Operational Manual 16 May 2007

Transcription

1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Andhra Pradesh Rural Water Scheme Operational Manual 16 May 2007 E

2 CURRENCY EQUIVALENTS (Exchange Rate Effective January 4, 2007) Currency Unit = Indian Rupees (Rs) Rs 44.3 US$0.023 = US$1 Rs1 ABBREVIATIONS AND ACRONYMS AP APL BPL CAS CSWS GPOBA (hh) MPN/ml MOU NGO OBA UV WHIN WHO WSP RWS Andhra Pradesh Above Poverty Line Below Poverty Line Country Assistance Strategy Community Safe Water Scheme Global Partnership on Output-Based Aid Households Most Probable Number per milliliter Memorandum of Understanding Non-Government Organization Output Based Aid Ultraviolet Water Health International Ltd. World Health Organization Water and Sanitation Program (World Bank) Rural Water Supply Department - 2 -

3 CONTENTS 1. INTRODUCTION... 4 A.1. Project Background...4 A.2. Basic Structure of the OBA Scheme...4 A.3. Target Area...4 A.4. Structure of the Project Operations Manual...4 B. OVERVIEW OF THE OPERATIONS... 5 B.1. Contractual arrangements...5 B.2. Project size and investment details...7 B.3. Project Preparation and Implementation...7 B3.1 Village Selection & Needs Assessment...7 B3.2 Project preparation activities...9 B3.3 Construction and Installation...10 B3.4 Plant Commissioning, Registration of Households and Plant Operation...10 B.4. Project schedule...11 C. PROJECT IMPLEMENTATION...12 C.1. Financial Management and Project Accounting...12 C1.1 Financial Management...12 C1.2 Project Accounting...12 C.2. Flow of Funds and disbursement arrangements...12 C.3. Project Audit...13 C.4. Procurement...14 C4.1 Procurement Plan...14 C4.2 Consultants' Services...15 C.5. Environmental and Social Compliance...15 C.6. Output Monitoring...16 C.7. Reporting Obligations...17 Annexes Annex 1: Output Verification Report (OVR) Annex 2: Monitoring and Verification Indicators - 3 -

4 1. INTRODUCTION A.1. Project Background In the State of Andhra Pradesh, where this project will take place, there are approximately 17 million people, or over 22% of the total state population, which experience bacteriological contamination of water. Especially, rural households at the coastal districts of AP (Krishna, East and West Godavari, Prakasam and Guntur) are the most affected. Thus, there is a clear need for increased investment in the water sector to improve access to higher quality water resources for the rural poor in AP. In the case of water quality, education is important for preventing illness. Given various social, caste and other issues it is clear that the program needs to provide for the rural communities to be educated to improve awareness of the risks posed by the consumption of unsafe water. A.2. Basic Structure of the OBA Scheme GPOBA has a mandate to fund pro-poor output-based subsidies in the delivery of the basic infrastructure services, including water and sanitation, with special emphasis on the poorest countries, of which the proposed OBA pilot in Indian State of AP would help fulfill that mandate. This project promotes public-private partnership in the water sector through the creation of a Community Supply Water Scheme (CSWS) linking the village government (or Panchayat ) with a Non-Government Organization (NGO) and a private sector provider. The project is for the development of 25 individual Community Supply Water Schemes targeting 75,000 people (25 villages x 500 households x 6 people). Each CSWS involves the construction, installation, commissioning and operation of a water treatment plant connected to a water distribution point from which users will purchase water in jerry cans. The project does not envisage domestic connections. Each CSWS involves the community (represented by the village Panchayat), Naandi, an NGO as project manager, and a water operator Water Health India Private (WHIN). The scheme provides a one-off subscription subsidy linked to the provision of clean water and these subsidy payments are largely made after the delivery of agreed outputs. These outputs include registration of the households to the scheme (represented by the purchase of a 12/20 liter jerry can), and three months of billed user fee consumption (represented by number of sold Water Coupons). The OBA pilots require that tariffs paid by users for consumption should cover operation and maintenance costs, 1 user-fee collection costs, and loan repayment. This requirement helps to ensure that the project is sustainable in the long-term without subsidies. A.3. Target Area The project targets 25 villages in Krishna, Guntur and West Godavari Districts of Andhra Pradesh state. A.4. Structure of the Project Operations Manual This project operations manual (Operations Manual) sets out the arrangements agreed by the parties for the implementation of the Project. It presents the project cycle and relevant details for each phase of the project. Additionally the manual sets out the procurement, financial management, disbursement and monitoring arrangements. This Operations Manual is intended to be a reference document for project partners, documenting the key steps and requirements at each stage of the project. Any changes to the Operations Manual during the course of implementing the project will need to be approved by the World Bank. 1 Each village will have a plant operator who will be employed and trained by WHI

5 B. OVERVIEW OF THE OPERATIONS B.1. Contractual arrangements Figure 1 below summarizes the contractual arrangements of the OBA scheme. Payment per village against output verified by Independent verification Agent: GPOBA Grant Agreement Naandi Foundation (Project Manager) Direct withdrawal request MOU detailing roles and responsibilities Water Health India (Operator) Provides prefinancing to be repaid through OBA Program mgmt Tripartite Performance Agreement Village Panchayat Community contribution (20%) Provides long term loan (recovered through tariffs) Key: Fund flow: Contractual relationship Information flow: Community Safe Water Scheme Verifies and issues opinion on outputs reached WB WSP Independent Verification Agent Each CSWS involves the community (represented by the village Panchayat), Naandi, an NGO as project manager, and a water operator WHIN. The roles of each are defined below. 1. Community, as represented by the Village Panchayat (village council): The Village Panchayat will provide a regular source of water and land for the water purification system with the necessary perimeter fence to secure the location for the treatment facility. It will further assist the project by providing electricity at a pre-agreed tariff. Upon termination of the loan repayments by Naandi and WHIN, the ownership of the assets will transfer to the Village Panchayat. 2. Naandi Foundation: Naandi will act as the Project Manager and coordinator. Naandi will be the signatory to the Grant Agreement with GPOBA. It will ensure that the project meets its deliverables. As well as being responsible for delivering the overall CSWS, Naandi will be responsible for undertaking campaigns to educate rural communities on the importance of safe drinking water and incentivising the local community to use the treated water of the CSWS to meet their basic needs. Upon completion of the construction of the purification plant, Naandi will also be responsible for collecting user-fees. 3. Water Health India: WHIN will construct and install 25 ultraviolet (UV) filter water purification plants (with associated storage tanks) at identified village sites. WHIN will be responsible to operate and maintain the plants and will provide long-term loans to the different villages to cover part of the construction costs. In addition, WHIN will share project implementation risks by issuing operational performance guarantees

6 The following contractual arrangements are envisaged: 1. Grant agreement between GPOBA and Naandi Foundation 2. Tripartite Performance Agreement (see Annex E): a legally binding document between Naandi, WHIN and each Village Panchayat. In each agreement, a village will commit to: Providing unencumbered access to a raw water source Provide a piece of land which belongs to the Village Panchayat for the treatment plant and storage tank Providing electricity at a pre-agreed tariff for the treatment plant, Village contribution equivalent to 20% of the total cost of setting up and operating the plant in the village (US$10,000). At least 5% of the 20% local contribution must come from the users themselves, Permitting collection of user fee by Naandi or its authorized representative. Free and unencumbered land use for the CSWS site, as well as the minimum 20% community contribution, will be a condition precedent for the Tripartite Performance Agreement effectiveness. In addition, the agreement will set out the eventual transfer of ownership of the assets after the loans have been repaid by Naandi/WHIN. This time period is anticipated to be seven years. 3. The relationship between Naandi and WHIN will be in accordance to a Memorandum of Understanding (MOU). The roles and responsibilities of the various actors will be: Naandi Foundation : (i) Project Manager, (ii) education and consumption adherence campaign, (iii) together with WHIN provides pre-financing for the sum of US$32,000 per project 2, and (iv) user-fee collection agent. WHIN: (i) Installation, operation and maintenance of water purification plant and tank, (ii) long term lender for at least the sum of US$8,000 per village; and (iii) provider of operational performance guarantees 3, (iv) periodic water quality testing and on-going quality assurance. 4. The Water and Sanitation Program (WSP), a partnership program between the World Bank and the United Nations Development Program to provide safe water and sanitation to developing countries, will provide support for monitoring and output-verification. Agreement has been reached that WSP staff in India will produce a comprehensive report of project process and outcome, which serves as a reference for verification of subsidy disbursements. 2 Commercial borrowing is expected to be raised by Naandi by using GPOBA award letter as collateral and Operational Guarantees provided by WHIN the technology partner. 3 MoU will detail the specifications and compliance of the installations services as defined by Indian legislation and regulations governing environmental, technical, metrology and quality standards

7 B.2. Project size and investment details The total project cost is $1,250,000 of which 64% ($800,000) will be covered by the GPOBA subsidy. A further 20% ($250,000) will be sourced as a community contribution, and the remaining 16% ($200,000) through a commercial loan to be provided through WHIN. Minimum number of households expected to benefit from the CSWS is 500 (considering an average population of each Project village to be 8,000-10,000) Overall investment and GPOBA subsidy Per village (US$) For 25 villages (US$) Initial investment per water purification plant 50,000 1,250,000 % of Total Investment Community Contribution 10, ,000 20% GPOBA connection subsidy (500 $64 per hh) 32, ,000 64% Commercial borrowing 8, ,000 16% B.3. Project Preparation and Implementation B3.1 Village Selection & Needs Assessment B3.1.1 Village selection Villages will be selected on the basis of the following criteria: a. Undertake a needs assessment of a village with regard to issues related to drinking water quality, after meeting the Village Panchayat (the elected village governing body). This will include briefing the Village Panchayat on the Project Model involving provision of appropriate technology, community-mobilization activities, individual and Community level benefits e.g. health, economic, productivity-linked, etc. b. Presence of a water source (surface water, ground water etc) c. Confirmation that there is no imminent planned purified drinking water supply project in the village d. Presence of severe fecal contamination (above the WHO permissible limit of 100 MPN/ml) of drinking water resources e. Test reports to indicate that the existing water quality can be purified by U.V. Waterworks technology to meet the bacterial contamination criterion set by the Bureau of Indian Standards. In the event that these tests produce negative results (i.e. water cannot be satisfactorily purified by U.V. technology) Naandi will proceed to the selection of another village. f. Willingness and ability of the Panchayat to opt for a Community Safe Water System (CSWS) under the paid water usage scheme. This will involve initial permission, willingness/ability to provide a raw water source, in-kind contribution of land for plant installation, entering into and following a mutually agreeable tripartite agreement. g. The Panchayat is able and willing to: allow Naandi or its authorized representatives to collect user fees and charge O&M expenses to any such fee collected allow Naandi to carry out culturally-appropriate promotional activities in the village (including access to schools and school children for promotion of Safe Drinking Water - 7 -

8 Project), and facilitating an enabling environment for promotion of safe water on a user fee mode, mobilize public support and take measures for reducing /preventing activities leading to contamination of the water source and also taking-up upkeep and maintenance (including fencing) of the raw water source B3.1.2 Land issues In a good number of cases the land for the CSWS may be owned by the Village Panchayat. In some villages however, this may not be the case and lands will have to be secured from private individuals. These lands could either be donated (gifted) or purchased by the Village Panchayat. The rules governing taking possession of land will include the following: o The project will not resort to any involuntary land acquisition o All donations and purchases will be voluntary. Mechanisms will be developed not only to ensure the voluntariness but also that it will not involve any significant adverse impacts upon incomes or physical displacement. o All voluntary land transactions will meet the following criteria: (i) the land in question will be free of squatters, encroachers or other claims of encumbrances; (ii) land chosen and or proposed to be agreeable to the community for setting-up the CSWS (iii) verification of the voluntary nature of land donations in each case; (iii) due transparent measures lands will be chosen (by the community) after ensuring that water indeed will be available in that particular piece of land; (iii) verification of the voluntary nature of land donations in each case; (iii) due transparent measures will be in place; (iv) land transfers will be complete, land title will be vested in the community; and (v) provision will be made for redressal of grievances (ROG) if any. o All voluntary transactions will be documented and signed by both the parties. A certification to the above effect is essential. Naandi will establish a two member committee, one of them a senior employee of Naandi and an external Respectable Citizen, will be formed and entrusted the responsibility for certification. This certification will be verified by the Independent Verification Agent. B3.1.3 Targeting the Poor Naandi will need to document, as part of the village selection criteria, the manner in which the population to benefit has been selected. Naandi will be required to build a socio-economic-cultural profile of the households (included as well as excluded) from their existing schemes. Once, this is done, an enquiry into factors that promote, inhibit and or constrain individuals from subscribing to safe water will be done. This will form the basis for specific targeting. In this regard the following will be required and should be adequately documented as evidence to be verified by the Independent Verification Agent: an individual is entitled to the Government s white ration card Family size should be greater or equal than 5 persons Only one main earning member in the family Families with one or more children in the age-group of 0 to 14 years None or defunct piped drinking water supply at the beneficiaries home at present Construction of house from low cost material (typically mud) Reliance on traditional non-paid sources of drinking water High level of involvement and time spent by other men, women and children of the house in fetching water - 8 -

9 B3.2 Project preparation activities Once the village and beneficiary population has been selected the following activities will be undertaken in preparation of the signature of the Tripartite Agreement, namely: B3.2.1 Baseline Survey and Pre-launch Awareness Campaign Based on the initial beneficiary population identified under B3.2.1, the Safe Water Promoter engaged by Naandi Foundation will conduct a household level baseline survey which reveals water consumption patterns in the village. This survey must capture a range of demographic and socio economic data and will enable the identification of 500 poor households whose consumption of safe water will be tracked in intervals of three, six, nine, twelve and eighteen months after the plant is commissioned (one of the projects key outputs ) Naandi is also required to undertake a door-to door awareness campaign on the project, the institutions involved and the benefits of safe water. The Safe Water Promoter shall be trained to handle queries from households regarding various aspects of the project including: Charging for Water and Price of water ( user fees) Mode of sale-access e.g. at the CSWS Plant and /or through distribution in the village Registration charges Efficacy of purification technology Plant timings B3.2.2 Community contribution Naandi initiates the process of raising funds for the 20% Community Contribution. B3.2.3 Human Resources An important sustainability feature in this pilot is the recruitment and training of local men and women from the village to operate the system and run a village wide educational campaign on the benefits of consuming pathogen-free water. Naandi and WHIN will be required to employ on fair and reasonable market terms, three (3) staff for each village. Of these staff, two positions will be as technical operators and one will be the Safe Water Promoter. Naandi will ensure that at least one of these positions is covered by a woman, and will guarantee and warrant that all necessary training, support and supervision will be provided to these staff for the adequate fulfillment of their respective job descriptions. Accordingly Naandi will be responsible for any substitution of any of these positions should they be required for the successful running and operation of each CSWS. Only after the above conditions set out in sections B3.2.1 to B3.2.3 are completed, will the parties proceed to the signature of the Tripartite Performance Agreement

10 B3.3 Construction and Installation After the Tripartite Performance Agreement is signed, WHIN constructs a civil structure to house the purification equipment as well as undertakes the equipment installation. Electric supply for the plant is provided through a connection registered in the name of the Village Panchayat. WHIN tests the system to ensure that the finished or purified water quality is in line with the norms for bacterial contamination treatment set by the Bureau of Indian Standards and issues a certificate of completion of works. During this phase Naandi s role includes: a) Coordinating with the Government s Rural Water Supply (RWS) Department regarding their clearance to set up the CSWS; entering into an agreement with RWS (wherever applicable) towards commissioning of the CSWS b) Following up with the District Administration for clearance to set up the CSWS Towards the end of this phase, Naandi places an order with the cans supplier for the requisite number of plastic jerry cans in which water is made available by/to the consumers. The number of cans required is estimated on the basis of the results of the household survey conducted by the Safe Water Promoter. B3.4 Plant Commissioning, Registration of Households and Plant Operation The purification equipment will be installed and commissioned according to the terms of the Tripartite Performance Agreement to be signed between Naandi, WHIN and the village Panchayat. Households are registered as members of the plant by (1) Paying a nominal subscription charge of Rs 1, and (2) Purchasing a can (s) and buy prepaid water Rs 1.5 for a can of 20 liters or Rs 1 for a 12 liter can of purified water B3.4.1 Promotion, Sales & Education campaigns The Promotional Activities for each village should include two types: (1)Generic Promotional activities on the Need, Relevance, Benefit etc aspects of the Safe Drinking Water; and (2) Promotion of the Water Available from the CSWS over other untreated water being accessed by the villagers currently. The continuous sale of water coupons is jointly managed by the local team comprising the technical operators and the Safe Water Promoter. The SWP along with her supervisor - a Cluster Coordinator (in charge of supervising the activities of Safe Water Promoters in a cluster of 4-5 villages) will track consumption of water by individual households and institutions (e.g. schools, colleges, bakeries) in every village. They will report these figures and trends back to officers at Naandi s regional office in Vijayawada (Krishna district). These field level reports will be converted into reports to be verified by the Independent Verification Agent. The Safe Water Promoter is trained to identify households that have chosen not to register or have registered and are not coming forward to purchase water on a regular basis. B3.4.2 Operations & Maintenance Operations and Maintenance activities to facilitate the regular supply of safe water will be handled by the technical operators supervised and assisted by a team of qualified engineers and technicians employed by WHIN. They are to be trained by Naandi and WHIN to monitor input and output water quality, collect samples for period lab testing, run preventive maintenance operations, change and clean filters, address technical problems and run the plant efficiently. The CSWS will operate as a minimum from 6am to 6 pm every day from Monday to Sunday or at a schedule that ensures that there is a reasonable full access to all people in the community. WHIN is responsible for O&M for a minimum of 7 years after the plant has been commissioned. After this period, and once the assets have been

11 transferred to the ownership of the Village Panchayat, WHIN and or Naandi may provide further services to the respective village. B.4. Project schedule Activity Quarters/Activities Project Support: GPOBA Grant agreement Preliminary selection of eligible villages Appraisal Signing of Tripartite Agreement Construction Contract implementation Independent Verification Agent GPOBA Subsidy Payments Prog. Supervision Review

12 C. PROJECT IMPLEMENTATION C.1. Financial Management and Project Accounting C1.1 Financial Management Naandi will not need to maintain a separate foreign currency account in a commercial bank to receive OBA funds. Naandi will receive reimbursement of expenditure incurred by them after the outputs as defined below have been verified by the independent agent and a request is made. Naandi will maintain an administrative unit responsible for financial and budget management, reporting and accounting. Naandi will utilize its respective financial management and reporting systems which must be followed during the project's life. Naandi will maintain project financial and auditing records for a minimum period of five years after completion of the project. C1.2 Project Accounting When the grant agreement has been signed, Naandi will set up the accounting and financial management system for the GPOBA funding of sub-projects and consultants' services. Documentation on the systems will be forwarded to the GPOBA for comments and approval within 15 (fifteen) business days of grant signing. The payments to Naandi are based on outputs and on verification of the output by the Independent Verification Agent, as such no Special Account will be necessary to receive any initial advance or for subsequent reimbursements. Naandi will report to the Bank on the financial progress of the project using the calendar semester financial reports (also known as Interim Financial Reports, or IFRs). The IFR and any supporting documentation must be provided to GPOBA within one month after the end of each calendar semester. The IFR format will be customized in a format to be agreed between GPOBA and Naandi, adapted to the specific needs of the project. The IFRs will include: Financial Reports, including a statement of disbursement of funds by project activity/component by the funding source (GPOBA) on the basis of the output verification reports. physical progress report on implementation progress (Project Monitoring Reports) provided by Naandi, and Naandi will oversee compliance with the conditions agreed on with GPOBA for all villages. It will process and submit applications for funds to GPOBA, maintain accounting records for ex-post reviews and manage the external annual audit. C.2. Flow of Funds and disbursement arrangements There is to be no payment or disbursement in advance. Payments / reimbursements will be made directly by GPOBA to Naandi on a per village basis on the following outputs: 20% on plant commissioning (implies that a technical test has been undertaken and the plant produces water to the agreed standard), 60% verification of 500 hhs registered and paid subscription fees, and 20% upon verification of three months of billed user fee consumption (represented by number of sold Water Coupons for a minimum of 500 hhs)

13 Naandi will compile in the form of a Direct Withdrawal Request, and on the basis of the progress for each village CSWS and its achievement of agreed outputs, a summary application for withdrawal will be sent to GPOBA detailing the name of the village, the respective output reached, the corresponding amount for the reached output and a summary of the total amount to be reimbursed by GPOBA. The format will be in accordance with World Bank Disbursement Guidelines for Projects, dated May 1, 2006, ( Disbursement Guidelines ). Application for withdrawal or payments application would be accompanied by the relevant Output Verification Reports (OVR) by the Independent Verification Agent. Reimbursement will be on the basis of the outputs that have been confirmed by the verification agent and appropriate evidence thereof. The unit costs of each type of output will be agreed in advance and the reimbursement will be on the basis of number of outputs times unit cost of output as per the percentages indicated above. Disbursement will be made by GPOBA as a direct payment to Naandi as the Grant recipient. GPOBA will not make any advance payments. The written confirmation by the Independent Verification Agent through the OVR will include the corresponding CSWS commissioning certificate by WHI, the records demonstrating registered and paid subscription fees, and the billing records for three months providing evidence for actual use. GPOBA will subsequently make direct payments to Naandi into their existing Foreign Currency account, provided the account and such payment are in compliance of all relevant Indian laws. This aspect will be examined by Naandi and verified by the GPOBA. C.3. Project Audit There will be two types of audit: (a) Technical Audit to be undertaken by the Independent Verification Agent, and (b) Financial Audit. (a) Technical Audit to be undertaken by the Independent Verification Agent The Technical Audit will be funded through the proceeds of the Grant in an amount not to exceed US$50,000. Naandi in consultation with WSP will draw up terms of reference for the Independent Verification Agent and submit to GPOBA for approval. The technical audit engagement is expected to cover at least two years. The Independent Verification Agent will perform the following services: 1. Semi-anual technical audit of output deliveries to include: a. verification of installations; b. billing records for new connections 2. Ex-post review for each village of: - technical test undertaken after plant commissioning and the plant produces water to the agreed standard, - verification of registered and paid subscription fees, - verification of three months of billed user fee consumption. (b) Financial Audit The Financial Audit costs will be the responsibility of Naandi and will not be financed through the proceeds of the Grant. Naandi shall have its own entity financial statements audited as per the auditing standards of the Institute of Chartered Accountants of India. These financial statements will contain a separate disclosure on the project activities/accounts and will be submitted annually no later than six months after the end of the financial year. For project accounts, the Independent Verification Agent will verify that the payments as per the defined unit costs have been made to the subcontractors for the outputs certified by technical audit

14 It may be noted that audit of project accounts will be conducted as a mandatory requirement to encourage accountability, but the audited accounts will not be used as a basis for disbursements. The audit reports will be: Agency Audit Report Audited by Naandi (GPOBA project including sub-contractor s claims) Naandi s entity audited financial statements (with separate disclosure of project accounts) Independent Verification Agent and Financial Auditors (separate). Financial Auditors will be Naandi s entity auditors. Independent Verification Agent will be appointed by Naandi. C.4. Procurement All procurement packages will be prepared by Naandi Foundation directly, and will be carried out in accordance with the Procurement Plan as agreed with the World Bank. Naandi Foundation will forward the procurement packages to the World Bank for prior review and no objection. This includes specifically: (i) prior review and no objection of the proceedings for the sole source provider WHIN; and (ii) prior review and no objection of the Terms of Reference for the Independent Verification Agent needed for contract supervision, monitoring and verification of outputs. C4.1 Procurement Plan The procurement and consultant selection methods, estimated costs, prior review requirements, and time frame have been agreed upon between Naandi Foundation and the World Bank in the Procurement Plan (see, table below). This plan has been prepared during project preparation by Naandi Foundation. The Procurement Plan will be updated in agreement with the World Bank as required to reflect the actual project implementation needs. Contract No. & Type Total US$. Method UV Provider 25 OBA 800,000 Sole Source IVA for 1 Lump Monitoring & Sum verification of output services Preparatio n & Invitation 50,000 CQs September 07 Evaluation & Prior Review Award & Signing March 07 March 07 April 07 September 07 September 07 The World Bank will conduct a prior review of all contracts both for the selection of the UV Provider, and for consultant services. To streamline output-based project operations, the World Bank will not review any contract under the UV. These contracts will be subject to ex-post review by independent audit

15 C4.2 Consultants' Services Consulting Services under this Project will include services to be provided by firms and/or individual consultants, to include technical auditing services and monitoring and verification of outputs. The following selection procedures would be used for Consultants Services: (a) Quality-and-Cost-based Selection and Least-Cost Selection: All consulting service contracts valued at more than US$50,000 equivalent would be awarded through the Quality and Cost Based Selection (QCBS) and Least-Cost Selection (LCS) methods. To ensure that priority is given to the identification of suitable and qualified national consulting firms, short-lists for QCBS and LCS contracts may be comprised entirely of national consultants, provided that at least three qualified firms are available. (b) Consultant s Qualification Selection (CQ) may be used for Consultants Services contracts below an estimated contract amount of US$50,000 equivalent, for auditing, and monitoring and verification of outputs. The procurement method will be conducted using World Bank s standard bidding documents namely Consultant's Qualification Selection cf. section The appointment of the Independent Verification Agent will be subject to the approval / no objection of GPOBA, and will be effective within six months of the signature date of the Grant Agreement. Site visits will be part of the technical audit. C.5. Environmental and Social Compliance The project staff of Naandi will be directly responsible to monitor environmental compliance for each village both at the time of site selection and during project implementation. The following activities will be carried out by Naandi on a bi-annual basis: 1. The project will develop a baseline database on the existing status of water quality sources in the project villages. Baseline data will be obtained mainly from secondary sources such as the Public Health Department or any other water supply agency and a comparison is to be made by baseline data to be undertaken by Naandi. This baseline data to be undertaken by Naandi prior to installation of the unit. Both Naandi and WHIN will ensure that raw water samples at are analyzed at least three to four times for bacteriological as well as chemical contamination. The interval between analysis should be around 10 days between samples. 2. The project will also create a base line data base on the disease burden in the proposed 25 villages. This will be done mainly from information available from secondary sources from public health centres or any other health assessment report. 3. Naandi will be responsible to create an environmental screening criteria using its existing site screening criteria but strengthened by adding critical environmental indicators to include for example Indian standards for coli form count, fluoride concentration, chloride and other chemical and heavy metal contamination. 4. The project will undertake chemical and heavy metal residue water quality analysis (for the raw water) twice a year for the initial two years. 5. The project will undertake pesticide residue analysis (for the raw water) once every year. Naandi will conduct a social assessment in every village before initiating the project so as to enable developing a socio-economic profile in the context of a rural water scheme. Simultaneously, this will help in identifying issues relevant in the context of accomplishing the objectives of Inclusion, Equity, Participation, Transparency, and local level institutional development. Accordingly, interventions too will be planned for. This will also include a monitoring and evaluation framework and the indicators thereof Results of these will be captured in a village level micro plan. Naandi will share all the micro plans with and seek comments from WSP

16 C.6. Output Monitoring Naandi is overall responsible for the monitoring and verification of output deliveries and for the compliance with terms of the Grant Agreement, Tripartite Performance Agreement and MOU entered into between the different parties thereof. Naandi is thus responsible for the development of output verification procedures and the carrying out and reporting of output verification. In these regard, Naandi will oversee the services performed by WHIN. To provide for an independent verification of outputs, Naandi will in coordination with the Bank s Water and Sanitation Program (WSP) and with the no objection of GPOBA, be responsible for the contracting of an Independent Verification Agent (IVA) firm or individual that would conduct ex post reviews of the completeness, accuracy and authenticity of documentation provided for each village as well as undertake ex post physical spot checks. The findings of the IVA will be presented in an Output Verification Report (OVR). Annex 1 gives the template for the OVR. Naandi is to use these reports as certificates that outputs have been achieved when requesting disbursement of funds as per section C. The subsidy disbursements will be made upon delivery of the following outputs for each village which will be verified by the Independent Verification Agent: Indica tor # Output Item Description of the Output Proposed Means of Verification 1. Construction and installation of 25 UV water purification plants 2. Registration of the households 3. Three months of billed user fee consumption Completion and Commissioning of the Community Water Systems Represented as paid Subscription fees Represented by number of sold Water Coupons Completion report for each plant available from the Independent Verification Agent Minimum 500 hh registered for paid usage of Water ; Subscription Fee available from such HH Continued usage of Paid Water by a minimum 500 HH % Disburse ment 20% 60% 20% Annex 2 provides for the Monitoring and Verification Indicators

17 C.7. Reporting Obligations Naandi shall be responsible to monitor and evaluate the progress of the Project and prepare Project Reports for each of the 25 villages. Each Project Report shall cover the period of one calendar quarter, and shall be furnished to the World Bank not later than one month after the end of the period covered by such report. Baseline Survey Report: At the inception of the project, Naandi will give a report of incidence of water borne diseases. Subsequently an annual reconnaissance survey will be conducted to review the results of each CSWS. The IVA will be responsible for verifying this data and will report on it in his OVR. Progress Monitoring Reports: Implementation monitoring will focus on progress of the project relative to planned implementation schedules. Naandi, using its own records, will develop and submit to GPOBA semi-annually implementation reports describing project progress. The format of such report will be agreed with the Bank within one month from Grant Effectiveness. Output Verification Reports (OVR): Output monitoring is the verification of the delivery of outputs to trigger GPOBA subsidy payments. The monitoring and verification of actual outputs for certification and subsidy disbursement will be undertaken by the Independent Verification Agent supported by the Water and Sanitation Program (WSP) for monitoring and tracking purposes. Copies will be furnished to Naandi and the Government Authority, the Department of Drinking Water, Ministry of Rural Development, AP for information purposes. Annex 1 contains the template for such reporting obligations. Post Project Completion Report At the end of the Grant period, Naandi will prepare a Post Project Completion Report no later than six months after the Closing Date according to the data sheet for Monitoring and Verification Indicators attached as Annex 2. In addition, Naandi shall furnish the Post Project Completion Reports to GPOBA no later than one month after the first and second anniversaries of the Closing Date, respectively

18 Annexes to the OBA for Rural Water Supply in Andhra Pradesh Operations Manual Contents: Annex 1: Output Verification Report (OVR) Annex 2: Monitoring and Verification Indicators

19 Annex 1: Output Verification Report (OVR) Village Name & Location Output Verification Report Date of verification: No. of OVR issued: Name of verifier Outcome/Result delivered 1 Construction and installation of 25 UV water purification plants Means of Verification Date of verification Comments/Observations Completion report for each 1. plant available from the Independent Verification Agent Registration of the households Minimum 500 hh registered for paid usage of Water ; Subscription Fee available from such HH 2. Three months of billed user fee consumption Continued usage of Paid Water by a minimum 500 HH 3. Comments to verification: Recommendations Attachments: 1. List of participants in output verification 2. Map of project area showing location of output(s) 3. List of registered households 4. Billing records for water sold 5. Commissioning certificates

20 Annex to the OVR per village: The respective village OVR must be accompanied by the following additional information : Additional verification items 1 No. of Households making upfront cash contribution for the project against No. of households Planned to be mobilized. 2 No. of BPL / white ration card households reached with safe drinking water. Description Village Panchayat will mobilize their financial contribution with the support of Naandi Team. Give details on how this was achieved for this particular village One of the prime objectives of GPOBA support is to reach at least 500 households below the poverty line. Above this the project may reach additional no. of households who are either BPL or APL. Attachments 1. Register of household contribution 2. Minutes of Panchayat meeting 3. Bank statement of Village Panchayat demonstrating community contribution in place or statement submitted by Naandi Foundation to Village Panchayat giving details of Cash Contributions received Household-wise 1. No. of water coupons sold in the proceeding months to BPL households in the project operation 2. Register of BPL households 3 No. of households discontinuing use of unsafe water for drinking purpose 4 Other A project inventory will be developed on safe drinking water sources available for the Village Panchayat. A household visit questionnaire will be developed and will be canvassed by Naandi Safe Water Promoter on a periodic basis to each and every household. The outputs of the questionnaire will be tabulated and developed as a report. Report of Household visit questionnaires on healthy practices

21 Annex 2: Monitoring and Verification Indicators for total number of villages Naandi Foundation, will also conduct audits of the project as designated in the Grant Agreement, and will provide the necessary information to complete the table below. Output Based Aid to India State of Andhra Pradesh for Rural Community Water Project Verifiable Project Indicators Project Characteristics Project output(s) Poverty targeting (surveys, community decisions, geographic) OBA design period Planned implementation period for outputs months months Water borne diseases Baseline survey of project villages will be done at the inception of the project, which will give a report of incidence of water borne diseases. Subsequently an annual reconnaissance survey will be conducted to see the results Financing Investment grants Private sector investment finance, if any (own funds/loans) Private sector finance mobilized for investments Project Outcome Investment cost per hh Subsidy per hh Equivalent Grant assistance per household connected Outreach of OBA grant(s) to poor population GPOBA payments proceeding according to plan (Y/N)? Payments delay, if any Local co-funding supplied as planned (Y/N)? Tariff adjustment clauses respected OBA service provider before project (public/private) OBA service provider after project (public/private) User assessment of project (no/poor/fair/good/very good) Degree of local capacity building (none, low, medium, high) Means of dissemination of lessons learned, if any No. of beneficiary registered households No. of sold water cans (12 lts and/ or 20 lts) Water sales per year Service availability (daily average) Water tariff Affordability ratio 1) USD ths USD ths USD USD USD pct. months no. no. m3 h/day US$/m3 pct GPOBA Donors Govt. Local Replicability

22 Pilot scheme or replication? Scheme introduced to other potential financiers (Y/N)? Scheme considered for replication/replicated (Y/N)? Funding of replications if any (government, donors) 1) Average water bill per household per month divided by average monthly household expenditure