Project Administration Memorandum

Transcription

1 Project Administration Memorandum Loan No. 2588/2589/2590: Civil Aviation Development Investment Program (CADIP) Project Administration Memorandum CADIP Batch 1 Projects April 2010 i

2 Project Administration Memorandum Forward The Project Administration Memorandum (PAM) is a living document that is progressively updated and revised as necessary, particularly following any changes in project or program costs, scope, or implementation arrangements. It is a guide to the management, implementation, and monitoring of the Civil Aviation Development Investment Program (CADIP). The PAM contains project data and information that allows the Government, the National Airports Corporation (NAC) as the executing agency and the Asian Development Bank (ADB) to monitor project implementation and evaluate project impact. In particular, the PAM outlines the implementation arrangements for the Program and contains the basic requirements and procedures on recruitment of consultants, procurement of goods, contracting of civil works, draw down of loan funds, disbursements, progress reporting, performance monitoring and auditing requirements under the Program. The contents and interpretation of the PAM will be discussed and updated regularly by the NAC and the CADIP Project Implementation Unit (PIU). In case of conflict among the documents in meaning or intent, the specific provisions of the Loan Agreement shall prevail. Prepared by: CADIP PROJECT IMPLEMENTATION UNIT (PIU) ii

3 Project Administration Memorandum TABLE OF CONTENTS S. No Page Map of PNG showing the respective CADIP Projects iii 1. Executive Summary 4 2. Program Summary 4 3. Total Program Cost & Financing Plan 5 4 Loan Amount and Terms of the Loan 5 5 Program Descriptions 6 6 Project Monitoring Development Effectiveness Framework 7 7 Special Features 7 8 Implementation Arrangements 8 9 Implementation Timetable 9 10 Procurement 9 11 Disbursement Program Monitoring & Evaluation Reporting Requirements Auditing Requirements Anti-Corruption Major Loan Covenants Summary of Appendices 12 iii

4 Project Administration Memorandum CADIP Figure 1. Map of Papua New Guinea showing the respective CADIP projects. iv

5 Project Administration Memorandum 1. EXECUTIVE SUMMARY 1. The National Airports Corporation (NAC) has started implementing the Civil Aviation Development Investment Program (CADIP). This Program is aimed at revitalising and redeveloping the nations 21 national airports over a nine year period at a total cost of US$640 million. The Program is divided into four Batches of projects. Batch 1 Projects of the Program is within budget, scope and schedule. 2. A number of milestones have been achieved during the reporting period. These among others include the successful conclusion of loan negotiations cumulating in the signing of the CADIP Project and Loan Agreements between Government and the ADB, Loan Effectiveness, the establishment and staffing of the CADIP Project implementation Unit (PIU), the Changing of the Executing Agency (EA) name from the former Civil Aviation Authority (CAA) of PNG to the NAC, the commencement of bidding for procurement contract packages (POM Apron extension, POM ILS and Kavieng fencing), the establishment of a CADIP Project Trust Account and the securing of government counterpart funding for the first quarter of Ongoing internal and external project issues are continually being managed and monitored respectively by the PIU. 3. The Multi-tranche Financing Facility (MFF) is an ADB funding modality that is used to fund large scale investment projects. It was determined that the MFF is the most appropriate financing mechanism for CADIP. This financing model will be used to finance all CADIP projects in the four tranches including the Batch 1 Projects. The ADB s MFF will finance 85% of the program whilst the Government finances the remaining 15%. Refer to sections 3 and 4 for the financing plans and loan components respectively. 4. In this PAM document, the terms Batch 1 and Project 1 will be used interchangeably to describe the first tranche of the MFF for CADIP. 2. PROGRAM SUMMARY 2.1 Loan Processing History Activity Date 1 Fact-Finding Mission May Fact Finding Wrap-Up Meeting 03 June Management Review Meeting (ADB) 15 July Investment Program Appraisal 27 July-7 August Staff Review Committee Meeting (ADB) 07 September Loan Negotiations September ADB Board Consideration and Approval 24 November Loan Agreement Signing 28 January Loan Effectiveness 22 March

6 Project Administration Memorandum 2.2 Pre-Inception Activity Date 1 ADB Project Implementation Seminar Development Effectiveness Monitoring Framework workshop PNG country portfolio review mission Change in EA name from CAA to NAC 15 February GoPNG and ADB Sign CADIP Loan and Project Agreements 24 February Environmental Permits secured February Procurement dates (Bid Start/Close) - POM ILS/Navigational Aids - Kavieng Fencing - POM Domestic Apron Start 5 Opening of CADIP Trust Account March st Quarter GoPNG funding of K1.28 million secured March EOI for PIU Individual Consultants 22 March EOI for DSC 22 March 2010 Close 13 Jan March March April April June Project Administration Activity Date 1 Project Inception Mission th April TOTAL PROGRAM COST AND FINANCING PLAN CADIP Funding Source USD Million PGK Million ADB ,250.0 PPP GoPNG Total ,670.0 CADIP Batch 1 Funding ADB GoPNG Total CADIP Batch 1 Financing Plan Airport Improvement Project Support & Capacity Development Program Management Contingencies Financing Charges during Implementation Total A fixed exchange rate of 2.6% applies for all conversions. Appendix 05 contains a detailed financing plan for CADIP Batch 1 Projects. Appendix 06 contains the CADIP 2010 Cash Flow 6

7 Project Administration Memorandum 4. LOAN AMOUNTS AND TERMS OF THE LOAN The terms and conditions of the ADB Project1 loans are as follows; 4.1 Ordinary Capital Resources (OCR) Loan Amount US$25.0 million Repayment Period 25 years Grace Period 5 years Interest Charge To be determined in accordance with ADB s LIBORbased lending facility Interest Rate Movements 1 July January July 2010 Exchange Rate: 1 July January July Commitment Charge 0.15% per annum 4.2 Asian Development Fund (ADF) ( Hard Term ) Loan Amount US$20.0 million equivalent in Special Drawing Rights (SDR) Repayment Period 32 years Grace Period 8 years Interest Charge 3.5% per annum Interest Rate Movements 1 July January July Asian Development Fund (ADF) ( Soft loan ) Loan Amount US$50.0 million equivalent in Special Drawing Rights (SDR) Repayment Period 32 years Grace Period 8 years Interest Charge 1.0% per annum during grace period and 1.5% per annum Interest Rates Movements 1 July January July 2010 A description of the Loan Amounts and Terms is contained in Appendix PROGRAM DESCRIPTION 5. The objective of CADIP is to establish a sustainable civil aviation network that supports the growth and development of the nation. It has been developed and adopted to redevelop and revitalise the 21 national airports to meet minimum safety and security standards as well as the operational requirements of the newly introduced F100 aircraft. Batch 1 Projects will comprise an extension to the Jacksons Domestic Parking Apron and the replacement of old fire trucks and supply and installation of Instrument landing and Navigational Systems at that airport. This phase will also include an upgrading of the Mt. Hagen, Wewak, Hoskins and Gurney airports as well as the installation of new security fences at the Goroka, Gurney, Hoskins, Kavieng and Wewak airports. The Project components include; 7

8 Project Administration Memorandum 6. Airport Improvement: Airport improvements include the rehabilitation and upgrading of aerodrome infrastructure. The Aerodrome infrastructure consists of air side facilities including runways, taxiways, parking aprons, fire-tenders, and land side facilities such as passenger terminals, car parking and associated infrastructure facilities. 7. CNS/ATM Enhancement Upgrading of communication, navigation and surveillance equipment for reroute, landing, take off operations within the PNG Flight Information Region (FIR). 8 Program Support & Capacity Development: Capacity development would include institutional strengthening and capacity building of National Airports Corporation, PNG Air Services Limited and PNG Civil Aviation Safety Authority. 9 Program Management: Program management includes consulting services for the design and supervision of contracts as well as the implementation of the program through the PIU. 6. PROJECT DEVELOPMENT EFFECTIVENESS MONITORING FRAMEWORK 10. The Paris Declaration on Aid Effectiveness calls for effective monitoring of development assistance programs to developing countries by the donor countries and multilateral partners. The CADIP program adopts that strategy into its implementation and monitoring framework. CADIP PIU will update this section on a six (6) monthly basis starting in July 2010 to measure the progress of project activities against the expected project outputs and outcomes. Appendix 13 contains the detailed monitoring framework for CADIP and Batch 1 Projects. 7. SPECIAL FEATURES 7.1 Environmental Implications 11. Consistent with the Environmental Act of 2000 (the Act) an Initial Environmental Examination (IEE) Report was compiled for all the Batch 1 Projects. All contractors engaged under the Program will be monitored to ensure compliance with the Act as well as other relevant environmental legislation, policies and strategies of Government including the requirements of the Department of Environment and Conservation. Appendix 16 contains details of the IEE. 7.2 Poverty Reduction: Benefits and Beneficiaries 12. Preliminary studies on poverty reduction and benefit sharing in relation to the implementation of CADIP was undertaken in A follow up assessment report has just been compiled by the PIU in March From these assessments, the PIU has incorporated as much as possible the requests of the local population into the project 8

9 Project Administration Memorandum scope of Batch 1 Projects. Batch 1 Projects will now implement poverty reduction and benefit sharing strategies during project works at the respective project locations to ensure that the local population benefit from these works. Appendix 17 contains additional information on poverty reduction and benefits. 7.3 Land Acquisition and Resettlement 13. The PIU has had constructive consultations with the provincial authorities in each project site in relation to land acquisition and resettlement issues (if any). The Provincial Authorities have made an undertaking to deal with these issues. The PIU will continue to engage with the respective provincial authorities and other relevant agencies of Government to ensure the smooth facilitation of land issues at the project sites. 8. IMPLEMENTATION ARRANGEMENTS 8.1 National Airports Corporation 14. The CADIP Executing Agency has been officially changed by Government from the former Civil Aviation Authority of Papua New Guinea to the National Airports Corporation in February This followed from the restructure of the former CAA which was completed in January Appendix 02 contains the management structure of the NAC/CADIP PIU Project Implementation Unit (PIU) 15. The PIU is headed by a Project Director with two Deputy Directors for Technical (vacant) and Policy & Administration. The PIU is staffed with airport Engineers, a CNS/ATM Engineer, an Environmentalist, Economist, Financial Management Accountant, Policy Analyst, a Social/Gender Specialist and support staff. Vacancies exist for additional technical and support staff. Engagement of the Deputy Director (Technical) and intermediate consultants including an Airport Rescue & Fire Fighting Specialist and a Financial Management Specialist is currently underway. Appendix 03 contains the operational structure of the PIU. 16. The projects that the PIU is responsible for includes the security fencing projects, the replace of old fire trucks, the Domestic Apron Extension of Port Moresby, the supply and installation of the Instrument Landing System (ILS) and navigational aids at Port Moresby and the undertaking of the institutional and capacity building component of CADIP Design and Supervision Consultant (DSC) 17. The DSC will be headed by a Project Manager and will be staffed with a Design and Contract Engineer, a Design and Documentation Engineer, a Procurement Engineer, a Pavement Specialist and a Construction and Maintenance Supervisor. EOI s have been called for the DSC. The PIU is currently evaluating the submitted EOI s. The DSC 9

10 Project Administration Memorandum will be selected in accordance with the NAC and the ADB s procurement processes. It is expected that the DSC will be appointed in November The TOR for the DSC is attached as Appendix The Projects that the DSC is responsible for in design, documentation and construction supervision include the Mt Hagen pavement strengthening, new terminal and associated works, the Hoskins runway extension, pavement strengthening and associated works, the Wewak runway extension and associated works and the Vanimo pavement strengthening and associated works. 9. IMPLEMENTATION TIMETABLE a. CADIP Program Implementation Timetable: 19. The investment program is broken up into four tranches and will run for a total of nine years commencing in the mid 2010 and ending in December 31, Each tranche will run for a total of two years however, preparatory works will be carried out in advance. Appendix 07 contains a detailed CADIP implementation schedule. 9.2 Batch 1 Implementation Timetable: 20. CADIP Batch 1 Projects will take two years to implement starting in the middle of 2010 and ending by late December Appendix 08 contains a detailed implementation schedule of CADIP Batch 1 Projects. 10. PROCUREMENT 21. The main procurements for CADIP Batch 1 include consulting services, civil works/infrastructures and institutional capacity building. The total procurements budgeted for Batch 1 is K291.2 million (refer to Section 3, Total Cost and Financing Plan). These are highlighted below Consulting Services 22. International and national consultants will be engaged for engineering design, supervision of civil works, capacity building, advisory services and studies as appropriate. Consultants will be recruited in line with ADB s Guidelines on the Use of Consultants (2007, as amended from time to time). Quality and cost- based selection method will be used. Detailed outlines of the Consultants Recruitment Activity Monitoring or CRAM s for the respective consultants are attached as follows; 1 Appendix 18 Design and Supervision Consultant (DSC) 2 Appendix 19 Deputy Director (Infrastructure) 3 Appendix 20 Airport Rescue and Fire Fighting Specialist (RFF) 4 Appendix 21 Financial Management Specialist 10

11 Project Administration Memorandum 10.2 Civil Works / Infrastructure 23. Civil works and infrastructure will form the bulk of procurement for the program. This includes runway extension, pavement strengthening, upgrading of terminal facilities, security fencing and associated works. Detailed procurement plans and summary of works for the respective Batch 1 Projects is attached as follows; (PRAM) - Appendices is for preliminary works only. 1 Appendix 22 Port Moresby Domestic Apron Extension 2 Appendix 23 Kavieng Fencing Project 3 Appendix 24 Airport (Hoskins, Goroka, Wewak, Gurney) Security Fencing Projects 4 Appendix 25 Wewak upgrade and associated works 5 Appendix 26 Mt. Hagen upgrade and associated works 6 Appendix 27 Gurney upgrade and associated works 7 Appendix 28 Hoskins upgrade and associated works 8 Appendix 29 Port Moresby Instrument Landing System (ILS) 10.3 Capacity Building 24. Institutional Capacity building and strengthening is a core component of the program. The PNG CASA, NAC, and PNG Air Services will undergo institutional strengthening and capacity building as a part of the overall program. The NAC as the EA will lead the implementation of capacity building and institutional strengthening through a structured plan. 11. DISBURSEMENT 25. Direct Payments and Reimbursements are the two procedures used for disbursements. Direct Payment procedure is applicable for the procurement of large works, goods and services when the ADB pays the designated beneficiary directly at the borrowers request. Reimbursements are applicable to petty purchases when the ADB pays from the loan account to the Project account for eligible expenditures which were incurred and paid for by the project out of its own budget allocation. 26. The first withdrawal application has been sent to the ADB for reimbursements to the NAC account the retro-active financing arrangements. It is expected that the number of withdrawal applications will increase in conjunction with the progress of the project. 27. A CADIP Project Trust Account with two subsidiary bank accounts, the GoPNG and ADB have been opened. The Government has released its counterpart funding commitments for the 1 st Quarter and will continue to release funding for the subsequent quarters. 28. Appendix 11 contains Disbursement Procedures while Appendix 12 contains the CADIP 2010 Cash Flow and Budget. 11

12 Project Administration Memorandum 12. PROJECT MONITORING AND EVALUATION 29. It is expected that project monitoring and evaluation will increase in conjunction with Batch 1 project activity and associated works. Minimal amounts of project monitoring and evaluation have been undertaken during this reporting period. 30. The key performance targets and indicators are provided in the Design and Monitoring Framework (Schedule 2 to the FFA). The consultants for Investment Program implementation support will work with NAC to collect additional data from relevant agencies, including provincial and local level governments and statistics bureaus, to measure the performance indicators at inception, completion, and three years after completion of each Project and the Investment Program; and (ii) report to ADB key findings on a quarterly basis. NAC with the assistance of the supervision consultant will monitor and evaluate Investment Program impacts to ensure that the completed infrastructure is managed effectively and the Investment Program benefits maximized. Appendix 14 contains additional information on CADIP monitoring and evaluation. 13. REPORTING REQUIREMENT 31. The PIU will produce monthly project update reports. These reports will encompass the general administration of the project as well as project specific updates including financials. A reporting template has been developed for this purpose. These monthly reports will be publically available and will also be posted on the NAC website once established. 32. The PIU will also produce a quarterly report. This quarterly report will take the form of the PAM. This PAM is the first quarterly report for CADIP and will be submitted to the ADB within 14 days of the new quarter. A monthly situation report will also be submitted to the ADB within 5 calendar days from month end starting, May The PIU will also produce a yearly report on all project activities. It is expected that the monthly reports and the quarterly reports will form the basis of this report. This report will provide a summary of all project activities undertaken during the year. The 2009 CADIP Annual Report has been produced and is awaiting formal endorsement form NAC Board before becoming publicly available. These reports will be posted on the NAC website once established. 14. AUDITING REQUIREMENT 34. Yearly audits will be undertaken of all CADIP project funds from both Government and the ADB in compliance with appropriate Government processes, regulations and legislation. The Auditor General s office will undertake the Audits or contract out as and when required. Audits for 2010 should be completed by July Appendix 15 contains additional information on auditing requirements. 15. ANTI CORRPUTION 35. ADB's Anticorruption Policy requires that all ADB staff, and all parties carrying out activities financed by ADB, to adhere to the highest financial and ethical standards. The Office of Anticorruption and Integrity (OAI) is the initial point of contact for allegations of 12

13 Project Administration Memorandum and to screen and investigate fraud or corruption. It is ADB's independent investigative unit. 36. ADB launched the Second Governance and Anticorruption Action Plan (GACAP II) to improve its performance in the implementation of the governance and anticorruption policies in sectors where ADB operates. ADB also supports governments' efforts toward effective and transparent systems for public service, anti-bribery and business integrity, through its governance work and active involvement in the ADB/OECD Anti-Corruption Initiative for Asia-Pacific. 16. MAJOR LOAN COVENANTS 37. The PIU will ensure that the CADIP Project Loan and Project Administration covenants are complied on a timely basis. A summary of the major loan covenants is attached as Appendix

14 1 17. APPENDICES. Number Description Appendix 01 Key Persons Involved with the Project Appendix 02 NAC/CADIP/PIU Management Structure Appendix 03 CADIP/PIU Operational Structure Appendix 04 Cost Estimate, Financing Plan and Allocations Appendix 05 CADIP 2010 Cash Flow Appendix 06 CADIP Loan Amounts and Terms Appendix 07 Implementation Schedule for Batch 1 Appendix 08 Implementation Schedule for the entire CADIP Project Appendix 09 TOR for the Design & Supervision Consultant Appendix 10 Disbursement Procedures Appendix 11 Appendix 12 Appendix 13 Appendix 14 Appendix 15 Appendix 16 CADIP Loan Covenants CADIP Program Monitoring and Evaluation Framework Project Monitoring and Evaluation Auditing Requirements Environmental Implications Poverty Reduction: Benefits and Beneficiaries Appendix 17 CRAM Design and Supervision Consultant (DSC) Appendix 18 CRAM Deputy Director (Technical) Appendix 19 CRAM Airport Rescue and Firefighting Specialist (RFF) Appendix 20 CRAM Financial Management Specialist Appendix 21 Summary of Works Port Moresby Domestic Apron Extension Appendix 22 Summary of Works Kavieng Fencing Project Appendix 23 Summary of Works Airport Security Fencing Projects Appendix 24 Summary of Works Wewak upgrade and associated works Appendix 25 Summary of Works Mt. Hagen upgrade and associated works Appendix 26 Summary of Works Gurney upgrade and associated works Appendix 27 Summary of Works Hoskins upgrade and associated works Appendix 28 Summary of Works Port Moresby Instrument landing System (ILS) 1

15 2 Appendix 01: Key Persons Involved with the project NAME DESIGNATION DEPARTMENT OF NATIONAL PLANNING AND MONITORING Mr. Kingsley Lore Assistant Director Ms.Loia Vaira Senior Aid Coordinator (ADB) Mr. Bill Flaherty TSSP Strategic Advisor, Mr. Greg Uma Program Officer Mr. Ilivatilo Saneto First Assistant Secretary DEPARTMENT OF TREASURY Mr. Clement Kote First Assistant Secretary (SPID) Mr. John Uware First Assistant Secretary (FED) Mr. Harry Greenwell (*) SGP Advisor, (SPID) Mr. Moses Zazon (*) Senior Economist, (SPID) Megan Hardy SGP Advisor, (FED) DEPARTMENT OF TRANSPORT Mr. Gabi Houda First Assistant Secretary NATIONAL AIRPORTS CORPORATION Mr.Peter Neville Chairman Mr. Joseph Kintau Chief Executive Officer Mr. Andrew Numbasa Executive Manager, Strategic Business Units Mr. Gebo Henao Senior Engineer, Airports Planning & Development Mr. Russell Safety Officer- Mt Hagen Airport Mr.Tiroqs Goroka Airport Mr.Peter Michael Manager Engineering Services Division Mr. Wilson Saggati Safety Manager PROJECT IMPLEMENTATION UNIT Mr.Manuai Kametan Project Director Mr.Erry Tara Social Development officer Mr. Percy Sukbat Engineer Mr.Haggai Zeriga Engineer Ms.Karren Siwi Project Officer - Financial Analyst Mr. Rodney Wapindu Project Officer- Economist Mr. Barksy Panka Project Officer- Environmentalist PNG AIR SERVICES LTD Mr. John Cappelletti Mr.Marcellin Donnelly AUSAID Mr. Keith Joyce WORKD BANK Ms.L. Bailey Chief Executive officer Chief Finance officer First Secretary Country Manager 2

16 3 Appendix 02. PIU Management Structure 3

17 4 Appendix 03: CADIP/PIU Operational Structure 4

18 5 Appendix 04: Cost Estimates, Financing Plan and Allocations 5

19 APPENDIX CASHFLOW STATEMENT PROJECT : CIVIL AVIATION DEVELOPMENT INVESTMENT PROGRAMME (CADIP) AGENCY: NATIONAL AIRPORTS CORPORATION (NAC) EXPENDITURE VOTE NO: ITEM DESCRIPTION DONOR ORIGINAL ADB GoPNG JAN FEB MAR 1st QTR APR MAY JUN 2ND JUL AUG SEP 3RD OCT NOV DEC 4TH 2010 ANNUAL NO. OF ITEM CODE 1/ BUDGET COMPONENTCOMPONENT Cash Cash Cash CASH Cash Cash Cash QTR Cash Cash Cash QTR Cash Cash Cash QTR TOTAL 121 Travel and Subsistance Expenses 0 180, ,000 18, , , , , , , , ,500 18, Utilities 0 110,000 99,000 11, , , , ,750 11, Office Materials and Supplies 0 240, ,000 24,000 2,000 2,000 2,000 6,000 2,000 2,000 2,000 6,000 2,000 2,000 2,000 6,000 2,000 2,000 2,000 6,000 24,000 Fees & Charges 190, ,000 19,000 3,145 3, , ,062 1,104 3, ,145 6, ,235 5,276 19, Operational Materials and Supplies Transport and Fuel 0 160, ,000 16,000 1,333 1,333 1,333 4,000 1,333 1,333 1,333 4,000 1,333 1,333 1,333 4,000 1,333 1,333 1,333 4,000 16, Administrative Consultancy Fees (MOA Review) 0 4,126,000 3,713, ,600 34,383 34,383 34, ,150 34,383 34,383 34, ,150 34,383 34,383 34, ,150 34,383 34,383 34, , , Other operational Expenses 0 920, ,000 92,000 7,667 7,667 7,667 23,000 7,667 7,667 7,667 23,000 7,667 7,667 7,667 23,000 7,667 7,667 7,667 23,000 92, Grants & Transfers to Public Authorities (Gender Coor) Grants to Individuals & NPO (LOA) Grants & Subsidies to Public & Dept Enterpr (LTC) Office Furniture and Equipment 0 250, ,000 25, ,500 12, , , , Purchase of Vehicles 0 430, ,000 43, , , , Feasibility Studies, Project Preparation & Design CADIP PROJECTS Construction, Renovation & Improvement Port Moresby Domestic Apron Extension 2,170,000 1,779, ,600 12, , , , , , ,600 2 Hoskins Improvements 500, ,000 85, ,500 42, , ,000 3 Wewak Runway Extension 580, ,400 98, ,100 59,500 98, ,600 4 Mt.Hagen Improvements Gurney Improvements Training & Capacity building , , , , , ,000 7 Kavieng Fencing 5,032,000 4,126, , , , , , , , , ,760 8 Goroka Fencing 3,665,000 2,968, , , , , , , , ,350 9 Wewak Fencing 1,260,000 1,033, , ,400 21, , , , Hoskins Fencing 787, , , , , , , Gurney Fencing 330, ,600 59, ,400 59,400 59, Port Moresby Instrument Landing System 1,200,000 1,068, , ,000 55,000 22, , , Port Moresby Fire Tenders RFF 110, ,100 9, ,500 4,500 2,700 2, ,400 9, PIU Reimbursables ( 10% on Salaries only ) 540,000 60,000 20,000 20,000 20,000 60, , PIU Reimbursables ( 100% on others ) 500, , , , , , Operational and Facility Enhencement Program 936, ,000 50,000 16,667 16,667 16,667 50, , Accounting & External Audit (for GoPNG purpose) 100, , , , , , , Contigencies 5,000,000 30,000 10,000 10,000 10,000 30, ,000 Total 29,707,000 25,205,330 4,501, , , ,821 1,269,810 88, , , ,104 61, , , , , ,681 1,107,545 2,391,446 4,501,670

20 6 Appendix 06: Loan Amount and Terms The request for the following loans: (i) (ii) a loan of $50.0 million equivalent form the soft-loan lending under ADB s Asian Development Fund (ADF), a loan of $20.0 million equivalent form the hard-term lending facility under ADB s ADF and; (iii) a loan of $25.0 million equivalent form the ordinary resources lending facility under ADB s Ordinary Capital. ADB will provide loans to finance Projects, as and when the latter are ready for financing; provided Papua New Guinea is in compliance with the understandings hereunder, and the Projects proposed for financing are in line with those same understandings. Each loan will constitute a tranche. Each tranche may be financed under terms different from the financing terms of previous or subsequent tranches. The choice of financing terms will depend on the Project, capital market conditions, and ADB s financing policies that are prevailing at the time the tranche is formalized in a legal agreement. Tranches may be provided in sequence or simultaneously, and some may overlap in time with each other. Commitment charges are not payable on the Facility. They are payable only on financing actually committed by ADB as a loan. ADB rules on commitment charges, which are in effect when a tranche is provided, will apply with respect to such tranche. The maximum financing amount available under the facility is$480 million (four hundred and eighty million US dollars). It will be provided through individual tranches comprising a blend of funds form ADB s Ordinary Capital Resources and from ADB s Asian Development Fund (ADF). ADB has informed Papua New Guinea that ADF allocations will be subject to; (i) (ii) (iii) General availability of ADF resources; Papua New Guinea s access to such resources pursuant to ADB s Gradual Policy and the requirements of the ADF donors and ; the availability of such resources to Papua New Guinea pursuant to the applicable policies concerning allocation of, and eligibility for, such resources. The Total investment Program cost (including the anticipated public-private partnership for the international airport is estimated at $640 million equivalent. The Total cost of Project 1 including taxes, duties, physical and prices contingencies, interest and other charges is estimated at $112.0 million equivalent. The summary of the cost estimate and the tentative Financing Plan are shown below in Table 1 and Table 2 respectively. 6

21 7 Appendix 07. Implementation Schedule for Project 1 7

22 8 Appendix 08. Implementation Schedule for the Entire CADIP Project 8

23 9 Appendix 9: Terms of Reference (TOR) for the Design & Supervision Consultant The main objective of the Design and Supervision Consultant (DSC) is to provide additional capacity and expertise to assist CAA/PIU to implement the Project One works in an efficient and timely manner. The DSC will receive administration support from CAA in relation to the administration of the project and improvement and upgrading works and the maintenance tasks. The DSC will be directly accountable to CAA under the direction of the Chief Executive Officer in all operational matters, with the PIU Program Director responsible for day to day liaison. The CEO will (i) ensure the regular flow of counterpart funding into the project trust accounts established for the purpose and (ii) ensure that the implementation methods and strategies developed, including subproject approval process, remain consistent with approved maintenance objectives, policies, and guidelines of the Government and the Bank. The DSC will complement the capacity of CAA and the PIU and assist by: preparing periodic financing requests; performing site and geotechnical investigations and topographic surveys (where this has not been done in advance by CAA); undertaking design and documentation of airport infrastructure works in accordance with the scope of works provided by CAA; preparing bid documents; providing support during the tender stage; performing contract administration; managing construction and maintenance supervision and maintaining overall financial control of the Project. The DSC will ensure the Program for Batch One is completed within the four year time frame, and in accordance with the nominated standards to the satisfaction of the Government and ADB. Supervision of all construction and maintenance works will be thorough to ensure that they are carried out in full compliance with the engineering design, technical specifications, summary initial environmental examination and summary social impact assessment recommendations, and other contract documentation. The DSC will work in collaboration with the CAA in relation to improvement and upgrading works and maintenance activities. To foster sustainability, CAA and GoPNG procedures and documentation will be used in all implementation stages. In addition to direct implementation roles, consultants will build capacity in key technical and management functions by training young professional staff seconded from the PIU and CAA Design and Supervision Consultant Organisation: The DSC team will be headed by the Project Manager (PM) Functions of the Project Manager The Project Manager (PM) will be a senior civil engineer with at least 20 years experience in the implementation of airport improvement, upgrading and maintenance projects. In addition, the PM will be a specialist in Performance Based Contracting, maintenance operations, and be familiar with the cultural, climatic, and topographic issues that influence construction activities in PNG The duties of the Project Manager are; (1) To exercise day to day control and management of the Project activities; (ii) Administration of the Project Trust Accounts including those established for the subprojects and the maintenance trust accounts established for each airport where runway works have been carried out; (iii) Oversight and monitoring of Investigation, Design and Supervision Consultants engaged for the implementation of sub-project components; 9

24 10 (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (iv) Establishing and implementing DSC operating procedures; Establishing planning and implementation procedures for optimal utilisation and preservation of technical and other data collected by the project; Manage a team of specialists to deliver project objectives in an efficient manner; Develop and implement training plans for its national professional staff relating to the preparation and administration of civil works and maintenance using performance based contracts. On the job training will also be provided in computer skills, basic spreadsheet and word processing, contract documentation and management, quality control, work measurement and reporting, and condition assessments; Appoint and supervise Investigation, Design and Supervision Consultants where required in the implementation of sub-project works; Prepare tender documents based on the pro-forma performance based contracts tendered under International Competitive Bidding; Assist in the evaluation of tenders performed in accordance with CAA and bank procedures; Ensure the timely submission of reports; Perform the role of Engineer as defined in the construction and maintenance contracts; Coordinate the involvement of CAA and PIU personnel involved in implementation and training; Liaise with the CADIP Steering Committee Design and Contracts Engineer (DCE) The DCE will be responsible to the PM for the pre-contract functions of site investigation, design and documentation of construction works. The DCE will be a professional engineer with a minimum of 10 years experience in the investigation, design and documentation of airport infrastructure and 5 years experience working in a developing country. The DCE will perform the following tasks: (i) Preparation of site investigation plans and (ii) Prepare tender documents for site investigations 9.5. Sub-Consultants (where this has not been done in advance by CAA) (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) Prepare pre-tender estimates; Administration and supervision of site investigation sub-consultants; Preparation of terms of reference for design and documentation of civil engineering works; Administration and supervision of in-house design and documentation, or sub-consultants where applicable; Ensure all investigations and designs comply with relevant PNG and Australian design codes and ICAO standards and recommended practices;(development of specifications for performance based airport maintenance contracts based on CAA material specifications and experience, and pro-forma performance based contracting tender documents; Assist the Procurement Engineer in the preparation of construction and maintenance tender documents; Technical appraisal of tenders as part of the tender evaluation process; Technical evaluation of the qualifications of civil works and airport maintenance contractors; 10

25 11 (ix) Provide on the job training to graduate trainees seconded to the DSC in site investigation, design and documentation and tender preparation, procurement procedures, preparation of pre-tender estimates and evaluation of consulting and construction tenders Design and Documentation Engineer (DDE) The DDE will assist the DCE in the completion of site investigation works and design and documentation of airport improvement and upgrading works. The DDE will have at least 7 years experience in the investigation, design and documentation of major infrastructure projects in a developing country. The DDE will perform the following tasks: (i) Initial investigation of sub-projects and development of the scope of investigation and design and documentation works as precursor to developing investigation, survey and design and documentation terms of reference for in-house designers or sub-consultants; (ii) Administration of the sub-consultancy contracts to ensure compliance with contract conditions; Ensure deliverables comply with relevant CAA technical requirements and Bank conditions; (iii) Field appraisals of the consultancy deliverables to ensure their compliance with the intent of the consultancy agreements. Review the adequacy of the deliverables considering their use in airport maintenance contracts. (iv) Provide on the job training to graduate trainees seconded to DSC in site investigation, design and documentation of airport works Procurement Engineer (PE) The PE will assist the DCE in all procurement associated with the implementation of the program. Ensure the program complies with the ADB s Procurement Guidelines and relevant standard bidding documents. The PE will have at least 3 years experience in the preparation of ADB tender documents for services, goods and works and preferably experience in the procurement aspects of the PNG Financial Management Act. The PE will perform the following tasks: (i) (ii) (iii) (iv) Preparation of tender documents in compliance with the ADB and CAA procurement guidelines. Tender documents will be prepared for consulting services associated with the investigation, design and documentation of the works and construction supervision as required, Airport construction comprising improvement and upgrading works, and routine maintenance for a seven year period following completion of construction. Design, administer and monitor all procurement activities to ensure compliance with agreed procurement frameworks Pavement Specialist (PS): The DSC will provide a specialist to advice on airport pavement design, construction, pavement materials and maintenance techniques. The specialist shall work in collaboration with the Design and Contracts Engineer. The objective of the PS will be to identify long term sustainable solutions to existing pavement problems and performance. Airports of initial interest shall include Hoskins, Mt Hagen and Wewak. 11

26 12 The Pavement Specialist will perform the following tasks, (i) (ii) (iii) (iv) Review existing studies and reports on the condition of pavements at airports which are included in Batch One. In collaboration with the PIU Program Director develop and implement a program of pavement investigation including availability and quality of materials. Recommend pavement works to be carried out as part of Batch One projects. Inspect and report on construction of pavements by the civil works Contractor(s) at critical stages during construction and upon completion Financial Management Specialist (FMS): The DSC will provide a specialist to set up and operate a financial accounting system for the program. The financial accounting system shall be independent of the CAA financial accounting system and entirely concerned with the disbursement of funds from the project trust account. The system will have inbuilt capacity to handle the second and subsequent Batches of projects as successive tranches are drawn down. The FMS shall: (i) (ii) (iii) (iv) Prepare regular subproject cost and commitment reports in accordance with GoPNG and Bank requirements; Prepare management reports for subprojects in compliance with GoPNG and Bank requirements; Provide on the job training to graduate trainees seconded to DSC in basic computer skills, cost estimation, budgeting, GoPNG Financial Administration Act, managing trust accounts and cost accounting; and Prepare the trainees to take over and run the financial accounting system before completion of Batch One Construction and Maintenance Supervisor (CMS) The DSC shall provide up to four Construction and Maintenance Supervisors to supervise construction and maintenance activities. The CMS s will be directly accountable to the Project Manager and will be qualified engineers or experienced technicians. CMS s will have 8 years experience in the administration and supervision of airport construction contracts, particularly pavements, preferably in a developing country. The CMS s will undertake the following tasks: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) act as Engineer s Representative; provide comprehensive day-to-day field contract supervision and administration services at the site; assist the PM to ensure that the notice to commence the works has been issued; ensure that the contractor has arranged proper insurance cover; ensure that the contractor has provided a performance bond; certify advance payments in accordance with the contracts; receive and assess the contractor s implementation program; ensure that the contractor has possession of the site; 12

27 13 (ix) (x) (xi) (xii) (xiii) (xiv) (xv) (xvi) (xvii) (xviii) (xix) (xx) (xxi) (xxii) (xxiii) (xxiv) (xxv) provide the contractor with all necessary survey data and reference for setting out the works; liaise with the appropriate authorities to ensure that all the affected utility services are promptly relocated; carry out checks on the contractor s setting out, ensure that the works are carried out in accordance with drawings and other design details; provide direct day-to-day control of the site materials testing laboratory and its activities; ensure that the works are executed in accordance with all the provisions of the contract, including those concerning standards of workmanship, ordinance clearance, and other safety provisions and protections of the environment; measure the works, agreeing and certifying to interim and final payment certificates for submission to the employer, assisting the employer in preparing loan withdrawal documentation for submission to ADB; administer, assess and, where appropriate, make recommendations on applications for extension of time, claims for additional payment, and contractual disputes; issue site instructions, variation orders, provisional sum orders, and day works orders as appropriate; maintain regular estimates of the cost to completion and time to completion for each contract and ensure that as-built drawings are prepared; prepare monthly progress reports, in a form agreed upon with the DSC and ADB, and submit these within 10 days of the end of the month to which they refer; maintain full and detailed permanent site records, which will include site correspondence, survey data, quality acceptance data, site diaries, measurement and certification, minutes of meetings, and records of all other contractually relevant matters; administer the completion of the contract, including all activities in relation to the issue of the Taking Over Certificate and Defects Liability Certificate; throughout the services, maintain close liaison with the DSC and other relevant agencies, including the police and other Government and regional authorities; prepare a final report, which will be a compilation and condensation of data presented in regular monthly progress reports, together with copies of as-built drawings within two months of the issue of the Defects Liability Certificate; provide on-the-job training for CAA staff in carrying out construction supervision including contract administration, quality control, monitoring and evaluation, and other relevant activities. The on-the-job training will specifically cover the operation of the environmental monitoring and reporting system; ensure that measures are taken to reduce the risk of socially transmitted diseases, including HIV-AIDS in cooperation with the National AIDS Council and its provincial offices. The consultants and the civil works contractors will organize training and disseminate publicity materials targeted to road construction workers and users Training: The PM shall prepare and monitor the training programs for staff as outlined above. DSC and CAA/PIU will liaise regarding suitable staff members for training and monitor their progress. 13

28 Consulting Services: A consulting firm will be appointed by the PIU for each batch to carry out Investigation, Detailed design, Preparation of tender and contract documents and Contract Supervision Procurement: The managing consultant will undertake the majority of the civil works procurement. CAA will be responsible for some procurement, including procurement of the managing consultant CAA.All procurement to be financed under an ADB loan will be carried out in accordance with ADB s Procurement Guidelines (2007, as amended from time to time).international competitive bidding procedures will be followed for all contracts over $3 million for all civil works and $0.5million for goods. National competitive bidding will be used for contracts under these thresholds. Shopping will be used for minor contracts under $100,000 as appropriate. Advance contracting and retroactive financing will be utilized for survey works including geotechnical studies and other necessary studies to assist in the preparation of subsequent sub-projects. Appendix 10: Disbursement Procedures The last date on which any disbursement under any tranche may be made will be 30 June The last financing tranche is expected to be executed no later than 32 December The legal agreement for the first tranche must be executed within 12 months of approval by ADB s board of Directors of the Facility; otherwise the validity of the Facility will lapse. Tranches to be provided under the Facility will be subject to the following procedures and undertakings: Papua New Guinea will have notified ADB of a forthcoming PFR in advance of the submission of the PFR. 1. Papua New Guinea will have submitted a PFR in the format agreed with ADB 2. ADB may, in its sole discretion, decline to authorize the negotiation and execution of any legal agreement for a tranche. 3. If ADB confirms acceptance of the PFR, the legal agreements will be negotiated and executed by the parties. Periodic Financing Request The PFR will substantially be in the form attached hereto, and will contain the following details; 1. Loan amount; 2. Description of the Project and its component(s), including Subprojects, to be financed 3. Cost estimates and financing plan; 4. Implementation arrangements specific to the Project; 5. Confirmation of the continuing validity of, and adherence to, the understandings in this FFA; 6. Confirmation of compliance with the provisions under previous legal agreements, as appropriate; and 7. Other information as may be required under the Facility Administration Manual, or reasonably requested by ADB. 14

29 15 Appendix:11 CADIP Loan Covenants. LOAN AGREEMENT: ARTICLE IV Particular Covenants Covenant Description Due Date Date Complied Delays Ratings Remarks 1 Section In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 5 to this Loan Agreement 2 Section The Borrower shall enable ADB s representatives to inspect the Project, the Goods and Works financed out of the proceeds of the Loan, all other plants, sites, properties and equipment of the Borrower, and any relevant records and documents. 3 Section The Borrower shall take all action which shall be necessary on its part to enable CAA to perform its obligations under the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations. (dd/mm/yy) (dd/mm/yy) (months) (S,PS,U) 31/12/13 On-going 31/12/13 On-going 31/12/13 On-going PROJECT AGREEMENT: ARTICLE II Particular Covenants 4 Covenant Description Due Date Date Complied Delays Ratings Remarks 5 Section (a) CAA shall carry out the Project with due diligence and efficiency, and in conformity with sound administrative, financial, engineering, and environmental and air (dd/mm/yy) (dd/mm/yy) (months) (S,PS,U) 31/12/13 S On-going 15