Component 1: Performance Grants (US$ 145 million)

Component 1 focuses on two areas of urban governance and is aligned with the seven DLIs. The first sub-component addresses resource planning and management, seeking to improve decision making, consolidate fragmented revenue sources and strengthen resource mobilization (DLIs 1-4). The second sub-component addresses transparency and voice in the preparation, monitoring and evaluation of plans and programs in urban areas, (DLIs 5-7).This  component will provide an annual grant to the project cities, based on achievement of specified annual targets against a set of DLIs in selected governance areas. The amount of the performance grant for each city is determined on the PFC formula basis.

Disbursements under Component 1 will be tracked against a set of Eligible Expenditure Programs (EEPs) that reflect non-salary O&M expenditures of existing urban assets and services such as roads and water supply in the city.

Component 2: Project Implementation and Capacity Building (US$5 million)

This component will supports the five cities. The project will provide financing for: (i) operating costs for the USPMSU and the five CPUs incurred against project activities; and (ii) technical assistance and capacity building initiatives for urban areas in the Province.

Component 3: Contingent Emergency Response (US$ 0 million)

This component will support preparedness and rapid response to disaster, emergency, and/or catastrophic events, as needed. The provisional zero cost for this component will allow for rapid reallocation of credit proceeds from other components under streamlined procurement and disbursement procedures. This component could also be used to channel additional funds should they become available as a result of the emergency.