Multitranche Financing Facility Azerbaijan: Water Supply and Sanitation Investment Program Project 2

Transcription

1 Project Administration Manual Project Number: P Loan No AZE November 2017 Multitranche Financing Facility Azerbaijan: Water Supply and Sanitation Investment Program Project 2

2 2 CONTENTS ABBREVIATIONS 4 I. PROJECT DESCRIPTION 5 A. Overview 5 B. Project 2 5 II. IMPLEMENTATION PLANS 7 A. Project Readiness Activities 7 B. Overall Project Implementation Plan 8 III. PROJECT MANAGEMENT ARRANGEMENT 9 A. Project Implementation Organizations Roles and Responsibilities 9 B. Key Persons Involved in Implementation 10 C. Investment Program Organization Structure 11 D. Allocation and Withdrawal of Tranche 2 Loan Proceeds 12 IV. COSTS AND FINANCING 13 A. Detailed Cost Estimates by Expenditure Category 13 B. Detailed Cost Estimates by Financier 14 C. Detailed Cost Estimates by Outputs/Components 15 D. Project 2 Detailed Cost Estimates by Year 16 E. Contract and Disbursement S-curve 17 F. Fund Flow Diagram 18 V. FINANCIAL MANAGEMENT 19 A. Financial Management Assessment 19 B. Disbursement 19 C. Accounting 20 D. Auditing 20 VI. PROCUREMENT AND CONSULTING SERVICES 21 A. Advance Contracting and Retroactive Financing 21 B. Procurement of Goods, Works and Consulting Services 21 C. Procurement Plan for Project 2 22 BASIC DATA 22 VII. SAFEGUARDS 25 A. Social Safeguards 25 B. Environmental Safeguards 25 VIII. GENDER AND SOCIAL DIMENSIONS 29 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING, AND COMMUNICATION 32 A. Monitoring 32 B. Evaluation 32 C. Reporting 32 X. ANTICORRUPTION POLICY 33 XI. ACCOUNTABILITY MECHANISM 34 XII. RECORD OF PAM CHANGES 35

3 3 Project Administration Manual Purpose and Process The project administration manual (PAM) describes the essential administrative and management requirements to implement the Water Supply and Sanitation Investment Program (Investment Program) on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the FAM. Azersu Joint Stock Company (AZERSU) and the State Amelioration and Water Management Committee (SAWMC), the investment program executing agencies, are wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB s policies and procedures. ADB staff is responsible to support implementation including compliance by AZERSU and SAWMC of their obligations and responsibilities for project implementation in accordance with ADB s policies and procedures. In the event of any discrepancy or contradiction between the PAM and the Loan and/or Project Agreement, the provisions of the Loan and/or Project Agreement shall prevail. After ADB President s approval of the loan, changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

4 4 Abbreviations ADB AZERSU EA EIRR EOCC FFA FIRR GDP IEE JSC LIBOR MFF NGO PFR PMF IPMO PPMS SAWMC TWUA WACC WSS Asian Development Bank Azersu Joint Stock Company executing agency economic internal rate of return economic opportunity cost of capital framework financing agreement financial internal rate of return gross domestic product initial environmental examination joint stock company London interbank offered rate multitranche financing facility nongovernment organization periodic financing request program management facility investment program management office project performance management system State Amelioration and Water Management Committee town water users association weighted average cost of capital water supply and sanitation

5 5 I. PROJECT DESCRIPTION A. Overview 1. The Investment Program will improve public health and environment in areas having about 500,000 residents total. The outcome of the Investment Program will be improved coverage, and continuity and quality of water supplies and wastewater disposal. Outputs include (i) physical expansion of the system; (ii) greater institutional efficiencies and management; and (iii) better planning, monitoring, evaluation, reporting, and treatment of priority themes. 1. Component A: Water Supply and Sanitation Infrastructure Development 2. Component A will finance WSS infrastructure in Agdash, Agdjabedi, Beylagan, Goychay, Nakhchivan. This component will increase water supply coverage and the number of metered connections to piped networks; reduce system leaks to ensure 24-hour supply of pressurized, safe drinking water; and improve the disposal and treatment of wastewater. 2. Component B: Institutional Effectiveness 3. Component B will be implemented in Agdash, Agdjabedi, Beylagan, Nakchivan. This component will finance nonphysical instruments targeting (i) institutional improvements for water supply and sanitation (WSS) service delivery; (ii) capacity development for better system planning, operation, and maintenance; (iii) enhanced cost recovery through metering, billing, and collection tariffs; (iv) increased efficiency for timely processing of effective WSS projects; and (v) a twinning arrangement with an external WSS utility to support capacity development. 3. Component C: Program Management Facility 4. Component C will finance implementation oversight at joint stock companies (JSCs)and sukanals, and consulting services for supervising works in the remaining investment program towns. B. Project 2 5. Project 2 of the Investment Program will improve WSS services in Agdash, Beylagan, Goychay, and Nakhchivan. The outcome of project 2 is improved access to WSS infrastructure in Agdash, Beylagan, Goychay, and Nakhchivan. The outputs will include (i) infrastructure investments to rehabilitate, improve, and expand WSS system and construct sewage treatment facilities in Agdash, Beylagan, Goychay, and Nakhchivan, and benefit approximately 201,000 persons by the end of the project period; (ii) implementation of a public outreach program targeting school children and teachers to disseminate project benefits, and better hygiene and sanitation practices to the community; and (iii) program management investments to supervise civil works in Nakhchivan.See Annex 1 for the Design and Monitoring Framework. 6. The Azersu Joint Stock Company (AZERSU) will be the Executing Agency for all project activities except those in Nakhchivan Autonomous Republic (NAR), where the State Amelioration and Water Management Committee(SAWMC) will be the Executing Agency. The investment program management offices (IPMOs) created at AZERSU and SAWMC will be responsible for supporting project implementation. Each IPMO will comprise international and national consultants (to be engaged through firms or directly as individuals) and counterpart staff.

6 6 7. The IPMOs will submit PFRs; undertake due diligence for subsequent projects; prepare detailed design for future investments; supervise procurement and construction; oversee safeguards and gender compliance; coordinate among rayon (town) agencies; monitor and evaluate project progress; prepare progress reports; and provide expertise in project management, planning, results measurement, and training. The IPMOs will also provide handson training to staff members during each stage of the investment program implementation. 8. Officials of the Cabinet of Ministers, the Ministry of Finance, the Ministry of Economic, Azersu provides general policy and strategic oversight, resolves interagency problems and oversees overall implementation. They comprehensively decide on future PFRs and evaluate implementation of the Investment Program based on the design and monitoring framework.

7 7 II. IMPLEMENTATION PLANS A. Project Readiness Activities Project 2 Indicative Activities 1 Advance contracting actions 1 2 Management Approval 4 Tranche 2 Loan signing 5 Government legal opinion provided 6 Government budget inclusion 7 Tranche 2 Loan effectiveness Jun Jul Aug Sept Oct Nov Dec Jan Party AZERSU, SAWMC, ADB ADB MOF, AZERSU SAWMC, ADB MOF, AZERSU SAWMC MOF MOF, MOJ ADB = Asian Development Bank, AZERSU = Azersu Joint Stock Company, MFF = multitranche financing facility, MOJ = Ministry of Justice, MOF = Ministry of Finance, SAWMC = State Amelioration and Water Management Committee. 1 ADB approved advance contracting and retroactive financing for civil works and consulting services on 17 November 2011.

8 8 B. Overall Project Implementation Plan Azerbaijan: Water Supply and Sanitation Investment Program - T2 Loan Implementation Progress Activity 1 Project Preparation 2 Detailed Engineering Design and Bidding Document 3 Invitation for Bids 4 Loan Approval 5 Trance 2 Loan Effectiveness Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Component A: WSS Infrastructure Development 6 Agdash Water Supply and Sewerage Network 7 Beylagan Water Supply and Sewerage Network 8 Goychay Water Supply and Sewerage Network 9 Nakhchivan Water Supply and Sewerage Network 10 Goychay Sewage Treatment Plant 11 Nakhchivan Sewage Treatment Plant Shikhmahmud Water Supply and Sewarage Network Component B: Institutional Effectiveness 12 Twinning Program 13 Public Outreach Program Component C: Program Management Facility 14 Design and Supervision 15 Resettlement Plan Implementation 16 Safeguards Compliance Monitoring 17 Gender Action Plan Monitoring

9 9 III. PROJECT MANAGEMENT ARRANGEMENT A. Project Implementation Organizations Roles and Responsibilities Implementation Organizations Executing Agency (AZERSU and SAWMC) Program Management Facility (PMF) Investment Program Management Consultant (AZERSU) Investment Program Management Consultant (SAWMC) Management Roles and Responsibilities responsible for investment program oversight and administration hold monthly meetings with JSCs and Sukanals to review progress submit progress reports to the PSC for decision making ensure compliance with investment program covenants submit Investment Program documents, including audit reports, to ADB on time responsible for executing the investment program including its development and management provide hands-on training to JSCs and SuKanals staff during each stage of the investment program implementation responsible for tendering, and construction supervision in Agdash, Aghabedi, Balakan, Beylagan, and Goychay responsible for completion safeguards compliance documents for all subprojects responsible for assisting AZERSU in preparing the periodic financing request responsible for tendering, and construction supervision in Nakhchivan responsible for completion safeguards compliance documents for all subprojects responsible for assisting SAWMC in preparing the periodic financing request ADB Ensure technical and financial support and oversight according to the framework financing, loan and project agreement

10 10 B. Key Persons Involved in Implementation Executing Agency Azersu Joint Stock Company State Amelioration and Water Management Committee(SAWMC) Asian Development Bank Azerbaijan Resident Mission Central and West Asia Department Mission Leader Contact Information Officer's Name: Mr. Etibar Mammadov Position: Deputy Chairman Telephone: address: Officer's Name: Mr. Asgar Asgerov Position: Chairman Telephone: (+99436) address: Staff Name: Mr. Nariman Mannapbekov Position: Country Director Telephone: (ext 108) address: Staff Name: Ms. Sabina Jafarova Position: Project Officer Telephone: (ext 116) address:

11 11 C. Investment Program Organization Structure Cabinet of Ministries Azersu Joint Stock Company State Amelioration and Water Management Committee Investment Program Management Office Investment Program Management Office Investment Program Management Consultant Contractor Investment Program Management Consultant Contractor Water Supply and Sanitation Infrastructure Improvement

12 12 D. Allocation and Withdrawal of Tranche 2 Loan Proceeds Number Category Total Amount Allocated for ADB Financing ADB Financing ($) Percentage and Basis for Withdrawal from the Loan Account 1 Civil Works % of total expenditure claimed* 2 Consulting Services and Project Management % of total expenditure claimed* 3 Unallocated - Total * excluding taxes and duties. Source: AZERSU and SAWMC data.

13 13 IV. COSTS AND FINANCING A. Detailed Cost Estimates by Expenditure Category Project 2 Items $ million Total Cost % of Total Base Cost A. Investment Costs 1 Civil Works Environment and Social Mitigation Consultants Subtotal (A) B. Recurrent Costs 1 IPMO System Operation and Maintenance Subtotal (B) Total Base Cost C. Contingencies 1 Physical Price Subtotal (C) D. Financing Charges During Implementation 1 Interest During Construction Commitment Charges Subtotal (D) Total Project Cost (A+B+C+D) Source: AZERSU and SAWMC estimates as of November 2011.

14 14 B. Detailed Cost Estimates by Financier Project 2 A. Investment Costs Item $ million Total Cost Amount ADB % of Cost Category Government Amount % of Cost Category 1 Civil Works Environment and Social Mitigation Consultants Subtotal (A) B. Recurrent Costs 1 IPMO System Operation and Maintenance Subtotal (B) Total Base Cost C. Contingencies 1 Physical Price Subtotal (C) D. Financing Charges During Implementation 1 Interest During Implementation Commitment Charges Subtotal (D) Total Project Cost (A+B+C+D) Source: AZERSU and SAWMC estimates as of November 2011.

15 15 C. Detailed Cost Estimates by Outputs/Components Project 2 Item A. Investment Costs $ million Total Cost Water Amount % of Cost Category Sewerage Amount % of Cost Category 1 Civil Works Environment and Social Mitigation Consultants Subtotal (A) B. Recurrent Costs 1 IPMO System Operation and Maintenance Subtotal (B) Total Base Cost C. Contingencies 1 Physical Price Subtotal (C) D. Financing Charges During Implementation 1 Interest During Implementation Commitment Charges Subtotal (D) Total Project Cost (A+B+C+D) Source: AZERSU and SAWMC estimates as of November 2011.

16 16 D. Project 2 Detailed Cost Estimates by Year A Investment Costs $ million Cost Category Total Civil Works Environment and Social Mitigation Consultants B Subtotal A - Investment Costs Recurrent Costs 1 IPMO System O&M C Subtotal B - Recurrent Costs Total Base Cost Contingencies 1 Physical Price D Subtotal C - Contingencies Financing Charges 1 Interest During Construction Commitment Charges Subtotal D - Financing Charges Total Project Cost Source: AZERSU and SAWMC estimates as of November 2011.

17 мар.12 июн.12 сен.12 дек.12 мар.13 июн.13 сен.13 дек.13 мар.14 июн.14 сен.14 дек.14 мар.15 июн.15 сен.15 дек.15 мар.16 июн.16 сен.16 дек.16 мар.17 июн.17 сен E. Contract and Disbursement S-curve Project Contract and Disbursement S -curve 0 Contract Award Actual Disbursement Actual

18 18 F. Fund Flow Diagram Direct Payment Asian Development Bank Direct Payment Withdrawal Application/ Invoices Ministry of Finance Contractor Invoices Bills Contractor Investment Program Management Consultant UNICEF Invoices / Bills AZERSU Executing Agency SAWMC Executing Agency Invoices / Bills Investment Program Management Consultant

19 19 A. Financial Management Assessment V. FINANCIAL MANAGEMENT 9. The financial management assessment (FMA) for AZERSU and SAWMC indicated that the two executing agencies have gained sufficient experience with international lending institutions and currently meets ADB minimum financial management requirements. AZERSU and SAWMC have the financial management capability to satisfactorily record all transactions and balances, support the preparation of regular and reliable financial statements and financial monitoring reports, safeguard the assets, and subject these to auditing arrangements acceptable to ADB. B. Disbursement 10. The loan proceeds for financing Goods, Works, and consulting services shall be disbursed in accordance with ADB s Loan Disbursement Handbook (2007, as amended to date). 2 Pursuant to ADB's Safeguard Policy Statement (2009) (SPS), 3 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. The direct payment method will be used under the loan. 11. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. Withdrawal applications and other loan disbursement information are available at ADB Controller s Department s website, The statement of expenditure (SOE) procedure may be used for reimbursement of eligible expenditures incurred under the Project, in accordance with the Loan Disbursement Handbook and detailed arrangements agreed upon between the Borrower and ADB. Any individual payment to be reimbursed or liquidated under the SOE procedure shall not exceed the equivalent of $ 100, First Withdrawal Application (WA). MOF should submit to ADB sufficient evidence of the authority of the (two) persons who will sign the withdrawal applications on behalf of the Government, together with the authenticated specimen signatures of each authorized person. 14. Retroactive Financing. If approved by ADB, withdrawals from the relevant Loan Account may be made for reimbursement of eligible expenditures incurred under the relevant Project before the Effective Date of the Loan Agreement (but not earlier than 12 months before the date of the Loan Agreement) in connection with items to be retroactively financed, subject to a maximum amount equivalent to 20% of the amount of the Loan. ADB will reimburse eligible expenditures incurred for retroactive financing to the Borrower, MoF, AZERSU, or SAWMC depending on the entity incurring eligible expenditures. The entity should provide sufficient evidence satisfactory to ADB of having incurred the eligible expenditure to be eligible to claim amounts to be retroactively financed. 2 Available at: 3 Available at:

20 Condition for Withdrawals from Loan Account. Notwithstanding any other provision detailed in the Loan Agreement for the current tranche, no withdrawals shall be made from the Loan Account until the Subsidiary Loan Agreement described between the Borrower, AZERSU and SAWMC in form and substance satisfactory to ADB, has been duly authorized or ratified, and executed and delivered on behalf of, the Borrower AZERSU and SAWMC, and is legally binding upon the parties thereto in accordance with its terms. C. Accounting 16. The Government shall ensure that the executing agencies (AZERSU and SAWMC) maintain separate accounts and records for the Loan Components and in accordance with sound accounting principles. These accounts shall be audited annually in accordance with standards acceptable to ADB, and the Government shall provide ADB with certified copies of the audited accounts promptly after their preparation (and no later than nine months after the close of the Financial Year for the relevant accounts). D. Auditing 17. The Borrower will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing and/or in accordance with the Government's audit regulations by an auditor acceptable to ADB. The Borrower will also cause to audit the accounts and annual financial statements of AZERSU and SAWMC. All audited accounts will be submitted using the English language to ADB within 9 months of the end of the fiscal year by AZERSU and SAWMC. The Borrower has been made aware of ADB s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB s financing is used in accordance with ADB s policies and procedures.

21 21 VI. PROCUREMENT AND CONSULTING SERVICES A. Advance Contracting and Retroactive Financing 18. All advance contracting and retroactive financing will be undertaken in conformity with ADB s Procurement Guidelines (April 2010, as amended from time to time) and ADB s Guidelines on the Use of Consultants (April 2010, as amended from time to time). The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. The government and executing agencies have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the Investment Program. 19. Advance contracting. The government has requested ADB s approval of advance contracting for civil works construction and consulting services. Civil works construction will include development of WSS system in Agdash, Beylagan, Goychay and Nakhchivan. Consulting services will include appointment of a design and supervision consultant (DSC) for works in Nakhchivan. 20. Retroactive financing. For tranche 2, ADB will finance a maximum amount of eligible expenditures up to the equivalent of 20% of the loan for tranche 2 (approximately $60,000,000) incurred before tranche 2 loan effectiveness but not earlier than 12 months before the signing of the Loan Agreement for tranche2. Retroactive financing shall apply to civil works and consulting services under tranche 2 loan. B. Procurement of Goods, Works and Consulting Services 21. The investment program will follow ADB s Procurement Guidelines (2010, as amended time to time) and tranche 2 loan includes: (i) five international competitive bids (ICBs) for procurement of civil works for water supply and sewerage network in Agdash, Beylagan, Goychay and Nakchivan;(ii) two ICBs for procurement of civil works for sewage treatment plant in Goychay and Nakchivan; (iii) one consulting package using the quality-and cost- based selection method to recruit a DSC in Nakhchivan; (iv) one consulting services using a single source selection method to recruit UNICEF to implement the public outreach program. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is listed in Section C. Procurement of civil works will use a single-stage single-envelope method. 22. Bidders eligibility will be determined in accordance with ADB's Procurement Guidelines (2010, as amended from time to time). Accordingly, no bidder or potential bidder shall be declared ineligible for ADB financed contracts for any reason other than those set out in ADB's Procurement Guidelines. For goods or services funded by loans from ADB's Special Fund resources, payments are limited to goods produced in, and services supplied by, developed member countries that have contributed to such resources and all developing member countries.

22 22 C. Procurement Plan for Project 2 Basic Data Project Name: Water Supply and Sanitation Investment Program Project 2 Country: Azerbaijan Executing Agency: AZERSU and SAWMC Loan Amount: $300 million Loan (Grant) Number: 2842-AZE Date of First Procurement Plan: 7 December 2011 Date of this Procurement Plan: 15 November Process Thresholds, Review and 18-Month Procurement Plan a. Project Procurement Thresholds 23. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works. Method Procurement of Goods and Works Threshold International Competitive Bidding (ICB) for Works Above $10,000,000, b. ADB Prior or Post Review 24. 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 Method Prior or Post Comments Procurement of Goods and Works ICB Works Prior Recruitment of Consulting Firms Quality- and Cost-Based Selection (QCBS) Other selection methods: Least-Cost Selection (LCS) and Single Source (SSS) Recruitment of Individual Consultants Individual Consultants Prior Prior Prior

23 23 c. Goods and Works Contracts Estimated to Cost More Than $1 Million 25. 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 Procurement Method Prequalification of Bidders (y/n) Advertisement Date (quarter/year) Comments Procurement of civil works for water supply and sewerage network Procurement of civil works for water supply and sewerage network Procurement of civil works for water supply and sewerage network Procurement of civil works for water supply and sewerage network Procurement of civil works for sewage treatment plant Procurement of civil works for water supply and sewerage network (Shikhmahmud) Procurement of civil works for sewage treatment plant $34million ICB - Works N Q1/ package in Goychay $79million ICB - Works N Q1/ package in Agdash $66million ICB - Works N Q1/ package in Beylagan $92 million ICB - Works N Q4/ packages in Nakhchivan $21 million ICB - Works N Q1/ package for Goychay. $12,2 million ICB-WORKS N Q3/ package in Nakhchivan $45.25 million ICB - Works N Q1/ package in Nakhchivan Note: Amounts include value added tax. d. Consulting Services Contracts Estimated to Cost More Than $100, 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 Contract Value Recruitment Method 1 Advertisement Date (quarter/year) International or National Assignment Comments Design and Supervision $3.7 million QCBS (90:10) Q4/2011 International For design of WSS network peri-urban Nakhchivan and

24 24 General Description Consultant - SAWMC Contract Value Recruitment Method 1 Advertisement Date (quarter/year) International or National Assignment Comments supervision of WSS network and sewage treatment plant million Consultants for auditing $0.3 million LCS - National To conduct project accounts auditing - 1 Auditor for Azersu and 1 for SAWMC Note: Amounts include value added tax. e. Goods and Works Contracts Estimated to Cost Less than $1 Million and Consulting Services Contracts Less than $100, 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 Value of Contracts (cumulative) Number of Contracts Procurement / Recruitment Method 1 Comments Twinning program for SAWMC - $0.075 million 1 SSS WSS Utility to be determined by SAWMC 2. Indicative List of Packages Required Under the Project 28. The following table provides an indicative list of all procurement (goods, works and consulting services) over the life of the project. Contracts financed by the Borrower and others should also be indicated, with an appropriate notation in the comments section. General Description Estimated Value (cumulative) Estimated Number of Contracts Procurement Method Domestic Preference Applicable Comments NOT APPLICABLE

25 25 VII. SAFEGUARDS A. Social Safeguards 29. In order to ensure compliance with ADB Safeguard Policy Statement, 2009 (SPS), AZERSU and SAWMC as executing agencies will ensure social safeguards compliance under the Investment Program. AZERSU and SAWMC endorsed the Resettlement Framework (RF) that was prepared for the investment program and updated based on the SPS on 11 November 2011 by SAWMC and 15 November 2011 by AZERSU. The involuntary resettlement process as required under the RF will be followed during implementation and necessary resettlement plans will be prepared. 30. The RF will be reviewed regularly and, if necessary, updated during later tranches of the MFF, if indicated by unanticipated new types of impacts (review of applicability and relevance). The eligibility and entitlement provisions of the RF will not be lowered in subsequent revisions and updates. 31. During construction, there may be some temporary disturbance caused by subproject contractors for laying of water supply networks or for borrow pits, dump sites, storage areas and similar other activities. EAs will address such issues through appropriate conditions in the civil works contract. The civil works contracts will require the contractors to obtain approval of EAs, before they temporarily occupy any land for the purpose material storage or similar other activities. The contractors will be also required to negotiate and reach an agreement with the owners of such sites before those are used for temporary material storage/dumping purposes. Proofs of such agreements will also be submitted to Azersu for review to ensure that all appropriate provisions in the Land Acquisition and Resettlement Framework LARF (2011) are complied with. B. Environmental Safeguards 32. In order to ensure compliance with ADB Safeguard Policy Statement (2009), AZERSU and SAWMC as executing agencies will ensure the implementation of the following requirements and procedures for the investment program. AZERSU and SAWMC endorsed the Environmental Assessment and Review Framework (EARF) that was prepared for the investment program and updated based on the SPS on 11 November 2011 by SAWMC and 15 November 2011 by AZERSU. The EARF and the environmental assessment process as required under the EARF will be followed during implementation and necessary IEE and EMP will be prepared. Environmental Management Actions Implementation Activities Pre-construction commences Activity 1: Project becomes effective Conditions Required to Complete Actions Environmental recording system established in IPMO, UWSCG. Design and implement baseline monitoring for environmental conditions; unless this has been undertaken during the environmental assessment stage Activity 2: IMPO established with ESU. Environment staff appointed to ESU Activity 3: Prepare project baseline environmental matrix Budget, facilities and staff for ESU have been provided according to Loan Agreement

26 26 Environmental Management Actions Environment Specialist (ES) prepares design brief for design consultants that incorporates EMP Design requirements ES checks Design Brief meets EMP requirements ES extracts construction requirements from EMP and pass to design consultants for inclusion in bidding documents ES reviews bidding documents and confirm that environmental management provisions are sufficient ESU review environmental conditions of bid and rank contractors on this ability ES reviews SEMP and EMS ESU verifies compliance of Contractor with SEMP at site meeting ES informs IPMO that Contractor is now cleared to start work Pre-construction completed Construction commences ES, IPMO monitors contractor s SEMP compliance activities. ES audits construction activities ES evaluates monitoring program Implementation Activities Activity 4: Pre-construction: Design; Incorporation of EMP requirements Activity 5: Bidding documents prepared Activity 6: Bids evaluated and Contractor appointed Activity 7: Contractor prepares Site EMP (SEMP) and EMS if required Activity 8: Contractor inducted to site by ESU Activity 9: Contractor approved to start work Activity 1: Contractor begins work. Activity 2: Environmental monitoring undertaken and reports prepared. By Contractor: Monthly environmental report sent to IPMO Quarterly environmental report to ADB and country environmental agency Conditions Required to Complete Actions Appointment of Design and Supervision consultant with necessary technical capacity to address EMP requirements Standard environmental conditions have been prepared which are integrated into bidding documents ES to be a member of the Bid Evaluation Panel Contractor appoints Environmental Manager. After award of contact Contractor has 30 days to prepare SEMP/EMS. ADB CWRD Guidance notes on preparing SEMP available Contractor cannot take possession of construction site until (i) SEMP/EMS has been approved and (ii) induction is completed satisfactorily Contractor complies with SEMP requirements for implementing and monitoring work on-site ADB CWRD Guidance notes on preparing monitoring reports available Construction completed Activity 3: Construction completed and project commissioned Project works completed in accordance with the SEMP and all sites satisfactorily

27 27 Environmental Management Actions Implementation Activities Conditions Required to Complete Actions rehabilitated and restored. ES reviews and sign-off on completed work Final environmental monitoring report prepared Payments may be withheld if sites not cleared and closed to meet SEMP specifications. Sub Projects for subsequent tranches Sub-projects assessed against the selection criteria set out in the environmental assessment and review framework Environmental classification completed. Categorization forms sent to ADB regional Department and local Environment Authority for confirmation. ES prepares TOR for environmental assessment requirements Consultant appointed to prepare the necessary environmental assessment documents Environmental Assessment documents to accompany PFR Documents to be reviewed by ES CWRD. Design and implement baseline monitoring for environmental conditions; unless this has been undertaken during the environmental assessment stage ES prepare Design Brief for design consultants that incorporates EMP Design requirements ES check Design Brief meets EMP requirements ES extracts construction requirements from EMP and pass to design consultants for inclusion in bidding documents ES reviews bidding documents Activity 1: Potential sub-projects for new tranche identified Activity 2: Preliminary design undertaken for sub-projects Activity 3: Project Financing request submitted to ADB Activity 4: Sub-projects in new tranche approved Activity 5: Prepare project baseline environmental matrix Activity 6: Pre-construction: Design and incorporation of EMP requirements Activity 7: Bid documents prepared

28 28 Environmental Management Actions and confirm that environmental management provisions are sufficient ES review environmental conditions of Bid and rank contractors on this ability ES reviews SEMP and EMS Implementation Activities Activity 8: Bids evaluated and Contractor appointed Activity 9: Contractor prepares Site EMP (SEMP) and EMS if required Activity 10: Contractor inducted to site by ESU Conditions Required to Complete Actions 33. The EARF is reviewed regularly and, if necessary, updated during later tranches of the MFF, if indicated by unanticipated new types of impacts (review of applicability and relevance). The eligibility and entitlement provisions of the EARF will not be lowered in subsequent revisions and updates.

29 29 VIII. GENDER AND SOCIAL DIMENSIONS 34. See Annex 2 for the Summary Poverty Reduction and Social Strategy. 35. Gender Development Strategy. Project 2 will improve access to WSS through construction of water supply and sewerage networks. Schools in project 2 towns will have improved access to WSS facilities and separate toilet for girls will also be constructed. Teachers (80% women) and mothers will be trained as hygiene change agents. The management capacity of sukanals and JSCs will be enhanced and human resources management will be gender mainstreamed to give women and men equal employment opportunities. 36. Knowledge of gender specific customer behavior will be gained through survey and analysis that will inform a sex-disaggregated customer database. The role of women will be expanded through their engagement in complaints redress mechanisms, which will provide feedback on service quality. Based on the analysis, an IEC on WSS, customer rights, and water efficiency will be conducted. As a pilot initiative, UNICEF Azerbaijan will develop a national hygiene educational policy, elaborate a training module and roll out the public information campaign in the selected towns. 37. The gender specialist, will closely work with the gender consultant of the EAs and will supervise and monitor the timely implementation of the GAP.

30 30 GENDER ACTION PLAN (GAP) Objective/impact on gender equality Actions and Description Output 1: Water Supply and Sanitation Infrastructure Development Equal access to Ensure construction of water supply potable water and and sewerage networks including improved sanitation house connections to all female for both male and headed households in all project 2 female-headed towns households provided Target/Indicator and Timeframe 100% female-headed households have access to 24-hour potable water supply (2017) 100% female-headed households have access to sanitation facilities (2017) Institutional Responsibility SAWMC, JSC and AZERSU Improved access to water supply and sanitation facilities in schools of Project 2 towns Ensure separate and adequate latrines and washing facilities for girls in 15 public schools in project 2 towns. Separate sanitation and hygiene facilities for boys and girls in 15 public school constructed (2017) SAWMC, JSC and AZERSU (Improved living standard ) Output 2: Institutional Effectiveness Enhanced Ensure equal employment management capacity opportunities for women in SuKanals of Sukanals and and JSCs JSCsand gender mainstreamed human resource management Train female staff working on management information system (MIS) and accounting system (Increased economic empowerment) Output 3: Program Management Facility Knowledge of gender Conduct survey and analyze specific customer knowledge gaps of households behavior enhanced (especially women as household managers) on water, hygiene, sanitation, customer rights and efficient water use Establish a sex-disaggregated customer database 30% of Sukanals and JSC staff are women 30% of customer care center staff are women Sex-disaggregated database in place for human resource management (2013) Sex-disaggregated customer database created to gain knowledge on gender specific customer behavior (2013) SAWMC, JSC and AZERSU SAWMC, JSC and AZERSU

31 Objective/impact on gender equality Improved hygiene and sanitation practices in the community Actions and Description Develop public outreach program (POP) on water, hygiene, sanitation based on survey results Train children and teachers to become effective advocates of change in their households and communities Ensure that national hygiene educational policy, standards, and training modules are developed and approved Target/Indicator and Timeframe POP material on water, hygiene and sanitation practices, customer rights is disseminated in 15 public schools in project 2 towns (2013-continuous) 5000 women in the community, 150 teachers (30 male and 120 female), and 2000 students (900 male and 1100 female) covered by the POP National hygiene educational policy approved by Institutional Responsibility SAWMC, JSC and AZERSU Improved WSS services through community feedback Develop and conduct awareness raising campaign on customer rights and water efficiency catering to women of all households in project towns IEC material customer rights, complaint mechanisms disseminated to all households in project towns SAWMC, JSC and AZERSU (Increased participation decision making) in Establish complaint redressal mechanism and database in customer care centers and identify specific customer service requirement (targeting women s needs) Establish a 24-hour customer care hotline and train staff of customer care centers as hygiene and sanitation advocates Annual report on quantity and redress of complaints published (2013 continuous) with gender analysis(women provide feedback on WSS services) Customer care hotline is established (2013) with 30% women staff and 100% of all staff are trained on water, hygiene, sanitation practices, customer rights and complaint mechanisms (issue resolutions)

32 32 IX. Performance Monitoring, Evaluation, Reporting, and Communication A. Monitoring 38. Project performance monitoring. Disaggregated baseline data for output and outcome indicators gathered during Investment Program processing will be updated and reported quarterly through investment program quarterly progress reports prepared by the AZERSU and SAWMC, and after each ADB review mission. These quarterly reports will provide information necessary to update ADB's project performance reporting system Compliance monitoring. Compliance on covenants will be monitored through regular ADB review missions and on a quarterly basis in discussion with the AZERSU and SAWMC. 40. Safeguards monitoring. Monitoring and reporting of the implementation on safeguards requirements and procedures will be prepared by AZERSU and SAWMC. The Investment Program Management Office (IPMO) will undertake internal monitoring of safeguard covenants compliance to be included in the quarterly project progress report. An ADB Staff Consultant will validate the internal monitoring reports and evaluate compliance of Investment Program activities with the ADB s Safeguard Policy Statement (2009). External monitoring will be carried out by the Resettlement Specialist in the Investment Program Management Consultant appointed by AZERSU and in two phases, once during the RP implementation and once a year later. 41. Gender and social dimensions monitoring. See DMF and the GAP for monitoring indicators. Currently, the IPMO reports on GAP indicators and an ADB Staff Consultant confirms the figures. B. Evaluation 42. Within 3 months of project completion, AZERSU and SAWMC will submit a project completion report to ADB. 5 C. Reporting 43. The executing agencies will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of each tranche of the Investment Program. To ensure that the investment program is efficiently managed, accounts of every tranche of the facility together with the associated auditor's report, should be adequately reviewed. 4 ADB's project performance reporting system is available at: 5 Project completion report format is available at: Sector-Landscape.rar

33 33 X. ANTICORRUPTION POLICY 44. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project. 6 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB s anticorruption debarment list are ineligible to participate in ADBfinanced activity and may not be awarded any contracts under the Project To support these efforts, relevant provisions are included in the framework financing agreement, loan and project agreements, loan regulations, and the bidding documents for the investment program. The Government will disclose to the public, and update annually the current status of the investment program and how the proceeds of the facility are used. For each contract financed under the Investment Program, AZERSU and SAWMC will disclose on their respective websites information on, among others, the: (a) list of participating bidders; (b) name of the winning bidder; (c) basic details on bidding procedures and procurement methods adopted; (d)amount of contract awarded; (e)list of goods/services, including consulting services procured; and (f)intended and actual utilization of the facility proceeds. 6 Available at: 7 ADB's Integrity Office web site is available at:

34 34 XI. ACCOUNTABILITY MECHANISM 46. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make a good faith effort to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism. 8 8 For further information see:

35 35 XII. RECORD OF PAM CHANGES 47. PAM Updates Date of first draft PAM - November 2011 Revision 1 - November Update of procurement plan 2. Update of project implementation plan 3. Update in social safeguards implementation arrangements 4. Update in project management arrangement

36 36 ANNEX 1 - DESIGN AND MONITORING FRAMEWORK Design Summary Impact Improved water supply and sanitation services in the urban centers of Agdash, Beylagan, Goychay and Nakhchivan Performance Targets and/or Indicators By the end of Tranche 2 plus three years (2020): (i) Pressurized water supplied for 24 hours daily (ii) Nonrevenue water less than 20% (iii) Residual chlorine at tail ends of water supply system maintained at parts per million (iv) Sewage pumps operating daily and discharging sewage to the treatment plant (v) Effluent from the sewage treatment plant meets Azerbaijan effluent discharge standards Data Sources and/or Reporting Mechanisms Sex-disaggregated baseline survey conducted at Investment Program inception in tranche 1 (2012) and completion (2016) and annually thereafter. Surveys conducted as a part of PPMS and by the executing agencies (AZERSU and SAWMC) Assumptions and Risks Assumptions The Government provides an enabling investment climate Government provides adequate incentives to ensure Sukanals and JSCs provide efficient service delivery Risks Insufficient viability gap funding from the government to the executing agencies, to ensure financially sustainable service delivery Outcome Improved access to water supply and sanitation infrastructure in Agdash, Beylagan, Goychay and Nakhchivan By end of Tranche 2 (2017): (i) Residents (including 100% female headed households) access to sanitation facilities increased from 36% in 2011 to 95% by 2017 (ii) Residents (including 100% female headed households) access to 24-hour potable water supply increased from 57% in 2011 to 95% by 2017 Executing Agency (AZERSU and SAWMC) Annual Reports and audited statements Project component completion and commissioning certificates provided by investment program construction supervision consultant Risks Government s inability to protect the environment and natural resources from unregulated discharge of untreated sewage into water bodies Outputs By 2017: Water supply system efficiency improved through rehabilitation and replacement, and coverage expanded (i) 460 km of distribution networks constructed (ii) 7000cum of storage reservoirs constructed (iii) Pressurized water of 140 liters per capita supplied for 24-hour daily Semiannual progress reports prepared by AZERSU and SAWMC Disbursement and reimbursement records maintained by AZERSU and SAWMC PPMS reports prepared by AZERSU and SAWMC Assumption Ongoing internationally financed projects are efficiently implemented. Risk Lack of construction contractor and industry interest in bidding for projects in Azerbaijan

37 37 Design Summary Performance Targets and/or Indicators Data Sources and/or Reporting Mechanisms Assumptions and Risks Sewerage and sanitation system efficiency improved through rehabilitation and reconstruction, and coverage expanded (i) 424 km of sewer lines constructed (ii) Sewage treatment plants constructed to treat and safely discharge 83 MLD of sewage (iii) Separate and adequate latrines and washing facilities provided in 15 public schools in project towns AZERSU and SAWMC annual work plans As-built developed contractors drawings by Project component completion and commissioning certificates provided by investment program construction supervision consultant Substantial variance between the bid prices and engineer s estimate By 2017: Management information system developed (i) Sex-disaggregated human resource database maintained by AZERSU and SAWMC for human resource management Semiannual progress reports prepared by AZERSU and SAWMC AZERSU and SAWMC annual work plans Management capacity of Sukanals and JSCs enhanced Institutions improved for WSS delivery (i) Women in 30% of key management staff positions in Sukanals and JSCs (ii) Sukanals and JSCs staff trained in financial management and accounting (30% of them women) (iii) Women comprise 30% of customer care unit staff in project towns and inform, educate, and communicate on water, hygiene, and sanitation (i) Twinning program established with a WSS utility from a developed member country by 2013 (ii) JSCs and Sukanals achieve revenue surpluses annually from 2015