NEPAL Second Rural Water Supply And Sanitation Project

NEPALSecond Rural Water Supplyand Sanitation ProjectReport No. 114286JUNE 16, 2017

2017 International Bank for Reconstructionand Development / The World Bank1818 H Street NWWashington DC 20433Telephone: 202-473-1000Internet: www.worldbank.orgThis work is a product of the staff of The WorldBank with external contributions. The findings,interpretations, and conclusions expressed inthis work do not necessarily reflect the views ofThe World Bank, its Board of ExecutiveDirectors, or the governments they represent.Attribution—Please cite the work as follows:World Bank. 2017. Project PerformanceAssessment Report: Nepal—Second RuralWater Supply and Sanitation Project.Washington, DC: World Bank.The World Bank does not guarantee theaccuracy of the data included in this work. Theboundaries, colors, denominations, and otherinformation shown on any map in this work donot imply any judgment on the part of TheWorld Bank concerning the legal status of anyterritory or the endorsement or acceptance ofsuch boundaries.RIGHTS AND PERMISSIONSThe material in this work is subject to copyright.Because The World Bank encouragesdissemination of its knowledge, this work may bereproduced, in whole or in part, fornoncommercial purposes as long as fullattribution to this work is given.Any queries on rights and licenses, includingsubsidiary rights, should be addressed toWorld Bank Publications, The World BankGroup, 1818 H Street NW, Washington, DC20433, USA; fax: 202-522-2625; e-mail:pubrights@worldbank.org.

Report No: 114286PROJECT PERFORMANCE ASSESSMENT REPORTNEPALSECOND RURAL WATER SUPPLY AND SANITATION PROJECTLOAN/CREDIT NO. C3911; CH369June 16, 2017Financial, Private Sector, and Sustainable DevelopmentIndependent Evaluation Group

iiCurrency Equivalents (annual averages)Currency Unit Nepalese rupees (NPR)200420052006200720082009201020112012US 1.00US 1.00US 1.00US 1.00US 1.00US 1.00US 1.00US 1.00US 1.00NPR 73.00NPR 72.00NPR 72.00NPR 70.00NPR 63.98NPR 77.47NPR 74.59NPR 71.44NPR 84.99All dollar amounts are U.S. dollars unless otherwise indicated.Abbreviations and AcronymsADBDFIDERRFINNIDAFund WTSSAsian Development BankU.K. Department for International Developmenteconomic rate of returnFinnish International Development AgencyRural Water Supply and Sanitation Fund Development BoardImplementation Completion and Results ReportInternational Development AssociationIndependent Evaluation Groupmonitoring and evaluationmanagement information systemNepalese rupeesproject development objectivesProject Performance Assessment ReportRural Water Supply and SanitationUnited Nations International Children’s FundVillage Development CommitteeVillage Maintenance WorkerWater and Sanitation Users CommitteeWomen’s Technical Support ServicesFiscal YearGovernment:July 16–July 15Director-General, Independent Evaluation:Director, IEG Financial, Private Sector, Sustainable Development:Manager, IEG Sustainable Development:Task Manager:Caroline HeiderJosé C. Carbajo MartínezMidori MakinoArun Arya

iiiContentsPrincipal Ratings . viKey Staff Responsible. viPreface. viiiSummary . ix1. Background and Context. 1Country Background . 1Project Context. 12. Objectives, Design, and their Relevance . 2Objectives . 2Relevance of Objectives . 2Design . 3Components . 3Implementation Arrangements. 3Monitoring and Evaluation Design . 4Relevance of Design . 5Relevance of Project Design to Objectives . 5Quality of Results Framework . 53. Implementation . 6Planned versus Actual Expenditure by Component. 6Implementation Experience . 6Safeguards Compliance . 7Financial Management and Procurement. 84. Achievement of the Objectives . 9Objective 1: Improve Sector Institutional Performance and Mainstream Fund BoardApproach . 9Improve Sector Institutional Performance . 9Outputs . 9Outcomes . 10Mainstream Fund-Board Approach in the Government’s System . 10Outputs . 10This report was prepared by Arun Arya, task manager, with support from Madhu Sudan Gautam,consultant, who assessed the project in November–December, 2016. The report was peer-reviewed byRasmus Heltberg and Victor Vergara; and panel-reviewed by Ridley Nelson, consultant. CarlaFabiola Chacaltana, Sushila Rai, and Romayne Pereira provided administrative support.

ivOutcomes . 11Objective 2: Inclusive Water Supply and Sanitation User Groups . 12Outputs . 12Outcomes . 13Objective 3: Sustainable Health, Hygiene, and Productivity Benefits . 15Outputs . 15Outcomes . 155. Efficiency . 166. Ratings . 18Outcome . 18Risk to Development Outcome . 18World Bank Performance . 20Quality at Entry . 20Quality of Supervision . 21Borrower Performance . 21Government Performance . 21Implementing Agency Performance . 22Monitoring and Evaluation . 237. Lessons . 25References . 27Appendix A. Basic Data Sheet. 29Appendix B. Project Scheme Cycle . 33Appendix C. Project Costs . 35Appendix D. Investments by Major Donors in RWSS Sector . 37Appendix E. List of Persons Met . 39Appendix F. IEG Field Visits . 41Appendix G. Sector Performance of Rural Water Supply and Sanitation Sector in Nepal . 49Appendix H. Economic and Financial Analysis . 58Appendix I. Government Budget Allocations in the Rural Water Supply and SanitationSector . 59Appendix J. Coverage under Nepal Second RWSS Project . 60Appendix K. Key Findings of Baseline Studies . 63Appendix L. Borrower Comments . 67

TableTable 4.1. Adoption of Fund-Board Approach by Different Agencies . .11

viPrincipal RatingsICR*SatisfactoryICR gible to LowNegligible to LowSignificantWorld Bank factoryBorrower factoryOutcomeRisk to developmentoutcome* The Implementation Completion and Results Report (ICR) is a self-evaluation by the responsibleWorld Bank global practice. The ICR Review is an intermediate IEG product that seeks toindependently validate the findings of the ICR.Key Staff ResponsibleProjectAppraisalCompletionTask manager orleaderTashi TenzingWilliam KingdomSector directorSonia HammamMing ZhangCountry directorKenichi OhashiEllen Goldstein

viiIEG Mission: Improving World Bank Group development results through excellence inindependent evaluation.About this ReportThe Independent Evaluation Group assesses the programs and activities of the World Bank for two purposes:first, to ensure the integrity of the World Bank’s self-evaluation process and to verify that the World Bank’s work isproducing the expected results, and second, to help develop improved directions, policies, and procedures through thedissemination of lessons drawn from experience. As part of this work, IEG annually assesses 20–25 percent of the WorldBank’s lending operations through field work. In selecting operations for assessment, preference is given to those that areinnovative, large, or complex; those that are relevant to upcoming studies or country evaluations; those for which ExecutiveDirectors or World Bank management have requested assessments; and those that are likely to generate importantlessons.To prepare a Project Performance Assessment Report (PPAR), IEG staff examine project files and otherdocuments, visit the borrowing country to discuss the operation with the government, and other in-country stakeholders,interview World Bank staff and other donor agency staff both at headquarters and in local offices as appropriate, andapply other evaluative methods as needed.Each PPAR is subject to technical peer review, internal IEG Panel review, and management approval. Oncecleared internally, the PPAR is commented on by the responsible World Bank country management unit. The PPAR isalso sent to the borrower for review.About the IEG Rating System for Public Sector EvaluationsIEG’s use of multiple evaluation methods offers both rigor and a necessary level of flexibility to adapt tolending instrument, project design, or sectoral approach. IEG evaluators all apply the same basic method to arrive attheir project ratings. Following is the definition and rating scale used for each evaluation criterion (additional informationis available on the IEG website: http://ieg.worldbankgroup.org).Outcome: The extent to which the operation’s major relevant objectives were achieved, or are expected to beachieved, efficiently. The rating has three dimensions: relevance, efficacy, and efficiency. Relevance includes relevanceof objectives and relevance of design. Relevance of objectives is the extent to which the project’s objectives areconsistent with the country’s current development priorities and with current World Bank country and sectoralassistance strategies and corporate goals (expressed in Poverty Reduction Strategy Papers, Country AssistanceStrategies, Sector Strategy Papers, and Operational Policies). Relevance of design is the extent to which the project’sdesign is consistent with the stated objectives. Efficacy is the extent to which the project’s objectives were achieved, orare expected to be achieved, taking into account their relative importance. Efficiency is the extent to which the projectachieved, or is expected to achieve, a return higher than the opportunity cost of capital and benefits at least costcompared to alternatives. The efficiency dimension is not applied to development policy operations, which providegeneral budget support. Possible ratings for outcome: highly satisfactory, satisfactory, moderately satisfactory,moderately unsatisfactory, unsatisfactory, highly unsatisfactory.Risk to Development Outcome: The risk, at the time of evaluation, that development outcomes (or expectedoutcomes) will not be maintained (or realized). Possible ratings for risk to development outcome: high, significant,moderate, negligible to low, not evaluable.World Bank Performance: The extent to which services provided by the World Bank–ensured quality at entryof the operation and supported effective implementation through appropriate supervision (including ensuring adequatetransition arrangements for regular operation of supported activities after loan/credit closing, toward the achievement ofdevelopment outcomes. The rating has two dimensions: quality at entry and quality of supervision. Possible ratings forWorld Bank performance: highly satisfactory, satisfactory, moderately satisfactory, moderately unsatisfactory,unsatisfactory, highly unsatisfactory.Borrower Performance: The extent to which the borrower (including the government and implementingagency or agencies) ensured quality of preparation and implementation, and complied with covenants and agreements,toward the achievement of development outcomes. The rating has two dimensions: government performance andimplementing agency(ies) performance. Possible ratings for borrower performance: highly satisfactory, satisfactory,moderately satisfactory, moderately unsatisfactory, unsatisfactory, highly unsatisfactory.