OF LmERIA FORAN EMERGENCY MONROVIA URBAN SANITATION PROJECT Urban and Water Country Department AFCWl Africa Region October 6, "2009 Report No: LR f'l CO._~ This document bas a restricted distribution and may be used by recipients only in the performanee oftbeir official duties."its contents may not otberwise be disclosed witbout World Bank authorization.

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3 Republic of Liberia Emergency Monrovia Urban Sanitation Project Table of Contents A. Introduction... 1 B. Emergency Challenge... 1 C. Bank Response and Strategy... 4 D. Appraisal of Project Activities E. Implementation Arrangements and Financing Plan F. Project Risks and Mitigating Measures G. Terms and Conditions for Project Financing Annex 1: Detailed Description of Project Components Annex 2: Results Framework and Monitoring Annex 3: Summary of Estimated Project Costs Annex 4: Financial Management and Disbursement Arrangements Annex 5: Procurement Arrangements Annex 6: Implementation and Monitoring Arrangements Annex 7: Project Preparation and Appraisal Team Members Annex 8: Environmental and Social Safeguards Framework Annex 9: Points of Agreement between MOF and MCC regarding project financing Annex 10: Documents in the Project File Annex 11: Statement of Loans and Credits Annex 12: Country at a Glance Annex 13: Maps IV

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5 Republic of Liberia Emergency Monrovia Urban Sanitation Project EMERGENCY PAPER DATA SHEET Date: October 6, 2009 Country Director: Ishac Diwan Sector Manager: Jaime Biderman Lending instrument: Emergency operation. Team Leader: Kremena Ionkova. Sectors: Urban Unit Themes: Urban Environmental Category: B Project Name' Emergency Monrovia Urban Sanitation Project (EMUS) Type of Operation: New Operation [X] Additional Financing [] Existing Financing (restructuring) [ ] Financing type: Loan [ ] Credit [ ] IDA Grant [ ] Other [ X ]. Project ID(s): P Total Amount: US$18.4 I Proposed terms: TF Grant (Liberia Expected implementation period: 4 years Reconstruction TF) Expected effectiveness date: October 20, 2009 Expected closing date: December 31, 2013 Borrower: Ministry of Finance Broad Street, Monrovia, Liberia Responsible Agency: Monrovia City Corporation Tubman Blvd., Monrovia, Liberia I i i I I Development Objective: The Project's objective is to increase access to solid waste collection service in Monrovia. Short Description: The project will include two main components, as follows: Comnonent 1: Solid Waste Collection {USD 11.2 million). The objective of this component is to assist the Monrovia City Corporation (MeC) to provide solid waste services and increase the volume of collected and disposed waste from approximately 30% of daily generated waste to 45%. This will be achieved through: (i) technical assistance to small and medium enterprises which provide door-to-door collection service; (ii) construction of transfer stations, provision of equipment, and assistance towards financing the operating cost of service delivery; and (iii) a public awareness campaign to sensitize the population towards safe handling of solid waste. Com)!onent 2: Building Institutional and Technical Canacitv at MCC {USD 4.9 million}. This component aims to strengthen the capacity of MCC for proper revenue administration, financi(lj management, and technical oversight to the provision of solid waste services in Monrovia. The following activities will be financed: (i) technical assistance (TA) for a financial and organizational audit followed by assistance for the implementation of selected action items identified by the audit; and (ii) TA for project implementation and supervision. In addition, USD 1.8 million (10%) has been allocated for contingency and USD 0.5 million for I audit fees, training and operating costs of the implementing agency. v

6 Financing Plan (USD million) Source Local Foreign i Total Borrower Total IBRD/IDA Trust Funds: Liberia Reconstruction TF Others. Total 18.4 Estimated disbursements (Bank FYIuSD million) 2010 i 2011 I i Total IBRD/IDA i I Trust Funds 3.5 i i Does the emergency operation require any exceptions from Bank policies? I Yes [ ] No [x] Have these been approved by Bank management?. Yes [ ] No [ ], Are there any critical risks rated "substantial" or "high"?. What safeguard policies are triggered, if any? i Environmental Assessment (OP/BP 4.01) and Involuntary Resettlement (OP/BP 4.12) Significant, non-standard conditions, if any: None Yes [x] No[ ] VI

7 A. Introduction 1. This Project Paper seeks the approval of the Regional Vice President (RVP) of the Africa Region for a grant in the amount of USD 18.4 million to Liberia to finance an Emergency Monrovia Urban Sanitation Project (EMUS). The Project will, on an emergency basis, support the Government of Liberia to maintain and increase access to solid waste collection service in the capital city of Monrovia. B. Emergency Challenge 1. Country Context 2. Development in Liberia has been set back by years of conflict. Liberia's economy, institutions, and human capacity were completely devastated by the country's 14 year civil war, which ended in The 2003 Accra Comprehensive Peace Accord and the deployment of a United Nations (UN) peacekeeping force have provided much needed space to lay a solid foundation for recovery. Since that time, Liberia has made important progress, beginning to rebuild public sector institutions, delivering some essential public services, and laying the foundations of a local government system. 3. Rehabilitation of infrastructure and the provision of basic services remains the country's greatest post war challenge. During the war, the extensive destruction of basic infrastructure, coupled with lack of maintenance, contributed to the collapse of productive activities and a reversion essentially to a subsistence economy. Basic public services, including sanitation, water supply and electricity were discontinued. Public buildings and equipment were vandalized, and expertise and know how vanished.. 4. The capital city of Monrovia has been among the worst affected areas. Lack of basic services and crippling infrastructure has dominated life there. Central to poor living conditions has been the collapse of the solid waste management system. The service ceased to exist for over 14 years, leading to massive accumulation of waste throughout the city. Piling waste created health and environmental hazards, contributed to the spread of diseases, clogged the drainage and sewerage networks, and contributed to flooding which further deteriorated city infrastructure. Solid waste service in Monrovia was partially restored in , but remains critically low. Today, only about a third of daily generated waste is collected and disposed of away from the city. The remaining waste remains scattered in between houses, in public drains, parks and streets. 5. City infrastructure and services are additionally stretched by urbanization. Approximately 50% of Liberia's population lives in urban areas, compared to 40% in 1985 and 30% a decade earlier. The trend of urbanization is expected to continue, reaching 65% by Urban population is concentrated in the greater Monrovia area (approximately 1 million), estimated to host around 40% of the entire population of Liberia. The predominantly young population - 50% below the age of 14 years has not experienced publicly delivered services and is unfamiliar with civic responsibilities associated with them. Re educating the public and changing behavioral patterns towards preserving public assets is another challenge for the Government to address. 6. The economic situation remains difficult, adding more pressure to strained financial resources at the local level. During the war, the institution of local government had been marginalized. Six years after the war, municipalities in Liberia remain very weak in terms of institutional and staff capacity, ability to generate revenues and engage with constituencies. Most

8 local governments continue to deliver few public services. Even though the Government has declared its commitment to the principles of decentralization, effective transfer of authority and resources requires substantial reforms at the local level. Among local governments the municipality of Monrovia is the largest and most organized. Still, it has not been able to tap its large revenue base and relies heavily on financial assistance from the Government. 7. Outside of the economic arena, Liberia remains a relatively fragile post-conflict country. To ensure stability, the Government needs to continue to provide the "peace benefit" to the population. Delivering real tangible improvement in living conditions remains a priority. 2. Recovery Strategy and Policy Framework 8. Liberia's first full Poverty Reduction Strategy (PRS) sets out the Government's priority agenda for the three-year period from April 2008 to June The PRS is built around four pillars that represent the core strategic areas of intervention: Peace and Security, Economic Revitalization, Governance and the Rule of Law, and Infrastructure and Basic Services. In the area of infrastructure and basic services, the main objective is "to embark on the rehabilitation of infrastructure and the rebuilding of systems to deliver basic services in order to create the conditions and linkages needed to achieve broad-based growth and poverty reduction." Priority areas identified through stakeholder consultations in infrastructure include the rehabilitation of roads, water supply, and sanitation!. Roads and water supply are being supported separately by other IDA projects. 9. Restoring sanitation 2 in Monrovia has been a key priority for the Government since 2006, when it requested emergency IDA assistance 3 for solid waste collection. This emergency assistance has since been funding solid waste service in Monrovia. This funding will be exhausted by November Maintaining and expanding the current levels of service are among the Government's priorities as demonstrated recently (see below). 10. The Liberia Reconstruction Trust Fund (LRTF) - a multi-donor trust fund for Liberia - was set up in 2008 and its Closing Date was recently extended from 2011 to The LRTF pools funds from bi- and multi-lateral partners in order to address the vast funding gap to rebuild and rehabilitate infrastructure in-country. Currently, donors that have contributed to the LRTF include Germany, Ireland, Sweden, and the World Bank's State and Peace-building Fund (SPF)4. To date, the LRTF has received USD 33.9 million in contributions. Additional contributions of around USD 120 million are expected from the European Commission, the United Kingdom, and Germany in the coming year. The World Bank is the administrator of the LRTF. An Oversight Committee (OC) of contributing partners chaired by the Ministry of Finance (MOF) and Co Chaired by the World Bank, was set up to decide on funds allocation. In December 2008, at the request of the Government, the OC agreed to allocate USD 18.4 million for the EMUS projects. In addition, the OC agreed to allocate USD 9.2 million as co-financing to the IDA-financed Urban and Rural Infrastructure Rehabilitation Project (URIRP) which was approved in June "Solid waste" in Liberia is referred to as"sanitation ". 2 Ibid. 3 Emergency Infrastructure Project Supplemental Component (EIPSC), initiated under the parent Emergency Infrastructure Project (ElP). 4 The SPF replaces two funds--the Post-Conflict Fund (PCF) and the Low Income Countries under Stress (LICUS) Trust Fund. 5 The LRTF will also finance the cost of appraisal and supervision by Bank staff, estimated at approximately $0.8 mil over the life of the project. 2

9 11. The institution responsible for solid waste service provision - the Monrovia City Corporation (MCC) - does not generate sufficient resources to fund the cost of service. Presently, all operating and capital costs are funded by IDA under the ongoing emergency operation 6 The proposed EMUS project would continue to fund operating costs but on a four-year declining basis. During this time, the Government plans to put in place a financing mechanism to assume the full operating cost of collection by the end of year four. Government's funds will include revenue generated by the MCC as well as a contribution from the MOF. Under the Government's strategy, the MCC's contribution will grow over time (as its capacity is enhanced) and MCC will assume full responsibility for the service provision within a reasonable period of time (see detailed discussion in Annex 6). The Government has requested donor assistance under EMUS to build capacity within MCC and set up a financing mechanism which would allow the implementation of its strategy (see Annex 4). 12. The Monrovia Solid Waste Letter of Sector Policy prepared by the MCC in 2009 guides stakeholders in making choices for managing solid waste. The overarching policy statement affirms that "safe collection, treatment and disposal of solid waste generated by all population groups are essential for the development of public health and improvement of the quality of life, and should be performed in an environmentally and socially satisfactory manner using the most economical means available". The Letter of Sector Policy establishes guiding principles for the provision of the service in Monrovia, including: (i) all people have access to solid waste service at affordable cost; (li) solid waste management adopts cost recovery mechanisms for long term financial sustainability; (iii) efficiency gains are obtained through the involvement of the private sector for service provision; (iv) solid waste management is conducted in an environmentally conscientious manner that conserves natural resources. The EMUS project is guided by this policy framework. 3. Rationale for Proposed Emergency Project 13. The recently re-established solid waste management system in Monrovia (since ; with limited coverage), was one of the post-war "peace dividends" to the population. Since then, expectations for a cleaner Monrovia have been rising. Local capacity for service delivery however has not developed in par with demand. The institution responsible for the service lacks capacity and resources. Therefore, if external funding is discontinued, the established solid waste collection service will likely be dismantled and service provision would cease. At the same time, as with other recently re-established basic services, the immediate challenge for the Government is to provide continuous and reliable service which gradually expands to cover the majority of the population. Consistency and reliability of Government-delivered services secures public trust and promotes stability. 14. The proposed emergency project would assist the Government to achieve its strategy to (i) continue to deliver a basic service to the population; (ii) expand service coverage beyond current level to capture more households and waste generated; (iii) start building capacity at the MCC the institution responsible for service provision; (iv) assist the Government to set up a mechanism for shared funding of the service (through MCC and MOF contributions), which would be initiated in year three of the project and continue to operate after the project ends. h Ibid. 3

10 C. Bank Response and Strategy 4. Brief description of Bank's strategy of emergency support 15. Initial emergency assistance to the Government of Liberia for sanitation services was provided in 2006 under the EIPSC 7 The EIPSC funded a one-time citywide clean-up campaign and the introduction of a simple collection system for about 30% of daily generated waste. Presently, EIPSC continues to fund the collection service in Monrovia. Project funding will be exhausted by November The EMUS project is proposed to commence immediately following the depletion of EIPSC funds. It is Government's concern that interruption in service delivery may compromise the fragile public faith in publicly delivered services. In addition, if the solid waste system currently in operation is suspended for several months in a row, it would need to be re-built when service provision is renewed. It is on these grounds that the Government approached the OC of the LRTF and requested emergency donor assistance. Subsequently, the LRTF funding was approved by the donors on the understanding that the project would be processed on a fast track. It is therefore proposed that the project is processed under the emergency procedures of OP The proposed fast nature of this project's preparation and implementation is not intended to preclude provisions for institutional development. In fact, while the focus remains on continuous solid waste service delivery, emphasis is also placed on the longer-term sustainability of institutional and funding arrangements. This is necessary in order to transition from purely emergency operations (such as the preceding emergency project which does not incorporate institutional development) to typical institutional development projects (which could be envisaged in the future). The proposed project is modest in its institutional development objectives and aims to start building capacity and strengthen technical skills and revenue administration at MCC. It should be noted that following the war this will be the first donorsupported capacity building activity at the municipality. Therefore, it should not be expected that by project end the MCC will achieve institutional excellence or be fully empowered to financially underwrite the service; achieving such results is a longer term goal, which spans beyond the life of the proposed project. 18. In view of these limitations, the project is designed to establish the minimum conditions necessary so that at project end the solid waste service remains in existence. This includes (i) placing project's implementation within the agency responsible for service delivery and, (ii) establishing a financing mechanism for solid waste intended to remain in existence after the project ends. Both are discussed below. 19. An important lesson learned from the ongoing EIPSC relates to ownership of project activities and leadership. While MCC has the institutional mandate to provide solid waste services in Monrovia and as such is the beneficiary under the EIPSC, it has not been involved with project implementation, which has been entrusted with other agencies (UNDP and the Special Implementation Unit (SIU) at the Ministry of Public Works (MPW». Such arrangement reflects the early post-conflict setting in Liberia where expediency was a primary consideration of project design. While the IPSC is being implemented successfully, the implementing Government agency (SIU) has shown little interest to build or retain established capacity for solid waste service provision. In fact, within the next few years the SIU will transition into a Roads Authority under the MPW and will further narrow its expertise in the transport sector. As such, it 7 Ibid. 4

11 will not be suitable to continue implementing solid waste projects. Apart from suitability within the SIU/Roads Authority context, the experience gained under the EIPSC shows that strong ownership within the implementing agency is essential for sustained service provision. Only when the service is permanently placed with the agency mandated to deliver it, can effective capacity building and institutional strengthening commence. Locating the implementation responsibilities outside the MCC is, therefore, not recommended for this proposed project. 20. In terms of funding for service provision, it should be noted that the MCC's capacity to increase its revenues over the project span and fund the cost of service is very limited. The project will support the MCC to increase its revenues but costs will continue to exceed MCC's ability to finance them for at least several years after the project ends. At the same time, the Government has recognized the importance of solid waste collection and has agreed to provide financial assistance towards its cost. It is therefore essential that a financing mechanism governing contributions from both MCC and MOF is established and operationalized prior to project end. To this end, the project proposes to finance the cost of collection on a declining basis where the balance is funded out of the newly established financing mechanism (with MCC and MOF contributions ). 21. An important feature of the above financing arrangements is that a special solid waste account will be opened to capture all municipal revenues from solid waste and ensure that they are re-invested in the sector and not used for other municipal activities. This fund will be supplemented (in years 3 and 4 of the project) with the MOF contribution towards the cost of service under specific arrangements to be detailed in the Project Implementation Manual (PIM). 22. The above two interventions, i.e. entrusting the MCC with project implementation and establishing a financing mechanism, together with specific capacity building activities at MCC (Le. a financial and organizational audit followed by assistance to implement selected priority actions described further below), are believed to initiate long-term sustainability of institutional and funding arrangements. At project end, the MCC is expected to have obtained technical knowhow to manage the outsourced (as per arrangements established under the EIPSC) solid waste activities, and to have a functioning solid waste account and a functioning financing mechanism with contributions from the MOF, to meet the cost of service delivery. 23. Unlike the institutional strengthening activities and implementation arrangements outlined above which depart from the purely emergency nature of the on-going EIPSC, all technical activities and designs of the proposed project stem from the EIPSC. Initiated in 2006, the EIPSC funded a onetime massive clean-up campaign of Monrovia and the establishment of a simple collection system. The project was processed as an emergency operation and sought to improve the immediate living environment in Monrovia and remove accumulated waste from the city. The collection system covered only secondary collections and as such was limited in scope. Volumes captured and disposed properly increased gradually from zero to approximately 30% of daily generated waste. The only permitted disposal site within city limits initially an uncontrolled dump was upgraded and subsequently capped and closed (Fiamah site). Another location for a sanitary landfill with a life span of approximately 6-8 years was identified and is currently being developed (Whein town) with funding from EIPSC. A location for a permanent land-fill with a life span of approximately 25 years is identified (Mt. Barcley) and preparatory activities for its development (Le. environmental and feasibility studies) will be supported under the EIP. Overall, the EIPSC is considered very successful in managing to turn around the solid 8 Secondaty Collection refers to collection of waste from communal skips and skip stations, haulage and disposal of such waste to landfill site. 5

12 waste situation in Monrovia in less than 3 years and drastically improve sanitary conditions and disposal within city limits. 24. In parallel to the EIPSC-supported secondary collection, the ILO has set up a primary collection system 9, through which, small SMEs collect waste from approximately 5% of households and dispose at the communal collection points captured under the secondary collection. 25. The proposed project builds on the technical design of the IPSC and the ILOintroduced primary collection. It aims to improve the efficiency of secondary collection by introducing transfer stations, bigger trucks, and greater private sector involvement. Volumes of waste captured and disposed are expected to increase to approximately 45% of daily generated waste. The project also aims to increase the number of households captured through the primary collection. A large public awareness campaign is also planned and aims to continue engaging with the public on issues of disposal and handling of waste. The campaign will build upon the work of a local NGO appointed under the IPSC project to sensitize communities and explain the solid waste collection system. A table with activities under the various projects is provided in Annex Project Development Objectives 26. The project development objective (PDO) is to increase access to solid waste collection service in Monrovia. This will be achieved through: (i) investments in selected areas of the primary collection system to expand service coverage at the household level; (ii) investments in the secondary collection system to collect, haul and dispose waste captured through primary collection; (iii) a public education campaign on handling and disposal of solid waste; and (iv) technical assistance to the MCC to enhance municipal capacity for proper revenue administration, financial management, and management of the solid waste service. 6. Summary of Project Components 27. Component 1: Solid Waste Collection (USD 11.2 million). The objective of this component is to assist the MCC to provide solid waste JO collection services and increase the volume of collected and disposed waste from approximately 30% of daily generated waste to 45%. This will be achieved through: (i) technical assistance (T A) to community-based small and medium enterprises (SMEs) which provide door-io-door collection service; (ii) construction of transfer stations, provision of equipment, assistance towards the operating cost of collection and disposal of waste 11 ; and (iii) public awareness campaign to sensitize the population towards safe handling of solid wastes. 28. Sub-component 1.1: Primary Collection l2 (USD 0.6 million). This sub-component will provide T A to strengthen the primary collection system and increase the number of households served by door-la-door collection. It will: (i) improve SMEs' managerial and operational capacities to provide service to households; (ii) assist MCC to strengthen its supervision capacity 9 Primary Collection refers to collection from households to communal skips, i.e. "at the door collection" and disposal at a communal skips. 10 Municipal solid waste does not include medical and hospital wastes and industrial wastes. II i.e. cost of haulage, including fuel, maintenance of equipment, opelation of transfer stations and disposal site. 12 Ibid. 6

13 and oversight of primary collection; and (iii) create an environment that will enable MCC to track and report on SMEs' performance based on an easy to use database system. 29. Primary collection in Monrovia was initiated in 2007 as a pilot project with funding from the International Labor Organization (ILO). It is estimated that only around 5% of households in Monrovia are currently benefitting from it. The collection is based on the franchising model and the city is divided into zones serviced by SMEs. Initial results from the pilot are promising in terms of public awareness and initial demand for the service. The sub-component will scale up the primary collection by strengthening the SMEs and providing advisory service to the MCC on issues of oversight and regulation. 30. Sub-component 1.2: Secondary Collection 13, Transfer and Disposal (USD 10.1 million). This sub-component will finance the construction of two transfer stations, purchase of container skips and skip lifters, improvement of skip platforms for easy access, and transportation of municipal solid waste from the skips to transfer stations/disposal site l4 and from transfer stations to disposal site as required. 31. Secondary collection covering about 30% of produced waste in Monrovia has been achieved under the IDA-funded EIPSC project. The city is divided into four zones and through a competitive bidding process private contractors were awarded the contracts for collection and disposal. Through the collection program, they operate eight skip trucks to collect waste from 120 communal skip containers. In addition, the contractors occasionally use their own vehicles to collect waste from around the skip containers. A third-party engineer supervises all project activities. A local non-governmental organization (NGO) has been working with communities to explain the collection system. All waste is disposed of at Whein site, which is being developed under the EIPSC project on an emergency basis. The emergency development of Whein site allowed the open dump-site within city limits (Fiamah site) to be closed and capped without halting the newly re-established routine collection of waste. Fiamah site has recently been capped. One of the two transfer stations planned under the project will be located there. 32. The investment under this sub-component is expected to strengthen and improve the present collection, transportation and disposal of municipal solid wastes. It will finance the building of two transfer stations. Large trucks will transport the waste from the transfer stations to the landfill, while smaller size trucks hauling smaller volumes will serve the city-areas and transport waste to the transfer stations. The number of skip containers located around town will be increased beyond the current number of 120 to allow increased service coverage. The investment will reduce current vehicle turnaround time and, by the end of the project, the overall collection and disposal will reach about 330 tons per day from the currently estimated 210 tons per day. As in the case of EIPSC funded collection, this subcomponent will continue to focus on residential areas, small business establishments and municipal markets. 33. Sub-component 1.3: Public Awareness Campaign (USD 0.5 million). The sub-component will consist of a public awareness campaign (PAC), which will seek to encourage Monrovia residents to use the solid waste collection services; it will also sensitize citizens about the impact of unsafe handling and use of waste. This will be achieved by a combination of communication techniques (i.e. radio, town hall meetings, jingles) on the benefits of using the collection systems and hazards of unsafe handling of waste. This sub-component will help to increase awareness and use of the solid waste services. Solid waste management is a relatively new concept in Monrovia 13 Ibid. J4 Depending on location, some skips may be disposed of directly at the landfill and not at the transfer stations. 7

14 following years without regular collection. Presently, the majority of the population handles waste by burning, disposing it in drains and rivers, or using it to reclaim land on which to build homes. 34. Component 2: Building Institutional and Technical Capacity at MCC (USD 4.9 million). This component aims to strengthen the capacity of MCC for proper revenue administration, financial management, and technical oversight related to the provision of solid waste services in Monrovia. To achieve this objective, the following activities will be financed: (i) technical assistance (TA) in critical areas to build/revamp systems and capacity; and (ii) T A for project implementation and supervision. The two sub-components are interlinked. However, a distinction is made with respect to institutional strengthening and technical inputs. Institutional strengthening will relate to building of capacity in the areas of revenue reform and administration; financial management and improved internal controls; organizational structure; and governance. Technical inputs will be provided for all technical aspects of implementation of the project through a Design and Supervision Engineer (Firm) and experts at the Project Implementation Unit (PIU) (see below). Both sub-components will include training and capacity building for MCC employees limited to the provision of solid waste services. 35. Sub-component 2.1 (USD 2.0 million). Financial and Organizational Management TA. This SUb-component will provide TA for a financial and organizational audit followed by support for the implementation of selected action items identified by the audit. The audit would commence with financial and organizational diagnostics of MCC; its findings would then help develop an action plan for revenue mobilization with key quantifiable targets; this will be followed by TA support for the implementation of prioritized actions items. Specific activities will seek to (i) overhaul the revenue mobilization system; (ii) strengthen the budgeting process; develop a proper accounting system and the generation of accounting reports; and (iii) develop organizational flow charts, HR assessment tools, manuals and policies. 36. As an immediate step following project Effectiveness and to demonstrate MCC's commitment, MCC will open a special solid waste account where all municipal revenues from solid waste will be deposited. Since the MOF requires that all municipal revenue are first deposited in a Treasury Account and then transferred as a budget line to the MCC, MCC shall ensure that such transfers are automatically deposited in the special Solid Waste Account. The proceeds from this account will be used solely for reinvestment into the solid waste sector and will not finance other municipal activities. 37. Sub-component 2.2 (USD 2.9 million). Project Implementation and Technical Supervision. It is envisaged that a small unit (PIU) would be established first to address project management and procurement issues, and that over a period of time this unit will also build the capacity of the line departments. FM functions under the project will be handled by the Project Financial Management Unit (PFMU) already established at the MOF. Other than the PIU, the Design and Supervision Engineer will be located at the MCC premises, work closely with staff of the Solid Waste Department (SWD) and as such, provide on-the job training (see Annex 6 for detail discussion). 38. The cost breakdown is summarized in the table below. 8

15 Project Cost by Component local Foreign Total USD million USDmillion USDmillion : Compooent 1 Lsub:-eom2onent 1.1: Primary collection f SUD-cOmp(lflent 1.2: Secondafv Collection Sub-component 1.3: Public awareness campaign Sub-total Component 2 Sub-component 2.1: Fin. and organizational mgmt TA Sub-comQ<lllent 2.2: ImllIementation and technical su[l:elvision Sub-total Audit, Trai~ ost Contingenc Total Eligibility for Processing under OP/BP Given the magnitude and emergency nature of the post-conflict challenge in Liberia, the June 2007 Interim Strategy Note (ISN) established an emergency portfolio for Liberia allowing the processing all projects under OP 8.00 to allow for greater speed and flexibility in preparation and implementation. To date, 10 projects (both IDA and trust-funded) have been processed using OP 8.00 procedures. The current project is not included in the ISN program, however, the new Country Assistance Strategy for Liberia, provides continued flexibility for use of OP 8.00 procedures The emergency nature of the project stems from the prevailing sanitary conditions in Monrovia, which are hampering social and economic recovery, as well as the need to move with all possible speed in order to ensure that collection service does not cease in November The planned activities are designed to secure enough breathing space for the Government to set up appropriate arrangements for service provision without creating serious health, environmental and social implications due to an interruption in service. Such arrangements would build upon project activities and include, among others, setting up a financing mechanism to start funding the service before the project ends. The project will generate visible benefits for the population, will continue to improve the population's trust in Government, bring tangible services to improve the living conditions of Monrovia residents and, in the process, build capacity at MCC. 41. Assistance for the EMUS project was requested by the Government because of its concern that interruption in service delivery could erode public trust. The solid waste collection was one of the first post-war peace dividends for the population. Given the still fragile environment in country, consistent and reliable service promotes stability. It is on these grounds that the Government approached the OC of the LRTF and requested emergency donor assistance. Subsequently, the LRTF funding was approved by the donors on the understanding that the project would be processed on a fast track. Donors saw their assistance as promoting peace and security. It is therefore proposed that the project is processed under the emergency procedures of OP Consistency with Country Strategy 42. The Country Assistance Strategy (CAS) prepared jointly in 2009 by the World Bank, the African Development Bank, and the International Finance Corporation, sets out planned support by these institutions to Liberia over the period July 2008-June The CAS is fully aligned ]5 The CAS provisions approximately $138 million support to Liberia over the 3-year period. 9

16 with the PRS and is designed to support Liberia's transition from post-conflict recovery to longterm development. It seeks to address some key constraints on growth as well as to enhance the policy and institutional framework to ensure that growth is increasingly pro-poor. As such, the CAS is set to pursue three strategic themes: (i) rebuilding core state functions and institutions; (ii) rehabilitating infrastructure to jump-start economic growth; and (iii) facilitating pro-poor growth. 43. In the area of urban development, the CAS envisages assistance to "sustain earlier emergency work in the area of solid waste collection" as well as "efforts to improve municipal revenue collections, introduce financial controls, consolidate operations, and build capacity at the sub-national level". The EMUS project is aligned with the CAS of Liberia. 9. Expected Outcomes 44. Expected outputs, intermediate and project outcomes as well as monitoring arrangements are summarized in the table below. Component Output ntennediate Outcome Proiect Outcome Monitorin2 (i) The volume of waste Baseline: (i) baseline collected and disposed (i) Two (2) transfer survey completed by properly compared to stations built ILO; (ii) baseline data total waste produced is collected by expected to increase Supervision Engineer; (ii) Training provided from 30% to 45%. ComQonent 1: (iii) baseline survey at to all SMEs (10 (ii) Vehicle turn-arolmd Expanded coverage of Solid Waste start of PAC; SME~ time (from 2 hours to 1 solid waste collection: Collection Final: (i) city database hour) the number of on primary collection; (iii) Residents reached (iii) Households targeted households served in (ii) MIS data by that dump their waste in serviced areas is by awareness Supervision Engineer; the canal, river, swamp expected to increase campaigns (60"10) (iii) impact assessment or burn the waste (50% from approximately by PAC consultant. 'to 40%) 5,300 to 10,000 A Special Solid Waste households (90% MCC staff trained in Account which will increase). ComQQnent 2: fmancial management capture all municipal Baseline: information Building i.e. revenue revenue from solid collected from MCC capacity at administration, waste will be at project design stage; MCC budgeting, accounting established and its Final: information from (80% of relevant staft) proceeds reinvested in Bank accounts from the sector. MCC and MOF. D. Appraisal of Project Activities 45. Technical. Presently, the collection system in Monrovia is organized as follows: (i) solid waste from households and small businesses are collected by community-based SMEs. disposed of at communal skips (120 skips spread around town), and then transported to Whein Town landfill by private contractors on behalf of MCC; the contractors use eight MCC-owned skip trucks while the surplus waste at skip stations is transported using contractors' own vehicles; (ii) solid waste from large and medium businesses and institutions are collected by private waste management companies and disposed at Whein Tovm landfill site. Following a revievv' of the \0

17 entire cycle of operation of waste management in Monrovia and taking into consideration experience in the sub-region, the following issues are highlighted: 46. Primary Collection. A recent evaluation of primary collection of waste in Conakry, Guinea suggests that community/small operator-based waste management models work when there is full support from the respective local authority and success is possible when the members of SMEs offering the service are from within the same community; additionally, regular performance evaluation and a certain level of performance as condition for contract renewal are a strong incentive for efficient and effective operations by SMEs. The former appears to be the case in Monrovia while the latter will be supported under the proposed project. 47. The present primary collection in Monrovia was initiated in 2007 under a pilot project funded by the ILO. It had set up a primary network structure by dividing the city into 10 collection zones following the existing geo-administrative organization of the metropolitan area. Community based organizations (CBOs) in each zone were identified, trained and subsequently registered as SMEs. 48. The technical assessment of the exlstmg collection organization and network, and statistics showing waste quantities collected through SMEs suggest that further action to strengthen the capacity of these SMEs will contribute to reaching more households and businesses, creating more jobs, and augmenting the overall volume of waste collected. The following remarks and observations are offered: SMEs are active in different zones of the city. They play key roles in solid waste management and should be encouraged and supported through capacity building activities, including material and financial support to training, coordination and monitoring; The most important managerial problems are those related to financial issues because these determine reliability and sustainabiiity of service. Inadequate fee collection and lack of sanctions for non-payment are two of the major ones; Enterprise development needs financial and technical support especially in low income areas; Detailed and comprehensive waste management by-laws which provide an adequate regulatory framework and recognize the role of the private sector, especially SMEs, in the provision and delivery of waste management services are needed and should be adapted for application. 49. It is recommended that the MCC builds on ILO's successful experience in managing the activities pertaining to capacity building and operational follow up of SME activities in the areas of budgeting, cash flow management and operations; safe handling of waste, etc. This would allow full utilization of accumulated expertise within the agency. A database should be a central element of the data collection and reporting system as it will help keep precise records on existing customer base, progress made in servicing households in each zone, as well as key data like evolution of average weight of waste arriving at skips and ultimately at the landfill. 50. Transfer Points (Skip Stations) Need Improvement for Easy Access. In some skip locations, the platform on which the skip is located was constructed higher than ground level. This needs to be rectified to improve access to the skip to deposit waste. All new platforms should be constructed with a dwarf wall on three sides to contain surplus waste within the platform. The platform top shall be matched with ground level and where the platform is at a 11

18 higher elevation than ground level, steps shall be provided. Rectification measures shall be taken by MCC to improve access. 51. Waste Collection at Skips. Only 38 of the 120 skips are collected daily (of which 23 collected twice daily). Others are collected at intervals of 4 days (32 skips), 5 days (29 skips) and 7 days (21 skips). This indicates that at some places the skip capacity is low while in other places, the capacity is too high for what is deposited there on a daily basis. It may also be true that the skip location in some cases is not attractive for the operators to collect daily as they are remunerated for the number of skips collected rather than collection of skips following a defined route. Nevertheless, from the analysis made, it is concluded that one third of the aggregate volume of skip remains unfilled on any given day. Therefore, the storage capacity in the skips unutijized on any given day can be as high as 200 cum (equivalent 70 tons at 0.35 kg/cum). With introduction of bigger skips (8-10 cum) in the areas where skips are collected twice daily, the collection of skips could be brought down to once a day, and by rationalizing the location of skip stations, the collection efficiency could be improved. However, skip lifters or load luggers of higher capacity will have to be introduced. 52. Optimization of Routings of Skip Trucks. Currently, the route followed by the skip trucks for collection of skips is based on road condition and traffic. Though this ensures that the maintenance requirements on the vehicles remain low, it is not optimum for collection of waste. A major program for improvement of the city roads is under implementation and the road condition is expected to significantly improve in near term (overlay of most major city streets is scheduled to take place during two dry seasons). Collection routes are to be planned to maximize use of the vehicles' capacity and take account of the capacity of skips and area where waste is generated faster. 53. Waste from Markets. A large number of markets exist in Greater Monrovia, and they generate a large volume of waste. The markets being private businesses, arrangements for waste collection within the market area should be made with the Liberia Market Association (LMA). However, markets should be encouraged to practice the principles of waste reduction and minimization as the waste will finally be disposed at the disposal site of the MCC. In the most desirable option, the LMA should take responsibility for collection, hire contractors to transport waste to disposal site, and pay MCC tipping fees. However, until such a system is put in place, MCC could arrange collection from the transfer point (skip) and channel the waste to a disposal site as will be done for the domestic waste, and recover cost from the LMA for the services rendered. MCC should announce the policy on charging fees for the market waste conduct a survey of the LMA and decide accordingly which of the two options is to be implemented. This would inform a decision to accordingly mobilize skips. 54. Construction and Demolition Waste. Greater Monrovia is a potential generator of a large quantity of construction and demolition waste due to ongoing construction activities. It consists mostly of inert and non-biodegradable material such as concrete, plaster, metal, wood, etc. These wastes are heavy, very dense, and often bulky and will occupy considerable storage space of the skip. Being predominantly inert in nature, construction and demolition waste does not create chemical or biochemical pollution. The material can be used for filling/leveling areas. MCC should examine whether there are areas around Monrovia where the construction and demolition waste could be disposed without impacting the environment. This will also heip transportation of reduced volume of waste to the disposal site. 55. Transportation and Transfer Stations. The distance from Central Monrovia to the present disposal site is about 25 km, and it takes more than 2 hours for a skip truck to make the round 12

19 trip. Partially this is due to bad road conditions. Further, the busy market at Red Light is a major bottleneck. Occasionally, it takes much longer for a trip to be completed by a skip truck. As a result, the transportation to the disposal site at Whein Town is affected. In order to alleviate this and to achieve faster movement of waste, two transfer stations are required -- one on the eastern side and another on the northern side of Central Monrovia. Several potential sites for a transfer station were examined. Initially, the site at the Freeport in the north of Central Monrovia appeared sui tab Ie for immediate construction of transfer station with a capacity of tons/day. However, the Government has recently decided to use this location for a port-related operation and it is no longer available as a location for a transfer station. Another location also in the northern part of Monrovia (Stocken Creek) is currently under investigation by the Government. It is empty land located just off the main road (Somalia drive) and appears suitable for a transfer station. The Fiamah site has been identified as the location for a transfer station in the east of Central Monrovia. The Liberia Water and Sewer Corporation (LWSC) owns some open space adjacent to the Fiamah site and has agreed (in a Memorandum of Understanding with the MCC) to make this space available for a transfer station. The location is feasible for the construction of a small transfer station (to handle 80 tons/day). 56. Future Disposal Site. The Whein Town landfill site where the wastes are disposed at present was developed as an Interim Disposal Site (IDS). It is a small area of 10 hectares, of which at least 5 hectares are usable for land filling. It is expected to be adequate for another 6-8 years. It is therefore of concern that if urgent action is not taken to finalize acquisition of land for a permanent landfill site to succeed Whein Town closure, indiscreet dumping of waste will be resorted to and the clean-up efforts of the MCC will be severely compromised. The Bank is supporting the feasibility studies, an environmental and social assessment and final design of a permanent landfill under ElP (and therefore this assistance is not envisaged under EMUS). The environmental impact assessment and social acceptance review of the permanent site are required before planning and design of the landfill is undertaken. It may take up to 2-3 years to complete the studies and obtain necessary clearances before actual construction could begin, and 12 to 18 months before the site will be ready to accept waste. It is, therefore, essential that MCC takes urgent action on deciding on the future disposal site. If this process is delayed, there is a risk that the Whein Town landfill will reach the end of its design life before the permanent site is open, which would have extremely adverse consequences for the continuation of waste management beyond the project. 57. Waste Minimization. The waste of Monrovia is composed of a high (43%) content of vegetable/putrescible matter 16 Together with other organic material in the waste, the total organic fraction of the waste is estimated to be over 50%. This offers scope for composting of waste at source and at community level to reduce the waste volume for transportation to the disposal site. This process would result in conservation of natural resources and is an important processing method, especially in agriculture and horticulture. Segregation of recyclable waste (paper, plastic, glass, ceramics, metal, and packaging material, etc. constitute more than 15% of total waste) also will significantly contribute to extending the life of the disposal site, and at the same time may tum out to be a source of income if care is taken to develop entrepreneurial interest on this subject. In fact, scavengers pick-up recyclable waste at the disposal site at Whein Town. In addition, interest exists in recyclable and reusable material among those who are in the business of waste transportation and management. MCC should take a step forward in this to educate people and organize workshops with the interested entrepreneurs, traders and industries. Even a partial success in reduction in volume of waste to be disposed at the landfill will increase longevity of the disposal site and reduce overall cost of transportation of waste material. 16 Solid waste Management Plan for Monrovia City Corporation (MCq, Liberia, developed with technical assistance from UNICEF with funding from DFID, August

20 58. Public Awareness. Currently, many residents are not practicing healthy or effective solid waste management: waste is regularly thrown on the ground, in drains, and in the river; many people use waste to reclaim swamp land on which to build homes. Solid waste management is a relatively new concept for Monrovia's population. Until late 2007, there had been 14 years without regular collection. During the war, an estimated 500,000 rural Liberians moved into Monrovia. Most of these relative newcomers have never experienced an urban solid waste management system. A public awareness PAC is therefore critical for a successful solid waste management in Monrovia as it will encourage residents to use the solid waste collection services and will sensitize them to health hazards related to unsafe handling of waste. The campaign should also discourage the hazardous practices of using waste for land reclamation and disposing waste in open drains and other uncontrolled locations. 59. Institutional. The MCC was established with a Charter in 1973 as a municipal government. The municipal government is divided into three branches: judicial, legislative, and executive. The Executive Branch is headed by an elected Mayor while the Legislative Branch is headed by an elected Common Council. Current MCC functions include: (i) the collection, transfer, and disposal of solid waste; (ii) the management of public toilets; (iii) the regulation of advertising signs; (iv) the regulation of parking and abandoned vehicles; and (v) municipal policing. Compared with other municipalities in Africa, the MCC's functions are modest in scope. City streets and drainage maintenance, water supply and electricity, are all responsibilities of other Agencies (MPW, L WSC and the Liberia Electricity Corporation (LEC), respectively) and are being supported under other IDA projects. Under its Charter, the MCC is enabled to pass municipal laws and ordinances and levy municipal taxes and fees, subject to the approval of the President of Liberia, which has taken place in the past about the revenues currently collected. 60. An initial assessment ofmcc was carried out under the EIPSC (June 2008) and included a review of municipal roles and responsibilities, municipal revenues and expenditures, organizational structure and procedures. Its key findings are summarized below and the assessment document is available on file. A detailed review of MCC's institutional capacity will be the subject of the financial and organizational audit envisaged under the T A component of the proposed project. The audit will result in an action plan for revenue mobilization with quantifiable targets, for which implementation will be supported under the project (see Annex 1). 61. Historically systems in the MCC have been weak. This has been largely due to the fact that the MCC has never had a comprehensive enabling legal environment for it to function. The top management of the MCC is aware of this, and, in view of the demands about to be put on them in terms of the project, are ready and willing to undertake the task of initiating improvements which will allow them to have proper governance controls over, particularly, solid waste management. 62. Some specific observations of the initial assessment include: 0) most of the departments of the MCC lack a definitive work plan and their functional responsibilities overlap; (ii) the revenue collection system is fragmented and ineffective; (iii) the City lacks a comprehensive list of businesses which should receive tax invoices; (iv) the process for tax collection is manual and inefficient; (v) the legal process is far too long and lacks true enforcement measures; (vi) fee rates are outdated and categories are not clear. The assessment concludes that the City is collecting only a portion of their prospective tax and fee revenue. 63. Currently the MCC's total revenue earnings are of the order of USD 0.5 million per year, of which approximately $0.07 are from solid waste revenue. At the same time, collecting and 14

21 disposing approximately 45% of daily generated waste will require an outlay of approximately USD 2.5 million per year. This means that after the grant period is over, the MCC will have to be subsidized to meet the required cost of waste collection (see discussion below). 64. The MCC has several sources of solid waste revenue: (i) SWF collected from households according to City Ordinance (presently, almost no fee is collected from households); (ii) SWF collected from businesses (presently the fee is collected); (iii) SW license fee collected from large private waste companies (collected); (iv) SW registration fee collected from SMEs (collected), and (v) tipping fee at landfill. A city ordinance specifies the rates 17 However, the categories are not well defined, and the way that the fees are structured provides a considerable discretionary power to the collector. Thus there is obvious leakage of revenue. The MCC is conscious of this and proposes to correct these deficiencies. 65. MCC believes that it can increase SWF through taking measures by (i) redefining categories of payers more precisely, (ii) developing a proper database of businesses, (iii) reducing the area of discretion for SWF collectors, (iv) starting to charge households a small amount, and (v) asking the Ministries and Agencies to pay for solid waste removal. The MCC also considers that while defining the categories, large community generators of SW such as markets, could be made into a special category and SWF charged appropriately. There is also a possibility of revision of rates which MCC wishes to consider. However MCC recognizes that there is unlikely to be a large revision, given the current economic conditions in Liberia (see detailed discussion and projections in Annex 6). 66. An inspection by the Bank's team of MCC's projected revenues from SWF reveals that there has been an assumption on the part of the MCC on proposed household SWF that may be optimistic. A much more conservative assessment of SWF revenue increase potential was carried out by the Bank (presented in Annex 6). According to it, the MCC's revenues will increase at a much slower pace than projected by the municipality. The Bank Team's assessment downsized the MCC's projections by almost 75%. Further, as an abundant measure of conservatism, the actual contributions of the MCC to the operations costs of the project from Year 3 onwards were taken to start from a baseline which is equivalent to the current solid waste revenues, and all projections were also accordingly further reduced. This is revealed in the Table provided in Annex 6. MCC's contribution is predicated upon the assumption that all municipal solid waste revenues are channeled into a special solid waste account from Year 1 and used solely for reinvestments in the sector. While no contribution is necessary from MCC in Years 1 and 2, the money collected during thcse years will act as a buffer in case collections in later years do not match estimates. Opening of stich an account is provisioned under the project. 67. The issue of whether the MCC will have an administrative and collection system in place to take advantage of the various alternatives remains uncertain. Collection from households will depend on two crucial factors 0) the ability of the MCC to put in place an appropriate collection and accounting system, and (ii) the willingness of the households to pay. So far as the second factor is concerned, it is to he noted that while the MCC, the MOF and the Presidency are rather hesitant to continue subsidizing the majority of the SW cost over the medium and longer run, the alternatives for fee collection from households are yet to be examined from a policy perspective, and in terms of all possible socio-political consequences. Currently, the MCC collects SW fees from businesses and some households; expanding the collection to medium and poor households will require significant administrative effort and political will. It should also be noted that poor 17 Small Businesses are charged LS 2600 per annum (L$ 60 = I USD approx.). Medium Businesses Type I are also charged the same. Medium Businesses Type II are charged L$ 6500 per annum. Large Businesses Type I are charged L$I 0, , and Large Businesses Type II are charged L$ 18,000 per annum. 15

22 households are being educated through the SME primary collection system that service provision is not for free. It is therefore envisaged, that some collection from households is likely to roll out in three to four years from now. So far as the first factor is concerned, if a political mandate is provided within a reasonable time, generation of sufficient capacity within the MCC to undertake this task within the next three years is a possibility, given the level of TA support which this project envisages to provide lb 68. Based on the above findings (to be detailed by the financial and organization audit planned under the project), areas which require particular attention and support include revenue reform and administration, financial management and intemal controls, and organizational structure. 69. Economic Considerations. The proposed project is assessed to be cost-effective, if executed as designed. However, its outcome, due to the dynamic nature of solid waste management operation, depends on strong proactive monitoring and fast actions in response to the day-to-day feedback from the operations. The following considerations are made: Primary collection at household and small enterprises level is already on a trajectory of self-financing. The primary collection by the community-based SMEs allows those who are able and willing to pay to contribute towards the cost of service. At the same time, the poor have an alternative: the increase in collection points/skips allows free communal access through self-service for those without income or unwilling to pay. The implementation of the project under a hard budget constraint, based on rational choices to buy or hire/rent equipment and build and not build transfer stations is likely to lead to cost-effective results. The planned construction of transfer stations is expected to enhance the optimum use of existing transport capacity; the analyses have taken into consideration the increase in population and gradual improvement in welfare, which tend to increase solid waste generation and pressure for higher removal of waste at both primary and secondary collection points. The planned awareness campaign is expected to increase the rate of participation in the collection system by households, small, medium and large businesses and institutions. It would also teach the public to reduce waste generation through rational choice. Benefits from the project include qualitative improvements such as positive health and environmental impact for the population as well more easily quantifiable savings related to city infrastructure. In particular, the removal of solid waste would avoid water stagnating on road surfaces, flooding of building structures and damage to properties with significant savings to society from potential costs for rehabilitation and maintenance expenditure. The capacity building and institutional improvements under component 2 would additionally enhance the benefits of the project. With the implementation of the project and improved solid waste service delivery, MCC is expected to be in a stronger position to generate income from fees. The fiscal impact of EMUS is also positive, being financed through a grant. 18 The fee could be collected as a surcharge on the monthly fee to households charged by the SMEs for "at the door" collection or a surcharge on the annual1icense fee for squatters. Presently, SMEs charges range from USD I - USD 25 per month for poor households and rich households/small businesses respectively. The MCC-proposed surc~rge is for 12% increase, i.e. USD 1 - USD 25 fee per annum respectively. 16

23 70. Procurement. Procurement of goods and works and selection of consultants would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, revised in October 2006; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, revised in October 2006, and the provisions stipulated in the Legal Agreement or any other method accepted by the Bank. 71. The capacity of the MCC was reviewed, with a view to determining its ability to conduct procurement. It was found that its existing structure for procurement complied with the requirements of the Liberia Public Procurement and Concessions Law. Being a procurement entity, the MCC has a Procurement Unit headed by the Mayor with four members. Procurement activities undertaken are generally in the areas of goods, mainly shopping; there is minimal involvement in works procurement, though there is an indication that some services procurement had been conducted before. The review established that MCC does not have any experience working with donor funds, including IDA funds. The Council, therefore, does not have any experience with procurement using the Bank's Guidelines for services, and also the Guidelines for goods and works. Based on these limitations, it was observed that MCC has no dependable procurement capacity to manage the new project. It is therefore recommended that a Procurement Specialist with experience in IDA procurement is recruited for at least two years to manage all project activities and to have the additional responsibility of training MCC staff. 72. Financial Management. The financial management arrangement for implementation of the project was reviewed at two levels namely at the MCC and then subsequently at the PFMU of the MOF. 73. Following the review and due to lack of acceptable financial management system at the MCC that meets the Bank's minimum requirements, the financial management of the Project will be carried out by the PFMU at the MOF. The PFMU has since its inception in 2006 developed financial management structures, functions, and responsibilities acceptable to the IDA and these have been relied upon by IDA for implementing several ongoing projects. Under the proposed implementation arrangements it has been agreed that the PFMU will be fully responsible for the financial management functions. 74. A Memorandum of Understanding (MOU) detailing the respective financial management responsibilities of the parties will be signed between the PFMU and the MCC. 75. In general terms, under the MOU the PFMU is tasked with the following responsibilities: Operate an efficient financial management system acceptable to the IDA; Expose an accounting staff from the MCC to bank financial management procedures. Operate a US Dollar denominated Designated Account and a US Dollar drawdown project account in a reputable bank satisfactory to IDA on behalf of MCC; Establish effective accounting and transaction processing procedures to support the payment of all eligible expenditure; Provide internal audit services and periodically review the control environment to ensure that policies and procedures are being complied with. It will also verify existence and location of project assets to ensure they are properly recorded in the Assets Register and they are safeguarded; 17

24 Prepare on a timely basis quarterly financial reports (IFRs) and annual project financial statements as well as any other financial reports as may be requested by the IDA and the MCC from time to time; Lastly, in consultation with the MCC ensure that the financial statements of the project are audited and conform to the financial covenants as per the Grant Agreement in every respect. 76. As in other post conflict environments, the overall fiduciary environment in Liberia is weak and currently is being strengthened through a series of Project Financial Management (PFM) reform measures. For this particular project this is more critical considering the lack of experience of the MCC in implementing donor funded projects and knowledge in Bank procedure and processes. 77. The project financial management is strengthened primarily by the involvement of the PFMU which has satisfactorily supported the financial implementation arrangements of projects in the Liberia portfolio. Consistent with the Bank's guidelines under OP/BP 8.00, the MOF adopted the PFMU as a centralized accounting unit which handles all financial management for most IDA and other donor-funded projects in Liberia. 78. Environmental. Initiated in 2006, the EIPSC funded a one-time massive clean-up campaign of Monrovia and the establishment of a simple collection system. The project was processed as an emergency operation and sought to improve the immediate living environment in Monrovia and remove accumulated waste from the city. The only permitted disposal site within city limits - initially an uncontrolled dump - was upgraded and subsequently capped and closed (Fiamah site). Another location for a sanitary landfill with a life span of approximately 6-8 years was identified and is currently being developed (Whein town) with funding from EIPSC. Solid waste collected under the EIPSC is disposed of at Whein town. Waste collected under EMUS will also be disposed of there. A location for a permanent land-fill with a life span of approximately 25 years is identified (Mt. Barcley) and preparatory activities for its development (I.e. environmental, feasibility studies, design) will be supported under the parent EIP project (and therefore not supported under EMUS). Overall, the EIPSC is considered very successful in managing to tum around the solid waste situation in Monrovia in less than 3 years and drastically improve sanitary conditions within city limits and of disposal. 79. The overall environmental impact of the EMUS project will be positive in that it will initially continue vital solid waste collection and disposal activities and then, through the construction and operation of two solid waste transfer stations, will maj<.e transport to the landfill more efficient and thereby allow collection to expand. Potential negative impacts can result from two activities: (i) the impact of construction and operation of the two transfer stations are local and readily manageable by good construction and operating practice, coupled with effective community liaison; and (ii) the potential impact of the operation of Whein Town Sanitary Landfill are more significant, primarily as they may affect groundwater quality. 80. The project is in Category B. OP 4.01 Environmental Assessment and OP 4.12 Involuntary Resettlement are triggered. The project is classified as Category B because "its potential adverse environmental impacts on human populations or environmentally important areas... are less adverse... are site-specific... [are not] irreversible, and mitigatory measures can be designed". Two of the relevant safeguard instruments for EMUS were completed in the course of other Bank-supported infrastructure projects in Liberia. The first of these is the Environmental Mitigation Plan (EMP) for the urban works of the EIPSC, which covers waste collection and transport. The mitigation and monitoring measures in the EMP have proven effective in EIPSC 18

25 and are sufficient for the continuation of waste collection and transport that EMUS is financing. The EMP was reviewed and cleared by the Bank in 2008, and InfoShop disclosure occurred in November of that year for EIPSC. In-country disclosure occurred in January The EMP was re-disclosed for EMUS in the InfoShop on April 14, The second safeguards document is for Whein Town Landfill, also prepared under EIPSC. It is relevant to EMUS because it contains the environmental and social impact mitigation and monitoring measures for the landfill, to which this project must pay judicious attention as it supports the continuation of operations there. This Environmental Impact Assessment (EIA) was prepared on an urgent basis to avoid delaying the closure of the Fiamah Dumpsite, for which the Whein Town Landfill is the replacement disposal facility. The final draft was presented at a community consultation meeting held on September 5, 2008 and was disclosed in the InfoShop in November The final report, incorporating comments from the Bank and including a summary of the issues raised by the community and their disposition as well as a list of attendees, was issued in December It was reviewed and cleared by the Bank and by Liberia EPA and disclosed in-country on March 31, 2009, for both EIPSC and EMUS. The final EIA was re-disclosed in the InfoShop for this project on Apri114, The remaining safeguards documents the project will need are for the two solid waste transfer stations. These are small facilities, and their impacts can be managed through sitespecific EMPs. As of date, the site at Fiamah has been identified as the location for a transfer station on the eastern side of Monrovia. Another location at Stocken Creek is currently under investigation as a possible transfer station on the northern side of the city. EMPs for both stations (at Fiamah and at a second location yet to be confirmed) will be prepared in accordance with OP The project will have a disbursement condition related to each transfer station, requiring completion and disclosure of an EMP and, if needed, a Resettlement Action Plan (RAP), acceptable to the Bank. While the requirement of a RAP is included in principle for both transfer stations, an abbreviated RAP (ARAP) is likely to apply for the transfer station located at Fiamah due to the expected limited extent of involuntary resettlement (see also discussion in paragraph 84). 83. The Liberia Environmental Protection Agency has overall responsibility for managing environmental impact as well as for national solid waste management strategy. Another Banksupported operation, Urban and Rural Infrastructure Rehabilitation project (URIRP), will be providing support to EPA to build capacity in auditing and enforcing compliance with EIAs. The MCC is implementing solid waste management through a combination of outsourcing (for landfill operations for example) and privatization; it will receive assistance under the project to build capacity to oversee contractor operations and enforce contract provisions governing environmental and social impact management. The consulting engineers that supervised the closure of Fiamah dumpsite and designed and now supervise the landfill will be designing the transfer stations and providing general supervision support to MCC. 84. Social. The overall social impacts of the project components are positive, particularly for market women and young children. Potential social safeguards risks are minor and limited to the building of transfer stations. At Fiamah, the possible use of larger solid waste trucks will require the rehabilitation of the access road to the entrance (about 50 meters) of the transfer station and induce involuntary resettlement, as there are some stalls in the right of way, which will have to be relocated. To that end, an ARAP will have to be prepared, prior to the commencement of the civil works of the road section rehabilitation. Upon final identification of a location for a second transfer station, a RAP (or ARAP in case of limited extent of involuntary resettlement) will be prepared. The ARAP for the Fiamah transfer station and the RAP (or ARAP) for the second 19

26 transfer station will be reviewed and cleared by the MCC, the Liberia EPA if applicable and the Bank, and be disclosed. 85. As a public education campaign is one of the project components, the PIU has to include a part-time social development specialist. Besides information, education and communication campaigns, the project has to ensure the quality of the social development instruments and products. Social development challenges faced include: (i) baseline studies/surveys, e.g. regarding scavengers; (ii) continuous public and private consultations (iii) management of potential resettlement/rehabilitation issues at Fiamah; (iv) change of attitudes; (v) behavior change; and (vi) impact assessment. 86. The la-hectare parcel of land for the Whein Town landfill was acquired from a single owner by the Government of Liberia, represented by officials from MPW and MLME, in a commercial transaction for US$ 75,000 in February 2008, in conjunction with EIPSC. The site was not occupied or being actively used for anything except occasional laterite quarrying. There were only a few residences within sight of the landfill. Formal consultations with the local community were held on September 5, 2008 as part of the Environmental Assessment (EA) process, and 39 members of the Whein Town and Caine Village communities including the Whein Town Chief attended. Government officials from EPA, Forest Development Authority, MCC Council, and MCC Solid Waste Department participated. UNDP and World Bank were present as observers, and the solid waste supervising engineer supported the process. Local citizens raised concerns about their needs for water supply, protection of water resources, health care, transportation, health and safety, odors and vermin, and employment. Most of these concerns have been addressed in the EMP for the project. In general, the citizens accepted the plan for the landfill as a good solution to the solid waste problems but expressed some skepticism about implementation of the EMP. All agreed on the importance of continuing communication during the life of the landfill, and Bank supervision missions have confirmed that the operating contractor and the engineer are maintaining liaison with the community. E. Implementation Arrangements and Financing Plan 87. Implementation Period. Upon grant effectiveness, the project is expected to be fully implemented within four years (the completion date is currently estimated to be December 31, 2013). During the first six months of the project, collection is expected to continue under arrangements established under the EIPSC. The rainy season of 2009 has been utilized to develop designs fer the transfer stations and advance the bidding process. First visible activities towards improved effectiveness of current operations and more frequent collection and disposal of waste will be carried out within about twelve months of grant effectiveness after the transfer stations are introduced. The design, specifications and bidding documents for the procurement of additional equipment will be completed in parallel with the construction of the transfer stations. With regards to TA to MCC, the PIU is expected to be fully staffed within three months from Effectiveness. The financial and organizational audit is expected to be completed within the first 12 months of the project. An implementation timetable is provided in Annex Government's Capacity for Project Execution. In view of the need for rapid results on the ground, the project has been designed to rely on implementation arrangements that have been successfully tested in other post-conflict environments. Prior experience in Liberia has also been taken into consideration. It is therefore envisaged that a small specialized unit, PIU, would first be established to address project management and procurement issues, and that over a period oftime this unit will also build the capacity of the line departments. Other alternatives, such as using the existing SIVof the MPW were considered. This idea was discarded in view of the lessons learned 20

27 under the EIPSC that strong ownership of the implementing Agency is essential for sustained service provision (see earlier discussion in Section C). FM functions under the project will be handled by the PFMU already established at the MOF. 89. Transitional Arrangements for Implementation. Since project implem~ntation is of an emergency nature and proposed to commence immediately, some activities are proposed to take place while an implementation agency is being established within the MCC. Thus, transitional arrangements are envisaged. In the initial period after project Effectiveness and until the pm is established and key staff appointed, project implementation and procurement will be handled by the SIU at MPW. Following this initial period, implementation and procurement will be transferred from the sm to the PIU. Assessment ofpiuimcc capacity will be carried out at midterm review. The assessment will include a review of the PIU's project management and project coordination capacity as well as its capacity to carry out procurement processes and contract management in accordance with applicable guidelines. Recommendations for improvement will be made. The PFMU will continue to handle all financial matters throughout the life of the project. i Procurement of Goods, Contract Management, and Implementation Agency Timeline Triggers SIU From project Effectiveness An MOU between the sm and MCC will outline SIU's until the PIU at MCC is responsibilities for project implementation during the established and three key initial period prior to pm being staffed with key staff appointed, project personnel. The MOU will be a condition of implementation and Disbursement. procurement will be carried out by the SIU I9 PIU at MCC established is a condition of disbursement. PIU Following establishment of Appointment of key staff at PIU (Project Mana R er2o, the PIU and appointment of Procurement Specialist and Sanitary Engineer 2 ) is a key staff, project dated Legal covenant (3 months from Effectiveness). implementation and i procurement will be transferred from the SIU to I. the PIU. I Financial Management Agency Timeline I Comment 19 The following contracts are expected to be procured during this period (or procurement to commence): (i) Goods: computers, office supplies, furniture, etc as per Ptocurement Plan (shopping method); (ii) Works: construction of transfer stations (NCB and ICB); improvement of skip platforms (shopping); (iii) Consulting services: key staff of PIU and TA for financial and organizational audit; (iv) Non-consulting services, including collection contracts and maintenance of equipment: no new contracts are expected; the funding source of existing contracts need to be transferred to EMUS. 20 An EOI for the position of the Project Manager has been posted on dgmarket and in country. Qualifications under the TOR include minimum of 15 years of senior managerial experience working on similar donor funded projects. Shortlisted candidates were interviewed and the Bank has provided noobjection to the Evaluations Report recommending award of contract. 21 The Procurement Specialist will be recruited competitively and an EOI is in a process of being published on dgmarket and in country. Qualifications under the TOR include minimum of 10 years of experience as a procurement specialist working on donor funded projects, including IDAlIBRD projects. 21

28 90. The SIU was established in June 2006 in the MPW. The Unit, which includes several national and international specialists, was initially established as an implementation unit for IDAfinanced infrastructure projects. It has been managing the implementation of projects across the following sub-sectors: transport (roads and bridges, maritime, and aviation); water, agriculture, and urban works. Lately, the implementation of sector specific projects has started to transition to respective Line Ministries and Agencies. This reflects the Government's goal to empower respective agencies and build capacity. The SIU is expected to evolve into the Infrastructure Implementation Unit (liu) and thereafter into a Roads Authority (expected to emerge in three to four years). 91. Key staff of the SIU includes Project Manager and Deputy, Road Engineer, Water Engineer, Environmentalist, Agriculture Specialist, Procurement Specialist, Contract Management Specialist, and Financial Officer. International technical assistants provide additional assistance in the areas of contract management and civil engineering services. 92. The PIU will be responsible for overall project management and coordination, following the transitional period as described above. The PIU will have three professional staff. It will be headed by a Project Manager (FM or Revenue Expert) and include a Procurement Specialist and a Sanitary/Environmental Engineer. The PIU will be assisted by a Social Development Specialist in overseeing social issues related to project activities, and a Monitoring and Evaluation (M&E) Specialist will provide assistance to compile annual M&E reports utilizing the project's MIS. 93. The PFMU. As stated earlier, the PFMU at MOF which has been established for the purpose of other IDA projects and is fully operational will handle all financial management under the project. Specific arrangements and modus operandi between the PIU and PFMU will be detailed in a MOU. The MOU will follow the model of the MOU detailing arrangements between the SIU and PFMU for other IDA projects. Further details on the PFMU's organizational structure and rules of engagement with the PIU are provided in Annex The Design and Supervision Engineer. In order to further strengthen the enabling environment, particular attention will be paid to the capacity development of the SWD at MCC, through on-the-job training by the Design and Supervision Engineer. The Engineer will be hosted at the MCC and, among others, will be responsible to: (i) draft and finalize all bidding documents for each activity under sub-component 1.2 including design, scope of works and bill of quantities (BoQs); Oi) advise on all matters related to the interaction between the primary and secondary collection and work with the ILO to resolve issues as needed; (iii) assist the PIU with procurement processes and provide due diligence in the form of supervision of contractors; (iv) work with the contractors to build their capacity; and (v) further develop the technical concept for the solid waste collection and disposal system. 95. The Design and Supervision Engineer has been appointed under the EIPSC project in February 2009 for a period of 18 months. The firm selected is the same one that oversaw the very successful turnaround at Fiamah from an uncontrolled open dump, frequently on fire and continuously a source of community complaints, to a well-controlled operation that has subsequently been closed down and is being capped and revegated. Following the end of this 18- month contract, a new Engineer will be procured (the possibility to extend the current contract will be explored subject to procurement guidelines and consultant's performance). 22

29 96. Activity-specific implementation arrangements are described below: Sub-component 1.1. It is proposed that ILO is sole-sourced (service contract) to design and manage sub-component 1.1, including development/improvement of the contractual framework with the SMEs; planning, designing and managing of the proposed capacity building program; design and implementation of the city database system and in the recording and reporting on SME performance; capacity building activities at MCC related to oversight of the primary collection; pilot composting at a selected market area. Engaging the ILO will provide continuity of current activities and engagement with SMEs. The activity is envisaged to span over 2 years. Sub-component 1.2. The Design and Supervision Engineer will be responsible for design and technical supervision of all activities under this sub-component. Haulage of solid waste from the skips to the transfer stations and from the transfer stations to the landfill will be carried out by contractors procured competitively. Contractors will use own equipment as well as MCC equipment. All construction works will be executed by private contractors procured competitively. The operations of the transfer stations and the landfill will also be handled by private operators. Sub-component 1.3. It is envisioned that the campaign, including a baseline survey and impact assessment, would be undertaken by a single NGO or firm procured through competitive bidding. The NGO/firm running the campaign will be encouraged to tap ILO's expertise in working with SMEs and individual customers in designing the creative elements of the campaign. Component 2. Component 2 is primarily concerned with the provision of TA for specific purposes. All TA to assist project implementation will, in addition, build capacity of line departments of MCC (i.e. the Environmental Engineer is expected to work closely with the S WD to transfer knowledge and provide training). In addition, TA assistance will be provided to perform a financial and organizational audit ofmcc and follow up capacity building. With the exception of the Design and Supervision Engineer, all TAs will be individual consultants with solid expertise in their subject matter and previous experience in post-conflict (or developing) countries. 97. Procurement Arrangements. Priority will be given to ensuring adequate transparency of the procurement process to reduce opportunities for corrupt practices. Procurement methods and arrangements to be used under the project will build on experience to date with ongoing projects in Liberia. 98. Procurement will be conducted in accordance with applicable International Bank of Reconstruction and Development (IBRD) guidelines. Procurement methods will rely on competitive processes in most cases - essentially, International Competitive Bidding (ICB) and National Competitive Bidding (NCB) for goods and works, and Quality-Cost Based Selection (QCBS) for services. Sole source contracting (SSC) will be used in a limited number of specific cases which meet the criteria set in OP Procurement arrangements are presented in Annex Financing Plan. The overall financing and disbursement arrangements will follow the route of opening of a Designated Account for the project and payment of expenses there from, with such safeguards and internal controls as applicable to current Bank financed projects in Liberia. 23

30 100. For the first two years of the project all expenses (for Goods, Works, Services and Operating and Training costs) shall be met from the Designated Account. The project will finance 100 percent of au expenditures, inclusive of taxes. This is consistent with the Country Financing Parameters for Liberia. The disbursement schedule is expected to be as follows: 20 percent in FYIO; 33 percent in FYI1; 30 percent in FYI2; 17 percent in FY The project will finance 80 percent of operating cost for solid waste collection in year three and 60 percent of the same in year four. The balance will be funded by a combination of MCC and MOF funds along arrangements agreed in principle and to be detailed in the PIM (see Annex 6 for discussion on MCC's ability to raise revenue; see Annex 4 for discussion on flow of funds) The Financing Plan for operating costs from the third year of the projects till the end of the project period (and beyond) envisages compliance with certain critical conditions, i.e. (i) the operating costs of the project will be transferred from the LRTF to the government in a gradual manner; (ii) the government itself will transfer the burden of operating costs to the MCC in a gradual manner; and (iii) during the period when the MCC will only partially bear the operating costs, there will be laid down rules and assurances designed to ensure that the MCC receives the needed financial support from the MOF in time and of the appropriate amount as agreed upon Given the above, the financial flow mechanism discussed with the Government uses a dedicated Budget line in the Government Budget to ensure that the required funds are available and transferred to MCC. This mechanism emerges from the fact that under proposals currently before the legislature and being favorably considered by it, all municipal revenues (i.e. taxes and fees) are to be deposited in a Central Treasury account first, and then, under respective arrangements, channeled back to the City. Under this arrangement, the MCC is expected to continue to bill its customers a SWF, and the MOF is expected to refund the entire amount back to MCC (together with its own contribution towards the running cost) Further on, municipal SW revenue would be deposited into a designated Treasury Account of the Government. The MCC would then present a funds requirement request to the MOF based on what has been collected and deposited (reconciling municipal billing with Bank statements for actual payment), and the amount that the MOF is committed to pay on a pro-rata basis. Upon the receipt of the request for funds, the MOF would instruct the Treasury to transfer the amoupt of funds requested. These funds would include both municipal SW revenue as well as the MOF contribution The LRTF transfer would be initiated as soon as the Government funds have been transferred, and then LRTF money would be transferred from the Designated Account directly to the Project Account LRTF would transfer funds from the Grant Account in the LRTF book of accounts to the Designated Account, from which withdrawals would be requested on a transaction by transaction (need) basis to the Project Account that will also receive funds from MOF and MCC The Project Account as well as Designated Account will be closed at the end of the project. However, the Solid Waste Special Account will continue thereafter and hold all municipal SW revenues as well as contributions from MOF. 24

31 108. Financial Management, Reporting and Auditing. The project's financial management arrangements being implemented by the PFMU have been determined as satisfying Bank's minimum requirements under OP Further detail is provided in Annex Compliance with Bank Safeguard Policies. The project is classified as Environmental Category B as the potential environmental and social impacts are not significant. They are likely to be small-scale, site-specific and thus easily manageable. The project triggers two safeguards policies: OP 4.01 on Environmental Assessment and OP 4.12 on Involuntary Resettlement. These triggered policies are applicable to one subcomponent (SUb-component 1.2) and relates to the construction of two small transfer stations. The project requires: (i) EMP for the collection and disposal of waste. This has been completed and disclosed under the EIPSC project; (ii) EIA for the landfill site. It has been prepared and disclosed under the EIPSC project; (iii) site specific EMPs (see Section D, Environment) As required under OP 8.00, the Bank has prepared an Environmental and Social Screening and Assessment Framework, which outlines the mitigation approach during implementation (see Annex 8) Supervision by Bank's Team. At least three supervlslon missions per year will be conducted by the World Bank in the first two years of project implementation, followed by supervision missions conducted at least twice a year for the remainder of the project implementation period. All supervision missions will include a procurement specialist in addition to the Task Team Leader and the technical specialists. Environmental and social development specialists will participate in at least one supervision mission per year, while a financial management specialist will join the supervision teams at least twice per year. Implementation support and supervision, through missions as well as direct involvement by the Liberia Country Office will, in particular, focus on performance of the implementing entity in managing contracts, procurement, safeguards, technic:li and financial management, as well as in eompleting the agreed upon implementation plans. F. Project Risks and Mitigating Measures 112. The project faces a variety of risks, which are considered to be Substantial, and include: Risk Rating Mitigation From Outcome to Project Qevelopment Ob,jective.. Funds from Government H High level commitment from Government delayed and MCC not able to secured during project preparation (letters of generate needed resources for comfort provided). The project provides T A to solid waste collection. assist with the set up of a financing mechanism for operating cost of solid waste and advise the Government of size and timing of required contributions. City Ordinance which pennits the MCC to charge SWF exists but is rarely enforced, The household fee will be introduced only in gradual stages, and after substantial improvements have already been brought in the SW Management system. In the interim, the MCC to mount its own campaign. showcasing the gains that have been made in the of Rating fter la Miti ation S 25

32 at least two years, and visible changes are expected to happen within that period. Internal resistance (within S The top management is already sensitized to the M MCC) to change towards need for systemic reforms and a Project financial management and Management Committee has been formed. The organizational structure I Project Management Committee will address the improvements (I.e. pressure issues arising out of resistance to change on a to preserve the statusquol regular basis. Effective S Regular and close supervision by Design and M interface/coordination Supervision Engineer; Training and capacity between primary and improvement for each collection sector. secondary collection not achieved I From Component to Outcome Readily available land H High level commitment by Government to resolve S transfer stations the issue in place. Assistance by Design and Supervision Engineer to advance dialogue for speedy resolution. Currently accepted unsafe H Public awareness campaign will build on past S I practices of solid waste disposal remain widespread. I I -L I experience from urban projects in Liberia and in I the sub-region and will include strong emphasis on educating younger residents (i.e. in schools) who are more likely to adopt new practices. High cost of maintenance of H Current costs of maintenance under EIPSC seem S equipment. too high and need to be monitored very closely and confirmed. This will be done through I intensified supervision by Engineer and close I monitoring of cost (monthly reports). Early! waming in case that high cost persists. Given that I I equipment will be procured only in year two of the project, if costs remain high, adjustments to. the type of equipment will be made. Poor performance of SMEs H Close monitoring of SME's performance; S resulting in primary Training and capacity improvement for SMEs; collection is f~liling below MCC oversight actual generation of waste Weak fiduciary capacity at H Use of PFMU staffed with qualified personnel to S MCC. I provide [mancial management support for the I projects will minimize fiduciary risk. Use of a highly qualified Procurement Specialist at the PIU to manage procurement and train selected MCC staffwill mitigate fiduciary risk. PIU is not fully in place in good time for the project to begin on schedule I, I The use of a high level Inter Ministerial Committee (the Oversight Committee) of all stakeholders and the PIU will provide technical and strategic oversight during implementation. The involvement of the PFMU in financial management will minimize fiduciary risk. s Transitional arrangements have been provisioned M where the SIU will handle procurement and implementation tor an initial period until the PlU is established and fully staffed. 26

33 Potential n~gative impact on I M environment and : communities may result from construction of two transfer stations and operations of landfill. i Overall Risk H-High S - Substantial Site specific EMPs for the transfer stations will be prepared; EA for the landfill has been prepared and disclosed; Abbreviated RAP will be prepared prior to start of works and accordingly disclosed. M-Modest L Low L s I I G. Terms and Conditions for Project Financing 113. The project is expected to be funded through a USD18.4 million grant, which will cover 100 percent of expenditure as per the Country Financing Parameters. Conditions include: Presentation to RVP: the Closing Date of the Liberia Reconstruction Trust Fund (LRTF - TF ) administered by the World Bank is extended beyond the Closing date of the proposed Emergency Monrovia Urban Sanitation Project. The condition has been met. The LRTF has been extended to December 31, 2020, whereas the Closing date ofthe proposed Project is December 31,2013. Effectiveness: The execution and delivery of the Agreement on behalf of the Recipient have been duly authorized or ratified by all necessary governmental action. Disbursement: (i) PIU at MCC established, satisfactory to the Bank; (ii) the FM MOU between the PFMUIMOF and MCC has been entered into; (iii) the Transitional MOU between the MCC and SIU has been entered into; (iii) With respect to expenditures under contracts for works for each solid waste transfer station, community consultations, Environment Management Plan (EMP), RAP (if needed) for the two transfer stations should be completed prior to commencing works. Dated Legal Covenants: (i) Three key staff at PIU (Project Manager, Procurement and Sanitary Engineer) should be appointed within 3 months from Effectiveness; (ii) PIM adopted within 3 months from Effectiveness; (iii) The project's Auditor is appointed no later than 4 months from Effectiveness; (iv) The Project's Oversight Committee is set up no later than 3 months from Effectiveness; (v) The FM MOU is signed within 3 months from Effectiveness; (vi) The Transitional MOU is signed within 3 months from Effectiveness. 27

34 Annex 1: Detailed Description of Project Components LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) A. Background 1. The EIPSC provides the background and rationale for the proposed project. Initiated in 2006, the EIPSC funded a one-time massive clean-up campaign of Monrovia and the establishment of a simple collection system. The project was processed as an emergency operation and sought to improve the immediate living environment in Monrovia and remove accumulated waste from the city. The collection system covered only secondary collection! and as such was limited in scope. Volumes captured and disposed properly increased gradually from zero to approximately 30% of daily generated waste. The only permitted disposal site within city limits initially an uncontrolled dump - was upgraded and subsequently capped and closed (Fiamah site). Another location for a sanitary landfill with a life span of approximately 6-8 years was identified and is currently being developed (Whein town) with funding from EIPSC. Solid waste collected under the EIPSC is disposed of at Whein site. Waste collected under EMUS will also be. disposed of there. A location for a permanent land-fill with a life span of approximately 25 years is identified (Mt. Bardey) and preparatory activities for its development (i.e. environmental and feasibility. studies) will be supported under the parent Emergency Infrastructure Project (EIP) project (and therefore not supported under EMUS). Overall, the EIPSC is considered very successful in managing to tum around the solid waste situation in Monrovia in less than 3 years and drastically improve sanitary conditions within city limits and of disposaf. 2. The proposed project builds on the technical design of the EIPSC. It aims to expand the scope of the EIPSC-funded collection system and capture primary collection. It also aims to improve the efficiency of secondary collection by introducing transfer stations, bigger trucks, and greater private sector involvement. Volumes of waste captured and disposed are expected to increase to approximately 45% of daily generated waste. A large public awareness campaign is also planned and aims to continue engaging the public. on issues of disposal and handling of waste. The campaign will build upon the work of a local NGO appointed under the EIPSC project to sensitize communities and explain the solid waste collection system. Disposal of waste under the EMUS project will continue to utilize the temporary landfill at Whein town (which is currently being developed with funds from EIPSC). A list of activities funded under the various projects is provided in the table below. 1 Secondary Collection refers to collection of waste from communal skip and skip station, haulage and disposal of such waste to landfill site. 2 No donors other than the ILO and some NOOs providing small scale assistance for solid waste are involved in the sector (UNDP was involved with EIPSC project implementation on behalf of the Government). 28

35 Secondary Collection for 30% of On-going EIPSC daily generated waste Secondary Collection increased to Planned EMUS capture 45% of daily generated waste I Transfer stations Planned EMUS On-going collection contracts will be transferred to EMUS after Additional collection contracts will be procured. Two transfer stations for improved efficiency of operations are planned. Upgraded dump-site, capped and closed (Fiamah) Development of a sanitary temporary On-going EIPSC land-fill (Whein town, 6-8 year span) I Env. and feasibility studies for a Planned EIP permanent land-fill (Mt. BarcIey, 25 year span) Government in process of acquiring land (from private owner). Studies planed to commence after land is A limited in scope assessment of institutional functions and roles, revenues and expenditures and organizational structure. Financial and Organizational Audit and assistance for the implementation of selected action items identified by the audit. Planned EMUS The assessment was carried out over a 3 week period by an individual consultant. 3. Lessons learned under the on-going EIPSC project were incorporated in the project design of EMUS. These include: (i) lack of clear ownership of project activities implemented by UNDP and the SIU since these agencies do not have the institutional mandate for service delivery; the EMUS project therefore proposes to place project implementation with the MCC; (ii) the EIPSC is an emergency project without a clear exit strategy; the EMUS project proposes to help establish a financing mechanism expected to remain in existence after the project is completed; (iii) primary collection was not supported under the EIPCS while it significantly improves sanitary conditions for the population; the EMUS project proposes a sub-component targeting primary collection; (iv) long haulage distance from skip location to landfill is inefficient; the EMUS proposes to introduce two transfer stations to reduce time of haulage and increase volumes captured; (v) public awareness campaigns are essential to explain and promote the collection system and educate the public about hazards related to handling of waste; the EMUS project is going to build up on initial campaigns under EIPSC and has provisioned a subcomponent on public awareness; (vi) transitioning from the emergency nature of the EIPSC requires assistance with institutional development; the EMSU project is proposing a T A component intended to start building capacity and strengthen technical skills and revenue 29

36 administration at MCC. Following the war this will be the first donor-supported capacity building activity at the municipality and its achievements are expected to remain modest. 4. The project has two components presented further below. B. Project Area 5. The project area includes Monrovia proper which is the jurisdiction area of MCC. The secondary collection established under the EIPSC captures the entire area governed by MCC; the zones of the primary collection where the 10 SMEs operate cover the majority of the same area (approximately 90-95%) and all low-income areas in Monrovia. The solid waste collected under the proposed project would benefit households, very small businesses (i.e. market stalls) and citizens who utilize the communal disposal sites (at the skip). Medium and large businesses and institutions have separate private arrangements with large solid waste contractors and remain outside of the scope of the project. C. Component 1: Solid Waste Collection (USD 11.2 million) Objective and Results Indicators 6. The objective of this component is to assist the MCC to provide solid waste 3 services and increase the volume of collected and disposed waste from 210 tons/day to 330 tons/day (approximately 30% of daily generated waste to 45%). To achieve this objective, activities under the component will seek to expand the coverage of the primary collection system, strengthen the existing capacity of the secondary collection system and build additional capacity for transporting and disposing of waste captured through the primary collection, and sensitize the population towards safe handling of solid wastes. 7. Performance indicators to measure the outcomes of the component will include the volume of waste collected and disposed properly compared to total waste produced. Sub-Component 1.1: Primary collection (USD 0.6 million) 8. Key Elements of Background. The present primary collection was initiated in 2007 under a pilot project funded by the ILO. This project had set up a primary collection network structured around a city division of 10 collection zones following by the existing geo administrative organization of the metropolitan area 4 Community Based Organizations (CBOs) in each zone were identified trained and subsequently registered as SMEs. Initial equipment (wheel-barrows, shovels, safety equipment) and training in running a small business were provided. Presently, these SMEs collect waste from approximately 5% of households and dispose 3 Municipal solid waste does not include medical and hospital wastes and industrial wastes. 4 The affiliation of SMEs to a particular zone follows the administrative division of the City, where 18 administrative zones are in turn divided into a total of 188 communities, containing all together 720 blocks. The existing SMEs active in the solid waste management program conducted by ILO are assigned to cover 10 administrative zones, located in Monrovia proper. The remaining 8 zones are areas with low density located at city's skirt (except for the Fiamah area and an area located along Somalia drive), some estates (Lakpazee, Stephen Tolbert Estate) and a few blocks along the road to neighboring townships (Paynesville, Gardnersville, Bamersville) with a density below 100 inhabitantslha and can easily be assigned to those SMEs active in the proximity as their capacities are strengthened. 30

37 of it in the 120 communal skips disseminated throughout Monrovia 5 Only half of the SMEs register a small profit. An in-depth review of managerial and operational practice of SMEs has shown that SMEs are inefficient in their operations and have a small customer base. 9. Presently, each SME has signed an MOU with the MCC, which details its role and responsibilities 6. Under these MOUs, SMEs are assigned to a particular zone, within which they are permitted to provide door-fa-door waste collection to households and small businesses; collected waste is disposed of in the communal skips. Medium and large businesses as well as institutions are serviced on the basis of private arrangements by large solid waste companies 7, which dispose the waste directly at the landfill and pay a tipping fee. SMEs are free to charge whatever fee they deem necessary to cover their expenses and are able to recover from customers 8. Presently, SMEs do not transfer funds to MCC and retain all fee collected. They pay one-time (per MOU) registration fee to MCC. Current MOUs have specific duration (around one year span) but do not list performance targets or conditions for contract extension. 10. Key Elements of Design. The sub-component will provide assistance to communitybased SMEs engaged with primary collection and to MCC in order to (i) improve SMEs' managerial and operational capacities to provide service to households; (ii) assist MCC in clarifying its role and responsibilities in oversight and supervision of the primary collection; and (iii) create an environment that will enable MCC to track and report on SMEs' performance based on an easy to use city management database system. Specifically, the sub-component will fund: Training and capacity building for SMEs in the areas of budgeting, cash flow management and operations; Training in safety handling of waste, risks associated with land reclamation, and opportunities for recycling. As part of their responsibilities, SMEs will sensitize communities about safety handling of waste; TA to MCC to (a) convert the MOU between the MCC and SMEs into a contractual arrangement, which would allow the introduction of performance standards with built-in incentives; (b) introduce conditions for contract renewal/extension based upon meeting certain performance standards; (c) explore possibilities to introduce, on a pilot basis, competition among SMEs/CBOs within a zone as a means to improve performance 9 ; (d) train MCC staff to monitor primary collection providers skips are disseminated around Monrovia on the basis of area density and potential w~te generation quantities. 6 Responsibilities outlined in the MOUs are not always enforced. For example, SMEs are responsible for cleaning of streets and open drains in their zone, however this is not taking place large solid waste companies operate in Monrovia. Typically, these companies have own equipment (dump trucks, compactors, frond-end loaders), collect from large generators and dispose directly at the landfill site. 8 Fees charged by SMEs vary between $limonth to $25/month for poor households and small business respectively. In both cases, waste collection takes place daily. The solid waste payment is collected weekly. 9 SMEs are indeed community-based organizations trained in business. To secure their customer base, SMEs rely heavily on backing and support provided by community leaders and district officials, who are closely involved with SMEs. In fact, the successful launch of the primary collection since 2006 was attributed to the involvement and support of such leaders and district officials. Opening the competition to external parties (from outside the zone) is therefore not envisaged at this stage. On the longer tenn, as the majority of households start to use the system and demand increases, open competition should be explored and introduced; similarly, as (some) SMEs are strengthened and become true business units able to transport waste across longer distance (to transfer station or landfill), SMEs could be encouraged to start servicing all generators (small and large) located in their respective zone. Certain twinning arrangements with the large SW companies may also emerge and should be encouraged. This would result in a single service provider in a particular zone, which would be the medium/long-term preferred arrangement for primary collection. 31

38 TA to MCC to set up a city management database, linked to the MIS. The database will be used for monitoring purpose and become a management tool for the Solid Waste Department at MCC. A pilot initiative in one selected market area to separate market waste at the source and handle at-the-site composting. 11. Expected Results. This sub-component will strengthen the primary collection system of door-to-door collection provided by SMEs. 12. Key Elements of Implementation. It is proposed that ILO is sole-sourced (service contract) to design and manage sub-component 1.1, including development/improvement of the contractual framework with the SMEs; planning, designing and managing of the proposed capacity building program; design and implementation of the city data base system and in the recording and reporting on SME performance; capacity building activities at MCC related to oversight of the primary collection; pilot composting at a selected market area. Engaging the ILO will provide continuity of current activities and engagement with SMEs. The activity is envisaged to span over 2 years. 13. Regular reporting will be required from the ILO and will involve regular collecting of data and reporting by SMEs under the supervision of the ILO. The city data base management system will be the central element of the data collection and reporting system as it will help keep precise records on existing customer base, progress made in servicing households in each zone, as well as key data like evolution of average weight of waste arriving at skips and ultimately at dump site. Selected Key Indicators will feed into the MIS managed by the PID. 14. Estimated Cost. One comprehensive contract to include all activities is estimated to cost USD 0.6 million. Sub-Component 1.2: Secondary Collection, Transfer and Disposal (USn 10.1 million) 15. Key Elements of Background. Secondary collection covering about 30% of produced waste in Monrovia has been achieved under the IDA-funded EIPSC project. The city is divided into four lots and through a competitive bidding process private contractors were awarded the contracts for collection and disposal. Through the collection program, they operate eight skip trucks (owned by MCC) to collect waste from 120 communal skip containers (6 cub. m. capacity). In addition, the contractors occasionally use their own vehicles to collect surplus waste dumped next to the skip containers. The wastes are transported to the interim disposal site (10 hectare area) at Whein Town where an emergency cell was opened up on closing of the dump site at Fiamah Site in May Fiamah site has been capped (with funding from EIPSC) and has been identified as the location of one of the two transfer stations planned under the proposed project. There is provision for improvement of the Whein Town site into a sanitary land fill site with funding from EIPSC and the works in this regard have begun. A third-party Engineer supervises all project activities. A local NGO has been working with communities to explain the collection system. 16. At present only 210 tons of the waste generated in Greater Monrovia (667 tons/day) is collected. The number of skip trucks available is not adequate to service 120 skips by doing several cycles every day as the average return distance of 35 km to the dump site is long given the prevailing road condition and traffic situation in Monrovia. In addition, skips in 23 locations, mainly in market areas, fill up fast requiring removal twice a day. Subsequently, the operation of skips and skip trucks (owned by MCC) represent a collection of approximately 30%, and the 32

39 contractors own system (i.e. using private vehicles) represents a collection of 60% of the total waste stream reaching the waste disposal site. The remaining 10% is brought in by private contractors through other initiatives (servicing large and medium businesses under private arrangements ). 17. In order to improve faster movement of waste, two transfer stations are required -- one on the eastem side and another on the northern side of Central Monrovia. With the introduction of bigger skips in areas where skips are collected twice daily, the collection of skips could be brought down to once a day, and by rationalizing the location of skips, the collection efficiency could improve significantly. The introduction of additional number of skips of larger capacity will call for construction of new platfonns. Some of the platfonn already constructed need improvement. All new platfonns and those platfonns which are to be improved shall have level to match 'with the ground level and are to be constructed with a dwarf wall on three sides to contain surplus waste within the platfonn. 18. Key Elements of Design. The sub-component will provide assistance to (i) support the operation of present collection and transportation system; (ii) construct two transfer stations; (iii) procure additional plant and equipment after the introduction of the transfer stations; (iv) support the operation of l'ouection and transportation system modified by introduction of transfer stations. 19..fu!m2ort to the operation of present collection and transportation system. Present waste collection and disposal system will have to be continued until the system is altered by the introduction of transfer stations followed by deployment of additional plants and equipment. The project has envisaged that the existing operation may have to be continued for one year without alteration except for making the route of skip operation more efficient. In this regard, the following support will be provided: Support for the collection of waste by MCC skip trucks and other private trucks (i.e. towards running cost); Maintenance of the MCC skip trucks; Ongoing maintenance and operations of the site at Whein town; Maintenance of other equipment for the disposal site (bulldozer). 20. Construct two transfer stations. Two transfer stations- one at Fiamah Town and another at the northern part of Monrovia (possibly Stocken Creek, which is currently under investigation) - are proposed. While the Fiamah transfer station (envisaged capacity of 80 tons/day) could ideally handle waste volume generated in Central Monrovia and transport them to the disposal site through the West-East corridor, the transfer station in the north part of town (envisaged capacity of 120-\50 tons/day) could handle the wastes generated in the northern part of the city and transport them through the Somalia Drive to the disposal site. 21. A fu ll-fledged system (transfer floor, ramp, fencing, drainage systems, roofing structure, entrance control. stacking area, paving, recycling areas, weighing scale, etc.) is envisaged for the transfer station at the north part of town. However, system design and facilities will be governed by the availability of land. Due to the potentially limited land in Fiamah, the facility to be constructed there would be limited. 22. Additional plant and equipment after the introduction of the transfer stations. The waste volumes collected will increase with strengthening of the primary collection system. In order to keep abreast of the increase in collection, allowances have to be made to increase the number of skips and along with it the necessary trucks. These additional skips are to be installed at transfer 33

40 points where the waste volume generated is high and shall be located on the route of the new skip trucks. Additional systems to be procured include: Additional skips (8-10 cum capacity; 20 numbers); Replacement/Additional skip trucks (16 ton skip lifters or load luggers; 4 numbers) 23. Support to the operation of collection and transportation system modified by introduction of transfer stations. With the transfer station facilities being in place in the first year, the waste collection and disposal service will continue albeit based on a slightly different routine.involving the new systems. The project envisaged that the secondary collection within the catchment area of the respective transfer stations, shall be transported to transfer stations and haulage contractors shall transport wastes in large vehicles from transfer station to the disposal site (using own vehicles). Therefore, the project provided for the following items for the subsequent years of project period: Provision and Improvement of skip platforms; Maintenance ofmcc skip trucks and other equipment (bulldozers); Management of transfer stations and disposal site; Transportation from (i) skip stations to transfer stations; (ii) skip stations to disposal site; (iii) transfer stations to disposal site. 24. Expected Results. The investment under the sub-component is expected to strengthen and improve the present collection, transportation and disposal of municipal solid wastes. The investment will reduce current vehicle turnaround time and, by the end of the project, the overall collection and disposal will reach about 330 tons per day from the currently estimated 210 tons per day. This subcomponent will focus on residential areas, small business establishments and municipal markets. 25. Key Elements of Implementation. The Design and Supervision Engineer will be responsible for design and technical supervision of all activities under this sub-component. Haulage of solid waste from the skips to the transfer stations and from the transfer stations to the landfill will be carried out by contractors procured competitively. Contractors will use own equipment as well as MCC equipment. All construction works will be executed by private contractors procured competitively. The operations of the transfer stations and the landfill will also be handled by private operators. 26. Estimated Cost. Activity Cost (USO million) A. Operation of present collection and transportation system 1.3 B. Construction of Transfer Stations 2.5 C. Additional Plants and Equipment 0.7 D. Operation of collection&transportation system modified by introduction of Transfer Stations 5.6 tal SUb-Component Cost

41 Sub-Component 1.3: Public Awareness Campaign (USD 0.5 million) 27. Key Elements of Background. Solid waste management is a relatively new concept for Monrovia following a fourteen years without regular collection. In 2007, a simple system was put in place, which collects approximately 30% of daily generated waste. During the war, an estimated 500,000 rural Liberians moved into Monrovia. Most of these relative newcomers have never experienced an urban solid waste management system. As a result, waste in Monrovia is regularly burned; thrown on the ground, in drains, and in the river; residents use waste to reclaim swamp land on which to build homes. Scavengers recover items from landfills with little or no protective gear. 28. Key Elements of Design. The sub-component will finance a public awareness campaign (PAC) which will encourage residents to use the solid waste collection services and disseminate knowledge about safety handling of waste. An initial survey and an impact assessment will be part of PAC. 29. The PAC will discourage hazardous or reckless disposal of waste and will communicate messages to the public revealing health and environment risks associated with uncontrolled disposal or handling of waste. Methods of delivering the messages under the PAC will include: (i) Meetings with communities, which will form the basis of the campaign as they will secure local buy-in and participation; (ii) A second major channel will be Monrovia's primary and secondary schools. In many cases, children are the ones who take household waste to communal collection sites. They are thus both at risk of health problems associated with poor solid waste management and the ideal target tor a campaign focused on behavior change; (iii) A variety of radio, video and signage programs. 30. As part of PAC, an initial Knowledge, Attitudes, and Practices (KAP) survey will capture a comprehensive set of baseline data on indicators such as percentage of households using comm1:mal collection sites; percentage of households using primary collection system; etc. The baseline survey will also capture data about waste scavengers (see Annex 8: Environmental and Social Safeguards Framework). One year into the PAC, a follow-up impact assessment will be carried out. 31. PAC could include a campaign promoting the collection and recycling of plastic if a private sector initiative, currently at a concept stage, picks up (producing pellets from plastic; successful examples in Nigeria and Egypt). (The Design and Supervision Engineer, as part of its task to build capacity of contractors, will organize a training session on possibilities for recycling of plastic.) 32. Expected Results. The campaign is expected to reach the majonty of Monrovia's population and enhance popular understanding of how to handle waste safety, including waste disposal utilizing the available system. 33. Key Elements of Implementation. It is envisioned that the campaign, including the baseline survey and impact assessment components, would be undertaken by a single NGO or firm through competitive bidding. As SUb-component 1.1 of the project (primary collection) will aim to increase the customer base, the SMEs will be encouraged to make use of the PAC materials. In parallel, the NGO/firm running the campaign will be encouraged to tap ILO's expertise in designing the creative elements of the campaign. The campaign is expected to span over 1.5 years. 35

42 34. Estimated Cost. One service contract to include all activities is estimated to cost USD 0.5 million. D. Component 2: Building Institutional and Technical Capacity at MCC (USn 4.9 million) Objective and Results Indicators 35. This component aims to strengthen the capacity of MCC for proper revenue administration, financial management, and technical oversight related to the provision of solid waste services in Monrovia. To achieve this objective, the following activities will be financed: (i) TA in critical areas with a view to building/revamping of systems and capacity; and (ii) T A for project implementation and supervision. 36. Performance indicators to measure the outcomes of the component will include the establishment of a special Solid Waste Account that will capture all municipal revenues from solid waste to be reinvested in the sector. Sub~Component 2.1: Providing TA to MCC (USn 2.0 mihion) 37. Key Elements of Background. Currently, institutional and technical capacity at MCC to meet current costs of solid waste service provision and address revenue generation imperatives in the long run arising from the project itself, are weak. Collecting and disposing approximately 45% of daily generated waste will require an outlay of approximately USD 2.:;!11i 1 lion per year, whereas current municipal earnings are of the order of USD 0.5 million. This means that MCC will have to raise such revenue. The TA provided under this sub-component intends to assist MCC in this direction and strengthen MCC's capacity to raise revenue (see Annex 6, section Government's Capacity for Project Execution for a detailed discussion on MCC's revenue increase potential). 38. Further, the MCC management envisaged administrative and manageri81 reforms. However, the issue remains that the MCC has not identified a clear prioritization of tasks for itself. On the positive side, the MCC top management is quite obviously commihed to the project and has even started considering it as an issue of prestige on the part of the organization. It appears that they need sustained guidance at least for the initial part of the project. Thus TA at the very top policy level of the MCC seems necessary to provide advice on policy options, 39. Key Elements of Design. This SUb-component will provide TA j()r financial and organizational audit followed by assistance to implement selected prioritized activities, 40. The activities will commence with a financial and organizational audit of MCC. It will comprise of financial (revenue and expenditure) and administrative (organizational) diagnostics which will identify and describe current procedures of financial management and process flows. The diagnostic work will then identify financial and organizational gaps and develop an action plan for revenue mobilization with key quantifiable targets. Selected activities ul1(ler the action plan will be prioritized for further assistance under the proposed project. SlIeh ndi'.itics will aim to: (i) overhaul the revenue administration system; (ii) strengthen the budgeting p:dcess; and (iii) develop organizational flow charts, tools and manuals. The objective of the T A provided under the SUb-component is to assist in the process of strengthening MCC's capacity to raise revenues. 36

43 Timeframe Comments Financial and Organizational Audit followed by corresponding Action Plan for revenue mobilization TA appointed and Audit completed within 12 months from Effectiveness Audit is expected to last approximately 3-4 months. A team of 2 to 3 experts will be mobilized to perform the audit. General Objectives of the Audit will include: (a) a due diligence on both processes and procedures in Accounting and Financial Management, (b) an evaluation of the quality and scope of all Accounting and Financial Reports and the justifications for current periodicity, (c) an evaluation of the Revenue administration system and the capacities of personnel employed in that department (d) an evaluation of the present sources of revenue and the extent to which existing legal enablers for revenue raising are fully utilized, (e) an evaluation of managerial effectiveness and quality of decision-making, (f) a Training Needs assessment, (g) a due diligence on HR practices in the MCC, (h) a rapid assessment of the effectiveness of the organization structure, (i) an evaluation of manpower requirements and also G) a rapid assessment of capacities of MCC personnel across the board. It is expected that the audit will assist in (a) providing clear indications of improvements necessary in the Accounting and Financial Management system in the MCC, (b) the actions that need to be taken to streamline the Revenue Administration system, (c) the actions that can to be taken to augment revenues within the existing legal environment, (d) the Way Forward for improving organization effectiveness through restructuring and other measures, (e) identifying the premises for the development of a detailed Training and. Capacity building policy and plan. Capacity building and institution strengthening in priority areas i identified by Prioritized activities under the Action Plan I selected with, clear target indicators and Support for the implementation of selec~ed activities and capacity building in the areas of: (i) revenue administration; (ii) budgeting and accounting, and (iii) organizational functions. 41. Expected Results. The T A is expected to strengthen the capacity of MCC in FM and overall management of inputs related to the provision of solid waste services. MCC's revenue collections are expected to increase. 42. Key Elements of Implementation. Individual T As will be provided. The PIU will be responsible for the coordination of the TAs' inputs. The Project Management Committee chaired by the Mayor will provide overall guidance and ensure smooth interface between the strategies being followed by the various T As and evolving action programs. It will also be taking decisions to accelerate the pace of reforms and reorganization. 37

44 43. Estimated Cost. Consulting contracts and respective reimbursable items are estimated to cost USD 2.0 million. Sub-Component 2.2: Providing TA to MCC for Project Implementation and Supervision (USD 2.9 million) 44. Key Elements of Background. Currently, institutional and technical capacity at MCC to actually take on project management and administration responsibilities is weak. MCC has never implemented Bank projects. 45. While the MCC is the beneficiary under the on-going EIPSC project, the project was implemented by the SIU at the MPW and UNDP (for 3rd party executed activities). In addition, even though other agencies benefiting from IDA funds executed by the SIU are represented within the SIU structure, the MCC has not been represented. As a result, the MCC is inexperienced with Bank procedures. Fiduciary environment has been appraised to be weak. Associated risks prior to project intervention are therefore high both in terms of FM and procurement, as well as safeguards compliance. 46. Key Elements of Design. This sub-component will provide T A for projcct management, supervision and technical capacity building. 47. It is envisaged that a small specialized unit, PIU, would first be established to address project management and procurement issues, and that over a period of time this unit will also build the capacity of the line departments. FM functions under the project will be handled by the Project Financial Management Unit (PFMU) already established at the MOF. 48. The PIU will have three professional staff. It will be headed by a Project Manager (FM or Revenue Expert) and include a Procurement Specialist and an Environmental Engineer. The Project Manager will have sufficient experience in managing donor funded (especially Bank funded) projects. The Procurement Specialist should be familiar with Bank procurement guidelines and should have prior experience with Bank funded projects. The Environmental Engineer would preferably hold a degree in sanitary or civil engineering and have prior experience with urban sanitation (Le. solid waste). S/he will serve a dual role to provide engineering input and also serve as the environmental specialist on the team. From time to time (approximately once per year), the PIU will also be assisted by a Social Development Specialist who would assist in overseeing the execution of Component 1.3 (Awareness campaign) as well as any other social issues related to project activities. Similarly, a M&E Specialist will provide assistance to compile annual M&E reports utilizing the project's MIS. All members of the PIU will be responsible also to provide training and capacity building for relevant MCC employees. 49. Technical inputs will be provided for all technical aspects of implementation of the project through Design and Supervision Engineer (Firm). The Engineer will be responsible for the design of all activities under sub-component 1.2, in addition to assistance with evaluation of bids, activities towards capacity building for contractors, on-the job training for the Solid Waste Department of MCC, and development of a comprehensive solid waste concept. 50. Expected Results. The SUb-component shall ensure transparent and accountable environment for project execution while at the same time enhance skills and capacity of MCC's employees. 38

45 51. Key Elements of Implementation. With the exception of the Design and Supervision Engineer, individual T As will be recruited for the key positions at the PIU. In the case of the Design and Supervision Engineer, a firm is being procured. 52. Estimated Cost. Consulting contracts and respective reimbursable items over the life of the project are estimated to cost USD 2.9 million. 39

46 Annex 2: Results Framework and Monitoring LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) Increased access to municipal solid waste services in Monrovia Households with access to door to door solid waste collection service (number, % increase) Assess project's impact on the population in improving access to solid waste management services Component 1: Increased coverage and efficiency of the solid waste collection system Component 2 Improved capacity ofmcc to provide appropriate enabling, support and resource functions for better management of the solid waste collection Volume of waste collected compared to total waste produced (tons, %) Vehicle tum-around time (hours) Households targeted that dump their waste in canal, river, swamp or burn the waste (%) Outputs Transfer stations built (number) SMEs provided with training (number) People reached by awareness cam ai ns % Special Solid Waste Account for municipal revenue from solid waste established Outputs MCC staff trained in fmancial management i.e. revenue administration, budgeting, accounting (% of relevant sta ;U" utbltennedj,ate ()utmme.." Munitorin Assess effectiveness of the investments in the secondary system Assess actual implementation of transfer stations Assess effectiveness of the primary collection system in place Assess effectiveness of sensitization campaign Assess MCC's commitment to reform Assess prospects for sustainability in solid waste management in Monrovia Assess progress in capacity building 40

47 Indicators Households with access to door to door solid waste collection (number, % increase Intermediate Outcome Indicators Volume of waste collected compared to total waste produced (tons, %) Vehicle turn-around time Households targeted that dump their waste in the canal, river, swamp or bum the waste (% Special Solid Waste Account for municipal revenue from solid waste established Outout Indicators Transfer stations built _ (number.) SMEs provided with tr~ining (number People reached by Baseline 5, tons, 30% 2 hours 50% nla o o ---- o ,500 23% 210 tons 30% 2 hours 50% yes % Target Values ~ 2013 ~~ ~ ,000 10,000 10,000 51% 90% 90% tons 330 tons 330 tons 40% 45% 45% -- hour I hour I hour % 40% 40% yes yes --- yes % 60% 60% Data Collection and R"I'UJ "ll~ Frequency Data Collection Responsibility for _ and Reports _ Instruments Data Collection SMEs customers ILO, PIU Quarterly registry logs; MIS , Design and Quarterly MIS reports Supervision Engineer Annually Annually MIS reports Annual Survey --- Same as above Annual Bank account Financial Controller Annually Design and MIS reports Supervision Engineer Quarterly MIS reports ILO ---- Annually Annual Survey PAC ConsultantIPlU financial management i.e. revenue administration, budgeting, accounting (% of relevant staff) o 10% % 80% 80% -~- Quarterly Training Reports PlU 41

48 Annex 3: Summary of Estimated Project Costs LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) 1. Summary of project costs are presented in the following table. Summary of Project Costs Local Foreign Total Project Costi!Y Component USO million USO million U SO million Componoot 1 Sub-componoot 1.1: Primary collection SuiH:omponent 1.2: Secondary Collection Sub-component 1.3: Public awareness campaign Sub-total Component 2 Sub-component 2.1: Fin. and organizational mgmt TA Sub-component 2.2: Implementation and technical supervision Sub-total Audit Training. Operating Cost Contingency (10%) Total

49 2. Project costs are detailed in the table below. COMPONENT 1: Solid Waste Collection Sub-Component 1.1: Primary Collection Description Estimated (US$ Million) 0.6 Sub-Component 1.2: Secondary Collection and Disposal A. Operation of present collection and transportation system 1. Collection by skip trucks and other trucks 2. Maintenance of skip trucks 3. Maintenance of dump site 4. Maintenance of other equipment (bulldozers) Sub Total of A B. Construction of Transfer Stations 1. at Fiamah (80 tons/day) i. at Free Port ( tons/day) Sub Total ofb C. Additional Plants and Equipment 1. Additional skips (8-10 cum capacity; 20 numbers) 2. Replacement/Additional skip trucks (16 ton skip lifters or load luggers; 4 numbers) Sub Total ofc OJ OJ D. Operation of collection&transportation system modified by introduction of Transfer Stations 1. Management of Transfer Stations 2. From skip stations to Transfer Stations 3. From skip stations to disposal site 4. Maintenance of skip trucks 5. Maintenance of disposal site 6. Maintenance of other equipment (bulldozers) 7. Transportation of wastes from transfer stations to disposal site 8. Provision and lmprovement of skip platforms Sub Total ofd Total estimated cost for Sub-Total Component 1.2 Grant ftmding (average over 4 years) is 85% Total for Sub-Component 1.2 Sub-Component 1.3: Public Education campaign TOTAL FOR COMPONENT O.S

50 COMPONENT 2: TAtoMCC A. TA to MCC Sub-component 2.2 A. TA to MCC B. Supervision Engineer C. Goods and equipment Total for Sub-Component 2.2 TOT AL FOR COMPONENT 2 Description Estimated (US$ Million) AUDIT FEFS, TRAINING. OPERA TING COST A. Audit Fees B. Training C. Operating Cost Total CONTINGENCY (10''10) GRANT TOTAL Disbursement category of planned activities is shown below OA

51 Annex 4: Financial Management and Disbursement Arrangements LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) Introduction I. In accordance with the Financial Management Practices Manual issued by the Financial Management Sector Board on November 3, 2005, and also in conformity with the guiding principles for emergency operations OP/BP 8.00, a financial management assessment was done to assesses the adequacy or otherwise of the financial managements for the EMUS project to be implemented by the Monrovia City Corporation (MCC). The objective of the assessment was to determine whether: (a) the MCC and PFMU has adequate financial management arrangements to ensure project funds will be used for purposes intended in an efficient and economical way; (b) the project's financial reports will be prepared in an accurate, reliable and timely manner; and (c) there are procedures and processes to safeguard the assets of the project. 2. Due to lack of acceptable financial management system at the MCC that meets the Bank's minimum requirements, the financial management of the Project will be carried out by the Project Financial Management Unit (PFMU) at the Ministry of Finance (MOF). The PFMU has since its inception in 2006 developed financial management structures, functions, and responsibilities acceptable to the IDA and these have been relied upon by IDA for implementing several ongoing project. Under the proposed implementation arrangements it has been agreed that the PFMU will be fully responsible for the financial management functions. Country Issues 3. A Public Expenditure Management and Financial Accountability Review (PEMFAR) was conducted in 2007 and included an analysis of Liberia's PFM strengths and weaknesses. The findings from the PEMF AR show that the Government has taken considerable actions to improve public financial management since Government revenues have increased several folds since 2002/03, and expenditure controls have been strengthened through the establishment of the cash management committee and the interim commitment control system. However, the Government still needs to address weaknesses in its financial management systems, specifically within the areas of the legal and regulatory framework; internal and external audit functions; procurement and concessions; budget planning, fonnulation and execution; accounting, recording and reporting; human resources and payroll management; cash and debt management and aid management. 4. The Government's developmental and poverty reduction priorities are anchored in the Poverty Reduction Strategy which is generally aligned with the budget although there are no formal poverty reducing expenditure tracking systems. The budget cycle is coordinated by an inter-ministerial Budget Committee and spending ministries are consulted early in the budgeting process. All revenues are by law deposited into a revenue bank account at the Central Bank and expenditure from this account is strictly in accordance with annual cash plans and allotments. However, majority of donor expenditure is project based and not executed through the government budget. 5. The country lacks sufficient number of qualified accountants to serve the public and private sector. A PFMU in MOF provides centralized project financial management for donor projects. An International Procurement Agency (IPA) is also in place in MOF to handle procurement. The PFMU and procurement agency are staffed by qualified consultants with 45

52 experience in managing donor-funded projects. Fiduciary risks for donor funded projects are mitigated by the use of the PFMO and IPA which has internal controls and procedures and practices acceptable to the Bank. 6. The lack of qualified PFM personnel is a major constraint to implement PFM reforms to address the weaknesses identified in the PEMF AR. At the moment key agencies such as the MOF are using external experts under GEMAP and by the World Bank's technical assistance provided to the Resource Management Unit 7. The Government is making progress in PFM reforms. The Cabinet approved the Internal Audit strategy in June 2008 that will see the establishment of an internal audit cadre and a charter clarifying the roles and responsibilities for internal controls. The MOF has moved from a single entry recording system to an interim accounting system that is now used to prepare budget outtum reports. The interim system provides a foundation for migrating to IFMIS that will eventually handle all the accounting and recording for the consolidated funds with arrangements to capture and report on donor-funded projects. A PFM Law and its enabling regulations and manuals are being prepared that will further strengthen the legal and regulatory framework. 8. In the area of procurement, the Public Procurement and Concessions (PPC) Act came into effect in January 2006, as Liberia's first significant step towards subjecting public sector contracts to transparency and meaningful competition. These measures in financial management and procurement will put in place appropriate structures and processes to promote transparency and accountability and mitigate the fiduciary risk in utilizing public funds both at the country and project level. Project Financial Management 9. As described in detail in Annex 6, the project will be implemented by the MCC through a PIO structure headed by a Project Manager supported by other technical staff and consultants; however, the financial management functions and responsibilities will be handled by the PFMU of the Ministry of Finance. The reason for adopting the PFMU is because of the weak financial management capacity. 10. The working relationship and the respective responsibilities between the PFMU and the MCC have been outlined in a Memorandum of Understanding (MOU) which will be a condition of disbursement. 11. In general terms, under the MOU the PFMU is tasked with the following responsibilities: i. Operate an efficient financial management system acceptable to the IDA; n. Expose an accounting staff from the MCC in bank financial management procedures. iii. Operate a US Dollar denominated Designated Account and a US Dollar draw-down project account in a reputable bank satisfactory to IDA on behalf ofmcc; iv. Establish effective accounting and transaction processing procedures to support the payment of all eligible expenditure; v. Provide internal audit services and periodically review the control environment to ensure that policies and procedures are being complied with. It will also verify existence and location of project assets to ensure they are properly recorded in the Assets Register and they are safeguarded; Vi. Prepare on a timely basis quarterly financial reports (I FRs) and annual project financial statements as well as any other financial reports as may be requested by the IDA and the MCC from time to time; 46

53 vii. Lastly, in consultation with the MCC ensure that the financial statements of the project are audited and conform to the financial covenants as per the Grant Agreement in every respect. Project Risk Assessment and Mitigation 12. The Table below shows the results of the financial management risks identified during the FM assessment which may hinder the achievement of project objectives. The suggested risk mitigating measures and recommendations are provided and the likely residual risk subsequent to the implementation of the measures by the Project Management team in MCC and the PFMU. The risk assessment is based on the review and assessment of the PFMU as the unit responsible for handling the financial management functions on behalf of the MCC. Risk Rating Summary Table Country Level Weaknesses in public H financial management by state institutions due to lack of technical capacity. There is a an inherent risk in project management in Liberia because government entities are too weak to fulfill their functions, implement project activities, and to comply with Bank's environmental, social and fiduciary safeguards No s This risk IS being mitigated through engagement by the IDA and other donors aimed at strengthening the role of the public institutions In PFM capacity building through ongoing reforms. Entity Level Weak fiduciary, H monitoring and enforcement arrangements within the MCC for implementation coupled with a lack of experience in managing WB funded projects. Project Level Being the first Bank H project within MCC there is the risk associated with and lack of The MCC staff is inexperienced in implementing World Bank projects and requires substantial capacity building in project management, procurement and financial management. i Use of qualified financial for the PFMU staffed with personnel to provide management support Used ofpfmu i The project has an institutional strengthening component aimed at addressing these challenges over No. No s s 47

54 coordination amongst the components and stakeholders. Weak fiduciary capacity at themcc. The use of a high level Inter Ministerial Committee (the Oversight Committee) of all stakeholders and the PIU will provide technical and strategic oversight during implementation. The involvement of the PFMU m financial management will minimize risk. Budgeting The challenge in preparing realistic long term budgets and annual work plans. H The PIU with guidance of the Bank will assist MCC in preparing budgets that are realistic and based on annual work plans No S Accounting Workload challenges S within the PFMU. The financial management No responsibility will be done through the PFMU, which is adequately staffed and technically competent. Staff will be seconded from MCC to be exposed to Bank policies and procedures. M Internal Controls! Internal Auditing Weak internal audit function at PFMU poses a risk of non compliance with internal control procedures. S To address possible work load issues the PFMU intends to recruit more staff. The PFMU has an internal audit unit responsible for assessing the control environment of IDA projects during implementation. The effectiveness of the internal audit function at PFMU will be assessed regularly by the Bank FMS during supervision missions. The weak internal audit function is a risk which is No S Funds Flow Possible delays in S processing withdrawal in The PFMU will rely on No supporting documentation and advice from MCCIPIU s 48

55 problems honoring payments to third parties. and any delays in the internal approval and authorization processes will delay payments to : third parties.. Financial Reporting Quality and timeliness in submitting IFR and other financial reports. M The PFMU operates an efficient computerized system (Sun Accounts) capable of generating reliable reports in a timely manner. No M Auditing Delays in the submission of audit reports and the timeliness of management follow up on audit issues. S Standard IFR formats being used for ongoing IDA project will be adopted and modified to suit the needs of for EMUS ect. To ensure timeliness of audit compliance, the project's Auditor will be appointed within 4 months from Effectiveness. TOR which have been used for audit by PFMU will be used for this project (the TOR have been No s H -High S Substantial M-Modest L-Low Overall FM Risk 13. The overall FM risk is high and the residual risk is rated Substantial. Strengths and weaknesses of the Financial Management System 14. Strengths. The project financial management is strengthened primarily by the involvement of the PFMU which has satisfactorily supported the financial implementation arrangements of project in the Liberia portfolio. Consistent with the Bank's guidelines under OP/BP 8.00, the Ministry of Finance adopted the PFMU as a centralized accounting unit which handles all financial management for most IDA and other donor-funded projects in Liberia. The unit is very familiar with the key requirements for implementing IDA projects and has instituted polices manuals and work procedures which are acceptable to the IDA. 15. Weaknesses. As in other post conflict environments, the overall fiduciary environment in Liberia is weak, and for this project in particular this is more critical considering the lack of experience of the MCC in implementing donor funded projects and knowledge in IDA procedure and processes. The MCC has no experience in managing Bank funded projects. These limitations can lead to delays, errors and instances of non compliance with eligibility criteria and other financial convents as stated in the Grant Agreement. It is to address this weakness that the project 49

56 is relying on the PFMU's staff and its financial management capabilities to provide technical support during implementation. 16. Time Bound Action. The table below presents actions which must be taken to guarantee and ensure a strong fiduciary environment before and during implementation. Action Due date Responsibility i. The signing of the MOU between the Prior to Disbursement MOF/PlU & MCC MOFIPFMU and MCC 11. The completion of the draft Project Within 3 months from MCC/IDA Implementation Manual outlining Effectiveness policies and procedure for implementation iii. Engagement of external auditors for External auditor to be MCCIPFMU I project and actual appointment of the external auditor. appointed not later than four months after Effectiveness Project Financial Management 17. The project will be implemented by the MCC through a PlU structure headed by a Project Manger supported by other technical staff and consultants; however, as stated earlier the financial management functions and responsibilities will be handled by the PFMU of the Ministry of Finance. The working relationship and the respective responsibilities between the PFMU and the MCC have been outlined in a Memorandum of Understanding (MoU) to be signed between the parties prior to disbursement. Budgeting Arrangements 18. The PIU is responsible for preparing annual budgets and work plans based on agreed programs and components as outlined in the EPP. On an annual basis the budget and work plans will be reviewed jointly by the MCC and the PFMU and should be approved by the MCC Council and subsequently a copy submitted to IDA. The Bank's assessment indicated that budgeting and the development of reasonable work plans is a major challenge which must be addressed as part of the financial management institutional strengthening arrangements in order to get the MCC to own and be responsible for the activities. The Budgeting & Finance departments within the MCC must be provided technical assistance by the PlU and other consultants working on the project in strategic planning and budget preparation. As of now it is likely the PFMU will be involved in monitoring budgets against expenditure and help in controlling commitments against projected cash flow. The PFMU has in place systems for monitoring budget utilization and commitments on behalf of the MCC/PIU. Accounting Arrangements. 19. The Unit Manager of the PFMU will be responsible for overall financial management of the project working in collaboration with the accounting staff of the PIU and MCC to facilitate smooth and timely processing of transactions. The PFMU is adequately staffed with personnel that have the requisite qualification and experiences needed for project implementation. The current staff numbers ensure a fairly balanced distribution of workload and adequate segregation of duties and responsibilities however as the PFMU takes on more responsibilities it may be advisable to consider work load management and the need to recruit additional staff. 50

57 20. The processes and procedures for receiving invoices and transaction processing for accounting will be done in line with the procedures as documented in the Operations Manual and consistent with the Financial Procedures Manual (FPM) of the PFMD. The PFMU uses Sun Accounting package and our assessment indicates that it is suitable for recording and reporting correctly all accounting transactions. As part of the terms of the MoU it has been agreed that MCC will assign a dedicated accounts officer to work as a liaison officer between MCC and also be trained by the PFMU in IDA financial management and disbursement procedures. Accounting function in MCC will have to improve considerably to address the issue of SWF collections accounting. Internal Control & Internal Auditing 2 L The internal auditor of the PFMU working in collaboration with the internal audit unit of MCC 'will be responsible for ensuring that the control environment for implementation is adequate and satisfactory. 22. The duties and responsibilities of the internal auditor (PFMU) are documented in an Internal Audit Manual and these include reviewing the internal control systems of the all IDA projects being supervised by the unit. Our assessment notes that this role has not been satisfactorily performed by the PFMU and needs to be strengthened and improved upon and made more effective. The work has been largely compliance and transaction oriented and adds little value to the control framework. This weakness has been discussed with the Head of the PFMU and will be monitored by the Bank during supervision missions. Fuuds Flow Arrangements 23. The project is expected to be financed through a US$18.4 million Grant under the Liberia Restructuring Trust Fund (LRTF) to be disbursed over a four year period. Banking and payment processing will be managed centrally by the PFMU in order to ensure adequate control and financial monitoring of payments and disbursements. Approvals for activity initiation and procurement will be done within the MCCIPIU and in line with their internal authorization and approval processes. Following approval and certification by the Project Manager, the necessary supporting documents (contracts, invoices etc) will be forwarded to the Financial Controller of the MCC who then prepares a 'Payment Instruction Advice' and submits to PFMU for processing of the payment to third parties. (Details to be outlined in the Project Implementation Manual). 24. Proceeds of the financing will follow the standard Bank procedures for Investment Lending, for use by the borrower for eligible expenditures as defined in project financing agreement. Disbursement arrangements have been designed in consultation with the Recipient after taking into consideration the assessments of Recipient's financial management and, cash flow needs of the operation and the Recipient's prior disbursement experience. Additional instructions for disbursements are provided in the Disbursement Letter and were discussed and agreed at negotiations. 25. The project will use transaction disbursement approach to access the Grant proceeds. Withdrawal applications will be used for requesting IDA to disburse Grant proceeds by the Grant Recipient on behalf of the project. The project will use various disbursement methods that are detailed in the Operational Manual being used by the PFMU. In summary, these methods are (i) Advances to the Designated ACCOUIit (DA), (ii) Reimbursement of eligible expenditures, (iii) Direct Payment, and (iv) Special commitment. Except for the SOE procedure where supporting documentation will be retained by the implementing agencies for review by the IDA missions and external auditors, all other documentation will be required in support of eligible expenditures. 51

58 Supporting documentation will be requested along with withdrawal applications as specified in the disbursement letter. The initial disbursement will be based on the aggregate expenditure estimate and cash forecast for a period of 4 months. Subsequent withdrawals to replenish the DA will be made on submission of satisfactory Withdrawal applications and SOE documenting the use of funds from the Designated Account and in line with the instructions of the Disbursement Letter. The Bank's FM team will periodically review and assess the adequacy of financial management arrangements and recommend any change deemed appropriate to ensure project funds are used only the intended purposes bearing consideration for efficiency and economy. Financing Plan 26. The Grant Recipient will open a Designated Account for the project in a reputable bank that is acceptable to IDA. Upon request by the Recipient through a satisfactory Withdrawal application duly signed by the authorized signatories, IDA will disburse an Advance to the Designated Account. The MCC/project will use the PFMU to manage the DA in accordance with the existing arrangements for IDA funded projects inliberia. 27. For the tlrst two years of the project all expenses (for Goods, Works, Services and Operating and Training costs) shall be met from the Designated Account. The project will finance 100 percent of all expenditures, inclusive of taxes. This is consistent with the Country Financing Parameters for Liberia. The disbursement schedule is expected to be as follows: 26 percent in FYlO; 30 percent in FYIl; 23 percent in FY12; 21 percent in FY The project will finance 80 percent of running cost for solid waste collection in year three and 60 percent of the same in year four. The balance will be funded by a combination of MCC and MOF funds along arrangements agreed in principle and to be detailed in the PIM (see Annex 6 for discussion on MCC's ability to raise revenue). 29. The Financing Plan for running costs from the third year of the project to the end of the project life (and beyond) envisages compliance with certain critical conditions, i.e. 0) the running costs of the project will be transferred from the LRTF to the government in a gradual manner; (ii) the government itself will transfer the burden of running costs to the MCC in a gradual manner; and (iii) during the period when the MCC will only partially bear the running costs, there will be laid down rules and assurances designed to ensure that the MCC receives the needed financial support from the MOF in time and of the appropriate amount as agreed upon. 30. Given the above, the financial flow mechanism discussed with the Government uses a dedicated Budget line (see chart below) in the Government Budget to ensure that the required funds are available and transferred to MCC. This mechanism emerges from the fact that under current legislature, all municipal revenues (i.e. taxes and fees) are to be deposited in a Central Treasury account first, and then, under respective arrangements, channeled back to the City. Under this arrangement, the MCC is expected to continue to bill its customers a SWF, and the MOF is expected to fund the entire amo'unt back to MCC (together with its own contribution towards the running cost). 31. Further on, municipal SW revenue would be deposited into a designated Treasury Account of the Government. The MCC would then present a funds requirement request to the MOF based on what has been collected and deposited (reconciling municipal billing with Bank.statements for actual payment), and the amount that the MOF is committed to pay on pro-rata basis. Upon the receipt of the request for funds, the MOF would instruct the Treasury to transfer amount of funds requested. These funds would include both municipal SW revenue as well as MOF contribution. 52

59 32. The LRTF transfer would be initiated as soon as the Government funds have been transferred, and then LRTF portion money would be transferred from the Designated Account directly to the Project Account. 33. LRTF would transfer funds from the Grant Account in the LRTF books of accounts to the Designated Account, from which withdrawals would be requested on a transaction by transaction (need) basis to the Project Account that will also receive funds from GOL and MCC. Payments to vendors / contractors for all eligible expenditures incurred during years 1 and 2 of the operation will be made directly by the Bank (Direct Payment method) or from the Designated Account (Advances method of disbursement). From the 3rd year onwards, funds for certain specified expenditures (Component 1.2 D) relating to Operation of Collection and Transportation system that will be co financed by Government will be transferred from the Designated Account to the Project Account based on invoices and Statements of Expenditures certified by PFMU. Replenishments into the Designated Account will be made on the basis of these invoices and Statements of Expenditure. Payments to vendors and contractors for these expenditures will be made from commingled funds available in the Project Accounts. Both these bank accounts will be subject to regular reconciliation and oversight by PFMU. 34. The Project Account as well as Designated Account will be closed at the end of the project. However, the Solid Waste Special Account will continue thereafter and hold all municipal SW revenues as well as contributions from MOF. 53

60 . Treasury Account (holds MCC collections from SW Revenue) World BanklLRTF ~ 1 MOF instructs Treasury to transfer funds Designated Account (LRTF Funds) Municipal Budget 2 Transferred funds include: (i) municipal SWrevenue Solid Waste Special Account (ii) MOF's contribution (years 3 and 4) 1 Project Account With Commercial Bank Solid Waste collection contractors and other operating expenses Financial Reporting Arrangements 35. The Project Accountant of the PFMU, working under the direct supervision of the Head of the PFMU will be responsible for generating quarterly Interim unaudited Financial Reports (IFRs) and any other financial reports as may be required during implementation. These reports should show clearly as a minimum: Sources and Uses of Funds, Uses of Funds by Project Activity/Component, expenditure summary by category code and expenditure projections by the project. The PFMU is responsible for maintaining a filling system for all transactions including all necessary supporting documents that will ensure an effective audit trail 54

61 36. The existing reporting fonnats which are generated by the financial system at the PFMU are acceptable and will also be used under the current project. The financial reports have been designed to provide relevant and timely infonnation to the project management, implementing agencies, and various stakeholders involved in monitoring the project's perfonnance. The FM assessment of the accounting package and the Chart of Accounts indicates the sun System is capable of generating the required reports. 37. The quarterly reports (including narrative reports) required under the project will be shared with LRTF donors. No other special reporting for the LRTF is envisioned. Auditing 38. The Auditor General of Liberia is primarily responsible for the auditing of all government projects; however due to capacity constraints it is procedural for the Auditor General to subcontract the audit assignments of donor funded projects to private auditors. Under the MoU between the PFMU this arrangement will also be followed subject to IDA's procurement guidelines for the selection of consultants and the clearance of the Tenns of Reference (TOR) for the audit. To ensure compliance with audit covenant as provided for in the Grant Agreement, PFMU will have to ensure that the external auditors will be appointed not later than four months of effectiveness. Supervision plan 39. Based on the current risk assessment of the project and given the inherent high risk environment in Liberia it is expected that during the first year of implementation there will be full and intensive FM supervision both at MCC where transactions originate and the PFMU. The supervision will focus on the effectiveness of the fund flow arrangement and also the internal control environment for activity initiation and transaction processing. In view of this there will be at least two on-site FM supervision visits and this will be complemented by detailed desk review of the quarterly IFRs, review of the transactions processed through the Designated Account. On an annual basis, the FM team in Monrovia will review external audit reports and management letters. Conclusion 40. Our assessment of the project's financial management arrangements being implemented by the PFMU as documented in the preceding paragraphs indicates that the systems satisfy the minimum requirements under OP/BPI At the country level the risk would be judged as high due the weaknesses in governance and the lack of technical capacity of public institutions coupled with the slow pace of public financial management reforms. At the entity level the risk is rated as high, primarily because of the inexperience of the MCC in managing IDA funded projects and this rating also influenced the project level risk. Key challenges will be in providing adequate technical support to the project team during implementation and engaging all stakeholders to help achieve project objectives. Overall the Project financial management risk is rated as being substantial and this risk will be mitigated by the involvement of the PFMU during implementation. 55

62 Annex 5: Procurement Arrangements LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) A. General 1. Procurement of goods and works and selection of consultants would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004, revised in October 2006; and "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004, revised in October 2006, and the provisions stipulated in the Legal Agreement or any other method accepted by the Bank. The various items under different expenditure categories to be financed are described below. For each contract to be financed by the Grant, the different procurement methods or consultant selection methods, the need for pre-qualification, estimated costs, prior review requirements, and time frame are agreed between the Government and the Bank project team in the Procurement Plan. The Procurement Plan will be updated at least annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 2. Procurement of Works. A total of about US$ million of works would be procured under this project. These would include the construction of transfer stations at Fiamah and in the northern part of Monrovia (possibly at Stocken Creek), and the (ii) provision and improvement of skip platforms. The procurement will be done using the Bank's Standard Bidding Documents (SBD) for all ICB and for all others National SBDs agreed with or satisfactory to the Bank. Contracts below US$3,000,000 but above US$100,000 equivalent per contract will be procured under National Competitive Bidding (NCB). In spite of this, relevant NCB works contracts, which are deemed complex and/or have significant risks levels, will be prior-reviewed; such contracts will be identified in the tables and also in the procurement plans. Again, under NCB, it shall be ensured that (a) foreign bidders shall be allowed to participate in National Competitive Bidding procedures; (b) bidders shall be given at least one month to submit bids from the date of the invitation to bid or the date of availability of bidding documents, whichever is later; (c) no domestic preference shall be given for domestic bidders for works; and (d) in accordance with para (e) of the Procurement Guidelines, each bidding document and contract financed out of the proceeds of the Financing shall provide that: (i) the bidders,suppliers, contractors and subcontractors shall permit the Association, at its request, to inspect their accounts and records relating to the bid submission and performance of the contract, and to have said accounts and records audited by auditors appointed by the association; and (ii) the deliberate and material violation by the bidder, supplier, contractor or subcontractor of such provision may amount to an obstructive practice as defined in paragraph 1.14(a)(v) of the Procurement Guidelines. Contracts estimated to cost less than US$1 00,000 equivalent per contract would be procured using shopping procedures based on a model request for quotations satisfactory to the Bank. Direct contracting may be used where necessary, but will be subject to Bank's No-Objection. 3. Further, in response to the new Framework for Rapid Response to Crises and Emergencies captured in OP 8.00, and to facilitate project implementation and quick delivery of results, the appropriate approach from the bulleted list below may be applied, i.e. Using rapid procurement methods (direct contracting or simple shopping) for engaging the services of qualified United Nations (UN) Agencies / programs and/ or civil works contractors already mobilized and working in emergency area; 56

63 Using lists of qualified contractors with good track record to whom periodic invitations are issued. The pre-qualification document may use a simplified format; Extending contracts issued under existing projects for similar activities by increasing their corresponding contract amounts; Where alternative arrangements are not available, using Force Account for delivery of works services directly related to the emergency; and Using NCB, accelerated bid times not below 21 days, and streamlined procedures and applying Bank provisions on the use of bid-securing declarations and the elimination or waiving of bid bond or, bid securities for small contracts. 4. Procurement of Goods. A total of about US$ million of goods, plant and equipment would be procured under this project. These would include procurement of (i additional skips, (ii) additional skip trucks, skip lifters or load luggers (iii) computers, UPSs, Printers, Stabilizers, Hubs/switch, cabling, (iv) office equipment for PIU and MCC, i.e. photocopiers, LCD and screen, (v) training items, (vi) furniture, (vii) vehicles, and (viii) motor bikes. The procurement will be done using the Bank's SBD for all ICB and National SBD agreed with or satisfactory to the Bank. Contracts below US$500,000 but above US$50,000 equivalent per contract may be procured under NCB. In spite of this, relevant NCB goods contracts, which are deemed complex and/or have significant risks levels, will be prior-reviewed; such contracts will be identified in the tables and also in the procurement plans. Again, under NCB, it shall be ensured that (a) foreign bidders shall be allowed to participate in National Competitive Bidding procedures; (b) bidders shall be given at least one month to submit bids from the date of the invitation to bid or the date of availability of bidding documents, whichever is later; ( c) no domestic preference shall be given for domestic bidders and for domestically manufactured goods; and (d) in accordance with para.l14 (e) of the Procurement Guidelines, each bidding document and contract financed out of the proceeds of the Financing shall provide that: (i) the bidders,suppliers, contractors and subcontractors shall permit the Association, at its request, to inspect their accounts and records relating to the bid submission and performance of the contract, and to have said accounts and records audited by auditors appointed by the association; and (ii) the deliberate and material violation by the bidder, supplier, contractor or subcontractor of such provision may amount to an obstructive practice as defined in paragraph 1.14(a)(v) of the Procurement Guidelines. Contracts estimated to cost less than US$50,OOO equivalent per contract would be procured using shopping procedures based on a model request for quotations satisfactory to the Bank. Direct contracting may be used where necessary, subject to Bank's No Objection. 5. Alternatively, goods may also be procured from UN Agencies (e.g. UNOPS United Nations Office for Project Services) provided that such a contract does not exceed US$200,OOO for each type of goods. Further, in response to the new Framework for Rapid Response to Crises and Emergencies captured in OP 8.00, and to facilitate project implementation and quick delivery of results, the appropriate approach from the bulleted list below may be applied, i.e. Using rapid procurement methods (direct contracting or simple shopping) for engaging the services of qualified UN Agencies / programs and/or suppliers of goods; Using lists of qualified suppliers with good track record to whom periodic invitations are issued. The pre-qualification document may use a simplified format; Extending contracts issued under existing projects for similar activities by increasing their corresponding contract amounts; and 57

64 15. The Monrovia City Council did not have any experience working with donor funds, let alone with World Bank funds. The Council, therefore, does not have any experience with procurement using the Bank's Guidelines for services, and also the Guidelines for goods and works. Based on above limitations, it was clear that there was no dependable procurement capacity to manage the new project. 16. It is, therefore, recommended that a Procurement Specialist be hired for at least three years or the duration of the project to manage the project and to have the additional responsibility of training MCC staff. In addition to this, a Project Implementation Manual (PIM) should be prepared to include a procurement section, which would confirm the organizational arrangement for the management of procurement, and offer clear instructions and guidance for the management of procurement and its records. At project start-up, the recruited Procurement Specialist (or the SIU Procurement Specialist) shall provide orientation on the principles of good procurement planning and practice, including discussions on procurement arrangements and procurement management under the project. No Key Risk Risk Mitb~ation Actions ByWbom ByWben 1 Lack of presence of any Contracting of a The Monrovia Just after the reliable and competent Procnrement Specialist to City Council project becomes procurement capacity in manage procurement and (MCC) supported effective MCC train selected MCC staff initially by SIU of MPW, 17. The overall project risk for procurement is high. C. Procurement Plan 18. The Government, at appraisal, drafted an 18 month procurement plan for project implementation which provides the basis for the procurement methods. This plan was agreed on between the Government and the Project Team prior to negotiations and will be available at the Offices of the SIU at the Ministry of Public Works in Monrovia. It will also be available in the project's database and in th~ Bank's external website. The Procurement Plan will be updated in agreement with the Project Team annually or as required to reflect the actual project implementation needs and improvements in institutional capacity. 60

65 Table 1: Thresholds for Procurement Methods and Prior Review No Expenditure Contract Value Contracts Subject to Prior Review I Procurement Method Category Threshold* CUSS) 1 C>=3,000,000 ICB All contracts I Works I 00,000<C<3,000,000 NCB C<IOO,OOO Shopping None Specified contracts as would be identified in the Procurement Plans I All Values Direct Contracting All Contracts 2 C>=500,000 ICB I LIB All contracts I Goods and services other than Consulting Services 50,OOO<C<500,OOO Specified contracts as would be identified NCB C=<200,00 in the Procurement Plans UN Agencies C<50,OOO Shopping None I 3 Consulting Services All Values Direct Contracting All Contracts C>=200,OOO (firms) QCBS All contracts 100,OOO=<C<200,000 (firms) C<lOO,OOO (firms) C>50,00O (individuals) QCBS CQS IC Qualifications of proposed pool of consultants + TORs and Terms of Employment. If pool of experts method is not chosen, all contracts Qualifications of proposed pool of consultants + TORs and Terms of Employment. If pool of experts' method is not chosen, then all TORs. Qualifications of proposed pool of consultants + TORs and Terms of Employment. If pool of experts' method is not chosen, all contracts. C<50,OOO (individuals) IC Only TOR All values SSS All contracts 4 Training, To be based on Workshops, All Values Annual Work Plan & Study Tours, Budgets *These thresholds are for the purposes of the inittal procurement plan. The thresholds will be revised periodically based on re-assessment of risks. 61

66 D. Frequency of Procurement Supervision 19. In addition, it is recommended to carry out supervision missions to conduct post review of contracts which are not subject to the above prior review requirements on a frequency of three to four supervision missions each year to visit the field and to carry out a post review of procurement actions. The procurement post-reviews should cover at least 20% of contracts subject to post-review. In addition, post reviews of in-country training will be conducted from time to time to review the selection of institutions/facilitators!course contents of trainees and justifications thereof, and costs incurred. 20. Procurement Audits. Not later than three months after the end of each financial year. The Project Implementation Unit (PIU) will have prepared a procurement audit report, by consultants selected in accordance with the guidelines for selection of consultants and TOR incorporated in the project implementation manual. The audits would: (a) verify that the procurement and contracting procedures and processes followed for the projects were in accordance with the Grant Agreement; (b) verify technical compliance, physical completion and price competitiveness of each contract in the selected representative sample; (c) review and comment on contract administration and management issues as dealt with by participating agencies; (d) review capacity of participating agencies in handling procurement efficiently; and (e) identify improvements in the procurement process in the light of any identified deficiencies. The Borrower and IDA will review all thresholds stated in this section on an annual basis. Amendments may be agreed upon based on performance and actual values of procurement implemented. Amendments to the FA may be proposed accordingly. 21. Contract Management and Expenditure Reports. As part of the Procurement Management Reports (PMR), MCC will submit contract management and expenditure information in quarterly reports to IDA. The procurement management report will consist of information on procurement of goods, works and consultants' services and compliance with agreed procurement methods. The report will compare procurement performance against the plan agreed at negotiations and as appropriately update at the end of each quarter. The report will also provide any information on complaints by bidders, unsatisfactory performance by contractors and any information on contractual disputes. 22. Publication of Awards and Debriefing. Publication of contract awards of the bidding process and debriefing for all ICB procurements, and also for all consultant contracts for hiring firms, will be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004 and revised in October 2006; the "Guidelines: Selection and Employment of Consultants by World Bank Borrowers" dated May 2004 and revised in October Publication of results of other procurement activities, including debriefing shall be subject to the relevant stipulations in the Liberian Public Procurement and Concessions Law of Fraud and Corruption. All procuring entities as well as bidders and service providers, i.e. suppliers, contractors and consultants shall observe the highest standard of ethics during the procurement and execution of contracts financed under the project in accordanee with paragraphs 1.14 of the Procurement Guidelines and paragraphs 1.22 of the Consultants Guidelines, in addition to the relevant Articles of the Public Procurement and Concessions Act which refer to corrupt practices. 62

67 E. Details of the Procurement Arrangements Involving International Competition 24. Goods, Works, and Non Consulting Services (a) List of contract packages to be procured following ICB include: Table 2' Goods* Contract Estimated Procurement P- Domestic Review Expected (Description) Cost Method Q Preference by Bid Ref. ($Million) (yes/no) Bank Opening No. (Priori Date post) 1 Purchase of 31Aug additional 0.32 ICB No No Prior 2010 skips 2 Purchase of 31 Aug additional skip 0.40 ICB No No Prior 2010 trucks * In pnnclple, all ICB goods contracts estimated to cost above US$500,000 per contract and all direct contracting will be subject to prior review by the Bank. Table 3' Works* Contract (Description) Estimated Procurement P- Domestic Review Expected Ref. No. Cost Method Q Preference by Bank Bid ($MilIion) (yes/no) (PriorI Opening post) Date Construction of Transfer October Station in the northern part ICB No No Prior 2009 of Monrovia *In pnnclple, ICB works contracts estimated to cost above US$3 Million per contract and all direct contracting will be subject to prior review by the Bank. 63

68 25. Consulting Services (a) List of consulting assignments with short-list of international firms. T a bl e 4 C onsu l' tmg S ervlces Description of Assignment Estimated Selection Review by Expected Proposals Ref No. Cost Method Bank (Prior submission Date/ (US D) /Post) Presence on project EMUS/C- **International Organization for 600,000 SSS Prior Nov 15, Supervision and Management of Small Solid Waste collectors (SMEs). EMUS/C- Consultant for Design and 500,000 QBS/LCS Prior 2 Dissemination - Awareness November lo, Campaign for Solid Waste 2009 Management addressed to Citizens EMUS/C- Project Manager for PIU for 4 750,000 IC Prior Within 60 days 3 years (International) after effectiveness EMUS/C- Procurement Specialist (PIU) for 3 321,260 IC Prior Within 90 days 4 years (International) after effectiveness EMUS/C- Environmental Engineer 118,500 IC Prior Within 90 days 5 (National) for 3 years after effectiveness EMUS/C- Municipal Revenue Specialist 153,000 IC Prior Within 4 months 11 (International) after effectiveness EMUS/C- FM & Accounting Specialist 240,000 IC Prior Within 4 months 12 (International) after effectiveness EMUS/C- HR and Training Specialist 2lO,000 IC Prior Within 4 months 13 (International) after effectiveness EMUS/C- Municipal Governance Adviser 220,000 IC Prior Within 4 months 14 (International) after effectiveness **ILO will be sole-sourced subject to the Bank's prior agreement. 26. All contracts not subject to prior review will be post-reviewed. 64

69 Table 5: Complex or significantly risky NCB contracts to be prior-reviewed (These will, in consultation with Borrower, be identified in the procurement plans and also in the table belmv). I No. Expected Estimated Domestic Review by Contract Procurement Bid Cost P-Q Preference Bank (Description) Method Opening ($Million) (yes/no) (Prior/post) Date Collection from Skip Stations to 15 March NCB No No Prior Transfer 2010 Stations (Year 2) 65

70 Annex 6: Implementation and Monitoring Arrangements LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) Institutional Set-Up 1. The MCC shares responsibilities for providing urban services with a number of other institutions. However Solid Waste Management is the exclusive area of MCC. The municipality bears the overall responsibility to provide solid waste services to its constituencies. The MOF, which has agreed to contribute towards the operating cost of service, will also be involved with the project. Other players in the field include the ILO, which has been implementing a pilot project for house to house collection (also known as door-to-door collection) using SMEs and large private solid waste companies with individual arrangements with customers. 2. For the purposes of the Project, MOF will be referred to as "the Recipient" while MCC will be referred to as "the Beneficiary". 3. Given the specific roles of key stakeholders in the detailing and implementation of the project, it is proposed to design the implementation arrangements in such a way as to clearly delineate areas of coordination between the MOF and the MCC so far as technical implementation is concerned. As such, the technical aspects of the project will continue to be within the purview of the MCC. The role of the MOF will relate to the financing structure of the project (i.e. flow of funds), and a later (three years into the project) co-financing action. The PFMU at MOF will perform FM functions under the project. Implementation Period 4. Upon grant effectiveness, the project is expected to be fully implemented within four years (the completion date is currently estimated to be December 31, 2013). During the first six months of the project, collection is expected to continue under arrangements established under the EJPSC. The rainy season of 2009 has been utilized to develop designs for the transfer stations and advance the bidding process. First visible activities towards improved effectiveness of current operations and more frequent collection and disposal of waste will be carried out within about twelve months of grant effectiveness after the transfer stations are introduced. The design, specifications and bidding documents for the procurement of additional equipment will be completed in parallel with the construction of the transfer stations. With regards to T A to MCC, the PIU is expected to be fully staffed within three months from EtTectiveness. The financial and organizational audit is expected to be completed within the first 12 months of the project. More detail is provided in the table below. Activity (1) Establish PlU and appoint PlU staff; (2) Ring-fenced special solid waste account to capture all municipal revenue from solid waste activities established; (3) Collection of solid waste continues under arrangements established under EIPSC; (4) Preparatory activities to amend and expand collection, including: design of transfer stations, consultations, EMPs and RAPs (if needed) for the transfer stations; advance of bidding process (pre-qualifications), design of new collection routes and collection zones; (5) Plan to re-iocate some of the existing 120 skips Uointly with District officials); Timeline Effectiveness +- 6 months 66

71 (6) IdentifY skip platforms for rehabilitation and location of new ones; (7) Commence procurement ofta for financial and organizational audit; TA to SME s ( propose d so 1 e sourcmg. 0 f t h e ILO) ; an d TA f, or t h e pu bi" IC awareness campaign; I (8) Construction of t~~nsfer stations; (9) Bidding for new collection zones and haulage contracts (skip to transfer stations and transfer stations to land-fill) commences; (10) Complete specifications for additional equipment; Effectiveness + 12 months (11) Private operators under new collection and disposal contracts utilizing the Effectiveness transfer stations - on-board; + 18 months (12) Financial and organizational audit completed and prioritized Action Plan to enhance revenue - agreed (13) On-going TA for SMEs (primary collection) and public awareness campaign; (14) On-going collection and disposal utilizing transfer stations; on-going TA for Effectiveness SMEs (primary collection) and Public awareness campaign; + 24 months (15) T A to assist MCC with implementation of the prioritized Action Plan agreed as a result of the financial and organizational audit; - (16) Project's financing towards the operating cost of collection is reduced to 80% of Effectiveness costs and the contribution of the MCC and MOF funds is utilized; + 36 months (17) Public awareness campaign, T A to SMEs, and T A to implement prioritized Action Plan are finalized towards the end of the period; (18) Project's financing towards the operating cost of collection is reduced further to Effectiveness 60% of costs. +48 months (19) Phasing out. Government's Capacity for Project Execution 5. In terms of Government's capacity to execute the project, two aspects need to be considered. One is the capacity of the MCC to address revenue generation imperatives in the long run, arising from the project itself. The second the MCC's capacity to actually take on project management and administration responsibilities. Both issues are discussed below. 6. Revenue Generation Capacity at MCC. Currently the MCC's total revenue earnings are of the order of USD 0.5 million per year. Collecting and disposing approximately 45% of daily generated waste will require an outlay of approximately USD 2.5 million per year. This means that the MCC will have to raise this amount of revenues from its sources. It stands to reason that to the maximum extent possible, these revenues need to come from the SWF which is currently collected. If it appears that the SWF will not be sufficient to meet the operational costs, then only should other revenues be channelized to defray the costs of the solid waste management operation. 7. The MCC has several sources of solid waste revenue: (i) SWF collected from households according to city Ordinance (presently, almost no fee is collected from households); (ii) SWF collected from businesses (presently the fee is collected); (iii) SW license fee collected from large private waste companies (collected); (iii) SW registration fee collected from SMEs (collected). A 67

72 city ordinance specifies the rates 31 However, the categories are not well defined, and the way that the fees are structured provides a considerable discretionary power to the collector. Thus there is obvious leakage of revenue. The MCC is conscious of this and proposes to correct these deficiencies. The revenue from businesses is expected to increase after capturing businesses which currently remain outside of the collection and after redefining the categories and rates as discussed above. 8. MCC considers that it can increase SWF through taking measures to (i) redefine categories of payers in a more precise manner, (ii) developing a proper database of businesses, (iii) reducing the area of discretion for SWF collectors, (iv) starting to charge a small amount from householders, and (v) asking the Ministries and Agencies to pay for solid waste removal. The MCC also considers that while defining the categories, large community generators of SW such as markets, could be made into a special category and SWF charged appropriately. There is also of course a possibility of revision of rates which needs consideration here and which MCC wishes to consider. However MCC recognizes that there is unlikely to be a large revision, given the current economic conditions in Liberia. 9. Based on the above arguments the MCC has drawn up a projection of its revenues which is given below (all figures in USD except as indicated). 10. An inspection by the Bank's team of MCC's projected revenues from SWF reveals that there has been an assumption on the part of the MCC on proposed household SWF that may be optimistic. The MCC has based this on similar experience in other African countries. But it needs to be considered that in those other countries households do not have to pay separately to individual collection companies. In the case of Monrovia the households are already paying to SMEs which collect waste from their premises and take the same to the communal skips. It stands to reason, however, that household SWF would contribute towards the cost of waste haulage from communal skips to disposal. This cost is currently fully paid by the public sector. Finally, it is of interest to note that MCC has been at least reasonably conservative in projecting SWF revenues, and has taken USD 1 per year for the poor households and USD 25 per year for upper class households. 31 Small Businesses are charged L$ 2600 per annum (L$ 60 1 USD approx.). Medium Businesses Type I are also charged the same. Medium Businesses Type II are charged L$ 6500 per annum. Large Businesses Type I are charged LSlO, , and Large Businesses Type II are charged L$ 18,000 per annum. 68

73 11. The Bank Team has arrived at its own, more conservative assessments of SWF revenue increase. However, the issue of whether the MCC will have an administrative and collection system in place to take advantage of the various alternatives remains uncertain. Collection from households will depend on two crucial factors ~ (i) the ability of the MCC to put in place an appropriate collection and accounting system (even if, as the MOF envisages, the collections are credited to the Government's Treasury Account), and (ii) the willingness of the households to pay. So far as the second factor is concerned, it is to be noted that while the MCC, the MOF and the Presidency are rather hesitant to continue subsidizing the majority of the SW cost over the medium and longer run, the alternatives for fee collection from households are yet to be examined from a policy perspective, and in tenns of all possible socio-political consequences. 12. Currently, the MCC collects SW fees from businesses and some households; expanding the collection to medium and poor households will require significant administrative effort and political will. It should also be noted that poor households are being educated through the SME primary collection system that service provision is not for free. It is therefore envisaged, that some collection from households is likely to roll out in three to four years from now. So far as the first factor is concerned, if a political mandate is provided within a reasonable time, generation of sufficient capacity within the MCC to undertake this task within the next three years is certainly a possibility, given the level of T A support which this project envisages to provide (all figures in USD except as indicated). 13. The comparison between the two estimates is shown below: Comparison of SWF Projections " 8.00 ~ i 6.00 Q ::l '" Year 69

74 14. Under the above assumptions, and using the Bank Team's assessment, the MCC/Government of Liberia in its MOF will have to bear the costs of operations in the manner shown below (USD Mill.): 15. The above may also seem to be optimistic especially in the later years. However, given the fact that MCC proposes to undergo major changes in its revenue administration, one could err on the side of caution and say that even if there is a shortfall on the more conservative projections, there would be still room for meeting the requirements. The projected Cash Flow on the Solid Waste Account would then be as follows: 16. An important input into the revenue flows comes from household SWF. There is a current City Regulation (Ordinance No 7 of February 1988) which permits the City Government to charge a SW Fee from Households (Clause 1 [k]). However, this does not seem to have been seriously applied. Even if the Legislature does not allow the imposition of new taxes or fees, the existing Ordinance will therefore serve as legal enabler to charge a small household SW Fee. The issue here is the mode of collection, and also that of the political will to permit collection. So far as the mode of collection is concerned, the City Government apparently has the following options: (i) charging the SW Fee ofusd 1 annually at the time of renewal of Squatter permits, or (ii) using the SMEs to collect the extra fee from their customers. Presently, SMEs charges range from USD 1 - USD 25 per month for poor households and small businesses respectively. The MCC-proposed surcharge is for 12% increase to increase, i.e. respectively USD 1 - USD 25 fee per annum. This appears to be a reasonable approach although it will require substantial improvements in the revenue administration system. That issue is proposed to be dealt with through T A interventions through the Project Period. 17. The above projections are to be taken in conjunction with other measures for revenue improvement that the MCC proposes to implement. However, it is important to note that even in terms of the extremely conservative estimates that have been taken by the Bank Team there is a 70

75 reasonable degree of assurance that the MCC will be able to meet the operational costs over the long run..18. Projeet Management Capacity at MCC. Currently, both institutional and technical capacity at MCC is low and requires strengthening (see Institutional section, Section D of main document). While the MCC is the beneficiary under the on-going EIPSC project, TA under this project has so far not been provided. This was partially due to the emergency nature of the operation and the implementation modalities in place; in the case of EIPSC, the SlU at the MPW and the UNDP (for 3rd party executed activities) execute all project activities on behalf of the MCC. Even though other agencies benefiting from IDA funds executed by the SIU are represented within the SlU structure (i.e. the Liberian Water and Sewer Company (LWSC), the Environmental Protection Agency (EPA)), the MCC has not been represented. 19. The project design envisages the establishment of a PIU within the MCC. Such a concept has been successfully used in other countries, particularly Afghanistan. However, in Afghanistan it has been seen that the borrowing entities have not concentrated on developing the capacity of their civil servants and that in fact T As continue to be used in executive capacity. While there are a number of other reasons for this, the fact remains that in applying the same concept to Liberia, caution must be exercised to see that a similar situation does not occur. It is recommended that during the course of the project, a medium term integration strategy be formulated and adopted. Specific arrangements could be reviewed at the time ofthe mid-term review. Implementation Arrangements 20. In view of the need for rapid results on the ground, the project has been designed to rely on implementation arrangements that have been successfully tested in other post-conflict environments. Prior experience in Liberia has also been taken into consideration. It is therefore envisaged that a small specialized unit, PIU, would first be established to address project management and procurement issues, and that over a period of time this unit will also build the capacity of the line departments. Other alternatives, such as using the existing SIU of the Ministry of Public Works throughout the project period were considered. This idea was discarded in view of the lessons learned under the EIPSC that strong ownership of the implementing Agency is essential for sustained service provision (see earlier discussion in Section C of the main EPP document). FM functions under the project will be handled by the PFMU already established at the MOF. 21. Transitional Arrangements for Implementation. Since project implementation is of an emergency nature and proposed to commence immediately, some activities are proposed to take place while an implementation agency is being established within the MCC. Thus, transitional arrangements are envisaged. In the initial period after project Effectiveness and until the PIU is established and key staff appointed, project implementation and procurement will be handled by the SIU at MPW. Following this initial period, implementation and procurement will be transferred from the SIU to the PIU. The PFMU will continue to handle all financial matters throughout the life of the project. Procurement of Goods, Contract Management, and Implementation Timeline Triggers SIU From project Effectiveness An MOU between the SIU and MCC will outline until the PIU at MCC is established and three ke staff 71

76 PIU appointed, project implementation and procurement will be carried out by the SIU32. key personnel. The MOU will be a condition of Disbursement. PIU at MCC established is a condition of Disbursement. Following establishment of the PIU and appointment of Appointment of key staff at PIU (Project Manager 33, key staff, project Procurement Specialist and Sanitary Engineer 34 ) is a implementation and dated Legal covenant (3 months from Effectiveness). procurement will be transferred from the SIU to the PIU. Financial Management Agency Timeline Comment PFMU At all times during project implementation. 22. The SIU was established in June 2006 in the MPW. The Unit, which includes several national and international specialists, was initially established as an implementation unit for IDAfinanced infrastructure projects. It has been managing the implementation of projects across the following sub-sectors: transport (roads and bridges, maritime, and aviation); water, agriculture, and urban works. Lately, the implementation of sector specific projects has started to transition to respective Line Ministries and Agencies. This reflects the Government's goal to empower respective agencies and build capacity. The SIU is expected to evolve into the Infrastructure Implementation Unit (IIU) and thereafter - into a Roads Authority (expected to emerge in three to four years). 23. Key staff of the SIU includes Project Manager and Deputy, Road Engineer, Water Engineer, Environmentalist, Agriculture Specialist, Procurement Specialist, Contract Management Specialist, and Financial Officer. International technical assistants provide additional assistance in the areas of contract management and civil engineering services. 24. The PIU. As stated earlier, the PIU will be responsible for overall project management, and coordination following the transitional period discussed above. The PIU will have three professional staff. It will be headed by a Project Manager (FM or Revenue Expert) and include a 32 The following contracts are expected to be procured during this period (or procurement to commence): (i) Goods: computers, office supplies, furniture, etc as per Procurement Plan (shopping method); (ii) Works: construction of transfer stations (NCB and ICB); improvement of skip platforms (shopping); (iii) Consulting services: key staff of PIU and TA for financial and organizational audit; (iv) Non-consulting services, including collection contracts and maintenance of equipment: no new contracts are expected; the funding source of existing contracts need to be transferred to EMUS. 33 An EOI for the position of the Project Manager has been posted on dgmarket and in country. Qualifications under the TOR include minimum of 15 years of senior managerial experience working on similar donor funded projects. Shortlisted candidates were interviewed and the Bank has provided noobjection to the Evaluations Report recommending award of contract. 34 The Procurement Specialist will be recruited competitively and an EOI is in a process of being published on dgmarket and in country. Qualifications under the TOR include minimum of 10 years of experience as a procurement specialist working on donor funde(j projects, including IDAlIBRD projects. 72

77 Procurement Specialist and an Environmental Engineer. The Project Manager will have sufficient experience in managing donor funded (especially Bank funded), projects. The Procurement Specialist should be familiar with Bank procurement guidelines and should have prior experience with Bank funded projects. The Environmental Engineer would preferably hold a degree in sanitary or civil engineering and have prior experience with urban sanitation (Le. solid waste). S/he will serve a dual role to provide engineering expertise and also serve as the environmental specialist on the team. From time to time (approximately once per year), the PIU will also be assisted by a Social Development Specialist who would assist in overseeing the execution of Component 1.3 (Awareness campaign) as well as any other social issues related to project activities. Similarly, a M&E Specialist will provide assistance to compile annual M&E reports utilizing the project's MIS. 25. The primary functions of the PIU will be to: (i) provide overall project management; (ii) provide overall coordination between MCC, MOF, the World Bank, and other parties for the purpose of project execution; (iii) coordinate between the various TA including the Design and Supervision Engineer; (iv) process all request for payments in conjunction with and through the PFMU of the MOF; (v) prepare all necessary reports on the project for LRTF, World Bank and Government as needed; (vi) carry out procurement and contract management functions related to the project; (vii) carry out secondary oversight functions of the project itself. 27. The PFMU has since its inception in 2006 developed financial management structures, functions, and responsibilities acceptable to the IDA and these have been relied upon by IDA for implementing several ongoing projects. The PFMU is fully staffed and operational and will be relied upon for the EMVS project. The working relationship and the respective responsibilities between the PFMU and the MCC have been outlined, in a Memorandum of Understanding (MOU) to be signed between the parties. Further detail is provided in Annex 4. Detail on allocation offunctions between the PIU and PFMU is provided in the table below. ].0 Procurement of Contracted Goods, W Services 1.1 Preparing procurement plans Approving procurement plans Procurement Specialist attached to the PIU. HeadPIU and MCC PIU and MCC This function will be i done by the PIUIMCC involvement involvement 73

78 1.13 Awarding and Signing contracts MCC Contracts would have been prepared PIU 1.14 Submitting of (signed) contract MCC document to IDA 2.0 Contract Management, 2.1 PIU 2.2 of implementation, PIU Third of contracts 2.3 PIU 2.4 PIU 3.0 Financial 3.1 Prepare annual work plans and budgets PIU and MCC To be vetted by the Mayor ofmcc or the internal bu.dget committee 3.2 Approve annual work plans and budgets Head of the The budget and PIUIMCC work plans have to be approved by the Mayor ofmcc. Review Bank. 3.3 Monitoring achjai expenditure and Head of the To be discussed and commitments against budgets PFMU coordinated at the PFMU-reported in Quarterly Financial to the PIU 3.4 Expenditure initiation - Official memo Head ofpiu or other staff of verify as per the PIU EPP or 3.5 Verification, approval and authorization Head ofpiu Initial verification is of expenditure invoices and supporting documentation 3.6. confirmation Head ofpiu 3.7 Submitting of payment request to HeadofPIU PFMU atmof 3.8 Cheques processing or authorizing Head of done by the Head of PIU prior to sending a payment request to the PFMU payment transfer advice for payments PFMU from DA 3.9 Authorizing petty cash payments from Head of All cash payment (if imprest accounts, recording PFMU any) must be authorized 74 the

79 3.10 Recording all project U110"'''''''' transactions in the accounting system Preparation of quarterly and annual Financial Statements Veri tying bank reconciliation PFMU Project Accountant PFMU Reviewed by Head ofpfmu W"",i.. ""prl by Head ofpfmu Preparation of Withdrawal Applications Authorization of Withdrawal Applications 4.4 Engagement of Extemal Auditors Head of PFMU Head of PFMU Head of PFMU Authorized signatories to be shared with the Bank and to include the Head of the PIUIMCC. 26. Activity specific implementation arrangements are provided below. 27. Component 1. Component 1 is divided into three sub-components dealing with, respectively, collection of waste by the SMEs, creation of infrastructure for the project, and an awareness campaign among the citizens. Implementation arrangements under these components are explained below. 28. Sub-component 1.1. It is proposed that ILO is sole-sourced (service contract) to design and manage sub-component 1.1, including development/improvement of the contractual framework with the SMEs; planning, designing and managing of the proposed capacity building program; design and implementation of the city data base system and in the recording and reporting on SME performance; capacity building activities at MCC related to oversight of the primary collection; pilot composting at a selected market area. Engaging the ILO will provide continuity of current activities and engagement with SMEs. The activity is envisaged to span over 1.5 years. 29. Sub-component 1.2. The Design and Supervision Engineer will be responsible for design and technical supervision of all activities under this sub-component. Haulage of solid waste from the skips to the transfer stations and from the transfer stations to the landfill will be carried out by contractors procured competitively. Contractors will use own equipment as well as MCC equipment. All construction works will be executed by private contractors procured competitively. The operations of the transfer stations and the landfill will also be handled by private operators. 75

80 30. Sub-component 1.3. It is envisioned that the campaign, including a baseline survey and impact assessment, would be undertaken by a single NGO or firm through competitive bidding. The NGOlfirm running the campaign will be encouraged to tap ILO's expertise in working with SMEs and individual customers in designing the creative elements of the campaign. 31. Component 2. Component 2 is primarily concerned with the provision of T A for specific purposes. All T A to assist project implementation will in addition build capacity of line departments of MCC (i.e. the Environmental Engineer is expected to work closely with the SWD to transfer knowledge and provide training). In addition, TA assistance will be provided to perform a financial and organizational audit. All T As will be individual consultants with solid expertise in their subject matter and previous experience in post-conflict (or developing) countries. 32. The Design and Supervision Engineer. In order to further strengthen the enabling environment, particular attention will be paid to the capacity development of the SWD at MCC, through on-the-job training by the Design and Supervision Engineer. The Engineer will be hosted at the MCC and, among others, will be responsible to: (i) draft and finalize all bidding documents for each activity under sub-component 1.2 including design, scope of works and bill of quantities (BoQs); (ii) advise on all matters related to the interaction between the primary and secondary collection and work with the ILO to resolve issues as needed; (iii) assist the PIU with procurement processes and provide due diligence in the form of supervision of contractors; (iv) work with the contractors to build their capacity; and (v) develop the technical concept for the solid waste collection and disposal system. 33. Exact arrangements will be described in the Project Implementation Manual (PIM) which will be drafted prior to Effectiveness and finalized within 3 months of Effectiveness. This is also necessitated by the fact that other than the Public Financial Management (PFM) Law which has been referred, amendments to the legal status of Municipalities also appear to be in the offing. 34. The major issues the above formulation has been designed to address are (i) the need to maintain internal controls: (ii) the need to be clear on fiduciary arrangements; and (iii) obtaining assurance from the government and the MCC as to the maintenance of their respective commitments in the long run. These matters have already been discussed by the Bank Team in detail both with the MCC and the MOF, which have provided Letters of Comfort to this effect. Project Oversight 35. Oversight of project execution is proposed to be carried out at two levels, one at the level of major stakeholders, and the second at an intra-organizational level. These are described below: 36. Project Oversight Committee. At the level of the stakeholders, an Oversight Committee will be established under the Chairmanship of the Minister of Finance. The Mayor of Monrovia, the Deputy Minister of the Ministry of Public Works and such other nominees as the Chairman may desire and is satisfactory to the Bank. The Committee is expected to meet quarterly, review project progress and provide general guidance and oversight. A detailed Terms of Reference for the Oversight Committee will be worked out and included in the Project Implementation Manual. 37. Project Management Conunittee. At the level of the MCC, a Management Committee will be set up and will consist of the Mayor, the Financial Controller of MCC, the Head of the MCC Sanitation Department, a Management Specialist, the Project Manager of the PIU, and the 76

81 Supervision Engineer as a permanent invitee to the Project Management Committee. The Committee is expected to (i) provide operational guidance for all activities under the project; and (ii) manage inputs from various T As. The Committee is expected to meet monthly or as needed. 38. In terms of managing the inputs of the various TAs, the Committee is expected to: (i) review monthly reports submitted by the various TAs; (ii) take decisions to accelerate the pace of reforms and reorganization; (iii) ensure that there is a smooth interface between the diverse strategies being followed by the various T As and evolving action programs. Monitoring and Evaluation 39. Existing capacity for M&E at MCC is very low. During the EIPSC, data was collected by the Supervision Engineer and the M&E function under the project was carried out by the SIU. 40. M&E for the project will be done by an expert who will be invited to visit the project at least twice a year and will submit his Report to the MCC with copies to the Bank. Monitoring and Evaluation activities will be carried out in accordance with the Results Framework as well as related indices. In the meantime, an information database on project activities will be developed and populated on a regular basis (including data collected daily on collection and disposal of SW) and regular reports will be sent quarterly to both the top management of the MCC as well as the Bank. A proper MIS will be developed in the MCC over the project period. A database to capture the primary collection will be developed by the ILO and feed into the MIS. The MIS will provide inputs for Monitoring and Evaluation. The PlU will be responsible for coordinating M&E activities on a regular basis and will seek the assistance of the Design and Supervision Engineer to obtain monitoring data. The monitoring framework that is envisaged is shown below: ~! -- onem 11.1 r--1 I I Cceation Activity Performance of SMEs Monitored by and Period PlU on monthly basis on the basis of data submitted by ILO on perfonnance of SMEs. Data to also include ' issues and their resolution in consultation with MCC as necessary of Monitored by the Project Mgmt Committee for In frastructure procurement and payment [for the PlU] and by PlU an~ ~r?curement for activities carried out by the Design and, activities Supervision Engineer. Reports to be generated monthly I 1.3 Education I Monitored by the PlU as well as Project Mgmt I Campaign I Committee with inputs from concerned departments of I the MCC. Reports to be generated monthly 2.1 Activities carried Monitored by the Project Mgmt. Committee on out by TAs in monthly basis. Inputs from T As, PIU, and various independently from the SW department functional departments of MCC I 2.2 Ad;viti" ofpiu I MODitO"d by tho Pmject Mgmt. Committ" on and Design and monthly basis. Inputs from TAs, PlU, and Supervision independently from the SW department i Engineer I I 77

82 41. At least three supervision missions per year will be conducted by the World Bank in the first two years of project implementation, followed by supervision missions conducted at least twice a year for the remainder of the project implementation period. Supervision teams will include procurement, financial management, and safeguards specialists in addition to the Task Team Leader and the technical specialists. Implementation support and supervision, through missions as well as direct involvement by the Liberia Country Office will, in particular, focus on performance of the implementing entity in managing contracts, procurement, safeguards, technical and financial management, as well as in completing the agreed upon implementation plans. 78

83 Annex 7: Project Preparation and Appraisal Team Members LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) 1. Key project dates are presented below: Initial PID to PIC Appraisal Updated PID to PIC Updated ISDS to PIC Negotiations RVP approval Planned date of effectiveness Planned date of mid-term review Planned closing date Planned 01116/ /07/ /07/ /07/ /30/ /20/ / / Actual 03/09/ /07/ /14/ /06/ Key institutions responsible for preparation of the project: Monrovia City Corporation (MCC) and the Ministry of Finance (MOF). Bank staff and consultants who worked on the project included: Name Title Unit Kremena Ionkova Urban Specialist/TTL AFTUW Catherine Farvacque-Vitkovic Lead Urban Specialist AFTUW Shyamal Sarkar Sr. Sanitary Engineer SASDU Robert Wallace DeGraft-Hanson Financial Management Specialist AFTFM Antoine Lema Sr. Social Development Specialist AFTCS Anthony Mensa-Bonsu Procurement Specialist/Consultant AFTPC Ephrem Asebe Economist/Consultant AFTUW Bappaditya Chakravarty Municipal Development AFTUW Specialist/Consultant Maximilien Onga Nana Sanitation Specialist/Consultant AFTUW Thomas Walton Environmental Specialist/Consultant AFTUW Jonathan David Pavluk Senior Counsel LEGAF Rajiv Sondhi Senior Finance Officer CTRFC Callista Chen Communications and Country AFTTR Liaison/Consultant Marie-Adele Tchakounte Sitchet Language Program Assistant AFTUW Florence Geegbae-Dukuly Program Assistant AFMLR Peer Reviewers Allan Rotman Lead Procurement Specialist AFTPC Ellen Hamilton Sr. Urban Planner LSCUW Paul Kriss Lead Urban Specialist EASCS 79

84 Bank funds expended to date on project preparation: 1. Bank resources: $0.0 ii. Trust funds: $ 80,000 Ill. Total: $ 80,000 Estimated Approval and Supervision costs: 1. Remaining costs to approval: $ 10, Estimated annual supervision cost: US$180,000 80

85 Subproject Screening Annex 8: Environmental and Social Safeguards Framework LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) I. The investments to be supported have been screened for safeguards as shown in the table below. Subcomponents for which the only applicable instrument is the generic EMP are judged to be of low risk; moreover, the EMP already exists, prepared under EIP and ElPSC, and so the work can begin immediately after effectiveness. Similarly, the ElA for Whein Town Landfill was prepared under EIPSC and remains as the governing safeguards document for its operation. No new safeguards document is needed for this component. Disbursement for the transfer stations, for which site-specific EMPs and, if needed, RAPs will not begin until those instruments have been prepared, reviewed, cleared (by the MCC, Liberia EPA if applicable, and the Bank) and disclosed. Subcomponent EA Category EMPfor Site-Specific Urban Works EMP Applicable Safeguards Instruments EIA RAP Solid waste collection in Monrovia Construction and B X operation of two solid B i Ix waste transfer stations I i Operation ofwhein I B Town Sa~tary Landfill 1 Impact management capacity-building for C I MCC i I i!x I Preparation of Safeguards Instruments 2. Environmental Management Plan for Urban Works. An EMP for urban works was prepared and disclosed for EIP and EIPSC. The EMP includes social and environmental impact management measures for solid waste cleanup (the emergency activities to remove accumulated waste in Monrovia) and routine solid waste collection. The amended EMP will be utilized for solid waste collection being supported under Component 1. No further safeguards preparation is necessary, but the ElP EMP will be re-disclosed in country and in the InfoShop for EMUS. 3. EIA for Whein Town Landfill. An EIA was prepared for the development and operation of the landfill. It has been reviewed and approved by Liberia Environmental Protection Agency (EPA) and disclosed in-country and in the InfoShop. No additional safeguards preparation is required for this subcomponent. The EIA will be re-disclosed in-country and in the InfoShop. 4. Site-specific Environmental Management Plans and Resettlement Action Plans for Solid Waste Transfer Stations. The two simple transfer stations that will be constructed and placed into operation under EMUS will not have impacts that are complex or significant. They can normally be managed through application of proper operating procedures. However, it is important to ensure that the design of the facilities, the planning of haul routes, and the operating 81

86 procedures including hours of operation are appropriate in the environmental and social settings of the stations. Consultation with the affected communities is essential, so that communities can have inputs into design, operating procedures, and environmental and social impact management measures. Consequently, for these reasons, site-specific EMPs are necessary. They should be prepared in tandem with final site selection and design. The EMPs will be completed, reviewed by EPA if necessary, and by the Bank, and disclosed prior to disbursement for construction of the transfer stations. 5. Five sites were screened by the solid waste management consultants and the Bank. The site at Fiamah has been confirmed as one of the locations for a transfer station, while the site at Stocken Creek is still under investigation. An earlier considered site at the Freeport is not available any more. It is possible that MCC will have to find an alternative location to the site at Stocken Creek. No acquisition of private or community land is involved in the Fiamah location. If the Stocken Creek location is confirmed as suitable for a transfer station, it may require that the Government acquires a small area from one private owner. The owner has identified willingness to sell the land to the Government, while the Government, through the MOF, has agreed to secure funding for the acquisition of the land. As of date, the land is not occupied. However, at Fiamah (and possibly at alternative sites) there would be a need to improve the access road, including clearing some small businesses from the right-of-way so that large transfer trucks will be able to pass. An abbreviated RAP for Fiamah would be necessary and would be prepared prior to disbursement for construction of the stations. If needed, a RAP (or an abbreviated RAP if the extent on involuntary resettlement is limited) will be prepared for the second transfer station. A RAP for solid waste management recently prepared and disclosed for EIPSC conform!l quite well to the provisions of OP 4.12 and will be provided to consultants as a template for any RAP that may be required for this subcomponent. SIU or PIU will procure consulting services for the sitespecific EMPs and RAPs as part of design or through separate consulting contracts. Review and Approval by Liberia Environmental Protection Agency 6. Annex I to the Environmental Protection and Management Law of the Republic of Liberia (November 2002) specifies the types of development projects for which environmental impact assessment is mandatory and includes under the heading "Municipal Solid Waste the following activities: Construction of incineration plant Construction of composting plant Construction of recovery Ire-cycling plant Construction of municipal solid waste landfill facility Construction of waste depots Collection and transportation 7. Transfer stations may fall under "waste depots" or "collection and transportation." In practice EPA exercises discretion in the level of environmental review and analysis it requires based on the nature of the proposed project, its scale and setting. EPA has already reviewed the EIA for Whein Town Landfill. Routine solid waste collection is likely to be below the threshold of EPA concern, and the transfer stations may be as well. However, in view of the generality and inclusiveness of the statement in Annex I, only EPA can make that determination. EPA also has the authority to decide whether or not a public hearing is necessary as part of its review and approval process. MCC will therefore consult with EPA in advance on all safeguards work and will ensure that it conforms to any requirements the agency may specify for the level of analysis, the type of agency review and approval, and arrangements for public disclosure and consultation. 82

87 Consultation and Disclosure 8. The existing urban EMP and Whein Town EIA will be re-disclosed at SIU and in the InfoShop, and the in-country disclosure will be advertised in local newspapers. Additional consultation should not be necessary on these documents, but the advertisement will provide for a 2 I-day review and comment period. Terms of reference for preparation of the site-specific EMPs will instruct the consultants to meet with project-affected people, solicit their concerns and recommendations, summarize them in their reports, and respond as appropriate in formulating mitigation and monitoring measures. RAP preparation necessarily entails consultation with project-affected people that must be documented in the reports. RAPs and site-specific EMPs will be disclosed for review and comment at Monrovia City Hall and at appropriate locations in the affected communities. All documents will be disclosed or re-disclosed, as the case may be, in the InfoShop. These are the minimum requirements to satisfy OP 4.01 and 4.12; as noted above, Liberia EPA may prescribe additional consultation and disclosure, and the MCC will of course comply. EMP and RAP Implementation 9. EMPs and RAPs specify the institutional arrangements for their implementation. The contractor is the first line of supervision for EMP implementation during site preparation and construction as well as during any period in which the contractor is responsible for operation. The client - MCC through PIU and with the support of the supervision consultant - will be responsible for oversight and enforcement. Tender documents and contracts will include provisions that incorporate insofar as possible the environmental and social impact management and health and safety requirements as enforceable contractual obligations. The documents will in addition cite and require adherence to the applicable EMP. Each contractor will be required to designate a supervisor or health, safety and environment officer to be responsible for overseeing compliance. Contracts will also require contractors to train their personnel in workplace safety and health procedures and to enforce them. This training should include making the workforce generally aware of the provisions of EMPs. Details will be left to the responsible supervisor or officer. 10. Once the transfer stations have been turned over to MCC, MCC will be responsible for implementation of EMP provisions applicable to operation. Since the operation will be outsourced, MCC will require adherence to the EMP in the operating contracts and will monitor and enforce compliance. 11. The Bank task team will supervise safeguards implementation through review and clearance of safeguards documents, review of progress reports, and supervision missions. Environmental and social development specialists will participate in at least one supervision mission per year. Experience with the Liberia Infrastructure Rehabilitation Project (LIRP), EIP, EIP-SC and the Agriculture and Infrastructure Development Project (AIDP) has shown that more frequent safeguards specialist participation is valuable, and supervision budgets have to date provided for specialists to join two missions per year. The project appraisal stage ISDS will be updated after six months and thereafter as appropriate to reflect progress in preparing and disclosing safeguards instruments in accordance with OP Institutional Arrangements and Strengthening for EMP and RAP Implementation 12. In support of Liberia's efforts to upgrade environmental management in tandem with reconstruction and new development, URIRP includes funding for institutional strengthening for 83

88 Liberia EPA, to increase its capacity to develop standards, cany out audits, and enforce compliance with EIA preparation and implementation regulations. The small PIU to be established within MCC's' Solid Waste Department will include an environmental engineer to assist MCC in overseeing the construction and operation of the transfer stations and collection system during EMUS. Terms of reference for PIU staff will require substantial time allocations to on-the-job training and knowledge transfer. SIU's full-time environmental specialist (on loan from EPA) will also be available to assist with preparation of terms of reference, review of consultant reports, and monitoring in the field. 13. For the longer term, Component 2 of EMUS provides technical assistance funding to build MCC's capacity to plan and manage solid waste collection, recycling and disposal in a manner that is environmentally and socially sound. 14. Four social development aspects need to be given due attention during project imp lementation: a) the plight of scavengers at the current. landfill and future transfer stations; b) the management of market waste, c) the need for a buffer zone around the landfill and d) the need for informed decisions on transfer stations. 15. The collection of metal, cans, bottles plastic/glass is the source of scavengers' revenues. It is recommended that a census of scavengers be undertaken. The focus should be on, but not limited to: (i) number of scavengers; (ii) age; (iii) gender breakdown; (iv) marital situation; (v) ethnic/cultural/regional background; objects collected; (vi) revenue generated from collection, (vii) main source of income and (viii) tools used in the collection work. 16. The need for a buffer zone around the Whein Town LandfilL One of the key conclusions of consultations carried out by the NGO FIND at Fiamah landfill was that, the community had negative perceptions and associations to landfills. Subsequent consultations carried out by FIND with support by the supervision consultant (Poyry) in the quest to identify potential sites for transfer stations, came to similar conclusions. It is therefore recommended that public consultations at Fiamah are held prior to starting work on a transfer station. 84

89 Annex 9: Points of Agreement between MOF and MCC regarding project financing LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) 1. The following Accounts will be opened/used and operated as shown against each: (i) (ii) (iii) (iv) (v) A Treasury Account to receive money collected for Solid Waste services to be opened and controlled by Government (using a transitory account in a commercial bank). A Special Account to be called 'Monrovia Solid Waste Account' will be opened in a commercial bank and will be jointly operated by MCC and MOF. Signatories to any instrument would be one person from MOF and one person from MCC. The Monrovia Solid Waste Account shall be opened through a joint letter from MCC and MOF. After the MOF ceases to contribute, the account shall be operated by MCC only. A Project Account shall be opened in a commercial bank and managed by the PFMU under the MOF. Credits to this Project Account will be from (a) Monrovia Solid Waste Account; (b) World BankILRTF Replenishments through the Designated Account [described below]. Transfers from the Designated Account to the Project Account will be done on a need basis triggered by documented evidence. The Project Account will be used to finance operational costs of the Project. There will be a Designated Account in one of the commercial banks for the purpose of receiving funds from the LRTFlWorld Bank. This account will be managed by PFMU. 2. Role of PFMU There will be an Agreement between the PFMU and the MCC which will articulate the role of the PFMU as the manager of funds for the Project during the lifetime of the Project. In particular: a. Management of the Project Account will rest with the PFMU for the duration of the project. b. PFMU shall manage all replenishments from the LRTF. c. PFMU and the PIU of the MCC shall jointly prepare applications for replenishment of the Project Account from the Solid Waste Account. 3. Inflows and Outflows from the various Accounts Account Inflow Outflow i Transitory Account Pay-ins by citizens Treasury Account i Treasury Account Transitory Account Monrovia Solid Waste' Account Monrovia Solid Waste Treasury Account Project Account Account Designated Account LRTFlWorld Bank 1) Contractors 2) Project Account 85

90 Project Account [3 ro year of project onwards] 1) Designated Account Contractors and other for [3 rd and 4th year of Operating Costs project] 2) Monrovia SW Alc [3 rd year of project onwards] Note on Transfer Modality - As deemed appropriate by the MOP. Same will apply for transfers from Transit01Y Account to Treasury Account. 4. Procedure Manual - A detailed step by step procedural manual for all the above steps shall be prepared by MCC and the same shall also be ratified by the MOF. A copy of the document shall be sent to the W orid Bank. 5. Preliminary Actions by MCC - MCC will reorganize its internal systems so that all bills (a) carry a Serial number both on the top-half as well as the bottom-half of the bill, and (b) carry the Treasury account number and name of designated Bank and (c) the Transitory Account number to which the citizen's cheque is to be credited. This pay-in procedure will override and substitute all other currently being used in these regards. The MCC will notify the public accordingly. 6. MOF Contribution to Operational Costs a. During Years 1 and 2 of the project there will be no contribution from MOF to the operational costs of the project. However, moneys collected on account of solid waste removal will continue to be deposited in the Transitory Account and then to the Monrovia Solid Waste Account. There will be no withdrawals. b. Contributions from MOF and withdrawals from the Monrovia Solid Waste Account shall start from Year 3 of the EMUS project. c. The above procedure will continue from the first year of the project until such time that MOF discontinues to subsidize the Solid Waste Management operational costs. d. MOF contribution shall be according to a formula to be specified and agreed upon. See below for details. e. In case the MCC cannot raise sufficient revenues from solid waste fees to meet its obligations under the formula, it will have to supplement the collections with transfers from its general revenues. f. Conversely, if the MCC raises more than its allocated share as per the agreed formula, an incentive scheme may be considered by the MOF for the efforts put in by the MCC. Such a scheme may be formulated and discussed by the Government after review of the performance of the MCC during the project. 7. Relationship of Procedures to Budgetary Matters a. For the fiscal year beginning July 2009, a specific budget code shall be allotted to 'Receipt of Solid Waste Fees from MCC' on the revenue side. This budget code may be allotted from the unassigned codes that are currently available. There will a caveat from the Minister/Deputy Minister on this code - to effect that moneys under this revenue code should not be taken to General Revenues or used for any other purpose. 86

91 b. For the fiscal year beginning July 2009, MOF shall book all transfers to the Monrovia Solid Waste Account, under a specific Expenditure code. This Expenditure code may be one of the unassigned ones currently. c. From the fiscal year beginning July 2009, MOF shall transfer all money received under the particular revenue code for solid waste to Monrovia Solid Waste Account on a monthly basis d. From the fiscal year beginning July 2011, MCC shall prepare a Budget projection for revenues and expenditures related to solid waste and show the amount to be received from the MOF. MOF will then create a separate Budget Category for the purpose. e. There will be regular reconciliation of all moneys deposited, withdrawn or transferred from one account to another by MOF and MCC representatives. Reconciliation shall take place at least once a month. 8. MCC responsibilities a. MCC will reconcile the funds received in the Treasury Account and the MCC's Ledger account for revenues credited to the Treasury on a monthly basis. b. MCC will reconcile the Treasury Account and the Monrovia Solid Waste Account on a monthly basis. c. MCC will take appropriate action with respect to the Returned Cheques [including contacting the concerned citizen and obtaining a new cheque or asking the citizen to distribute the money in cash, and levying such penalties as may be applicable J. 9. Responsibilities of the Commercial Bank where Transitory Account is operated. The commercial bank that receives solid waste fees shall be instructed to do the following: Receive bills from citizens in any of their branches. Receive cheques and cash from citizens. Citizens should be instructed to write their name, address and bank account number on the back of the cheque. Upon receipt of cheque or cash, stamp the bill [top half and bottom half] with date of receipt and mode of payment. Tear off the bottom half of the bill and return the top half to the citizen. Enter cheque number, bank, and citizen's name and address in a register. At the close of business for the day, the bank will prepare a statement of all cash received, all cheques received, and the list of serial numbers of all the bottom half of the bills. The bank will retain a copy of this statement, and send the statement to the MCC with an extra copy which will be forwarded to the Treasury. The bank will also send the physical bottom-halves of the bills to the MCC. MCC will forward this Provisional Statement to the MoF. Every week, Bank will forward to the MCC the Returned Cheques [cheques that are not encashed] with a separate statement. Bank will also forward a weekly Statement of account balances and transactions to MCC with a copy to MOF. 87

92 1 10. Sharing of Contribution between MCC and MOF for Operational Costs through the Monrovia Solid Waste Account The sharing ratio for contributions from the MOF and the MCC for the operational costs of solid waste management is derived from the Cash Flow projections for the Project for the four years of project duration. In the third year of the project the Government and the MCC shall discuss the ration of contributions to be made operative from the fifth year onwards. The figures given below in the Table below for the fifth and sixth years are indicative. However the figures for the first four years are confirmed. All figures in USD Million I Contributor I I 2015 LRTF MOF MCC : 0.07 i 0.15 i Contribution I I Total I Total Operations 1.70 I i 2.56 Cost I I Projected MCC , i collection I I I I , The percentage contribution is shown in the following Table: Percentage Contributions to total operations cost I MCC I LRTF OJ ~OF The pattern of contributions is graphed as follows: 88

93 MOF and MCC contributions c:: j 0 f/) :::l 0.5 -MOF I ~ MCC Contribution I Year The following conditions shall be applied: The above table shall be revisited in the fifth year of the project and contribution ratios for the seventh year onwards shah be worked out. If there is a variation in the total operational costs in any given year then o o o If the variation is in the 1 st or 2 nd year of the project, the shortfall if any shall be met by the EMUS project, not to exceed funding under Component 1.2 (secondary collection) of the Project. If the variation is in the 3rd or any subsequent year, the shortfall, if any shall be met by MOF and MCC. The shortfall make-up amount shall be divided pro-rata between MCC and MOF on the basis of the basic contribution ratio for that year as per the above Table. 11. Audits A Project Auditor shall be appointed by the MoF within four months of Effectiveness. The selection of the Auditor will be done by due process and SIU will be charged with the task. Terms of Reference of the Auditor shall be prepared by the PFMU. 12. Projections - MCC will prepare detailed revenue projections on Solid Waste Account annually. The exercise should be completed and the projections approved by Competent Authority one month before the end of the fiscal year and shall submit the same with justifications, to the MOF and the World Bank. 13. Competent Authorities Competent Authorities for the operation of these Procedures are: (i) For the MOF - Deputy Minister[s] for Revenue and Expenditure, and Assistant Ministers for Revenue and Expenditure. For all transfers in and transfers out from Treasury account[s] and the Comptroller-General. For all Reconciliation, Officers nominated by above Competent Authority. Deputy Minister of Expenditure and Assistant Minister for Expenditure for transfers out from the Monrovia Solid Waste Fee Account. 89

94 (ii) For the MCC - Mayor and the Controller, for all transfers out from Monrovia Solid Waste Fee Account. (iii) For the Project - Manager of the PFMU and the Project Manager of the PIU. 90

95 Annex 10: Documents in the Project File LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) 1. Solid Waste Concept Report, Poyry, MCC Letter of Solid Waste Sector Policy (MCC). 3. Background calculations and economic analysis (project team). 4. EMP for urban works. 5. EIA for Whein Town. 91

96 Annex 11: Statement of Loans and Credits LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) Original Amount in US$ Millions Difference between expected and actual disbursements Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev'd PI LR-Econ. Gov. & Institut. Ref. TAL (FY P LR-Agric. & Infra. Dev. Proj. ERL (FY08) PI LR-Comm. Empowerment II PI LR-Health Systems Reconstr PlO LR-Emergency Infrastructure ERL (FY06) Total: STATEMENT OF IFC's Held and Disbursed Portfolio In Millions of US Dollars Committed IFC Disbursed IFC FY Approval Company Loan Equity Quasi Partie. Loan Equity Quasi Partie. Total portfolio: Approvals Pending Commitment FY Approval Company Loan Equity Quasi Partie. Total pending commitment:

97 Annex 12: Country at a Glance LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) POVERTY and SOCIAL liberia 2007 Population, mid-year (millions) 3.8 GNI per capita (Atlas method, US$) 150 GNI(Atlas method, US$ billions) 055 Average annual growth, Population (%) 2.8 Labo rfo rce (%) 2.1 Most recent estimate (latest year available, ) P a varty (% 0 ( po pulatia n bela w natio nal po verty line) Urban po pulatio n (% a (to tal po pulatio n) 59 Life expectancy at birth (years) 45 Infant mo rtality (per 1000 live births) 157 Child m.'nutritia n (% 0 f children under 5) Access to an improved water source (%o( population) 64 Literacy (% 0 f population age 15-1) 52 Gross primary enro IIment (%ofschool-agepopulation) 91 Male 98 Female 87 Sub- Saharan Africa lowincome ~ 'Il0 89 Development diamond'" GNI per capita Life expectancy + Gras. < primary! enrollment Access to improved water source --Liberia --'-Low-income group KEY ECONOM IC RATIOS and LONG-TERM TRENDS GOP (US$ billions) Gross capital formation/gop Exports of goods and selvices/gop Gross domestic savings/gop Gross national.avings/gop Current account balance/gop Interest payments/gop Total debt/gop Total debt selvice/exports Present value of debt/gop P resent value of debt/expo rts (average annual growth) GOP -20,6 3.1 GOP per capita -2tf -0.5 Exports of goods and selviees , Eco no m ic ratios* Trade 11- Oomestic savings Indebtednes. --Liberia._.._.._.._.- Low-mcome group Capital formation STRUCTURE of the ECONOM Y (%o(gdp) Agriculture Industry M anufactunng SelVices Household final consumption expenditure General gov't final consumption expenditure Imports of goods and services ) < < !~owthOf capital and GOP (%) i:~ GCF (average annual growth) Agricurture Industry M an"facturing SelVices & 2007 Household final consumption expenditure General gov't final co nsum plion expenditure Gross capital formation Imports of goods and selvice. Note: 2007 data are preliminaryestimates. This table was produced from the Development Economics LOB database, The diamonds show lour key indicato rs in the country (in bold) compared with its income-group average. If data are missing, the diamond will 93

98 Liberia PRICES and GOVERNM ENT FINANCE Domestic prices (%change) Co nsumer prices 5.0 Implicit GDP deflator 6.1 -tl.o Inflation (%) ~~ Current revenue O Go vernment finance (%of GOP, includes current grants) Current budget balance Overall surplus/deficit --GDPdeflator _CPI TRADE (US$ millions) Total exports (fob) n.a. n.a. Manufactures Total imports (cif) Food Fuel and energy Capital go a ds Export and import levels (US$ mill.) Export price index (2000;f)O) O Import price index (2000;f)O) II!iII Exports IIlll'Tllorts Terms of trade (2000;f)O) BALANCE of PAYM ENTS (US$ millions) Exports of goods and services Imports of goods and services 386 2' Resource balance Net income ' Net current transfers Current account balance -73 -'lj6-20 Financing items (net) Changes in net reserves Memo: Reserves including gold (US$ millions) Conversion rate (DEC, locaiius$) Current account balance to GOP (%) EXTERNAL DEBT and RESOURCE FLOWS Composition of 2006 debt (US$ mill.) (US$ millions) Total debt outstanding and disbursed 1,705 2,012 2,674 IBRD 147 ' A: 147 IDA 1)5 1)2 1)9 77 B: 109 Total debt service IBRD IDA G: 1,223 Composition of net resource flows D: 137 Official grants ' Official credito rs Private credito rs 0 0 Foreign direct investment (net inflo'ins) Portfolio equity (net inflows) 0 0 F: 199 World Bank program Commitments 0 0 A-IBRD E- Bilateral Disbursements 8 0 B-IDA 0- Other rrultilateral F - Private Principal repayments 0 0 '98 C-IMF G - Short-!er Net flows 0 0 -'98 Interest payments ) Net transfers Note:This table was produced from the Development Economics LDB database. 9/24/08 94

99 Annex 13: Maps LIBERIA: Emergency Monrovia Urban Sanitation Project (EMUS) 95

100 MAP SECTION

101 3O()CXlOmE '~ f! t 310 ~ I I ~ --?.., , ~ \, Candidate Sites for-proposed Landfill,Facility for Monrovia & Irlf1:nvlrons ~:r:j.. _~.~.; ;.--~'. "-'~" I ,. '7!~ '~". '.\5...'.~ ~,.~ I:... ~.....,'.,I : 'I'" -':.:.-=---~--