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Implementation Completion Report (ICR) Review - Industrial pollution control project


  
1. Project Data:   
ES Date Posted:
06/28/2000   
PROJ ID:
P009906
Appraisal
Actual
Project Name:
Industrial pollution control project
Project Costs(US $M)
 260  685
Country:
India
Loan/Credit (US $M)
 155.6  139.8
Sector, Major Sect.:
Pollution Control / Waste Management,
Environment
Cofinancing (US $M)
   
L/C Number:
C2252; L3334      
   
Board Approval (FY)
  91
Partners involved
 
Closing Date
06/30/1998 03/31/1999
         
Prepared by: Reviewed by: Group Manager: Group:  
John C. English
Andres Liebenthal Ridley Nelson OEDST

2. Project Objectives and Components:

a. Objectives
The project's overall objective was to support GOI's efforts to prevent and alleviate environmental degradation caused by industrial operations. The specific goals were to: (i) promote effective and timely enforcement of existing legislation on environmental protection regarding industrial sources; (ii) support efforts by industry to comply with existing environmental regulations, including a special effort to reach the small scale sector through the setting up of common effluent treatment facilities (CETPs); and (iii) support assessments, extension services and research in waste minimization, resource recovery and pollution abatement in industry.

b. Components
The project comprised:

(i) an institutional component designed to strengthen the Central and State Pollution Control Boards in four states; (ii) an investment component, through two Development Finance Institutions (DFIs), designed to support efforts by industry to comply with regulations through subloans and grants for: (a) the establishment of CETPs, mainly for small scale industries at sites with heavy concentrations of chemical industries; (b) individual projects undertaken by polluting industries; and (c) demonstration projects; and (iii) a technical assistance component for the assessment of environmental problems and the development of solutions, and for the preparation of feasibility studies.

c. Comments on Project Cost, Financing and Dates
The distribution of project costs were:
Appraisal Final outcome
Institutional Component 7% 2%
Investment Component
CETPs 23% ) 9% )
Individual projects 64% ) 91% 87% ) 98%
Demonstration projects 4% ) 2% )
TA component 2% <1%
Total cost $260 million $685 million


3. Achievement of Relevant Objectives:

The project's institutional objectives were only partially achieved, in particular because of delays in procuring equipment. The investment component expanded to encompass 98% of expenditure, entirely because of the expansion of spending on individual projects. Some 70 projects were supported, of which about 75% were for medium to large-scale projects in the chemical and related industries, as intended. CETPs, however, were slow to materialize, because of bureaucratic hurdles, and there is some question as to whether they are being operated in the most effective manner. Demonstration projects also suffered from procedural delays. The TA funding was greatly underutilized.

4. Significant Outcomes/Impacts:

Most of the funding was used, as intended, to support pollution control in the chemical industries. The facilities financed appear to be appropriate and "have generated their intended benefits" (ICR para. 70).

5. Significant Shortcomings (include non-compliance with safeguard features):

Financing for individual projects became attractive because the on-lending rate under the project proved to be significantly below market rates in the early years of the project. It is reported that a significant share of the projects financed were already underway at the times the sub-loans were made. That is, a significant share of funding replaced rather than augmented private funds.

6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
UnsatisfactoryMarginally Unsatisfactory
    The majority of the funding was used for the intended purpose and most of the sub-projects financed appear to have generated their intended benefits.
Institutional Dev.:
PartialModest
Sustainability:
UnlikelyUncertain
    The ICR provides no evidence that the private facilities will not be adequately maintained. The prospects for the CETPs and institutional elements are more problematic.
Bank Performance:
DeficientUnsatisfactory
Borrower Perf.:
DeficientUnsatisfactory
Quality of ICR:
Satisfactory

7. Lessons of Broad Applicablity:

Lines of credit geared to environmentally related investment by private entities are likely to provide little assistance in achieving broader sectoral objectives.

8. Audit Recommended?  No

          Why?  

9. Comments on Quality of ICR:

The ICR provides a highly detailed assessment of the outcome of the project. At times the level of detail tends to obscure the basic message it is intending to convey.

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