POLICY MATRIX SAFEGUARDS ASSESSMENT
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1 TRANCHE 1 POLICY MATRIX SAFEGUARDS ASSESSMENT Objectives Tranche 1 Output 1. Improved public financial management and utility regulation 1.1 Program budgeting executed 1.2 Utility regulation strengthened 1. MOTC and SCWE formulate KPIs to execute program budgeting, and introduce performance auditing in their internal audit departments. 2. Government issues plan to improve PSRC s independence, transparency and accountability. Infrastructure Sustainability Support Program (Phase 2) (RRP ARM 46220) Policy change only relates to implementation of program budgeting. Policy and legislative changes only impacts the way PSRC operates. 3. PSRC drafts operational rules and model contracts for drinking water supply and wastewater and seeks public feedback. Output 2. Increased financing and improved operations in the road sector 2.1 Increased road 4. The 2017 road maintenance budget maintenance funding increases by at least 22% as compared to 2016, excluding donor financing. Implementation of new rules, will impact new water operator in delivery of drinking water and sanitation services. However, rules will be within current environmental laws. No mitigation measures required. Increased funding will mean increased road maintenance, which will have no impact on the environment. Road conditions will improve. This intervention is within the current laws related to the environment and resettlement. 2.2 Improved road maintenance 5. Government introduces a 20% VAT on diesel and increases the excise taxes on diesel, petrol and CNG. 6. Government approves (i) new criteria for road rehabilitation and (ii) minimum Increased diesel tax will discourage diesel use which would encourage the use of cleaner fuels. Policy change improves operational practices in road transport capital
2 2 Objectives Tranche 1 operations standards for accepting completion of road rehabilitation works. 7. Government approves maintenance contracts permitting (i) performance-based payments, (ii) flexibility in pricing and timing, and (iii) periodic maintenance. works projects. Policy change improves operational practices in road transport maintenance works. 8. MOTC issues traffic count guidelines to improve prioritizing road maintenance. Output 3. Increased financing and improved operations in the water sector 3.1 Increased water maintenance funding 3.2 Improved water supply services and strengthened water policy operations 9. The 15 year lease contract with the private water concessionaire is in force and provides for mandatory maintenance expenditure of at least $79 million throughout the contract period funded by tariff revenues. 10. Signed 15 year lease contract with a private concessionaire in force providing key performance metrics for minimum water supply service duration, progressive reduction of NRW and minimum water quality standards. Policy change improves operational practices regarding gathering road traffic data. Policy change sees water infrastructure maintenance funded through the tariff instead of the Budget. Performance provisions require improved performance on duration, NRW and water quality. 11. SCWE established investment planning and asset management department. 12. SCWE prepared an action-plan to reduce New department will focus on new water investments and managing the piped network infrastructure. Future developments to the water network will be done in compliance with relevant national legislation. Action-plan is to help SCWE in its
3 3 Objectives Tranche 1 NRW. Output 4. Increased power sector competitiveness and revenue generation 4.1 Reforms 13. Government initiates stakeholder undertaken to consultation towards eliminating a singlebuyer power purchase market structure. introduce competition in the power sector 14. Government initiates stakeholder consultation to amend the Energy Law (2001) to facilitate cross-border power trading with the European Union. negotiations with new private lessee. 15. PSRC introduces a distribution tariff to allow third-party access to the distribution network, as part of the move to a more competitive power sector. 16. Government improves corporate governance by appointing independent directors to each board of wholly-government owned power corporations, and at least one woman in each such board. New tariff impacts financial operations of power companies and consumers. Policy changes impact governance and operations of wholly-owned government power companies.
4 4 TRANCHE 2 Output 1. Improved public financial management and utility regulation 1.1 Program budgeting executed 1.2 Utility regulation strengthened 1. MOF shall have issued guidelines to execute program budgeting to all line departments and MOTC, SCWE and MOENR implement program budgeting for 2018 budget. 2. PSRC shall have implemented a plan approved by government to improve its transparency and accountability. Policy change only relates to implementation of program budgeting. Policy and legislative changes only impacts the way PSRC operates. 3. PSRC shall have issued operational rules and model contracts for drinking water supply and wastewater. Implementation of new rules, will impact new water operator in delivery of drinking water and sanitation services. However, rules will be within current environmental laws. No mitigation measures required. 4. PSRC s budget shall have been increased for 2018 to enable it to meet the requirements of the government approved plan. Output 2. Increased financing and improved operations in the road sector 2.1 Increased road maintenance funding 2.2 Improved road maintenance 5. The 2018 and 2019 road maintenance budget shall have been increased by 48% and 82%, respectively, compared to 2016, excluding donor financing. 6. ARD shall have awarded at least one road rehabilitation contract as per new minimum No impact Financing increases for PSRC only impact the way PSRC operates. Increased funding will mean increased road maintenance, which will have no impact on the environment. Road conditions will improve. This intervention is within the current laws related to the environment and resettlement. Implementation of policy change only affects standards for rehabilitation
5 5 operations requirements. 7. ARD shall have awarded at least one (i) performance-based contract, (ii) contract with price indexing, (iii) contract for a period which is not the standard 5 years, and (iv) periodic maintenance contract. 8. ARD shall have installed at least 10 new traffic count stations and conducted a pavement condition survey covering at least 1,200 kilometers. contracts. Implementation of policy change only affects types and contracting arrangements for maintenance activities. Implementation of policy change will mean more data available on traffic flows. 9. Government shall have reviewed ARD with a view to strengthening ARD by increasing its independence through a plan providing for a corporate structure with an adequate pay scale to retain professionals, and dedicated funding from MOF. Output 3. Increased financing and improved operations in the water sector 3.1 Increased water maintenance funding 3.2 Improved water supply services and strengthened water policy operations 10. SCWE shall have contracted an independent firm to audit the private concessionaire s compliance with the key performance metrics under the concessionaire s contract, and the concessionaire shall have appointed a financial auditor. 11. SCWE investment planning and asset management department shall have appointed at least 12 professionals, and shall Review will make recommendations to improve efficiency of operations in ARD. Auditor will ensure compliance of lease contract for the private water operator. New department will focus on new water investments and managing the piped network infrastructure.
6 6 have prepared guidelines to execute its mandate. 12. SCWE shall have monitored implementation of water strategy and reported the results to the government. Report will inform government of progress in implementing water strategy. 13. Government shall have drafted amendments to sanitation legislation that improve wastewater management. Indirect impact. Output 4. Increased power sector competitiveness and revenue generation 4.1 Reforms 14. Government shall have agreed on the undertaken to new power market structure and approved a introduce competition in the power sector time-bound action plan to implement the new competitive power market. Policy and legislative changes may impact sanitation capital projects. This will have a positive impact on the sanitation conditions in the country. Impacts on the environment will be positive. All infrastructure developed under this in the future will be in compliance with the national legislation. 15. Government shall have submitted a revised Energy Law to the National Assembly. 16. Government shall have introduced a Grid Code to permit cross border trading. 17. PSRC shall have introduced market rules for competitive power trading including implementing new tariff structure. Grid Code is a technical document affecting physical supply of power. Market rules provide economic rules for competitive power trading.
7 7 18. MOF shall have conducted a study on contingent liabilities related to contracts with private counterparties in the power and water supply sectors. Study will describe financial risks from private contracts in infrastructure delivery.
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