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Document of
The World Bank
Report No: ICR00002241
IMPLEMENTATION COMPLETION AND RESULTS REPORT
(TF-23789)
ON A
GRANT
IN THE AMOUNT OF US$83.02 MILLION
TO THE
REPUBLIC OF INDIA
FOR A
CHLOROFLUOROCARBON PRODUCTION SECTOR
GRADUAL PHASEOUT PROJECT (ODS III)
June 22, 2012
Sustainable Development Department
South Asia Region
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CURRENCY EQUIVALENTS
(Exchange Rate Effective May 8, 2012)
Currency Unit = Indian Rupee (Rs.)
US$ 1.00 = Rs. 53.15
FISCAL YEAR
April 1 - March 31
ABBREVIATIONS AND ACRONYMS
ACPP Accelerated CFC Phase-out Program
CAS Country Assistance Strategy
CER Certified Emission Reduction
CFC Chlorofluorocarbons
CSL Chemplast Sanmar Limited
CTC Carbon tetrachloride
DEA Department of Economic Affairs, MOF, GoI
DGFT Directorate General of Foreign Trade India
EMP Environmental Management Plans
EUN Essential Use Nomination
ExCom Executive Committee of the MLF
FI Financial intermediary
FM Financial Management
GEF Global Environment Facility
GEO Global Environmental Objective
GFL Gujarat Fluorochemicals Limited
GHG Greenhouse gases
GIZ Gesellschaft für Internationale Zusammenarbeit (German Agency for
International Cooperation)
GoI Government of India
GWP Global Warming Potential
HCFC22 Hydro-chlorofluorocarbon 22
HFC23 Hydro-fluorocarbon 23
IDBI Industrial and Development Bank of India
ISR Implementation Status and Results Report
MDI Metered dose inhalers
MEA Multilateral Environmental Agreement
MIS Management Information System
MLF Multilateral Fund for the Implementation of the MP
MoEF Ministry of Environment and Forests
MOF Ministry of Finance
MP Montreal Protocol
3
MT Metric Ton (1000 kilograms)
MTR Mid Term Review
NACEN National Academy of Customs Excise and Narcotics
NCCoPP National CFC Consumption Phase-out Plan
NFI Navin Flourine Industries
NOU National Ozone Unit
ODP Ozone Depleting Potential
ODS Ozone Depleting Substance
ODS II Ozone Depleting Substance II Project(P031829)
ODS III CFC Production Sector Closure Project (P069376)
ODS IV CTC Sector Phase-out Project (P085345)
PDO Project Development Objective
PMU Project Management Unit
PRCL Polyolefins Rubber Chemicals Limited
TA Technical Assistance
UNDP United Nations Development Program
UNEP United Nations Environment Program
UNIDO United Nations Industrial Development Organization
Vice President: Isabel Guerrero
Country Director: N. Roberto Zagha
Sector Manager: Herbert Acquay
Project Team Leader: Ruma Tavorath
ICR Team Leader : Akiko Nakagawa
4
INDIA
CFC PRODUCTION SECTOR GRADUAL PHASEOUT PROJECT
CONTENTS
Data Sheet
A. Basic Information
B. Key Dates
C. Ratings Summary
D. Sector and Theme Codes
E. Bank Staff
F. Results Framework Analysis
G. Ratings of Project Performance in ISRs
H. Restructuring
I. Disbursement Graph
1. Project Context, Global Environment Objectives and Design ................................... 5
2. Key Factors Affecting Implementation and Outcomes ............................................ 15 3. Assessment of Outcomes .......................................................................................... 16
4. Assessment of Risk to Development Outcome ......................................................... 20 5. Assessment of Bank and Borrower Performance ..................................................... 20
6. Lessons Learned ....................................................................................................... 23 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 25 Annex 1. Project Costs and Financing .......................................................................... 26
Annex 2. Outputs by Component ................................................................................. 27 Annex 3. Economic and Financial Analysis ................................................................. 30
Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 31 Annex 5. Beneficiary Survey Results ........................................................................... 33 Annex 6. Stakeholder Workshop Report and Results ................................................... 34
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 35 Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ....................... 36 Annex 9. List of Supporting Documents ...................................................................... 37
5
Project Data Sheet
A. Basic Information
Country: India Project Name:
INDIA - CFC
PRODUCTION
SECTOR CLOSURE
PROJECT (ODS III)
Project ID: P069376 L/C/TF Number(s): TF-23789
ICR Date: 06/21/2012 ICR Type: Core ICR
Lending Instrument: SIL Borrower: MULTILATERAL
GRANT TO INDIA
Original Total
Commitment: USD 83.02M Disbursed Amount: USD 87.48M
Revised Amount: USD 88.54M
Environmental Category: B Global Focal Area: O
Implementing Agencies:
United Nations Environment Program, Ministry of Environment and Forests
Cofinanciers and Other External Partners:
B. Key Dates
Process Date Process Original Date Revised / Actual
Date(s)
Concept Review: 02/18/1999 Effectiveness:
Appraisal: 12/06/1999 Restructuring(s):
Approval: 06/09/2000 Mid-term Review: 10/02/2006 10/02/2006
Closing: 06/30/2011 12/31/2011
C. Ratings Summary
C.1 Performance Rating by ICR
Outcomes: Satisfactory
Risk to Global Environment Outcome Low or Negligible
Bank Performance: Satisfactory
Borrower Performance: Satisfactory
C.2 Detailed Ratings of Bank and Borrower Performance
Bank Ratings Borrower Ratings
Quality at Entry: Highly Satisfactory Government: Satisfactory
Quality of Supervision: Satisfactory Implementing
Agency/Agencies: Satisfactory
Overall Bank
Performance: Satisfactory
Overall Borrower
Performance: Satisfactory
6
C.3 Quality at Entry and Implementation Performance Indicators
Implementation
Performance Indicators
QAG Assessments
(if any) Rating
Potential Problem Project
at any time (Yes/No): No
Quality at Entry
(QEA): Satisfactory
Problem Project at any
time (Yes/No): No
Quality of
Supervision (QSA): Satisfactory
GEO rating before
Closing/Inactive status Highly Satisfactory
D. Sector and Theme Codes
Original Actual
Sector Code (as % of total Bank financing)
Banking 1 1
Central government administration 2 2
Other industry 97 97
Theme Code (as % of total Bank financing)
Environmental policies and institutions 50 50
Pollution management and environmental health 50 50
E. Bank Staff
Positions At ICR At Approval
Vice President: Isabel M. Guerrero Mieko Nishimizu
Country Director: N. Roberto Zagha Edwin R. Lim
Sector Manager: Herbert Acquay Richard O. Ackermann
Project Team Leader: Ruma Tavorath Naimeh Hadjitarkhani
ICR Team Leader: Akiko Nakagawa
ICR Primary Author: Akiko Nakagawa
Vaideeswaran Sankaran
F. Results Framework Analysis Global Environment Objectives (GEO) and Key Indicators(as approved) The global objective of this project was to support India's CFC production phase-out as mandated
by the Montreal Protocol (MP). Developing countries under Article 5 of the MP, including India,
were required to stop CFC production by 2010, and as India was the second largest CFC producer
in the world after China, India's achievement was seen as a major milestone in achieving the
global environmental objective with regards to helping restore the stratospheric ozone layer.
7
Project outcomes were monitored through independent verification of CFC production against a
CFC production quota at individual plant levels and national aggregate levels.
Revised Global Environment Objectives (as approved by original approving authority)
and Key Indicators and reasons/justifications
(a) GEO Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target
Values
Actual Value
Achieved at
Completion or
Target Years
Indicator 1 : Phasing out CFC production
Value
(quantitative or
Qualitative)
22589 MT 0 MT 0 MT
Date achieved 12/31/1999 01/01/2010 08/01/2008
Comments
(incl. %
achievement)
CFC production phase-out was completed 17 month ahead of the original
schedule except the production of pharmaceutical CFCs allowed under the
Essential Use Nomination (EUN) production.
Indicator 2 : Establishment of tradable quota system for CFC production
Value
(quantitative or
Qualitative)
System not yet
operational
System maintained
and kept
operational
Date achieved 06/07/2000 12/31/2010
Comments
(incl. %
achievement)
The quota system regulating the 4 producers was introduced under a Government
Order (March 2, 2000). Tradable quotas and quota reporting system are kept
operational under the EUN production.
(b) Intermediate Outcome Indicator(s)
Indicator Baseline Value
Original Target
Values (from
approval
documents)
Formally
Revised
Target Values
Actual Value
Achieved at
Completion or
Target Years
Indicator 1 : CFC manufacturers in compliance with production targets
Value
(quantitative or
Qualitative)
13,176 MT 0 MT
Date achieved 01/01/2004 12/31/2011
Comments
(incl. %
achievement)
CFC production stopped except the production of pharmaceutical CFCs allowed
under the Essential Use Nomination (EUN) production.
8
G. Ratings of Project Performance in ISRs
No. Date ISR
Archived GEO IP
Actual
Disbursements
(USD millions)
1 12/21/2000 Satisfactory Satisfactory 20.49
2 03/12/2001 Satisfactory Satisfactory 23.03
3 09/19/2001 Satisfactory Satisfactory 32.79
4 03/21/2002 Satisfactory Satisfactory 33.87
5 12/26/2002 Satisfactory Satisfactory 39.19
6 06/26/2003 Satisfactory Satisfactory 40.05
7 12/15/2003 Satisfactory Satisfactory 45.92
8 06/09/2004 Satisfactory Satisfactory 48.55
9 08/29/2004 Satisfactory Satisfactory 52.10
10 03/07/2005 Satisfactory Satisfactory 54.46
11 11/07/2005 Satisfactory Satisfactory 60.07
12 05/16/2006 Satisfactory Satisfactory 60.66
13 12/29/2006 Satisfactory Satisfactory 65.98
14 06/08/2007 Satisfactory Satisfactory 66.57
15 12/04/2007 Satisfactory Satisfactory 71.89
16 06/09/2008 Highly Satisfactory Satisfactory 72.91
17 12/21/2008 Highly Satisfactory Satisfactory 76.45
18 05/20/2009 Satisfactory Satisfactory 78.82
19 11/26/2009 Highly Satisfactory Satisfactory 78.82
20 05/25/2010 Highly Satisfactory Satisfactory 81.73
21 12/06/2010 Highly Satisfactory Moderately Satisfactory 82.00
22 06/08/2011 Highly Satisfactory Satisfactory 85.34
23 12/24/2011 Highly Satisfactory Moderately Satisfactory 85.34
January 2012 87.47
Note: The project closed on December 31, 2011, and the final ISR was received on December 23,
2011. However, among the additional compensation for the Accelerated CFC Phase-out Program
(ACPP), the first tranche mounting to US$2.134 million was disbursed in January 2012, which
was within the disbursement grace period until April 30, 2012.
H. Restructuring (if any) Not Applicable
9
I. Disbursement Profile
10
1. Project Context, Global Environment Objectives and Design
1.1 Context at Appraisal
1. Background. The Vienna Convention for the Protection of the Ozone Layer and the
Montreal Protocol (MP) on Substances that Deplete the Ozone Layer under the Convention are
international treaties which became effective in the 1980s. Their objectives are to eliminate
consumption and production of ozone depleting substances (ODS) to avoid ozone layer depletion
which adversely affects human health and the environment. Under Article 5 of the MP,
developing countries including India, were required to meet the following phase-out schedule for
ODS having high ozone-depleting potential (ODP):
Table 1: Phase-out Schedule for Article 5 Countries
Year
ODS Controlled under the MP
CFCs (Annex A Group1)
Halons (Annex A Group II)
HCFCs (Annex C Group I)
CY 1999 Freeze consumption
CY 2002 Freeze consumption
CY 2005 Reduce by 50%
CY 2007 Reduce by 85%
CY 2010 Reduce by 100% Reduce by 100%
CY 2013 Freeze consumption
CY 2015 Reduce by 10%
CY 2020 Reduce by 35%
CY 2025 Reduce by 67.5%
CY 2030 Reduce by 97.5%
CY 2040 Reduce by 100%
Source: MP. The table does not include ODS chemicals unrelated to this project. Regarding HCFC, at the
19th Meeting of the Parties to the MP in September 2007, the Parties agreed to accelerate the HCFC phase-
out schedule in the MP in both developing and developed countries, as shown in Table 1 above.
2. India’s CFC Phase-out Program. For CFCs in Annex A Group I of the MP, the
Government of India (GoI) successfully complied with the “1999 freeze” requirement and
prepared the CFC Production Sector Phase-out Plan with the Bank’s assistance. The Plan
proposed quantified phase-out targets of CFC production from 1999 until production cessation in
2010, and was submitted to the Executive Committee (ExCom) of the Multilateral Fund (MLF), a
fund responsible for supporting developing countries in meeting their MP commitments. At its
29th meeting in November 1999, ExCom approved the Plan, with an MLF grant of US$82 million
to GoI, and appointed the Bank as the implementing agency (ExCom Decision 29/69). The MLF
grant was approved on the basis of the annual phase-out target volume corresponding to the
annual grant tranches, as shown in Table 2 below.
3. Country Assistance Strategy (CAS). At the time of appraisal, India’s CAS (1998-2000)
did not have a specific reference to ODS, but it did identify global environment as one of the
three themes to focus on in the environmental assistance strategy. The CAS stated that
supporting India in complying with the agreements reached at the Kyoto Conference (1997) for
11
climate change should be the Bank strategy, which is in alignment with support to comply with
other Multilateral Environmental Agreements (MEA) such as MP.
Table 2: CFC Production Phase-out Targets and Approved MLF Grant Tranches
4. Building on the basis of the Bank’s predecessor projects (ODS I and ODS II), this
project (referred to as ODS III) supported the final stage of India’s CFC production
phase-out efforts.
1.2 Original Global Environment Objectives (GEO) and Key Indicators (as approved)
5. The original GEO of this project was to support GoI in the reduction and eventual
stoppage of CFC production (CFC11, CFC12, CFC113), and thus, to assist GoI to comply with
one of the ODS phase-out requirements under the MP. At the time of appraisal, India was the
second largest CFC producer in the world after China, and India’s final stoppage of CFC
production by 2010 was expected as a major milestone in achieving the GEO of helping to restore
the stratospheric ozone layer. Project outcomes were monitored through independent verification
of indicators such as CFC production volume against the CFC production quota at individual
plant levels and the national aggregate level.
6. GEO indicators include the phased-out CFC production volume with each CFC producer
in compliance with annual production targets and the establishment of a tradable quota system for
CFC production.
1.3 Revised GEO (as approved by original approving authority) and Key Indicators,
and reasons/justification
7. The original GEO and key indicators were not changed. As described in section 1.6, the
phase-out of halon, which is one of the non-CFC ODS, was added as a component during
implementation, but because the plant dismantling was followed by the one-time disbursement
and monitoring was unnecessary for this additional component, no indicators were added.
CY1999 22,588 12
CY2000 20,706 11
CY2001 18,824 11
CY2002 16,941 6
CY2003 15,058 6
CY2004 13,176 6
CY2005 11,294 6
CY2006 7,342 6
CY2007 3,389 6
CY2008 2,259 6
CY2009 1,130 4.8
CY2010 0 1.2
Total 82
Grant Tranche (US$million)Production Ceiling (Mt)
12
1.4 Main Beneficiaries (original /revised, briefly describe the “primary target group” identified in the PAD and as captured
in the GEO, as well as any other individuals/ organizations expected to benefit from the project)
8. Primary beneficiaries. The four CFC producers in India were the primary beneficiaries
of the enterprise compensation component: SRF Limited (Rajastan), Gujarat Fluorochemicals
Limited (GFL) (Gujarat), Navin Fluorine Industries (NFI) (Gujarat), and Chemplast Sanmar
Limited (CSL) (Tamil Nadu). Based on the CFC Phase-out Annual Program submitted and
approved at ExCom meetings and the verified production figures, these enterprises received
compensation tied to CFC production phased-out targets.
9. Secondary beneficiaries. The secondary beneficiaries were individuals and institutions
that benefited from the Technical Assistance (TA) component. The Ozone Cell at the Ministry of
Environment and Forests (MoEF) and the Project Management Unit (PMU) in the MoEF
benefited from institutional strengthening and the development of Management Information
System (MIS). MoEF received support in establishing a production and consumption quota
system. The Directorate General for Foreign Trade (DGFT), National Academy of Customs
Excise and Narcotics (NACEN), and custom authorities were given customs training and capacity
building to control illegal transactions.
10. Direct global benefits. As the second largest CFC producer in the world after China at
the time of appraisal, India’s cessation of CFC production and its accelerated cessation efforts
contributed significantly towards helping to restore the stratospheric ozone layer. However, the
complete reversal of the ozone layer damage will take decades. A secondary direct global benefit
is the reduction of greenhouse gases (GHG). CFCs have a high global warming potential (GWP)
compared to carbon dioxide, and CFC production phase-out itself is a significant contribution to
reduce GHG emission.
1.5 Original Components (as approved)
11. The project components are as follows:
12. Component 1: Enterprise compensation (US$80 million). This component provided
grant funds as compensation payments to the four CFC producers in return for meeting the CFC
annual phase-out target volumes, as outlined in Table 2 above.
13. Component 2: Technical assistance (TA) (US$2 million). The United Nations
Environmental Program (UNEP) was responsible for supervising this component. The
component activities consisted of: (a) staffing support for the PMU to be established by MoEF,
(b) development of an MIS for collecting and managing production data, (c) consultant services
for technical support to the PMU in fulfilling its responsibilities, (d) design and implementation
of public awareness programs, (e) support for research activities on substitute chemicals, (f)
support for training, seminars and workshops, (g) support for research on CFC recovery and
recycling, (h) technical support to the CFC producers with environmental analysis and
preparation of environmental management plans (EMPs), and (i) support for other governmental
departments and agencies collaborating in the CFC phase-out program.
13
Table 3: Estimated Project Cost
Category Appraisal Estimate (US$ millions)
CFC phase-out compensation 80.00
Financial Agency Fee (IDBI) 0.80
Technical Assistance (UNEP) 2.00
UNEP Agency Fee 0.22
Total 83.02
14. Estimated project cost for the TA component is as follows.
Table 4: Estimated Project Cost for the TA Component
Category Appraisal Estimate (US$)
Consultant’s service 1,150,000
Office Supplies and Operating Costs 650,000
Training Workshops 200,000
Service Fee 220,000
Total 2,220,000
1.6 Revised Components
(a) Halon Component 15. Responding to the ExCom decision at the 34
th meeting (July 2001) to finance the
dismantling, removal and destruction of halon production plants in India, the Grant Agreement
was amended in 2003 to include the Halon Producers Production Phaseout component (US$ 2.3
million) at two beneficiary enterprises under the ODS III project, i.e., SRF Ltd and Navin
Flourine Industries (NFI) Ltd., with the latter reconstituted as the Polyolefins Rubber Chemicals
Limited (PRCL) at the time of the amendment. The freeze compliance of halon production in the
two enterprises achieved a phase-out at a total of 288.8 ODP metric tons (MT), and the
compensation for plant dismantling was shared between NFI and PRCL in the ratio of 69.93
percent and 30.07 percent respectively, for which the one-time disbursement was made in
September 2003 under the verification audit and performance-based disbursement mechanism
established in the ODS III project.
16. This component was added as a result of the Consensus Agreement between the ExCom
and GoI (ExCom Decision 34/68), and Restructuring Documents were not prepared at the Bank.
Addition of this component was managed by a legal document to amend the original OTF Grant
Agreement (TF023789), which was issued by the Bank on March 10, 2003, and counter-signed
by Industrial Development Bank of India (IDBI) on April 17, 2003.
(b) Accelerated CFC Phase-out Program (ACPP)
17. During its 56th meeting (November 2008), the ExCom approved the revised agreement
between GoI and the ExCom on India’s ACPP to complete the production phase-out as of August
2008, or 17 months ahead of schedule. Restructuring documents were not prepared for such
revision and the Project Agreement between the Bank and GoI was amended and became
effective on December 21, 2011. Such an accelerated phase-out made the four enterprises
eligible for a total of US$3.17 million additional compensation. Among the additional
14
compensation for ACPP, the first tranche amounting to US$2.134 million was disbursed in
January 2012.
1.7 Other significant changes (in design, scope/scale, implementation arrangements/schedule, and funding allocations)
18. The closing date of the project was extended from June 30, 2011 to December 31, 2011
due to the delayed procedures related to the ACPP. The extension was intended to allow for the
remaining final tranche disbursement (US$1.057 million) after the decision of the ExCom 66th
meeting (April 16-20, 2012) during the standard four-month grace period through April 30, 2012,
or an additional two months of extension until June 30, 2012 based on a possible request from
GoI.
19. The request for the second and final tranche amounting to US$1.057 million was
considered at the 66th ExCom meeting, but ExCom members raised questions regarding
“documentation on CFC stockpile destruction (ExCom Decision 60/47, 2010), and on production
closure and dismantling” (ExCom Decision 54/37(d), 2008). As a result, the ExCom agreed to
defer the disbursement request until its 67th meeting in July 2012. Hence, the disbursement grace
period expired without carrying out the final disbursement of US$1.057 million.
Table 5: Estimated, Revised and Final Project Cost (in US$ millions)
80.000 80.000 83.170 82.113 102.64%
-- 2.300 2.300 2.300 --
0.800 0.823 0.855 0.845 105.64%
2.000 2.000 2.000 2.000 100.00%
0.220 0.220 0.220 0.220 100.00%
83.020 85.343 88.545 87.478 105.37%
0.000 0.000 0.000 0.000 --
0.000 0.000 0.000 0.000 --
83.020 85.343 88.545 87.478 105.37%
Percentage
of
Appraisal
Total Project Costs
Project Preparation Facility (PPF)
Front-end fee IBRD
Total Financing Required
Total Baseline Cost
CFC phase-out compensation
Halon phase-out compensation
IDBI Financial Agency Fee
Technical Assistance (UNEP)
UNEP Agency Fee
Components
Appraisal
Estimate
Revised
Estimate
after adding
Halon
Component
Revised
Estimate
after
ACPP
Final
Disburse-
ment
Note: Figures are rounded.
20. Other than the changes as mentioned above, the design, scope, implementation
arrangements and funding allocations were not modified.
15
2. Key Factors Affecting Implementation and Outcomes
2.1 Project Preparation, Design and Quality at Entry (including whether lessons of earlier operations were taken into account, risks and their
mitigations identified, and adequacy of participatory processes, as applicable) 21. Quality at entry was highly satisfactory. The ODS III project inherited the design
established in India’s ODS II project which captured the lessons learned from ODS I. The first
lesson was to have a financial intermediary (FI) between the Bank and the beneficiaries to
minimize transaction costs. IDBI, which was the FI under ODS II, assumed the same role in
ODS III, and ensured continuity. The number of beneficiaries in the ODS III project was four
producers as opposed to 83 subprojects in ODS II, thereby assuring greater efficiency at entry.
The second lesson was performance-based disbursement tied to CFC production reduction,
subject to third-party audits. A simple project design involving only four producers contributed
to timely disbursements, accelerated phase-out, and effective implementation.
2.2 Implementation (including any project changes/restructuring, mid-term review, Project at Risk status, actions taken)
22. Implementation of the CFC Production Sector Phase-Out component proceeded
satisfactorily throughout the project period. CFC Production phase-out agreements and targets
were set; producers met these targets; monitoring was done through audits; disbursements of
grants were made in line with the agreements. IDBI had some minor delays in fund transfers,
which was mainly due to the grant being held in foreign currency in the United States, and thus
delayed as the bank where the account was established had to abide with the prevailing laws in
the United States, e.g. sanctions against Iran. In this regard, the introduction of the Real Time
Gross Settlement system in November 2005 was useful because disbursements flowed directly to
the beneficiaries on the same or the following day.
23. Implementation of the TA component was delayed during the initial phase because the
fund flow arrangements among the Bank, UNEP and Ozone Cell had not been streamlined.
However, once these were established, the constraints were removed.
24. During implementation, the Project Coordinator within the PMU played an important role,
and when the Project Coordinator position was vacant, the implementation became slow, as
described in Sections 5.1(a) and 5.2 (a). However, as described in those sections, the vacancy did
not have much impact on the implementation or the PDO as most of the critical tasks were
initiated / completed when the Project Coordinator was in place.
2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization
25. In the CFC Production Sector Phase-Out Component, the regular audits served as the
M&E tool, and the process was followed in a streamlined manner throughout the project period.
These audits were done by two agencies, i.e., the Ozone Cell and the Bank. The Ozone Cell’s
half-yearly audit was useful in providing guidance on mid-year corrections if any, and also
formed the basis for releasing the second installment (60 per cent) to the CFC producers. The
third-party audits under the project served the mandatory purpose of reporting to the ExCom and
also provided recommendations for the ensuing year.
16
2.4 Safeguard and Fiduciary Compliance (focusing on issues and their resolution)
26. Safeguards. The project was classified as category B, consistent with that of other ODS
projects assisted by the Bank. Under the project, CFC producers were required to prepare
Environmental Management Plans (EMPs) for plant modification or dismantling in case both
CFC and HCFC22 production was terminated. However, all the CFC production facilities were
swing plants capable of producing HCFC22 too and thus there was no need to undergo any partial
or total modification as they phased out CFC production and transformed to HCFC production.
Under the MP, India is entitled to produce HCFC until 2040, and since no swing plants were
dismantled during the life of the project, MoEF has the responsibility that whenever the cessation
of HCFC production takes place, the production lines of swing plants would be dismantled
according to environmentally sound practice in compliance with GoI requirements.
27. As for the halon phase-out component, EMPs were made by the two manufacturers (SRF
Ltd and PRCL, formerly NFI). Based on site visits conducted by the third-party auditor (Deloitte
Touche Tohmatsu India Private Limited), it was confirmed that the EMPs included an appropriate
monitoring system and a mitigation mechanism in order to minimize environmental impact
caused by dismantling the plants.
28. Fiduciary compliance. There were no financial management (FM) issues or
procurement issues during implementation. This was due to (a) the simple project FM
design which involved IDBI as FI responsible for annual financial audits, and (b) there
were not many procurement transactions, as most of the financial resources were
disbursed to CFC manufacturers as compensation for phased-out production.
2.5 Post-completion Operation/Next Phase (including transition arrangement to post-completion operation of investments financed by present operation, O&M, sustaining reforms and institutional capacity, and next phase/follow-up operation)
29. The Bank is currently assisting GoI in meeting MP requirements to reduce the production
and consumption of carbon tetrachloride (CTC), which is another group of ODS. The CTC
project (ODS IV, P085345) is being implemented under an institutional arrangement similar to
that of ODS III, and TA and supervision missions for ODS III and ODS IV have been conducted
jointly.
3. Assessment of Outcomes
3.1 Relevance of Objectives, Design and Implementation (to current country and global priorities, and Bank assistance strategy) 30. The PDOs were relevant at the appraisal stage and were still relevant at closure. They
were directly relevant to GoI’s obligation under the MP to phase out CFC production. As shown
in Table 6 below, the project supported GoI in completing the final decade of CFC production
phase-out, which was an agreed obligation of GoI.
31. The objectives of the project were also highly relevant to the global priorities of phasing-
out ODS. As stated above, India was the second largest CFC manufacturing country at the time
of the appraisal, and CFC production phase-out of such a country was one of the most important
17
building blocks of the phase-out schedule under MP, as outlined in Section 1.1. Furthermore,
accelerated phase-out generated additional global benefits.
32. In the latest CAS (2010-2014), MLF under the MP is acknowledged as playing an
important role in ODS phase-out efforts in India, having two on-going projects (ODS III and
ODS IV).
Table 6: Agreed and actual CFC production by year and producer
Source: ExCom meeting documents. CFC production ceased as of August 1, 2008, and production in
CY2010 was for MDIs, as allowed under MPs Decision IV/25 for essential uses.
3.2 Achievement of Global Environmental Objectives (GEO) (including brief discussion of causal linkages between outputs/outcomes, with details in Annex 2)
33. The ODS-III project is deemed Satisfactory. First, the ultimate objective of the project
was to ensure that GoI could meet its CFC production phase-out target under the MP by 2010.
As shown in Table 6 above, GoI successfully achieved the phase-out target and all milestones.
Moreover, GoI responded to the incentives in promoting accelerated phase-out under the MP and
completed the 100% production phase-out as of August 1, 2008, or 17 months ahead of schedule.
CFC production beyond 2008 is for metered dose inhalers (MDI) only, which is authorized under
essential use nomination (EUN). It should be noted that, although CFC production was
successfully phased-out and the GEO was achieved, GoI did not meet the requirement on
documenting the CFC stockpile destruction and equipment dismantling described in Section 1.7
above and hence, the 66th ExCom meeting (April, 2012) deferred the request for final
disbursement of US$ 1.057 million until the 67th meeting in July 2012.
34. The second objective was to ensure that annual production targets by each CFC
manufacturer are in compliance with production targets, in accordance with the Quota Order. In
Required
reduction
under MP
Agreed
volume
under MLF CSL GFL NFI SRF
CY1999 22,588 22,411 0% 1,485 7,415 7,244 6,267
CY2000 20,706 20,407 8% 1,823 7,352 5,179 6,053
CY2001 18,824 18,691 17% 1,601 6,614 4,958 5,518
CY2002 16,941 16,890 25% 1,440 6,037 4,440 4,973
CY2003 15,058 15,014 33% 1,279 5,370 3,943 4,422
CY2004 13,176 13,069 42% 324 4,623 4,250 3,872
CY2005 11,294 11,161 50% 50% 954 3,988 2,929 3,289
CY2006 7,342 6,964 67% 626 2,278 1,924 2,136
CY2007 3,389 2,347 85% 85% 286 195 881 985
CY2008 2,259 674 90% 0 246 228 200
CY2009 1,130 0 95% 0 0 0 0
CY2010 0 319 100% 100% 0 0 111 208
51%
Actual
volume
CFC production in India
Agreed
volume
under
MLF
(MT)
Actual
volume
(MT)
Actual CFC production
per producer
(MT)
90%
100%
(N/A)
Production reduction percentage
compared to baseline (%)
18
this regard, as shown in Table 6 above, the total production volume of the four manufacturers in
any given year was always within the annual production target. As the third key indicator, a
tradable quota system for CFC production was established. For example, in CY2010 when a
limited amount of CFCs were produced for MDI use under MoEF license, two producers (CSL
and GFL) traded their entire quota to the other two producers (NFI and SRF) under this tradable
quota system.
3.3 Efficiency (NPV/EIRR, cost effectiveness, e.g., unit rate norms, least cost, and comparisons; and FIRR) 35. For ODS consumption projects, ExCom evaluates proposals using cost-effectiveness
thresholds to prioritize funding in case necessary resources exceed the resources available (ExCom Decision16/20). ODS III is a production phase-out project for which compensation is
based on profit losses, but the average cost-effectiveness of US$3.54/Kg ODP achieved in ODS
III CFC production phase-out component still demonstrates high efficiency. The average cost-
effectiveness of the Halon production phase-out component was US$7.98/Kg ODP, and the
component benefited from economies of scale gained through implementation under the ongoing
project framework.
Table 7: ExCom Cost Effectiveness Thresholds for ODS Consumption
Sector Sub-sector US$/Kg ODP
Aerosol Hydrocarbon 4.40
Foam General
Flexible polyurethane
Integral skin
Polystyrene/polyethylene
Rigid polyurethane
9.53
6.23
16.86
8.22
7.83
Halon General 1.48
Refrigeration Commercial
Domestic
15.21
13.76
Solvent CFC-113
TCA (trichloroethane)
19.73
38.50
3.4 Justification of Overall Outcome Rating (combining relevance, achievement of GEOs, and efficiency)
Rating: Satisfactory
36. The intended development outcome of CFC production closure was achieved in an
accelerated manner even ahead of what was envisaged at the Mid-term Review (MTR) in
December 2006. The prevailing market scenario – both within India and internationally – also
abetted the accelerated phase-out. ODS III is certainly one of the most successful projects
implemented by the Ozone Cell / MoEF. Targets were set and met. Accelerated phase-out was
agreed; additional compensation was given; the phase-out was completed 17 months ahead of
schedule. Several TA initiatives were taken, e.g. training of the Custom Officers and data
triangulation, in order to ensure that no CFCs are continued to be used in the country. The TA
was also found to be effective as the number of confiscation increased between 2004 and 2008. It
should be noted that, although CFC production was successfully phased-out and the GEO was
19
achieved, GoI did not meet the requirement on documenting the CFC stockpile destruction and
equipment dismantling described in Section 1.7. Therefore, the overall outcome was Satisfactory.
3.5 Overarching Themes, Other Outcomes and Impacts (if any, where not previously covered or to amplify discussion above)
(a) Poverty Impacts, Gender Aspects, and Social Development 37. ODS-III project has no direct relevance to poverty or gender.
(b) Institutional Change/Strengthening
(particularly with reference to impacts on longer-term capacity and institutional development)
38. Under the ODS III project, MoEF /Ozone Cell established an independent organization -
-PMU - - as a registered society. This was a special vehicle created for the ODS phase-out. The
objectives of the PMU were not restricted to CFC production sector phase-out, and as a legal
entity, it was intended to continue beyond the project period as well. At that time, the creation of
the PMU was a big step for ensuring institutional strengthening of MoEF. The PMU was
responsible for facilitating the phase-out in a project mode whereas the Ozone Cell was assigned
to manage the phase-out in terms of international and national policy. The PMU was dealing
with various multilateral and bilateral agencies pertaining to the phase-out, including the World
Bank, UNEP, United Nations Development Program (UNDP), United Nations Industrial
Development Organization (UNIDO) and Gesellschaft für Internationale Zusammenarbeit (GIZ,
German Agency for International Cooperation). While there were many constraints, the PMU
functioned smoothly once its procedures were streamlined. The PMU’s operation was guided by
the Project Implementation Manual and Operational Manual. In addition, the PMU prepared a
ODS phase-out strategy for every three years that was approved by the Ozone Cell and MoEF.
(c ) Other Unintended Outcomes and Impacts (positive or negative, if any)
39. During the last two years of project implementation, there was a difference of opinion
between the Ozone Cell and the Bank regarding the project. From the Bank’s perspective, the
PDO had been met by December 31, 2011 and no activities were scheduled beyond that time, and
thus the project was closed, with disbursement of the final tranche expected by the end of the
disbursement grace period, April 30, 2012 in accordance with the 66th ExCom approval.
However, the Ozone Cell felt that the project could not be closed before the ExCom had approved
the final disbursement, and this was not expected to happen until the April 2012 meeting. In
addition, the Ozone Cell also felt that, although the Bank was the implementing agency under the
MLF, the Bank’s decision to close the project was unacceptable. Such a difference of opinion
was unfortunate, although it should be noted that it had no bearing on the project outcome.
3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops (optional for Core ICR, required for ILI, details in annexes) 40. Not applicable.
20
4. Assessment of Risk to Development Outcome Rating: Low or negligible
41. Given that compensation has been paid to the CFC manufacturers and the national policy
prohibits the manufacture and use of CFCs, the risk to the PDO is low. The consumption quota
system and transaction-wise import/export data reporting system were established to avoid any
illegal CFC transaction, and thus ensure sustainability and continuity.
42. The 66th ExCom meeting (April 16-20, 2012) pointed out that the CFC production
closure and dismantling (ExCom Decision 54/37(d), 2008) had not been properly documented
and presented as one of the reasons for not allowing the final disbursement. However, the Bank
was notified that equipment at the swing plants of the four producers related solely to the
production of CFCs such as piping and day tanks were dismantled, and this makes resuming CFC
production economically unattractive. It should be noted however that such notification to the
Bank was informal, because as indicated in Section 7 below, the Ozone Cell unfortunately does
not acknowledge the closure of this project on December 31, 2011, and did not allow
communication between the Bank and the four manufacturers.
43. As for the halon production phase-out component, there should be no risks to PDO since
the dismantling of production plants at two enterprises was verified in 2003, which makes
resuming halon production economically unviable.
5. Assessment of Bank and Borrower Performance (relating to design, implementation and outcome issues)
5.1 Bank (a) Bank Performance in Ensuring Quality at Entry (i.e., performance through lending phase)
Rating: Satisfactory
44. In preparing this project, the Bank team took note of the lessons learned during the
implementation of previous ODS II project approved in March 1995 and closed in September
2004. In the project design, the main component of disbursing grant to the beneficiaries through
an FI for CFC production closure was supported with a TA component that would build the
capacity to ensure full and complete phase-out across the country. Such a project design fully
captured the lessons learned during the implementation of the ODS II project, of which the details
are described in Section 2.1.
(b) Quality of Supervision (including of fiduciary and safeguards policies)
Rating: Satisfactory
45. Supervision in General. The Bank’s performance in supervising the project is rated
Satisfactory. The Bank approach of regular supervision/ implementation support missions to
identify key issues during implementation and to raise the same at the appropriate level within the
Government was useful. The Bank team was systematic, structured and organized. They
21
produced structured Aide Memoires that were useful for follow-up and pointing out gaps /lacunas
for the PMU / Ozone Cell to take appropriate actions, and produced Implementation Status and
Results Reports (ISR) in compliance with Bank rules. In addition, the Bank provided constant,
close follow-up and support to the PMU, particularly when they had challenges with decisions to
be taken by MoEF / GoI with the Ozone Cell. Also, coordination with the Bank was effective
due to the TTL’s presence in New Delhi, and the overall method of management was good.
46. During the early period of implementation, there were some issues between the Bank and
UNEP on the TA component. Such issues were procedural and not technical in nature, and were
subsequently resolved. UNEP played an important and useful role in terms of providing TA, i.e.,
pointing out that India could be a defaulter in terms of meeting the consumption targets, sharing
of expertise in conducting workshop and data triangulation. Although UNEP missions were
independent of the Bank’s, they were well-coordinated and worked in conjunction with each
other.
47. An important aspect where the Bank provided substantive support related to the
accelerated phase-out that the CFC producers agreed about a year after the MTR. In ExCom’s
51st meeting (March 2007), there was a suggestion for the Bank to work with GoI on an
accelerated phase-out, and in ExCom 56th meeting (November 2008), ExCom approved revision
of the agreement between ExCom and GoI to include accelerated CFC production phase-out and
the award of an additional compensation of US$3.17 million (ExCom Decision 56/63). The
period between March 2007 and November 2008 was challenging in terms of developing a
detailed proposal and reaching an agreement between ExCom and GoI on the ACPP. Through
this project, the Bank assisted the Ozone Cell in a substantive way to support the establishment of
the ACPP.
48. Supervision in the Last Two Years. Since the Project Coordinator at PMU resigned in
December 2009 for personal reasons, the Ozone Cell’s capacity weakened, and its effectiveness
in addressing pressing issues was significantly diminished. This Project Coordinator who served
the longest in that position (September 2004 to December 2009) was highly competent, and
identifying an equally competent successor was difficult. While the Project Coordinator position
was vacant, as a result of ExCom approving the ACPP in November 2008, the Performance
Agreement between GoI and the four CFC producers required amendment, but this could not be
completed until December 2011. In addition, the Ozone Cell spent an inordinate amount of time
on questioning the Bank’s fiduciary and reporting procedures and the rationale for following the
protocol set out by the Department of Economic Affairs (DEA) at the Ministry of Finance (MOF)
and the Bank’s overall engagement in India. From the Bank’s perspective, all trust-funded
programs including those dealing with the global commons are subject to the protocol set out by
the respective focal points in each country. The Bank also reserves the right to assign sector
specialists in field offices, as they are viewed to be better placed in understanding conditions on
the ground and coordinating the efforts of various players within a given country.
49. While a number of meetings were held with the Ozone Cell, officials at MoEF and DEA,
these often tended to focus on the issues at hand, for instance regarding the pending amendment
to the Performance Agreement, and did not fully resolve the underlying questions regarding the
legitimacy of the Bank’s process and procedures to supervise the program. Such difficulties of
engaging in a productive dialogue were shared among all relevant units in the Bank, and after the
last supervision mission in May 2010, ISRs were prepared based on information included in
annual technical audit reports, and without conducting official supervision missions. Three ISRs
were prepared and given clearance without supervision until the close of the project in December
2011.
22
50. Official supervision missions not implemented in the final 18 months did not influence
the project quality because of the following factors: (i) the project was subject to third- party
audits which is sufficient for Bank procedures, and (ii) as shown in Table 6 above, CFC
production (except for medical purposes) was terminated in August 2008 and the project
activities were drawing to a close. In the last 18 months, the focus of project activity was for
ExCom to confirm whether India satisfied the requirements to release the additional disbursement
for ACPP, and documentation to finalize the payment to producers who had stopped the
generation of CFCs in advance of stated targets. Even after MoEF asked for an extension, the
remaining activity was for payments to producers to stop production of CFCs and meet with
compliance requirements.
(c ) Justification of Rating for Overall Bank Performance
Rating: Satisfactory
51. The outcome of the project has been successful in assisting India to meet the production
phase-out as per the agreed phase-out schedules under the MP.
5.2 Borrower (a) Government Performance
Rating: Satisfactory
52. The role of GoI / MoEF / Ozone Cell was to oversee the functioning of the PMU, which
had the responsibility for implementing the project. Though the PMU was an independent unit
established to implement phase-out projects, it operated under the day-to-day guidance and
supervision of the Ozone Cell. The PMU arranged for audits to be conducted on a regular basis,
and had no conflict in outcomes. The PMU constantly advised and deliberated with the Ozone
Cell on policy issues based on their project implementation experience, created substantive
awareness and engaged stakeholders through a number of workshops that were held, particularly
between 2003 and 2006.
53. The PMU played an important organizational role in the successful implementation of
this project. It was staffed with about 5-6 officers and included the following positions: Project
Coordinator, Audit Coordinator, MIS Coordinator, Technical Officer, a Data Entry Operator and
one support staff. The Project Coordinator played a significant role in project management, and
although the position was sometimes vacant, it was staffed during the critical phases of the
project such as target setting, agreements of accelerated phase-out and conducting awareness
workshops. Therefore, although inconvenient, the occasional absence of a full time Project
Coordinator did not have impact greatly on project implementation.
54. The delay in implementation of the ACPP appears to be due to the several legal
procedures that needed to be carried out by the CFC manufacturers in preparing the Project
Completion Reports that were pending for a long time. Some producers did not furnish the
reports in agreement with the Ozone Cell. An affidavit on CFC equipment dismantling was
required, and this was not completed. The reasons for this delay are not known as the interviews
with the Ozone Cell and the CFC manufacturers could not be carried out as explained in Sections
4 and 7 of this report.
23
(b) Implementing Agency or Agencies Performance
Rating: Satisfactory
55. IDBI was the Bank’s FI for disbursing grant proceeds to beneficiaries. Throughout the
project period, the IDBI carried out its role as FI in conformity with appropriate financial and
administrative practices, and under the monitoring of the Ozone Cell / MoEF. As required, IDBI
maintained a financial management system, including records and accounts. IDBI was
responsible for due diligence in the execution of sub-project agreements, management of the
Special Account for the grant fund, submission of withdrawal application to the Bank for
processing timely disbursements of grant funds to the CFC manufacturers, timely replenishment
of funds, arranging annual financial audits by Statutory Auditors, and submission of final audit
reports to the Bank. During the course of implementation, the beneficiaries have never faced any
problem with disbursement of funds. All the activities were carried out in a satisfactory manner,
and full compliance of financial covenants was also maintained. Effective and productive
cooperation among the Ozone Cell / MoEF, the Bank, beneficiaries and IDBI were one of the key
factors for this satisfactory performance.
(c ) Justification of Rating for Overall Borrower Performance
Rating: Satisfactory
56. Throughout the project period, the PMU / Ozone Cell progressed with the
implementation in a systematic manner and accomplished the PDO effectively. Towards the end
of the project period, there were some delays in settling the additional compensation for the
ACPP, as described in Section 5.2 (a) above. The delays led to strained relationships between the
PMU / Ozone Cell and the Bank, although this was relatively insignificant considering the overall
success of project implementation and PDO achievement.
6. Lessons Learned (both project-specific and of wide general application)
57. Staff continuity contributed to smooth implementation. The project was implemented
from 2000 until 2011, and although the implementation period was long, the project benefited
from staff continuity such as the TTL at project closing date already becoming a task team
member in the second supervision mission in 2001, and assigned as the TTL in 2004. Such staff
continuity was crucial to ensuring continued relationship with clients, and helped greatly to
manage the project efficiently.
58. Lean staffing at implementing entity may cause delay. The Ozone Cell at MoEF has
limited human resources, and after the Project Coordinator resigned and the position became
vacant in 2009, decision-making and clearance process at the Ozone Cell became significantly
delayed towards project closure.
59. Coordination within the Bank. ExCom is a decision-making body which governs the
MLF under the MP and approves country annual programs to phase out ODS, and since the
Environment Anchor in the Sustaninable Development Network represents the Bank and
participates in the ExCom meetings, adequate information sharing between the Anchor and the
regional unit proved to be crucial for the overall success of the project. Such precautions were
24
not necessary in the case of other agencies such as UNEP where project implementation staff
participate in ExCom meetings. Such precaution might have been unnecessary if ODS were not
managed by a vertical fund such as MLF in which a limited number of participants discuss and
approve annual programs, as opposed to the case of a multi-subsector fund such as the Global
Environment Facility (GEF) where a large number of council members and constituencies jointly
review a wide range of proposals.
60. More structured coordination between various multilateral and bilateral agencies
enhances effectiveness. CFC production phase-out assisted by the Bank was one part of the
overall national ODS phase-out program, and there were other projects implemented with UNDP,
UNIDO and GIZ support. While some level of coordination was achieved through the integration
of activities at the Ozone Cell, greater effectiveness could have been possible if coordination was
built into the design of these various projects. The necessity of coordination between multilateral
agencies was especially felt during the last few years of the project when the CFC production in
India was for MDI producers only, who were the beneficiaries of an Italy/UNDP/UNEP project
under the MLF, but who did not have any engagement in or contact with ODS III.
61. PMU needed to have greater and full autonomy. The PMU was created as an
independent institution registered with full autonomy. At the time of its establishment, it was felt
that such an autonomous organization was required to efficiently and effectively implement the
phase-out projects. However, in practice, the PMU was not given financial autonomy and this
resulted in the PMU’s reporting to the Ozone Cell, which was responsible for its day-to-day
functioning. This made the role of the PMU very difficult. On the one hand, the PMU had to
report to the Ozone Cell. On the other hand, it also had to report to various multilateral and
bilateral agencies. In certain cases, the differing views between the Ozone Cell and the
multilateral agencies put the PMU in a difficult situation operationally. If the PMU had been
given full autonomy, it would have been as efficient and effective as the other units within the
Ozone Cell such as those managing the UNDP, UNIDO or GIZ programs.
62. Bank’s systems and procedures are constraining when compared to those of other
multilateral and bilateral agencies involved in ODS phase-out. Other ODS phase-out projects
are implemented by national governments with significant handholding by the development
agencies such as UNDP and GIZ. However, the Bank’s systems and procedures are designed for
national governments to execute projects on their own, and project management without constant
and close support from the Bank. The other agencies (e.g. UNDP or UNIDO) had their own units,
which were reporting directly to them (e.g. UNDP itself) and not to the Ozone Cell. These units
functioned more efficiently and effectively compared to the PMU as it had to directly report to
the Ozone Cell. Also, the system of the PMU reporting directly to the World Bank is not in line
with the World Bank’s own systems & procedures.
63. Long-term partnership between the Bank and IDBI continues to be an important
aspect of the Montreal Protocol program. The Bank’s investment in the relationship with
IDBI has been an important aspect of the successful MP program in India. The smooth and
effective functioning of IDBI in the ODS III project is a testimony to the benefits of such a well-
developed relationship.
25
7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies
64. As of the date of this report, the Ozone Cell has unfortunately refused to acknowledge
that the project closed on December 31, 2011. Subsequently, this ICR is prepared without the
benefit of an ICR mission or inputs from the Ozone Cell.
(b) Cofinanciers
65. Not applicable.
(c ) Other partners and stakeholders (e.g. NGOs/private sector/civil society)
66. UNEP. As described in Section 2.2 above, implementation of the TA was delayed
during the initial years, but since the issues were subsequently resolved, UNEP sees this TA
component being completed in a highly satisfactory manner. UNEP points out that their
engagement in the project generated synergies, they effectively coordinated between government
agencies, and enhanced awareness among stakeholders.
67. IDBI. IDBI is of the view that from their perspective, the project design, institutional
arrangement, IDBI fee level and project implementation were appropriate, and they do not see
any room to improve the institutional arrangement.
68. Beneficiary enterprises. As indicated in Section 4 above, the Ozone Cell has not
allowed any form of communication between the Bank and the four manufacturers, and
comments from four enterprises were unavailable at the time of the report preparation.
26
Annex 1. Project Costs and Financing
(a) Project Cost by Component (in US$ Million equivalent)
80.000 80.000 83.170 82.113 102.64%
-- 2.300 2.300 2.300 --
0.800 0.823 0.855 0.845 105.64%
2.000 2.000 2.000 2.000 100.00%
0.220 0.220 0.220 0.220 100.00%
83.020 85.343 88.545 87.478 105.37%
0.000 0.000 0.000 0.000 --
0.000 0.000 0.000 0.000 --
83.020 85.343 88.545 87.478 105.37%
Percentage
of
Appraisal
Total Project Costs
Project Preparation Facility (PPF)
Front-end fee IBRD
Total Financing Required
Total Baseline Cost
CFC phase-out compensation
Halon phase-out compensation
IDBI Financial Agency Fee
Technical Assistance (UNEP)
UNEP Agency Fee
Components
Appraisal
Estimate
Revised
Estimate
after adding
Halon
Component
Revised
Estimate
after
ACPP
Final
Disburse-
ment
Note: Figures are rounded.
The 66
th ExCom meeting (April 16-20, 2012) did not allow the final disbursement of US$1.057
million out of the additional compensation of US$3.17 million for the accelerated phase-out, and
ExCom agreed to defer the disbursement request until its 67th meeting in July 2012. Details are
described in Section 1.7.
(b) Financing(in US$ Million equivalent)
Source of Funds Type of
Co-
financing
Appraisal
Estimate
Latest
Estimate
Actual
Disburse-
ment
Percenta
ge of
Appraisa
l
Borrower Self 0.00 0.00 0.00 0.00
Montreal Protocol Investment Fund Grant 83.020 88.545 87.478 106.6%
27
Annex 2. Outputs by Component
1. Global Environmental Objectives (GEO)
1. The GEO of this project was aimed at supporting India's CFC production phase-out as
mandated by MP. Developing countries under Article 5 of the MP, including India, were
required to stop CFC production by 2010. Since India was the second largest CFC producer in
the world after China, India's achievement was expected as a major milestone in achieving the
GEO with regards to helping restore the stratospheric ozone layer.
2. GEO Indicators
Indicator
Baseline Value
Original
Target Values
Formally
Revised
Target Values
Actual Value
Achieved at
Completion or
Target Years
Indicator 1 Phasing out CFC production
Value
(quantitative or
qualitative)
22589 MT 0 MT 0 MT
Date achieved 12/31/1999 01/01/2010 8/1/2008
Comments
(incl. %
achievement)
CFC production phase-out was completed 17 months ahead of the original
schedule with the exception of the production of pharmaceutical CFCs allowed
under the Essential Use Nomination (EUN) production.
Indicator 2 Establishment of tradable quota system for CFC production
Value
(quantitative or
qualitative)
System not yet
operational
System
operational and
maintained
System operational
and maintained
Date achieved 06/07/2000 01/01/2010 12/31/2010
Comments
(incl. %
achievement)
The quota system regulating the four producers was introduced under a
Government Order (March 2, 2000). Tradable quotas and quota reporting
system are kept operational under the EUN production.
Indicator 3 CFC manufacturers in compliance with production targets
Value
(quantitative or
qualitative)
13,176 MT 0 MT 0 MT
Date achieved 1/1/2004 01/01/2010 12/31/2010
Comments
(incl. %
achievement)
CFC manufacturers in compliance with production targets, and CFC
production phase-out was completed 17 months ahead of the original schedule
with the exception of the production of pharmaceutical CFCs allowed under
the EUN production.
3. Major Outputs of the TA component
2. This section is a summary of the completion report prepared by UNEP.
3.1 Institutional Strengthening. 3. PMU was established and operating with one project coordinator, one audit coordinator
and one MIS coordinator and other secretarial staff. A Long term TA strategy (2001 – 2004) and
28
(2005-2007) focusing on production and consumption was developed and finalized. The training
and capacity building of the PMU staff has enabled them to mainstream many activities in their
work plan. The project also supported the Ozone Cell in linking up with the consumption sector
activities under National CFC Consumption Phaseout Plan (NCCoPP), particularly in the
following aspects:
(a) Supporting NCCoPP in demonstration and training on good service practices and retrofitting
of open type compressors using CFC12 with HCFC 22.
(b) Training of state government agencies (industry, environment, police, shipping, legal etc) for
prevention of illegal trade.
4. The linkages between the production sector and consumption sector strategies through
NCCoPP project of GIZ enabled linkages between CFC producers and consumers. Monitoring
and verification of production and sale of CFCs for exports and domestic markets was made
possible by synergies between ODS III and NCCoPP.
3.2 Data Management System. 5. Data Triangulation work between producers, Directorate General for Foreign Trade
(DGFT) and customs data, which is an ongoing exercise, has enabled development of a database
as well as a reporting framework. This has been found useful by relevant stakeholders and will
continue to be relevant during the HCFC phase-out as well.
3.3 Service Sector Training. 6. The training sub-component in ODS III project was implemented in close coordination
with the NCCoPP activities, and has been very successful. A study instituted by Ozone Cell
indicates significant achievements in servicing sector as indicated below:
Use of CFC in the service sector stopped from 2008 onwards.
India phased out the use of CFC in MDI sector which enabled it to withdraw its EUN for
2010.
3.4 Customs Training. 7. UNEP supported National Academy of Customs Excise and Narcotics (NACEN) to
mainstream ODS issues in the training curricula for customs officers. The ODS training modules
for Customs officers were strengthened to curb illegal imports of ODS so as to avoid potential
non-compliance. The training strategy targeted two specific categories of personnel, the first
comprising of Customs officials is purely related to the control of cross-border trade in CFCs and
combating of illegal trade of all ODS. The second category was a conglomeration of various
enforcement authorities and stakeholders at the state and central levels performing different
functions relating to ODS. The strengthening of the capacity of NACEN will be leveraged to
promote the objectives of CFC phase-out. Given that there are sufficient resources within
NACEN and that ODS issues have been well mainstreamed in the training curricula, the
sustainability of the activity is not in question.
3.5 Awareness and Outreach.
8. The main activities under this sub-component included publication of newsletters for
refrigeration and air conditioning technicians, dissemination of an awareness video/ information
kit, support to Ozone Cell to organize Ozone Day, use of mass media to communicate with
29
general public, outreach / awareness workshops for major stakeholders, and maintenance/
updating of the website.
30
Annex 3. Economic and Financial Analysis (including assumptions in the analysis)
1. Economic and financial analysis was not carried out for this project. However, as stated
in Section 3.3, this project achieved significant economies of scale, considering the investment
and its achievements.
Cost effectiveness by component Project cost
(US$ million)
Phased-out ODP
(Kg)
Average cost effectiveness
(US$/Kg ODP)
CFC production phase-out 80.0 22,589,000 3.54
Halon production phase-out 2.3 288,000 7.98
2. For ODS consumption projects, ExCom evaluates proposals using cost-effectiveness
thresholds to prioritize funding in case necessary resources exceed the resources available
(ExCom Decision 16/20). ODS III is a production phase-out project for which compensation is
based on profit losses but the average cost-effectiveness of US$3.54/Kg ODP achieved under the
ODS III CFC production phase-out component still demonstrates high efficiency. The average
cost-effectiveness of the Halon production phase-out component was US$7.98/Kg ODP and the
component benefited from economies of scale gained through implementation under the ongoing
project framework.
ExCom Cost Effectiveness Thresholds for ODS Consumption
Sector Sub-sector US$/Kg ODP
Aerosol Hydrocarbon 4.40
Foam General
Flexible polyurethane
Integral skin
Polystyrene/polyethylene
Rigid polyurethane
9.53
6.23
16.86
8.22
7.83
Halon General 1.48
Refrigeration Commercial
Domestic
15.21
13.76
Solvent CFC-113
TCA (trichloroethane)
19.73
38.50
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Annex 4. Bank Lending and Implementation Support/Supervision Processes
(a) Task Team members
Names Title Unit Responsibility/
Specialty
Lending
Naimeh Hadjitarkhani Sr Operations Officer SASEN Team Leader (-2000)
William Marke Principal FM Sp. SARFM FMS
Sanjay Vani Sr Financial Management Sp. SARFM FMS
Robert Saum Financial Management Sp. SARFM FMS
Rajat Narula Financial Management Sp. SARFM FMS
Santhanam Krishnan Procurement Specialist SARPS Procurement
Kumi Kitamori Environmental Specialist SASEN Environment Management
Steve Gorman MP Team Leader ENVMP Environment Policy
Muthoni Kaniaru Counsel SARIM Legal
Roy Pepper Principal Industrial Economist PSDEN Industrial Analysis
Bela Varma Program Assistant SASEN Program Support
Supervision/ICR
Ruma Tavorath Sr Environmental Specialist SASDI Team Leader (2004-11)
Bilal H. Rahill Senior Manager CESI2 Team Leader (2000-04)
Akiko Nakagawa Sr Environmental Specialist SASDI ICR Team Leader
Shellka Arora Legal Associate SARIM Legal
Philip Beauregard Sr Policy Officer HRSEP Legal
Papia Bhatachaarji Sr Financial Management Sp. SARFM FMS
Arun Manuja Sr Financial Management Sp. SARFM FMS
Arvind Mantha FM Analyst SARFM FMS
Kumaraswamy
Sankaravadivelu Procurement Specialist SARPS Procurement
Viraj Vithoontien Sr Environmental Specialist EASER ODS Technologies
Vaideeswaran Sankaran Consultant SASDI ODS Technologies
Erik Pedersen Consultant EASER ODS Technologies
Srinivas Ravindra Consultant SASDI ODS Technologies
Kumudni Choudhary Program Assistant SASDO Program Support
Genevieve Maria Dutta Program Assistant SASDO Program Support
Madhu Philips E T Temporary SASDO Program Support
Bela Varma Program Assistant SASDO Program Support
(b) Staff Time and Cost
Stage of Project Cycle
Staff Time and Cost (Bank Budget Only)
No. of staff weeks US$ Thousands (including
travel and consultant costs)
Lending
FY00 65.62
32
FY01 1.96
FY02 0.00
FY03 20.70
FY04 2.04
FY05 0.00
FY06 4.41
FY07 -0.01
FY08 0.00
Total: 94.72
Supervision/ICR
FY00 7.00
FY01 104.45
FY02 56.19
FY03 78.47
FY04 58.57
FY05 47.40
FY06 74.02
FY07 89.35
FY08 62.49
Total: 577.94
33
Annex 5. Beneficiary Survey Results (if any)
Unfortunately, the Ozone Cell does not acknowledge that the project closed on December 31,
2011, and did not allow any form of communication between the Bank and the four
manufacturers during preparation of this report.
34
Annex 6. Stakeholder Workshop Report and Results (if any)
Not applicable.
35
Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR As of the date of this report, the Ozone Cell has unfortunately refused to acknowledge that this
project closed on December 31, 2011. Subsequently, this ICR was prepared without the benefit
an ICR mission or inputs from the Ozone Cell.
36
Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders
This section is a summary of the completion reports prepared by UNEP and IDBI.
1. UNEP
UNEP's views on this project were conveyed through a memo and a teleconference. The UNEP
memo summarizes the project background, UNEP’s roles, execution of the TA component, and
lessons learned. The implementation of TA was delayed during the initial years, but since the
issues were resolved subsequently, UNEP sees the TA component of this project as satisfactory.
UNEP identifies the following as lessons learned:
Strategic project planning through a joint consultation process with the leading technical
experts, industry and other stakeholders is necessary. Field testing of the methodologies for
implementation should be done prior to putting into practice on a large scale.
Intelligent use of limited funds is crucial to reach-out to a maximum number of stakeholders,
enterprises and technicians. Use of effective awareness tools targeting different stakeholders
is a cost effective measure.
A network should be developed which effectively provides all the necessary support to the
project during its entire implementation cycle and optimal utilization of project resources.
Lean management structure with effective coordination and empowered as a decision
making body has made PMU an effective institution for project implementation. However,
during the project implementation, frequent changes in the PMU have, at times, led to slow
down activities. It is necessary therefore to have continuity at the PMU management level.
Continuous development and review of an accurate and relevant database for evidence based
decision-making is necessary for effective implementation.
2. IDBI
IDBI’s views on this project were conveyed through a memo and a teleconference. The IDBI
memo summarizes the project background, IDBI’s roles, disbursement details to four
manufacturers, compliance to financial covenants, and lessons learned. IDBI is in the view that
from their perspective, project design, institutional arrangement, IDBI fee level and project
implementation were appropriate, and they do not see any room to improve the institutional
arrangement of the project. According to IDBI, the four manufacturers have never faced any
problems with fund disbursement from IDBI, and have expressed their appreciation for IDBI’s
prompt services. Such a high quality of performance was also observed by the financial
management specialists at the Bank.
37
Annex 9. List of Supporting Documents (archived in WB Docs/IRIS/Operations Portal)
1. MLF for the Implementation of the MP: Memorandum and Recommendation of the Country
Director for India of the IBRD to the RVP, SAR on a Proposed Ozone Projects Trust Fund
Grant (Report No. 20613) June 7, 2000
2. Accelerated CFC production phase-out (agreement) (ExCom 56), October 2008
3. ODS III Project Mid-term Review (Strategic Review), December 23, 2006
4. UNEP Implementation Completion and Results Report, April 2012
5. IDBI Implementation Completion and Results Report, March 2012
6. Halon closure report
7. All 23 ISRs
8. Aide-Memoires/ Management Letters
9. Ozone Projects Trust Fund (OTF) Grant Agreement (TF023789) June 30, 2000
10. Amendment to the OTF Grant Agreement (TF023789) March 10, 2003/April 17, 2003
11. Consensus Agreement for the Indian Halon Production and Consumption Sector (*Agreement
between the ExCom and GoI, decided at the 34th ExCom meeting.
UNEP/OzL.Pro/ExCom/34/58, Annex XV)