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Lesson
Knowledge about local context and political dynamics will be important, as well as investing enough time for dialogue and consultation with local stakeholders.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
Finding the right balance of complexity is important, and ADB should spend enough time during project preparation to decide how complex or simple the project scope will be. Lessons from evaluation studies indicate that projects with fewer subprojects are easier to manage and achieve better results.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
It is easier to build new infrastructure than to repair the existing infrastructure, in terms of both cost and political benefit/visibility. Local authorities and ADB have focused on new infrastructure in the past. Replacing old and leaky water lines is expensive, not because of the water pipe itself, but because of road repairs and related traffic disruption in busy, already overcrowded lanes and streets. These associated expenditures cost several times more than the water line itself, and are often underestimated.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
Future projects need to develop clear rules and obligations for efficient water sharing. ADB loan covenants need to ensure that city governments, with assistance from state and national governments, resolve cost-sharing arrangements before the project is closed and assets are transferred.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
Integrated infrastructure development also includes optimizing the design of the facilities so that cost is minimized and the service coverage maximized. This may entail sharing the use of a facility between adjacent cities if that is a cheaper alternative compared to providing standalone facilities for each city.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
ADB should promote a policy dialogue for water sector reforms at the national or state level on the best institutional arrangements for urban-rural sharing of water.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
Municipal governments need to strategize how to achieve wider water supply coverage, including exploring cross-subsidies between industrial/commercial users and household consumers, and providing subsidized connections to low-income families.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
The state government needs to provide financial incentives to encourage ULBs to take their tariff setting and revenue collection more seriously. Such incentives should be performance driven, and preferably also underpinned by accountability agreements between the state government and the ULBs.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
Tariff reform in the water sector is difficult due to cultural and political sensitivities. As such, a strategic approach to tariffs and cost recovery is needed. It may include a clear timeline to increase tariffs, and address the unwillingness to charge for water and sanitation services. A clear approach to the broader sustainability of the project needs to be set out in project proposals.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
A chicken-and-egg dilemma confronts the local governments in their efforts to enforce appropriate water tariffs. Consumers would agree to tariff increases only after services have been improved. National government policy is sympathetic to this sentiment. On the other hand, local governments cannot improve water services if they cannot collect adequate revenues.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
The use of sewage lines for evacuating excess storm drain water has led to problems of overflowing in some areas, so it is important to ensure drainage and sewer networks are separated. This reconfirms that urban sector projects, particularly the ones providing water and sanitation, remain relevant for countries with a high rate of urbanization.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
Intermittent water supply is more costly both for the ULBs and the beneficiaries in the long run. Intermittent water flow increases the risk of contamination in the system (since adequate water pressure is not maintained in the pipes allowing infiltration of contaminated ground water) and reduces the durability of the pipes due to the pressure surges experienced when the pumps come back on. The absence of full-time water supply means customers still have to make an extra effort to collect or pump water from other sources, as well as store and treat the water.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
To encourage more households to connect to the water services, municipal governments may consider incentives such as free connection. This proved successful in expanding water supply coverage in Lao PDR. There is scope to raise awareness among households on the benefits of connecting to water supply services.

Project Number: 30303-013
Project Name: Karnataka Urban Development and Coastal Environmental Management Project
Report Date:
Lesson
The DSPP entity undertook non-operational decisions relating to the company name and accounting practices without gaining the required approvals from the lenders before implementing the decisions. While these matters have been satisfactorily explained subsequently, they raise concerns for lenders seeking to confirm that the project entity is being managed in accordance with the requirements of the loan documents; significant time is expended to work through these issues as they are discovered.

Project Number: 45915-014
Project Name: Dahanu Solar Power Project
Report Date:
Lesson
The hedging policy approved at appraisal did not reflect the foreign exchange hedging instruments available in the local market. When exchange rates deteriorated, the hedging policy and the required sponsor support needed to be renegotiated. It is fairly usual to have rolling foreign exchange hedging requirements, rather than the life-of-loan program that was originally documented, and better investigation of the likely options that would be available to the project could have reduced the work required to adapt to the situation as it arose.

Project Number: 45915-014
Project Name: Dahanu Solar Power Project
Report Date: