PROJECT INFORMATION DOCUMENT (PID) APPRAISAL STAGE Report No.: 89212 Project Name: Additional Financing for FATA Urban Centers Project (P150522) Region: SOUTH ASIA Country: Pakistan Sector(s): Sub-national govt. admin; Solid waste management; Water supply and sanitation; Theme(s): Access to urban services and housing (60); Municipal governance and institution building (20); Other urban development (20) Lending Instrument: Multi Donor Trust Fund Project ID: P125414 Borrower(s): Economic Affairs Division, Government of Pakistan Implementing Agency: FATA Secretariat Environmental Category: B-Partial Assessment Date PID Prepared/Updated: May 29, 2014 Estimated Date of Appraisal Completion: May 19, 2014 Estimated Date of Board Approval: June 30, 2014 Decision Other Decision I. Project Context: The KP-FATA region is severely lagging across a wide range of social and economic indicators compared to the rest of Pakistan. While the post-9/11 events have led to acute destabilization of the region and severely affected FATA, more recently, insurgency and counterinsurgency actions in 2009 led to a displacement of approximately 3 million people in FATA and the neighboring Khyber Phaktunkhwa (KP) regions. While most have returned to their homes, the events are likely to have long-term effects on their socio-economic growth, with high unemployment and large scale internal migration. The crisis has also contributed towards the destruction of basic public infrastructure, deterioration of services, and decline of institutional capacity at the local level. In order to stimulate growth in FATA, there is an urgent need to improve basic amenities such as water supply, roads, and municipal services, as well as to increase security. In the face of the crises that have confronted KP and FATA over the past decade, the federal and provincial governments have embarked on rapid post-crisis recovery and reconstruction efforts in collaboration with international and national partners. In 2009, the Government of Pakistan (GoP) launched various assessments for strategic medium to long term support for the crisis affected region. A subsequent Post Crisis Needs Assessment (PCNA) supported by the Asian Development Bank (ADB), European Commission (EC), United Nations (UN) and the World Bank was delivered in October 2010. The PCNA provides the underpinnings for long term peace building in KP and FATA. As a follow-up to the PCNA, the FATA Secretariat conceived the flagship Tribal Areas Rural-to-Urban Centers Conversion Initiative, TARUCCI (referred to as the TARUCCI program in this document) as a long term strategy for fundamental social and economic transformation through the 14 urban centers in FATA. The TARUCCI program is based on the recognition that any strategy to achieve lasting peace and cost effective sustainable development has to be based on encouraging urbanization as a means of social transformation, and therefore envisages focusing on the existing urban centers in FATA to enable provision of quality services, employment opportunities, and security, in order to support the peace- building objectives of the PCNA. FATA Urban Centers Project was conceived to support the FATA Secretariat to pilot the TARUCCI program in one of the 14 urban centers. The intent of the project is to scale-up the approaches developed and successfully implemented in the pilot project to other urban centers based on the results achieved and lessons learnt from implementation experience. The rationale for the project is further supported by global experience which suggests that in the aftermath of a crisis, strategic investment in the recovery of urban centers can contribute significantly to building foundations for sustainable development, and reduces the risks of conflict relapse. The available financing under the original grant has allowed the project to support only a subset of priority infrastructure investments in Khar. The additional financing will allow the scaling up of priority infrastructure investments in Khar, Bajaur Agency, which have been identified and prioritized through a participatory planning process undertaken in Khar. They will also allow development of a Structure Plan, and identification of demand-driven priority investments in two other urban centers1 in FATA, hence contributing towards the future implementation of the TARUCCI program in other urban centers in FATA beyond Khar. The additional financing is from savings from the FATA share of the MDTF round- 1 funds, which the FATA Secretariat has allocated to projects under implementation that have promise of achieving expected results. II. Project Development Objectives: The objective of the FUCP is to improve urban services and management in Khar, Bajaur Agency, and develop a framework for urban management in FATA. The objectives of the Additional Financing for FUCP are aligned with the original grant. III. Project Description: The project comprises two components: a) Priority Infrastructure Investments; and b) Technical Assistance and Implementation Support. A description of each component is summarized below. The additional financing for the project will support both components of the on-going project. The additional financing would specifically focus on scaling-up priority infrastructure investments in Khar, Bajaur Agency, and undertake a planning exercise to develop structure plans and identify priority for two additional urban centers in FATA. Component 1: Priority Infrastructure Investment Projects (US$ 0.4 Million). This component supports priority infrastructure investments in Khar town in Bajaur Agency. The universe of infrastructure sub-projects supported under this component includes rehabilitation, reconstruction, expansion, and upgradation of urban municipal infrastructure and services. 1 The additional financing will support the implementation of additional infrastructure investments in Khar, including (i) primary collection of solid waste, (ii) provision of rescue and firefighting equipment, (iii) development of a family park, and (iv) construction of public toilets. Component 2: Technical Assistance and Implementation Support (US$ 0.6 Million). The component supports: a) design and development of an overall urban management framework to be implemented under the TARUCCI program in all 14 towns in FATA; and b) detail the implementation plan for the pilot center (Khar, Bajaur Agency) being supported under this project. The additional financing will assist in the undertaking of a planning exercise, involving the development of structure plans and identification of priority investments in two more towns in FATA, besides Khar, i.e., Landi Kotal, Khyber Agency, and Ghalanai, Mohmand Agency. IV. Financing (in USD Million) For Loans/Credits/Others Amount BORROWER/RECIPIENT 0.00 Financing Gap 8.00 Total 8.00 Financing gap is funded by MDTF for Crisis Affected Areas of KP/FATA/Balochistan. V. Implementation Implementation arrangements for the additional financing, including financial management, procurement, and monitoring will remain the same as under the original grant. FATA Secretariat will be the project implementing agency. TARUCCI Project Management Unit (TPMU), headed by a dedicated Project Director, will be the main counterpart responsible for coordinating and monitoring the project on behalf of FATA Secretariat. TPMU will be responsible for procurement of goods and services. Coordination with the Bank team, financial management, and implementation of environmental and social safeguards will be handled by the TMPU. It will also be the implementing agency for Component 2. It will identify the technical assistance and capacity building activities in close consultation with the Directorate of Local Government and Rural Development (DLG&RD) and the FATA Secretariat. DLG&RD will be responsible for implementation and supervision of investments in municipal infrastructure and services under Component 1. They will also be responsible for procuring civil works, under the supervision and support of TPMU. The proposed project would entail up to three small works contracts which can be adequately managed under the current procurement arrangements. VI. Safeguard Policies (including public consultations) Environmental Assessment OP/BP 4.01 Yes Natural Habitats OP/BP 4.04 No Forests OP/BP 4.36 No Pest Management OP 4.09 No Physical Cultural Resources OP/BP 4.11 No Indigenous Peoples OP/BP 4.10 No Involuntary Resettlement OP/BP 4.12 Yes Safety of Dams OP/BP 4.37 No Projects on International Waterways OP/BP 7.50 No Projects in Disputed Areas OP/BP 7.60 . No VII. Contact point World Bank Contact: Email: P125414@worldbank.org Implementing Agencies Name: FATA Secretariat Contact: Muhammad Zahoor Title: Project Director TARUCCI Tel: 92-91-921 2724 Email: pd.tarucci@fata.gov.pk Name: FATA Secretariat Contact: Zahir Shah Title: Director General (Projects), Planning & Development Department, FATA Secretariat Tel: 92-91-921 3015 Email: DoPFATA@gmail.com VIII. 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