Agi KissZagreb, May 7, 2009

Operational Policy/Bank Procedure 4.00

Piloting the Use of Borrower Systems to Address Environmental and Social Safeguard Issues in Bank-Supported Projects

Covers all fiduciary aspects: Financial Management, Procurement, Safeguards

OP 4.00 key points Definition: use of the country’s national, sub-national,

or sectoral implementing institutions and applicable laws, regulations, procedures for an activity being supported by the Bank

Can refer to central government, sub-national governments or specific agencies/entities or utilities (e.g., in infrastructure) 

To be used where, in the Bank’s judgment, the country’s system would materially satisfy the objectives and operational principles of the applicable Bank policies

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Objectives of UCSGreater efficiency: move beyond project-by-

project approach; accelerate project preparation and appraisal; facilitate harmonization, reducing transaction costs imposed by requirements of multiple donor systems

Greater development impact: improve policies, procedures, practices for all investment, not just WB-financed; encourage and buiod country capacity

Enhance country ownership: Improve nature of relationship and strengthen community of interest between Bank and Borrower (particularly part of the MIC agenda)

UCS History UCS already in place for years for financial

management and for procurement through national competitive bidding

Sept 2004, Management proposal to Board for pilot program extending UCS to environmental and social safeguards and to international competitive bidding (ICB) procurement and international selection o f consultants… where, in the Bank’s judgment: “ they are equivalent to the Bank’s policy framework applicable to the operation, and where relevant country implementation practices, capacity, and track record are satisfactory.”

UCS History (cont.)

October 2004: Issues Paper* --focusing on UCS for E&S SG-- posted on WB websiteFollowed by face-to-face consultations with

governments, bi/multilateral development partners, NGOs, private sector in all 6 Region

Endorsed by borrowers and dev’t partnersNGOs more cautious: emphasized need to

ensure no dilution of SG policies or WB’s responsibility for due diligence

*Expanding the Use of Country Systems in Bank-supported Operations: Issues and Proposals

UCS History (cont.)

February 2005: First UCS pilot program for SG mandated by WB Board* (12 pilot projects)

12 pilot projects identified, including Romania: Water, Sanitation and Flood Protection

Project; and Roads and Highways, Railways ProjectOthers in: Bhutan, Ghana, Jamaica, Tunisia, India,

South Africa, Uganda, Morroco

OP 4.01 piloted in all projects; OP 4.11 in four, OP 4.04 and OP 4.12 in one country each

UCS History (cont.)

November 2007: Evaluation Report on first 2 years* based on 7 active pilots… main findings: Limited uptake: -- project-by-project approach very limited

in impact (12 projects in portfolio of 1600) High transaction costs: upfront preparation costs are

prohibitive (averaged $104,000 extra expenses) Promising approach for OP 4.01 and OP 4.11; less so for OP

4.12 due to fundamental gaps between national laws and WB OP

Gap-filling measures have policy and practical benefits beyond the project

Too early to judge costs, effectiveness of implementation, supervision

To expand program, will need clear and consistent management signals

*“Evaluation of the initial phase of the pilot program for use of country systems for environmental and social safeguards : lessons learned and management proposal for an incremental scale up of the program”

Nov 2007 Evaluation Report - selected recommendations:

Scale up to sub-national or country level, as free-standing exercise not linked to a project. Focus SDR on overall systems, not specific implementing agencies. Apply results to selected projects with gap-filling, capacity building as needed

In large country with diverse systems and capacity, take sub-national approach (provincial, state, municipal, sectoral, level institutions)

Select further pilots based on county interest, lending opportunities in pipeline, high level of mutual trust between WB and Borrower

Use Country Environmental Assessments, Strategic Environmental Assessments, etc. to identify candidate countries, programs

Clarify benefits of UCS to Borrowers and staff and provide clear roadmap to accessing these benefits

For MICs with well-developed systems (e.g. new EU members) move from SDR to full application of UCS without intermediate pilot project step. For new EU members, collaborate with EC, EBRD, EIB on SDR

Distinguish between risk of harm and reputational risk to WB (latter is not Borrower’s responsibility)

UCS History (cont.)January 2008: Board approved extension of

UCS pilot program for SG, with scaling up from project level to country level

UCS Approach – 2 Part Analysis“Safeguard Diagnostic Review” (SDR)Equivalence: Borrower’s env & soc. SG system is

considered equivalent to WB’s if borrower’s system is designed to achieve objectives and adhere to principles outlined in Annex A… not necessarily 1:1 match in methodology

Acceptability: Assessment of Borrower's implementation practices, track record, and capacity (assessment carried out only in areas where equivalence analysis was positive)

UCS may cover one or more of the OPs

Acceptability analysis limited to OPs selected based on Equivalency analysis

Steps in UCS Analysis1. Identify relevant national/sub-national or other

implementing entities

2. Review national/sub-national/corporate policies, laws, and regulations applicable to the project and Bank policies triggered or applicable

3. Compare the objectives and operational principles that underpin Bank policies, with country systems (rules, regulations, practices, and capacity of relevant institutions) to determine acceptability. Identify any actions needed to fill gaps.

4. Assess country system and implementation agency experience and track record. Identify strengths and weaknesses, and agree with borrower on any actions needed to fill gaps.

UCS Approach: Gap-fillingIf SDR identifies significant gaps between

borrower policies or capacities and SG policies/principles:

Borrower indicates commitment to fill gaps Borrower commitments are incorporated in

Equ/Acc analysisLegal documents indicate gap filling to be

completed prior to initiating relevant activities

Illustrative Draft Framework for Assessing EA

Systems

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Bank OP/BP Objectives Operational Principles Basis for Assessment/Development of

Performance Criteria

OP/BP 4.01,EnvironmentalAssessment 

 

To assess, minimize, and mitigate potentially adverse impacts of Bank supported investment projects (and SECALs).

1.. Screen early in project cycle for potential environmental and social risks and impacts. 2.          Identify and analyze project alternatives.  3.          Involve stakeholders in the decision-making process through consultation and participation. 

4.          Ensure transparency through timely disclosure.  5.          Prevent, minimize or compensate for adverse project impacts.

·   Identify sector, location and scale of project; nature and magnitude of potential risks.  ·   All feasible alternatives assessed for potential impacts. 

·   Consultations held soon after screening and also after preparation of draft EA report.   ·   Draft and final reports (Ex Sum in local language) disclosed in public places. ·   EMP covers mitigation of potential impacts and specifies implementation arrangements, i.e., budget, monitoring, capacity building and reporting requirements.

 

CROATIA UCS Pilot

preliminary thoughtsTake a comprehensive view of Country

Systems (not just EIA law) e.g., OP 4.01 requirement for “analysis of alternatives

analysis” might be addressed through national spatial planning process and Strategic Environmental Assessment law

e.g., OP 4.01 requirement for EMP might be addressed through legal permitting process (location, construction and operating permits)

For consultation process, emphasis on meaningful, informed consultation not specific steps

Attempts to harmonize large body of legislation with EU in short time frame may raise “Acceptability” issues

‘Bye Now