Prioritized Urban Investments in Four Provincial Capital Cities

COMPONENT 3: PRIORITIZED URBAN INVESTMENTS IN FOUR PROVINCIAL CAPITAL CITIES (US$25 m)
In line with the overall objectives and the programmatic approach of EZ‐Kar, this component will leverage the CIP platform within IDLG to strengthen the municipalities’ public financial management (PFM) systems and invest in priority  investments  that enable  local  economic  development  and  business  growth.  This  component  will  be implemented by IDLG in the four PCCs of Jalalabad, Kandahar, Herat and Khost.  


Subcomponent  3.1:  Prioritized  Urban  Investments. Performance  grant  allocations  for  Prioritized  Urban Investments  (Priority Projects) will  be  awarded  against  achievement  of  specific  performance  criteria  in  three cycles. Upon Project effectiveness, four participating PCCs will receive 5 percent of the formula‐based allocation investment financing amount following the submittal of a “Municipal Investment Platform” (Cycle‐1) as required under the CIP project. The remaining financing for investments will be distributed in two subsequent budgetary cycles.  These  will  be  aligned  with  budgetary  cycles  in  FY2019  (Cycle  2)  and  FY2021  (Cycle  3).  Performance allocations in the Cycle‐2 (45 percent of the overall financing allocation) and Cycle‐3 (50 percent of the overall financing allocation) will be awarded based on the level of compliance by the municipality with the public financial management  triggers  (as per  the principles of  the parallel World Bank  funded CIP) as well as  the construction permit  trigger. Achieving  the  latter  will  be  funded  and  supported  by  technical  assistance  provided  under Subcomponent  2.3  of  EZ‐Kar.  Furthermore,  progress  in  the  implementation  of  reforms  under  the  CIP  will determine the rate of release of funds for the implementation of Priority Projects (see Table 1). The payments would be made upon receipt of third party verification.  


Table 1: Release of Funds under subcomponent 3.1 of EZ‐Kar

















First Investment tranche (Cycle‐1):  
5% Release condition 
Available to all four cities upon project effectiveness and following the submittal 
by each municipality of a “Municipal Investment Platform”. Financing is aimed 
at helping to establish the project, undertake design work and complete the 2nd
tranche release condition. 
Second Investment tranche (Cycle‐2): 
45% release condition 
The  three  cities  of  Jalalabad,  Kandahar  and  Herat  satisfactorily  complete  a 
construction permit reform implementation plan and meet the Cycle‐2 reforms 
under the CIP.  
Khost will only need to comply with Cycle‐2 reforms under the CIP
Third Investment tranche (Cycle‐3):  
50% release condition 
The  three  cities  of  Jalalabad,  Kandahar  and  Herat  satisfactorily  complete  the  construction permit reforms and meet the Cycle‐3 reforms under the CIP.   
Khost will only need to comply with Cycle‐3 reforms under the CIP

 


Priority  Projects  will  be  selected  through  inclusive  and  participatory  consultations  led  by  municipalities,  in coordination with Municipal Advisory Boards (MABs) and the private sector. Furthermore, budget allocation per participating city will be allotted according to the number of returnees in the past 3 years (2016‐2018). As such the four participating cities will receive the following allocations: Jalalabad (US$9million); Kandahar (US$4million); Herat (US$ 4million) and Khost (US$3million). This subcomponent is also fully aligned behind the implementation Along with Public Financial Management (PFM) reform triggers. arrangements under the parallel World Bank‐funded CIP project. A clearing mechanism (within the IDLG CIP PIU
will be established to decide which of the Priority Projects will be financed under the CIP or the EZ‐Kar Window. Priority  Projects with  high  economic  returns  and  located  within  areas  of  heavy  returnees’  presence  will  be financed under the EZ‐Kar window.  


Subcomponent 3.2: Project management. Given that Component 3 will be implemented by the CIP PIU at IDLG, subcomponent  3.2  will  finance  the  cost  of  feasibility  studies,  detailed  engineering  designs,  construction supervision, and monitoring and evaluation for a budget equal to US$5million. Progress and financial reporting, as well as output and outcome monitoring under this component will be reported upon under a separate reporting system along the same format of the CIP

COMPONENT 3 (IDLG)