The economic internal rates of return EIRRs and financial internal rates of

The economic internal rates of return eirrs and

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The economic internal rates of return (EIRRs) and financial internal rates of return (FIRR) of all of the components of the Urban Water Supply and Environmental Improvement Project (UWSEIP) in Madhya Pradesh were evaluated at project completion using the data provided by the Government of Madhya Pradesh, the four municipal corporations of Bhopal, Gwalior, Indore, and Jabalpur, and the project management unit in Bhopal. Relevant information was also collected from the websites of the Government of India and other institutions. These EIRRs and FIRRs were compared with the supplementary loan appraisal estimates. 2. The economic and financial analysis of the project used the framework provided in A DB’s Guidelines for the Economic Analysis of Water Projects and Financial Management and Analysis of Projects. 1 3. The economic and financial analysis focused on the economic benefits generated by the project and its financial sustainability. The analysis also considered the financial and fiscal capacity of the four municipal corporations to service project debts and ensure the sustainable provision of urban services. The reassessment of the EIRRs, FIRRs, and financial and fiscal performance of the four municipal corporations as estimated during project appraisal provided insights into the financial and economic performance of the investments during the project implementation period (2005 2014). Sensitivity tests of the EIRRs and FIRRs were undertaken to understand the institutional and service management reforms required to sustain these investments. The economic and financial viability of the project was evaluated for a period of 25 years, with no subsequent salvage value assumed. This appendix summarizes the economic and financial viability evaluation of the project at completion and compares its findings with those of the evaluation carried out during appraisal of the original and supplementary loans for the project. 2 B. Economic Evaluation I. Analysis at Appraisal 4. An economic analysis of the original project loan was carried out to confirm its economic viability during the loan appraisal, and reported in the Report and Recommendation of the President 3 in 2003. Subsequent financing was extended through the supplementary loan to mitigate the impact of foreign exchange fluctuation and price escalation in 2008 with no variation in the project scope and benefit levels. The cost benefit analysis was revised accordingly without changing its original approach. Thus, economic evaluation was carried out twice during the processing of the original and supplementary loans. The available evaluation results are in Table A8.3. The current economic analysis is for the project completion report (PCR) and 1 ADB. 1998. Guidelines for the Economic Analysis of Water Supply Projects . Manila; ADB. 2005. Financial Management and Analysis of Projects. Manila.
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