International development association project appraisal document

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    1. Country Context

  1. The Kyrgyz Republic is, with a 2014 GNI per capita of US$1,040, one the poorest Former Soviet Union countries in Central Asia. About 39 percent of its population of currently 6.2 million are considered to be living in poverty, with the rate widely varying both by region and between urban and rural areas (where the poverty rate in many areas exceeds 60 percent). Around one-third of the population lives in cities and small towns, with the population of Bishkek, the capital, reaching about 1.0 million, while the other two-thirds live in an estimated 1,805 rural villages of varying sizes. Many of them are scattered in remote and isolated mountainous areas.

  1. The country faces substantial challenges in addressing rural poverty alleviation and development. Recent data indicates that rural (41 percent) and urban (29 percent) poverty rates are diverging, with the gap widening to more than 11 percentage points in 2013. Rural populations remain vulnerable, affected by volatile economic growth due to frequent internal and external shocks, including natural disasters, social unrest, fluctuating commodity prices and a deteriorating economic situation in Russia that affects remittances to the Kyrgyz Republic. Furthermore, it has been identified that access to safe drinking water and piped sewerage systems contributed most to multidimensional aspects of poverty. In 2008 those deprivations contributed 48 percent to overall non-monetary poverty; this share increased to 84 percent by 2012—providing an indication of the continued infrastructural problems faced by the population.1

  1. The Kyrgyz Republic has an administrative and territorial organizational governance structure, divided into seven oblasts, which in turn are sub-divided into 40 rayons. The next level of administration is formed by local self-government units that currently include 31 urban municipalities (including the cities of Bishkek and Osh) and 453 Ayil Okmotus, which are responsible for, among other services, water supply and sanitation (WSS) within their territories in accordance with the 2011 law on local self-government.

  1. Since independence in 1991, the country has experienced a rather tumultuous political history that has hindered economic growth and, in many sectors, has slowed the development of solid administration structures and institutional systems. The ‘Tulip Revolution’ in 2005 resulted in the ouster of President Akaev, a fate shared in the spring of 2010 by his successor, President Bakiyev. Moreover, in summer 2010 violent and widespread riots in the south of the country resulted in numerous casualties and economic losses. In the wake of the 2010 events, a new constitution was adopted by popular referendum and the country shifted from a presidential system to a parliamentary republic. Since then the country has been politically stable.

    1. Sectoral and Institutional Context

  1. Basic public services such as water supply and sanitation have rapidly deteriorated since independence. The Kyrgyz Republic had, inherited from Soviet times, a relatively well developed system of water supply. Access to piped water service (i.e., potable water piped into the dwelling, plot or yard or into a public tap/standpipe) was the standard of service for Central Asia. Existing infrastructure, majority of which was built prior to 1980’s is now generally in poor condition and very inefficient, with losses estimated on average at 55 percent. Until 2014, there was no national (or local) budget for capital investments in WSS, except those provided by international donors on a credit or grant basis.

  1. In addition to low public expenditure in the sector, low tariffs, low collection rates, and limited metering coverage have led to unsustainable operation, maintenance and investments. According to household surveys, even for the poorest households the expenditure on drinking water supply constitutes only 0.35 percent of income.2 In addition to low tariffs, collection rates are exceedingly low, with average collection ratios below 25 percent in rural areas and below 50 percent in urban areas. Furthermore, metering coverage is very limited in rural areas—according to the Kyrgyz Integrated Household Survey (KIHS), only 1.6 percent of the rural population had water meters in 2012. Low metering leads to strong incentives to under-report usage, which further contributes to insufficient payments for water supply and low revenues of the service providers.3 This situation, coupled with limited human resource capacity led to a deterioration in services, which in turn further exacerbates the issues - as collection rates decreased coinciding with a decline in customer satisfaction.

  1. Access to and quality of water supply and sanitation services, particularly in rural areas remains low. Distances from a home to the nearest water source is much longer for rural households than for urban ones, which implies greater time spent by rural households transporting water for their basic needs. By 2000, a mere 40 percent of rural inhabitants were believed to have access to working water supply systems, while the remaining collected water from unprotected wells, springs, streams, or irrigation canals. According to KIHS, in 2012, not more than 5 percent of the poor rural population had in-house access to piped water. The survey also showed that rural sanitation conditions have remained very poor, with 96 percent of the rural population in 2012 relying exclusively on outdoor pit latrines. These difficult conditions are aggravated by the often harsh climatic conditions and result in significant hardship for the rural population in general, and for women and children in particular.

  1. Low access rates and deteriorating services are a constraint to the development process – particularly in rural areas. The economic impact of poor WSS—in both urban and rural areas—is estimated to cost the country about US$116 million per year (or 1.79 percent of GDP, of which half is direct financial losses).4 These economic costs reflect in part, the adverse effects of inadequate water services on public health and general quality of life. Among water-related diseases in the Kyrgyz Republic, the most frequent one is typhoid fever. In 2007 recorded typhoid fever and paratyphoid morbidity (186 and 90 cases respectively) increased by 140 percent and was mainly caused by inadequate access to safe drinking water. About 40–45 percent of infectious diseases are helminthosis, caused by poor personal hygiene practices as well as by poor quality of drinking water5.

  1. In recognition of these issues, the Government of Kyrgyz Republic has directed financial and technical assistance from international donors towards infrastructure investments and institutional support for sector reforms. In 2001 the Bank, in concert with the Asian Development Bank (ADB) and the UK Department for International Development (DFID), funded the “Taza Suu” rural water supply program. The program included the Bank’s Rural Water Supply and Sanitation Project (RWSSP-1, US$10 million plus a DFID contribution of US$6.3 million) and ADB’s Community Based Infrastructure Sustainable Services Project (CBISSP, US$36 million). Despite occasional difficulties in implementation and various shortcomings in technical designs and work execution, both projects progressed reasonably well and completed satisfactorily. As a result, in 2009, the Bank and DFID jointly agreed with ADB to put in place a follow-up program consisting of RWSSP-26 (US$13 million) and CBISSP (US$30 million)7.

  1. Together, RWSSP and CBISSP helped to partially address the needs of about 500 villages through an approach which focused on rehabilitation and upgrading of deteriorated assets. This first phase of the program also supported the creation of Community Drinking Water User Unions (CDWUUs), an alternative service delivery model. Based on lessons learnt, RWSSP-2 adopted a more focused approach, which involved construction of new water systems, to extended benefits of improved access to good quality water supply to around 83,000 people in 55 villages, allowing more than 3,900 households to obtain water supply connections on their premises. In addition, RWSSP-2 expanded support under the sanitation component for the rehabilitation of sanitation facilities in 18 schools along with complementary sanitation and hygiene education programs, together benefitting more than 5,000 children. The rural water supply program collectively supported the development of sector institutional capacity at the central level. Specifically, analytical outputs and technical assistance financed under the RWSSP-2, assisted the Government to resolve a number of ambiguities revolving around conflicting and overlapping mandates of various institutions within the sector. Thereafter, the responsibility for water supply and sanitation sector issues have clearly been concentrated within the Department of Drinking Water Supply and Wastewater Disposal (DDWSWD), in the State Committee for Architecture, Construction and Communal Services (GOSSTROY), a new department legally established in 2011.

  1. In parallel with the stabilization of the political system, the past few years have seen a noticeable improvement in the institutional environment of the water sector. The capacity and autonomy of DDWSWD has incrementally expanded, as demonstrated through the yearly increases in allocations from the central budget8. Furthermore, by early 2016 the DDWSWD had successfully completed, without donor support, water supply rehabilitation projects for 15 villages. Under the leadership of DDWSWD, the strategic and policy environment has also improved and with support of RWSSP-2, a Drinking Water Supply, Wastewater Disposal and Sanitation Strategy till 2026 was approved by the Government, in March 2016. The strategy provides guidance for sector developments, which under a delegated management framework promotes: (i) a clear separation of function (policy, operation and regulation), (ii) autonomy, accountability and efficiency in service delivery, (iii) principles of full cost-recovery and financial sustainability, and (iv) environmental sustainability and climate resilience. The long-term strategic objectives are to achieve universal coverage of water services; to support independence through enabling self- or private-sector financing; to protect the environment and improve public health; and to create robust institutional structures and supporting mechanisms that respond to local demands for sustainable water services.

  1. Despite this progress, a number of institutional capacity constraints still remain, limiting the transition towards sector sustainability. The responsibility for water supply and sanitation service rests with local government authorities, in accordance with the 2011 law on self-government (i.e. Municipalities in small towns and Ayil Okmotus in rural areas) – who are in turn enabled to contract operational services on an agreement basis (most often to CDWUU’s in rural villages). While the decentralization of service provision appears to be well advanced a number of issues still remain in terms of enabling sustainable service delivery in rural areas. This is evident through the results of the CDWUU operational performance analysis, carried out during preparation of the sector strategy, which indicates that only 25 percent of the 633 existing CDWUU’s are operating on a financially sustainable basis. Key issues identified include limited technical guidance, insufficient service and financial regulation at the local and central levels, as well as inadequate equipment, human capital, and funding for maintenance and expansion of services – which in effect have made it difficult for service contract operators and local authorities to sustain and increase access to quality services. In response to this issue, the ADB initiated in 2015 a technical assistance program focused specifically on institutional structures and support mechanisms required to enable sustainable water service delivery in rural areas. This technical assistance program is on-going, but preliminary findings and recommendations have been considered in the design of SRWSSDP.

  1. Policy, regulatory and institutional developments, for the promotion of sustainable rural sanitation, are less advanced. The Government’s strategy recognizes a number of key challenges related to sanitation, it outlines general objectives, some priorities areas (including a focus on WASH at schools) and provides guiding principles. However, further analytical and technical support is required to ‘map out’ the way forward and to provide a more detailed implementation strategy to achieve sustainable results under this agenda. Specifically, this includes the development of comprehensive rural sanitation strategy which would focus on: (a) strengthening the enabling environment; (b) changing and sustaining improved sanitation behaviors; (c) building markets and industry for improved sanitation; and (d) accelerating access – particularly for women, girls, the poor and vulnerable groups.

  1. The Community Drinking Water Supply and Wastewater Disposal Strategy till 2026 sets out ambitious targets for increasing access to potable water supply system and improved sanitation. In rural areas, the goal is to reach 90 percent coverage for water services and 70 percent coverage for sanitation systems by 2026. A country wide assessment, including all 1805 villages, indicates that some 651 villages require new water supply systems, while some 760 villages require substantial investments for system rehabilitation and expansion. Initial cost estimates however exceed foreseeable resources, with investment needs estimated to be in excess of US$600 million – for water supply alone. Capital investments required to achieve sanitation coverage expansion targets have not yet been reliably estimated and will depend largely upon the adopted approach for promoting rural sanitation development, which requires further analysis and strategic planning.

  1. It is within this sector and institutional context that the Sustainable Rural Water Supply and Sanitation Development Project (SRWSSDP) has been defined. Accordingly, through strategic infrastructure and institutional support activities, SRWSSDP will build upon and leverage recent advancements in the sector and lessons from previous projects to assist the Government to develop, implement and institutionalize sustainable models for improved rural water supply and sanitation services. This will involve strengthening the institutions and regulatory environment at the national level and establishing systems to support local operations (including capacity building of local government entities and CDWUUs). The project has been developed in close consultation with other donors and in response to strong demand from the Government to support the rural development agenda and is informed by poverty and sector analytics.

    1. Higher Level Objectives to which the Project Contributes

  1. Water supply and sanitation services are an integral part of the World Bank’s support toward the Twin Goals of ending extreme poverty and promoting shared prosperity. There is a direct link between access to improved water services (including hygiene promotion) and the incidence of water-borne diseases and public health. Improving access reduces coping costs, leads to time savings, and increase productivity—wide economic impacts with disproportionate and direct benefits to the poor. Women and children are among those who benefit most from improved access to services.9

  1. More specifically, the project contributes to the Twin Goals and has a poverty focus, which includes design elements to target and extend benefits to the poorest households. At a programmatic level, it contributes to poverty reduction by concentrating on rural areas, which have the highest rates of poverty and vulnerability—specifically addressing access to services, which has been identified as the most significant multidimensional aspect of poverty in the country. At the activity and component level, infrastructure investments have been screened to consider existing service conditions and data related to incidents of waterborne diseases. The project will also support the development of a connection subsidy strategy and tariff mechanisms to address the needs of poorest and most vulnerable groups. Monitoring and evaluation systems have been designed to identify the proportion of project beneficiaries considered poor or in the lowest two income quintiles to track and evaluate impacts at project completion, including results across income groups.

  1. The project contributes towards Sustainable Development Goal No.6, which calls for universal and equitable access to safe and affordable drinking water, sanitation and hygiene for all by 2030. It also contributes to and is fully aligned with the World Bank’s Country Partnership Strategy for the Kyrgyz Republic 2014-2017. The planned project activities, specifically support the development of Area of Engagement 1: Public Administration and Service Delivery. At the request of the Government, SRWSSDP was introduced into the CPS programing in 2015 through a reallocation, to address urgent investment needs in the sector, ensure continuity of support after successful completion of RWSSP-2 (closed 31 October, 2014), and in recognition of the critical link between improved water services, rural development and poverty alleviation.

  1. The National Sustainable Development Strategy (NSDS) for the Kyrgyz Republic 2013-2017 emphasizes the importance of improving the system of delivery of water supply and sanitation services and recognizes the objective to achieve financial sustainability and effective management of resources at the local level.


    1. PDO

  1. The project development objectives (PDO) are to assist the Kyrgyz Republic (i) to improve access to and quality of water supply and sanitation services in the Participating Rural Communities; and (ii) to strengthen capacity of the Recipient’s institutions in the water supply and sanitation sector.

Project Beneficiaries

  1. The project is expected to benefit more than 100,000 people residing within the participating rural villages in Osh, Chui and Issyk-Kul Oblasts. The majority of beneficiaries within the project areas will be provided with access to piped water services through a new household connection10. Furthermore, some 16,000 people (mostly children), will directly benefit through the investments in sanitation facilities and associated hygiene, and behavior change interventions in schools and other eligible public institutions (for example, health clinics).

  1. Beneficiaries for the institutional strengthening activities will include national, local, government, and community-level institutions, namely: the Department of Drinking Water Supply and Wastewater Disposal (DDWSWD) within the State Agency for Architecture, Construction and Communal Services (SAACCS, also known as GOSSTROY), and Sanitary Epidemiological Surveillance (SES) units located within the Ministry of Health at the central and rayon government level; the local self-government units (Ayil Okmotus) in the participating areas; and the CDWUUs. Ultimately, the customers in the project areas will benefit through improved service delivery as a result of the institutional support and capacity-building activities at the national and local levels.

PDO Level Results Indicators

  1. Key indicators to measure progress towards achievement of the PDO include:

      1. Number of people in rural areas provided with access to an improved water source under the project;

      2. Number of people in rural areas provided with improved sanitation facilities under the project;

      3. Average hours of water supply per day in project areas;

      4. Operating Cost Coverage Ratio of service providers in project areas; and

      5. Institutional Support Plan for DDWSWD developed and approved.

  1. In addition, intermediary indicators have been identified in order to measure the more specific infrastructure and institutional objectives expected to result from each component (see Annex 1).


    1. Project Components

  1. The proposed project is a follow-on from the Second Rural Water Supply and Sanitation Project (RWSSP-2), which closed October 31, 2014, and is designed to scale-up water supply and sanitation investments and service delivery models, to new project areas, and to support the implementation (and enhance where necessary) of the Government’s sector strategy for the rural water sector. The project will build-upon the analytical outputs and lessons derived from RWSSP-2 and seeks to harness the momentum and demand for change generated through the successful implementation experience over the last 2-3 years of the project.

  1. The project will support the Government to implement strategic actions already identified and to create a programmatic framework which will guide the investment planning and implementation process. In addition, the project will take full advantage of opportunities to reduce extreme poverty by working in rural areas and extending piped water services to predominantly low-income households. This will be supported by specific activities, including developing and mainstreaming citizen engagement and gender-inclusive policies and procedures.

  1. The SRWSSDP has been structured in four components. A summary of activities to be financed under each component is provided below. Additional details are provided in Annex 2.

  1. Component 1: Water Supply Investments (US$21.1 million). This component will address the needs for rehabilitation of existing and/or construction of new water supply systems in the target areas, benefitting up to 100,000 people. The component will finance goods, works and services (including engineering design and construction supervision) and will include civil and electrical/mechanical installations for water supply production (boreholes, well-fields, intakes, etc., as well as disinfection, and pumping as required), and transmission and distribution (networks, storage, meters, etc.) to households in the project areas. This component will also finance preparatory activities including detailed engineering designs for scaling up investments under the program. Complementary institutional support activities are defined under component 3. These activities together with the infrastructure investments will support water system operations to enable sustainable service delivery.

  1. The project-financed water supply systems will reflect careful consideration of a number of important design philosophy and implementation principles, including the objective of achieving equitable access and quality of services within the project areas; individual metering for each connection (and the introduction of consumption-based billing), consideration of full life-cycle costs, including assessment of water source options, consideration of climatic factors and resilience, and the capacity support requirements of the operator. Details are provided in Annex 2. Furthermore, it is important to note that communities and local governments will be involved in identifying priority investments in their respective areas, through public consultations and meetings. Female beneficiaries and women’s groups will be encouraged to participate in order to reflect women’s voices in identifying investments of significance to them. The communities will also be involved in monitoring the quality of civil works through community monitoring processes. Costs associated with implementation of resettlement activities (as per RPF procedures) will be financed under component 1, through the central Government’s contribution to the project.

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