PROJECT CANCELLATION
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1 PROJECT CANCELLATION ExCom Guidelines and Rules Financial Agents Workshop March 25-26, 2002
2 Project Approval Projects are submitted on behalf of the Government in order to help the country meeting its obligations under the Montreal Protocol. The project should include the following commitments: The enterprise is committed to provide counterpart funding as necessary for the implementation of the project; Commitment to implement the project within the duration given in the project document and in accordance with the milestones given in the project document; Convert to the technology as given in the approved project; Stop using ODS and producing ODS containing products when the project is completed; Provide a Project Completion Report (PCR) in the format requested by the ExCom when the project is completed.
3 Project Milestones The approved project document include the following milestones (Decision 23/7): Milestones Within # of months after approval Grant agreement submitted to enterprise: 1 to 3 month Grant agreement signed: 3 to 6 month Bids prepared and requested: 3 to 9 month Contract awarded: 6 to 12 month Equipment delivered and installed: 12 to 24 month Commissioning and trial runs: 12 to 30 month Equipment disposal: 24 to 36 month PCR submitted: 30 to 42 month
4 Project Documentation The enterprise should have the following documents in its project implementation file: Original project document and supporting documentation (e.g enterprise commitment letter); Costs table with original requested and the final approved MLF funding and eligible costs items; Appraisal report, including the following: Any specific approval conditions and requirements, Project implementation plan, Project milestones, Equipment disposal plan. Sub-grant agreement between the enterprise and the FI; procurement rules General information; Procurement contracts and supporting information; Reporting requirements; PCR template.
5 Reasons for project implementation delays Categories listed by ExCom, (Decision 22/62): Changes in project specifications by beneficiaries; Enterprises refrain from implementing their projects until their competitors had been approved or government regulations enacted; The bidding process resulted in higher than expected costs; Difficulties in obtaining agreements on transfer of technology; Prolonged contract negotiations; Changes in technology; Differences in appraised tonnage; Completion of grant agreement; and (but not listed by ExCom) Difficulties in raising counterpart funding
6 Impact of project delays Continued use of ODS beyond the planned date of conversion. - Resulting in additional destruction of the Ozone Layer despite MLF funds provided; Undermine countries effort to meet their MP obligations and could eventually lead to illegal import; Total emission due to delayed projects estimated to be over 10,000 tons ODP; Tying up funds which could have help other companies phasing out ODS; Costly to the FI and due to ongoing work.
7 Procedures for project cancellations The following rules has been adopted by ExCom (Decision 26/2) First: Projects can be cancelled by mutual agreement among the Implementing Agencies, the Government concerned and the beneficiary enterprise where applicable. Reason for cancellation should be given using the categories decided at the 22 nd meeting. Second: Projects with implementation delays identified by the ExCom at its SECOND meeting in each year could be considered for cancellation if the following two criteria were met. (next slide). Note that the annual progress report from the implementing agencies is always submitted to the SECOND meeting in the year.
8 Criteria for ExCom Cancellation (Decision 26/2) Criterion 1: If no progress is reported after a project has been classified in the latest progress report as having an implementation delay, the Secretariat on behalf of the ExCom may, at the meeting following the classification, issue notice of possible cancellation of the project to the Implementing Agency concerned and the recipient country Government. Criterion 2: If no progress is reported to two consecutive meetings of the ExCom for a project classified as having an implementation delay, the Committee may, taking into account the response to the notice of possible cancellation, decide on cancellation of the project on a case-by-case basis.
9 Projects for Cancellation by ExCom, (Decision 32/4) Amendments to Decision 26/2: Projects which have made no progress (since last meeting); Projects approved more than three years previously which have not moved from one milestone to another, the delay in which has not been clearly removed, or which have additional implementation delays, and which, despite additional actions taken by the agency, government or beneficiary, still experience implementation delays.
10 Consequences of Cancellation All remaining funds, including agency support costs, to be returned; Project Implementation Status Report to be provided by the FI to the showing what had been done (if anything) and annual ODS consumption from time of approval to time cancellation, future plans regarding phasing out the use of ODS (if relevant); Reason for the delays which led to cancellation. The categories as defined by ExCom should be used; Can only reapply for funding after two years after cancellation; The resubmitted project will be considered on a case-by-case basis only; and The funds approved can not exceed the initial approved amount (minus any funds used before cancellation of the original project).
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