Project Administration Memorandum. Democratic Socialist Republic of Sri Lanka: Eastern & North Central Provincial Road Project

Transcription

1 Project Administration Memorandum Project Number: Loan Number: 2546 December 2009 Democratic Socialist Republic of Sri Lanka: Eastern & North Central Provincial Road Project This Project administration memorandum (PAM) is an active document, progressively updated and revised as necessary, particularly following any changes in project costs, scope, or implementation arrangements. This PAM shall be read along with the Report and Recommendations of the President, Loan Agreement and relevant ADB publications. This PAM incorporates agreements reached between SATC and Executing Agency as of 8 December In case of discrepancy, the Loan Agreement shall prevail.

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3 CONTENTS Page Main Text I. Introduction 1 II. Purpose 1 III. Overview 1 IV. Key Persons Involved in the Project 2 V. Loan Processing History 4 Annex 1: Project Definition Sponsors, Stakeholders and External Agencies Impact and Outcomes Outputs 5 Annex 2: Project Management Project Management Organization Roles and Responsibilities 7 Annex 3: Procurement Plan Process Thresholds and Reviews Goods and Works Contracts Consulting Services Contracts 10 Annex 4: Safeguards Plan Environment Involuntary Resettlement 12 Annex 5: Financing Plan Funds Flow Financing Plan Withdrawal Applications Disbursement Arrangements Allocation Table Government Financing 16 Annex 6: Investment (Cost) Plan Detailed Cost Estimates by Expenditure Category 17 Annex 7: Execution Plan Work Breakdown Structure (WBS) Gantt Chart 20 Annex 8: Performance Monitoring and Evaluation Performance Indicators Monitoring and Evaluation Report 21 Annex 9: Major Covenants Sector Covenants Financial Covenants Environment Covenants Social Covenants Other Covenants 25 Annex 10: Appendixes 27

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5 Main Text I. INTRODUCTION Impact and Outcome: In support of the CPS, the project impact will be an overall improvement of Sri Lanka's transport system. Transport of goods and services will be enhanced, contributing to economic growth and community well being. The Project's immediate outcome will be the improved road network and institutional capacity in Eastern Province and North Central Province. Outputs: Project outputs are: (i) (ii) (iii) approximately 370 km of provincial roads rehabilitated and improved, and selected bridge links rehabilitated or replaced; enhanced project management capability of Eastern Provincial Road Development Department (EPRDD) and North Central Provincial Road Development Authority (NCPRDA), achieving efficient project implementation; and an improved EPRDD office. II. PURPOSE The Project will improve connectivity in the transport networks of two relatively poor and conflict affected provinces. The provision of improved roads will contribute to poverty reduction. The Project will improve connectivity to neglected areas, supporting socially inclusive development. The institutional capacities of EPRDD and NCPRDA need to be strengthened, particularly in planning, programming, and contract administration. The Project will also help strengthen their institutional capacity in road asset management. III. OVERVIEW Annex 1 Annex 2 Annex 3 Annex 4 Annex 5 Annex 6 Annex 7 Annex 8 Annex 9 Annex 10 Project Description Project Management Procurement Plan Safeguards Plan Financing Plan Investment (Cost) Plan Execution Plan Performance Monitoring and Evaluation Major Covenants Appendixes

6 2 Main Text ) IV. KEY PERSONS INVOLVED IN THE PROJECT A. ADB Staff The Transport and Communications Division (SATC) under the South Asia Department (SARD) has the overall responsibility for the implementation of the Project in ADB. Transport & Communications Division (SATC) South Asia Regional Department (SARD) Sri Lanka Resident Office Ms. Sri Widowati Director, SATC Tel No. (632) swidowati@adb.org Mr. Dong Kyu Lee Transport Specialist, SATC Tel No. (632) dklee@adb.org A. Nanayakkara Project Implementation Officer Tel No. ananayakkara@adb.org Office of the General Counsel Controller's Department Loan Administration Division (CTLA-1) Central Operations Services Office Consulting Operations Services Division 1 (COS1) Address: Facsimile (SATC): J. Peththawadu Project Implementation Officer Tel No. peththawadu@adb.org Mr. Jan Versantvoort Counsel Tel No. (632) jversantvoort@adb.org Mr. Francis Mathew Financial Control Specialist, CTLA1 Tel No. (632) fmathew@adb.org Ms. Mart Khaltarpurev Procurement Specialist, COS1 Tel No. (632) mkhaltarpurev@adb.org Asian Development Bank No. 6 ADB Avenue, Mandaluyong City 1550 Metro Manila P.O. Box Manila, Philippines (632) Website Address:

7 3 B. Executing Agency Ministry of Local Government and Provincial Councils (MLGPC): Address: Facsimile: (94) C. Provincial Implementing Agencies North Central Province (NCP): Provincial Road Development Department (North Central Provincial Council) Address: H.P. Cashian Herath Secretary Ministry of Local Government & Provincial Councils No 330, Union Place, Colombo 02, Sri Lanka Mr. P.M.S. Pushpakumara General Manager (Acting) Provincial Road Development Authority (PRDA) Tel No. (094) (0) / H.B. Semasinghe Mawatha Anuradhapura, Sri Lanka Facsimile: (0094) (0) / Eastern Province (NCP): Provincial Road Development Department (Eastern Provincial Council) Address: Mr. V.P. Balasingham Chief Secretary Eastern Province Tel No. (0094) (0) No. 198, Inner Harbour Road Trincomalee, Sri Lanka Facsimile: (0094) (0) V. LOAN PROCESSING HISTORY Approval of PPTA PPTA not required Fact-finding Mission 19 February 5 March 2009 Management Review Meeting 15 April 2009 Appraisal Mission April 2009 Staff Review Committee Meeting 4 June 2009 Loan and Grant Negotiations 8 July 2009 RRP Board circulation 20 August 2009 Board Consideration and Loan Approval 16 September 2009 Signing of Loan Agreement 22 October 2009 Loan Effectiveness 13 November 2009

8 4 Annex 1: Project Definition ) 1.1 Sponsors, Stakeholders and External Agencies (i) (ii) (iii) Sponsors: - Ministry of Local Government & Provincial Councils (MLGPC) - Ministry of Finance and Planning (External Resource Department and National Planning Department, Finance Commission) - Ministry of Highways and Road Development - Easter Provincial Road Development Department (EPRDD) - North Central Provincial Road Development Authority (NCPRDA) - Asian Development Bank (ADB) Stakeholders: - Residents in Anuradhapura, Polunnaruwa, Trincomali, Batticaloa, and Ampara,districts External Agencies 1.2 Impact and Outcomes (i) Impact: Overall improvement of Sri Lanka's road transport system. Transport of goods and services will be enhanced, contributing to economic growth and community well being. (ii) Outcomes: 1.3 Outputs Improved transport network and institutional capacity in Eastern Province and North Central Province. The Project has three components: (a) (b) (c) Approximately 370km of PRs are rehabilitated and improved, and selected bridge links are rehabilitated and replaced. Project management capability of EPRDD and NCPRDA is enhanced, achieving efficient project implementation. EPRDD's office is improved.

9 Annex 2: Project Management 2.1 Project Management Organization (i) Project Organization Structure \ 5

10 6 Annex 2: Project Management ) 2.2 Roles and Responsibilities (i) Strategic and Management Level Project Coordinating Unit will assist MLGPC in performing its role. National Steering Committee will be responsible for overseeing and monitoring project implementation as well as the adequacy of overall project funding and that for nonproject roads. The steering committee will meet as required but at least quarterly. (ii) Operational Level Project Implementing Agency will be responsible for project management. Detailed responsibilities include: procurement; day-to-day project implementation in the Eastern and North and Central provinces withdrawal applications certification progress report preparation maintenance of project accounts and completion of loan financial records for auditing purposes Provincial Coordination Committee will be responsible for monitoring project implementation at the respective provincial level. The Committees will conduct monthly meetings.

11 7 Annex 3: Procurement Plan 3.1 Process Thresholds and Reviews (i) Thresholds Except as ADB may otherwise agree, the following process thresholds shall apply to procurement of goods and works. Procurement of Goods and Works Method Threshold International Competitive Bidding (ICB) for Works Above $3,000,000 National Competitive Bidding (NCB) for Works Beneath that stated for ICB, Works NCB for Goods $100,000 $1,000,000 Shopping for Works Below $100,000 Shopping for Goods Below $100,000 (ii) Reviews Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the project. Procurement of Goods and Works Procurement Method Prior or Post Comments ICB Works Prior NCB Works Prior Bidding documents: prior review for the first package. Bid evaluation reports. NCB Goods Post Shopping for Works Post Shopping for Goods Post 3.2 Goods and Works Contracts Estimated to Cost More than US$1 million The following table lists goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description Contract Value ($ million) Procurement Method Prequalification of Bidders (y/n) Advertisement Date (quarter/year) Comments Eastern Province - Phase - I, (Roads) EP NCB N 4 May 09 EP NCB N 4 May 09 EP NCB N 4 May 09

12 8 Phase - I (Bridges) EPBP NCB N 4 May 09 EPBP NCB N 4 May 09 Phase II (Roads) EP NCB N 4 Aug 09 EP NCB N 4 Aug 09 EP NCB N 4 Aug 09 EP NCB N 4 Aug 09 North Central Province Phase - 1, (Roads) NCP 1, 3.2 NCB N 4 May 09 NCP NCB N 4 May 09 NCP NCB N 4 May 09 North Central Province Phase 1, (Bridges) NCPBP NCB N 4 May 09 NCPBP NCB N 4 May 09 North Central Province Phase 2 (Roads) NCP NCB N 4 Aug 09 NCP NCB N 4 Aug 09 NCP NCB N 4 Aug 09 NCP NCB N 4 Aug 09 NCP NCB N 4 Aug 09 General Description Civil works contracts (28 packages) Contract Value Per package: $0.2 Million to $3.4 Million Procurement Method Prequalification of Bidders (Y/N) Advertisement Date (qtr/yr) Comments NCB N Q2/2009 Notwithstanding the ICB threshold, considering the post conflict situation, all civil works contracts under the Project will be procured under NCB method.

13 9 3.3 Consulting Services Contracts Estimated to Cost More Than $100,000 The following table lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description Project Implementation Consultants (two packages) Contract Recruitment Value Method About QCBS $2.6 Million (90:10) each package International Advertisement or National Date (qtr/yr) Assignment Comments Q2/2009 International 3.4 Goods and Works Contracts Estimated to Cost Less than $1 Million and Consulting Services Contracts Less than $100,000 The following table groups smaller-value goods, works and consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months General Description Equipment (detailed specification and contract packaging will be finalized during project implementation by the TA consultants) Value of Contracts (cumulative) About $2 Million Procurement / Number of Recruitment Contracts Method Q4/2009 NCB or Shopping Comments

14 10 Annex 4: Safeguards Plan ) 4.1 Environment 1. Environmental Management Plan (EMP). The management and monitoring mechanism required to ensure that project implementation is carried out in accordance with due regards to environment has been formulated. This includes major environmental issues and associated impacts, suggested mitigation measures, implementation and supervising responsibilities, a monitoring plan and institutional assessment and training requirements for successful implementation of the mitigation measures. 2. Site-specific impacts and mitigation measures are presented in detailed separately in each EMP as part of each IEE reports. The summary of the mitigation measures and EMP prepared for the project is attached in the Annex 1 of this SIEE. The Environmental Monitoring Plan for the project is presented in Annex 2. The Environmental Monitoring Plans form the basis for verifying the extent of compliance during the implementation and operation stages of the project. The objectives of the Environmental Monitoring Plan are: (a) to evaluate the performance of mitigation measures proposed in the IEE; (b) to provide information which could be used to verify predicted impacts and thus validate impact prediction techniques; (c) to suggest improvement in environmental mitigation measures if required; and (d) to provide information on unanticipated adverse impacts or sudden change in impact trends. The environmental monitoring report will be prepared by the implementing agencies and MLGPC and ADB.

15 11 Annex 4: Safeguards Plan ) 4.2 Involuntary Resettlement Type of Losses Entitlement Implementation Issues Temporarily affected land (during construction) regardless of land ownership Permanent loss of land (with land title and/or ownership records) Loss of crops and trees by cultivators regardless of the land ownership Permanent loss of structures and immovable assets by owners (regardless of the land title) Physical displacement Loss of structures and immovable assets by owners Restoration of cultural and/or community structures Rental payment during the temporary use of affected person s land Cash compensation at replacement cost will be applied. Cash compensation at replacement cost. If sown or standing crops are damaged or uprooted, the owner of the affected crops will be compensated in cash for the loss of unharvested crops, at the mature crop value to be assessed on the basis of current market rates. Compensation for loss of fruit trees at replacement cost is based on the present income and cropbearing capacity. Compensation for structures and/or assets at full replacement costs without deduction for depreciation and/or salvageable materials. The cost will include transportation and labor costs. Compensation at replacement cost, or resettlement support to rebuild the house and other structures If income or livelihood affected, appropriate and sufficient assistance to improve or at least or restore income and livelihood Cash compensation for structures at full replacement costs without depreciation Complete restoration work or cash compensation for rehabilitation and/or rebuilding of affected common property resources and cultural structures and installations The land will be restored to its previous or better quality. Payment will be made at the divisional secretariat as soon as the Ministry of Finance approves the proposal for payment. The trees and crops are identified and listed by the Grama Niladaris. The trees are valued by specialized agencies such as the Coconut Development Board, Rubber Research Institute, and divisional secretaries. If the affected person belong to a vulnerable group alternative location to live will be provided. The implementing agencies will be responsible to find suitable land for a house plot. Owners of the affected structures will be allowed to take the salvageable materials To be paid to the formal or locally recognized patrons and/or user group leaders.

16 12 Annex 5: Financing Plan ) 5.1 Funds Flow Second Generation Imprest Account state bank Eastern Povince Chief Secretary EPRDD Project Account First Imprest Account Central Bank Ministry of Local Government and Provincial Councils Second Generation Imprest Account state bank Project Coordination Unit Asian Development Bank Second Generation Imprest Account state bank North Central Province Chief Secretary NCPRDA Project Account Contractors Suppliers Contractors Suppliers Note: Cash flow Reports for reconciliation and replenishment EPRDD = Eastern Provincial Road Development Department, NCPRDA = North Central Provincial Road Authority. 5.2 Financing Plan Source Amount Share (%) Asian Development Bank (ADF) Government Total Source: Asian Development Bank estimates.

17 13 Annex 5: Financing Plan ) 5.3 Withdrawal Application Signed Withdrawal Application (Appendix 5, p 81) Summary Sheet (Appendix 8, page 89) Supporting Documents (Appendix 10, page 91) Payment of Goods (suppliers invoice, bill of lading, or other similar documents Payment of services (consultant s claim or invoice) Payment of Civil Works (claim or invoice from the contractor and a summary of work progress certified by the project engineer and approved by the borrower s authorized representative ADB Project Officer (for endorsement) ADB Controller s Department Disbursement Unit (for processing) ADB Treasury Department (for releasing of funds)

18 14 Annex 5: Financing Plan ) 5.4 Disbursement Arrangements Loan disbursements will be made in accordance with ADB s Loan Disbursement Handbook (2007, as amended from time to time), and the agreed detailed arrangements. (i) Basic Requirements for Disbursement Authorized signatory letter from the Ministry of Finance and Planning of Sri Lanka addressed to ADB Specimen signatures of authorized signatories Any subsequent change in the list of authorized representatives must be reported immediately and authenticated specimen signatures of new representatives must also be provided. (ii) (iii) (iv) (v) Direct Payment ADB, at the Borrower s request, pays a designated beneficiary directly. Narrative procedures are in Appendix 14 of the ADB Loan Disbursement Handbook. Reimbursement Procedure ADB pays from the loan account to the Borrower s account or, in some cases, to the project account for eligible expenditures which have been incurred and paid for by the Borrower or EA out of its budget allocation or its own resources. Statement of Expenditure (SOE) procedure may be used for reimbursement of eligible expenditures and to liquidate advances provided into the imprest accounts. Any individual payment to be reimbursed or liquidated under the SOE procedure shall not exceed the equivalent of $100,000. Imprest Account The Ministry of Local Government and Provincial Councils (MLGPC) will establish a first generation imprest account at the Central Bank of Sri Lanka. The currency of the account shall be the Dollar A second generation imprest account will be established each for MLGPC, Eastern Provincial Council, and North Central Provincial Council at state banks acceptable to ADB. The aggregate initial amount to be deposited into the imprest accounts shall not exceed the lower of (i) the estimated expenditure to be financed from the imprest accounts for the first 6 months of Project implementation, or (ii) the equivalent of 10% of the Loan amount. The imprest accounts shall be established, managed, replenished, and liquidated in accordance with the ADB Loan Disbursement Handbook and detailed arrangements agreed upon between the Borrower and ADB.

19 15 Annex 5: Financing Plan ) ) 5.4 Allocation Table ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (Eastern and North Central Provincial Road Project) CATEGORY ADB FINANCING Number Item Amount Allocated SDR Percentage and Basis for Withdrawal From the Loan Account 1 Works 34,379, percent of total expenditure claimed 2 Equipment 129, percent of total 3 Consultants 3,367, Project Management (Incremental Expenditures) Interest during Implementation 647,000 1,813,000 6 Unallocated 4,985,000 Total 45,320,000 * Excluding taxes and duties imposed within the territory of the Borrower. expenditure claimed* 100 percent of total expenditure claimed* 100 percent of total expenditure claimed* 5.5 Government Financing The Government will only finance taxes and duties equivalent to $8 million. This will ease the Government s burden to provide counterpart funding.

20 16 Annex 6: Investment (Cost) Plan ) 6.1 Detailed Cost Estimate ADB Government Cost Share Item Total Cost ADB Government (%) (%) (%) A. Investment Costs a 1. Civil Works a. Eastern Province b b. North Central Province Consultants a. Eastern Province b. North Central Province Equipment Taxes and Duties c Subtotal (A) B. Recurrent Costs - Project Management d 1. Project Coordination Unit Eastern Province North Central Province Subtotal (B) % C. Contingencies Physical Contingency e Price Contingency f Subtotal (C) D. Interest During Implementation g a b c d e f g Total Project Cost (A+B+C+D) In early 2009 prices. Includes road and bridges improvement and Eastern Provincial Road Development Department office building improvement. Computed at 12% for civil works contract values, foreign consultant remuneration, and equipment. Incremental administrative expenditures, including imprest accounts bank charges Computed at 10% for civil works contract and consulting services contract values. Computed at 2.4% for foreign exchange costs, and 7% for local currency costs. At 1% during the grace period (8 years).

21 17 Annex 7: Execution Plan ) 7.1 Work Breakdown Structure (WBS) Level 1 Level 2 Responsible Parties MLGPC EPRDD/ NCPRDA CON CNT ADB 1. Pre-Start Up 1.1 Board Approval 1.2 Loan Signing * 1.3 Loan Effectiveness * 1.5 Establish Imprest Account * 1.6 Establish Second Generation Imprest 2. PMU and PIU established 2.1 Set up PMU and PIU office * 2.2 Recruit PMU and PIU office staff * 2.3 Procure office equipment and materials * 2.4 Engage project management consultants by * 3. Institutional Development Program Organizational Structure and Management 3.1 Review and improve the organization structure and staffing needs by March 2010 * 3.2 Prepare staff position descriptions and duty statements by May 2010 * 3.3 Formulate and implement policies and procedures by June 2010 * Management System Road Asset Maintenance Management Quality Control 4.1 Prepare project control and reporting systems by April Review and upgrade procurement systems 4.3 Develop PRDD and PRDA web-site by August Develop staff performance and monitoring system by August Develop computerized road inventory and road condition database between March October Design and implement Road Maintenance Management System 5.3 Establish road maintenance budgeting and planning capability by October Prepare performance-based maintenance contract documents by June Upgrade,materials testing laboratory by March Procure required equipment for the materials testing laboratory by June Study and test availability and quality of material quarries in Eastern Province by August 2011 * * * * * * * * * * *

22 18 4. Project Management and Administration 7.1 Project Administration * 7.2 Construction Supervision * 7.3 Project Performance Monitoring * 7.4 Withdraw and Disbursement * 7.5 Accounting and Auditing * 7.6 Covenant Compliance * 7.7 Midterm Review * 7.8 Project Completion * 7.9 Loan Account Closing * ADB = Asian Development Bank, CNT = Contractors, CON = Consultants, CSRN = Consulting Services Recruitment Notice, EPRDD = Eastern Provincial Road Development Department, MLGPC = Ministry of Local Government and Provincial Councils, NCPRDA = North Central Provincial Road Development Authority, PIU = Project Implementation Unit, PMU = Project Management Unit. * with primary responsibility

23 Annex 7: Execution Plan ) 7.2 Gantt Chart ADB = Asian Development Bank, TA = technical assistance. Source: Asian Development Bank. 19

24 20 Annex 8: Performance Monitoring and Evaluation ) A. 8.1 Performance Indicators Impact: By 2017: 2,374 km of national highways and 6,000 km of provincial roads upgraded and rehabilitated Outcome: By project completion: vehicle operating costs reduced by 30% in Eastern Province and 20% in NCP. Travel time reduced by 50% in Eastern Province and 30% in NCP. EPRDD and NCPRDA are restructured and staffed, and training program implemented Outputs: By project completion: approximately 150 km of roads in Eastern Province and 200 km roads in NCP are rehabilitated. Nineteen bridges and culverts in Eastern Province and 24 in NCP are rehabilitated and replaced. Five staff for each of EPRDD and NCPRDA are provided with on-the-job training with extensive hands-on project management skills. EPRDD s offices in Trincomalee and Batticaloa are improved. 8.2 Monitoring and Evaluation Report Design and Monitoring Framework a system framework and indicative indicators have been prepared and provided in Appendix 1. Annual Contract Awards and Disbursement Projections a Monthly Progress Reports Loan Agreement Schedule 5, para. 15(i) Quarterly Progress Reports b Loan Agreement Due Time Every 15 December of the year Within 15 days of the end of each month Within 15 days of the end of Schedule 5, para. 15(ii) each quarter Audited Financial Project Agreement Not later than 6 months Statements c Section 2.09, para. (a) after the close of the fiscal year Project Completion Report d Loan Agreement Within 3 months of physical Schedule 5, para. 16 completion of the Project a The format of Contract Awards and Disbursement projections is in Appendix 3. b for Quarterly Progress Report format, refer to Appendix 4. c for audit requirements, refer to Appendix 5. d for Project Completion Report format, refer to Appendix 6.

25 21 Annex 9: Major Covenants ) 9.1 Sector Covenants Implementation Arrangements 1. The Borrower shall designate MLGPC as the Project Executing Agency with overall responsibility for Project coordination at the central level, including provision of policy and technical guidance and interagency coordination. MLGPC shall undertake these activities through the existing project coordinating unit established under ADB loans 1986-SRI: Road Sector Development Project and 2080-SRI: Road Project Preparatory Facility. The project coordinating unit shall continue to be led by a Project coordinator, assisted by a chief accountant, an office engineer, and support staff. 2. EPC, through EPRDD, and NCPC, through NCPRDA, shall act as the implementing agencies with primary responsibility for project management, including without limitation - (i) procurement; (ii) day-to day project implementation; (iii) withdrawal applications certification; (iv) progress reports preparation; and (v) maintenance of project accounts and completion of loan financial records for auditing for the respective provinces. 3. EPRDD shall be led by the provincial director, assisted by a chief engineer Trincomalee, chief engineer Batticaloa, chief accountant, an office engineer, and support staff. NCPRDA shall be led by a general manager, assisted by the chief engineer operation 1, chief engineer operation 2, the chief accountant, an office engineer, and support staff. 4. The Borrower shall establish a national steering committee, which shall be responsible for overseeing and monitoring implementation of the Project and monitoring the adequacy of overall funding for the Project and for non-project roads. The national steering committee shall be chaired by the Secretary of MLGPC, and shall consist of representatives from: Ministry of Finance and Planning (External Resource Department and National Planning Department); Finance Commission; Ministry of Highways and Road Development; Chief Secretaries of EPC and NCPC, EPRDD, NCPRDA, and the project coordinating unit, and by invitation, as and when necessary, representatives from the CEA, Geological Survey and Mines Bureau, and utilities agencies (electricity, telecommunications, water, and drainage). The national steering committee shall meet as required but at least every quarter. 5. EPC and NCPC shall each establish in their respective provinces, a provincial coordination committee, which shall be responsible for monitoring project implementation at the provincial level. Each provincial coordination committee shall be chaired by the chief secretary of the respective province, and consist of a representative from EPRDD or NCPRDA (as applicable), the project implementation consultant (ex officio nonvoting) of the respective province, and by invitation, as and when necessary, the CEA, Geological Survey and Mines Bureau, utilities agencies (electricity, telecommunications, water, and drainage). The provincial coordination committee shall meet every month.

26 22 Road Maintenance and Rehabilitation 6. The Borrower shall ensure that: (i) (ii) (iii) (iv) (v) EPC (through EPRDD) and NCPC (through NCPRDA) maintain the Project roads to a proper standard, and that the benefits of the rehabilitated roads are realized over their expected lifetimes; EPC and NCPC commit the entire revenue from vehicle license fees towards routine maintenance of the provincial roads in their respective provinces; a provincial road investment plan ( ), including road maintenance plan, will be prepared by 30 September 2011; commencing Fiscal Year 2012, at least 70% of the periodic maintenance financing required for provincial roads under the road investment plan is made available to EPC and NCPC, and is increased by 10% annually until it reaches 100% of the required financing; and the funds required for road maintenance and rehabilitation are allocated annually and released on a timely basis. Institutional Strengthening 7. EPC and NCPC shall implement the institutional development program resulting from the recommendations of ADB s technical assistance for 'Capacity Development of Provincial Road Agencies' in accordance with the time frame set out in the program. 9.2 Financial Covenants Counterpart Support 8. The Borrower shall provide EPRDD and NCPRDA with adequate staff, resources, and facilities to implement the Project. The Borrower shall also make available all counterpart funds required for timely and effective implementation of the Project, including any funds required to make land available for the Project, to mitigate unforeseen environmental and social impacts and to meet additional costs arising from design changes, price escalation in construction costs and/or unforeseen circumstances. 9.3 Environment Covenants Environment 9. The Borrower shall ensure, and cause EPC through EPRDD, and NCPC through NCPRDA, to ensure that: (i) (ii) that the Project is undertaken and all Project facilities are designed, constructed, implemented, operated, and maintained in accordance with the Borrower s applicable laws and regulations and ADB s Environment Policy (2002); the EMP is implemented in accordance with its terms so that all adverse environmental impacts during construction and operation of the Project are mitigated; and in the event of any unanticipated adverse environmental impacts,

27 such impacts are reported to the CEA and ADB, and remedial actions taken to mitigate the impacts in consultation with the affected persons, the CEA and ADB; 23 (iii) (iv) (iv) (vi) an additional environmental study is undertaken and corresponding approval from the CEA is obtained should there be changes in the Project design that have significant environmental impacts; the IEE and EMP are updated, as necessary, during the course of Project implementation, and submitted to ADB for approval; reports on the implementation of the EMP are submitted to ADB on a semiannual basis; and (a) all contractors are provided with the summary IEE and the EMP, implement the required mitigation measures as described in the EMP in a satisfactory manner, and report the implementation of the EMP on a regular basis, along with any deviation from the IEE; (b) the bidding documents for Works under the Project include the requirement to comply with the EMP; and (c) the Project implementation consultants closely monitor compliance with the EMP by the contractors. 9.4 Social Covenants Land Acquisition and Resettlement 10. The Borrower shall ensure, and cause EPC through EPRDD, and NCPC through NCPRDA, to ensure, that: (i) (ii) (iii) the Project makes every effort to avoid land acquisition; and in the event any land acquisition or resettlement becomes necessary, or any potential impact on indigenous peoples is identified, a resettlement plan is drawn up in accordance with the Resettlement Framework in consultation with the affected people, and in compliance with the applicable national laws, regulations and policies, ADB s Involuntary Resettlement Policy (1995) and Policy on Indigenous Peoples (1998), and submitted to ADB for its approval; and any such resettlement plan approved by ADB is implemented in accordance with its terms, including: (a) (b) (c) (d) (e) public disclosure of the resettlement plan and any updates thereof; adequate budgetary support to cover the costs of land acquisition and resettlement; full compensation at replacement cost and relocation of affected persons before the commencement of Works; submission of external monitoring reports to ADB; and compliance with any other conditions and terms stipulated in the resettlement plan. Construction Labor 11. The Borrower shall ensure, and cause EPC through EPRDD, and NCPC through NCPRDA, to ensure that the contractors:

28 24 (i) (ii) (iii) provide appropriate information to, and create awareness among the construction workers on the risks of sexually transmitted diseases and HIV/AIDS; provide safe and healthy working conditions, including appropriate sanitation facilities for women workers; and comply with all applicable labor laws; provide equal pay for equal work; do not employ child labor; provide appropriate facilities for the children of the construction workers in construction campsites; and provide equal opportunities for women and men in the construction activities. 9.5 Other Covenants Grievance Redress Mechanism 12. Within 90 days of the Effective Date, the Borrower shall ensure that EPC and NCPC establish a grievance redress mechanism to redress any Project-related concerns raised by Project road users and communities along the Project roads. Governance 13. The Borrower shall ensure, and cause EPC and NCPC to ensure, that all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of implementing agencies and all contractors, suppliers, consultants, and other service providers as they relate to the Project. 14. The Borrower shall ensure, and cause EPC and NCPC to ensure, that: (i) (ii) (iii) (iv) a Project management and monitoring system is established; and the Project targets, progress, and achievements are disclosed to the public at the EPRDD and NCPRDA head offices, construction sites, and their websites; all road rehabilitation and maintenance Works are outsourced to the private sector; procurement is not restricted by contractor registration rules; and bidding documents are standardized and FIDIC-based contract management is implemented. Reporting 15. EPC through EPRDD, and NCPC through NCPRDA shall separately prepare and submit to ADB (i) (ii) within 15 days of the end of each month, monthly progress reports, with a copy to MLGPC, in a brief electronic form containing basic data, implementation progress, major issues/problems and proposed remedial measures, and work to be undertaken in the following period; and within 15 days of the end of each quarter, quarterly progress reports to MLGPC, which will consolidate and submit to ADB a report containing, in addition to the basic information provided in the monthly reports, any changes to implementation schedule, utilization of funds, achievement of outputs and outcome, and compliance with loan covenants.

29 Within 3 months of physical completion of the Project, MLGPC, in collaboration with EPRDD and NCPRDA, shall submit to ADB a Project completion report with a detailed evaluation of the Project design, costs, contractors and consultants performance, social and economic impact, economic rate of return, and other details as may be requested by ADB. Project Performance Monitoring and Evaluation 17. EPRDD and NCPRDA, assisted by Project implementation and technical assistance consultants under the Project, shall establish a Project performance management system, with indicators, criteria, and reporting agreed by ADB. These indicators shall be monitored at inception and completion of the Project, both on the Project roads and select control roads. Project Review 18. MLGPC, EPC through EPRDD, and NCPC through NCPRDA shall monitor Project implementation in accordance with the schedule and time-bound milestones, and keep ADB informed of any significant deviations that may result in the milestones not being met. ADB and the Borrower shall undertake at least annual reviews, and special reviews as necessary, throughout the Project implementation period.

30 26 Annex 10: Appendixes ) Appendix 1 Appendix 2 Appendix 3 Appendix 4 Appendix 5 Appendix 6 Appendix 7 Design and Monitoring Framework Disbursement Procedures Annual Contract Awards and Disbursement Projection Quarterly Progress Report Audit Requirement Project Completion Report Draft Terms of Reference for Project Management Consulting Services

31 Appendix 1 27 DESIGN AND MONITORING FRAMEWORK Design Summary Impact Improved transport system in Sri Lanka Outcome Improved road network in Eastern and North Central Provinces Improved institutional capacity Performance Targets and/or Indicators By 2017: 2,374 km of national highways and 6,000 km of provincial roads upgraded and rehabilitated By project completion: Vehicle operating costs reduced by 30% in Eastern Province and 20% in NCP. Travel time reduced by 50% in Eastern Province and 30% in NCP. EPRDD and NCPRDA are restructured and staffed, and training program implemented. Data Sources and/or Reporting Mechanisms Annual report of the Central Bank of Sri Lanka Publications of the Ministry of Highways and Road Development Publication of the Ministry of Local Government and Provincial Councils Development plans of the Ministry of Finance and Planning National Planning Department, Ministry of Finance and Planning EPRDD's and NCPRDA's completion reports Job descriptions and staff performance reports Assumptions and Risks Assumptions Policy directions of the Government's 10 Year Development Framework will remain valid. Conflict situation is gradually resolved. Risk Government investments are not adequate. Assumption Conflict situation is gradually resolved. Risk Funding for maintenance is inadequate. Outputs 1. Provincial roads are rehabilitated and improved, and selected bridge links are rehabilitated and replaced. By project completion: Approximately 150 km of roads in Eastern Province and 220 km roads in NCP are rehabilitated. Nineteen bridges and culverts in Eastern Province and 24 in NCP are rehabilitated and replaced. Engineer's progress reports Audit reports EPRDD's and NCPRDA's project progress and completion reports Assumption Qualified contractors are available. Risk Turnover of qualified trained staff is high. 2. EPRDD and NCPRDA project management capability is enhanced. Five staff for each of EPRDD and NCPRDA are provided with on-the-job training with extensive hands-on project management skills. 3. EPRDD's office is improved. EPRDD's offices in Trincomalee and Batticaloa are improved.

32 28 Appendix 1 Activities with Milestones 1. Roads, Bridges, and EPRDD Office Rehabilitation and Improvement 1.1 Contract award of civil works (phase 1) by October Contract award of civil works (phase 2) by March Completion of all construction and maintenance works by December 2013 Inputs For 1 and 2: ADB: $70 million Government: $8 million 2. Project Management 2.1 Engagement of project implementation consultant by October Project management on-the-job training completed by June Institutional Capacity Development 3.1 Engagement of CDTA consultant by March Preparation of capacity development plan, including organizational improvements, staffing allocation and assignments, training programs, and MIS requirements by June Establishment of simple MIS consisting of peer-to-peer office local area network, basic office software, and EPRDD website by July Development of functioning road maintenance management system with completed provincial inventory and visual conditions data with base map by March Annual maintenance works program by May Preparation of an objective road maintenance budget application for FY2012 onward by June Preparation of 3-year rolling road investment plans ( ) by August 2011 For 3: ADB: $800,000 Government: $150,000 inkind CDTA = capacity development technical assistance, EPRDD = Eastern Provincial Road Development Department, NCP = North Central Province, NCPRDA = North Central Provincial Road Development Authority.

33 Appendix 2 29 DISBURSEMENT PROCEDURES Reference: ADB s Loan Disbursement Handbook dated January 2007 B. DIRECT PAYMENT PROCEDURE 1. ADB, pays a designated beneficiary, at the request of the Borrower, from the loan funds (Section 7 of the Handbook). Narrative procedures are in Appendix 14 of the Handbook. Requirements (i) signed withdrawal application (form ADB-DRP/RMP in Appendix 5 of the Handbook) (ii) summary sheet (form ADB-DRP-SS in Appendix 8 of the Handbook) Supporting Documents (i) contract or confirmed purchase order (PO) indicating amount and due date (i) for payment of goods: supplier s invoice, bill of lading, or other similar documents (ii) for payment of services: consultant s claim or invoice (iii) for payment of civil works: claim or invoice from the contractor and a work progress certificate signed by the project engineer and approved by the borrower s authorized representative C. REIMBURSEMENT PROCEDURE 2. ADB pays to the borrower s account, or in some cases, to the project account for eligible expenditures, which have been incurred and paid for by the borrower or EA out of its budget allocation or its own resources (Section 9 of the Handbook). Narrative procedures are in Appendix 21 of the Handbook. Requirements (i) (ii) signed withdrawal application (form ADB-DRP/RMP in Appendix 5 of the Handbook) summary sheet (form ADB-RMP-SS in Appendix 8 of the Handbook) Supporting Documents (i) (ii) (iii) contract or confirmed PO copy of the invoice/bill/claim and delivery receipt evidence of payment showing the amount paid; the date of receipt and the payee D. IMPREST FUND PROCEDURE 3. ADB makes and advance disbursement from the loan account to the imprest account to be used for ADB s share of eligible expenditures (Section 10 of the Handbook). The following conditions must exist before the borrower is allowed to use the procedure: (i) need for the procedure, (ii) borrower s capability, and (iii) audit arrangements. Narrative procedures are in Appendix 34 of the Handbook. 4. The borrower is required to open for the exclusive use of the Project, a separate bank account in the name of the borrower for depositing advances. The account may be opened at

34 30 Appendix 2 the central bank of the borrower s country or in a commercial bank the borrower designates, provided that the institution chosen is capable of executing foreign exchange and local currency transactions, opening letters of credit and handling large volume of transactions, and issuing detailed monthly bank statements promptly. If the imprest account is maintained in a commercial bank, a comfort letter (Appendix 32 of the Handbook) is required to be submitted to ADB. 5. The ceiling of advance may not exceed the estimated expenditures for the next 6 months or 10% of the loan amount, whichever is lower. The borrower must obtain prior ADB approval for any upward changes in the approved ceiling. 6. The advances are to be gradually reduced within one year before the loan closing date or when the undisbursed balance of the loan, including outstanding commitments, is equal to twice the amount of the advance, whichever comes first. Requirements (i) signed withdrawal application (form ADB-IFP in Appendix 7 of the Handbook) (ii) summary sheet (form ADB-IFP-EES in Appendix 29 of the Handbook) - for initial advance (iii) summary sheet (form are in Appendix 8 of the Handbook) - for replenishment if full documentation is required (iv) summary sheet imprest account reconciliation statement (form is in Appendix 30 of the Handbook) for replenishment (v) liquidation of advance (form is in Appendix 31 of the Handbook) - for replenishment E. STATEMENT OF EXPENDITURES (SOE) UNDER REIMBURSEMENT PROCEDURE 7. This procedure requires no submission of supporting documents (see paragraphs 9.8 to 9.23 of the Handbook for details). Ceiling for the Project is $10,000 per item of expenditures. The SOE is used in lieu of the usual supporting documents and the summary sheet. It may also be used in connection with the liquidation or replenishment of the imprest account. 8. The SOE forms are in Appendix 22 to 25 of the Handbook. F. INSTRUCTIONS FOR WITHDRAWALS 9. Before the first W/A is submitted to ADB, the name of the authorized representative(s) must be provided to ADB, through the Ministry of Finance, including the authenticated specimen signatures of the representative(s). 10. The W/A should be signed by the authorized representative(s), sequentially numbered and should not exceed five digits (00001, 00002, etc.). 11. The W/A forms and summary sheets to be used vary for the different procedures. A separate W/A for each currency requested should be submitted. The Project may use any of the above disbursement procedures. The WA forms can be downloaded from LFIS website

35 Appendix The W/A to be submitted to ADB must be the signed original copy to the attention of Mr. Francis Mathew, Financial Control Specialist, CTLA-1 and copied to Director, SATC. However, supporting documents may be in photocopies and the originals to be kept for audit purposes.

36 Annual Contract Awards and Disbursement Projection 32 Appendix 3

37 Appendix 4 33 A. Introduction and Basic Data Provide the following: QUARTERLY PROGRESS REPORT ADB loan number, project title, borrower, executing agency(ies), implementing agency(ies); total estimated project cost and financing plan; status of project financing including availability of counterpart funds; dates of approval, signing, and effectiveness of ADB loan; original and revised (if applicable) ADB loan closing date and elapsed loan period based on original and revised (if applicable) loan closing dates; and date of last ADB review mission. B. Utilization of Funds (ADB Loan and Counterpart Funds) Provide the following: cumulative contract awards financed by the ADB loan, and counterpart funds (commitment of funds to date), and comparison with time-bound projections (targets); cumulative disbursements from the ADB loan, and counterpart funds (expenditure to date), and comparison with time-bound projections (targets); and re-estimated costs to completion, need for reallocation within ADB loan categories, and whether an overall project cost overrun is likely. C. Project Purpose Provide the following: status of project scope/implementation arrangements compared with those in the report and recommendation of the President (RRP), and whether major changes have occurred or will need to be made; an assessment of the likelihood that the immediate development objectives (project purpose) will be met in part or in full, and whether remedial measures are required based on the current project scope and implementation arrangements; an assessment of changes to the key assumptions and risks that affect attainment of the development objectives; and other project developments, including monitoring and reporting on environmental and social requirements that might adversely affect the project's viability or accomplishment of immediate objectives. D. Implementation Progress Provide the following: assessment of project implementation arrangements such as establishment, staffing, and funding of the PMU;

38 34 Appendix 4 information relating to other aspects of the EA s internal operations that may impact on the implementation arrangements or project progress; progress or achievements in implementation since the last progress report; assessment of the progress of each project component, such as, o recruitment of consultants and their performance; o procurement of goods and works (from preparation of detailed designs and bidding documents to contract awards); and o the performance of suppliers, manufacturers, and contractors for goods and works contracts; assessment of progress in implementing the overall project to date in comparison with the original implementation schedule quantifiable and monitorable target, (include simple charts such as bar or milestone to illustrate progress, a chart showing actual versus planned expenditure, S-curve graph showing the relationship between physical and financial performance, and actual progress in comparison with the original schedules and budgets; and an assessment of the validity of key assumptions and risks in achieving the quantifiable implementation targets. E. Compliance with Covenants Provide the following: the borrower's compliance with policy loan covenants such as sector reform initiatives and EA reforms, and the reasons for any noncompliance or delay in compliance; the borrower s and EA s compliance with financial loan covenants including the EA s financial management, and the provision of audited project accounts or audited agency financial statements; and the borrower s and EA s compliance with project-specific loan covenants associated with implementation, environment, and social dimensions. F. Major Project Issues and Problems Summarize the major problems and issues affecting or likely to affect implementation progress, compliance with covenants, and achievement of immediate development objectives. Recommend actions to overcome these problems and issues (e.g., changes in scope, changes in implementation arrangements, and reallocation of loan proceeds).