Secondary Towns and Rural Community Based Water Supply and Sanitation Project Loan No SRI (SF) LOAN COVENANTS COMPLIANCE AS AT 31 March 2011
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1 Secondary Towns and Rural Community Based Water Supply and Sanitation Project Loan No SRI (SF) LOAN COVENANTS COMPLIANCE AS AT 31 March 2011 Reference in Loan Agreement paras 2 and 3 Covenant A. Execution Arrangements NWSDB shall establish a PMU headed by an experienced Project Director supported by a core team of NWSDB employees comprising a DPD, Chief Engineer and Chief Sociologist selected not later than one month after the effectiveness. Status of Compliance PMU Established. para 8 para 3 para 7 para 9 For urban component PIUs shall be established at the five districts not later than six months after the Design and Construction Supervision Consultants are fielded. Project Managers / Engineers shall head the PIUs. A separate PIU shall be established under the Irrigation Department (ID) for the implementation of the Unnichchai tank bund raising sub component. A Resident Engineer from ID shall head this ID PIU. The PIU at Anuradhapura for Loan L-1575-SRI shall be converted into a District TSU and a District TSU shall be established at Polonnaruwa, no later that 6 months after the design consultants are fielded. PSIUs shall be established in participating Pradeshiya Sabha (PS) prior to the implementation of any sub project in that Pradeshiya Sabha. B. Coordinating Arrangements The borrower shall establish the National Steering Committee with responsibility for overall coordination of project implementation including policy matters, coordinating with other Ministries and Agencies. NSC shall meet at least every three months or as often necessary. The borrower shall call for water sector donor coordination meetings to occur at least once per year. The PPCC shall be established in the North Central Provincial Council immediately after the effective date for monitoring of the PSIUs and coordination with the other agencies. Complied with PIUs Established in 5 Project towns ID PIU Established Complied with for Batch 1 & Batch 2. PSIU Established. Establishment of National Steering Committee Complied with. Quarterly meetings on going. Meetings on going Meetings on going.
2 paras 19,20 C. Social Covenants The Government and NWSDB will ensure (and NWSDB will obtain Government assurance from the Land Acquisition Section) that all land, land rights, rights-of way, and other land-related rights, and all water and water-related rights for the Project be acquired in accordance with (a) the Government s National Involuntary Resettlement Policy (b) ADB s Policy on Involuntary Resettlement : and (c) the Short Resettlement Plan (RP) for Land Acquisition for the Project submitted by the Government to ADB on 15th September 2002, by the earlier of one year after Effective Date or mobilization of construction contractors. Land acquisition Completed and transfers of Government lands in process. paras 19,20 The Government shall submit an acceptable RP after the detail technical design of the Unnichchai tank subcomponent has been completed, prior to award of civil work contracts and such resettlement plan shall be implemented to the satisfaction of the bank. PMU/PIU (ID) confirmed with contractor in the revised plan schedule for implementation. Affected persons informed & compensation payments completed as approved by the compensation plan. para 19 para 24 The Government shall ensure that compliance with Borrower s and ADB policy on Involuntary Resettlement is covered in the Quarterly reports. (i) Within one month of the Effective Date, NWSDB shall submit to the Bank a strategy to ensure that at least 25% of professional and technical staff working in the PMU, the PIUs, PSIUs and counterpart NGO s shall be women. (ii) Within three months of the fielding of the Project Management Consultant, a strategy to ensure that women comprise 50% of participating CBO s and CBO executive committees. (iii) Within three months of the fielding of the Project Management Consultant, a strategy to ensure that at least 20% of the NWSDB employees receiving training shall be women. Complied with Complied with Under implementation. para 23 D. Environmental Covenants The Borrower and NWSDB shall ensure that the Project is carried out in accordance with existing environmental laws and regulations of Sri Lanka and Bank environmental guidelines. The project shall carry out as per the monitoring and mitigation measures indicated in the IEE and CEA approval documents and consult the local communities on Environmental issues. Environmental Officers recruited under the project for monitoring of construction activities and catchment s protection.
3 para 23 NWSBD shall obtain Environmental clearance from CEA for Matara subcomponent before any withdrawals are to be made from the loan account except as the bank may otherwise agree. Sub project is discontinued. Environmental clearance no longer required. para 8 E. Urban component The Borrower shall ensure that local authority shall be engaged by the PMU in the implementation of the drainage sub component and drainage shall be undertaken in GNDs selected based on population density and state of existing facilities. Complied with para 21 para 12 The ID shall enter into and agreement with NWSDB regarding the implementation arrangement for the Unnichchai tank bund raising subcomponent and allowing the NWSDB to audit the ID project s accounts. The Borrower shall ensure that the Unnichachai Tank Feasibility study shall be provide to ADB F. The Rural Component Implementation The borrower shall ensure registration of CBOs as a legal entity: (i) Approval of the by laws and resolutions related to management of RWS for CBO by the relevant authority. (ii) CBOs have been duly constituted MOU signed on 24 October A copy has been provided to ADB, complied with (i) Registration of CBOs with RWS section of NWSDB is complete for batch 1 and batch 2. NSC concurrence obtained as well as comments of the Gov t Legal Advisor and PS. Final Draft document approved. PS council concurrence is in the process. (ii) (iii) Approval of the relevant authorities for the water supply management manuals prepared for the use of PS and CBO under the third water supply and sanitation project. (iv) PSIUs of the project select sub projects that meet selection criteria satisfactory to the bank. (vi) CBOs and PSs enter into agreements relating to management regulations and distribution of water. (iii) Selection according to approved criteria. (iv) Satisfactorily Completed. (v) On going. 1st batch 98% completed and 2nd batch in progress.
4 para 13 Selection of subprojects shall follow criteria agreed between NWSDB and the Bank. para 14 para 15 G. Financial Management NWSDB shall prepare strategy to improve its financial management operations with a detailed schedule and financial plan, to be submitted to the Bank for approval within three months of the Effective Date. The performance of NWSDB shall be measured by operational performance indicators and targets set out in Appendix 2 of the RRP Strategy agreed with the NWSDB. Implementation is in progress indicators indicate variable levels of performance. On going para 17 para 30 The Borrower shall ensure that water tariffs are set by NWSDB prior to the Water Services industry Act coming in to legal effect. (i) NWSDB to implement a corporate strategy to improve the financial planning and resource allocation within 2 years of the effective date. (ii) NWSDB shall implement within one year of the effective date an action plan to address audit findings and KPMG Accounting and Financial Management Recommendations attached to the 13 Sept MOU between the Borrower and ADB. Not yet due. (i) Corporate strategy under implementation. (ii) Implementation on-going Progress report attached as at
5 (iii) NWSDB shall implement the strategy to reduce O&M cost by reducing electricity cost and non revenue water within two years of effective date. (iv) Completion of assets registry in all regions for water supply schemes having more than 10,000 connections within two years of the effective date. (v) NWSDB shall identify water schemes less than 1,000 connections for rehabilitation and mutual transfer to Local Government Institutions, private sector entities and / or CBO s within four years of the effective date. (iii) Strategy under Implementation. Overall funds allocated under this loan insufficient to achieve Corporate Strategy targets. (iv) Asset registry completed and submitted to the Valuation department for asset valuation purposes to preparation of asset register in future. Clarifying of land ownership is taking place. Land and building valuation is Continuing. (v) Board undertaking this activity on a pilot basis prior to establishing the transfer of all schemes. ADB s agreement obtained. para 16 H. Training NWSDB shall submit for the Bank concurrence a strategic five year training plan which shall specify in the training institutions methodologies and expected training outputs within three months of the effective date and annual training plan prior to 31st October of each year. Complied with 2004/2005, 2005/2006 & 2006/ /2008 Submitted to ADB. I. Reporting NWSDB shall submit quarterly progress reports on project implementation following the Bank standards procedures. NWSDB shall submit to the Bank the project completion report (PCR) within three months from the physical completion of the project On going Not yet due.
6 para 28 para 31 para 26 para 32 The PIUs and PSIUs shall maintain separate project accounts. The Audited project subaccounts and financial statements shall be submitted through the PMU within 09 months of the close of the related financial years. The audited Annual report of NWSDB shall be submitted to the Bank not later than 9 months after the close of each financial year. The Borrower and local Governments shall prepare by 31 December of each year and operation plan of the next fiscal year. J. Counterpart funding The Borrower shall ensure that counterpart funds shall be released by 31st December of each year. K. Project Performance Monitoring The PMU shall develop comprehensive PPMS procedures and plans in accordance with ADB s standards within 6 months after effective date. Auditor General s final report of the project for the year 2009 has been received and submitted to ADB and Ministry of Water Supply and Drainage. Monitoring system and CPM developed by the PMU.
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