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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Document of The World Bank FOR OFFICIAL USE ONLY PROJECT APPRAISAL DOCUMENT ON A PROPOSED CREDIT IN THE AMOUNT OF SDR 32.9 MILLION (US$46.7 MILLION EQUIVALENT) TO THE ISLAMIC REPUBLIC OF PAKISTAN FOR A Report No: PK PAKISTAN: SECOND PARTNERSHIP FOR POLIO ERADICATION PROJECT Human Development Unit South Asia Regional Office December 22,2005 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS (Exchange Rate Effective October 2, 2005) Currency Unit = PK Rupees (Rs) US$1 = Rupees59.71 Rupees 1 = US$O.O167 FISCAL YEAR July 1 - June 30 ABBREVIATIONS AND ACRONYMS AFP CAS CDC ED0 (H) EPI FATA FA BMGF GOP GPEI IACC IDA IPV LHW MDGs MOH MTDF NGO NID NIH NPV OPV PEI PHC PRSP SIA SNID SPPEP TA TAG TB DOTS UNF UNICEF USAID VAR WHO WPV Acute Flaccid Paralysis Country Assistance Strategy Centres for Disease Control and Prevention (USA) Executive District Officer (Health) Expanded Program for Immunization Federally Administered Tribal Areas Financing Agreement Bill & Melinda Gates Foundation Government of Pakistan Global Polio Eradication Initiative Inter-Agency Coordinating Committee International Development Associations Inactivated Polio Vaccine Lady Health Workers Millennium Development Goals Ministry of Health Medium Term Development Framework Non-governmental Organization National Immunization Day National Institute of Health Net Present Value Oral Polio Vaccine Polio Eradication Initiative Primary Health Care Poverty Reduction Strategy Paper Supplemental Immunization Activities Sub-National Immunization Day Second Partnership for Polio Eradication Project Technical Assistance Technical Advisory Group Tuberculosis Direct Observation Therapy Short course United Nations Foundation United Nations Children s Fund United States Agency for International Development Vaccine Arrival report World Health Organization Wild Polio Virus Vice President: Praful C. Pate1 Country Director: John W. Wall Sector Manager: Anabela Abreu Task Team Leader: Inaam Haq.. 11

3 PAKISTAN Pakistan: Second Partnership for Polio Eradication Project A B C D TABLE OF CONTENTS Page STRATEGIC CONTEXT AND RATIONALE... 3 Main sector issues and Government strategy... 3 Country assistance strategy and health related objectives... 3 Sector issues to be addressed by the project and strategic choice... 3 Rationale for Bank involvement... 5 PROJECT DESCRIPTION... 5 Lending instruments... 5 Project development objective... 5 Key performance indicators Project component... 6 Lessons learned and reflected in the project design... 7 Alternatives considered and reasons for rejection... 7 IMPLEMENTATION... 8 Partnership arrangements... 8 Institutional and Implementation Arrangements... 8 Monitoring and evaluation of outcomes/results Sustainability Critical risks and possible controversial aspects Credit conditions and covenants APPRAISAL SUMMARY Economic and financial analyses Technical Institutional Fiduciary Social Environment Safeguard policies... 14

4 8. Policy Exceptions and Readiness Annex 1: Polio Eradication Initiative Program Background Annex 2: Major Related Projects Financed by the Bank and/or other Agencies Annex 3: Results Framework and Monitoring Annex 4: Project Costs Annex 5: Financial Summary Annex 6: Financial Management and Disbursement Arrangements Annex 7: Procurement Arrangements Annex 8: Project Preparation and Supervision Annex 9: Documents in the Project File Annex 10: IDA Buy-Down Mechanism Annex 12: Country at a Glance MAP: IBRD iv

5 Date: December 22, 2005 Country Director: John W. Wall Sector Manager/Director: Anabela Abreu PAKISTAN SECOND PARTNERSHIP FOR POLIO ERADICATION Project Appraisal Document South Asia Regional Office SASHD Project ID: PO97402 Lending Instrument: Specific Investment Loan Project Financing Data [ ] Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other: Team Leader: Inaam Haq Sectors: Health (100%) Themes: Child health (P);Other communicable diseases (P) Environmental screening category: C Safeguard screening category: No impact For Loans/Credits/Others: Total Bank financing (US$m.): 46.7 Proposed terms (IDA): Standard Credit (35 years) with a special provision for third party funded Trust Fund to purchase the credit at its net present value once the Project has been successfully completed in Responsible Agency: Ministry of Health Expanded Program on Immunization (EPI) Address: National Institute of Health, Chak Shehzad, Islamabad, Pakistan FY Annual Cumulative

6 Does the project depart from the CAS in content or other significant respects? Re$ FAD A.2 [ ]Yes [XINO Does the project require any exceptions from Bank policies? Re$ PAD 0.8 [ ]Yes [XINO Have these been approved by Bank management? [ ]Yes [ IN0 Is approval for any policy exception sought from the Board? [ ]Yes [ IN0 Does the project include any critical risks rated substantial or high? [ X]Yes [I No Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Re$ [XIYes [ ]No FAD 0.8 Project development objective Re$ PAD B.2, Technical Annex 1 The objective is to assist Pakistan s effort to eradicate polio through supply of the Oral Polio Vaccine (0PV)for the country s supplementary immunization activities d&ng Project description Refi PAD B.4, Technical Annex 1 The project will support Polio Eradication Initiative, which has three components: (i) Vaccine procurement; (ii) supplemental operations; and (iii) surveillance. The project with an International Development Association (IDA) support of US $46.7 million will finance only the first component, i.e., procurement and timely supply of OPV and its effective use during SIAs. Which safeguard policies are triggered, if any? Re$ PAD D. 7, Safeguard policy on Project in disputed areas is triggered. The proposed project credit as the original project will support SIAs in Azad Jammu and Kashmir, a disputed area between India and Pakistan since By financing the supplemental credit, IDA does not intend to make any conclusion on the legal or any othe; status ofthe disputed territory or to prejudice the final determination of the parties claim.- Significant, non-standard conditions, if any, for: Re$ PAD C.6 Board presentation: None Loadcredit effectiveness: 0 OPV agreement has been executed by the Borrower and United Nations Children Fund (UNICEF) and all conditions precedent to its effectiveness have been met. 0 Submission of a satisfactory legal opinion on the Financing Agreement (FA). Covenants applicable to project implementation: 2

7 A. STRATEGIC CONTEXT AND RATIONALE 1. Main sector issues and Government strategy Pakistan is making slow progress towards the health related Millennium Development Goals (MDGs). Pakistan s health indicators remain poor relative to its Gross Domestic Product per capita of US$652 including high fertility (4.1 children per women) and infant mortality (77 per 100 live births). Factors intrinsic to the health sector contribute significantly to the above situation, which include: low and inefficient public spending, inadequate management capacity, and poor quality of services in public and private sector. The Government of Pakistan (GOP) is trying to address the above challenges by implementing a medium-term human development strategy, outlined in the Poverty Reduction Strategy Paper (PRSP) and the Medium Term Development Framework (MTDF). The strategy envisages an increased public investment in the health sector to strengthen the health systems and improve quality of health care in partnership with the private sector. 2. Country assistance strategy and health related objectives (Document # PAK, Latest CAS discussion: April 28,2004 (Document #28262-PAK) The Country Assistance Strategy (CAS) supports the PRSP with an aim to reduce poverty through implementation of pro-poor and pro-gender equity policies. In the health sector, the CAS objective is to improve access to health care by strengthening immunization, communicable disease control systems, maternal and child health programs and improving governance by supporting the devolution initiative. The project supports the CAS objective of improving equity by ensuring coverage of children in poor households. The poor with low health status and immunization coverage and residing in unhygienic conditions are at a greater risk of contracting polio. Disability resulting from polio limits a child s ability to benefit from education and employment opportunities, and puts additional burden on poor families and the health system for rehabilitation and care. 3. Sector issues to be addressed by the project and strategic choice The project will support the World Health Organization (WHO)-launched Global Polio Eradication Initiative (GPEI). GPEI i s the largest public health initiative that has successfully eliminated polio from all but 6 countries with only 1258 and 1262 cases reported globally in 2004 and respectively. Despite the progress, the situation remains fragile as during 2004/05, there were polio outbreaks in eight countries following importation and re-establishment of virus transmission. Polio virus transmission in endemic countries remains the last hurdle for a polio free world as a single infected child can put entire world s children at risk. Pakistan initiated Supplemental Immunization Activities (SIAs) in 1994 as part of its routine Expanded Program on Immunization (EPI). National Immunization Days (NIDs) were strengthened in 1999 with introduction of house to house immunization. Subsequently sub-national immunizations (SNIDs) rounds to target high risk districts in addition to cross border activities with Afghanistan and Iran were commenced. But, continued low intensity transmission of wild polio virus (WPV) required further intensification of efforts (increase in number of rounds and days per round) during Overall Program s achievement is reflected in declining number of polio cases, from tens of thousands per year in the 1980s to 1803 in 1993 (Graph 1). Since 1993 the number of cases has further declined to 53 in 2004 and only 19 polio cases in 20052, 25% lower than in the first nine months of Nigeria, India, Pakistan, Niger, Egypt, and Afghanistan As of September 20,2005 3

8 Palustan is most likely to interrupt WPV transmission by the end of This, however, will be confirmed after a 12 month transmission free period during which isolated cases may appear. Pakistan will continue to implement SIAs for at least three years following the last confirmed case until the country is certified polio free. Graph 1: Pakistan: Confirmed Polio Cases Years Pakistan s polio eradication strategy focuses on: (i) Reaching and maintaining the highest possible routine immunization coverage (80% minimum) with at least three doses of OPV; (ii) SIAs (NIDs) to deliver supplemental doses to all children under-five; (iii) Mop-up and outbreak response activities around any new case; (iv) Acute flaccid paralysis (AFP) surveillance system to detect and investigate every case in children under 15 years of age and all suspected cases of polio regardless of age; (v) Community mobilization and an awareness campaign; and (vi) Use of monovalent OPV for some rounds instead of trivalent OPV to enhance type specific protection against Type 1 polio virus. Of the three types of polio viruses, Pakistan has eradicated Type 2 and 3 viruses. At present all confirmed cases are due to Type 1 polio virus. In line with GPEI and Technical Advisory Group (TAG) recommendations Pakistan will also use monovalent OPV rather than trivalent OPV in some rounds of NDs. The monovalent vaccine provides significantly better type specific immunity and also facilitates protection by reducing wild polio virus excretion. Operationalizing SIA is a challenging task which immunizes over 30 million children in each round. SIAs are being effectively implemented with 97% of the target group immunized during 2004 and 2005 rounds. A fully functional AFP surveillance system provides regular quality data to help identify districts with virus circulation and is used as a guide to modify program strategies as needed. Information from the AFP system has identified 13 of 120 districts as high risk due to WPV transmission in 2005, decreasing from 39 high risk districts in WHO, with its 115 national and international staff, and UNICEF with its provincial field staff provide technical support. In addition, technical advice is provided by TAG, consisting o f international and national experts. The TAG during the last review concurred with the GOP and technical partners that Pakistan is close to interrupting the transmission in Strategic Choices: Interruption of polio virus transmission and eradication are difficult to achieve through routine immunization services as there is usually low zero-conversion rates among children living in developing countries (e.g. in Pakistan, 3 doses of OPV results in zero-conversion to Type 1 virus in only 60% of children on average) and low coverage by routine services. The only effective strategy is high quality SIAs ensuring coverage of almost all of the targeted population. In Pakistan, SIAs have been effective in immunizing about 97% of the targeted population during the last three years even in hard-toreach populations e.g. Northern Areas and Azad Jamuu and Kashmir have not reported any case of polio since As Pakistan is close to interrupting transmission, the proposed project will ensure continuation of the SIAs to stop transmission and eradicate polio successfully. 3 4

9 IDA has supported PEI in Pakistan through the IDA buy-down arrangement with the Partnership for Polio Eradication Project including a supplementary credit during The arrangements in the first project have worked well, ensuring timely availability of OPV for SIAs. Project implementation has been rated satisfactory and progress towards achieving Project Development Objectives rated as highly satisfactory. As in the original project, the proposed project will use the IDA buy-down mechanism, which will transform the IDA credit to grant terms upon satisfactory project implementation. This is preferred over a normal IDA credit because the decision to eradicate polio is a decision and responsibility of the global community, and not only of the last few polio-endemic countries. Also the IDA buy-down mechanism will convert the credit into a grant only on satisfactory implementation, will encourage the government to focus on implementation and results. IDA will finance only the OPV procurement as there is financing gap for OPV procurement with only partial financing expected from the Government of Japan. Other components of the program are well financed by the Government and other development partners. 4. Rationale for Bank involvement PEI has been a major national effort since 1994, and has been actively supported by several development partners. Through WHO and UNICEF, development partners are providing grant funds for the operational costs and surveillance. As eradication came closer, additional financing was needed to meet the vaccine requirements. To address this need the IDA buy-down financing mechanism (Annex 10) was developed by the Bank in partnership with the Bill & Melinda Gates Foundation (BMGF), United Nations Foundation (UNF) and other technical partners, following a request from the Global Polio Eradication Technical Advisory Committee. Funds provided by these partners will "buy-down" the cost of IDA Credits into grant terms to support polio-endemic countries. The Polio Eradication Trust Fund, financed by BMGF and UNF and managed by the World Bank, is already established. The Trust Fund will pay the service fee for the Credit during implementation and buy down the net present value of the IDA Credit when the projects are successfully completed. The trust funds are already financing the original and supplementary credit for Pakistan. Pakistan needs to continue SIAs for another three years and requires additional resources to meet the vaccine requirements for IDA will meet this financing gap. Through the partnership, the partners are also able to access rigor of Bank's project preparation and supervision in support of their efforts for polio eradication. B. PROJECT DESCRIPTION 1. Lending instruments The proposed lending instrument is Sector Investment Loan through an IDA credit with a special provision for third party funded Trust Fund to purchase the credit at its net present value once the Project has been successhlly completed in accordance with the terms of the financing agreement. 2. Project development objective The project development objective is to assist Palustan's effort to eradicate polio through supply of the Oral Polio Vaccine (OPV) for the country's supplementary immunization activities (SIAs) during The Second Partnership for Polio Eradication Project (SPPEP) is part of the WHO) led multi-country effort, and will contribute to a global public good, i.e., the eradication of polio from the world. SPPEP is a follow-on project of the Partnership for Polio Eradication Project. 3. Key performance indicators The indicators to measure project performance (see Annex 3) include: 5

10 0 0 0 Timely arrival of the OPV at the central stores of the Expanded Program on Immunization (EPI), Islamabad; (Target: at least five weeks before each of the SIAs); SIA coverage in the targeted population (under-five children) in each of the four provinces during 2006 and 2007 (Target 85%); and Number of confirmed polio cases reported (Target Zero Case). Vaccine arrival will be measured through EPI s Vaccine Arrival Reports (VAR). SIA coverage will be measured through a cluster sampling survey using standard WHO methodology which will also measure vitamin A coverage. The number of confirmed polio cases i s measurement o f success o f PEI and will be reported through the existing Acute Flaccid Polio (AFP) Surveillance System. Achievements of the targets for the first two indicators will be a trigger for the IDA buy-down. The details of key indicators for measuring the achievement of the development objective are described in Annex Project component (See Annex 1 for a detailed description and Annex 4 for project cost) SPPEP will support PEI, which has three components: (a) OPV procurement, (b) supplemental operations; and (c) surveillance. SPPEP will assist GOP to interrupt virus transmission, decrease the number of polio cases with the ultimate aim of eradicating the disease with an IDA support of US$ 46.7 million. SPPEP will provide financing for only the first component, Le., procurement and supply of OPV and its effective use during SIAs during IDA will finance the procurement of OPV though UNICEF, which is an established agency for vaccine procurement. UNICEF is already procuring the OPV for Pakistan s immunization program as well as under the first project. Given the very tight supply and demand of OPV during the final stages of the global eradication effort, UNICEF has been designated by the global polio eradication partners to be the sole procurement agent for OPV. Pakistan will conduct six rounds of NIDs in 2006 and four rounds in In addition, four mop-up rounds in 2006 and two mop-up rounds in 2007 will be planned in areas with evidence of virus circulation. The estimated OPV needed for the SIA during the project period is for approximately million doses at an estimated cost of US$61.4 million (Table 1). IDA will finance OPV procurement for US$46.7 million, US$12.8 million will be from the Government of Japan and with remaining US$1.9 million expected from the GOP. The second component o f PEI Le. supplemental operations consists of: (a) maintenance of cold chain; (b) social mobilization; and (c) training. All implementation arrangements are in place for these operations. The National, provincial and district units are supported by WHO and UNICEF through international and national staff to support and oversee the activities in the field. The system functions well, and during 2004 and 2005 an average coverage of about 97% of the targeted population has been achieved. The third component supports surveillance, including laboratory and epidemiological surveillance. The surveillance system is fully functional and data is regularly reviewed by TAG in collaboration with Government counterparts and technical partners. Each district regularly reports above the global standard on key indicators including timely collection of stool samples, 60 day follow up etc. The data from surveillance and assessments of the quality of campaign comprise the monitoring and evaluation system for PEI. 6

11 Table 1: Oral Polio Vaccine Requirement and Financing Required The total budget needed for SIAs during is about US$100.4 million (Table 2), of which US$61.4 million is needed for OPV procurement. IDA will only finance component 1 i.e. procurement of OPV. The Government of Japan is expected to finance US$12.8 million for OPV procurement; and IDA will finance the remaining gap of US$46.7 million. The cost of supplemental operations and surveillance (US$39.0 million) will be financed by WHO and UNICEF. Table 2: Polio Eradication Initiative: Cost by Component 2006/07 Component Indicative YO of Total Costs (US$M) Oral Polio Vaccine Procurement Supplemental Operations Surveillance Total Project Costs IDA-financing Yo of (US$M) IDA-financing Lessons learned and reflected in the project design The proposed project will implement a tested design implemented by the original project. In addition, it reflects lessons learnt from IDA-supported Health, Nutrition and Population projects in Pakistan and in the South Asia region including: (i) Need to keep the design simple and well-defined -- IDA support will focus on a single component of PEI; (ii) need to use the regular structures for program management rather than Project Management Unit - the project will use existing structures implementing EPI; (iii) Need to coordinate with the development partners - the project has been developed in close collaboration with development partners; and (iv) Improve monitoring and evaluation and the value and timeliness of feedback - the project seeks to achieve polio eradication through focused, large-scale campaigns that utilize surveillance and monitoring data as the basis of planning. 6. Alternatives considered and reasons for rejection The project will implement a tested design, which is being implemented in polio projects in Pakistan and Nigeria. The first project piloted the design successfully and in light of a clear financing gap for OPV, therefore other project alternatives, such as financing a different component, some or all of the components of PEI, were considered and rejected in favor of financing the OPV procurement. In addition, the alternative of procuring the vaccines through the government was also considered and rejected. The project s financing arrangements agreed upon by the partners, envisage procurement through UNICEF, due to very tight supply and demand of OPV during the final eradication efforts. 7

12 C. IMPLEMENTATION 1. Partnership arrangements The World Bank's Health, Nutrition & Population Sector Anchor established a partnership with BMGF, UNF and technical partners UNICEF and WHO to assist polio eradication by providing countries with IDA financial resources but without IDA repayment obligations. The BMGF and UNF agreed to provide funds to IDA-administered trust fund (the Polio Eradication Trust Funds or PETFs) that will buy down the debt incurred by recipient countries for successful implementation of polio eradication projects (Annex 10). Partnership arrangements are also in place with UNICEF and WHO to undertake procurement of OPV and a performance audit to determine if the IDA funds achieved their intended results upon project completion respectively. 2. Institutional and Implementation Arrangements SPPEP as the original project will be implemented and monitored through the existing structures of EPI which is already implementing PEI. EPI program implements the routine immunization program across Pakistan through an elaborate management arrangement at the federal, provincial and district levels. To ensure timely procurement and supply of the OPV to EPI, and to monitor its effective use, the following implementation arrangements are already in place: Supplemental Immunization Activities (SIAs): As in the original project, the proposed project will support a single component of procurement, supply and use of OPV. The OPV will be used in the SIAs which are organized and implemented as follows: Ministry of Health implements PEI through EPI in close collaboration with WHO and UNICEF. The National Program Manager, EPI is responsible for the PEI at the Federal level. A WHO team consisting of Centers for Disease Control and Prevention (CDC)-seconded senior epidemiologist, a senior program administrator, an NID controller, an EPI expert, a statistician, a social mobilization expert and a logistician provide technical support to the National Program Manager, EPI. At the Provincial level, the DirectorProvincial Program Manager EPI heads the program under the guidance of the Director General Health Services. At the District levels, Executive District Officer (Health) (ED0 (H)} supervises the EPI activities. ED0 (H) is supported by the officer responsible for EPI and other Officers working in the District Department of Health in each facility. The District team undertakes detailed micro-planning for each round ensuring all systems are functional for the SIA campaign. In addition, the District team calculates and verifies the target population, number and location of NID posts, cold chain needs, and ice requirements. This process is supported by WHO and UNICEF provincial and district-based staff. MOH is responsible for the procurement, storage and supply of vaccines, cold chain equipment, syringes, needles and transport for the routine and PEI. The Provincial Departments of Health bear the cost of staff, training, health education, stationary, petrol, oil and lubricants, and other contingencies. WHO and UNICEF assist by supplying the cold chain equipment, vehicles and technical assistance. Coordination Committees at the federal, provincial and district levels include government officials of related departments, local political and social leaders, and representatives of the NGOs and donors. 8

13 A national level Inter-Agency Coordinating Committee (IACC), chaired by the MinistedSecretary Health, has the overall responsibility for coordinating the SIAs. Similar committees function at the provincial level chaired by the provincial SecretariesDirector General Health Services. The Provincial Committees are responsible for specifying tasks, developing check lists, monitoring progress of planning and critical steps, delivering clear and simple messages to the community, compute vaccine requirement, and ensuring that the cold chain is effectively functioning. The role of the provincial Director/Program Manager EPI is to plan, implement, monitor and evaluate the SIA. At the district level, Coordination Committees are chaired by the ED0 (H), and attended by the Deputy Commissioner. These Committees meet monthly, and more frequently close to the actual campaigns. The mass media, religious and community leaders play a key role in raising awareness and mobilizing the public. School teachers, community members and Lady Health Workers are all involved in administering the oral vaccine. UNICEF provides strong support to the social mobilization component of the campaigns. Surveillance: Surveillance quality in Pakistan has achieved and maintained international standards for quality in key indicators since 2000 and is fully functional. This i s largely due to the deployment of WHO supported Surveillance Officers throughout the country, now totaling nearly sixty. Their main activities include continued active visits of key reporting sites; advocacy meetings with physicians, unregistered health care practitioners and faith healers; and training workshops for district surveillance coordinators and vaccinators. Surveillance goes through periodic international quality reviews. Procurement: The procurement arrangement agreed under the original project will be continued. UNICEF will be the sole procurement agent for OPV due to very tight supply and demand of OPV during the final stages of the global eradication effort. OPV will be procured and supplied to GOP under an agreement between the GOP and UNICEF. A draft agreement for the purpose has been drafted. UNICEF s international procurement division, based in Copenhagen, will undertake the procurement following UNICEF s procurement procedures. National Program Manager, EPI will be responsible for receiving the OPV at the National Institute of Health (NIH), Islamabad and for its in-country storage, distribution, administration and use. Vaccine requirements are forecast by the National Program Manager EPI with technical support from WHO and UNICEF. This is based on the latest estimates of the population of children under-five years, and the number of rounds and doses to be given per child during a given year. The requirements are endorsed by the Inter-Agency Coordination Committee (IACC) and TAG based on surveillance data. For 2006 and 2007 the program has forecast the requirements o f OPV as million doses including 276 million doses for 2006 and million doses for Financial Management: The project would support a single component i.e. provision of oral polio vaccine (OPV). UNICEF would procure vaccine for GOP for which the Bank would make direct payments to UNICEF. Financial management arrangements would be the same as used for the parent project. WHO and UNICEF will manage their share of project expenditure using their own financial management systems including internal and external audit. UNICEF would open a separate ledger account for this purpose in its books of account. GOP would maintain inventory records in respect of vaccine received and utilized. EPI Cell would provide to IDA a) OPV arrival reports; and b) a quarterly financial management report (Sources & Uses of Funds) including OPV received and its utilization. UNICEF would also provide to the Bank a statement of funds received from the Bank and payments there from on a six monthly basis. UNICEF s internal controls on use of funds, procurement of vaccine and utilization thereof are considered adequate and no audit reports would be required in respect o f the project as was the case in the 9

14 parent project. There are no significant unresolved financial problems in respect of the parent project except delays in submission of utilization reports. However, the delays did not have any impact on implementation of the project. The implementing agency has assured that there would not be any delays in reporting for the follow up project. Disbursements would be made under a blanket Withdrawal Application for the full amount of credit. UNICEF would submit cost estimates to GOP on a six monthly basis on the basis of which payments would be made by the Bank to UNICEF. As in the parent project, upon completion WHO will conduct a performance audit of the project within three months of project closing. The performance audit will report on timely vaccine procurement, use and coverage of children immunized. The report will be submitted to GOP with a copy to IDA. The WHO report will be used by IDA to trigger the IDA buy down. Details of financial management arrangements are contained in the attached annex. 3. Monitoring and evaluation of outcomes/results Existing systems of monitoring and evaluation established for PEI and SIA are fully functional. SPPEP will not require any new monitoring or evaluation mechanism. The existing system includes: SIA coverage is monitored by an analysis of tally sheets recording the number of children immunized against the number in the target group. The 1998 population census figures are used along with growth rate projections to arrive at a fairly accurate target group number. Output monitoring of SIAs quality and coverage is undertaken at the provincial and district level using District monitoring teams consisting of WHO, UNICEF and GOP staff. These teams monitor the quality of SIAs in high-risk and other selected districts. SIA outcome is monitored at the national, provincial and district level through the AFP surveillance system. TAG meets periodically and assesses progress. It analyses the polio eradication situation and provides recommendations to give strategic directions to the operations. These reports along with the periodic assessments o f the SIA quality are also used for monitoring and evaluation purposes. Upon completion, WHO will conduct a performance audit of the project within three months of project closing. The performance audit will report on timely vaccine procurement, use, and coverage of children immunized. The report will be submitted to GOP with a copy to IDA. The WHO report will be used by IDA to trigger the buy down. Sustainability SIAs will end with polio eradication and there will be no need to sustain these. Polio eradication benefits are infinite because the disease will be extinct, unless a man-made mistake or disaster makes it reappear. If eradication is delayed and additional financing is required, it is most likely to be supported by the development partners and technical agencies who are klly committed to eradicate the disease in Pakistan and globally. 5. Critical risks and possible controversial aspects The main risk is delay in achieving polio eradication nationally and also internationally. In addition, for reasons that are not well understood pertaining to the complex biology of entero-viruses, polio may not be eradicated despite best efforts and high coverage of SIAs. This will require additional efforts and financing. Until global eradication is achieved, all countries will need to maintain polio immunization. 10

15 Risk From outputs to objective Delay in achieving polio eradication nationally and also international1 y Larger than expected funding gap may occur for OPV procurement. The existing funding gap may increase on surveillance data. Low levels of access in compromised areas due to security situation and in tribal and conservative areas The eradication strategy using SIAs may not increase coverage sufficiently to interrupt polio transmission and delay eradication. Reestablishment of polio virus transmission in earthquake affected region of AJK and NWFP. Risk Rating S Risk Mitigation Measure The strategy is being revised including the use of monovalent OPV to enhance immunity to reduce transmission. As commitment to polio eradication remains high, support for additional efforts from the global community is most likely. Financial estimates are made on basis of present strategy. But if strategy is revised and enhanced financing is required, World Bank s participation in the global eradication partnership will facilitate additional funds being made available. Access is likely to be improved by increasing the number of rounds (7-8 rounds) which will increase the probability of all children being immunized in each subsequent round. In addition use of monovalent OPV will enhance immunity. Palustan seems on track to interrupt transmission through high coverage in 2004 and Sporadic cases might occur during The program has planned mop up rounds and epidemic response to overcome coverage issues especially in high risk areas. Although the risk of reestablishment of polio virus transmission in the effected areas is low, but the GOP has already started preemptive OPV immunization targeting all children in tented villages, children attending field hospitals and through mobile team in I accessible area. Risk Rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or Low Risk) 6. Credit conditions and covenants Effectiveness Condition M M N N 0 0 OPV agreement has been executed by the Borrower and UNICEF and all conditions precedent to its effectiveness have been met. Submission of a satisfactory legal opinion on the Financing Agreement (FA). D. APPRAISAL SUMMARY 1. Economic and financial analyses Economic Using standard public finance criteria, public involvement in and financing of SIAs to eradicate polio is well justified. Control of an infectious disease is an example of a public good for health with high externalities. Between 1988 and 2005, external sources will have provided US$4 billion to polio-endemic countries for eradication efforts, including OPV procurement, surveillance and operational costs for SIAs. External resources are also used for the certification and containment processes, advocacy and resource mobilization, documentation, meetings and administration. Resources are being channeled to polioendemic countries by bilateral funding through WHO and UNICEF and direct bilateral funding. Efforts are also being financed by national resources to pay for petrol, social mobilization, training and other activities and non-monetary commitments such as the time spent by volunteers. Between 1988 and 2005, 11

16 it has been estimated that polio-endemic countries will have contributed more than US$2.35 billion in volunteer time alone for PEI. These calculations do not account for the opportunity cost of the public sector staff and volunteer time. In order to achieve global eradication, the focus in is to ensure the interruption of polio transmission. As of July 2005, a total of US$200 million was still needed globally to implement the planned activities to reach that objective. Nigeria, India and Pakistan, which accounted for 78% of polio cases worldwide in 2004, account for 55% of the financial requirements for that period. Normal cost-benefit analysis does not easily apply to disease eradication, particularly at the level of any given country. While the costs of eradicating the last cases of polio are very high in relation to the very low burden of the disease, the benefits of successful eradication are infinite. To illustrate that point, for instance, a recent WHO report3 estimates the foregone treatment and rehabilitation costs after polio has been eradicated globally could exceed US$1 billion annually. Financial Polio Eradication is financially supported by bilateral donors and private donor agencies mainly through WHO and UNICEF. Pakistan provides about 50% of the financing, mainly through financing human resources and associated recurrent costs. The project will only support the procurement of the OPV. The quantity of vaccine procured will depend on the national strategy, regularly updated in light of surveillance data. As it is evident from the recent outbreaks in African and Asian countries through importation, there remains a risk that transmission may not be fully interrupted and eradication will be delayed. This would require financing for additional efforts, for which there is strong commitment within the global community. Financial sustainability is not an issue since SIAs will end with achievement o f eradication. The improved surveillance system set up for poliomyelitis is already being expanded to cover other diseases and is likely to be integrated in the health system. 2. Technical Polio eradication is possible because: (a) there is no animal reservoir for the disease; (b) the virus has a limited persistence in the environment; (c) there is no long-term carrier state; (d) permanent immunity is provided following infection; and (e) a safe and highly effective vaccine is available. The global target of polio eradication by 2000 has been delayed due to persistence o f WPV transmission. Pakistan i s most likely to interrupt transmission and meet the Global Strategic Plan s revised target of 2005, but sporadic cases still might occur in The significant risks to eradication include: (a) low coverage of the routine immunization program; (b) delay in interrupting transmission and eradication; and (c) uncertainty about continued funding. Pakistan will need to develop a strategy for polio immunization post-sias after achieving polio free status. TAG will provide input into strategy development in line with global recommendations from the Global Advisory Committee for Polio Eradication. The project team during implementation will ensure that the strategy is designed in light o f global recommendations and measures including financing are available for its implementation. Earthquake in AJK and NWFP - Implications for PEI: NWFP province (five districts) and AJK (three districts) suffered devastation due to a massive earthquake on October 8 with loss of thousands of lives and destruction of roads, communication, health and education infrastructure. A massive relief Global polio Eradication Initiative, Financial resource requirements,

17 effort is underway. There has been complete disruption of health care provision as the health system has been paralyzed, especially in AJK. The areas affected are not endemic for polio with no case reported in AJK since 2000 and last case from NWFP in 2004 was an imported case. In addition, SIA coverage and routine immunization especially in AJK have been high. The technical partners and the GOP concur that that the risk of polio transmission in the effected areas is low and unlikely to change. There is likely to be some negative impact on coverage of SIAs in districts of NWFP and in AX and disruption of surveillance system. However, to ensure that the area remains low risk and avert a polio epidemic, preemptive OPV immunization has already been initiated targeting all children in tented villages, children attending field hospitals and through mobile team in accessible area. In addition, AFP surveillance has been included as part of sentinel surveillance started in effected areas. NIDs planned for November 2005 will proceed as planned in NWFP and Rawalkot District of AJK but will only target tented camps, field hospitals and accessible areas in Muzaffarabad and Bagh. 3. Institutional The existing institutional arrangements for PEI have been effective as evident by an average SIA coverage of 97% of the targeted population and in reaching certification-level for AFP surveillance (one case of AFP per 100,000 population under 15) and approaching the international standard for collection of adequate diagnostic specimens from at least 80% of AFP cases within 14 days of onset of paralysis. The project will continue to use existing arrangements during SIAs at all levels between the public sector, international agencies, NGOs and community groups. The program holds consultations with partner NGOs and community groups which actively participate in social mobilization activities. Executing agencies: The project will be implemented through the existing federal, provincial, and district structures already managing the EPI program. The program will implement the PEI with technical support from WHO and UNICEF. No new structures will be created. The provincial and District Departments of Health through their EPI units will continue to implement SIAs. The Bank will work closely with the partners and will keep informed of the relevant institutional issues. 4. Fiduciary Procurement issues: OPV will be procured through a sole source agreement between UNICEF and GOP. The Bank has accepted that UNICEF will use its own procedures for the procurement and delivery of the OPV as in the original project. UNICEF and GOP have agreed the text of a draft agreement for procurement o f OPV. There are no significant procurement issues. Financial management issues: The project does not require direct involvement of the Borrower in the disbursement of the IDA credit. As the IDA funds will be transferred directly to UNICEF, there are no significant financial management issues. Assurance that the Bank s fiduciary requirements are met, especially that funds are used for the purpose intended with due regard to economy and efficiency, will be obtained through the measures discussed in Annex 6 and addressed in the OPV agreement to be entered into by the Borrower and UNICEF. Upon receipt of a direct payment request from the GOP, IDA funds will be transferred to UNICEF for the procurement of OPV. UNICEF s regular financial management system and auditing procedures will be used for this project. The Borrower is not required to undertake annual audits; the Association retains the option to request for an audit. Beside technical support, WHO manages financial support fiom donor agencies. These funds provide a large part of the financing for operational aspects o f the SIA. It is expected that WHO will have adequate funds to facilitate project implementation. This aspect will be assessed during appraisal. 13

18 5. Social The proposed project aims to benefit under-five children including vulnerable and neglected groups by providing polio immunization. Poor families, particularly their children, would be the primary beneficiaries of the project. Quantitative studies have found low utilization rates at public health facilities catering to the poor. Qualitative assessments of other health projects indicate that lack of physical access to services is a problem in some areas. While wealthier groups can purchase health services from the private sector, the poor are unable to afford these services and continue to rely on traditional practitioners. The project would address these issues in respect of polio eradication by developing specific strategies and by using surveillance data to reach the "hard-to-reach" populations. PEI has established a framework for on-going participation largely through the IACC. This mechanism includes representatives from: (a) key government ministrieddepartments; (b) multilateral agencies (UNICEF and WHO); (c) bilateral agencies including the Government of Japan, the Netherlands, EU, DFID, USAID, CDC, WB etc.; (d) NGOs; and (e) community mobilization and media experts. The IACC meets regularly to review needs and strategies of the national polio eradication program, and assess the performance of supplementary immunization activities. PEI has achieved success for the last few years by placing high priority on mobilizing participation of the beneficiaries, communities and other stakeholders. Local politicians and religious leaders are regularly sensitized and contribute by mobilizing local communities. Non acceptance of vaccination is very low. The EPI holds consultations with partner NGOs and community groups which actively participate in social mobilization activities for SIA. NGOs groups are represented in the IACC mechanism described earlier, and participate with government representatives in workshops for the micro-planning of polio activities at the district and below level. The current institutional arrangements for PEI have been effective achieving results on the grounds. The project will reinforce arrangements to promote coordination between the government departments, international agencies, NGOs and community groups at the national, provincial and local levels. 6. Environment The project has no significant negative environmental impact which would need to be addressed. The project involves the supply and use of OPV in small plastic vials which will need to be disposed off. The disposal of the vials will be done in accordance with the WHO guidelines for polio vaccination campaigns as being already practiced. No sharps such as needles or vial cutters are involved in the oral vaccination methods. Therefore, the program has no infected medical waste. It is deemed not necessary that a new environmental assessment be camed out. 7. Safeguard policies Safeguard Policies Triggered by the Project Yes No Environmental Assessment (OP/BP/GP 4.0 1) [I [XI Natural Habitats (OP/BP 4.04) [I [XI Pest Management (OP 4.09) [I [XI Cultural Property (OPN 11.03, being revised as OP 4.11) [I [XI Involuntary Resettlement (OP/BP 4.12) [I [XI Indigenous Peoples (OD 4.20, being revised as OP 4.10) [I [XI Forests (OPIBP 4.36) 111 [XI Safety of Dams (OP/BP 4.37) [I [XI Projects in Disputed Areas (OP/BP/GP 7.60)* [XI [I Projects on International Waterways (OP/BP/GP 7.50) [I [XI * By supporting theproposedproject, the Bank does not intend to prejudice thejinal determination of theparties' claims on the disputed areas 14

19 The proposed project credit as the original project will support SIAs in Azad Jammu and Kashmir, a disputed area between India and Pakistan since By financing the supplemental credit, IDA does not intend to make any conclusion on the legal or any other status of the disputed territory or to prejudice the final determination of the parties claim. 8. Policy Exceptions and Readiness Readiness for Implementation SPPEP is a follow-on project and all aspects of the program are part of an on-going operation and are ready for implementation. 1,a) The engineering design documents for the first year s activities are complete and ready for start of project implementation 1.b) Not applicable 2. The draft procurement document for OPV procurement has been prepared and will be ready at the start of project implementation. 3. The Project Implementation Plan has been made available to the Bank and is realistic and of satisfactory quality. Compliance with Bank Policies The project complies with all applicable Bank policies The following exceptions to Bank policies are recommended for approval. The project complies with all other applicable Bank policies. 15

20 Annex 1 : Polio Eradication Initiative Program Background The proposed project will support PEI, which seeks to eradicate polio and ensure Pakistan remains polio free till certification, with an IDA support of US$46.7 million. This will make a significant contribution to the eradication o f polio from the world. The PEI is implemented at the national level by EPI under the overall guidance o f the Federal Minister of Health. At the provincial and district level, well-established structures in the Provincial and District Departments of Health implement Supplemental Immunization Activities (SIAs) as part of the routine immunization program. PEI has three components: (a) the procurement, supply and use of OPV; (b) supporting supplemental operations; and (c) surveillance. IDA will support only the first component as in the original project. SIAs, in which the OPV will be used, require supporting activities such as logistics, social mobilization, training, surveillance, monitoring and evaluation. Besides the three levels of government, WHO and UNICEF support and finance these activities through bilateral donor and private agency contributions. The following indicators will measure the project's success and achievement of the first two indicators will be a trigger for the IDA buy-down: (i) Arrival of OPV at the EPI cold rooms in Islamabad at least five weeks before each of the SIAs, to be measured through the EPI's vaccine arrival reports; and (ii) SIA coverage of 85% achieved in the remaining endemic provinces during 2005, to be measured through a cluster sampling survey according to a WHO-approved methodology. Distribution arrangements and storage of vaccines in the EPI cold rooms at the national, provincial, and district levels are fully functional and no new arrangements are required for the proposed project. The system work well for routine program and have worked adequately for the original project. During the planning and implementation of SIAs, transport of these vaccines through vaccine carriers to the children is coordinated with the vaccination teams. Social mobilization and IEC activities with parents and communities are organized at the local, district, provincial and national levels. Media campaigns in visual, audio, and print form are carried out to make the public aware of the program benefits and to motivate them to get their children immunized. Mobilization of community leaders, health staff, and volunteers for planning and implementation of SIAs is a key activity. In Pakistan, about 750,000 personnel are mobilized for each campaign of whom 100,000 are public sector employees, including 10,000 vaccinators. In addition, 75,000 plus Lady Health Workers, the community based workers provide additional support during SIAs. The remaining, about 650,000 include other government staff, NGO staff and community members. Training and advocacy with these groups in micro-planning, supervision, administration of OPV, record keeping, and cold chain maintenance occurs prior to each round of immunization. By Component: Component 1 - procurement, supply and use of OPV: Through the proposed project IDA will only support component one i.e. support the timely provision of supplies o f OPV needed for SIAs to immunize all children below five years. It will also monitor the appropriate use of OPV. IDA will finance the procurement of about 75% o f the OPV needed for the SIAs to be carried out during UNICEF will supply the vaccine under an agreement between GOP and UNICEF as in the original project. The Bank has accepted use of UNICEF procurement procedures for the OPV procurement. The component's success will be measured by the following indicators: 0 Timeliness o f GOP's request for funds for procurement of the OPV: GOP will send, within three weeks of project effectiveness, a withdrawal application to the Bank requesting payment to UNICEF. 16

21 0 Timeliness of disbursement o f WE3 funds to UNICEF for OPV procurement: Bank will transfer funds to UNICEF within 30 business days of the date on which the payment request is received by the Bank. 0 Timeliness of procurement and supply by UNICEF; the OPV will arrive at the EPI cold rooms in Islamabad at least five weeks before each round of SIAs. Funds will not be handled by GOP and will be transferred directly to UNICEF. Accordingly only UNICEF will provide financial management and accounting for the funds and provide quarterly reports to the government with copies to IDA. IDA will use these reports to monitor the outstanding balance and the funds received and spent by UNICEF. SIAs coverage is monitored by an analysis o f the tally sheets recording the number of children immunized against the number in the target group. Output monitoring is undertaken at the provincial level through independent monitors, and impact monitoring at the national level through the AFP surveillance system. The Technical Advisory Group meets periodically and assesses progress. Its reports, along with the periodic assessments of the SIAs quality undertaken by WHO and other technical partners, are also used for monitoring and evaluation purposes. WHO will evaluate this component within three months of the project closing, focusing on the timeliness of OPV procurement and supply, and vaccination coverage. WHO will submit its report to GOP with copies to IDA. Component Two - supplemental operations: The second component of PEI i.e. supplemental operations consists of: (a) maintenance of cold chain; (b) social mobilization; and (c) training. All implementation arrangements are in place for these operations. The National, provincial and district units are supported by WHO and UNICEF through international and national staff to support and oversee the activities in the field. The system functions well, and during 2004 and 2005 an average coverage of about 97% of the targeted population has been achieved. This coomponent will be financed by WHO and UNICEF. Third component - surveillance: The surveillance component includes laboratory and epidemiological surveillance. The surveillance system is fully functional and data is regularly reviewed by TAG in collaboration with Government counterparts and technical partners. Each district regularly reports above the global standard on key indicators including timely collection of stool samples, 60 day follow up etc. The data fi-om surveillance and assessments of the quality of campaign comprise the monitoring and evaluation system for PEI. The component is financed by WHO. 17

22 Annex 2: Major Related Projects Financed by the Bank and/or other Agencies Sector Issue Bank-financed Project Latest Supervision (ISR) Ratings (Bank-finance projects only [mplementation Development Progress (IF) Objective (DO) Health Sector Reform SAPP-I SAPP-I1 S S S us Public Health, Family HealtWCommuni cable Disease Control Other Development Partners DFID USAID WHO ADB UNICEF UNAJDS IPDO Ratings: HI Northern Health, completed Population Welfare, completed Family Health I, completed Family Health 11, completed HIV/AIDS Prevention Project (ongoing) Partnership for Polio Eradication Project (ongoing) National Health Facility (ongoing) Support to NGOs for consumer protection and reproductive health Maternal and Neonatal Health (proposed) PAIMAN - Maternal health Technical assistance in multiple areas of health including polio and immunization Women s Health Project Reproductive Health Project Devolved Social Services Project in Sindh and Punjab Maternal and Child Health focusing on immunization, polio and maternal services Technical support to Enhanced HIV/AIDS program NGOs (Highly Satisfactory), S (Satisfactory), (Unsatisfactory), : S S S S S HS LJ (Highly Unsatis 1ctory) 18

23 ~ Annex 3: Results Framework and Monitoring Results Framework PDO 4ssist Pakistan s effort to xadicate polio through supply of ;he oral polio vaccine (OPV) ieeded during , for the :ountry s supplementary immunization activities. Project Outcome Indicators Coverage of SIAs of 85% achieved in the provinces in 2006 and 2007 Number of confirmed polio cases reported Use of Project Outcome Information Satisfactory performance to trigger IDA buy-down To assess program outcome and revise program strategy Intermediate Outcomes Component One: Timely provision of OPV to Government of Pakistan Intermediate Outcome Indicators Component One: Procurement o f UNICEF certified OPV and delivery to Government o f Pakistan s Expanded Program on Immunization for use in the supplemental immunization activities: five weeks before the scheduled supplemental immunization activities Use of Intermediate Outcome Monitoring Component One: Results to be used for: (a) planning of SIAs; (b) ensuring timely distribution of OPV supplies to various regions of the country; (c) to monitor the outstanding balance and the funds received and spent by UNICEF; and (d) release of payment request for next six months to UNICEF 19

24 Arrangements for Results Monitoring Indicator Coverage of SIAs of 85% achieved in the provinces in 2006and2007 Confirmed polio cases Procurement and delivery of UNICEF certified OPV to EPI for use in SIAs five weeks before the scheduled SIAs Source of data District Monitoring Reports Cluster sampling survey AFP surveillance Vaccine Arrival Reports Schedule for I Responsibility for ' Baseline date collection End of each roundofnids End 2007 Ongoing (reported monthly) Quarterly I data collection (YO) EPI 97 EPI EPI 53 in 2004 EPI Five weeks Target (YO) 85 0 Five weeks prior to the scheduled SIAs 20

25 Annex 4: Project Costs Project Cost by Component Local Foreign US$ million US$ million Oral Polio Vaccine Procurement Supplemental Operations Costs Surveillance 3.00 Total Baseline Cost Physical Contingency Price Contingency Total Project Cost Total Financing Required Total US$ million Project Cost by category Local US$ million Goods Works Services Training 3.00 Total Project Cost Total Financing Required Foreign Total US$ million US$ million OO Note: Total Project Cost including contingencies Identifiable taxes and duties are 0 (USSm) and the total project cost, net of taxes, is US$ million. Therefore the project cost sharing ratio is 47% of total project cost net of taxes. 21

26 Annex 5: Financial Summary Total Financing Required Project Costs Investment Costs Recurrent Costs Total Project Costs Total Financing: Financing IBRD/IDA Government Co-financiers (Japan UNICEF, and WHO User fees Beneficiaries Total project financing Year Implementation Period Year2 I Year3 Year4 Year5 I _t

27 ANNEX 6: FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS Summary of the Financial Management Assessment Not applicable Overview of Implementation Arrangement FINANCIAL MANAGEMENT IDA has entered into a partnership with Bill & Melinda Gates Foundation and UN Foundation to support the proposed project. The project will support a single component, i.e., the provision of OPV. The proposed project as the original project is using an innovative financing mechanism: although IDA financial resources will be provided to GOP, third party funding from the above partners will "buy down" the service charge, the commitment fee and repayments by financing the net present value (NPV) of the IDA credit. This would, in effect, mean grant funding for the program. The IDA credit will finance a single agreement for the supply of OPV between the GOP and UNICEF for the supply of OPV with the arrangements described below which are similar to original project: 0 OPV will be procured by UNICEF for GOP following its own procurement procedures. The draft agreement between GOP and UNICEF will be subject to the Bank's prior review and no objection. 0 GOP will send a blanket withdrawal application to the Bank, authorizing the Bank to make direct payments to UNICEF of amounts requested by UNICEF under this Agreement, through an initial, and subsequently semiannual, payment requests; 0 UNICEF will maintain a separate ledger account, through which all of UNICEF's receipts and expenditures for the purposes o f providing the services contemplated under this Agreement will be recorded; and 0 UNICEF will report semiannually to GOP, with copy to the Bank, on the use of funds received including: (a) balance at the beginning and end of the reporting period; (b) purchase orders placed by UNICEF during the reporting period; (c) actual quantities of OPV delivered and number of children immunized during the reporting period; and (d) expenditures from the OPV Procurement Account during the reporting period. The above arrangements are based on the proposed agreement for supply of OPV to be entered into between UNICEF and GOP. Financial Management Arrangements The proposed project as the original project does not require direct involvement of the Borrower in the management and accounting o f funds, which will be the responsibility of UNICEF. The credit proceeds will be disbursed by the Bank directly to UNICEF as stipulated in the procurement agreement to be signed between the GOP and UNICEF. The needed quantities o f vaccines will be agreed in advance and the price is relatively stable. The Bank will accept semiannual reports from UNICEF as meeting the financial information requirements for Financial Monitoring Reports. EPI Cell would provide to IDA a) OPV arrival reports; 23

28 and b) a quarterly financial management report (Sources & Uses o f Funds) including OPV received and its utilization. The assurance that the Bank's fiduciary requirements are met, and that funds are used for the purpose intended with due regard to economy and efficiency, will be achieved through the following measures: a a a a UNICEF's procedures for the procurement of OPV will be agreed upon with the Bank; All expenses will be on items agreed beforehand (vaccine cost including freight, and UNICEF handling charges); The semiannual financial report from UNICEF to GOP, with a copy to the Bank, will allow close monitoring of the outstanding balance and funds received and spent by UNICEF. The Bank will be in a position to verify expenditures before any subsequent disbursements; and GOP will be able to confirm receipt of the quantities of goods indicated in the above reports, GOP will also submit to IDA a quarterly evidence of utilization (issues of OPV to the implementing agencies) of the quantities received. UNICEF will submit to GOP, with a copy to IDA, a semiannual summary of Sources and Uses of funds Statement showing utilization by Disbursement Category and Activity. Audit Arrangements As the funds will be managed by UNICEF, the borrower is not required to submit audited annual financial statements to the Bank. However, the Association retains the option to request for an audit. Disbursement Arrangements Allocation of credit proceeds (Table A) Table A: Allocation of Credit Proceeds Expenditure Polio Vaccine Amount in US$ million Financing Percentage

29 Annex 7: Procurement Arrangements A. General Procurement for the proposed project would be carried out in accordance with the World Bank's "Guidelines: Procurement under IBRD Loans and IDA Credits" dated May 2004 and the provisions stipulated in the Legal Agreement. Procurement of Goods The goods will comprise OPV only, which shall be procured from UNICEF in accordance with the provisions of Paragraph 3.9 of the Procurement Guidelines. UNICEF has been agreed by the global polio eradication partners to be the sole procurement agent for OPV, given the tight supply and demand o f OPV during the final stages of the global polio eradication effort. The Credit will finance OPV for US$46.7 million under a single agreement with UNICEF for the supply of OPV. The draft agreement has been drafted. IDA will review and clear the draft agreement before UNICEF and GOP sign the agreement. B. Assessment of the agency's capacity to implement procurement As per the Director OPCPR's Memorandum dated October 17, 2002, a formal assessment of the procurement capacity o f the Federal EPI Cell (Project Implementing Agency) is not necessary according to Procurement Services Policy Group guidelines dated August 11, This is because under the proposed project, UNICEF, and not the implementing agency, will handle procurement. The Federal EPI Cell will be responsible for project execution at the national level. While EPI is a strong program, it has limited capacity for procurement, especially for large scale international procurement. As in the original project, the borrower will enter into an agreement with UNICEF for the supply of OPV. UNICEF will ensure timely supply of OPV to EPI. EPI will be responsible for the in-country storage, distribution and administration of the vaccines. UNICEF will report on a semiannual basis to the Government of Pakistan with a copy to IDA on: (a) purchase orders placed by UNICEF; (b) actual quantities o f OPV delivered to NIH; and (c) expenditure from the OPV Procurement Account during the reporting period. Payments to UNICEF will include its standard handling charges for vaccine procurement, an amount not exceeding 6% of the vaccine cost, and other non-freight costs, if any. The overall project risk for procurement is Average. C. Procurement Plan The quantity of vaccine required is determined by the needs identified by the Technical Advisory Group (TAG). These needs are regularly adjusted based on surveillance findings. If surveillance shows good results, and not all project funds are needed for procurement of OPV for during , through the first quarter 2007, IDA funds will be reprogrammed for the procurement of OPV needed for If TAG determines that are no longer needed, the available funds will be used for procurement of polio vaccines for the routine immunization program. A TAG recommendation to this effect will be needed. 25

30 D. Frequency of Procurement Supervision In addition to the prior review supervision to be carried out from Bank office, it is recommended that supervision mission take place every 12 months. E. Details of the Procurement Arrangements The credit will finance OPV for US$46.7 million under a single agreement of total US$61.4 million between GOP and UNICEF for the supply of OPV in accordance with Paragraph 3.9 o f the Procurement Guidelines. This agreement will be subject to prior review by the Bank before signing Table A: Project Costs by Procurement Arrangements (US$ million equivalent) 26

31 ~ Annex 8: Project Preparation and Supervision Planned Actual PCN review by Regional Panel September 5,2005 September 13,2005 Appraisal October 24,2005 October 18-31,2005 Negotiations November 7,2005 Board approval December 14,2005 Planned date of effectiveness Planned closing date January 15,2006 June 30,2008 Preparation Name Inaam Haq Amie Batson Akhtar Hamid Sheila Braka-Musiime Asif Ali Hassan Saqib Agnus Couffinhal Laura Kiang Zia A1 Jalaly Anwar Ali Bhatti Amna W Mir Specialty Sr. Health Specialist Sr. Health Specialist Lead Counsel Counsel Sr. Procurement Specialist Sr. Financial Management Specialist Health Economist Operations Officer Social Development Specialist Disbursement Officer Program Assistant UNIT SASHD HDNHE LEGMS LEGMS SARPS SARFM SASHD SASHD SACPK SASHD SASHD Bank funds expended to date on project preparation: US$ 1. Bank resources: 5, Trust funds: 3. Total: 5, Estimated Approval and Supervision costs: 1. Remaining costs to approval: 40,00 2. Estimated annual supervision cost: 30,00 Supervision Plan The proposed project will be supervised as follows: Through regular participation in the Inter-Agency Coordination Committee (IACC) meetings: IACC frequently reviews performance of SIAs and provides advice to the government. It reviews the monitoring reports for every NID and every SNID, as also the assessments of SLA by the 27

32 0 0 Technical Advisory Group. Bank is a member of the IACC and will participate in all its meetings and reviews. Through regular on-going supervisory visits and interaction with the implementers by the Bank s resident Senior Health Specialist. Through bi-annual joint Supervision Missions jointly with UNICEF and WHO: The Task Team Leader will lead bi-annual supervision mission with technical partners. Supervision Missions will be undertaken during or soon after the National Immunization Days (NIDS). The program of missions for the duration of the project is as follows: Mission Schedule Participating Organizations Partner Responsibilities Product March 2006 Bank, UNICEF & WHO Bank: Vaccine supply UNICEF: Social mobilization and Cold Chain WHO: Monitoring and Surveillance Joint Aide- Memoire October 2006 Bank, UNICEF & WHO Bank: Vaccine supply UNICEF: Social mobilization and Cold Chain WHO: Monitoring and Surveillance Joint Aide- Memoire March 2007 Bank, UNICEF & WHO Bank Vaccine supply UNICEF: Social mobilization and Cold Chain WHO: Monitoring and Surveillance Memoire November 2007 Bank, only ICR mission Memoire 28

33 A. Project Implementation Plan Annex 9: Documents in the Project File Polio Eradication 2"d Project through IDA Buy Down: Project Implementation Plan, Expanded Program on Immunization (EPI), Ministry of Health (MoH), Government of Palustan. B. Bank Documents Project Appraisal Document: Partnership for Polio Eradication Project, SASHD, The World Bank 2003 Supplemental Credit Document for the Partnership for Polio Eradication SASHD, The World Bank 2004 Implementation Status and Results: Pakistan Partnership for Polio Eradication Project (PO90 18 l), SASHD, The World Bank C. Global Polio Eradication Initiative Documents Global Polio Eradication Initiative: Strategic Plan , WHO, Global Polio Eradication Initiative. Global Polio Eradication Initiative 2004 Annual Report, WHO Geneva 2004 Global Polio Eradication Initiative Financial Resource Requirements , WHO and UNICEF July 2005 D. Pakistan Specific Documents Letter of the Ministry of Economic Affairs and Statistics: World Bank Assistance for Polio Eradication Project through IDA Buy Down, July 5,2005 Funding Proposal for the Government of Japan, Polio Eradication Initiative in Palustan , Ministry of Health, Government of Pakistan and UNICEF (Pakistan). Technical Advisory Group: Report of Informal Technical Consultation on Polio Eradication in Pakistan May Conclusions and Recommendations of the Adhoc Advisory Committee on Poliomyelitis Eradication, September 2004 Campaign Analysis for Provinces May-September 2004/5 (In collaboration with Government of Pakistan, WHO, and UNICEF). National Surveillance Bulletins: January-December 2004 and January-September 2005, National Surveillance Cell Federal EPI Pakistan (A monthly Bulletin of the Pakistan Polio Eradication Initiative). Draft Agreement for Procurement Services between The Government of Pakistan by and through the Ministry of Health and UNICEF, The United Nations Children's Fund for the Procurement of Oral Polio Vaccine as part of the Government's Campaign to eradicate Poliomyelitis. 29

34 E. Documents related IDA Buy-down Arrangements Agreement between Bill & Melinda Gates Foundation and the World Bank, June 6,2002. Polio Eradication Program IDA Buy down Mechanism, World Bank, Gates, Rotary International and UNF Polio Collaboration, Technical Briefing to World Bank Board by Human Development Network and Resource Mobilization Department, December 17,2002. Exchange of letters between World Bank and WHO on WHO'S role in Project evaluation, dated March Amendment #2 to the Agreement between the United Nations Foundation and the International Bank of Reconstruction and Development and the International Development Association to Support the Global program to Eradicate Poliomyelitis (TF50990), August 19,

35 Annex 10: IDA Buy-Down Mechanism Introduction This annex describes the arrangements for the implementation of the IDA buy-down mechanism for polio eradication projects, which aims to convert the terms of a normal IDA development credit to grant terms through provision of additional external donor resources under clearly defined performance criteria. In the context of the Pakistan second polio eradication project, resources for the buy-down will become available as a result of an agreement between IDA, the Bill & Melinda Gates Foundation (BMGF) and UN Foundation (UNF). The buy-down mechanism complies with IDA'S existing financial policies. The Partnership The World Bank's Health, Nutrition & Population Sector Anchor established a partnership with BMGF, UNF and several technical partners to assist polio eradication by providing countries with IDA financial resources but without IDA repayment obligations. The BMGF and UNF agreed to provide funds to IDAadministered trust fund (the Polio Eradication Trust Funds or PETFs) that will buy down the debt incurred by recipient countries for successful implementation of polio eradication projects. In addition to making commitment and service charge payments to IDA on behalf of the recipients during project implementation, the PETFs will, upon successful project implementation, buy down the net present value of the principal amount of the development credit. The Mechanism IDA is extending a development credit to Pakistan. The Financing Agreement will include two special provisions: 0 0 The PETFs will pay the applicable service charges and commitment charges, if any, and The PETFs will buy down the principal amount of the credit upon successful completion of project (as determined by a World Health Organization (WHO) performance audit). The buy-down will be funded by contributions from the BMGF and UNF. The buy-down mechanism operates in three stages-credit signing, project implementation, and project completion. These stages are described below. the At Credit Signing IDA (FRM) determines the discount rate (the prevailing SDR-basket Commercial Interest Reference Rates (CIRR) on the date of credit signing) and the foreign exchange rate (SDR:USD) that will be used to calculate the estimated net present value at final buy-down. The indicated amount is set aside in a special earmarked child-account under the PETFs. The set-aside amount equals IDA commitment and service charge payments over the projected implementation period and the estimated amount needed to buy down the principal of the credit at the end of the implementation period. IDA hedges the foreign exchange risk under its existing currency rebalancing mechanism. During Project Implementation Under the project, IDA, acting on a request from the recipient country, disburses funds to UNICEF, the agency responsible for procuring the polio vaccine. UNICEF in turn supplies the vaccines to the recipient government. Resources in the earmarked child accounts of the PETFs pay the commitment and service charges on the disbursed amounts during the implementation of the project. 31