|1. Project Data:
ICR Review Date Posted:
|Sri Lanka: Puttalam Housing Project
Project Costs(US $M)
Loan/Credit (US $M)
Cofinancing (US $M)
Board Approval Date
|Housing construction (52%), Water supply (31%), General public administration sector (7%), Flood protection (5%), Roads and highways (5%)|
|Pollution management and environmental health (25% - P)
Conflict prevention and post-conflict reconstruction (25% - P)
Urban services and housing for the poor (24% - P)
Social safety nets (13% - S)
Personal and property rights (13% - S)|
||ICR Review Coordinator:
||George T. K. Pitman
|2. Project Objectives and Components:|
a. Objectives:The project development objective as stated in the Project Appraisal Document (PAD, page 2) was:
According to the Financing Agreement (page 4) the objective of the Project was:
"to support the integration of Internally Displaced Persons in Puttalam by upgrading and improving the habitat, water and sanitation facilities of both Internally Displaced Persons and selected non-Internally Displaced Persons, and providing eligible Internally Displaced Persons in refugee camps with housing".
The review uses the objective statement from the Financing Agreement as it is more specific.
"to assist the Recipient in contributing to the social and economic integration of Internally Displaced Persons in Puttalam by upgrading and improving the habitat, water and sanitation facilities of Beneficiaries and providing eligible Internally Displaced Persons with permanent housing".
The project development objective was revised in November 2009. The revised objective was:
The revised objective is essentially the same as the original Financing Agreement objective except the target for beneficiaries for housing was expanded to include a limited number of non-Internally Displaced Persons in the host communities.
"to support the integration of Internally Displaced Persons in Puttalam by upgrading and improving the habitat, water and sanitation facilities of both Internally Displaced Persons and select non-Internally Displaced Persons, and providing eligible Internally Displaced Persons in refugee camps and a limited number of non-Internally Displaced Persons in the host communities with housing.
b. Were the project objectives/key associated outcome targets revised during implementation?
If yes, did the Board approve the revised objectives/key associated outcome targets?
Date of Board Approval: 11/11/2009
c. Components:Original Components
1: Housing Assistance (appraisal estimate US$16.1 million, actual cost US$17.6 million). "This component would provide grants apportioned across the 141 refugee camps in Puttalam District. The housing support cash grant would be Rs. 250,000 to construct a new house and Rs.100,000 to complete construction of a partly-completed house. The release of the grant installments to beneficiary bank accounts would be contingent upon meeting specified construction milestones as verified by technical officers, and the beneficiary would have six months to complete construction. It was expected that the housing component would be phased over four years with 1,463 houses targeted for completion in 2007; 2,201 houses in 2008; 2,031 in 2009; and 2,190 houses in 2010. If there was a risk of building material scarcity, the project would facilitate (where requested) the procurement of construction material in bulk to mitigate the risk of price escalation, supply constraints and unsustainable resource extraction. Beneficiaries, however, would retain the prerogative to independently procure their own materials if they choose to.
A household within a refugee camp would have to meet certain criteria to be entitled to housing Assistance: (i) It must have title to land; (ii) the head of the household and the majority of household members must live in the camp (according to United Nations High Commissioner for Refugees (UNHCR) Survey 2006 and Social Assessment 2006); (iii) the household should not have a permanent house in Puttalam or received similar housing assistance in its place of origin (iv) It should have had a temporary or partly-completed house within a camp as of April 2006 (according to UNHCR Survey). If the household had no clear title to the land on which the non-permanent house is situated, it should have at least possessed land as at such date where the title could be subsequently regularized prior to construction.
Prescriptive deeds would not be acceptable as this would trigger IDA'S operational policy on land acquisition and would therefore not be included under the Credit. The deed of prescriptive title under Sri Lankan law stipulates that a person or family encroaching on private land without interruption for 10 years can claim ownership and can automatically have absolute ownership after 20 years.
Some IDP communities living in environmentally unsustainable camps might need to be relocated on a voluntary basis. Should the situation arise, the Government was expected to provide alternate land with legal title. An Environment and Social Safeguards Framework includes guidelines to prepare a Resettlement Action Plan should the eventuality arise at a future date. The District Secretariat was to ensure adherence to the government’s environmental guidelines on the extraction of resources."
At restructuring, following revisions were made to the component 1 "Housing Assistance":
- The size of the housing grant for temporary houses was increased from Rupees 250,000 to Rupees 325,000 to ensure consistency across this and the North East Housing Project.
- The 2009 restructuring extended the benefits of Component 1 from only the Internally Displaced Persons in selected refugee camps to an additional number non-Internally Displaced Persons households in adjacent communities across four divisions in Puttalam district. This change aimed at improving social cohesion across communities served by the the Project by allowing a larger number of households to be eligible for assistance.
2: Water, Sanitation, Environment Mitigation, and Settlement Plans (appraisal estimate US$15.9 million, actual cost US$5.8 million).The component would provide water and sanitation to 136 refugee camps and select non IDP villages. The National Water Supply and Drainage Board (NWSDB) undertook a concept feasibility study to map groundwater sources, report on water availability, water quality, and source yield. Based on this study, pumping sites would be strategically located within a demarcated zone and safe water distributed to refugee camps and non IDP villages through a system of storage tanks and pipes, or pumped through tube wells. The type of scheme would depend on location and ground water condition. Stand posts would be considered the basic level; however households opting for a higher service level such as yard taps and or house connections would be able to do so provided they pay the additional cost for the higher service level and the source yield is adequate.
The project would provide drinking water to 13,584 IDP families and 3,291 non IDP families. Where services would be provided through connecting pipelines, existing permanent houses which would not be entitled for housing assistance would be brought under the local water and sanitation sub-projects. The population living in the vicinity of the water source (off-camp source) and villages en route to the transmission pipe would be included under the project where necessary to ensure wider community participation in sustainable water supply.
All 7,885 IDP households that receive housing support cash grants would construct appropriate latrines. The grant includes provision for the toilet.
3: Capacity Building and Monitoring (appraisal estimate US$0.8 million, actual cost US$1.3 million).The component will support a comprehensive technical assistance program to ensure smooth implementation. This will include: (a) Housing Assessment Survey, (b) Land Task Force. (c) Continuous Social Impact Assessment, (d) Technical Audit, (e) Communications Campaign, (f) Skills Training, and (f) Environmental Audit.
4: Project Management (appraisal estimate US$1.3 million, actual cost US$0.9 million). The component will provided project management and implementation support for the project. The IDA Credit would finance the incremental operating costs of the Puttalam Project Unit (PPU) . The incremental operating costs include: (a) Project management costs, (b) PPU staff salaries including travel costs, per diem for PPU staff, vehicle maintenance, fuel and insurance costs, costs of supervision field visits (travel costs and per diem), office supplies and communications expenses and such other administrative expenses arising through Project implementation, but excluding salaries o f the Recipient’s civil servants, and (c) the grievance redressal mechanism (that is travel costs and per diem for grievance redressal mechanism members).
d. Comments on Project Cost, Financing, Borrower Contribution, and DatesProject cost and Financing:
- Total project cost was US$25.2 million at closure, 74% of the appraisal estimate of US$34.2 million. The main reduction was in Component 2 (Water, Sanitation, Environment Mitigation, and Settlement Plans) as four out of twelve planned water supply schemes were not constructed due to lack of water source. In addition, at restructuring, an amount of US$ 0.9 million was reallocated from the physical contingencies under water and sanitation to the housing grant category. This implied that out of US$ 17.0 million for the housing component, a total of US$ 1.84 million was allocated to finance non-Internally Displaced Persons housing.
- At appraisal, IDA committed 21.7 million Special Drawing Rights (SDRs), equivalent to US$32.0 million. At project completion, 5.99 million SDR was cancelled, and the net disbursement was SDR 15.71 million, equivalent to US$23.3 million.
Borrower Contribution: US$2.2 million, the same as the appraisal estimate.
Dates: The closing date was extended by six months from June 30, 2011 to December 31, 2011 to complete pending activities under the infrastructure component.
|3. Relevance of Objectives & Design:|
a. Relevance of Objectives:Original objectives: High.
Project objectives were and remain relevant to the needs of Sri Lanka. After the cessation of civil conflict in 2006, the majority of Internally Displaced Peoples (IDPs) were housed in the district of Puttalam in north west Sri Lanka where 63,145 persons (or 15,480 families) lived in 141 refugee camps. Of these, 41% were children under the age of 18 who had known no other home than Puttalam. Due to security considerations, 96% of the IDPs in Puttalam indicated that they intended to settle down there and not return to the North, and almost three-quarters of them had bought land in Puttalam demonstrating a resolve to remain there. Of the IDPs in Puttalam displaced since 1989, 5,653 families lived in temporary thatched houses, 2,232 families in partly-completed houses and 1,093 families in permanent houses. Another 6,501 families, who are largely the married children of the original IDPs had no house of their own and lived with their extended families. Therefore, a total of 12,154 new houses and completions 2,232 of partially constructed units was required to address the housing needs of the Puttalam IDPs. Additionally, the refugee camps lacked access to safe drinking water, sanitation, drainage, health care and education. The refugee camps in Puttalam were initially anticipated to be of temporary duration and there was no investment in basic infrastructure. Thus project objectives to provide drinking water, sanitation and environment management was relevant as it was intended to upgrade the refugee camps into sustainable habitat and integrate them with the surrounding communities.
The objective of the project remains relevant to the Bank's Country Partnership Strategy for the period FY 2013-16 which aims to support improvements in living standards and social inclusion in order to ensure the benefits of rapid growth and higher quality services are broadly shared. Activities in this area include restoration of basic infrastructure, housing construction, and cash for work as well as support for starting new businesses in the conflict affected regions of the country.
The project objective was in line with the Government's development strategy to rehabilitate the conflict affected areas and encourage the return of Internally Displaced Persons.
Revised objectives: High.
The project objectives were restructured due to the emerging tensions between the host communities and the Internally Displaced Peoples. The project development objective was revised to include a limited number of the non-Internally Displaced Persons households in adjacent communities across four divisions in Puttalam district. The restructuring was intended to facilitate improvement of social cohesion within communities served in the project areas.
b. Relevance of Design:Original design: Modest.
The direct financing of activities aimed at the rehabilitation of the basic infrastructure such as water and sanitation and housing, and roads was relevant to assisting economic and social reunification. Selection criteria for beneficiary selection were relevant, as were the inclusion of social grievance mechanism, provision to move from environmentally hazardous areas and measures to mitigate cost-escalation. There was, however, no clear causal chain between these activities, their expected outputs and the attainment of the development objectives of social and economic integration.
Revised design: Substantial.
After the project approval, the Government pointed out that the United Nations High Commissioner for Refugees (UNHCR 2006) Survey had omitted those Internally Displaced Persons households who in fact had a temporary house but were classified as those without a temporary house and, therefore, had been omitted from the list. The Government found, through surveys and an Independent Housing Damage Assessment that a number of deserving families met the selection criteria and that the proportion of the temporary houses and semi-built houses is slightly different from that surveyed by the UNHCR 2006 Survey. In response to tensions between the host communities and the Internally Displaced Persons regarding housing reconstruction, the project was restructured to include limited number of host communities for housing grants. Thus the revised design removed some of the impediments to economic and social reunification.
|4. Achievement of Objectives (Efficacy) :|
To assist the Recipient in contributing to the social and economic integration of Internally Displaced Persons in Puttalam by upgrading and improving the habitat, water and sanitation facilities of Beneficiaries and providing eligible Internally Displaced Persons with permanent housing. The project objective comprises two sub-objectives: (a) social integration and (b) economic integration. These are discussed below.
(a) To assist the Recipient in contributing to the social integration of Internally Displaced Persons: modest
The project assisted in upgrading and reconstructing the houses of IDPs. About 98 percent of the targeted housing units were constructed within the allocated budget, with some initial delays in implementation. The project facilitated construction of 4987 new houses (compared to the original target of 5653 and revised target of 4350) and 1493 semi-permanent houses (compared to the target of 2232).
In some cases the quality of housing construction was poor. The implementation Unit increased the number of Technical Officers to improve the quality of construction (ICR p. 10). Also, support was provided to female headed households who were facing difficulties in completing their houses.
Water and Sanitation facilities were improved to a limited extent. The project assisted in providing safe drinking water to about 40 percent of the target number of families. The target was not achieved because four out of twelve planned water supply schemes were not constructed due to lack of water source.
The project provided water connections to 3754 families in 69 camps and 2373 families in 19 host villages. The sanitation sub-component contributed to construction of latrines for 6934 new and reconstructed houses. In addition, it facilitated construction of 1669 latrines as part of the sanitation grant to the Internally Displaced Persons and community toilets in schools, and health centers.
The projects assisted in the formation of the Community Based Organizations. These organizations contributed to social integration by creating an enabling environment through which different segments of the Internally Displaced Persons and non-Internally Displaced Persons managed the water supply assets as a common property in Puttalam. The Community Based Organizations received basic training in water quality monitoring. The ICR does not provide figures for the number of Community Based Organizations that were established. In terms of O&M of the water supply schemes, the CBOs were trained to better manage water supply schemes. However, the ICR (p. 17) reports that institutional support to the CBOs would be required to ensure sustainability.
The ICR (p. 38) reports that benefits of improvements in water and sanitation included reduction in health related expenditures and thus savings in treatment of diarrhea disease and value of less workers falling sick with diarrhea. Other benefits to the consumer of water and sanitation services include value of time savings due to access to water and sanitation and possible other indirect benefits like household switch away from more expensive water sources However, it does not provide any evidence.
The habitat of IDPs was improved. Rehabilitation of the houses was the only way to return the refugees to their place of origin. The provision of housing to the Internally Displaced Persons improved social integration as the IDPs could search for work.
(b) To assist the Recipient in contributing to the economic integration of Internally Displaced Persons: substantial
About 149 km of roads were improved. The ICR reports that the improvement of access roads and drainage facilitated increase in economic activity and thus, indirectly contributed to job creation. The improvements in roads enhanced connectivity within the camps and between the camp and the nearby trading towns in Puttalam.
The project assisted in developing construction skills among the Puttalam IDPs which they used to build their houses and provide labor for others. About 500 workers benefited from the skills training program.
To support the integration of Internally Displaced Persons in Puttalam by upgrading and improving the habitat, water and sanitation facilities of both Internally Displaced Persons and select non-Internally Displaced Persons, and providing eligible Internally Displaced Persons in refugee camps and a limited number of non-Internally Displaced Persons in the host communities with housing - is rated substantial.
The outputs and outcomes for the revised objective for the Internally Displaced Persons are the same as for the original development objective. For the non-Internally Displaced Persons 519 houses were completed out of the target of 600.
At appraisal it was assumed that there was a multiplier effect of new housing construction i.e. each dollar spent on construction would lead to wage increase of about US$ 0.34 in the local economy in Puttalam. It was expected that about 543 jobs would be created as a result of the housing construction. The skills training program was expected to increase individual incomes of the job-training beneficiaries by an average of about US$ 1,115 per annum.
By completion, the project facilitated construction of 5441 new houses and 1493 semi-permanent houses. About 500 construction workers were trained. The direct benefits include the value of the new housing stock and the incremental value of the reconstructed housing stocks. The indirect benefits from the project included multiplier impacts of wage incomes of construction workers generated from the housing construction. It is expected that the values of the houses constructed would appreciate over time in the project area at an annual rate of 6 percent. In order to compute the multiplier impacts of wage income and construction expenditures a multiplier of 1.4 was used in this analysis. It is assumed that the trained workers would earn additional wage incomes for the next 15 years of their productive life.
At an 8 percent rate of interest and 4 percent appreciation in house values, the Benefit: Cost ratio was 3.75. The Net Present Value at an 8% discount rate was Rs. 6,096 million.
The water and sanitation investments yielded slightly lower returns measured in terms of Benefit: Cost ratio and Net Present Value of cost and benefit streams. At 8% rate of interest the Benefit: Cost ratio was 2.3, which which is lower than the housing component Benefit: Cost ratio of 3.75. At a higher discount rate of 12 percent the project returned a Benefit: Cost ratio of 1.87.
Weak capacity of the PPU resulted in not only inadequate focus on implementation, but also limited coordination with other agencies concerned with environmental planning process. Also, Project Unit contributed to delayed responses to several critical aspects of implementation of water supply schemes, particularly with regard to procurement contracts. There were key weaknesses in financial management of the project were (i) internal audits were not conduct in a timely manner as the audits were done by GoSL staff. The internal audit department of the MOR lacked the incentives for performing the project internal audits and (ii) late submission of quarterly Financial Monitoring Reports to IDA and delays in submission of external audit reports.
Overall, the project efficiency is rated modest.
a. If available, enter the Economic Rate of Return (ERR)/Financial Rate of Return at appraisal and the re-estimated value at evaluation:
* Refers to percent of total project cost for which ERR/FRR was calculated