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Document of

The World Bank

Report No. 17640-UZ

PROJECT APPRAISAL DOCUMENT

ONA

PROPOSED LOAN

IN THE AMOUNT OF US$24.0 MILLION

TO THE

REPUBLIC OF UZBEKISTAN

FOR THE

TASHKENT SOLID WASTE MANAGEMENT PROJECT

April 6, 1998

Rural Development and Environment UnitEurope and Central Asia Region

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CURRENCY EQUIVALENTSCurrency Unit = Sum

1 Sum = US$0.012US$1 = 81 Sum

(as of February 1998)

AVERAGE EXCHANGE RATESSum per US$1 (end of year)

1994 25.11995 35.51996 55.01997 76.0

UZBEKISTAN - FISCAL YEARJanuary 1 - December 31

WEIGHTS AND MEASURESMetric System

ABBREVIATIONS AND ACRONYMS

BOO - Build-Own-OperateCAS - Country Assistance StrategyEBRD - European Bank for Reconstruction and DevelopmentGoU - Government of UzbekistanIBRD - International Bank for Reconstruction and Development (World Bank)ICB - International Competitive BiddingIERR - Internal Economic Rate of ReturnJEKs - Multi-story Housing AuthoritiesMSWM- Municipal Solid Waste Management SystemNGO - Non-Governmental OrganizationPIU - Project Implementation Unit

Vice President Johannes Linn, ECACountry Director Ishrat Husain, ECCO ISector Director Kevin Cleaver, ECSRESector Leader Michele de NeversProject Team Leader Roger Batstone, ECSRE

UZBEKISTANTASHKENT SOLID WASTE MANAGEMENT PROJECT

TABLE OF CONTENTS

Project Financing Data ............................................................ 1Block 1: Project Description ............................................................. 2

1. Project development objectives ............................................................ 22. Project components ............................................................ 23. Benefits and target population ............................................................ 34. Institutional and implementation arrangements ............................................................ 3

Block 2: Project Rationale ................... .45. CAS objective(s) supported by the project ............................................................. 46. Main sector issues and Government strategy ............................................................. 47. Sector issues to be addressed by the project and strategic choices ...........................................58. Project alternatives considered and reasons for rejection .........................................................69. Major related projects financed by the Bank and/or other development agencies ...................610. Lessons learned and reflected in proposed project design ......................................................711. Indications of borrower commitment and ownership ............................................................ 712. Value added of Bank support ............................................................ 8

Block 3: Summary Project Assessments ............................................................ 813. Economic Assessment ............................................................ 814. Financial Assessment ............................................................ 815. Technical Assessment ............................................................ 816. Institutional Assessment ............................................................ 917. Social Assessment ............................................................ 918. Environmental Assessment ............................................................ 1019. Participatory Approach ........................................................... 1020. Sustainability ........................................................... 1021. Critical Risks ........................................................... 1022. Possible Controversial Aspects ............................................................ 11

Block 4: Main Loan Conditions ........................................................... I 123. Conditionality ........................................................... 11

Block 5: Compliance with Bank Policies ........................................................... 12

ANNEXES1. Project Design Summary ............................................................ 132. Detailed Project Description ............................................................ 213. Estimated Project Costs ........................................................... 254. Economic Analysis ........................................................... 285. Financial Analysis ........................................................... 306. Procurement and Disbursement Arrangements ............................................................ 377. Project Processing Budget and Schedule ............................................................ 408. Documents in the Project File ........................................................... 419. Statement of Loans and Credits ........................................................... 4210.Uzbekistan at a Glance ........................................................... 44

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTINTERNATIONAL DEVELOPMENT ASSOCIATION

Europe and Central AsiaECSRE

Project Appraisal Document

UzbekistanTashkent Solid Waste Management Project

Date: March 6, 1998 [ I Draft [x] FinalProject Team Leader: Roger Batstone Country Director: Ishrat HusainProject ID: UZ-PE-49582 Sector: Environment Sector Leader: Michele de NeversLending Instrument: Specific Investment Loan PTI: [x] Yes [ ] No POC: Environmentally Sustainable Development

Project Financing Data[x] Loan [ ] Credit [] Guarantee [ ] Other [Specify]

For Loans/Credits/Others:

Amount (US$): 24 millionProposed Terms: [ Multi-currency [xJ Single currency, US Dollar

Grace period (years): 5 [ Standard Variable [ Fixed [x] LIBOR-basedYears to maturity: 20Commitment fee: 0.75 %

Service charge: 0 %Financing Plan and Estimated Disbursements (US$ million):

Source Local Foreign Total % Disbursement (Bank FY) 1999 2000 2001 2002 2003Government of Uzbekistan 11.0 11.0 20EBRD -- 21.0 21.0 38 Annual 2.9 6.7 7.2 6.0 1.2IBRD -- 24.0 24.0 43 Cumulative 2.9 9.6 16.8 22.8 24.0

Total 11.0 45.0 56.0 100Borrower-: Governmnent of UzbekistanGuarantor: NAResponsible agencies: the Ministry of Macroeconomics (Central Government) and the Municipality of Tashkent

For Guarantees: [xl None [ Partial Credit Partial Risk

Proposed coverage:Project sponsor:Nature of underlying financing:Terms of financing:

Principal amount (US$m)Final maturityAmortization profile

Financing available without guarantee: [ ] Yes [ ] NoEstimated financing cost or maturity with guarantee:

Expected Effectiveness Date: June 30, 1998 Closing Date: December 31, 2003

Project Appraisal DocumentTashkent Solid Waste Management Project Uzbekistan

Block 1: Project Description1. Project development objectives (see Annex I for key performance indicators):

The Government of Uzbekistan, the Municipality of Tashkent (a.k.a. Hokimiyat), the Word- Bank, and the European Bank forReconstruction and Development (EBRD) are cooperating on an investment project to restore Tashkent's municipal solid wastemanagement (MSWM) system. The project's overall objectives are to: (a) return the existing MSWM collection and disposalsystem to a satisfactory level of service; and (b) improve the technical, financial and institutional basis for its future operation anddevelopment.

The project's specific objectives are to: (a) ensure that adequate collection infrastructure in the form of collection bins and vehiclesexist to provide basic MSWM services to the residential, commercial, institutional and industrial sectors; (b) improve the access andsanitation at public and residential collection points; (c) upgrade infrastructure at the city's long-term landfill including landfillpractices and operations to improve efficiency and reduce environmental impact; (d) provide for the closure of two existing landfillswithin the city; (e) develop four transfer stations to optimize long-term use of the remaining landfill facility; (f) provide interimcapability for the safe handling of biomedical waste; (g) initiate actions to place the system on a stable financial footing in terms ofcost recovery and the ability to finance on-going operations and equipment replacement; (h) upgrade institutional capacity tomanage the system as an independent, self-financing utility suitable for privatization in the medium term; (i) develop a strategicplan for the system's future development, including identification of major capital facility requirements and business structureoptions for the system's financing and operation; and (j) provide for comprehensive public consultation in developing and operatingthe system.

2. Project components (see Annex 2 for project background and detailed description): Costs are in US$ millions and include physicaland price contingencies.

Indicative % ofComponent Category Costs Total

(a) Investment Component (93 percent of total project cost): Physical Investment

(i) Collection Vehicles and Support Equipment Goods and 15.0 26.7* Buy compactor trucks, roll-off container trucks, dump trucks, Equipment

tractors, vacuum trucks, service vehicles and spares.

(ii) Collection Infrastructure Civil Works, Goods 15.4 27.5* Increase number of collection bins and collection points. and Equipment

(iii) Landfill Modernization Civil Works, Goods 4.5 8.0* Buy bulldozers, compactors, excavators, dump trucks, service and Equipment

vehicles, and environmental monitoring equipment; and constructmaintenance and service buildings and utilities, and upgradeaccess, barrier improvements, and surface closure.

(iv) Vehicle Park Development Civil Works, Goods 3.1 5.6* Buy automotive machine tools, hand tools, materials handling and Equipment

equipment; upgrade the existing service park; and construct acentral maintenance center.

(v) Landfill Closure Civil Works, Goods 1.3 2.2* Buy bulldozers, excavators, dump trucks, and environmental and Equipment

monitoring equipment; and complete civil restoration works.

(vi) Transfer Stations Civil Works, Goods* Design, procurement and construction of four transfer stations, and Equipment 6.0 10.7

including civil works, compacting and materials handlingequipment, and containers.

(vii) Transfer Station Vehicles Goods and* Buy flat bed trucks and trailers for container transport from Equipment

Project Appraisal Document Page 3Uzbekistan Tashkent Solid Waste Management Project

transfer stations to landfill. 5.5 9.8

(viii) Biomedical Waste Facilities Civil Works, GoodsBuy collection vehicles and specialized containers; and civil and Equipment 0.4 0.7works for a segregated disposal cell at the landfill.

(ix) Operations Computer Equipment Goods and* Buy computer equipment for collection system, transfer station Equipment

and landfill operation, and hardware and software for the solid 0.8 1.5waste financial management system.

(b) Institutional Support (7 percent of total project cost): Technical Assistance

(i) Project Management Support (PIU equipment, staffing, training and Consulting Servicesadvisory support) 4.0 7.2

(ii) Strategic Plan (commercialization options, waste processing options,hazardous waste management, waste minimization and recycling)

(iii) Corporatization Assistance(iv) Financial Management System Development and Implementation(v) Tariff Study(vi) Collection Optimization Studies(vii) Landfill Operations Training(viii) Landfill Closure Design and Training(ix) Landfill Expansion Design Assistance(x) Public Participation and Education Assistance

Total 56.0 100

3. Benefits and target population:

Benefits. The main benefits of the project would be: (a) restoration of an environmentally acceptable, sustainable and cost-effectivelevel of MSWM collection service to the Municipality of Tashkent; and (b) positioning the Municipality for further development ofits MSWM system to incorporate modem solid waste reduction, resource recovery, and waste disposal technologies. The specificbenefits would be: (a) collection points meeting reasonable standards of accessibility and sanitation; (b) timely collection; (c)improved environmental performance and efficiency of future landfill operations; (d) environmentally sound closure of olderlandfills and return of urban land to appropriate land use; (e) improved handling of biomedical waste; (f) increased costeffectiveness of the current system; (g) enhanced system financial viability in terms of cost recovery and collection of revenues; (h)upgraded operational and financial management capacity in the system's operation; (i) orderly planning of future development ofthe MSWM system based on current technology, affordability and environmental protection; () a high level of public support andacceptance.

Target Population. The project would have an immediate impact on the overall population of Tashkent (2.2 million) throughimproved service. The project would specifically target: (a) residents in high-density housing where current waste collectionpractice represents significant sanitary and aesthetic issues; (b) women and children who normally assume household responsibilityfor waste disposal; and (c) populations living in the vicinity of landfill facilities.

4. Institutional and implementation arrangements:

Implementation period: 5 years.Executing agency: Municipality of Tashkent.Project coordination: Municipal Project Implementation Unit with the assistance of the Project Management Consultant.Project oversight (policy guidance, etc.): Tashkent Solid Waste Working Group comprising a member from each of ten interestedgovernment authorities.Accounting, financial reporting and auditing arrangements: Central Project Implementation Unit in the Ministry ofMacroeconomics.Monitoring and evaluation arrangements: Central Project Implementation Unit.


Two Project Implementation Units (PIU) would be used to reduce overhead costs and improve overall management of projectimplementation. The Central PIU would be located in the Central Government's Ministry of Macroeconomics and Statistics. ThisPIU has been operational for over two years under another Bank-financed project and would be expanded slightly to handle theadditional work load of the proposed project. This PIU has already demonstrated that they have the financial management capacityto handle all aspects of Bank-financed projects. Trained personnel in the PIU include accounting, procurement, disbursements andauditing specialists. This Central PIU would be responsible for supervising project procurement and have primary responsibility for-project financial management including disbursements, the special account, and project auditing. It was originally set up for theUzbekistan Water Supply, Sanitation and Health Project and would be expanded to handle the additional workload. The proposedproject would thus benefit from cross support and the experienced personnel in the central PIU for common services related to theBank loans.

A Municipal PIU would be in the Municipality of Tashkent under the recently created Tashkent Solid Waste ManagementDepartment. This PIU, comprising two staff members, would be responsible for the technical aspects of project detailed design andimplementation and for drafting progress reports acceptable to the IBRD and EBRD. It would be responsible for technical projectimplementation and would be assisted by a project management consultant. It would also be responsible for supervising thetechnical assistance portion of the project. Initial PIU staff training and assistance in bid document preparation would be providedusing funds from a Danish Consultant Trust Fund under a contract with a Danish consulting firm.

The two PlUs would be assisted by the existing Tashkent Solid Waste Project Working Group comprising members from all thecentral and municipal authorities interested in the project and is under the chairmanship of the Deputy Minister of Macroeconomics.The Working Group would appoint ad hoc bid evaluation teams made up of representatives from the central and municipalauthorities. The central PIU would supervise the procurement process and ensure that it follows the guidelines of the two Banks.

The present MSWM system is owned and operated by the Municipality of Tashkent. Within the municipal administration, theTashkent Solid Waste Management Department provides direct supervision to the system's operation as well as supporting it withadministrative and financial services. The physical operation of the system is provided by a Municipality-owned enterprise(Spetstrans) and four district colllection enterprises who are supervised operationally and financially by Spetstrans (DistrictSpetstrans). The Chief of the Tashkent Solid Waste Management Department would provide overall direction to the project.

Block 2: Project Rationale5. CAS objective(s) supported by the project:. Document Number and date of latest CAS discussion: No. 17376, 03/10/98

The proposed project is consistent with, and part of, the Bank's Country Assistance Strategy (CAS) for Uzbekistan. The currentstrategy is aimed at: (a) liberalizing the trade and exchange regime and minimizing distortions in the financial sector; (b) improvingincentives for increased output and employment in productive sectors; (c) removing the inefficiencies in resource utilization inmunicipal services and infrastructure; and (d) addressing the environmental damage resulting from the mismanagement of naturalresources in the Aral Sea Basin. Because most Uzbek municipal services and infrastructure facilities are provided either free ofcharge or at highly subsidized rates, improving the efficiency of public sector management and introducing cost recovery are keychallenges in the short to medium term to support sustainable, broad-based development in Uzbekistan. The proposed project wouldsupport the rehabilitation and reorganization of the solid waste management sector of Uzbekistan's largest city and as such wouldincrease the sector's cost recovery, operational efficiency, and financial sustainability in a visible and demonstrative manner.

6. Main sector issues and Government strategy:

Potentialfor MSWMSystem Collapse. The present system, while functional, has declined to the point of a major reduction in servicecapacity. This has caused increasing negative health and environmental impacts associated with unorganized waste collection anddisposal. The priority attached by ithe Government and the Municipality to restoring an appropriate level of service reflects theirrecognition of this need.

Public Concern RegardingMSWMManagement. As reflected in the social assessment, the population of Tashkent place a high priorityon obtaining adequate MSWM services to which they were previously accustomed. The current levels of service are creating highlyvisible, environmental, sanitary and quality of life impacts. This in turn is leading to discontent and disillusionment with theGovernment's and Municipality's ability to maintain previously accepted standards. The Govemment is aware of this public concernand is responding with this proposed project to address MSWM issues.

Declining Public Services Spending. The deterioration of the Tashkent MSWM system is symptomatic of the general decline in theresources that the Government is able to allocate directly for urban public services. Government strategies are now turning to


considerationof more market-orientedapproachesto financing such services and greater involvementofthe private sector.

User Paymentfor Services. The high level of accounts receivable in the solid waste sector indicates the inadequacy of tariff collectionmechanisms. Recent initiativesby the Municipality to raise residential tariffs and dedicate user-orientedtaxes represent overdue actionsfor putting the system on a more secure financial basis.

Institutional Structure for Delivery of MSWM Services. The current structure for the financing, management and operation of theMSWM system is recognized as being deficient, and the Government strategy is for the sector to evolve into an independent, self-financing utility with medium-term potential for privatization. The ability to complete this would depend on the restoration of servicecapacity and the creation of financial stability.

Appropriate Technologies. Government strategy respecting technology selection has reflected a gap in thinking between the politicaland operational level in two critical areas: waste processing technology and waste bins. On one hand, strong political interests,supported by representatives of foreign equipment suppliers, favor the development of high technology (and high cost) wasteprocessing facilities as well as the use of locally produced plastic bins. On the other hand, the Municipality administration recognizesthat a high-tech waste processing facility is unaffordable in the near term, is not needed as long as adequate landfill disposal capacity isavailable and can be developed, and would not be effective in the absence of a functional collection system. In support of the latterposition, previous worldwide experience with high-tech waste processing facilities such as incinerators indicates that in the absence of astrong financial base, such facilities are not sustainable. Similarly, the use of plastic bins for the majority of communal applications isrecognized as not being sustainable from either a cost or durability perspective. With respect to waste processing facilities, Governmentstrategies have recently shifted to supporting the rehabilitationapproach as a required initial step. Further, the Government has agreed tothe Bank's fundamental condition that any commitment to a waste processing facility must be implemented independently of thecurrent waste utility structure and only on a contracted "build, own and operate" concession arrangement that must be competitive withconventional waste disposal as provided for under the project. With respect to waste bins, the Government has agreed that plastic binswould not be appropriatewithin the project scope except in small sizes (less than 300 liters) suitable for individual residential service.

7. Sector issues to be addressed by the project and strategic choices:

Potentialfor MSWMSystem Collapse. The primary object of the project is to prevent the system's collapse and to restore it to the basiclevel of service that it was designed to provide. The strategic choice involved is the selection of a system rehabilitation approach andpreparing the system for orderly development in the future, as opposed to its complete reconstruction with different technologies andequipment designs.

Public Concern Regarding MSWMManagement. The project has been designed to respond directly to the expressed priority the publicattaches to improved MSWM service as reflected in the social assessment. The project focuses on the public's primary environmentaland health concerns, namely improved waste collection service. Furthermore, it incorporates public input into the upgrading ofcollection point infrastructure and service modalities. Finally, it provides resources for continued public input and consultation duringthe project and as part of the rehabilitated system's operation. Inclusion of a strong social and public participatory element into theproject's design represents a strategic choice to pursue a proactive rather than a reactive approach to MSWM development.

Declining Public Services Spending, User Payment for Services, Institutional Structure for Delivery of MSWM Services. These issuesare addressed collectively by the provision of technical assistance that would support the evolution of the existing system to a self-financing utility over the project period and its orderly development into the future. This would specifically involve upgrading financialand operational management capacity, examination of strategic options for institutional structure change, and support forcorporatization initiatives. The recent tariff increase for domestic users reestablished a balance in the different charges imposed on thedifferent user groups (domestic, industrial, commercial and institutional). The choice has also been made to support an evolutionaryapproach to institutional change as opposed to forcing immediate changes toward a single privatized utility.

Appropriate Technologies. The project is primarily focused on the basic elements of the MSWM system and the application ofestablished technologies. This approach ensures the restoration of the fundamental element of the system and maximizes its presentstrengths, namely the high level of operational capacity and the existence of adequate landfill disposal capacity in the immediatefuture. It represents a deliberate decision not to invest in sophisticated and costly high-technology waste processing options in thenear term. Such options, even in developed countries, are constrained by their high costs as well as technical, operational andenvironmental issues. As such, their viability in Tashkent remains to be proven. However, the project does recognize a longer-termneed for future modernization, both in the form of facility additions and in introducing approaches related to waste reduction andrecycling.


8. Project alternatives considered and reasons for rejection:

Low Technology Versus High Technology. The project has elected to focus on the basic MSWM collection and disposaltechnologies that are well established and with which the beneficiary is already familiar. The option of investments by theMunicipality in large-scale waste processing facilities such as incineration was considered, and it was agreed that the feasibilitycould best be assessed under a build-own-operate (BOO) contract, which would be drafted under the project. It should be noted thatTashkent has direct experience with such facilities, having developed and operated a large waste processing facility in the 1980swhich has been abandoned after proving technically inadequate and very expensive to operate.

Least-Cost Option. The project components were selected after analyzing investment and operating costs to determine the least-costscope of the proposed investments. Simple, low-cost equipment of well proven and robust designs were selected and are suitable forthe conditions in Tashkent. With the accelerated closure of the in-city landfills, it was necessary to develop solid waste transferstations to reduce haulage costs to the remaining outer-city landfill.

City-Wide Versus District. The option of focusing the project on a single high-density residential district of the city was initiallyconsidered. However, a city-wide project addressing relatively simple investments in well-established operations representsminimal risk, obtains the benefits of economies of scale, and maximizes impact. It is also recognized that the project would extendover a five-year period and detailed planning would consider its incremental implementation district by district.

Selection of Executing Agency. Consideration was given to selection of the operational enterprise (Spetstrans) as the executingagency. This would serve to concentrate management of the system and its rehabilitation in a single organization that is potentiallyfarther removed from the traditional municipal administrative structure and associated political influence, and represents aconsolidated vehicle for corporatization and potential privatization. While consistent with the longer-term objective of having thesystem operated independently, this option was rejected in favor of a more evolutionary approach that utilizes the superioradministrative and financial management capacity within the Municipality as the executing agency. The project would support theevolution of these institutional arrangements to the self-financing independent structure that is required to sustain the system from aregulatory and operational perspective.

Introduction of Waste Recovery and Recycling Options. The potential to introduce immediate waste recovery and recycling optionswas considered, based on the high level of public interest and potential to capture significant volumes of compostable waste.However, it was determined that markets are limited for conventional materials such as metals, glass, paper and plastic, and asignificant portion of bulk organic material is already diverted as animal feed. On this basis, it was elected not to adopt theseoptions until adequate analysis could be done as part of the strategic waste management plan and markets identified for recyclablematerials to the point of supporting organized initiatives.

Parallel Rehabilitation and Long-Term Planning Versus Initial Strategic Plan. A number of other solid waste initiatives by theBank and municipal governments have involved the preparation of strategic waste management plans as prerequisites to proceedingwith investment in MSWM infrastructure. In this instance, a choice has been made to include the long-term planning as a separateinitiative undertaken in parallel with the preparation of the rehabilitation project. While the MSWM systems in many other cities ofthe former Soviet Union have collapsed, Tashkent has retained its basic operating capacity and, perhaps most importantly, has anumber of years of adequate landfill disposal capacity available. In this instance, time is available to reestablish the normal level ofservice capacity, stabilize the operation financially, and use this as a basis for longer-term developments. In addition, the practicalexperience gained with this project would serve as useful input for the further development of the strategic waste management plan.

9. Major related projects financed by the Bank and/or other development agencies (completed, ongoing and planned).

Sector issue Project Ratings (ARPP97)Bank-financed Implementation Development

Solid Waste Management Poland: Solid Waste Project plannedAntigua and Barbuda: Solid Waste Management Project plannedLebanon: Solid Waste/ Environmental Management Project satisfactory satisfactoryMexico: Second Solid Waste Project satisfactory satisfactoryChina: Liaoning Environmental Project unsatisfactory unsatisfactoryChina: Shanghai Environmental Project satisfactory satisfactoryGhana: Urban Environment and Sanitation satisfactory satisfactory

Other development agenciesNone currently known


10. Lessons learned and reflected in proposed project design:

This project would be the third lending operation in support of Uzbekistan's infrastructure. The first of these operations is the PilotWater Supply Engineering Project (Ln. 4090-UZ), which became effective in February 1997. The second is the Water Supply,Sanitation and Health Project (Ln. 421 6-UZ), which became effective in September 1997. Both of these projects are on schedule andrated as satisfactory. Another Bank-financed investment project in the country is the Cotton Sub-Sector Improvement Project (Ln.3894-UZ). This project was slow in starting and several key components were rated as unsatisfactory. The project is now progressingsatisfactorily and the lessons learned are that setting up a PIU early in a project cycle is critical and that a lack of familiarity with therequirementsof internationallyfinanced projects by local counterpartscan cause significantdelays.

Lessons highlighted in the Bank's Europe and Central Asia Department Reports on Portfolio Performance in Russia and Central Asiafocus on: (a) the challenge of identifying a consistent counterpart team with sufficient authority to move the project forward; (b) thedifficulty of coordinating key government agencies on critical issues; (c) the importance of setting up project implementation capacityearly in the project cycle and training their staff in Bank procurementand disbursementprocedures; and (d) the importance of involvinglocal institutes in project design and preparation.

A review of lessons learned from World Bank MSWM projects worldwide also shows that due largely to inadequacies in project design(for example, inadequate attention to building institutional capacity, lack of strategic planning, failure to provide for safe landfilldisposal facilities), the execution of many of the investments encountered extensive delays and failed to achieve long-termimprovement in solid waste management in terms of both efficiency and environmental protection. Specific implementation problemsincluded unclear institutional structure and responsibilities, insufficient technical and managerial expertise, inappropriate vehiclespecifications, complicated procurement procedures, failure to maintain vehicles in operating condition, and inadequate cost recoverydue in large part to the lack of participation of users in the decision-makingprocess.

To the extent possible, this project incorporates the lessons learned from both the Bank's general experience in Russia and Central Asiaand its worldwide experience with solid waste investments. The Tashkent Solid Waste Management Department is well placed withinthe Municipality to coordinate involvement of other Government agencies and has clear authority for project implementation. Projectimplementation capacity in the areas of procurement and disbursement has already been established in the existing central PIU. Thescope of project preparation was expanded to include drafting of all long lead-time procurement bidding documents by negotiations.Professional advisory assistance for project implementation would be provided as part of the Institutional Strengthening Component.Project design also includes a significant input from the local communities which resulted in a new design for waste collection facilitiesin these communities. In additional to the technical expertise of Spetstrans, local hydrogeological and social assessment experts havecontributedto project design, the latter having been particularly important in ensuring public concerns are addressed in the rehabilitationof the collection system and closure of the in-city landfills. The key issue of the MSWM system's financial sustainability is beingaddressed by requiring action on tariff increases and revenue transfers prior to the start of the project. In addition, the project's technicalassistance component would provide support for institutional reform, improved financial management capacity, and development of aself-fmancingutility structure. The project itselfwould minimize technical risks by limiting investmentto conventionaltechnology withwhich the beneficiary is familiar. At the same time, the evolutionary development of the system would be provided for throughdevelopment of a strategic waste managementplan.

11. Indications of borrower commitment and ownership:

The President of Uzbekistan initiated the Bank's participation in this project during Vice President Johannes Linn's visit to Tashkentin October 1996. Subsequently, the assistance of the World Bank and the European Bank for Reconstruction and Development(EBRD) in upgrading Tashkent's MSWM infrastructure was requested by the Municipality of Tashkent. During the jointIBRD/EBRD identification mission in January 1997, the Municipality fully supported the approach developed for the project. Thiswas verified in the request of the Government (Deputy Prime Minister Hamidov), dated March 3, 1997 requesting IBRD and EBRDto proceed with project preparation. The Municipality's support was confirmed on March 11, 1997 in a meeting between the Hokimand joint IBRD/EBRD project preparation mission. At that time, immediate tariff increases were agreed, along with the release ofwaste-related tax revenues for operation of the MSWM system. The implementation of the promised domestic tariff increases hasoccurred with the issuing of Resolution No. 90, dated March 20, 1997, by the Tashkent Municipality. A further tariff increase in thesecond quarter of 1998 has been agreed with the Municipality. The government further indicated its commitment to the project bysending in January 1998 a policy letter to the Bank detailing the government's strategy in the sector and upcoming sectoral changesas well as a letter confirming the project scope and size.


12. Value added of Bank support:

This project responds to one of Tashkent's basic environmental priorities, namely the maintenance of an adequate level of MSWMservice. The Bank's involvement has acted as a catalyst for other cofinancing and has helped to mediate differences betweenmunicipal and national government objectives. The Bank's involvement has also increased the understanding of Spetstrans' financesand made them more sustainable. In the medium term, the Bank would help upgrade the environmental practices in Tashkent'slandfills to international standards and move the solid waste collection system towards financial and environmental sustainability. Inthe longer term, the project would potentially create the basis for local source reduction and recycling opportunities. Therehabilitation of the system and strengthening of its ability to ultimately operate on a full cost-recovery basis would likely createinvestment opportunities for the private sector as it takes an increasing role in financing, management and operation of publicservices. Additional benefits have derived from the Bank's requirement for a social assessment and beneficiary consultation whichare being adopted by the Municipality for its future developments and operations in the sector. The Bank's and EBRD's leadershipin this initiative should also attract private sector interest to various aspects of future system development. The Bank's involvementhas stimulated institutional and organizational restructuring to increase revenues and operational efficiency. Finally, this projectsrepresents a potential model that could be implemented as high impact, affordable infrastructure development projects in othermunicipalities within the former Soviet Union and elsewhere.

Block 3: Summary Project Assessments (Detailed assessments are in the project file. See Annex 8)13. Economic Assessment [x] Cost-Benefit Analysis: NPV=US$3.6 million; [ ] Cost Effectiveness [ ] Other(see Annex 4): ERR=13.2% Analysis: [Specify]

The switching values of critical items and the main assumptions for the economic analysis are presented in Annex 4.

14. Financial Assessment (see Annex 5) NPV=US$3.0 million; FRR=12%

Internal Rate of Return. The result of the base case scenario shows a rate of return of 12 percent. In calculating the benefits, the netpayments by the Municipality of Tashkent were considered as benefits accruing to the project, as the source of the payments was aspecific 0.5 percent waste removal/disposal tax, assessed by the Municipality on all enterprises. A sensitivity analysis wasperformed to test the robustness of the project against variations in benefits and costs, and the results are shown in Annex 5.

Net Present Value. In determining the Net Present Value a discount rate of 10 percent was used, which is considered to be theopportunity cost of capital in Uzbekistan. A sensitivity analysis similar to the one for the calculation of the internal rate of returnwas used, and the results are included in Annex 5.

15. Technical Assessment:

The proposed project involves incremental changes in the configuration and technical operation of the present system. The mostsignificant changes is from using multiple landfill sites within the city to a single landfill outside the city. Consequently, a detailedtechnical assessment was conducted, and the results are detailed below.

Collection Vehicles and Infrastructure. The introduction of more rear loading collection trucks and new style of bins will requireadditional route planning and coordination to ensure optimal matching of equipment with specific service requirements. Transportto the transfer stations would also have to be incorporated into the route planning and coordination. The selection of vehicles shouldemphasize simple compactor and roll-off truck designs as well as have matching fuel, lubrication and tire requirements suitable forlocally available materials in order to ensure affordable operation and realization of anticipated service lives. The selection of binmaterial (locally manufactured plastic bins versus locally fabricated metal bins) is a critical technical issue in the system's viability.Notwithstanding the local political interest in using plastic bins, these can not be considered to be pither durable enough or costeffective, except in small sizes (less than 300 liters) where care and custody is provided by individual households. Any substitutionof plastic bins in the majority of applications is precluded by project conditionality.

Transfer Stations and Landfill Haul Vehicles. A simple transfer station concept has been adopted based on proven equipment with ahigh level of environmental control. Technical assistance would be required in getting these operations established and is bestprovided within the scope of a turnkey design, procure and construction arrangement. The critical technical and implementationissue identified is the need to quickly and effectively site these facilities. While a reasonable choice of sites located on the Tashkentring road within industrial areas appears feasible, this process, along with ensuring optimum highway access, is being undertakenby a local design institute with the assistance of Danish technical experts.

Vehicle Park Development. The issue here is the re-organization of maintenance operations away from independent rayon centers to

Project Appraisai Document Page 9Uzbekistan Tashkent Solid Waste Management Project

a centralized operation for heavy maintenance and overhaul. This requires selection of location and organization of staff resources.

L;andfill Modernization. The upgrading of the centralized landfill operation at Aghangaranskoe is technically feasible. Presenthydrogeological studies indicate that the site has a substantial clay and till barrier with ground water only occurring at substantialdepths as well as a substantial area that could be considered for future expansion. On this basis, it is concluded that this site can beupgraded to sanitary landfill standards. The main issues relate to implementation of improved operating practice in site compactionand cover and the upgrading of the local infrastructure to sustain the substantial increase in utilization.

Landfill Closure. Both city landfill sites would require development and implementation of adequate closure plans. These mustaddress the land reclamation and fugitive gas emissions and should make specific efforts to obtain public input into landfill closureand any long-term land use proposals.

Biomedical Waste Management. The project's initiative to address this issue is viewed as a low-cost interim solution that wouldmitigate the immediate risks associated with co-disposal of these wastes with other wastes. It requires the development of a detailedimplementation plan by the authorities and careful monitoring as to effectiveness. Technical assistance covering this would beprovided for within the project's institutional strengthening.

16. Institutional Assessment:

Improving Institutional Capacity. Existing institutional arrangements for the solid waste management in Tashkent are basedprimarily on a Soviet model with some minor modifications resulting from reforms that have been made since independence. Themost important reform has been the setting up of Spetstrans as a separate legal entity, fully owned by the Municipality, with its ownfinancial management system and a tariff setting mechanism that is supposed to allow the enterprise to cover its operations andmaintenance costs. Further reforms are required in the tariff setting policies and procedures as well as in the commercialization andcorporatization of Spetstrans and eventual private sector participation and effective, independent regulation of the system. Theproject provides technical assistance to the Municipality to enable it to decide on the preferred options for sector arrangements andensuring that it has the necessary capacity for effective implementation. A major challenge in implementing institutional changeswould be integration of effective public input, such that public acceptance is achieved and that it is sensitive to the issues related toaffordability.

Project Management and Execution. Lack of familiarity with modem project management and supervision practices is a commonfeature of organizations operating under the old Soviet system. As in the case of the Uzbekistan Water Supply, Sanitation andHealth Project, provisions have been made under the technical assistance component of the proposed project to provide foreignexpertise to assist and train the Tashkent Solid Waste Management Department and Spetstrans and in the required procedures toensure the successful imnplementation of the project.

17. Social Assessment:

In March 1997, a social assessment was conducted with the assistance of local social scientists in which 500 households wereinterviewed in 10 of the 11 districts of Tashkent. About half the respondents said that inadequate solid waste management inTashkent was the single most important environmental problem facing the city. Most of these respondents mentioned inadequatecollection as the primary solid waste problem in Tashkent.

The average household was found to have approximately five people and an income of 9,600 Sum (the local currency) a month.This is further supported by the government statistics. The current solid waste collection tariff for domestic households is 15 Sumper person which represents about 0.8 percent of household income in March 1997. For 20 percent of the households surveyed, the15 Sum per person payment was more than 1.5 percent of household income. About 21 percent of the surveyed households saidthey would be willing to pay double the current tariff for improved collection service.

The social assessment suggested that solid waste collection is a priority for domestic customers, and while solid waste tariffincreases in real terms are feasible, a significant portion (perhaps 20 percent) of the population would have difficulty paying. Thusthe tariff study would investigate options for providing a safety net for this group.

In addition, one of the main implications of the social assessment findings was that the institutional strengthening component of theproject should include a public participation, information and education components to: provide general consumer informationabout Tashkent's solid waste services; inform the public about the project and the need to pay increased solid waste tariffs prior toimplementation; introduce municipal solid waste management into the formal education system; sensitize the general population tothe need for public cleanliness; and involve public consultations during project implementation. The project would includeresources to carry-out follow-up beneficiary assessments in the course of project implementation.

Project Appraisal DocumentTashkent Solid Waste Management Projecf Uzbekistan

18. Environmental Assessment: Environmental Category [ ] A [x] B [ ] C

Justification/Rationale for category rating:

Environmental impacts associated with the project would be small and would largely be those associated with higher energyconsumption and air pollution associated with additional vehicles operating as service levels are restored and the longer distancesdriven as land disposal is transferred to a more remote location. On the other hand, the rehabilitation of the system, as provided forby the project, would contribute significantly to improvement in the environmental performance of the overall MSWM system.Upgrading of landfill operations, particularly those related to cover practices and operating face restriction would reduceenvironmental risk as well as enhance sanitary and aesthetic impacts. Closure of the two city landfills would imprcve localconditions so long as the closures use appropriate design and include land restoration and long-term monitoring. Upgrading ofservice centers and the consolidation of major maintenance in a central operation would minimize future risks associated withhydrocarbon ground and surface water contamination. The provision of better designed collection points, adequate containment andperiodic bin washing would mitigate environmental and health impacts locally.

19. Participatory Approach:

Identify each stakeholder below and describe their planned involvement as: information sharing (IS); consultation (CON); or collaboration (COL)Stakeholders Preparation Implementation Operation

Beneficiaries/community groups CON/COL IS/CON/COL IS/CON/COLIntermediary NGOs CON IS/COL ISAcademic institutions COL IS/COL ISLocal government CON/COL COL COLPrivate Sector IS IS/CON IS/CON/COL

20. Sustainability:

Project sustainability is principally dependent on the establishment and maintenance of a stable financial and institutional structurefor the operation of the MSWM system. In the absence of these, the project investment simply delays rather than prevents theanticipated collapse of the system. This is being addressed in the project's preparation by obtaining Borrower commitments 'oimplement tariff increases and transferring the existing revenues needed for the full operation and maintenance of the MSWMsystem and its eventual restructuring. Project design addresses these issues by providing directed technical assistance, institutionalstrengthening and training such that ultimately a fully self-financing, commercialized system would evolve. The main emphasis ofthis assistance would be directed at ensuring institutional change toward a fully corporatized structure with priVate sectorparticipation. In outlining a tariff policy, care would be given to achieve equity in the tariff structure by incorporating the resultsfrom the social assessment work related to willingness-to-pay, the affordability assessment, and the maintenance of public support.It would also ensure that an appropriate balance of tariff levels and revenue dependence exists across the various generating sectors,and that reliable mechanisms for ensuring timely payment for services are in place.

21. Critical Risks (see fourth column of Annex 1):

Risk Risk Rating Risk Minimization MeasureProject outputs to Lack of sustained political will to Low to Maintain a policy dialogue with the Governmentdevelopment objectives undertake financial reforms in the form medium and Municipality; design and operation of a

of tariff increases and enforcement of comprehensive financial monitoring system;payment mechanisms; unwillingness of provision of technical assistance and training;the existing institutional structure to comprehensive semi-annual project reviews;allow the evolution of MSWM delivery cooperation with cofinancier to build upresponsibility to an independent institutions and foster a climate conducive toorganization; limited institutional and reforms; involve beneficiaries and stakeholders infinancial resources; inability of service project preparation and implementation; andcustomers to pay for increases in cost appropriate loan conditionality.of service.

Project components to Limited institutional and operational Low to Building up of institutional capacity throughoutputs resource capacity; failure to deliver medium institutional strengthening and training

sufficienit service improvement quickly component; loan conditionality to assureenough to maintain public support; Borrower contributions, early initiation of public


selection of unaffordable future awareness initiatives and involvement ofdevelopment options that could risk stakeholders and affected groups in projectlong-term system viability; lack of implementation; periodic social assessmentfamiliarity with Bank rules on updates; integration of a strategic planningprocurement, disbursement, accounting component into the project; advance training andand auditing. procurement documentation preparation; involve

the central PIU in project implementation to carryout common features required to process Bankloans.

Low toOverall Risk Rating medium

22. Possible Controversial Aspects:

Public Acceptance of Required Tariff Increases. While the social assessment indicates that strong public support exists forimproved residential MSWM service and a general willingness to pay exists, the required implementation of these measures inadvance of the project's implementation would likely cause negative public reaction. The project's implementation plan mustaddress this through early public awareness initiatives and rapid improvements in service delivery.

Block 4: Main Loan Conditions23. Conditionality:During negotiation agreement was reached that:

1. The Municipality of Tashkent and Spetstrans will:

(a) ensure that the turning access from the highway to the Aghangaranskoe landfill meets safety standards acceptable to the Bank;

(b) ensure that the closures of the Zangiata and Hasanbay landfills are done in an environmentally sustainable and publicly andsocially acceptable manner acceptable to the Bank;

(c) ensure that the design and siting of the four waste transfer stations are acceptable to the Bank;

(d) (i) maintain policies and procedures adequate to enable it to monitor and evaluate on an ongoing basis, in accordance withindicators satisfactory to the Bank, the carrying out of the Project and the achievement of the objectives thereof; (ii) prepare,under terms of reference satisfactory to the Bank, and furnish to the Bank, on or about June 30, 1999, a report integrating theresults of the monitoring and evaluation activities performed pursuant to sub-paragraph (i) of this paragraph, on the progressachieved in the carrying out of the Project during the period preceding the date of said report and setting out the measuresrecommended to ensure the efficient carrying out of the Project and the achievement of the objectives thereof during the periodfollowing such date; -and (iii) review with the Bank, by November 15, 1999, or such later date as the Bank shall request, thereport referred to in sub-paragraph (ii) of this paragraph, and, thereafter, take all measures required to ensure the efficientcompletion of the Project and the achievement of the objectives thereof, based on the conclusions and recommendations of thesaid report and the Bank views on the matter; and

(e) (i) have its records, accounts and financial statements for each fiscal year audited, in accordance with appropriate auditingprinciples consistently applied, by independent auditors acceptable to the Bank; (ii) furnish to the Bank as soon as available, butin any case not later than six months after the end of each such year, certified copies of the financial statements for such year asso audited and the report of such audit by said auditors of such scope and in such detail as the Bank shall have reasonablyrequested; and (iii) furnish to the Bank such other information concerning said records, accounts and financial statements as wellas the audit thereof, as the Bank shall from time to time reasonably requests.

2. The Municipality of Tashkent will:

(a) (i) by January 1, 1999, engage consultants for the preparation of a strategic solid waste management plan (Strategic Plan) underterms of reference acceptable to the Bank; (ii) have the Strategic Plan completed by June 30, 1999; (iii) upon completion of theStrategic Plan, furnish the same to the Bank for its review and comments; (iv) by December 31, 1999 adopt the Strategic Plantaking into account the comments, if any, thereon by the Bank; and (v) thereafter implement the Strategic Plan in a mannersatisfactory to the Bank;

(b) (i) by December 31, 1999, engage consultants for the preparation of a tariff study (Tariff Study) under terms of referenceacceptable to the Bank; (ii) have the Tariff Study completed by April 30, 2000; (iii) upon completion of the Tariff Study, furnish


the same to the Bank for its review and comments; and (iv) by July 1, 2000, adopt and put into effect a policy on tariffs on thebasis of the Tariff Study and taking into account the comments, if any, thereon by the Bank. The said tariff policy shall, as aminimum, provide for: (i) full adjustment of the tariffs for inflation on an annual basis; and (ii) real term increases to achievefull recovery of all operating and maintenance costs for the solid waste management system by such time as demonstratedfeasible in the Tariff Study. To the extent that the tariffs do not cover the full operating and maintenance costs of Spetstrans andother waste management operators, the Municipality of Tashkent shall contribute the funds (including proceeds from the CityImprovement tax) to cover any shortfall of the said operators.

3. Spetstrans will:

(a) (i) undertake and, by October 15, 1998, complete an assessment of its requirements for insurance; (ii) prepare, on the basis ofsuch review, a plan for insurance of its assets and operations against such risks and in such amount as shall be consistent withappropriate practices; (iii) furnish the said insurance assessment and plan to the Bank; and (iv) commencing January 1, 1999,implemenit the insurance plan taking into account the comments thereon, if any, by the Bank;

(b) take all measures necessary to ensure that its accounts receivable (after allowances for accounts receivable determined to beuncollectable) do not exceed three months of sales revenue on December 31, 1998 and two months of sales on December 31,2000; and

(c) (i) by January 1, 1999, engage consultants for the design and implementation of a utility accounting system under terms ofreference, acceptable to the Bank; (ii) have the said system design completed by August 31, 1999; and (iii) by July 1, 2000,implement the utility accounting system in a manner satisfactory to the Bank.

4. A Special Account will be established under terms and conditions acceptable to the Bank.

5. The execution of the Loan Agreement between the GoU and the European Bank for Reconstruction and Development is acondition of effectiveness for the Bank loan.

6. The IBRD loan would be made to the GoU as a LIBOR-based single currency loan on the following terms: a maturity 20 of yearswith 5 years of grace. The GoU would onlend to the Municipality of Tashkent on terms and conditions acceptable to the Bankincluding a maturity of 12 years with 3 years of grace, at an interest rate of 12.5 percent.

Block 5: Compliance with Bank Policies[x] This project complies with all applicable Bank policies.

Project ea ad atstone Country Director: Ishratlusain


Annex 1

Tashkent Solid Waste Management Project

Project Design Summary

Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and RisksCAS Objective1. Support macroeconomic - Establishment of a cost 1. Project supervision as 1. Sustainability of politicalstabilization in conjunction with effective, self-financing detailed below, inclusive of commitment to thestructural and sectoral reforms. MSWM organization, offering follow-up social corporatization process.

opportunities for private assessments.sector participation. 2. Public fiscal and regulatory

policies supportive of2. Strengthen market incentives, - Tariff policies consistent 2. Comprehensive project investment and operation ofparticularly in agriculture and with full service cost recovery review with agreement on market forces.energy. and which are attractive to actions after 18 months of

continued investment in the implementation. 3. Willingness of the presentsystem after project institutional and politicalcompletion. structure to abdicate control of

the present MSWM system's3. Protect vulnerable groups - Provision in tariff setting 3. Periodic Country operation in the long term.through establishing an effective policies for affordability tests portfolio reviews.safety net and more efficient and mechanisms to ensure 4. Institutional andservice delivery. service at reasonable rates to management capacity to

low-income groups. efficiently transfer existing- MSWM service delivery is municipal assets and expertise toresponsive to container an independent organizationaccess, collection point operating under marketsanitation and waste disposal conditions.land-use conflict issues.

5. Political and institutionalsensitivity and flexibility inresponding to public input toservice delivery requirementsand affordability constraintsimposed to achieve full costrecoverability.

Project Development Objectives1. Restoration of the basic - Complete coverage MSWM 1. Reports on regular 1. PBS and Spetstrans haveMSWM system. service requirements. intervals (monthly, operational management

- Reversal of present trends in quarterly, semi-annually and capacity and resources toad hoc and illegal dumping. annually) on key indicators undertake implementation. In its

with outline of actions to be absence, a risk exists of not2. Provision of adequate - All collection sites upgraded taken in case of major being able to use suppliedcollection infrastructure, by the end of 1999. discrepancy. equipment and assistance

- Absence of uncontained effectively.waste deposition. 2. Comprehensive project

review with agreement on 2. Resistance to changes in3. Improve accessibility and - Reduction in litter at actions after 18 months of operating practice by the work


Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Riskssanitation at collection points. collection points. implementation. force. Public do not accept or

- Increased public confidence cooperate in changes in serviceand reduction in complaints. 3. Carry out project start up delivery.

workshop and seminars on4. Upgrade or close existing - Implementation of training relevant Bank policies. 3. Failure of counterparts inlandfill operations. and design activities. Carry out follow-up social housing authorities to facilitate

- Delivery of new equipment. assessment. changes in collection points.- Identification of covermaterial. 4. Political resistance to

continued operation of landfills5. Creation of environmental - Operation of environmental having land-use conflicts,monitoring capacity. monitoring system and despite improvement in

reporting of results. operating practice.

6. Develop low-cost interim - Operation of secure area for 5. Ineffective environmentaldisposal capacity for biomedical exclusive disposal of regulation such that compliancewaste biomedical waste, including with proper disposal practice is

vehicles, containers etc. not enforced and the market for- Implementation of training MSWM services declines.and design activities

6. Resistance of the existingmunicipal institutions to allow

7. Financial sustainability and - Regular adjustment of tariffs - Meeting financial the development of a biomedicalfull cost recovery. according to increases in input performance targets, waste collection system.

cost; adjustment of tariffs- Reduction of accounts 7. Lack of political will toreceivable maintain the required tariff- Operation of effective policy and implement measuresmanagement and accounting necessary to enforce payment forsystems. service.

8. Institutional change to create a - Consolidated independent 8. Political insistence on themore efficient MSWM service organization operating the development of unaffordabledelivery organization. system by project completion. waste processing facilities in the

near term in favor of incremental9. Identification of suitable plans - Adoption of plan for development of more realisticfor privatization privatization of SW disposal. options.

10. Identification of waste Initiation of pilot waste 9. Resistance of wastereduction, recovery and recycling reduction/recycling initiative generators in all sectors to payoptions. in 1999. appropriate costs of the service

provided.11. Preparation of a strategic plan - Identification of long-termfor future system development. facility development options 10. Resistance of waste

for evaluation. generators in all sectors to pay- Development of a appropriate costs of the servicemanagement approach for provided.industrial hazardous waste.- Identification of futurebusiness structure options.-Definition of longer terminitiatives to upgrade street I


Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Riskswashing, sweeping and littercollection capacity. .

Project Outputs1. Acceptable collection - Minimum collection 1. Reports on regular 1. The project is unable tofrequency. frequency of four times/week intervals (monthly, respond quickly enough in

achieved. quarterly, semi-annually and implementing service- Absence of bin overflow. annually) on key indicators improvements to preserve public- Reduction in complaints. with outline of actions to be support for them.

taken in case of major2. Service capacity for all - 1.5 million tons collected in discrepancy. 2. Waste volumes have beenMSWM requirements. 1999, 1.6 million tons underestimated and additional

collected in 2000. 2. Comprehensive project requirements would be identified- Full capture of industrial review with agreement on when the project ismarket by 2000. actions after 18 months of implemented.

implementation.3. Adequate collection points. - Development of detailed 3. Worker resistance would

plans for design and hinder automation of collectionplacement of bins and bases. and operational optimization.- Public acceptance and usage.

4. Lack of basic skills4. Optimized collection - Increased vehicle usage, necessary to utilize improvedefficiency. automated bin pick up and maintenance capacity.

reduced unit operating cost.5. Failure to allocate sufficient

5. Improved vehicle - Vehicle availability beneficiary resources tomaintenance. increased to 90 percent. undertake supporting works for

- Establishment of landfill restoration.preventative maintenanceprograms. 6. Regulatory resistance to- Centralization of major allow continued operation of citymaintenance activities. landfills until medium and long-

term options can be developed.6. Accurate quantification of - Operation of weight scales.MSWM handled. - Landfill deliver records 7. Failure to maintain or act

reported and verified. upon environmental monitoringinformation.

7. Upgraded landfill operations. - Adoption of modemcompaction and cover 8. Flexibility to developpractice. interim solutions to- Reduction in active areas. accommodate hazardous- Increased acceptance by industrial waste currentlyneighbors. directed to MSWM facilities.- Regulatory acceptance.

9. Commitment to implement8. Operational environmental - Bi-monthly reports on bio- and operate efficient costmonitoring capacity. gas generation, and ground accounting systems and financial

and surface water impacts. control system

9. Monitoring and rejection of - Availability of trained staff 10. Competent regulatoryhazardous waste. for load inspection. capacity would exist to

- Reports on waste effectively oversee the system.composition and load Timely decision making is notrejection. ._ ._. _ ._ forthcoming with respect to


Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Risksstrategic waste management plan

10. Financial management - Accurate and timely recommendations.capacity. financial statements and cost

reports. 11. Waste recovery and- Anticipatory cost control recycling initiatives areaction. committed without a sound- Operation of a viable economic basis and appropriate

11. Independent MSWM utility. organization. markets for recovered material.- Substantial degree offinancial independence fromgovernment.- Full regulatory compliance.

12. Tariff structures allowing - Financial performanceadequate cost recovery. demonstrating adequate level

of cost recovery by 2000.

13. Full payment for services. - Reduction in accountsreceivable to 5 months of saleby 1999 and 4.5 months by2000.

14. Public awareness and - Information transferacceptance. initiatives implemented.

- Improvements in satisfactionresponse in follow-up socialassessments.

15. Strategic waste management - Decisions on new landfillplan adoption. development in 1999.

- Decision on proceeding withlong-term development ofwaste processing facilities.- Implementation ofprivatization and contractingout initiatives by 2000.- Implementation of wastereduction and recycleinitiatives.- Presentation of hazardouswaste management facilityproposals.

Project Components i. Availability of competitive1. Collection Infrastructure. - Delivery of 50,150 new and 1. Reports on regular local suppliers for bins and bases

replacement bins, and 10,000 intervals (monthly, who can also supply on-goingbases in 1998 and 1999. quarterly, semi-annually and requirements.- Replacement of 20,000 bins annually) on key indicatorsin 2000. with outline of actions to be.________________ _____________ I taken in case of major 2. Ability to accommodate


Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Risks2. Collection Vehicles. - Delivery of 170 x 3 ton discrepancy. large influx of new equipment

vehicles of rear and side with staff and maintenanceloading design and 45 x 5 ton 2. Comprehensive project capacity.dump trucks and other support review with agreement onvehicles with 15 additional 10 actions after 18 months of 3. Coordination of delivery ofton vehicles. implementation. new equipment, upgraded- Additional service vehicles collection infrastructure andfor Aghangaranskoe to service 3. Carry out project start up implementation of optimizedlandfill expansion workshop and seminars on operating practice.- Delivery of spares for 100 relevant Bank policies.existing vehicles in 1998 and 4. Timely decision on location100 each for Czech and 4. Carry out follow up of central maintenanceKorean vehicles social assessment. operation.

3. Vehicle Park Upgrading. - Early design and 5. Completion of worksimplementation of required to prepare maintenancemodifications to 11 existing operations in 1997 and earlyservice centers. 1998.- Decision on location andpreparation of central 6. Lack of motivation tomaintenance operation. improve operations by part of- Delivery of maintenance work force.equipment requirements in1998 and 1999. 7. Failure to obtain adequate- Training of maintenance cover material for new operatingpersonnel. practices.

4. Landfill Upgrading/ - Immediate closure of 2 in- 8. Diversion of landfillModernization and Closure. city landfills, Zangiata and equipment to other municipal

Hasanbay using new works.operating/closure procedures- Delivery of new landfill 9. Imposition of political andoperating and closure institutional bias into strategicequipment in 1998, and planning activity.transfer of closure equipmentto remaining landfill as it 10. Failure to identify strongbecomes available. local counterparts to support- Plan for expansion and strategic plan.upgrading of remaininglandfill, including building I1. Availability of suitablesafe efficient turning access to counterpart staff and skill sets toAghangaranskoe site. implement modern financial- Identification and management and accountingcontracting of cover material. systems.

5. Transfer Stations - Completion of four transfer 12. Institutional resistance tostations on outer edges of city implementation of publicby January 2000, equipped awareness programs.with two high-densitycompacting systems each, 13. Availability of suitable staffwaste transfer containers and for landfill and environmentalvehicles. monitoring training.


Narrative Summary Key Performance Indicators Monitoring and Supervision Critical Assumptions and Risks6. Residential Collection Bin - Ownership of bins by JEKs. 14. In ability of projectOwnership implementation resources to

process international7. Strategic Plan - Confirmation of donor procurement requirements.

funding if applicable.- Qualification of Plan 15. Inability of Municipalityconsultants, both local and and National Highwayforeign. Authorities to address issue- Establishment of strong local relating to safe access andcounterpart arrangements for turning space to theplan consultants. Aghangaranskoe site.- Overall Corporatization Planby the end of 1998. 16. Failure of Municipality to

complete rapid site selection for8. Technical Assistance. - Operation of effective transfer stations, land acquisition

financial management and and detailed designaccounting systems inSpetstrans by mid-1999. 17. Detailed engineering and- Collection system environmental studies concludeoptimization plan adopted by that transfer to single landfill isend of 1998. not feasible- Landfill upgrading designand training complete in 1998. 18. Public Consultation process- Public awareness programs for closure of landfills producesimplemented in early 1998. negative results-Environmental monitoringsystems operational and 19. Onlending arrangementstraining complete by end of undermined by change in1998. political establishment; Inflation- Development of bidding level becomes less stable; Cashdocuments for tendering of operating expenses, changes inwaste processing facility on working capital, minimum cashbuild-own-and-operate basis. balances and contribution of

internally generated funds not9. Project Implementation - Trained project metAssistance. implementation staff available

upon loan effectiveness, in 20. Not possible to use 0.5%PIU industrial waste disposal tax to- Efficient procurement and cover cash shortfalls; and tariffdisbursement. increase beyond inflationary

adjustment in case annualreceipts of waste disposal taxinsufficient


Table IA: Monitoring Indicators and Targets1998 1999 2000 2001 2002

Project OutputsPhysical Implementation

Operational Collection Vehicles - Residential/ Commercial/Budget Organizations, Services

i) Number of Vehicles 398 415 472 472 475

ii) Availability of Vehicles (%) 70 75 75 75 75

Operational Collection Vehicles - Industrial Services



Transfer Station to Landfill Operations



Street Cleaning, Latrine and Support Services



Landfill Operations

i) Pieces of Operating Equipment 10 18 21 21 21

ii) Availability of Equipment (%) 50 70 75 75 75

Number of Collection Bins in Service

i) Residential 0 10,000 20,500 21,000 21,500

ii) Apartment Buildings 10,000 22,500 45,000 46,000 47,000

iii) Commercial Establishments 2,500 11,250 22,500 23,000 23,500

iv) Budget Organizations 5,000 11,250 22,500 23,000 23,500

v) Industrial Customers 2,500 7,500 11,000 11,200 11,300

Number of Transfer Stations in Operation 0 2 4 4 4

Waste Collected in ton - Industry 216,000 223,000 230,000 236,000 243,000

Waste Collected in ton - Budget/Commercial Organizations 410,000 423,000 437,000 443,000 454,000

Waste Collected in ton - Residential Area 770,000 790,000 810,000 831,000 852,000

Waste Delivered to Transfer Stations (tons) 0 201,000 1,080,000 1,108,000 1,137,000

Waste Delivered Directly To Landfill by System (tons) 1,396,000 1,232,000 391,000 408,000 414,000

Waste Delivered Directly to at Landfill by others(tons) 134,000 138,000 142,000 146,000 151,000

Project Appraisa! DocumentTashkent Solid Waste Mafiagement Project Uzbekistan

Financial Aspects

Average Tariff Industry 477 622 877 1023 1195

Average Tariff Budget/Commercial Organizations 908 1185 1671 1948 2277

Average Tariff Residential 25 32 45 53 62

Tariff Waste Removal from Grounds at Apartment Buildings 682 890 1254 1463 1709

Tariff for Street Washing/Latrine Services 270 352 497 579 677

Spetstrans Accounts Receivable, average days of billing 90 75 60 60 60Industry

Spetstrans Accounts Receivable, average days of billing 90 75 60 60 60Budget/Commercial Organizations

Spetstrans Accounts Receivable, average days of billing 90 75 60 60 60Residence

Spetstrans Operating Ratio 116 123 124 120 III

Institutional Development

Utility Accounting Systems (Implementation in °) -- 50% 100% 100% 100%


Annex 2


Detailed Project Description

Background

1. The Tashkent MSWM system is managed by the Tashkent Solid Waste Management Department within theMunicipality administration. Reporting to the Solid Waste Management Department is a Municipality-owned enterprise(Spetstrans) and four subsidiary district waste collection enterprises that provide the operational services. The systemencompasses the collection and disposal of MSWM from: residential, commercial, institutional and industrial sources; citystreet cleaning; as well as collection and disposal of landscaping waste. A minor activity of the system is the collection ofliquid waste from latrine pits, which is transported to a controlled access point in the city sanitary sewer system. MSWM iscollected at a large variety of points, either in pre-positioned bins or, in their absence, open waste piles. A variety of collectionvehicle are used with compactor trucks and open dump trucks predominating. Each district collection enterprise operates truckparks and maintenance facilities. Disposal occurs at three landfills, one on the north side of the city (Hasanbay Landfill), oneon the south-west side of the city (Zangiata Landfill), and one located approximately 30 kilometers south of the city(Aghangaranskoe Highway Landfill). In addition, there is an inactive bio-thermal and incineration waste processing facilityadjacent to the Zangiata Landfill.

2. While there are no readily available and accurate data on waste collected, the actual volumes handled by the system in1997 is estimated to be 1.5 million tons, of which 750,000 tons are generated by residential and commercial sources, 400,000tones by institutional (budget organizations) sources, and 350,000 tones by industrial sources. Of the industrial andinstitutional waste, 610,000 tons is collected by Spetstrans and 140,000 tons is collected by private carriers for disposal in themunicipal landfills. A seasonal variation in waste volumes of approximately 25 percent occurs between summer and winter.While evidence of illegal or random dumping is limited, this activity is increasing.

3. The collection system is based primarily on 640-liter and 750-liter metal collection bins that provide communaldisposal for residential housing units as well as commercial or institutional establishments. These are designed for collectionby side-loading automated compactor trucks, mainly with 3 ton (7.5 m3

) capacity. Currently all bins are owned and maintainedby Spetstrans, but responsibility for those serving the majority of the residential population in multi-story dwellings iscurrently being transferred to the local housing authorities (JEKs). Either due to the shortage of bins or their incompatibilitywith high-rise residential trash chute systems, manual loading into open dump trucks, tractor wagon, or a bin carried by thecompactor vehicles are also practiced. A final variant of residential collection is collecting directly from residents who bringtheir garbage to the vehicle when it arrives. Street sweepings and industrial waste are primarily manually loaded into opentrucks of various sizes. The current waste collection vehicle fleet consists of 362 compactor trucks, 81 dump trucks, 28vacuum trucks, and 46 tractors and wagons for street cleaning operations. Truck park maintenance operations are operated byeach district enterprise, undertaking both routine maintenance and major overhauls.

4. The basic collection system is functional but rapidly deteriorating. Collection points are poorly maintained,increasingly lack serviceable bins, and often have limited accessibility to users. A shortage of bins is resulting in waste pilesbeing left for collection. Collection frequency is also declining due to vehicle availability. Public confidence in the system hasdropped as a consequence, resulting in increasing random dumping and local burning of uncollected waste. The average age ofthe present fleet is approximately 6 years old with vehicles as old as 12 years remaining in service, despite the purchase of 100new vehicles in 1996 as an emergency measure. Vehicle maintenance is no longer systematic, but largely based oncannibalization of retired vehicles and ad hoc acquisition of spares. Few of the maintenance facilities are adequately equippedfor anything but routine repairs.

5. The system's three landfill facilities are estimated to have the following remaining life at the present rate ofutilization: (a) Hasanbay Landfill - 6 to 7 years; (b) Zangiata Landfill - 2 years; and (c) Aghangaranskoe Highway Landfill - 20years. Operationally, all require upgrading, both in terms of equipment and operating practice. None utilize appropriatecovering practices and maintain long, high, open tipping faces. Compaction is limited to that achieved by bulldozer levelingactivities. While all have secure, controlled access and record incoming material by load, there is no routine inspection orweighting of incoming loads, although weight scales are nominally available at the Aghangaranskoe Highway and Zangiatasites. The presence of hazardous industrial waste in the landfills is not commonly observed but in the absence of dedicated


management facilities for these wastes, some disposal of these materials likely takes place. Similarly, biomedical waste isroutinely disposed of in the landfills, creating risks to workers and scavengers. The landfills operate in daylight hours and allhave full security. However, both Aghangaranskoe Highway and Hasanbay landfills are subject to illegal dumping fromunauthorized access points. From an environmental perspective, both the Hasanbay Landfill and Aghangaranskoe HighwayLandfill appear to have good natural hydrogeological barriers and would likely represent low-risk sites for ground watercontamination. The latter also has monitoring wells. The Zangiata Landfill, however, is located in a ravine system containingan active surface water course, sandy overburden, and associated wet lands. Consequently, it is likely to have negative impactson both surface and ground water quality. Landfill gas emissions appear to occur in all sites in moderate amounts; surface firesare common but not extensive, although fire is deliberately employed to reduce landscaping waste volume. Active firesuppression capacity using trucked water is utilized. The Zangiata Landfill is surrounded by industrial, commercial andagricultural development with reasonable buffers to adjacent development. Similarly, the Aghangaranskoe Highway Landfill islocated in an agricultural area with no immediate residential conflicts and substantial long-term expansion potential. TheHasanbay Landfill site, however, has residential development immediately adjacent on two sides and direct conflict with adhoc agricultural and commercial activity within the area of future filling. Light to moderate scavenging was noted at alllandfills. Due to the limited life and environmental concerns at the Zangiata landfill, and neighboring land use conflicts at theHasanbay landfill, the Municipality has recently decided to close both these facilities and concentrate disposal atAghangaranskoe Highway as soon as possible.

6. The MSWM system also nominally includes an inactive bio-thermal waste processing facility located adjacent to theZangiata Landfill. This facility was operated from the early 1980s until 1991, at which time poor performance, high operatingcosts, and inadequate facility maintenance forced its closure. While the history of this operation demonstrates the lack ofsustainability associated with high technology waste processing options, the Municipality has recently been entertainingproposals for bio-thermal and incineration facilities to process approximately 10 to 15 percent of the city's waste, potentiallyusing this location. However, other more realistic options being discussed include its use as a central maintenance vehiclefacility or transfer station.

7. The deterioration of the system's -physical service capacity and quality is directly correlated with its financialsituation. During the past few years overall operating costs have been rising, despite declines in the level of service. While,Spetstrans has been recovering operating costs during this period, it is based only on the increasing direct subsidies from theMunicipality. Currently, it carries a high level of accounts' receivable with 34 percent and 64 percent of its residential andindustrial commercial customers, respectively being in default. Significant cross subsidies exist from the industrial toresidential sectors, and revenue transfer mechanisms between the various operating organizations in the system do not reflectthe distribution of costs. While tariff charges kept pace with inflation until April 1996, the lack of any rate increases during thepast year has accelerated system decline. Effective April 1997, however, there has been a substantial increase in residentialrates from 4 sum/person/month to 15 sum/person/month.

8. A social assessment has shown that improvement of solid waste collection services is a high priority among thegeneral public. Among other findings, the assessment revealed a universal dissatisfaction with the current level of service; awillingness to pay more for adequate service; concern about collection point access, sanitation and child safety; and awillingness to recycle waste. The assessment also revealed that there is relatively little informal waste scavenging around thecity and only a modest amount of scavenging in the landfills. The project improvements, therefore, are not expected to have asignificant negative impact on those who may rely on waste scavenging as a source of food or income.

9. In summary, the present system is approaching a state of collapse, largely because of inadequate financial capacity forproper maintenance and capital replacement, although recent ad hoc initiatives by Municipality are serving to maintain aminimum service level. The critical area of concern is the collection system where rehabilitation of collection infrastructure,renewal of vehicle fleets, and modernization of maintenance capacity is required. While conventional waste disposal (landfill)capacity is adequate in the near term, the recent decision to close the city landfills necessitates upgrading of the remaining siteand creates a requirement for transfer station capability in order that the impact of the longer haul distance can be mitigatedefficiently. This should be done as part of the system's rehabilitation in order that it is coordinated with collection systemimprovements. In addition, it is recognized that any rehabilitation has to be accompanied by improvement in the system'sfinancial situation and ultimately in restructuring its operation as an independent, self-financing entity. Finally, therehabilitation process would require public support and its implementation, therefore, should reflect public input in areas suchas container access, collection point upgrading, development of equitable residential tariffs and collection mechanisms, landfillupgrading and closure activities, and development of public awareness and consumer information activities.


Project Description

10. The proposed project is structured with an investment component and an institutional support component. Theinvestment component focuses on upgrading the key parts of the present MSWM system, namely the waste collection anddisposal infrastructure as well as adding infrastructure necessary to allow efficient transition to a system based on a singledisposal facility and providing for future development of waste reduction and waste processing initiatives. The system, asenvisioned upon project completion in 2003, would route 1.1 million tones a year of residential, commercial and institutionalwaste to four transfer stations located on the perimeter of the city. This would be consolidated into larger vehicles for transferto the Aghangaranskoe Highway landfill. 400,000 tons of industrial and commercial waste would be transported directly to thelandfill. The institutional support component encompasses a strategic waste management plan for the future development ofthe system and technical assistance related to enhancing its financial viability, privatization and upgrading its technicaloperations. The following describes these two project components in more detail:

(a) Investment Component. This would cover the upgrading of the MSWM system's basic collection capacity,modernization of the long-term landfill facility, closure of the present city landfill facilities and developmentof four strategically located transfer stations in order to bring the system up to a reliable level of service.Investments are directed to the following sub-components:

(i) Collection Infrastructure. This sub-component would finance a variety of collection bin types, sufficientto re-equip the current system for service in all sectors, including those to be owned and maintained bythe housing authorities for the multi-story residential sector. They would mainly be 750-liter metalcollection bins suitable for both side and rear loading vehicles, including a portion of them havingwheels for transfer from resident to street collection points. A quantity of smaller plastic or metalresidential bins (100-liter and 240-liter) for individual residences have been included. In addition,dedicated commercial/industrial service metal bins in two sizes (1100-litre, 10,000-litre) is provided for.Prefabricated concrete slabs for collection points bins also would be supplied. They would be designedto facilitate user access, litter control, and bin washing.

(ii) Collection Vehicles and Support Equipment. The project would bring the Spetstrans fleet up to 620collection and support vehicles by the end of the year 2000, allowing for continued use of newerexisting vehicles and the changes in system configuration and operation to be implemented as part of theproject. Vehicles presently in service beyond their useful life would be retired as new vehicles aresupplied. The vehicle types to be supplied are primarily 3-ton rear and side loading compactors and 5-ton dump trucks suitable for service within the city and hauling to transfer stations. A number of 10-tonroll-off type container trucks are to be introduced to allow more efficient service to the heavycommercial and industrial sectors, as well as direct haulage to the landfill. A number of vacuum trucks,service vehicles, bin washing vehicles, and tractors are also provided for. In order to ensure that newerexisting vehicle operation is sustained, spares for 100 existing trucks purchased in 1996 have beenincluded.

(iii) Vehicle Park Development. The upgrading of all existing district service centers plus the development ofa central repair workshop for major repairs would be undertaken. The scope of operation at the districtcenters would be down-graded to only providing running maintenance, while major maintenance andoverhaul would be concentrated at the central facility which would also provide these services forlandfill equipment and transfer station vehicles. The central facility would be located at either anexisting district service center or at the Zangiata waste processing facility.

(iv) Landfill Modernization. The Aghangaranskoe Highway landfill would be substantially upgraded inrecognition of its role as the city's long-term disposal facility. This would involve the addition of newoperating equipment in the form of bulldozers, landfill compactors, and excavators, as well as supportequipment for maintenance and personnel transport. In addition, upgrading of the infrastructure with sitemaintenance shops, access and utility upgrading, environmental monitoring capacity and servicebuilding has been included, as well as allowance for progressive closure of presently utilized areas andopening of new areas. The sub-component excludes the development of a safe turning access point fromthe Aghangaranskoe Highway into the site access road that would be upgraded under the project. Thecurrent turning point from the Aghangaranskoe Highway into the main landfill is a narrow break in theconcrete divider between the sides of a four-lane highway which presents a safety hazard to the solidwaste collection vehicles having to cross on-coming traffic. An improved turning access will beprovided independently by the Borrower as part of highway improvement programs.


(v) Landfill Closure. This sub-component provides for equipment and civil works required to affect anenvironmentally sound closure at the Zangiata and Hasanbay landfills, as well as long-termenvironmental monitoring capacity. The equipment initially dedicated to this work would be re-assignedto the Aghangaranskoe Highway landfill operation once closure is complete in 2000.

(vi) Transfer Stations/Transfer Vehicles: This sub-component provides for four transfer stations eachhandling an equal portion of the 1.1 million tones/day of residential, commercial and institutional wastedesignated for consolidation within the city for transshipment to Aghangaranskoe Highway landfill. Eachwould be designed to handle up to 280 incoming vehicles/day and 30 outgoing vehicles per day. Theywould be developed on a turnkey basis and each would employ two fixed compaction systems that wouldfill 30 m3 containers. Two containers per trip would be transported on a flat bed truck and trailercombination. The transfer stations would be located on the perimeter of the city, each serving roughly acity quadrant and would be sited for convenient access to the ring road system leading to theAghangaranskoe Highway. Detailed siting is being undertaken by the Municipality as a perquisite toproject initiation.

(vii) Biomedical Waste Facilities. The project would include the development of an interim capacity tomanage biomedical waste which is currently co-disposed with other wastes at landfills. While thedevelopment of dedicated incineration or autoclave facilities would eventually be necessary, the projectwould provide for dedicated vehicles and containers such that this waste can be collected from generationsites separately from other wastes and disposed of in a segregated cell to be developed atAghangaranskoe Highway landfill.

(b) Institutional Support Component. This component is directed at both providing the necessary projectmanagement capacity for project implementation and the required institutional strengthening for theoperation of a sustainable system into the future. It is proposed that this component be administered underthe umbrella of a single consulting contract in order to ensure coordination of project implementation withthe longer-term system planning and technical assistance required. The following describes each part of thecomponent:

(i) Project Management Support. This sub-component covers the establishment and operation of two ProjectImplementation Units (PIU) which, together, would supervise the project's implementation along withthe project management consultant's support. The Central PIU would be located within the Ministry ofMacroeconomics and would build on an existing PIU which has a proven track record in managing Bankproject processing requirements including financial management. The subsidiary PIU, consisting of twopeople, would be situated within the Solid Waste Management Department of the Municipality.Specifically, this component would cover computer and office equipment, office improvements, PIU staffcosts, and implementation support respecting procurement and disbursement.

(ii) Institutional Strengthening. This sub-component covers a range of planning and technical assistanceactivities. This includes the development of a strategic plan for the future development of the system inthe medium and long term. This plan would specifically address the appropriate longer-term approaches,initiatives and investments required to maintain MSWM system capacity and its modemization in areassuch as waste processing facility development, hazardous waste management, and waste minimizationand recycling. Assistance would be provided in strengthening the financial management capacity of thesystem and facilitating its orderly corporatization and ultimately privatization as appropriate.Development and implementation of a modern financial management system, including the necessarysupport equipment and training is provided for. Finally, the sub-component would provide directtechnical assistance and training related to collection operations, landfill operation and closure and designof future landfill expansion. In addition, the sub-component would support the development andimplementation of a public participation and education plan that would address the needs for consumerinformation, public awareness, and public consultations in landfill facility design and closure, publicparticipation in strategic planning, and further beneficiary assessment. A key element within theinstitutional strengthening would be public participation.


Annex 3


Estimated Project Costs(US$ million)

Project Component Local Foreign Total % of BaseCost

Investment ComponentCollection Vehicles and Support Equipment -- 12.77 12.77 27%Collection Infrastructure 4.15 8.97 13.12 27%Landfill Modernization 1.10 2.71 3.81 8%Vehicle Park Development 1.70 0.98 2.68 6%Landfill Closure 0.12 0.94 1.06 2%Transfer Stations 2.15 2.96 5.11 11%Transfer Station Vehicles -- 4.72 4.72 10%Biomedical Waste Facilities -- 0.72 0.72 1%Operations Computer Equipment 0.06 0.28 0.34 1%

Institutional Support 0.05 3.75 3.80 8%Total Base Cost a' 9.32 38.81 48.13 100%

Physical Contingencies 0.91 3.69 4.70Price Contingencies 0.76 2.50 3.17

Total Project Cost 11.00 45.00 56.00al Includes all applicable taxes.

TASHKENT MUNICIPAL SOLID WASTE MANAGEMENT PROJECTBASE CAPITAL COST ESTIMATE

Ease Cost EstimateItom No Item Description Quantity Unit Cost Spares Total Base Cost Base Cost Physical Total Price Total VAT & Road Total Component % of

Uplift wto Cont. Local Foroign Contingencies w/Phy. Cont. Contingence w/ Cont. Taxes Project Cost Totals Total10% 6% 18%

PART 1 INVESTMENT1.1 Collection Infrastructure 15,372,338 27.5%

1.1 1 Collection BinsType 1- Std. communal bins (750 L.) 60000 50 3,000,000 3,000,000 300,000 3,300,000 214,267 3,514,267 632,947 4,147,214Type 2-Wheeled street bins (750 L.) 30000 75 2,250,000 2,250,000 225,000 2,475,000 160,700 2,635,700 474,710 3,110,410Type 3 - Small residential bins (100 L. 10000 35 350,000 350,000 35,000 385,000 24,998 409,998 73,844 483,842Type 4 - Large Residential bins (240 10000 40 400,000 400,000 40,000 440,000 28,569 468,569 84,393 552,962Type 5 - Small commercial bins (1100 10000 100 1,000,000 1,000,000 100,000 1,100,000 71,422 1,171,422 210,982 1,382,405Type 6 - Large commercial bins 300 2,000 600,000 600,000 60,000 660,000 42,853 702,853 126,589 829,443

1 12 Concrete Slabs for BinsTypel - Bin Concrete Slab 1800 200 360,000 360,000 36,000 396,000 25,712 421,712 75,954 497,666Type 2 - Bin Concrete Slab 1800 300 540,000 540,000 54,000 594,000 38,568 032,568 113,930 746,498Type 3 - Bin Concrete Slab 1800 400 720,000 720,000 72,000 792,000 51,424 843,424 151,907 995,331Type 4 - Bin Concrete Slab 1800 500 900,000 900,000 90,000 990,000 64,280 1,054,280 189,884 1,244,164

1.13 Slab/Bin Installation 20000 50 1,000,000 1,000,000 100,000 1,100,000 71,422 1,171,422 210,982 1,382,405

1.2 Collection vehicles1.2.1 Compactor Trucks 14,957,478 26.7%

Type 1- 3 tonne, 7.5m3 compactor 85 30,000 3,000 2,805,000 2,805,000 280,500 3,085,500 200,340 3,285,840 591,805 3,877,645Type 2 - 3 lonne, 7.5m3 (rear loadin 85 30,000 3,000 2,805,000 2,805,000 280,500 3,085,500 200,340 3,285,840 591,805 3,877,645Type 3- 10tonnecontalnertruck 15 45,000 4,600 742,500 742,600 74,250 816,750 53,031 869,781 156,654 1,026,435

1.2.2 Tipper (Dump) Truck 46 18,000 1,800 891,000 891,000 89,100 980,100 63,637 1,043,737 187,985 1,231,7221.2.3 Vacuumtankers 20 22,000 2,200 484,000 484,000 48,400 532,400 34,568 566,968 102,115 009,0841.2.4 Tractors wlGrader Blade 40 20,000 2,000 880,000 880,000 88,000 968,000 62,852 1,030,862 185,664 1,216,5161.2.6 Drop-side truck with loading crane 12 27,000 2,700 356,400 356,400 35,640 392,040 25,455 417,495 75,194 492,6091.2.7 Bin cleaning vehicle 12 600000 6,000 792,000 792,000 79,200 871,200 56,566 927,766 167,098 1,094,86412.8 Wheeled motorized chipper 24 10,000 1,000 204,000 264,000 26,400 290,400 18,865 309,255 55,699 364,9551 2.9 Spare parts for 1996 K0413 Compact 100 2,000 200,000 200,000 20,000 220,000 14,284 234,284 42,196 276,481

1.2.10 Spares tor 1997/98 Czech Trucks 100 2,000 200,000 200,000 20,000 220,000 14,284 234,284 42,196 276,4811.2.11 Spares for 1997/98 Korean Trucks 100 4,000 400,000 400,000 40,000 440,000 28,569 468,569 84,393 552,962

1.3 Vehicle Park Development 3,135,708 5.6%1.3.1 Vehicle Park upgrading 11 90,000 990,000 990,000 99,000 1,089,000 70,708 1,159,708 208,872 1,368,6801.3.2 Vehicle servicing equpment (distrclts) 11 23,000 2,300 278,300 278,300 27,830 306,130 19,877 326,007 58,716 384,7231.3.3 Central repair workshop 1 450,000 450,000 450,000 45,000 495,000 32,140 527,140 94,942 622,0821.3 4 Vehicle servicing equipment (central) 1 500,000 60,000 550,000 550,000 55,000 606,000 39,282 644,282 116,040 760,322

1.4 Main Landfill Modernization(Archangaranskoe) 4,462,125 8.0%

1.4.1 Bulldozers 2 150,000 15,000 330,000 330,000 33,000 363,000 23,569 386,569 69,624 456,1931.4.2 Landfill Compactors 3 300,000 30,000 990,000 990,000 99,000 1,089,000 70,708 1,169,708 208,872 1,368,5801.4.3 Tracked loader shovel 2 120,000 12,000 264,000 264,000 26,400 290,400 18,855 309,255 65,699 364,9551.4.4 Excavator 1 80,000 8,000 88,000 88,000 8,800 96,800 6,285 103,085 18,566 121,6521.4.5 Dump Truck-8tonne 4 40,000 4,000 176,000 176,000 17,600 193,600 12,570 206,170 37,133 243,3031.4.6 Low loader 1 96,000 9,600 105,600 105,600 10,560 116,160 7,542 123,702 22,280 145,9821.4.8 Bus For Labor Transport 1 20,000 2,000 22,000 22,000 2,200 24,200 1,571 25,771 4,642 30,4131 4.9 Light Transport Vehicles 2 10,000 1,000 22,000 22,000 2,200 24,200 1,571 25,771 4,642 30,413

1 4.10 Fuel Track 1 22,000 2,200 24,200 24,200 2,420 26,620 1,728 28,348 5,106 33,4541 4.11 Water Truck 3 20,000 2,000 66,000 66,000 6,600 72,600 4,714 77,314 13,925 91,2391.4.12 Truck Crane 1 30,000 3,000 33,000 33,000 3,300 36,300 2,357 38,657 6,962 45,6191.4.13 Weighbridge 2 35,000 3,500 77,000 77,000 7,700 84,700 5,500 90,200 16,246 106,4451.4.14 Maintenance Shop 1 50,000 50.000 50,000 5,000 55.000 3,571 58,571 10,549 69,120

Welding MachinesMachine ToolsMaterials Handling EquipmentService Tools

1.4.15 Environmental Montoring Systemportable Gas sampling device 1 20,000 20,000 20,000 2,000 22,000 1,428 23,428 4,220 27,648portable Infra red spectrometer 1 25,000 25,000 25,000 2,500 27,500 1,786 29,280 5,275 34,560portable gas detector 1 5,000 5,000 5,000 500 5,500 357 5,857 1,055 6,912monOoring wells 4 25,000 100,000 100,000 10,000 110,000 7,142 117,142 21,098 138,240

1.4 16 Intrastructure UpgradingAccess Roads 1 50,000 50,000 60,000 5,000 65,000 3,571 58,571 10,549 69,120Gates/Fencing/Lighting 1 100,000 100,000 100,000 10,000 110,000 7,142 117,142 21,098 138,240Service Utilitles 1 50,000 50,000 50,000 5,000 55,000 3,571 58,571 10,549 69,120Fuel Station 1 15,000 15,000 15,000 1,500 16,500 1,071 17,571 3,165 20,736Truck Wash 1 5,000 5,000 5,000 500 5,5 | 357 5,857 1,055 6,912

1.4.17 BuldingsMaintenance Shop (300m3) 1 140,000 140,000 140,000 14,000 154,000 9,999 163,000 29,538 193,537Staff/tUbility Building (200 m3) 1 100,000 160,000 100,000 16,000 176,000 11,428 187,428 33.767 221,185

3/6/98 COSTPAD.XLS

TASHKENT MUNICIPAL SOLID WASTE MANAGEMENT PROJECTBASE CAPITAL COST ESTIMATE

Warehouse (200m3) 1 60,000 60,000 60,000 6,000 66,000 4,265 70,265 12,659 62,9441.4.18 Closure/remediation 1 150,000 150,000 150,000 15,000 165,000 10,713 175,713 31.647 207,3611.4.17 Land Acquis6ion/Compensation for 1 100,000 100,000 100,000 10,000 110,000 7,142 117.142 21,098 138,240

Long Term Expansion

1.5 Landfill Closure(Zangiata & Khasambai) 1.255,223 22

1.5 1 Bulldozers 2 150,000 15,000 330,000 330,000 33,000 363,000 23,569 386,569 69,624 456,19315.2 Tracked loader shovel 1 120,000 12,000 132,000 132,000 13,200 145,200 9,428 154,628 27,850 162,4771.5.3 Excavator 1 0 ,000 88 ,00 88,000 8,800 96,800 6,285 103,085 18,566 121,65215.4 Dump Truck- 8 Tonne 2 40,000 11.200 102,400 102,400 10,240 112,640 7,314 119,954 21,605 141,5581.5.5 Low loader 1 96,000 9,600 105,600 105,600 10,560 116,160 7,542 123,702 22,280 145,9821.5.6 Environmental Monitoring System 1 50,000 50,000 . 50,000 5,000 55,000 3,571 58,571 10.049 69,1201.5.7 Civil Works 2 50,000 100,000 100,000 10,000 110,000 7,142 117,142 21.098 138,240

1.6 Transfer Stations (4) 5,991,894 10.7%16.1 Intrastructure Development

Transfer Station Design 4 20,000 80,000 80,000 8,000 88,000 5,714 93,714 16,879 110,592She Acquisition 4 100,000 400,000 400,000 40,000 440,000 28,569 468,569 84,393 552,962Se Access/Preparation 4 50,000 200,000 200,000 20,000 220,000 14,284 234,284 42,196 276,481General Building works 4 75,000 300,000 300,000 30,000 330,000 21,427 351,427 63,295 414,721Olf-Loading Platfomr/Ramp 4 75,000 300,000 300,000 30,000 330,000 21,427 351,427 63,295 414,721Gate House/Fencing 4 45,000 180,000 180,000 18,000 198,000 12,856 210,856 37,977 248,833Staffand Maintenance Facilities 4 45,000 180,000 180,000 18,000 198,000 12,856 210,856 37,977 248,833Miscellaneous 4 45,000 180,000 180,000 18,000 198,000 12,856 210,856 37,977 248,833

1.6.2 Speciality EquipmentCompaction System 8 175,000 9,600 1,476,800 t,476,800 147,680 1,624,480 105,476 1,729,956 311,579 2,041,535Containers 92 7,400 680,800 680,800 68,080 748,880 48,624 797,504 143,637 941,141Weighbridge 8 35,000 9,600 356,800 356,800 35,680 392,480 25,483 417,963 75,278 493,242

1.7 TransferStation/Landfill Vehicles 32 125,000 4,000,000 4,000,000 400,000 4,400,000 285,689 4,685,689 843,929 5,529,618 5,529,618 9.9%

1.8 Operations Computer Equipment 843,267 1,5%1 8.1 Computer Equipment for Collection 1 50,000 50,000 50,000 5,000 50,000 3,571 58,571 10,549 69.120

System Management1.8.2 Computer EquipmentforTransfer 4 12,000 48,000 48,000 4,800 52,800 3,428 56,228 10,127 66.355

Station Operations1.8.3 Computer Equipment For Landfill 1 12,000 12,000 12,000 1,200 13,200 857 14,057 2,532 16,589

Operations18.4 Computer/Equipment/Softwarefor 1 500,000 500,000 500,000 50,000 550,000 35,711 585,711 105,491 691,202

Spetstrans Financial System

1.9. Bio-Medical Waste Facilities 399.791 0 7%19.1 Collection Vehicle 2 100,000 9,600 219,200 219,200 21,920 241.120 15,656 256,776 46,247 303,02319.2 Containers 200 100 20.000 20,000 2,000 22,000 1,428 23,428 4,220 27,6481.9.3 Landfill Cell Development 1 50,000 50.000 50,000 5,000 55,000 3,571 58,571 10,549 69,120

PART 2 INSTITUTIONAL SUPPORT 4,052,557' 7 2%

2.1 Project Management2.1.1 Computer and office equipment Oor PIU 1 50,000 50,000 50,000 50,000 3,246 53,246 9,590 62,8372.12 PIU local staff costs (months) 48 910 43,680 43,680 43,680 2,836 46,516 8,378 54,8942.1 3 Office Improvements 1 1,000 1,000 1,000 1,000 65 1,065 192 1,2572.1.4 Implemenatrion support 1 300,000 300,000 300,000 300,000 19,479 319,479 57,541 377,019

2.2 Institutional Strengthening2.2.1 Strategic Plan 1 300,000 300,000 300,000 300,000 19,479 319,479 57,541 377,0192,2,2 Corporatisation Support 1 150,000 150,000 150,000 150,000 9,739 159,739 28,77 1688,5102.2,3 Financial Management System Dev. 1 100,000 100,000 100,000 100,000 6,493 106,493 19,180 125,6732.2.4 Financial Management System 1 1,300,000 1,300,000 1,300,000 1,300,000 84,408 1,384,408 249.343 1.633,7512.2.5 Tarif Studies 1 200,000 200,000 200,000 200,000 12,986 212,986 38,360 251,3462.2.6 Training 1 200,000 200,000 200,000 200,000 12,986 212,986 38,360 251,3462.2.7 Collection Operations Optimization Stu 1 100,000 100,000 100,000 100,000 6,493 106,493 19,180 125,6732.2.8 Landfill Operations Training/ 200,000 130,000 130,000 130,000 8,441 138,441 24,934 163,375

Waste Identification2.2,9 Landfill Closure Studies/Design 1 100,000 100,000 100,000 100,000 6,493 106,493 19,100 t25.673

2.2 10 Landfill Expansion Design 1 250,000 250,000 250,000 250,000 16,232 266,232 47,951 314,18322 11 Public Participation (Costs incorporated into landfll ems, uari study and strategic plan) 0 0 0 0 0 0

TOTAL l| | 40,e02,268 7,804,680 32,897,600 3,757,760 44,560,846 2,893,255 47,453,295 8,546,706E- 58,006,0008 56,00,066 100%


Annex 4


Economic Analysis

Table 4A: Cost Benefit Analysis Summary(In October 1997 US$ million at 10% discounted rate)

Present Value of Flow Fiscal ImpactsEconomic Financial (VAT, road taxes)Analysis Analysis

Incremental Benefits 100.8 a/ 117.8 18.0109.7 b/

Incremental Costs 96.6 114.7 17.2

Net Benefits 3.6 - 3.013.2 -

IRR: 13.2% a 12.0%20.0% -

Notes:- Projected financial revenues and costs are adjusted to identify economic benefits and costs.

- Value given to the change in environmental quality is based on the willingness of individuals

to pay estimated through the social assessment.

Main Assumptions:

The project life is assumed to be 10 years.

The economic rate of return has been calculated based on the adjusted financial revenues and costs of the projects.Quantified project benefits include incremental revenues from enhanced solid waste collection, street-cleaning, andlandfill disposal and the net transfer by the Municipality of Tashkent of the 0.5 percent waste removal/disposal taximposed on all enterprises or the new City Improvement Tax.

Willingness to pay for improved solid waste management obtained during the social assessment was used to assessthe lowest monetary value of changes in health and environmental quality which would be derived from the projectfor the household.

The majority of households reported a willingness to pay 15 sums pe; person per month (equivalent to 495 sum perton) for improved services and reported lack of trust that the supposed level of service would be achieved. Thosewith more confidence in improved management revealed a willingness to pay 30 sums per capita per month. Valuesof 990 sum per ton and 330 sum per ton were used to estimate the economic benefits of the situation with the projectand without the project, respectively.


Table 4B: Switching Values of Critical ItemsVariable Switching value

Financial IRR Economic IRR Economic IRRa'~~~~~~~b

Capital costs (including renewals) 5.0% 8.0% 30.0%

Operating costs 4.8% 6.8% 24.7%

Benefits (revenues or WTP) -7.6% -4.0% -12.0%Notes:

- Projected financial revenues and costs are adjusted to identify economic benefits and costs.Value given to the change in environmental quality is based on the willingness of individuals to pay estimated through thesocial assessment.


Annex 5


Financial Analysis

Table 5A: Financial SummaryYears Ending December 31

(In million Sum)FY99 FY00 FYO I

Project CostsInvestment Costs 3,740.4 4,745.5 348.3Recurrent Costs 1,458.5 2,199.2 2,649.5

Total 5,198.9 6,944.7 2,997.8

Financing Sources (% of total project costs)IBRD 31% 30% 5%EBRD 27% 25% 4%Government 14% 13% 2%User Fees/Beneficiaries 28% 27% 60%City Improvement Tax 0% 5% 28%

Total 100% 100% 100%

Table 5B: Financial Summary for Revenue Earning Project EntitiesYears Ending December 31, 1996 through 2001

(In millions of current Sum)1996 1997 1998 1999 2000 2001 Average

AnnualGrowth

Forecast

Income Statement Items

Revenues 255.5 673.6 1,101.4 1,555.4 2,053.6 2,401.8 266%

Operating Income 33.6 65.0 154.1 96.9 (145.6) (247.7) -237%

Net Income (1.3) 23.8 42.5 (217.9) (924.5) (1,722.1) -21089%

Funds Statement Items

Intemal Sources 8.0 51.1 126.4 41.1 (302.7) (465.5) -1529%

Borrowings - - - 751.7 953.7 70.0 5%

Equity Investments 175.0 - 1,431.0 2,988.7 4,116.8 1,128.3 1890%

Total Sources 183.0 51.1 1,557.3 3,781.5 4,767.9 732.8 813%

Capital Expenditures 166.2 - 1,431.0 3,740.4 4,745.5 598.1 962%

Working Capital Increase (Decrease) 16.7 51.1 126.4 41.1 22.3 134.7 481%

Debt Service - - - - - -

Total Applications 183.0 51.1 1,557.3 3,781.5 4,767.9 732.8 813%

Balance Sheet Items

Current Assets 61.1 109.2 259.3 819.2 969.9 1,182.0 736%

Net Fixed Assets 192.3 165.0 1,667.6 5,195.3 10,158.3 10,844.8 5102%

Total Assets 253.4 274.2 1,926.9 6,014.5 11,128.3 12,026.8 3222%


1996 1997 1998 1999 2000 2001 AverageAnnualGrowth

-- - - - - - - - - - - - - - - - - -S 3 - - - S Z _ -- - - 6_ . _--- - -- -- _f . -- - -4 i - -- - .-- -Current Liabilities 35.3 32.3 56.1 249.2 377.5 454.8 429%

Debt - 129.1 -205.1 275.6 400.4 467.0 90%

Equity 218.1 241.9 1,870.9 5,013.6 9,045.3 9,796.5 3667%

Total Liabilities and Equity 253.4 274.2 1.926.9 6,014.5 11,128.3 12,026.8

Financial RatiosExcluding Transfer Payments from the Municipality

Operating Income % of Revenue 13% 10% 14% 6% -7% -10%

Net Income as % of Revenue -1% 4% 4% -14% -45% -72%

Return on Average Invested Capital -2% 23% 5% -7% -14% -19%

Return on Net Revalued Fixed Assets -0.3% 3.3% 1.5% -1.4%JO -2.8% -3.8%

Debt Service Coverage na na 45.9 1.7 -0.9 -1.1

Percent of Total Capital Expenditures na 5% 0% -6% -93% -861%financed by Internal Sources

Current Ratio 1.7 3.4 4.6 3.3 2.6 2.6

Debt as % of Total Capitalization 0 0 0 12% 15% 15%

Including Transfer Payments from the Municipality

Return on Average Invested Capital -2% 23% 5% -7% -9% -9%

Return on Net Revalued Fixed Assets -0.3% 3.3% 1.5% -1.4% -1.6% -1.6%

Debt Service Coverage na na 45.9 1.7 1.1 2.8

Percent of Total Capital Expenditures na 5% 0% -6% -39% 64%financed by Internal Sources

1. Internal Rate of Return. The result of the Internal Rate of Returnbase case scenario shows a rate of return of 12percent. In calculating the benefits, the net payments Cost BaseCase Revenue-10% Revenue-15%

by the Municipality of Tashkent were considered as Base Case 12%I 7%I 0%benefits accruing to the project, as the source of the Investment + 10% 9% 1% -3%

payments was a specific 0.5 percent waste removal Recurrent Cost+ 10% 8% -1% -6%/disposal tax, assessed by the Municipality on allenterprises. This tax was in lieu of tariff increases, which otherwise would have directly benefited Spetstrans. Thistax was recently replaced by a City Improvement tax of up to 2 percent on all activities in Tashkent and funds fromthe new tax would be made available to lieu of the old 0.5 percent enterprise tax. A sensitivity analysis wasperformed to test the robustness of the project against variations in benefits and costs and the results are shown inthe table.

2. Net Present Value. In determining the Net NPVPresent Value, a discount rate of 10 percent was Revenueused, which is considered to be the opportunity cost

' .. ........... ,. ...... Cost Base Case Revenue -10% Revenue -15%of capital in Uzbekistan. A sensitivity analysis Base Case $3.00 $ (8.77)1 S (14.66)similar to the one for the calculation of the internal Investment + 10% ($2.23) $ (14.01) $ (19.90)rate of return was used and the results are included in Recurrent Cost + 10% ($3.24) $ (15.02) 5 (20.91)the table.

Past Performance

3. Spetstrans past performance is marked by insufficient funds to operate and maintain its equipmentproperly. Replacement of worn out equipment did not take place at regular intervals thus seriously jeopardizing itsoperations. In an effort to maintain a modest fleet of operational vehicles, equipment was cannibalized to securenecessary spare parts, as funds were lacking to purchase the spare parts in the market. Stores were completelydepleted some time ago and do not contain any parts of significant value at present. Although waste collection and


disposal tariffs were set at levels that should have ensured the proper functioning of Spetstrans, building up of highaccounts receivable prevented Spetstrans from obtaining the funds necessary for proper operations and maintenance.

4. Spetstrans management overcame these obstacles by pursuing a number of unorthodox measures, such asdelaying payment of wages, encouraging workers to obtain necessary spare parts on their own, collecting additionalpayments for waste removal from more affluent customers and ad hoc barter arrangements.

5. The political leadership, as represented by the Mayor, has recognized that pursuit of these survivaltechniques is only possible for a limited time. While the domestic waste collection tariffs were substantiallyincreased in April 1997, they have not been revised since, in spite of rampant inflation. As the political will islacking to make customers pay in the future directly for the major part of the cost of the operation, altemativesources of municipal revenues will have to be used to keep the system alive. Ultimately, however, a strongcommitment will be required to establish a system of tariff adjustments and collection mechanism for ensuringadequate operations, maintenance and replacement. Otherwise any intervention would be piecemeal and not lead tosustainability.

Tariffs

6. Spetstrans tariff structure is reviewed at least once a year on the basis of the cost of its operation. Tariffsetting policy in the past has been that tariffs for domestic waste collection and removal would cover 40 percent ofthe associated cost. A recent Government decision foresees the elimination of all subsidies. Therefore this cross-subsidy would be phased out by 10 percentage points during each of the next 6 years. To what extent this policy canbe implemented has to be seen, as it would require substantial tariff increases in real terms which, because of equityand affordability considerations, may not materialize.

7. Tariffs for industry, commerce and budget organizations are the result of negotiations with the individualenterprises on the basis of a guideline average tariff. Contracts with the individual enterprises foresee that theadjustmnent of the tariffs are in line with the development of the cost of major inputs such as fuel.

8. Tariffs for domestic waste collection and disposal are proposed by Spetstrans to the Municipality which,after review, forwards its recommendation to the Municipality for enactment. The latest tariff increase took place inApril 1997 when the previous level of sum 4 per head/month was increased to sum 15. Following this tariff increaseaccounts receivable doubled from sum 30 million to sum 60 million at the end of September 1997. Also the billedamounts did not correspond to the amount forecast and the population served, indicating that possibly a largeportion of the population might be exempted from payment for public services such as water, heating and wastedisposal.

9. The financial projections indicate (see below) that in addition to regular tariff adjustments for inflation,tariffs would have to be increased in real terms. Given that the present cost data is inadequate and that the futureoperations would be substantially different from the existing ones, a tariff study would have to be undertaken toreview the adequacy and affordability of the present system of tariffs and charges and to propose modifications.Therefore agreement was reached at negotiations that Spetstrans will: (a) by December 31, 1999, engageconsultants for the preparation of a tariff study (Tariff Study) under terms of reference acceptable to the Bank, (b)have the Tariff Study completed by April 30, 2000, (c) upon completion of the Tariff Study, furnish the same to theBank for its review and comments, and (d) by July 1, 2000, adopt and put into effect a policy on tariffs on the basisof the Tariff Study and taking into account the comments, if any, thereon by the Bank. The said tariffpolicy shall, asa minimum, provide for: (a) full adjustment of the tariffs for inflation on an annual basis; and (b) real termincreases to achieve full recovery of all operating and maintenance costs for the solid waste management system bysuch time as demonstratedfeasible in the Tariff Study. To the extent that the tariffs do not cover the full operatingand maintenance costs of Spetstrans and other waste management operators, the Municipality of Tashkent shallcontribute the funds (including proceeds from the City Improvement Tax) to cover any shortfall of the saidoperators.

Service to Urban Poor

10. Payments for waste collection and disposal services to the urban poor are arranged on a district levelthorough the Mahaliats, which receive the funds from the Municipality. The Mahaliats exist in each of the elevendistricts and arnongst their objectives in safeguarding the interests of the population living in the districts andproviding assistance to the urban poor.


Waste Removal/Disposal Tax

II. In addition to waste removal and disposal tariff charged by Spetstrans to its customers, the Municipalitywas assessing a 0.5 percent turnover tax on industry and commerce in Tashkent for financing investments and thecost of operations of waste removal and collection. This tax was never transferred to Spetstrans but instead was usedby the Municipality to finance the acquisition of equipment of the District Spetstrans. It was replaced in January1998 with a City Improvement tax of up to 2 percent on all activities in Tashkent.

Financing Arrangements

12. Due to limitations in raising tariffs beyond inflationary adjustments, Spetstrans operations would notgenerate sufficiently high levels of internal funds to permit it to contribute any amount to the financing of theproject. Instead most of the funding would be provided by the two banks and to some limited extent from theGovernment/Municipality of Tashkent. The table below indicates the relative share of the financing of the projectfrom three sources, by the proposed loans from the World Bank and the European Bank for Reconstruction andDevelopment as well as by the contribution from the Government/Municipality.

Local Foreign Total Local Foreign Total %

Expenditures Expenditures Expenditures Expenditures

in million sum in million US$

Project Cost 1,732.63 7,101.68 8,834.31 $ 10.97 $ 44.97 $ 55.94 100%

Financing

Loan

- EBRD 3,285.69 3,285.69 $ 20.80 $ 20.80 37.2%

- IBRD 3,815.99 3,815.99 $ 24.16 $ 24.16 43.2%

Equity

- GoU 1,732.63 1,732.63 $ 10.97 $ 10.97 19.6%

out of which

Local 381.47 $ 2.42

Expenditures.

Taxes 1,351.16 $ 8.55 1 .__ 1 _ _

1,732.63 7,101.68 8,834.31 $ 10.97 $ 44.97 $ 55.94 100%

13. The lending arrangements for the proposed Project would be different for the two Banks. The EBRD loanwould be made available to the GoU on the following terms: maturity 10 years, grace period 3 years, interest rateLIBOR + 1 percent, front-end fee 1 percent and a commitment charge of 0.75 percent. Onlending terms to theMunicipality of Tashkent are assumed presently at the following terms: maturity 10 years, grace period 3 years,interest rate of 13.5 percent, front-end fee I percent and a commitment charge of 0.5 percent. The IBRD loan wouldbe made available to the GoU on the following terms: maturity 20 years, grace period 5 years, interest rate for US Ssingle currency loans at LIBOR + 0.5 percent, and a commitment charge of 0.75 percent. Onlending terms to theMunicipality of Tashkent are assumed presently at the following terms: maturity 12 years, grace period 3 years,interest rate of 12.5 percent, commitment charge 0.5 percent.

14. The onlending conditions were set to permit the project to meet the following objectives: first the financingarrangements should be neutral to the Central Government Budget, second the impact of inflation on thebeneficiaries should not lead to a situation that would jeopardize the implementation of the project, third thefinancial viability of Spetstrans would be sustained. These objectives would be achieved if: (a) inflation rates do notexceed the assumed levels; (b) the assumed onlending terms as outlined above would apply; (c) Spetstrans wouldadjust tariffs for inflation to meet cash operating expenses, changes in working capital, minimum cash balances anda contribution out of internally generated funds of 15 percent of major replacement and would receive transferpayments from the Municipality of Tashkent out of the receipts of the City Improvement tax for covering cashshortfalls. Therefore during negotiations agreement was reached that the IBRD loan be made to the GoU as aLIBOR-based US dollar loan on the following terms: maturity 20 years, including 5 years of grace. The GoU wouldonlend to the Municipality of Tashkent on terms and conditions acceptable to the Bank which would foresee amaturity of 12 years including 3 years of grace at an interest rate of 12.5 percent.


Financial Projections

15. In assessing the financial viability of the project, the forecast financial situation for Spetstrans has to beexamined as well the impact of the project on the finances of the Municipality. In preparing the financial projectionsfor Spetstrans, cost data of the present operations was used as well as international norms for the operation of theproposed new equipment and installations. Spetstrans financial performance target shoild be to meet all operatingand maintenance cost, debt service requirements, changes in working capital requirements as well as a 15 percentcontribution to major equipment replacements. This target would mandate tariff increases beyond inflationaryadjustments, which would be quite difficult to implement on a large scale. Therefore receipts of the Cityimprovement tax would have to be used for covering cash shortfalls of Spetstrans. Proceeds of this tax would alsobe used on a priority basis for financing the obligations of the Municipality resulting from the implementation of theproject (see below). The available annual amounts of the City Improvement tax would, however, be insufficient tomeet the Spetstrans cash shortfall in year 2000, 2002 and 2006 when tariffs would have to be adjusted in real termsby 15.0 percent, 3.5 percent, and 3.5 percent respectively.

16. The projections indicate that Spetstrans operations would be financially sustainable in the future providedthat the following measures were taken: (a) tariffs adjusted for inflationary increases; (b) any cash shortfalls becovered by the Municipality out of the proceeds of the City- Improvement tax; and (c) Spetstrans would increase itstariffs to sufficiently high levels to meet the financial performance target.

17. In view of the rather high level of inflation, the adequacy of tariffs would have to be reviewed regularly.For this Spetstrans would have to prepare a review of the adequacy of its tariffs on a quarterly basis by comparingits cost of operations with the projected income to meet the financial performance target.

Sustainability

18. In addition to Spetstrans future performance, the assessment of the financial viability of the project requiresthe review of the implications of the project for the finances of the Municipality of Tashkent. As indicated above,the Municipality was the beneficiary of the proceeds of the 0.5 percent waste removal/disposal tax as well as itsreplacement tax for city improvements. In the financial analysis, it was assumed that the 0.5 percent tax would beused by the Government/Municipality to cover its equity contribution, representing mostly taxes, the debt servicerequirements of the Municipality vis-a-vis the central government after allowing for the receipt of the debt servicefrom Spetstrans, and at varying annual amounts Spetstrans' cash shortfall resulting from no opportunity to chargefull cost recovery tariffs. Collection of the new City Improvement tax and its continued application to the abovestated purposes is critical for achieving financial sustainability and full cost recovery.

Assessment of the Difference in Maturities

19. The implication of the differences in the onlending terms of the World Bank and EBRD loans on thecentral Government's budget was assessed by comparing the discounted value of the debt service requirements ofthe central Government vis-a-vis the two banks and the debt service payments from the Municipality of Tashkent tothe central Government. Annual loan disbursements were expressed in local currency by using the forecastexchange rate on the basis of the assumed inflation rates. The debt service payments at the Government andMunicipal level, separate for each loan, i. e., World Bank and EBRD, over the life of the loan were discounted usingdiscount rates from 0 to 11 percent. The difference between the discounted debt service payments at the Municipallevel and at the central Government level then indicates, separate for each lender, at what discount rate the debtservice would be neutral for the central Government under the assumed inflation rates and onlending rates. TheIBRD loan and the onlending conditions would be neutral to the central Government at a discount rate of 8.3percent and only above 11 percent for the EBRD. This shows that there would not be any major subsidies requiredwith the implementation of the Project, provided that the assumptions on the forecast level of inflation are correct.

Accounting, Auditing and Insurance

20. Overall. The project's accounting, financial reporting and auditing arrangements would be theresponsibility of the Central PIU. This PIU has already demonstrated that they have the financial managementcapacity to handle all aspects of Bank-financed projects. Trained personnel in the PIU include accounting,procurement, disbursements and auditing specialists. This Central PIU would be responsible for supervising projectprocurement and have primary responsibility for project financial management including disbursements, the specialaccount, and project auditing. It was originally set up for the Uzbekistan Water Supply, Sanitation and Health


Project and would be expanded to handle the additional workload. The proposed project would thus benefit fromcross support and the experienced personnel in the central PIU for common services related to the Bank loans.

21. Accounting. Spetstrans is presently using a double entry cash-based accounting system that is not a toolfor proper utility management. Parallel to this accounting system, another system of records exists which has itsorigins in the requirement of a planned economy with an objective to provide data on the actual perfornance incomparison to the planned values. As these systems are inadequate for sound financial and operational management,there is a need to design, implement and operate an accounting system that would meet these requirements.Agreement was therefore reached at negotiations that Spetstrans would: (a) contract consultants for the design andimplementation of a utility accounting system, by January 1, 1999, under terms and conditions acceptable to theBank which would provide, inter alia, that the system design be completed by August 31, 1999; and (b) therespective utility accounting systems would be-fully operational not later than July 1, 2000.

22. Auditing. So far the accounts of Spetstrans have not been audited by an independent auditor. Therefore,agreement was reached at negotiations that Spetstrans would: (a) engage independent auditors acceptable to theBanks for the annual audit of its financial statements including those of the PIUs, the project's accounts, theoperations of the special account, and the use of statements of expenditures; and (b) forward the audited accounts,together with the auditors' statement, to the Banks not later than six months after the end of its fiscal year.

23. Considering that Spetstrans has so far not been audited by non-government auditors, it is essential that itbecome familiar early on with the audit requirements so that the audit can be completed in the foreseen time limit.

24. Insurance. Spetstrans does not carry any insurance coverage, not even third-party liability insurance for itsvehicle. While Government agencies were supposed to cover the risks as self-insurers, this was not adequatelyapplied. Workers' compensation is arranged partly through the state-run pension system, and partly through theunions' social program to which every worker belongs. An insurance market is presently being established inUzbekistan, although it may take some time until insurance coverage for a variety of risks would be available atreasonable premiums. Nevertheless, it is important that adequate insurance be obtained in due course. Thereforeagreement was reached at negotiations that Spetstrans would: (a) undertake and, by October 15, 1998, complete anassessment of its requirements for insurance; (b) prepare, on the basis of such review, a plan for insurance of itsassets and operations against such risks and in such amount as shall be consistent with appropriate practices; (c)furnish the said insurance assessment and plan to the Bank; and (d) commencing January 1, 1999, implement theinsurance plan taking into account the comments thereon, if any, by the Bank.

Mid-Term Review

25. The project would involve the Municipality of Tashkent and Spetstrans, which so far have no experiencewith the implementation of internationally-funded projects. While the risks inherent in the scope of the project aremanageable, the risks in achieving the envisaged institutional improvements as well as the cost recovery andsustainability are substantial. In order to mitigate this risk, strong supervision would be required. As supervisiontends to be more focused on specific aspects, there is the need to foresee a comprehensive mid-term review. Thisreview would be conducted jointly by the Borrower, the Municipality of Tashkent and Spetstrans as well as theBanks. It would include: (a) assessment of the progress and success in implementing the project in relation to theplanned targets; (b) review of the progress made in achieving the planned institutional modifications includingprivatization; (c) examining the improvements in overall operational performance in terms of waste collection andremoval, maintenance, and staffing; (d) assessment of the financial situation, including tariff levels, cost recovery,accounts receivable, and inventory management; and (e) review of billing and collection, improvements in theaccounting system, including applicable procedures. In view of the importance of the review, agreement wasreached at negotiations that the Municipality and Spetstrans would: (a) maintain policies and procedures adequateto enable it to monitor and evaluate on an ongoing basis, in accordance with indicators satisfactory to the Bank, thecarrying out of the Project and the achievement of the objectives thereof; (b) prepare, under terms of referencesatisfactory to the Bank, andfurnish to the Bank, on or about June 30, 1999, a report integrating the results of themonitoring and evaluation activities performed, on the progress achieved in the carrying out of the Project duringthe period preceding the date of said report, and setting out the measures recommended to ensure the efficientcarrying out of the Project and the achievement of the objectives thereof during the periodfollowing such date; and(c) review with the Bank, by November 15, 1999, or such later date as the Bank shall request, the report referred toabove, and, thereafter, take all measures required to ensure the efficient completion of the Project and the


achievement of the objectives thereof, based on the conclusions and recommendations of the said report and the;Bank views on the matter.

Supervision and Monitoring

26. Implementation of the project would rest with the PIU. Unfamiliarity..with the procedures of internationallending agencies and the complexity and dispersion of the project would require considerable supervision efforts.

27. The technical assistance consultants would assist Spetstrans staff in drawing up an operational action plan.This plan would specify activities, training needs, responsibilities, outputs, time-lines, and perfbrmance measuringindicators which should help to ensure that agreed targets of the institutional development plan would be met, thecost recovery mechanism functions, sustainability is achieved, and facilities are operated according to acceptablestandards. This operational action plan would be updated quarterly and would be included in the semi-annualprogress reports.

28. Success in project implementation would be measured against physical and financial performance targets.Agreement was therefore reached at negotiations that Spetstrans would. (a) compare at stated intervals the actualperformance for each of the target indicators against the appraisal estimate; (b) this comparison be included in theproject progress report to be forwarded to the Banks on a semi-annual basis; and (c) remedial actions be outlined ifthere is significant difference between the target and forecast values and a timetable be prepared for theimplementation of these actions.


Annex 6


Procurement and Disbursement Arrangements

Procurement Methods (Table A)

1. The detailed procurement plan is provided in the Project Implementation Plan. What follows is a summaryof the project's procurement arrangements. Procurement would be the responsibility of the Project ImplementationUnit (PIU) in the municipal Tashkent Solid Waste Management Department in close collaboration with Spetstrans(Tashkent solid waste collection organization) on technical matters. The PIU would have a qualified procurementofficer. In addition, it would be supported by a management consultant. Close to loan effectiveness, a project launchworkshop would be held to ensure that those involved in project implementation understand the Bank'srequirements especially with regard to procurement.

2. The procurement of goods under the project would be conducted in accordance with the Bank's guidelinesProcurement under IBRD Loans and IDA Credits published in January 1995 and revised in January and August,1996, and September 1997. The project components not financed by the Bank would be procured in accordancewith national regulations or the cofinancing institutions' procurement regulations. A General Procurement Noticewas published in the Development Business in February 1998.

Prior Review Thresholds

3. The proceeds of the Bank loan would finance three goods and one turnkey contract (including design andengineering). All these packages would be procured through International Competitive Bidding (ICB). ICB biddingdocuments, based on the Standard Bidding Documents of the Bank for Goods and Supply and Installation, would befinalized by effectiveness.

4. All contracts for goods estimated to cost US$300,000 or more would be subject to the Bank's prior review.

Disbursement Arrangements

5. The project is expected to be disbursed over a period of five years, from mid-1998 to mid-2003, with ananticipated completion date of June 30, 2003. A closing date of December 31, 2003 is proposed. The disbursementprofile was established using the Bank's past experience in the execution of similar projects. Disbursements wouldfollow normal World Bank and cofinancier's procedures and would be made against eligible categories of projectexpenditures by: (a) special commitments in support of letters of credit issued by the Borrower's bank in favor offoreign suppliers of goods; (b) direct payment to suppliers; and (c) reimbursement of eligible expenditures forpayment already made by government agencies.

6. To facilitate timely project implementation, the borrower would establish, maintain and operate, underconditions, acceptable to the Bank, a Special Account in US Dollars in a commercial bank. During the early stage ofthe project, the initial allocation of the Special Account would be limited to US$500,000. However, when theaggregate disbursements under the loan have reached the level of US$2 million, the initial allocation may beincrease up to the authorized allocation of US$1 million by submitting the relevant Application for Withdrawal.Replenishment applications should be submitted at least every three months, and must include reconciled bankstatements as well as other appropriate supporting documents.

7. The loan would be at the Bank's standard interest rate for variable LIBOR-based US Dollar single-currencyloans, on amortized terms based on a maturity of 20 years, including 5 years of grace. The commitment fee wouldbe 0.75 percent on the undisbursed loan balance, beginning 60 days after loan signing, less any waiver. Allocationof loan proceeds is shown in Table B.


Table 6A: Project Costs by Procurement Arrangements al

(US$ million)Expenditure Category Procurement Method D Total Cost (including

ICB NCB Other N.B.F c contingencies)

1. WORKSVehicle Part Development d- 3.12 3.12Bin Slab Installation 1.37 1.37Landfill Infrastructure Upgrade/ 1.47 1.47Closure/Remediation/Expansion

2. GOODSTransfer Station 5.91 5.91

(5.01) (5.01)Collection Bins 10.34 10.34

(8.76) (8.76)Concrete Slabs for Bins 3.40 3.40

(2.88) (2.88)Compactor/Roll-off Trucks 8.68 8.68

(7.36) (7.36)Dump & Vacuum Trucks Tractors d 3.09 3.09Specialty Vehicles d/ 1.93 1.93Truck Spares CV 1.10 1.10Landfill Equipment d 3.95 3.95Landfill Maintenance Equip. d/ 0.07 0.07Weight Scales d/ 0.10 0.10Environmental Monitoring Equip d- 0.14 0.14Transfer Station Vehicles - 5.49 5.49Computer Equipment d/ 0.84 0.84Biomedical Waste Vehicles/Containers 0.32 0.32

3. SERVICESInstitutional Support/Project 4.43 4.43Management Consultants

Total 28.33 27.67 56.00(24.00) (24.00)

a Figures in parenthesis are the amounts to be financed by the Bank loan.E All IBRD-financed packages are ICB (US$24 million).'I N.B.F. = Not Bank financed.d/ EBRD-financed items.


Table 6B: Allocation of Loan ProceedsCategory Amount Expenditures to be FinancedTurnkey contract for transfer stations 5.0 100% of foreign expenditures, 100% of local expenditures

(ex-factory cost) on goods and 80% of local expenditures foritems procured locally

Equipment and waste collection 16.6 100% of foreign expendituresvehicles 100% of local expenditures (ex-factory cost) and 80% of

expenditures for other items procured locallyUnallocated 2.4

Total 24.0


Annex 7


Project Processing Budget and Schedule

A. Project Budget (US$000) Planned Actual(At final PCD stage)

$210 $210

B. Project Schedule Planned Actual

Time taken to prepare the project (months) 8 9First Bank mission (identification) 01/23/1997 01/23/1997Appraisal mission departure 10/28/1997 10/28/1997Negotiations 02/25/1998 02/25/1998Planned Date of Effectiveness 06/30/1998

Prepared by: Municipality of Tashkent

Preparation assistance: IBRD and EBRD

Bank staff who worked on the project included: Roger Batstone, Janis Bernstein, and Rita Cessti with theassistance of Rick Cooke, Johann Renkewitz, and Craig Leisher (consultants).


Annex 8


Documents in the Project File*

A. Project Implementation Plan

B. Bank Staff AssessmentsSocial Assessment Report (J. Bernstein)Mission Notes - Project Identification Mission (R. Cooke)Mission Notes - Project Preparation Mission (R. Cooke)

C. OtherConsultant's Report - Project Preparation Mission (J. Warren, H. Mascha)Procurement Plan - Project Preparation Mission (R. Gargrave)Project Capital and Operating Cost Estimates - Pre-Appraisal Mission (COWI, R. Cooke)Project Procurement Plan - Project Pre-Appraisal Mission (R. Cooke)Conclusion: Expansion of the Territory of Tashkent City Landfill (33km down AghangaranskoeHighway) ("Sogdina" Limited.)Local Consultant's Regional Hydrogeological Report - Project Preparation MissionFinancial and Institutional Analyses (EBRD, J. Renkewitz)

*Including electronic files.


Annex 9


Statement of Loans and Credits

UzbekistanSTATEMENT OF IFC's

Committed and Disbursed PortfolioAs of 3 1-Jan-98

(In US Dollar Millions)Committed Disbursed

IFC IFCFY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic

1994 Amantaytau Gold 0.00 0.00 .93 0.00 0.00 0.00 .93 0.001995 UZBEK LEASING 0.00 .60 0.00 0.00 0.00 .60 0.00 0.001996 ABN AMRO Uzbek 0.00 1.00 0.00 0.00 0.00 1.00 0.00 0.001997 Core Pharm 3.35 .50 0.00 0.00 0.00 0.00 0.00 0.00

Total Portfolio: 3.35 2.10 .93 0.00 0.00 1.60 .93 0.00

Approvals Pending Commitment

Loan Equitv Quasi Partic

1996 AMANTAYTAU II 45.00 4.40 9.40 85.001998 SEF BULUNGUR 1.29 .30 0.00 0.001997 SEF FAYZ 1.90 .50 0.00 0.001995 ULCL LTD 5.00 0.00 0.00 0.001997 UZCASE AGROLEASE 5.00 1.00 0.00 5.001997 UZCASEMASH 6.80 2.60 0.00 4.001997 UZCASESERVICE 6.40 1.60 0.00 5.00

Total Pending Commitment: 71.39 10.40 9.40 99.00

Status of Bank Group Operations in UzbekistanIBRD Loans and IDA Credits in the Operations Portfolio

Difference Betweenexpected

Original Amount in US$ Millions and actualLoan or Fiscal disbursements a/

Project ID Credit Year Borrower PurposeNo. IBRD IDA Cancellations Undisbursed Orig Frm Rev'd

Number of Closed Loans/credits: 1

Active LoansUZ-PE-9121 IBRD42160 1998 REPUBLIC OF UZBEKISTAN RURAL W.S. & SANITA. 75.00 0.00 0.00 75.00 .16 0.00UZ-PE-44942 IBRD40900 1997 REPUBLIC OF UZBEKISTAN PILOT WATER SUPPLY 5.00 0.00 0.00 1.82 -.83 0.00UZ-PE-9122 IBRD38940 1995 REP.OF UZBEKISTAN COTTON SUB-SEC IMPRV 66.00 0.00 0.00 88.31 13.97 0.00UZ-PE-9123 lBRD36500 1994 REPUB. OF UZBEKISTAN INSTIT BLDG/TA 21.00 0.00 0.00 6.25 6.27 0.00

Total 167.00 0.00 0.00 141.38 19.57 0.00

Active Loans Closed Loans TotalTotal Disbursed (IBRD and IDA): 25.62 160.00 185.62

of which has been repaid: 0.00 0.00 0.00Total now held by IBRD and IDA: 167.00 160.00 327.00Amount sold : 0.00 0.00 0.00

Of which repaid : 0.00 0.00 0.00Total Undisbursed : 141.38 0.00 141.38

a. Intended disbursements to date minus actual disbursements to date as projected at appraisal.b. Rating of 1-4: see OD 13.05. Annex D2. Preparation of Implementation Summary (Form 590). Following the FY94 Annual Review of Portfolio performance (ARPP), a letter

based system will be used (HS = highly Satisfactory, S = satisfactory, U = unsatisfactory, HU = highly unsatisfactory) : see proposed Improvements in Project andPortfolio Performance Rating Methodology (SecM94-901), August 23, 1994.

Note:Disbursement data is updated at the end of the first week of the month.

Uzbekistan at a Glance 80197

Europe & Lower-POVERTY and SOCIAL Central middle-

Uzbekistan Asia Income Development dlamond*

Population mid-1996 (millions) 23.3 479 1,125GNP per capita 1996 (US$) 1,010 2,180 1,750 Life expectancyGNP 1996 (billions USS) 23.5 1,043 1,967

TAverage annual growth, 1990-96

Population (%) 2.1 0.3 1.4 GNP GrossLabor force (I%) 2.8 0.5 1.8 per I prmary

Most recent estimate (latest year available since 1989) capita enrollment

Poverty: headcount index (% of population)Urban population (%6 of total population) 41 65 56Life expectancy at birth (years) 70 68 67Infant mortality (per 1,000 live births) 30 26 41 Access to safe waterChild malnutrition (% of children under 5)Access to safe water (% of population) .. .. 78Illiteracy (% of population age 15+) 3 .. .. |Gross primary enrollment (% of school-age population) 77 97 104 1 Uzbekistan

Male 78 97 105 Lower-middle-income groupFemale 76 97 101

KEY ECONOMIC RATIOS and LONG-TERM TRENDS

1975 1985 1995 1996

GDP (billions USS) .. .. 23.1 24.1Gross domestic investmentVGDP .. .. 20.9 16.1Exports of goods and services/GDP .. .. 38.0 31.8 Openness of economyGross domestic savings/GDP .. .. 20.5 8.2Gross national savings/GDP .. .. 20.3 7.8

Current account balance/GDP .. .. -0.2 -4.5Interest payments/GDP .. 0.3 , Savings f InvestmentTotal debt/GDP .. . 7.7 9.3Total debt service/exports .. .. 6.4 7.9 iPresent value of debtGDP .. .. 6.5 ..

Present value of debtVexports .. .. 38.4 Indebtedness

1975-85 1986-96 1995 1996 1997-05(average annual growth) - UzbekistanGDP . -0.9 1.8 ..GNP per capita . -3.5 -1.0 Lower-middle-income groupExports of goods and services .. ..

STRUCTURE of the ECONOMY1975 1985 1995 1996

(% of GDP) Growth rates of output and Investment (%O)Agriculture .. .. 32.3 26.1 20

Industry .. .. 28.1 27.6 10Manufacturing ..

Services .. .. 39.6 46.3 9.10T

Private consumption .. . 47.0 57.4 -201General government consumption .. .. 32.5 34.4Imports of goods and services .. .. 38.4 39.7 - GDI GDP

197545 1986-96 1995 1996(average annual growth)Agriculture .. .. 2.0 -7.0Industry .. .. -5.6 1.7

Manufacturing ..

Services .. .. 2.3 2.0

Private consumption ..

General government consumption ..

Gross domestic investment .. .. 1.8Imports of goods and services ..

Gross national product .. .. -1.8 1.1

Note: 1996 data are preliminary estimates. Figures in italics are for years other than those specified.

The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond willbe incomplete.

Uzbekistan

PRICES and GOVERNMENT FINANCE1975 1985 1995 19966-1

Domestic prices Inflatlon (%)(% change) 1,200,

Consumer prices .. .. 305.0 54.0 1 000 tImplidit GDP deflator .. .. 431.7 65.0 Boo /

400Government finance 200

(% of GDP) 0

Current revenue .. .. 34.6 34.2 ! 91 92 93 94 95 96

Current budget balance 3.2 5.2 iOverall surplus/deficit 4.1 -7.3 -

TRADE1975 1985 1995 1996 1 -

(mil/ions USS) i Export and Import levels (mill. US$)Total exports (fob) .. .. 3,806 3,781 25,000

Cotton .. .. 1,800 1,748Gold .. .. 611 832 1 20,000.

Manufactures 15,Total imports (cif) .. .. 3,597 4,712 i 1

Food .. .. 687 1,391 10,I.0

Fuel and energy . . 59 50 soco lCapital goods .. .. 1,279 1,713 o

Export prce index (1987=100) 90 91 92 93 94 00 96

Import price index (1987=100) J Exports . ImportsTerms of trade (1987=100) ..

BALANCEofPAYMENTS1975 1985 1995 1996 f - X

(millions US$) i Current account balance to GDP ratio (%)Exports of goods and services .. .. 3,806 3,781 1Imports of goods and services .. .. 3,807 4,754 0 ° 1 9 9 I 1 _ Resource balance .. .. -1 -973 i

Net income .. .. -67 -110Net current transfers .. .. 19 8 -

Current account balance, -3before official capital transfers .. .. -49 -1,075

Financing items (net) .. .. 627 1,108Changes in net reserves .. .. -578 -33 5

Memo:Reserves including gold (mill. US$) .. .. 1,867 1,901Conversion rate (/ocalYUS$) 12.9 20.7

EXTERNAL DEBT and RESOURCE FLOWS1975 1985 1995 1996 r ---

(millions US$) Gompositlon of total debt, 1996 (mIi. US$)Total debt outstanding and disbursed .. .. 1,787 2,249 i

IBRD 157 155 G AIDA .. 0. ° ° ! 22 155

Total debt service .. .. 243 298 F 238IBRD .. .. 2 10 762 /IDA .. .. 33

Composition of net resource flows i ! _ _ 3Official grants .. .. 13 ..

Official creditors .. .. 241Private creditors .. .. 120Foreign direct investment .. .. 115 .. - EPortfolio equity .. .. 0 .. 939

World Bank programCommitments .. .. 226 5 A - IBRD E - BilateralDisbursements .. .. 162 9 ' B - IDA D - Other multilateral F - PrivatePrncipal repayments .. .. 0 0 C - IMF G - Short-termNet flows .. .. 162 9Interest payments .. .. 2 10Net transfers .. .. 161 -1

Development Economics 8/20/97

Note: Estimates for economies of the former Soviet Union are subject to more than the usual range of uncertainty.Govemment finance includes balance of extrabudgetary funds (net of transfers).