Participatory Development Resource Cell (PDRC),
Sakano - Lab, Tokyo Institute of Technology, Japan

Note: This is published document of United Nations Development Program UNDP, Islamabad. PDRC is not responsible for the contents of this document.

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Source: www.undp.org

UNITED NATIONS DEVELOPMENT PROGRAMME

Project of the Government of the Islamic Republic of Pakistan

PROJECT DOCUMENT

Project number:	PAK 93/'006/A/01/99
Project title:	Kasur Tannery, Pollution Control (KTPC)
Duration of Phase 1:	One year and six months (Phase 1)
ACC/UNDP sector and sub-sector:	Health 1000, Environmental Health 1030
Government sector and sub-sector:	Leather & Leather Products Industry
National executing agency:	Housing. Physical and Environmental Planning Department (HP&EP)
Government Implementing Agency	Kasur Development Authority (KDA) Government of Punjab through Kasur Tannery Waste Management Agency (KTWMA)
Implementing agency for technical	United Nations Industrial Development Organisation
assistance:	(UNIIDO)
Estimated starting date:	January, 1996
National inputs in millions of Rupees	Government of Pakistan, Export Development Fund (EDF) Rs. 80m-, Economic Affairs Division (EAD) Rs. 13m-, Government of Punjab Rs. 86-m- Tanneries Association Dingarh (TAD) Rs. 20m. Total; local inputs: Rs. 199m not including contribution in kind.
UNDP financing (Phase 1):	IPF: US $1.218,800 TSS2: US $78,500 AOS: US $99,352

Brief Description: The project, through the Kasur Environmental Improvement Programme (KEIP) framework, intends to contain and reduce the environmental deterioration caused by tannery waste, to improve the tanners existing inadequate technical and managerial skills in tanning operations, to promote environmental awareness among the population, thus improving the overall living and working conditions and creating an environmentally sustainable development of the tanning industry in Kasur. The project also includes various measures to build and strengthen necessary institutional capacities and regulatory measures as well as to develop necessary actions for implementation of the remainder K-EIP. For optimum results the KTPC project "ill be implemented in phases. Phase I is focused on introduction of better process control in tanneries, tanneries in-house pretreatment and establishment of the overall drainage system including evacuation of the existing stagnant pools.

TABLE OF CO.NTENTS

Part A. Context

A. I Country Background

A.2 The leather industry in Pakistan

A.3 National policy on the environment

A.4 Kasur's Geographical Background

A.5 The tanning industry in Kasur

Part B. Project Justification.................................................................................................5

B. I Present situation

B.2 Expected end of project situation.

B.3 Project target beneficiaries and impacts

B.4 Project financial viability.

B.5 Project strategy, institutional and financial arrangements

B.6 Reasons for assistance from UNDP

Part C. Project development objective .............................................................................11

Part D. Immediate Objectives, outputs and activities .................................................……11

Part E. Project inputs .........................................................................................................18

Part F. Risks and safeguarding actions .........................................................................21

Part G. Prior obligations, prerequisites and other undertakings .............................22

Part H. Project review, reporting and evaluation ..........................................................24

Part 1. Legal context ...........................................................................................................25

Part J. Budgets.....................................................................................................................26

[Budget Sheets Phase I and Phase 11 (tentative) attached]

Annexes:

Annex I Map of Tannery Clusters Area

Annex 11 Project Impacts and benefits

Annex III Kasur Environmental Improvement Programme (KEIP)/Project Implementation Schedule/Work Plan

Annex IV Technical Project Data and Costs

Annex V Letter of Agreement between Government of Pakistan and UNIDO as implementing Agency

Annex VI Organization Structure (KDA/KTWMA)

Annex VII Land Acquisition and Permits

Annex VIII Schedule of Funding

Annex IX Draft Terms of Reference/Job Description for Technical Assistance

Annex X Review of Environmental Issues

Annex XI Monitoring Indicators and Arrangements

Part A. - Context

A.I. Country Background

Pakistan is administratively subdivided into four provinces: Punjab, Sindh. Northwest Frontier Province (NW'FP) and Baluchistan, as well as the Federally Administered Tribal Areas (FATA). The mid-1994 population is estimated at about 128 million people, growing at about 2.9 per cent per annum.

As an indicator of poverty, 40 % of households received only I 8 % of total income (I 994-85). Only 37 % of the adult population were literate in 1994. This is below the average of 42 % for South Asia and 60 % for third world countries. Availability of health services is limited to 55 % of the population, safe water to 45 % and sanitation to 20% of the population (1985-88, UNDP Balanced Development Report, 1992 p.2). With its human development indicators, Pakistan ranks 120^th out of 160 countries and clearly falls in the low human development category.

Pakistan's per capita GNP was $430 in 1993 - approximately on a par with China, above India and Bangladesh and below the Philippines and Indonesia. Pakistan's per capita GDP was $460 in 1993, of which 25 % was contributed by agriculture (including forestry and fishing), 25 % by industry and 50% by utilities, construction, trade and services.

In 1991-92, about 47 % of the employed labor force were working in agriculture (including forestry. and fishing) as against 24 % in industry (including mining and quarrying), and 29 % in utilities, construction and trade.

Pakistan's economic performance has been impressive during the last decade. The GNP growth rate has averaged 6 per cent. Agricultural production has increased at the rate of 4,3 per cent, while the manufacturing sector has expanded annually by 7,2 per cent. Per capita income has increased by over 2 per cent per annum and the proportion of households below the poverty line has declined.

The economic performance of Pakistan has not been achieved without producing significant social distortions and considerable damage to the environment. Consequently, a number of infrastructural bottlenecks have emerged especially in power, transport and communications. Municipal investments have also lagged behind and the quality of service provision has declined. This adversely affected the quality of life in the urban areas. Levels of pollution, congestion, crime and violence have increased in most of the metropolitan cities. Simultaneously, there has been little improvement in social indicators like the literacy rate, infant mortality rate and life expectancy.

A.2. The leather industry in Pakistan

According to a survey conducted by LIDO (1994), there are about 595 tanneries in Pakistan, most of them located in clusters or industrial zones in Karachi, Lahore, Kasur, Multan, Faisalabad, Peshawar, Gujranwala and Sialkot. While traditional, small and medium-scale units still prevail, there are some large, well-mechanized, export oriented tanneries, especially in Karachi.

The raw material base for the expanding leather and leather based producing industry is drawn from a livestock population consisting of 17.4 million cattle, 14.7 million buffaloes, 29.2 million sheep, 35.4 million goats and 4.5 million horses, camels and donkeys, producing about 5.8 million of cattle hides and over 35 million of goat and sheep skins a year.

The rawhides and skins collection and conservation in Pakistan is partly handled through organized sector slaughterhouses and partly through collection by private collectors after slaughter in villages and after religious festivals. The hides and skins have good quality, but are partly downgraded through poor flaying and curing practices.

Despite this large livestock base, the country has turned from a net exporter (which it was only a few years ago) into a net importer of hides and skins. This change is a result of a combination of bans, restrictions and/or levies on exports of raw and semi-processed hides and skins and various incentives for exports of higher level of processing products with higher added value.

The leather and leather products sector now represents one of the most important industrial sectors, significantly contributing to the national economy: in 1989-1990 sector exports amounted to Rs. 6 billion for semi-processed and finished leather (over 52% of total sector exports), Rs. 3.4 billion for leather garments, Rs. 1.9 billion for different leather products (gloves, footballs, leather goods) and Rs. 0. I billion for leather footwear, for a grand total of Rs. 1 1.5 billion. In 1990-91 this figure had increased to Rs. 16.7 billion. With a share of II per cent in total export earnings, the leather and leather products is second only to cotton textiles in this respect. In 1993-94, the exports of the leather sector touched US$770 million.

It is estimated that this sector directly employs more than 200,000 workers and if the cottage sector is included ,it is believed that over one million people depend for their livelihood on this sector . The downstream processing, i.e. the leather products sub-sector is labor-intensive and has potential for female employment.

There is, however, a growing concern that the expansion of the leather sector has resulted in considerable environmental degradation and that local processing of both domestic and imported hides and skids has brought pollution which used to take place elsewhere. While the 8th Five Year Plan (1993-1998) for Pakistan envisages continued industrial development of the country by more investment in industries which would bring higher export value, enhance efficiency, productivity, quality of products and promote labor intensive industries, it is also provided that industrial growth needs to be ecologically sustainable in the long run and that the associated pollution which has been and still is the major problem of the tanning industry needs to be controlled by optimum use of chemicals, recycling, treatment and better utilization of liquid and solid wastes.

Environmental pollution in several tannery areas has reached such proportions that it represents a direct health hazard to the population, and in particular to water supplies for different purposes. Urgent remedial actions are required to reduce the negative impacts on the environment.

On the other hand, disruption in the activities of this industry and thereby in the production of leather and of leather products, would have a grave impact on export earnings, on employment and on the utilization of available natural resources.

A.3. National policy on the environment

Pakistan is not a major polluting country on the global scale nor a large consumer of resources. However, the country's environment is in a state of acute degradation and misuse.

Although the 1973 Constitution gave responsibility for environmental pollution control and ecology to the Federal and Provincial Governments, there was very little environmental input in national planning throughout the 1970s.

Environmental legislation is dominated by the Pakistan Environmental Protection Ordinance 1983 (PEPO). 'Me PEPO is essentially an anti-industrial pollution ordinance, which enables both Federal and Provincial legislatures to enforce control, although little such action appears to have taken place. Although pollution regulations and standards have been proposed, none have yet been adopted. Therefore, this aspect of PEPO remains largely unimplemented. In the absence of regulations and their enforcement, industries and municipalities continue to pollute public waters.

There are a number of other Acts, Ordinances and Codes covering sectors, such as agriculture (1971), forestry (1927), wildlife (1974), cultural resources, motor vehicles (1965) and factories (1934) (the last two including some provisions controlling air pollution, which, however are poorly enforced).

The 1984 Factory Act contains provisions for controlling the discharge of industrial effluent on land into the air and water. This Act is not enforced. A survey in 1985 showed that only 3% of industrial plants across the country treated their waste to international standards and the Factory Act standards.

Both public and governmental concerns and awareness of Pakistan's environmental problems are spreading. Following a three-year long extensive consultative process a National Conservation Strategy (NCS) was approved on I March 1992 by the Cabinet of Pakistan. The NCS provides a broad framework for addressing environmental concerns in the country. The main environmental problems identified In the NCS includes, among others, the lack of supportive frameworks of regulations as well as institutional and financial mechanism which is aggravated by inadequate systems for the disposal of industrial and municipal waste and a high level of water and air pollution. Greater responsibilities and initiatives in addressing environmental problems have been delegated to provincial and lower authorities as well as to the private sector and NGOs, etc.

The 8th Five Year Plan recognizes the need for environmental conservation and accepts that the environment is the major issue. Under the 8^th five year plan , the Government envisages to allocate 1% of GNP to support the pollution -control and environmental protection activities put for-ward in the NCS.

The Implementation Plan for the NCS lists the project as a priority activity. The Government wishes that the project be implemented as a model for nationwide efforts to deal with industrial effluents.

A.4. Kasur's Geographical Background

The town of Kasur is situated about 55 km southeast of Lahore, in the province of Punjab, near the border with India, where the river Sutlej enters Pakistan. Kasur has been known since antiquity as a centre of trade, commerce and culture. According to the last (I 98 1) census the number of inhabitants was about 155.500. For 1993 it is estimated to be about 270.000.

The municipal boundary covers an area of about 2,335 acres, surrounded by agricultural land (wheat, grams, maize, rice and cotton). Mainly due to tannery effluent water, large land areas are at present under water constituting the so called stagnant lakes or pools, for which the town has become famous during the last few years as one of the most heavily polluted towns in Pakistan.

The textile industry is the largest industry in Kasur in terms of employment, followed by the tanning industry. These industries dominate the town, with a large proportion of the population directly or indirectly depending on them.

Kasur, located in a NW-SE ridge is surrounded by a flat landscape. The land is characterized by low permeability of the topsoil. Wind erosion and water logging deteriorates soil qualities thereby reducing land areas suited for agriculture. Farming relies on irrigation, using ground water and private tube wells. Intensive irrigation has changed the soil structure. Waterlogging and high salinity decrease the productivity of the agriculture sector. A Salinity Control and Reclamation Programme (SCARP) consisting of 12 wells and drainage channel, Pandoki Outfall, has been constructed in order to overcome these disadvantages. However, only one of these wells is currently in operation.

The Kasur district covers a gross area of 981,702 acres of which 705,224 acres is classified as cultivable land. Under irrigated agriculture condition, the soil is very productive. Rice, sugarcane, cotton, various fodder, maize and vegetables are the main crops in summer, while wheat is the only dominant crop in winter (rabbi).

A former river, Rohi Nullah, is meandering through the town. Natural affluent to this river has been cut off and today the water in the river consists of the domestic sewage from the town and some of the wastewater from the tanning industry. The riverbed is also the dumping site for garbage and other solid wastes. Farmers along the river are using the mixed sewage for irrigation, watering of buffaloes and washing of clothes.

Rohi Nullah disappears in a semiarid area near the Pandoki Outfall. During the monsoon period (July and August) the river fills up the former bed and even submerges the downtown areas of Kasur. In this period of the year the river also reaches the Pandoki Outfall and finally the Sutlej River, one of the main tributaries of Indus.

Yearly rainfall is about 500 mm and yearly evaporation is about 1,500 mm, i.e. a deficit of 1,000 MM.

A.5. The tanning industry in Kasur

Tanning has a longstanding tradition in Kasur. Initially, rather primitive tanneries, in which all operations were carried out annually, and in which tree barks for tanning proper were used, had apparently been established in the Dingarb area on the bank of the Rohi Nullah.

Subsequently, tanneries started spreading over a wider area south of the river and Kot Molvi, Abdul Qadir Niaz Nagar and Yonus Nagar agglomerations were gradually developed. With its 170 tanneries, Kasur is the biggest tanning concentration in number in the country. The map giving the general layout of the tannery clusters in Kasur is given in Annex I.

According to data provided by the Tanneries Association Dingarb, Kasur, the average daily input of all tanneries in Kasur is estimated to be over 190 tons of wet salted weight, comprising some 8,000 hides (cattle, buffaloes), and between 12,000 and 15,000 skins (sheep and goats) per day.

The small-scale units mainly produce hides and/or skins up to the wet-blue stage only, as they do not have the facilities for the finishing of leather. They sell the semi-processed leather to tanneries in Karachi, Sialkot and other places, where the leather is finished for various end uses. Some of the small and medium-sized tanneries also produce vegetable tanned leather for sole leather and for other purposes.

The traditional pattern has been well preserved: except for 3-5 larger and mechanized tanneries with a more or less industrial way of production, the other tanneries are small, family owned units, employing up to ten workers. Traditional family owned tanneries typical of Kasur are very basic. Most operations are still carried out with very limited use of machines and equipment. Chrome tanning has, to a great extent, replaced the slow vegetable tanning process but the ancient bag-tanning method can still be seen. Some tanners still prepare their own chrome liquors from dichromate under poorly controlled conditions. Due to the unavailability of water supply that is encouraged by its econon3ic incentives, all the tanneries are presently using the underground water for their tanning activities.

Most of medium-sized tanneries finish their chrome-tanned leather using only water based coatings and hand-spraying techniques. The largest tannery has fully automated spraying units (two) for the finishing of the leathers produced and several of the other larger tanneries are in the process of installing automated spraying units as well.

In contrast to the export oriented tanners of the Korangi industrial zone of Karachi, who operate large, well equipped factories, Kasur has remained a hide processing centre, mostly catering to the needs of the local, low-price bracket leather footwear manufacturers. Profit margins are low and access to capital and potential for modernization is limited. Many will find it difficult to survive in the increasingly competitive environment.

In view of its proximity to the large market of Lahore and the availability of leather and cheap labor in Kasur, it is somewhat surprising that no downstream manufacturing units (footwear, leather goods) have been established in Kasur itself, they remain within the Lahore area.

Sanitary conditions both within and outside tanneries are bad by any standard: few units are kept tidy. However, possibly due to the UNDP/UNIDO preparatory assistance project, an increasing awareness of the negative impact of tannery operations on the environment has been created among members of the tanning community.

Little attention is given to occupational health standards, protection from exposure to harmful chemicals and to safety at the work place.

The well organized Tanneries Association Dingarh, Kasur is the main driving force behind endeavor to catch up with more advanced tanners in the country and, in particular, to resolve the problem of treatment and discharge of tannery effluent which, sooner or later. is bound to paralyse the tanning operations in Kasur.

B. Project Justification

B. 1. Present situation

Kasur has been suffering from an environmental degradation, not only to air, surface water, fertile land and groundwater, but also a direct health hazard to the people living and working the affected areas as a result of: 9,000 cubic meters of heavily polluted tannery waste water from the three tannery clusters per day. About 2,500 cubic meters of the above tannery effluent together with domestic sewage is discharged into the Rohi Nullah. This is used for irrigation in the down stream parts of Rohi Nullah. The remaining ampount is discharged to the stagnant pools permanently covering an area of 327 acres and another 311 acres during the monsoon period. The chemically polluted water adversely affects the growth of crops, plants and crop yields outputs from animals and their health, in addition to contributing to social problems in the area.

A total of 100-150 tones/day of solid wastes and 150-200 tones/day of solid domestic waste is disposed of by casual dumping at various places, including the Rohi Nullah.

Water supplies from hand pumps and tube wells, and foodstuffs produced in the area are contained with dissolved solids, especially sodium chloride and sulfides. The Environmental Impact Assessment (EIA) (IUCN, February 1993, page 26) attributes the groundwater contamination to the tannery effluent, wastewater and stagnant pools.

Improper use and handling of chemicals has rendered workers and residents to hazardous exposures. Respiratory disorders, lung infection related diseases, diarrhea/dysentery and typhoid are the most serious illnesses among the community population etc. Currently 50,000 to 60,000 people are exposed to the environmentally polluted conditions. Most of the tanneries are small and their owners have limited knowledge of simple methods and ways of improving their tanning process, and working situation.

The following is the amount of the tannery pollution load discharged (per annum): 4,000 tones of BOD; 11.000 tones of COD2; 10,000 tones of SS; 160 tones of Chromium; and 400 tones of Sulfide (Calculated on basis of 13,000 m3/d; 300 days per year). It should be noted that although being a primary treatment type, the proposed treatment plant is expected to eliminate 65 % of the above BOD; 55 % of the COD; 95 % of the suspended solids; 95 % of the chromium; and 98% of the sulfide.

Deficiencies in providing urban services to Kasur Township, thus leading to and worsening the existing polluted situation.

1 Abbreviation for biochemical oxygen demand.

2 Abbreviation for chemical oxygen demand.

3 Solids in suspension in waste water and effluent.

B.2. Expected end-of-project situation

It is expected that the end of the project situation in Kasur, with respect to environmental protection measures will be as follows:

The outfall sewer, 'Final outfall channel or the Green Channel', to Pandouki Outfall constructed and in operation;

The stagnant pools dried out and ready for reclamation;

The in-house (within the individual tanneries) pre-treatment arrangements (installation of coarse screens and simple grease chambers, and process water flow meters) finalized and in operation;

The industrial and sanitary waste water pollution system in tannery clusters rehabilitated/constructed and in operation;

The Common Tannery Effluent Primary Treatment Plant with control lab-oratory installed and in continuous operation;

The CEPTP's sludge processing, transport and disposal facilities are operational (including disposal of tannery solid wastes);

The Authority (KDA) and Agency (KTWMA) responsible for the engagement of the treatment plant including solid waste and sludge handling, personnel and economy, well established for smooth operation of the project activities. Lessons from experience in the formulation, management and coordination of project will be applied, in other environmental pollution control activities in other parts of the country;

Sufficient number of local staff, employed by KTVIMA, well trained to independently operate and maintain the CEPTP with all auxiliary facilities including sludge handling and disposal system; leading experts and consultants trained to use the knowledge gained in dealing with similar problems elsewhere in the country;

The chrome-recovery plant, ideally potentially usable as by-products pilot plant, installed and in operation;

Local tanners are well acquainted with cleaner, environmentally friendly leather processing methods. Some of the methods, adapted to the local conditions, actually accepted for the production of various types of leather in day-to-day work;

Considerable improved general awareness concerning occupational health hazards, industrial safety and hygiene and specific measures adopted and adhered to;

Kasur Municipality Committee will be strengthened institutionally so that it can effectively assume its assigned functions;

Specific details required for urban development of Kasur, for implementation of the remainder of the Kasur Environmental Integrated Programme as well as other social impact related (women, children and health monitoring) studies will be available for the necessary follow-up actions.

Sound systems/mechanism facilitating 'polluters pay' principles will be established.

The pollution load presented in Part B. I above will be reduced and sanitarily disposed as follows:

Suspended Solids	95%
C. 0. D.	55%
B. 0. D.	65%
Sulfide	98%
Chromium	95%

B.3. Project target beneficiaries and impacts

The following target beneficiaries of the project have been identified:

- About 170 tannery owners benefit directly in the sense that the project will enable the continuation of their activities on a sustainable basis, which otherwise might have been curtailed for environmental reasons they will also benefit economically because they will initially pay part of the cost if pollution abatement, with the remainder being financed by various government agencies.

- An estimated 1,600 tannery workers will obtain the direct benefits of cleaner, safer and healthier working conditions; this will also apply to the large number of casual workers, transport operators and other workers in one way or other associated with the tanneries operation.

- The surrounding community, particularly residents in the tannery clusters themselves, will also obtain health benefits from the improvement of the environment in the area, as will the farmers using the improved water quality in Rohi Nullah for irrigation purposes; the EIA study estimated that a total of about 50,000 to 60,000 people are currently at risk.

- Local public agencies such as Municipal Committee of Kasur, the Housing and Physical Planning Department as well as other environmental monitoring and policy making bodies will benefit directly or indirectly from the project.

- An estimated 1,000 landowners, mostly small farmers, will benefit from reclaiming the stagnant pools now permanently submerging about 132 ha (or 327 acres) of land, and adversely affecting crops during part of the year on another 126 ha (or 311 acres) of land.'

A more detailed analysis of the expected environmental, policy, poverty, health impacts as well as economic benefits as a result of the project is provided in Annex 11. A summary of the project envisaged impacts according to the Government of Netherlands impact checklist is also attached to Annex 11.

B.4. Project financial viability.

In view of the pilot nature of the project, all capital expenditure towards implementation of the project facilities is to be financed as a grant to the Government. KTWMB through KTVFMA will have to finance 0 & M and capital depreciation costs out of contributions from the tanners, Municipal Committee of Kasur, the District Council and Government of Punjab.

According to the technical-economic Study completed under the UNDPIUNIDO Preparatory Assistance Project DPIPAK/89/025 estimates of the annual recurrent costs of the project including maintenance and depreciation are as follows:

Status early 1993; in the meantime the inundated and affected areas considerably increased.

- 0 & M costs:	Rs. 13-96 million or US$ 536.923 ( 63.7%)
- Depreciation:	Rs. 7.94 million or US$ 305,384 ( 36.3%)
Total:	Rs. 21.90 million or US$ 842,307 (100.0%)

The above annual recurrent cost represents less than I% of the sales value and about 2.5 % of the value-added generated by the leather industry in Kasur. Furthermore, the above Technical-Economic Study identifies the treatment system in the project as the only available least cost solution.

The following sharing formula to meet these annual 0 & M and depreciation costs has been agreed upon between Government of Punjab and the Tanneries Association Dtngarh, Kasur which needs to be laid down in a separate legal agreement:

- Kasur tanners	50% (or Rs. 10.95 million on current estimates)
- MCK	15 % (or Rs. 3.29
- District Council	15 % (or Rs. 3.29 ' ' . . )
- Government of Punjab	20% (or Rs. 4.38 on account of depreciation only)

The Finance Department, Government of Punjab, which will open a Depreciation Fund within the Public Account, from which replacement investments would be financed, will keep contributions towards depreciation.

In order to further ensure the project financial viability as the depreciation figures are based on historic costs, the Government of Punjab agrees that the above percentage sharing formula is maintained at variation of 0 & M costs and subject to the adjustment to depreciation. Depreciation costs will be based on periodically (every 2 years) revalued asset value based on replacement costs. For the same reason, the real value of the accumulated Fund balance that is maintained from the outset should earn a return at least equal to the increases in price of the assets for which the fund is ultimately to provide replacement. The Government of Punjab agrees to formalize above arrangements in the legal agreement before the start of the project.

B.5. Project strategy, institutional and financial arrangements:

a) Project approach

The Kasur Tannery Pollution Control Project (KTPCP) is the first part of the mom broadly conceived Kasur Environmental Improvement Programme (KEIP), details of which are presented in Annex 'M. KTPCP comprises those programme elements which are:

i) Institutional strengthening actions to facilitate project and programme implementation and sustainability-I

ii) Implementation of components that are ready for implementation and also respond to urgent environmental upgrading needs;

iii) Preparatory support actions to prepare/finalize subsequent stages of KEIP development;

For practical reasons and to achieve optimum results, technical assistance to be provided with LTNDP funding will be in phases, budget allocations for and implementation of which will be linked to appropriately match the availability of national inputs, actual progress of work at the project site and actions taken to ensure project sustainability.

The Government, on the other hand, is committed to not only the implementation of KTPCP, but also an early follow-up implementation of the remainder of KEIP.

b) Selection of technical alternatives

The technical solution selected as the best option for the project is a result of an extensive technical-economics study of the Preparatory Assistance under which various solutions were analyzed from technical and economic consideration. Other technical treatment alternatives are rejected due to their high cost involved. The selected treatment method is a simple, cost effective alternative, adapted to specific local conditions.

A possible alternative to the problem is to establish individual treatment plants for each of the existing tanneries. However, in view of the closeness of the units to each others and due to lack of sufficient space for setting up and operation of these individual plants, it would b-e technically impossible to opt for this alternative and furthermore, this alternative would be too costly.

c) Implementation strategy

Detailed designs and outline tender documents have been prepared in the technical-economic study of the preparatory assessment phase. The detailed design documents and bills will require some modifications as a result of the change in solid waste disposal site, as well as changes in the built-up area of the tannery clusters necessitating some minor changes in the lay-out of pumping stations. Additionally, unit costs will be reassessed prior to bidding in view of price escalations taking place. Hence, a final design review is required early on during project implementation before tenders can be called. Technical assistance in the form of consultants and subcontractor services is provided for in the project.

Contracts for civil works would be let by KDAIKTNVMA through local competitive bidding. In order to speed up the implementation of the project and to avoid significant price increases, the civil works will be split into five smaller packages, thus enabling smaller local companies to enter the bidding. The tender will therefore have to be split in to the following different packages accordingly:

- Drainage in tannery clusters	(equiv. about US $350,000)
- Solid waste site plus lagoons	(equiv. about US $1,100,000)
- Treatment structure	(equiv. about US $1,300,000)
- Pump houses in clusters	(equiv. about US $120,000)
- Final outfall	(equiv. about US $1,500,000)

An outline of the Technical Project Data and costs is given in Annex IV. It is foreseen that physical implementation of major civil works contracts would commence by early 1996 and would be completed by the beginning/mid-1997and that delivery and installation of equipment would take place during 1997, while introduction of cleaner technology including establishment of the chrome recovery, by-products plant and related training activities start from October 1995 (an outline of major project schedule and tentative project work plan is in Annex 111).

The technical assistance will only be provided after the project approval has been accorded and envisaged prerequisites and preconditions have been made available and/or fulfilled.

UNIDO agrees to provide technical backstopping support services related to introduction of low waste technologies including chrome recovery/byproducts, technical evaluation of equipment and training, as identified in the TSS2 project budget and as required during the project duration (Annex V refers). Its services, in particular, do not include the overall project management and all construction works except guidance in the initial review and introducing minor modifications of designs made during the project of preparatory assistance.

d. Institutional arrangements:

The Housing, Physical and Environmental Planning Department (HP & EP) of the Government of Punjab is administratively responsible for provincial policies and programmes in the areas of environmental planning and enforcement of standards, physical/urban planning and the provision of water and sanitation services. As such HP & EP has administrative control of its two subsidiary agencies, i.e., the Public Health Engineering Department (PHED) and the Environmental Protection Agency (EPA). Considering its functions and responsibilities, commitments, willingness to the project and in order to enhance the Government ownership of the project as well as its responsibilities for the achievement of objectives and sustainability of the project, HP & EP will be the executing agency for the project.

In its capacity of the national executing agency HP & EP will appoint a National Project Director (NPD) who will be responsible for overall project development and liaison with concerned government agencies and UNDP/UNIDO and with possible donor(s). In his work he will, during project life, be assisted by the Assistant National Project Director financed from the UNDP technical assistance project budget.

HP & EP, acting through the Kasur Development Authority (KDA) established as a legal authority to set up, guide and supervise the Kasur Waste Management Agency (KWMA) for construction, operation and maintenance of the Common Effluent Treatment Plant (CEPTP) will delegate the handling of all project related matters to the Kasur Tannery Waste Management Agency (KTWMA). This will enable KTWMA to assume ownership of the project.

Therefore, the KTWMA, acting through its Project Director, assisted by the technical, administrative and auxiliary staff will be the leading project implementation agency.

The KTMA will also ,among other duties, be responsible for revenue collection from the tanners.

The KTWMA as the key project-implementing agency will be responsible for the implementation of the civil works under the project through competitive bidding on a deposit basis on behalf of KDA/KTMA.

KTMA will delegate the direct responsibility for the promotion of in-house tannery technology improvements, operation improvements and the recovery and by-products pilot plant to the Kasur Tannery Association (KTA). The KTA will submit a detailed organization and operational plan of action to the Agency in this regard.

UNIDO is agreed to be another implementing agency responsible for delivery of inputs as specified in the main project budget document (i.e. specifically excluding overall coordination and construction works).

A Steering Committee will be established to oversee project implementation, chaired by the Chairman, Planning and Development Board, Government of Punjab, comprising representatives of Government of Punjab, KDA, KTWMA, UNDP, UNIDO, and possible donors.

Other functions, organizational structure and staff requirements of the KDA and KTMA are provided in Annex VI.

e. Financial arrangements:

The project will be launched with funding by the Government of Pakistan and UNDP; however, every effort will be made to persuade other donors earlier interested in supporting the project to reconsider their decision.

The amounts originally proposed were as follows:

UNDP	US$ 2.50 million
Netherlands	US$ 3. 10 million
NORAD	US$ 1.25 million

In that case, for reasons of efficiency in project implementation, it is expected that Netherlands and NORAD will make their contributions by way of cost sharing to UNDP. Agreement on the exact contributions of each donor, their modality and schedule etc. would be prepared according to usual procedure.

Accounting and financial reporting procedure will be followed according to UNDP guidelines under the PPM section 30503. Furthermore, in order to facilitate the project operation, the National Project Director is agreed to approve all payments from the project accounts and will be responsible to the KTWMA and HP & EP for record keeping, aggregation of documents, reconciliation of bank statements as required, and preparation of applications for replenishment.

Financial and accounting arrangements between UNDP and UNIDO will be made in accordance with the Standard letter of Agreement between the Government and UNIDO as implementing agency in Annex V.

B.6. Reasons for assistance from UNDP

The project is considered priority one in the action plan for the implementation of the National Conservation Strategy. Addressing environmental pollution problems especially identified under the NCS plan is one of the four priority areas in the UNDP and Government 5th Country Programme (1993-1998).

Furthermore, there has been considerable multilateral and bilateral assistance in the leather sector during the past decades. The external assistance has concentrated in the fields of institutional strengthening, training and extension services, improvement of quality and increased productivity, improved leather finishing etc.

C. Project development objective

The development objective of the project is to control the indiscriminate discharge of potentially harmful solid waste and heavily polluted waste waters and improve the working and living conditions in Kasur, thus ensuring an environmentally sustainable social and economic development of the area. Achievement of the project objectives will also contribute to a successful implementation of the National Conservation Strategy.

D. Immediate Objectives, outputs and activities

1. Immediate objective 1

Containment of environmental degradation caused by the indiscriminate discharge of toxic effluents by Kasur tanning industry and creation of cost-effective infrastructure for improvement of overall working and living conditions in Kasur.

1. 1 Output I

Evacuation of the stagnant pools or tannery effluents and the land ready for reclamation.

Main activities for output 1.

1.1.1 Finalization of design details, drawings and tender documents; tendering process, evaluation and awarding etc.

1.1.2 Construction of a final outfall drain (or the 'Green Channel' of about 8.4 km length) for taking the treated effluent from the pre-treatment plant to the Pandoki Outfall drain, from where it WW discharge into a branch of the Sutlej River.

1.1.3 Construction of an interception channel along the 'stagnant pool No I' to prevent further inflow of storm water into this largest stagnant pool area. The channel will be connected with the final outfall drain for carrying away the storm water.

1.1.4 Coordination with other construction works under the project ensuring the inflow of tannery effluents to the pools will be conducted to the common effluent treatment plant for treatment before discharging into the final outfall drain.

1. 1.5 Continuous supervision of the natural evaporation (estimated at 1,000 min to 1,50 mm per year) of the accumulated waste water in the stagnant pools ensuring that the land areas will be ready for reclamation and further use in accordance with the future town planning.

1.2 Output 2

Establishment and operation of a tannery effluent drainage and collection system within the three main tannery areas of Kasur.

Main activities for output 2.

1.2.1 Finalization of design details, drawings and tender documents; tendering process, evaluation and awarding etc.

1.2.2 Rehabilitation and extension of the Dingarb sewer lines. Since the establishment of a proper sewer system According to sound hydraulic principles has to be done in combination with 'in house arrangements' in the tanneries themselves, detailed design of the works under this activity heading will be finalized during project implementation.

1.2.3 Constructions of a collector channel close to Robi Nullah and of a pumping station. Through this collector channel effluent will flow by gravity to the pumping station from where it will be pumped over the ridge to the Pucca Drain.

1.2.4 Rehabilitation and prolongation of the Pucca Drain to the cluster of tanneries. All tannery wastewater including from Dingarh cluster will flow by gravity to the pre-treatment works.

1.2.5 Development of a drainage plan for two clusters namely Kot-Abdul and Niaz Nagar so as to guide the tanners of proper operation and maintenance of their sewer system in their existing self help scheme. This is expected to reduce the current maintenance costs and ensure better flows of effluent, thus preventing settling of solids or blockage in the sewers.

1.2.6 Construction of a central collector drain and a pumping station for Younus Nagar cluster, pumping the wastewater into the Pucca Drain.

1.3 Output 3.

Establishment and operation of a common tannery effluent treatment plant (CEFRP) including a simple analytical laboratory with local staff well trained in their operation and maintenance of the plant.

The plant is designed for treatment of a total effluent volume of 13,000 m3/day including 20 % of sanitary wastewater which is set at year 2007. The proposed treatment system consists of screening, vertical sedimentation and biological purification in a naturally aerated lagoon system with a retention time of over four days. To avoid shock-loads and obtain a more homogeneous quality of wastewater, which is better for the biological process, equalizing tanks with a retention time of 24 hours have been incorporated in the design. The expected elimination of pollutants is as follows:

Solids 95%

C.O.D 55%

B.O.D 65%

Sulfide 98%

Chromium 95 %

The simple analytical laboratory at the CEPTP site is for the purpose of monitoring effluent characteristics and parameters, thus optimizing the plant performance. It will also analyze and monitor the groundwater status at the site for the treatment plant, along Pandouki Outfall, and around at the landfill area etc. The data stored and processed in a computer unit (PC with appropriate software) will also serve the laboratory and the tanners as a data bank on low-waste leather and treatment technology.

Main activities for output 3.

1.3.1 Finalization of detailed designs including structural design and drawings for the civil works and equipment and tender documents; tendering process, tender evaluation and awarding, equipment requisition etc. (During the finalization of detailed designs for implementation of activities under this output, consideration will be given to the introduction of artificial aeration by means of surface aerators at a later stage in order to solve the anaerobic odor problem as well as to increase the overall efficiency of the plant.)

1.3.2 Installation of coarse screens and simple grit/grease chambers in every tannery to protect the sewer system from clogging by coarse floating or "settled" matters. Erection of small-sized tanks within each tannery in order to reclaim part of the sludge as well as for installation of four tanks within the tanning area to reduce the BOD concentration load before the effluent is lead to the treatment plant is also foreseen.

1.3.3 Carry out civil construction works for CEPTP including the laboratory and a main control and project building at the disused railway track near 'Stagnant Pool' No.2.

1.3.4 Supervision to the national contractors) executing the construction works on the plant and other related components.

1.3.5 Installation, acceptance test and commissioning of the plant and other related components.

1.3.6 Training on operation, maintenance and repair of the plant as well as operation of laboratory equipment and application of analytical results, including regular monitor the possible contamination of the environment, particularly on the ground water at the treatment plant etc. Concerned local staff will be trained and better aware of specific issues and problems associated with joint tannery effluent systems to disseminate and apply the expertise gained elsewhere.

1.4 Output 4.

Establishment and operation of a solid waste disposal system including a sanitary landfill for handling tanneries' solid waste and dried sludge generated at the treatment plant.

An impermeable clay layer will seal the landfill site that will be connected by a causeway to the pre-treatment plant. Over this clay layer a drain, consisting of a series of fine to coarse material will be laid.

One bulldozer for coverage of the (often foul smelling) sewerage regularly and five tractors, ten trailers and five dump trucks are among those provided under the project. These vehicles will be used for the transportation of dried sludge from the pre-treatment plant to the landfill site as well as for solid waste collection from the tannery clusters.

Main Activities for output 4.

1.4.1 Finalization of design dew]s, drawings and tender documents; tendering process, evaluation and awarding etc.

1.4.2 Construction of the selected landfill site and access road.

1.4.3 Requisition of related equipment for compacting, collection, removal and coverage of solid and dried sludge.

1.4.4 Elaboration of a waste management plan including a transport plan,

1.4.5 Regular monitoring of the possible influence on the environment, particularly on the ground water at the landfill and along the Pandoki Outfall etc.

2. Immediate objective 2

Improvement of tanners' existing inadequate technical, managerial and environmental knowledge and skills to create a sustainable development of tanning activities and enhance the quality of the Rather industry, facilitating an improvement of the overall living and working conditions of the tanners in Kasur as well as the environmental awareness of the people at large.

2.1 Output 1.

Introduction and demonstration of some low waste leather processing methods to be selected on the basis of the their viability in Kasur Tannery industry such as:

- Mechanical desalting (to reduce the amount of chlorides), affluent and in specially built wooden drums. (The long-term target should be processing of, preferably, fresh (or chilled) and dried hides and skins).

- Improved process control, better general and water housekeeping (float volume, temperature and batch rinsing).

- Recycling of floats (mainly exhausted chrome floats).

- Use of environmentally acceptable and low health risk chemicals (non-benzidine dyestuffs, bio-degnidable surfactant; avoidance of PCP based biocides); avoidance of organic solvents in degreasing and fuijshing.

- Better use and/or removal of solid waste; protection from and collection of shavings and buffing dust; installation of dust filters.

- Carbon dioxide deliming me-thods in larger and mechanized tanneries.

Main activities for output 1:

2.1.1 Re-appraisal of the processing methods presently followed by the tanneries concerned, monitoring of the pollution generated.

2.1.2 Selection of typical tanneries for introduction and application of the above identified or other low waste processing methods.

2.1.3 Demonstration of trial batches on the basis of modified methods, tests and evaluation of the quality of leathers produced and analysis of the effluents and wastes discharged etc.

2.1.4 Organization of seminars and courses designed to upgrade the knowledge of basic principles and undemtanding of tanning process as well as practical related training programmes to improve skills in carrying out various processes for tannery managers, foreman an operatives.

2.1.5 Dissemination of the most suitable and viable methods selected in the demonstration exercises for gradual utilization in other tanneries.

2.2 Output 2.

Installation and operation of a chrofne recovery pilot plant (possibly combined with utilization/conversion of sofne types of solid waste) %ithin the tanning area to dernorlstrate the possibilities of recycling of chemicals such as chrome and conversion of tannery wastes such as fleshing into animal feed, gelatine, tallow and other by-products of commercial value.

Main activities for output 2:

2.2.1 Review and selection of a suitable site for the plant to be set up (it is foreseen that the site would be within or adjacent to a medium size tannery or the project Facility-cum-Training Centre).

2.2.2 FinAization of detailed designs including drawings for related civil construction works and equipment specifications.

2.2.3 Carrying out construction works and equipment requisition; installation of equipment and commissioning of the plant.

2.2.4 Organization of on-the-job training programmes on plant retaliation, operation and maintenance as well as benefits of methods like chemical recovery and by-products conversion etc.

2.2.5 Evaluation of the plant performance results including the economic and technical viability for its duplication by some of the larger tanners and exploration of the feasibility for subsequently setting up a central and common plant or several similar individual units.

2.3 Output 3.

Development of a comprehensive package of baseline data and measures designed to improve Umners' occupational health and safety at works and to promote environmental awarmm of the Kasur population at hne.

Main activities for output 3.

2.3.1 Consolidation of the baseline data available relating to the impact of tanneries' operations on the environment and various health risks for the workers and the town population;

2.3.2 Conducting measurement of the micro-climate in line with WHO standards for maximum concentration of potentially harmful and toxic agents in tanneries

2.3.3 Promotion of strict adherence to safety at work regulations including appropriate safety measures for macbline operators for improvement as required.

2.3.4 Dissemination of information on chen3icals safety data (e.g. simplified safety data sheet), on maximally adn2issible concentrations of gaseous harmful substances;

2.3.5 Preparation and posting of signs, instruction boards an proper and safe handling of machines and equipment; dissemination of information on chemicals safety data etc.

2.3.6 Preparation and distribution of manuals, papers, hand-outs, videos and organization of environmental protection oriented seminars and workshops to facilitate related training programmes under the projects and promote the general environmental avautness of the people at large.

3. Immediate objective 3

Creation of an enabling institutional environment facilitating provision of improved urban services, smooth project implementation and implementation of the 'polluters pay' principle; and carrying out preparatory actions for the remainder of the Kasur Environmental Improvement Programme and other social improvement actions.

3.1 Output 1.

Operational capabilities of Municipal Committee Kasur (MCK) are Unproved to provide better urban services with respect to solid waste, drainage desludging and sewage.

To achieve this, advisory assistance will be provided by an all-round municipal engineer of one year, with a thorough understanding of procedural, organizational and financial c..-mgemert required for such irnoroveuk-nts. -1-his assistance would also provide an input into the feasibility study for the remainder of the KEIP components, particularly as they relate to MCK, such as the rehabilitation of the sewage pumping station and sewerage network and the re,%mtioning of the Rohi Nallah. It is envisaged that the advisor would be assigned to the MCK Chairn=, but would work closely with the municipal engineering and public health departments.

Main activities for output 1.

3.1.1 Finalization of the expert's job description, identification, recruitment and fielding of expert

3.1.2 A&sessment and presentation of MCK's present capabilities, resources and operational procedures.

3.1.3 Development of programmes, schedules and routines including improvements thereof on the basis of present MCK's resources.

3.1.4 Conducting revised operational procedures and review of implementation options.

3.1.5 Preparation of a plan for MCK's overall operational improvement including additional equipment etc.

3.1.6 Preparation of specific municipal services and investment requirements for inclusion in the feasibility study for the remainder of the KEIP.

3.2 Output 2.

The 1981 Outline Develoixnent Plan for Kasur will be upgraded to an extent as to guide its urban development and prepare a specific detailed plan for an industrial zone identified to be set up on the freed stagnant pool area.

This work can be carried out by the Housing and Physic4d Planning Department in association with the MCK urban planning officer (and for the latter part in association with the Punjab Small Scale Industries Corporation and landowners). A short-term catalytic advisory technical assistance will be provided under the project, comprising three short inputs of one month each (3 w/th) of a senior expatriate urban planner.

3.3 Output 3.

Establisfunent of systems to facilitate the application of the 'polluters pay' principle.

To facilitate the Mfiliment of this output, the Government of Punjab will empower the KDA and KTWMA with the necessary authority in respect to installation of water meters at every tannery, the approval and collection of tariffs, etc. The Government of Punjab will also empower the Deputy Commissioner of Kasur with the necessary enforcement authority in case of non-compliance, non-participation, and payment delinquency by existing tanneries as well as those to be established. These actions of empowerment will be made available before start of the project.

Main activities for output 3.

3.3.1 Finalization of detailed plans including equipment specifications, work arrangenwnts and mob I' resources including requisition of water rrwters for installation at the tanneries.

3.3.2 Installation of water ffwters at all water pumps of tanneries to measure the water consumption in every tannerv as a basis for charges.

3.3.3 Finalization of revenue control and reporting system; staff recruitment and assignment; establishment of tariff and schedule for revenue collection by the KTWMA from the tanners.

3.3.4 Dissemination and undertaking of other advance preparatory activities ensuring smooth implementation of the collection of charges.

3.3.5 Preparation of a draft legislation for consideration of the Government of Punjab to establish a Tannery Waste Abatement Fund and adopt a necessary mechanism making tanners in other tanning areas within Punjab province pay for the environmental pollution caused by their tanning activities.

3.4 Output 4.

A feasibility study for the remainder of KEIP enabling investment and possible funding decisions.

The study should focus especially on:

- Assmment of the needs of the local communities and stakeholders.

- A drainage and sewerage master plan for Kasur (storm water as well as sewage).

- The development of a common final effluent treatment plant, which will treat both pretreated tanneries effluent from the Unnery pre-treatment plant of the project as well as sewage from the rest of the town.

- Support in the finalization of the resectioning of the Rohi Nallah proposed under GOP funding;

- Rehabilitation of the sewerage Pumping works and existing town sewers.

- A resource mobilization strategy designed to secure appropriate grant and concessional loan financing for the fWl completion of the programme.

The feasibility study which would require about 10 w/m of expatriate and 10 w/m of local consultants will be carried out under subcontracting arrangements.

Main activities for output 4.

3.4.1 Preparation of terms of reference (TOR) for the feasibility study.

3.4.2 Review and finalization of TOR.

3.4.3 Acquisition of land for utilization in stage 11 of KEIP,

3.4.4 Invitation and evaluation of proposals from interested subcontract candidates, preparation of agreements, subcontract awarding etc.

3.4.5 Monitoring of subcontract implementation.

3.5 Output 5.

Three prefcasibility studies namely Women in Leather Industry, Children in Leather Industry and Health Nlonitoring in Kasur to facilitate follow-up actions by concerned authorities and interested donors.

i) Women in Leather Industry in Kasur

Study of women's position in the tanneries' clusters in Kasur, with the particular objective to find 'entry points' for wonwn into the leather sector. Some topics to be studied panicularly are the present and potential role of women in the PSIC Leather Services Centre. Recommendations would be made regarding concrete steps to involve wonwn in present or future leather work in Kasur, including training programmes, demonstration centres and credit systems and to improve mother health among the tannery workers and residents of Kasur. Tle study will also investigate the most feasible organizational arrangements and prepare a detailed work plan. It is envisaged that the study would require I w/m of an expatriate sociologist and 2 w/m of a local sociologist.

ii) Children in Leather Industry in Kasur

Child labor is often found in Pakistan in general and also in Kasur. This study wifl investigate the situation for children working in tanneries or in associated and related works. Based an investigation of the magnitude of the problem, recommendations will be made regarding possible local solutions including measures to be taken to directly improve cud health among tannery and resident population of Kasur. It is envisaged that the study would require I w/m of an expatriate sociologist and 2 w/m of a local sociologist.

iij) Health monitoring in Kawr

It is designed to prepare for establishment of a monitoring system for health development in Kasur. This consultancy would study the present health situation based on desk studies and interviews with medical personnel and other resource personnel in Kasur. A health monitoring system will be proposed in close contact and in cooperation with the private and governznental health system. The consultancy will make a detailed proposal, including organizational arrangements, cost estimates and methodology to be applied. It is envisaged that I wlm of an expatriate public health specialist would be required.

Main activities for this output.

3.5.1 Review and finalization of related Job descriptions for the expatriate experts and preparation of Job descriptions for local consultants.

3.5.2 Determination of most appropriate local counterparts directly involved in the related studies. I

3.5.3 Identification, recruitment and fielding of experts and consultants.

3.5.4 Monitoring of the assignments and presentation and discussion of the study findings and recommendations including agreements on follow-up actions.

E. Project inputs.

1 Summary

The total project costs are summarized below. The costs are based on January 1993 prices. Physical contingencies have been included at 10% for civil works and equipment. Price contingencies have been included at 6% per annum for local costs (civil works) and at 3.7% per annum for foreign exchange cost (equipment) assuming that the project would be launched during 1993 and implemented as per work plan elaborated by the end of the Joint Formulation Mission in February of the same year envisaging tendering of main construction works and equipment in 1994 and 1995. Conversion has been done applying the then prevaULng rate of exchange of US$ I = Rs. 26. The PC-1 of the GOP has been approved also applying the same conversion rate of Rs. 26...equivalent to US$ 1.

Project cost in US$ '000

	Drainage	Treatment	Sol id Waste	In House arrangements	Total
Civil works	2,202	2,462	223	228	5,115
Equipment*	197	1,623	448	281	2,549
Land	58	50	46		154
Techn. Assistance without equipment					1,562
Total	2,457	4,135	717	509	9,380

Project cost in Pakistan Rs '000

	Drainage	Treatment	Solid Waste	In House Arrangements	Total
Civil Works	57,255	64,022	5,813	5,932	133,022
Equipment*	5,122	42,198	11,648	7,306	66,274
Land	1,500	1,302	1,188		3,990
Techn. Assistance ithout equipment					40,612
Total	63,877	107,522 18,649 13,238 243,898	18,649	13,238	243,898

* including equipment provided by UADP

In view of the time lapse and change of the solid waste disposal site that took place after the calculations had been made, a thorough review and updating of the budget will be made shortly after launching the project. However it is estimated that the budget will remain within US$ 10 million.

2. Government inputs

The Government of Pakistan Punjab and the Government of Punjab ar@'committed to provide, as applicable:

- All inputs.required for implementation of preparatory actions and measures as envisaged in Part G, Prerequisites.

- All KTPCP project costs not specifically covered by the UNDP budget of technical assistance.

	Rs
- Export Development Fund (EDF)	80,000,000
- Economic Affairs Division (EAD)	13,000,000
- Government of Punjab (GoPun)	86,000,000
- Tanneries Association Dingarh (TAD)	20,000,000

Above figures are for the whole (K7PCP) project as designed by the Joint Formulation Mission, ie. including assistance to the Municipal Committee (7mmediate Objective 3, urban services and Outline Development Plan, feasibility study, on the municipal storm and sewage system, municipal waste water wvrks; andfeasibility studies on "men and children in the leather industry and health monitoring in Kasur).

7hey also include Rs 3.99 million representing costs of requisition of land requiredfor the drainage, treatment, solid waste vxrks. (Details relating to land acquisition, No-Objeciion- Certificate requirements and cost estimates are in Annex VII)

Should the donors not rejoin the project, foreign exchange will be needed for purchase of equipment not provided by the UNDP.

- All costs relating to project activities of the National Project Director (NPD): the cost of employment of the KDA and KTWMA staff members as well as those ensuring a normal operation of the Authority and Agency. The following Agency staff are required:

One General Manager, full time, during project life

Other Agency staff will be recruited in such a way that the core personnel will be recruited immediately, additional personnel will be recruited during the project implementation, full staffing not later than one year before the project commissioning (or before project equipment is installed ) as per KTWMA organizational structure diagram, Annex Vle. It specifically includes one deputy manager for operations, deputy for finance, one plant overseer, twelve plant operators, one solid waste overseer, two drivers, one maintenance assistant engineer, one accounting assistant, two billing assistants and one secretary.

It is recognized that the common effluent treatment alant (CEPTP) is actually a large andcomplex factory collecting every day about 13,000 m.m.m of heawly polluted waste water, processing it and producing a cleaner water to be discharged into a water recipient and tens of tons of semi-solid sludge to be disposed of at a suitable landfill.

- All costs relating to engagement of support personnel including one full-time secretary and three drivers required by the project office.

- All costs for the acquisition, operation and maintenance of a project office for international and national experts, the Authority members and Agency staff including its associated costs such as electricity, water, installation of two telephones and one facsimile machine, daily communication and furniture charges, operation of UNDP provided vehicles etc. during the project implementation.

- All cost relating to local storage, handling and transportation of project equipment from the port of arrival to project site.

The schedule of national inputs and approximation of UNDP contribution is indicated in Annex VIII.

Should at some stage donors (re)join the project they will take over part of above cost, the modalities to be elaborated if and when the need arises.

3. UNDP inputs

All external (UNDP, other donors - the Netherlands and NORAD) inputs to the project are assumed to be channelled to and referred to as UNDP inputs. The Draft Terms of Reference/Job Descriptions for Technical Assistance are elaborated in Annex IX.

The present UNDP financial inputs will be used to cover the cost of the international and national expertise including related supporting and monitoring activities provided within technical assistance component of the project and of some equipment primarily for improvement of the currently applied leather processing methods@M introduction of low waste technologies.

Additionally, UNDP will, under TSS2 arrangement, cover the cost of technical supervision, monitoring and backstopping services to be provided by UNIDO during project duration.

Possible inputs by the other donors will be used to cover the cost of international and national expertise primarily related to the social component of the project (Immediate objective 3 and its outputs) and equipment and part of civil works needed to set up the tannery effluent treatment plant (CEPTP).

F. Risks and safeguarding actions.

a) The most significant single project risk is that the envisaged institutional and financial arrangements (outlined in Part B and Schedule of Funding, Annex VM) to implement and operate the proiect will not work. This could be caused by delays in the establishment and/or autonomy of operations of KDAFKIVMA, delay in providing the funds as per schedule and/or as required; inadequate management skills, poor synchronization and interaction between various parties involved in project implementation; insufficient experience and/or of the inadequate powers for KDA/IKTWMA, insufficient freedom of operation for KTVMA to operate otrconunercial lines, inadequacy of KTWMA resources or other more operational or administrative reasons.

To safeguard against this risk, it is essemial that all preparatory actions required on the part of the Government of Punjab including the preparation and adoption of the necessary legislation to establish KDA, to constitute KDA, to appoint its secretary, to frame rules/bye laws, to establish KTWMA and to appoint its general manager, and to firm up the cost sharing agreement between GOPunjab agencies and the Tanneries Association in a legally binding agreement have to be completed before the start of the project.

Project design further safeguards against the above eventualities by the inclusion in the project of advisory technical assistance for implementation.

b) A potentially serious envirorunental risk is that of complete malfunctioning of the primaz treatment plant during the winter season, when water levels in Sutlej river (the ultimate recipient of the treated waste water) are reduced to a trickle (Annex X, Review of Environinental Issues). Such a situation would force the discharge of untreated waste water in the river body for a prolonged period, during a time when the dilution factor is at its lowest point. Tle immediate receiving point, a side arm of the river, normally does not have a natural flow during this period, but is dry or comprises of stagnant water.

To safeguard against such a situation the project includes a provision for adequate stand-by equipment and materials to rectify any malfunctioning in the shortest possible time. Additionally, design of the discharge channel includes valves to enable emergency discharge in the Rohi Nallah (where it crosses the Depalpur road). Finally, it is envisaged and insured by the Government of Punjab that Kl-WNiA would have adequate resources to immediately implement a further emergency solution, comprising of the bunding (through erection of earthen walls by manual labor) of the arm of the river Sutlej down stream from where it receives the effluent from Pandoki outfadi (effectively recreating temporary 'stagnant pools', but in an area away from population concentration or economic activity).

c) A potential project risk is formed by delays in land acquisition or obtaining N.O.C.s (Part G. Prerequisites). This can be safeguarded against by completion of the preparatory actions required on the part of Government of Punjab in advance of the start of project implementation.

d) A potential project risk consists of cost escalations beyond reasonable contingency levels cannot be ruled out. To safeguard against this risk to the best extent possible, the proiect design provides for a detailed desigli. tender documents and cost estimates review prior to initiation of the bidding process.

G. Prior obligations, prerequisites and other undertakings.

a) Prior obligations and prerequisites

i) GOPunjab wfll prepare the required legislation for the establishment of KDA, obtain concurrence from UNDP (and possibly of other donors) and arrange for its enactment/promulgation as an act/ordinance prior final processing of UNDP approval.

ii) Upon the enactment, GOPunjab will constitute KDA, appoint its secretary, draft and enact its bye-laws establishing KTWMA and, after clearance from UNDP appoint the KTWMA general manager, prior to signing of project documents by UNDP.

iii) Appropriate office with necessary facilities (telephone, facsimile, vehicle, parking place etc.) will be made available in Kasur to KTWMA, core (finance, civil engineer, mechanical engineer) and support staff employed.

The Project Manager of appropriate background in business management and proven record in complex operations preferably in the private sector, acceptable to UNDP, to be employed on top urgent basis and, in any case, prior to signing the project document.

iv) GOPunjab will prepare the project PC-1 including the necessary Goverrunent inputs and have this approved by the competent authorities prior to signing of project document by UNDP. GOPunjab will also provide for adequate funds in its 1995/96 ADP and release them immediately.

v) Similarly, evidence of ability and readiness of aH contributors (GOPunjab, EDF, TAD, GOP) to provide the funds required as per schedule attached, Annex VHI. Also, the mechanism remedial action to be taken in case of inability of any party to timely provide its contribution/installment will be elaborated and provided.

It is understood that all funds will be kept with KTWMA, regularly audited in the usuaj manner and financial situation included into quarterly reports to the contributors and donor(s).

vi) Land for the projec- -vill be acquired and the necessary No-Objection-Certificates (N.O.C.s) for the right of way or . tller departments property will be obtained prior to effectiveness of project agreements with UNDI; UNIDO (detailed land areas and NOCs required are indicated in Annex Vil: Land for CEPTP, Dinghar and Younus Nagar pumping stations, highway land for the Green Channel).

vii) Similarly, a suitable landfill for disposal of solid waste resulting from operations of individual tanneries in-plant pretreatment units from tanneries (construction of which is one of the first project activities has to be made available before launching the project.

viii) Concrete action to ensure power supply needed for the drainage system and CEPTP as per existing design (approximately 500 KVA) will be initiated prior to signing of the project document to be completed as needed according to the work plan.

ix) Prior to disbursements of project funds by UNDP/UNIDO, GOPunjab will arrange for the conclusion of a legal agreement, acceptable to the donor(s), embodying the depreciation and O&M cost sharing arrangements agreed with explicit commitments by tanners and MCK/District Council. GOPunjab will also appoint a National Project Director (NPD) acceptable to UNDP prior to disbursement of funds.

x) All consulting and contractor services will be obtained through open tender procedures, contracts awarded to the technically acceptable lowest bidder to the satisfaction of UNDP. Also, the administrative & support cost including clearing & transportation fees at 10 % of investment cost in PC-1, Rs 19,929,000 equivalent to US$ 767,000 appear too high and should be reconsidered as it significantly affects the overall project costs.

The Project Document will be signed by UNDP, and UNDP assistance to the project will be provided only if the above prior obligations and prerequisites have been fulfilled , or are likely to be fulfilled to UNDP's satisfactions. When anticipated fulfillment of one or more obligations and prerequisites fails to be materialized or exist, UNDP may, at its discretion, either suspend or terminate its assistance. I

Similarly, the UNDP will, prior to completion of Phase 1, i.e. approximately one year upon signing the project document, based on the outcome of the review of delivery of national inputs including, in particular, funding situation and of the actual work progress compared against targets set take decision about its further involvement in the project.

In case of positive outcome of that evaluation, UNDP will provide further financing for Phase 11 of the project. UNIDO will prepare a substantive project revision for the implementation of Phase B, including objectives, outputs, work plans, budget, etc. The revision will determine the date of the next review and define specific targets to be achieved by that time. the total life of the project is estimated to be three years and six months and UNDP's total contribution to the project including possible cost sharing from other interested donors, is expected to amount to US$ 2,499,800 as reflected in the attached budget (sect. J. Budgets).

b) Policy and programme undertakings

i) GOPunjab stands committed to install a sustainable common effluent treatment plant (CEPTP) and sludge disposal facilities and will not limit the project to mainly construction of the drainage system and evacuation of the stagnant pools.

ii) GOPunjab stands committed to implement the polluters pay principle as soon as is compatible with enforcement of the EPA standards and regulations.

To give practical contents to this policy intention, GOPunjab will actively promote similar projects and cost sharing arrangements as agreed for the project in other tannery clusters in the province. GOP'unjab will also initiate the establishment of a Tannery Waste Abatement Fund. Both measures would have as objective to implement the polluters pay principle as embodied in the project province wide and to maintain a 'level playing' field of business conditions among the tanners in the province. It is estimated that this can be achieved in three years time.

Once this is achieved, the Kasur Tanneries Association has agreed to accept an increasing financial responsibility for meeting the projft-t's O&M and depreciation costs, with their contribution increasing every year to achieve 100% in 5 years.

iii) GOPunjab stands committed to an early follow-up, i.e., advance land acquisition where necessary and active pursuit of major potential donors particularly the World Bank and the Asian Development Bank etc. Early implementation of the 2nd stage of the Kasur Environmental Improvement Programme will enhance the cost-effectiveness of the KTPCP plant. KTPCP includes technical assistance to make this possible.

H. Project review, reporting and evaluation

Annex XI, Monitoring Indicators and Arrangements provide supplementary criteria and emphasis of issues for review and reporting activities undertaken under the project.

a) The project wfll be subject to regular monitoring visits by UNDP officials and/or representatives of other concerned/potential donors at least twice per year. Monitoring missions would review progress as against the work plans, the envisaged environmental impacts of the project and the project benefits etc, to enable timely initiate project action to mitigate any undesirable impact or problems, if and when these arise. It is understood that during the implementation of the project, in order to facilitate the project operation and to achieve the project development objectives, any adjustment required to satisfy the expected end-,of- project situation and to ensure sustainability, will be accomodated in consultation with the concerned parties.

b) Project Reports.

Project reports wfll be prepared in accordance with UNDP formats for reporting. All reports are to be submitted through KTWMB to the GOPunjab and UNDP, who will in turn distribute to other concerned donor and parties.

The National Project Director (NPD) will prepare, in consultation with the CTA, brief quarterly and detafled semi-annual performance reports. Project performance reports wfli provide information on activities and outputs compared to project work plans and will highlight major problem areas, with suggestions for overcoming them.

The project wfll be subject to joint review by members of the Steering Committee and representative of UNM at least every 12 months. The Project Performance Evaluation Reports (PPER) in UNDP formats which wfll replace the second semiannual performance reports will be prepared by the NPD in consultation with the UNDP Programme Officer. PPERs will be made available one month before the annual joint review meeting date. In preparation of the PPER, the project will undertake internal evaluations of all operational matters relating to the project implementation and prepare suggestions for revisions and project design if necessary to be incorporated into the PPER. The initiation of internal evaluations is the responsibility of the project management.

Two month before the end of the project a Final Project Report will be prepared by NPD in consultation with the Progranune Officer and UNIDO.

c)Evaluation.

The project shafl be subject to an independent in-depth evaluation before the end of the project preferably right after the commissioning of the project treatment plant. Detailed tern-is of reference, team composition and main methods to be applied to satisfy different evaluation needs of all the concerned donor(s), GOP and UNIDO will be prepared by UNDP and have it agreed in advance.

Also, as already mentioned in the last paragraph of Part G., UNDP/TJNIDO prior to completion of Phase 1, i.e. approximately one year upon signing the project document, will review the funding situation and work progress compared against targets determined and make a decision about further involvement in the project.

I. Legal context

This Project Document shall be the instrument envisaged in the supplemental provisions of the PPM, section 30503.

The Govemment agrees to the recruitment of nationally recruited professional project personnel (NPPP) required for the implementation of this project, in accordance with UNDP policies and procedures established within the United Nations system for this purpose. These services constitute an addition to the regular person resources to be provided by the Government and will be available for the duration of the UNDP participation in the project. Tne remuneration of the NPPP will be determined on a case by case basis in accordance with the policies and procedures of UNDP; it should exceed neither the prevailing compensation for comparable functions in the host country nor remuneration level applicable within the United Nations system.

All nationals employed locally and financed by UNDP to perform professional services under this project shall be accorded:

(a) Immunity from legal process of any kind in respect of words spoken or written and acts done in the cause of the performance of their duties;

(b) Inviolability of afl papers and documents connected with his or her duties; and

(c) For the purpose of his or her communications with the UNDP, the right to receive papers and correspondence by courier or in sealed bags.

The following types of revisions may be made to this project document with the signature of the UNDP Resident Representative only, provided he or she is assured that the other signatories of the project document have no objections to the proposed changes:

(a) Revisions in, or addition of, any of the annexes of the project document, with the exception of the standard legal text for non-SBAA countries which may not be altered and the agreement to which is a pre-condition for UNDP assistance;

(b) Revisions which do not involve significant changes in the immediate objectives, outputs or activities of a project, but are caused by the rearrangement of inputs already agreed to or by cost increases due to inflation; and

(c) Nlandatory annual revisions which re-phase the delivery of agreed project inputs or increased expert or other costs due to inflation or take into account agency expenditure flexibility.

J. Budgets

See attached budget sheets of UNDP technical assistance for Phase I and the tentative budget for Phase fl which will be elaborated, in detail, upon project evaluation exercises to be carried out before completion of phase I

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