Greater Mekong Subregion: Flood and Drought Risk Management and Mitigation Project - Socialist Republic of Viet Nam

Transcription

1 GMS Flood and Drought Risk Management and Mitigation Project (RRP REG 40190) Project Administration Manual Project Number: Loan Number: LXXXX October 2012 Greater Mekong Subregion: Flood and Drought Risk Management and Mitigation Project - Socialist Republic of Viet Nam

2 CONTENTS ABBREVIATIONS I. PROJECT DESCRIPTION 1 A. Project's Rationale, Location and Beneficiaries 1 B. Project Impact and Outcome 1 C. Project Components 1 II. IMPLEMENTATION PLANS 3 A. Project Readiness Activities 3 B. Overall Project Implementation Plan 4 III. PROJECT MANAGEMENT ARRANGEMENTS 5 A. Project Stakeholders Roles and Responsibilities 5 B. Key Persons Involved in Implementation 7 C. Project Organization Structure 8 D. Technical Considerations 10 E. Approval of Detailed Design 10 IV. COSTS AND FINANCING 11 A. Detailed Cost Estimates by Expenditure Category 12 B. Allocation and Withdrawal of Loan Proceeds 13 C. Allocation and Withdrawal of Grant Proceeds 14 D. Detailed Cost Estimates by Financier ($ 000) 15 E. Detailed Cost Estimates by Components 16 F. Detailed Cost Estimates by Year ($ 000) 17 G. Disbursement S-curve 18 H. Fund Flow Diagram 19 V. FINANCIAL MANAGEMENT 20 A. Disbursement 21 B. Accounting 23 C. Auditing 23 VI. PROCUREMENT AND CONSULTING SERVICES 24 A. Advance Contracting 24 B. Procurement of Goods, Works and Consulting Services 25 C. Procurement Plan 27 D. National Competitive Bidding Procedures 31 E. Consultant's Terms of Reference 34 VII. SAFEGUARDS 57 A. Environmental Impact 57 B. Land Acquisition and Resettlement 59 C. Indigenous People 61 VIII. GENDER AND SOCIAL DIMENSIONS 61 A. Gender Issues 61 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 63 A. Project Design and Monitoring Framework 63 I

3 B. Monitoring 66 X. ANTICORRUPTION POLICY 72 XI. ACCOUNTABILITY MECHANISM 72 XII. RECORD OF PAM CHANGES 72 Attachment: 1. Project Readiness Filters

4 Project Administration Manual Purpose and Process The project administration manual (PAM) describes the essential administrative and management requirements to implement the project 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 PAM. The Ministry of Agriculture and Rural Development and the Provincial People s Committees 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 Ministry of Agriculture and Rural Development and the Provincial People s Committees of their obligations and responsibilities for project implementation in accordance with ADB s policies and procedures. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan agreement. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreement, the provisions of the Loan Agreement shall prevail. After ADB Board approval of the project's report and recommendations of the President (RRP) 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.

5 i Abbreviations ADB = Asian Development Bank ADF = Asian Development Fund AFS = audited financial statement CQS = consultant qualification selection DMF = design and monitoring framework EIA = environmental impact assessment EMP = environmental management plan ESMS = environmental and social management system GACAP = governance and anticorruption action plan GDP = gross domestic product ICB = international competitive bidding IEE = initial environmental examination IPP = indigenous people plan IPPF = indigenous people planning framework LAR = land acquisition and resettlement LIBOR = London interbank offered rate NCB = national competitive bidding NGO = nongovernment organization PAI = project administration instructions PAM = project administration manual PIU = project implementation unit QBS = quality based selection QCBS = quality- and cost based selection RRP = report and recommendation of the President SBD = standard bidding documents SGIA = second generation imprest accounts SOE = statement of expenditure SPS = Safeguard Policy Statement SPRSS = summary poverty reduction and social strategy TOR = terms of reference

6 I. PROJECT DESCRIPTION A. Project's Rationale, Location and Beneficiaries 1 1. The Project will improve the capacity of GMS countries and communities in the lower Mekong basin (LMB) in Cambodia, Lao PDR, and Viet Nam to prepare for, respond to, and recover from the negative impact of floods and droughts. The Project will focus on subregional activities to strengthen regional cooperation and integration (RCI) in water resources management in general and flood/drought management in particular, and (ii) in country investments which combine structural and non-structural actions to strengthen the capacity to manage and recover from the impacts of flood and/or drought events. 2. In Viet Nam, subprojects have been identified to address structural and non-structural investments in flood and drought management. Non-structural activities will include designing flood and drought interventions for the Cuu Long River Basin, assessing flood situation particularly in the border zone of Vietnam and Cambodia, and strengthening the communitybased capacity for flood and drought mitigation and management in Tieng Giang and Dong Thap provinces. Structural investments will upgrade and rehabilitate primary canal systems to strengthen flood drainage capacity in flood season and increase water conveyance capacity in dry season to secure a stabilized agricultural production, supporting poverty reduction for the local people; improve waterway transportation, etc. (ii) protecting agricultural areas from flood risks; and (iii) protecting people and infrastructure facilities against river bank erosion. The four proposed structural subprojects will be implemented in Tien Giang (2 subprojects), and Dong Thap (2 subprojects) with a combined population of 1,078,700 people. About 84% of the populations of the two provinces are farmers and agriculture is the main economic activity. B. Project Impact and Outcome 3. The Project impact will be reduced economic losses resulting from flood or drought events. The Project outcome will be improved capacity and preparedness to manage and mitigate the impacts of flood and drought events. C. Project Components 4. The Project components will be regional data, information and knowledge base for the management of flood and droughts enhanced, (ii) water management infrastructure developed and/or upgraded, (iii) capacity for community based flood and drought management enhanced, and (iv) effective project implementation. 1. Enhancing Regional Data, Information and Knowledge Base for the Management of Flood and Droughts 5. This component will be updated design standards for flood and drought infrastructure and management strategies for the Cuu Long Delta, including cross border flood management. A study of the options and opportunities to improve cross-border management of floods will be undertaken. 1 ADB TA No.6456-REG: Preparing the GMS Flood and Drought Risk Management and Mitigation was approved for the preparation of the project design and for assistance with project implementation readiness.

7 2 2. Upgrading Water Management Infrastructures 6. This component covers construction or rehabilitation of infrastructure for four flood and drought risk management Subprojects in Dong Thap and Tien Giang provinces, comprising: (ii) (iii) (iv) Upgrading the Main Canal System to Drain and Irrigate Plain of Reeds Area (Dong Thap Province): upgrading to rehabilitate four canals including by dredging approximately 80 km of canals. This will increase their capacity from current levels (that can inadequately irrigate 37,000 ha of winter-spring crop and a similar area of summer-autumn crop) to an adequately watered area of 38,000 ha for both crops with an associated increase in productivity given the timely application of water. It will also increase flood discharge capacity in the canals to protect property and economic activity in the immediate vicinity benefiting agriculture, public infrastructure, urban and private rural property whilst reducing the need to relocate flood affected households. The subproject will improve road access along the length of the canals (about 19.7 km) thereby enhancing market access and will improve water transport services (both freight and passenger) with the increased capacity of canals to accommodate larger and small craft in increasing numbers. Benefits are estimated from incremental agricultural productivity, improved transport services - both rural roads and waterway transport of both passengers and agricultural goods, and from the increased capacity of the canals to accommodate greater flood water during periods of peak flood reducing potential flood threats. Thuong Thoi Tien Bank Protection (Dong Thap Province): upgrading and strengthening of approximately 3 km of flood embankments to stabilize left bank of the Tien River in vicinity of Thuong Thoi Tien town. The embankment will have little impact on flooding in the immediate area of the town site but will at least stabilize the river bank from further erosion. There is considerable commercial and industrial activity in close proximity to the planned embankment whilst agricultural production is limited to small scale household production of will have limited impact. Similarly, the need for relocation of houses (and people) and businesses along the embankment will be relatively small, the greatest impact will come from industrial output, loss of public infrastructure and personal property. Control and Mitigation of Flood Risk for the Ba Rai-Phu An area (Tien Giang Province): upgrading the flood control system by constructing approximately 24 sluice gates to mitigate flood risks. The impact area is currently planted to significant areas of fruit trees (370 ha of durians and 1,950 ha of citrus) and 1,460 ha of rice. Rice does not generate the financial returns that perennial crops can, but, given the threat of flooding that damages the more vulnerable fruit trees, farmers are reluctant to adopt a longer term planning perspective as establishment periods are between 3-7 years and full production is not achieved for 10 years by which time flooding could have decimated the orchard. Benefits are estimated based on assumed flooding frequencies at two levels that have associated levels of tree losses while the with subproject scenario analyses the impact from the expansion of more profitable fruit trees and reduced rice farming on existing agricultural land. Upgrading the Salinity Intrusion System for the Go-Cong Area (Tien Giang Province): constructing approximately 3 sluice gates to enhance control of tidal and brackish water movement from urban areas permitting flushing whilst retaining additional fresh water resources in paddy growing areas. Being relatively close to the ocean, the Go

8 3 Cong area suffers from saline intrusions as brackish water extends up the drainage system into agricultural areas with two peak tides each day depressing crop yields. The nearby urban area benefits from this regular flushing, removing urban waste water out through the natural drainage lines. For the farmers in the area, they seek to retain fresh water in rice paddies rather than have it drain out each day and face the continual threat of saline intrusion. After installation, the water level in irrigation canals will be an estimated 50 cm higher, which will reduce pumping costs by as much as 30%. Benefits from the investment therefore include an incremental crop yield in response to reduced saline intrusion into rice growing areas, and a reduction in water pumping costs while, for the urban inhabitants, the cost of public health care and improved labor efficiency has been estimated as part of the subproject benefit. 3. Capacity Building of Community-Based Flood and Drought Management 7. This component includes developing the capacity of community based flood and drought management (community based disaster risk management CBDRM) which includes focused activities in 63 communes through up scaling of CBDRM strategies in the project area. 4. Project Management 8. This component will strengthen the capacity of MARD CPMU and the Provincial DARD units to ensure effective Project implementation. The CPMU, DARD PPMUs and project implementation consultants will aim to ensure completion of the Project in 6 years with all accounts closed in 6.5 years and the achievement of project objectives. II. IMPLEMENTATION PLANS A. Project Readiness Activities Indicative Activities Jul Aug Sept Oct Nov Dec Jan Feb Mar Who responsible* Advance contracting actions Establish project implementation arrangements SEER/MARD/SBV MARD/DARD ADB Board approval Loan signing Government legal opinion provided Government budget inclusion Loan effectiveness SEER SEER/OGC/MOF MARD/MOF MARD/MOF SEER/OGC MARD = Ministry of Agriculture and Rural Development of Viet Nam, MOF = Ministry of Finance of Viet Nam, OGC = Office of the General Counsel (ADB), SBV = State Bank of Viet Nam, SEER = Southeast Asia Department, Environment, Natural Resources and Agriculture Division (ADB). Source: ADB Staff estimates

9 4 B. Overall Project Implementation Plan No. Activities Loan Approval 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 Q1 Q2 Q3 Q4 A Loan Effectiveness Outputs 1 Upgrading Water Management Infrastructure 1.1 Preparation of Detailed Design, Bidding Documents 1.2 Implementation of Resettlement Plans 1.3 Award of construction contracts 1.4 Implementation monitoring and supervision 2 Capacity Bulding of CBDRM 2.1 Recruitment of Consulting Team and Contract Award 2.2 Implementation monitoring and supervision 3 Enhancing regional data, information and knowledge base for the management of floods and droughts Recruitment of Consulting Team and Contract Award Implementation monitoring and supervision 4 Effective project implementation Establish Project Management Structure Open Imprest Accounts Recruit Project Implementation Consultants Develop PPME Submit Quarterly and Annual Reports Prepare and submit Project Completion Report Implement the Gender Action Plan Maintain and operate CPMU Maintain and operate PPMUs

10 5 III. PROJECT MANAGEMENT ARRANGEMENTS A. Project Stakeholders Roles and Responsibilities Project Stakeholders Executing Agency Ministry of Agriculture and Rural Development through its Central Project Office and a Central Project Management Unit Implementing Agencies Provincial People s Committees Management Roles and Responsibilities MARD, through the CPO, which is the investment owner for the activities implemented by MARD, and the CPMU will manage Government and ADB project funds and will be responsible for overall management and coordination of project implementation. The CPMU, to be established in Can Tho, will provide overall management and coordination of the Project, liaise with PPCs and DARDs in project management and implementation at the project localities, provide guidance and coordination of DARD s operation in rehabilitation and construction of flood and drought management (irrigation and drainage and infrastructure and bank protection works), implement the Project Performance Management System (PPMS), establish and manage two first generation imprest accounts, one for the ADB loan and the other for the AusAid grant, recruit consulting services (excluding local consulting services that are procured for specific subprojects), procure civil works contracts (ICB) for subproject construction, procure vehicles and equipment at the national level, prepare forecasts of contract awards and disbursements, prepare and submit withdrawal applications to ADB; submit reporting and financial statements to ADB; establish and maintain the FGIA; arrange project account audits, and synthesize PPMU s reports and prepare project progress and completion reports as required, and other required tasks Overall responsibility for subproject management and implementation including: Approval of subproject investment reports, including provincial counterpart fund allocation, and give guidance in land acquisition and compensation; and, Approval of procurement plan for subprojects in their

11 6 Department of Agriculture and Rural Development in each participating province province. DARDs will be the investment owner of the subprojects. They will be responsible for approval of implementation and operation arrangements for each subproject. Provincial Project Management Units The PPMUs will be responsible for overall financial management of project funds allocated to the province. Among others, the PPMUs will be responsible for overall management and coordination of subproject implementation including the procurement of goods, civil works and vehicles under National Competitive Bidding and shopping procedures; management and implementation of work, including construction and upgrading of flood and drought management activities (irrigation, drainage and bank protection infrastructure); maintain the SGIAs implementation of Resettlement Plans, Environmental Management Plans; and Gender Action Plan (with technical assistance provided by Project Implementation Consultants). Financiers ADB Provide financing for 70% of the project cost in accordance with the Loan Agreement; Monitor project implementation arrangements, disbursement, procurement, consultant selection, and reporting; Monitor schedules of activities, including funds flow; Review compliance with agreed procurement procedures; Analyze the outcomes of the capacity building and training programs; Monitor effectiveness of safeguard procedures; Monitor project conformity with ADB anti-corruption policies; Undertake periodic review missions; and Undertake midterm project review jointly with the Government Government of Australia Provide joint cofinancing of 9% of the total project cost.

12 7 B. Key Persons Involved in Implementation Executing Agency MARD International Cooperation Department Nguyen Thi Tuyet Hoa Deputy Director General, International Cooperation Division Telephone: Fax: address: tuyethoa.htqt@mard.gov.vn Office Address Ministry of Agriculture and Rural Development 2 Ngoc Ha Street Hanoi Central Project Management Unit (CPMU) Eng. Nguyen Hong Phuong Deputy Director General, Central Project Office, MARD Telephone: Fax: phuongnh@cpo.vn Office Address: Central Project Office Ministry of Agriculture and Rural Development 23 Hang Tre, Hoan Kiem Hanoi, Viet Nam ADB Environment, Natural Resources and Agriculture Division Javed H. Mir Director Telephone No.: Fax: address: jhmir@adb.org Office Address: 6 ADB Avenue Mandaluyong City 1550 Metro Manila Philippines Su Chin Teoh Natural Resources Specialist Telephone No.: Fax: address: steoh@adb.org Office Address: 6 ADB Avenue Mandaluyong City 1550 Metro Manila Philippines

13 Notes: ADB Asian Development Bank, AusAID Government of Australia, CPMU Central Project Management Unit, CPO Central Project Office, DARD Department of Agriculture and Rural Development; MARD Ministry of Agriculture and Rural Development, PPC Provincial People Committee; PPMU Provincial Project Management Unit. Source: ADB Fact Finding. 8 C. Project Organization Structure AusAID ADB MARD (CPO) PPCs Implementation Consultants Nonstructural Service Contractors CPMU located in Can Tho DARDs PPMUs Suppliers Contractors Local consultancies Resettlement Units Management control Advisory and information flows

14 9 9. At the central level: the Executing Agency for the project is MARD. The responsibility for overall project coordination will be delegated by MARD to its CPO. 2 The CPO will establish a CPMU which will be located in Can Tho City to place management close to the implementation teams in the participating provinces; (ii) enable maximum synergy and coordination with the World Bank-funded Mekong Delta Water Resources Management for Rural Development Project CPMO; and (iii) enable easy access by air from Hanoi for oversight by CPO. In terms of the Government s allocation of responsibilities, the CPO will be the investment owner for all activities under the central level responsibility. The CPMU will be responsible for the central level management and coordination of the project. The CPMU will be led by a Project Director with full delegated responsibility for decision making. The CPMU will comprise of full-time qualified and experienced staff and experts acceptable to ADB. 10. At the provincial level: Project implementing responsibilities will be decentralized to the Provincial Peoples Committees (PPCs). The Vice Chairmen of the PPC will assume overall responsibility for implementation coordination in each province. The PPCs shall in turn delegate subproject implementation to the Departments of Agriculture and Rural Development (DARDs). In terms of the Government s allocation of responsibilities, the DARD in each province will be the investment owner for all activities at the provincial level. Each DARD shall establish a Provincial Project Management Unit (PPMU). In order to carry out daily activities at provincial level, DARDs at each province will establish one PPMU led by a full-time project manager with qualifications acceptable to ADB. PPMUs will be responsible for procurement of goods and civil works under the National Competitive Bidding (NCB) and shopping procedures; (ii) management and implementation of works items, including construction and upgrading flood and drought management activities (irrigation, drainage and bank protection infrastructure); (iii) operationalization of PPMUs, implementation of Resettlement Plans (RPs), Environmental Management Plans (EMPs) and Gender Action Plans (GAPs) with technical assistance provided by Project Implementation Consultants (PICs). 11. Key PPMU staff will be selected based on their qualifications and experience in management of similar projects. Approximately ten qualified full-time staff 3 will be appointed to ensure day-to-day operation of the PPMU and to coordinate the work of specific technical experts involved in subproject design and supervision of civil works contracts. 12. An important position in each PPMU will be the Safeguard Officer (SO) appointed to ensure compliance with public consultation requirements, environmental impact assessment and mitigation and social impact assessment and mitigation (including resettlement) aspects of subproject implementation. The SO will play a key role in ensuring that supporting initiatives are implemented so that the poor are able to participate equally in subproject benefits. The SO will supervise the subproject benefit monitoring and evaluation system as well as liaison with beneficiary communities. 13. At the commune levels, the PPMUs will coordinate closely with the Commune People's Committee who will be responsible for ensuring coordination of day-to-day activities at the commune level between the project and commune authorities. This will include organizing public consultations and carrying out implementation monitoring by Commune Supervision Boards (CSBs). District and commune people s committees will provide administrative 2 The functions, responsibilities and organizational structure of CPO have been specified by MARD in its Decision Ref. 3239/QD-BNN-TCCB dated 22 October Chief accountant of the PPMU will be appointed by DARD to work on a part time basis.

15 10 management within their administrative borderlines and be fully responsible for land acquisition, compensation and resettlement, i.e., to facilitate the construction as required in the signed contracts. 14. Instead of establishing provincial steering committees, one of the PPC Vice Chairmen will be nominated to assume overall responsibility for implementation in the provinces. This represents a more efficient means of achieving inter-agency cooperation at provincial level than a formal steering committee. D. Technical Considerations 15. Subproject implementation will include the following steps: (ii) (iii) (iv) (v) (vi) (vii) (viii) Preparation of Detailed Engineering Design; Preparation and approval of resettlement plans; Review/approval of detailed design; Tendering for civil works; Complete implementation of resettlement plans and provision of required compensation to project affected people before issuing Instruction to proceed to contractors. Construction, including technical and safeguard supervision and monitoring; Commissioning, training and handover; and, Operation, maintenance and monitoring. 16. The CPMU will recruit National Safeguards Consultants. The consultants shall be responsible for preparing the resettlement plans in consultation with CPMU, PPMU, PPCs and project affected people. This will ensure that appropriate measures are taken to mitigate any negative social impacts including special measures for land acquisition, compensation, and to ensure full implementation of measures to improve the participation of women and other disadvantaged groups as beneficiaries. The safeguards specialists and the PIC will ensure the gender action plan is fully implemented. E. Approval of Detailed Design 17. The detailed technical design for each subproject will be carried out by the national consultants recruited by the PPMUs. Where required, and on the request of the individual DARDs, PIC consultants will provide guidance and technical advice to the national consultants during the preparation of detailed design. Safeguard consultants among the PIC consultants will conduct spot checks on detailed designs to ensure that the safeguard integrity of project designs is being addressed. 18. Basic designs for subproject investments must take into account: (ii) (iii) previous experiences from similar infrastructure projects; the topographical, environmental and physical conditions of Mekong Delta areas, including use of dredged materials for embankment construction; and, the expected limited capacity and budget for O&M of the improved infrastructure, embankments, and canals and drain channels following completion.

16 The PIC will make regular field inspections during construction to ensure quality assurance as the resources to monitor construction in remote locations are inadequate within the established government structures. IV. COSTS AND FINANCING 20. The total project cost is estimated at $64.36 million including $1.71 million for interest during construction. The Government has requested a loan of SDR 29,650,000 [$45 million equivalent] in various currencies from ADB s Special Funds Resources (ADF) to help finance the Project. The loan will have a 32-year term, including a grace period of 8 years, an interest rate of 1.0% per annum during the grace period and 1.5% per annum thereafter, and such other terms and conditions set forth in the draft loan agreement. 21. The loan will be utilized for land acquisition and resettlement, construction of civil works, infrastructure operations and maintenance, vehicles, equipment, project implementation consultants, project implementation and management and interest during implementation. Taxes and duties ADB financed items will be financed from the loan. Table A below shows financing by expenditure category. 22. The bulk of the proceeds of the loan (excluding the funds for capacity building and those for national level project coordination) will be passed to the two participating provincial governments by the national government as a grant. 23. The Government of Australia will provide $5.89 million grant financing to support Outputs 1 and 3 and costs in Output 4 related to the community based disaster risk management (CBDRM) consultant. 24. The Government will finance the equivalent of $13.47 million, from the central government and the provinces budget allocations. The government contribution will be utilized to pay for taxes and duties, subproject preparation studies, infrastructure operations and maintenance, land acquisition and compensation as part of the implementation management cost and provision of office space 4 for management structures. 25. Section C below shows financing by financiers. The central Government will provide counterpart funds associated for the operation of the CPO/CPMU including staff secondments to assist with overall Project implementation and technical coordination/facilitation of detailed designs for subprojects and taxes and duties. The counterpart funds at provincial level will finance land acquisition and compensation; (ii) tax and duty for the civil works, vehicles and equipments; (iii) staff secondments to assist with preparation, management and implementation of the subprojects; (iv) PPMU operation cost; and (iv) O&M activities. If savings are achieved in the utilization of counterpart funds, MARD will reallocate surplus funds for civil works, implementation consultants, capacity building initiatives, and the establishment and operations of management and implementation structures. 4 Office space shall include office lease.

17 12 A. Detailed Cost Estimates by Expenditure Category (Dong Million) (US$ '000) Local Foreign Total Local Foreign Total I. Investment Costs A. Land Acquisition and Resettlement 107, , , ,260.2 B. Unexploded Ordnance 4, , C. Construction and Civil Works 1. Civil Works Works - infrastructure subprojects 528, , , , , ,019.7 Works - CBDRM 4, , , Subtotal 532, , , , , , Construction Services 66, , , , O&M During Implementation 23, , , ,147.5 Subtotal 623, , , , , ,673.6 D. CBDRM 1. CBDRM Provincial Initiatives 58, , , , , CBDRM Implementation and Management 5, , , CBDRM Monitoring and Evaluation 1, , Subtotal 65, , , , ,591.1 E. Vehicles and equipment 1. Vehicles Vehicles for Outputs 2 and , , Vehicles for CBDRM , , Subtotal 1, , , Equipment Equipment for Output 2 2, , Equipment for Outputs 1 and Subtotal 3, , Subtotal 4, , , F. Services EMP and RP preparation 5, , Workshops - Output 1 3, , Subtotal 9, , , G. Consultants - Project implementation 21, , , , , ,064.6 H. Consultants - Output 1 7, , , I. Project Implementation and Management 52, , , , ,895.0 Total BASELINE COSTS 895, , ,076, , , ,523.4 Physical Contingencies 73, , , , ,397.5 Price Contingencies 127, , , , ,723.7 Total PROJECT COSTS 1,097, , ,290, , , ,644.7 Interest During Implementation - 35, , , ,714.8 Total Costs to be Financed 1,097, , ,325, , , ,359.5

18 13 B. Allocation and Withdrawal of Loan Proceeds ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (Greater Mekong Subregion Flood and Drought Risk Management and Mitigation Project) CATEGORY ADB FINANCING Number Item Total Amount Allocated for ADB Financing SDR Category Subcategory 1 Land Acquisition and 47 percent of total 1,629,000 Resettlement expenditure claimed 2 Works 19,575,000 2A Infrastructure 90 percent of total 18,895,000 subprojects expenditure claimed 2B Infrastructure O&M 90 percent of total 680,000 expenditure claimed 3 Vehicles for 100 percent of total 99,000 Components 2 and 4 expenditure claimed 4 Office refurbishment and 95 percent of total equipment for 88,000 expenditure claimed Component Consultants project implementation excluding CBDRM consultant Project implementation and management 1,269,000 1,176,000 Percentage and Basis for Withdrawal from the Loan Account 100 percent of total expenditure claimed 6A Component 2 90 percent of total 357,000 expenditure claimed 6B Component 4* 100 percent of total 819,000 expenditure claimed 7 Interest during 100 percent of total amount 1,130,000 Implementation due 8 Unallocated 4,684,000 Total 29,650,000 *Excluding CPMU salaries.

19 C. Allocation and Withdrawal of Grant Proceeds ALLOCATION AND WITHDRAWAL OF GRANT PROCEEDS GMS Flood and Drought Risk Management and Mitigation CATEGORY Total Amount Allocated ($) Number Item Category Subcategory 1 Works for CBDRM 230,600 2 CBDRM implementation 3,277,200 2A 2B CBDRM Provincial Initiatives CBDRM Implementation and Management 3 Vehicles for CBDRM 74, Equipment for Components 1 and 3 Workshops for Component 1 38, ,300 6 Consultants 1,006,300 6A 6B 7 Consultants project implementation (only for CBDRM consultant) Consultants Component 1 Project implementation and management for Component 1 51,000 8 Unallocated** 1,038,100 Total 5,887,400 2,877, , , ,000 GOVERNMENT OF AUSTRALIA FINANCING Percentage and Basis for Withdrawal from the Grant Account 90 percent of total expenditure claimed 90 percent of total expenditure claimed 100 percent of total expenditure claimed* 100 percent of total expenditure claimed* 100 percent of total expenditure claimed* 100 percent of total expenditure claimed* 100 percent of total expenditure claimed* 100 percent of total expenditure claimed * 100 percent of total expenditure claimed * * Exclusive of taxes and duties imposed within the territory of the Recipient **This amount may be used towards administration fees and other charges to the extent that these items are not covered by interest and investment income earned by ADB on this grant.

20 15 D. Detailed Cost Estimates by Financier ($ 000) *Government of Australia financing. Administered by the Asian Development Bank. This amount also includes ADB s administration fee, audit costs, bank charges and a provision of foreign exchange fluctuation, if any to the extent that these items are not covered by the interest and investment income earned on the grant or any additional grant from the Government of Australia. Any taxes and duties to be incurred on Government of Australia financed expenditures will be covered by the Central Government.

21 16 E. Detailed Cost Estimates by Components Enhanced Regional Data, Inforamtion and Know ledge base for the Water Management Infrastructure Upgraded Mgt. of Floods and Droughts Upgrading Assessment Mekong of Salt Design of Upgrading River Bank Water Water Criteria Cross-border of Primary Protection Resources Intrusion Capacity for in Flood Canals in in Thuong System in Protection Community-based Effective Mekong Management the Plain Thoi Tien Bai Rai Phu System in Disaster Risk Project Delta Options of Reeds Tow n An Orchard Go Gong Management Implementation Total I. Investment Costs A. Land Acquisition and Resettlement - - 2, , , ,660.3 B. Unexploded Ordnance C. Construction and Civil Works 1. Civil Works Works - infrastructure subprojects , , , , ,696.0 Works - CBDRM Subtotal , , , , , Construction Services , , , O&M During Implementation ,405.8 Subtotal , , , , ,078.4 D. CBDRM 1. CBDRM Provincial Initiatives , , CBDRM Implementation and Management CBDRM Monitoring and Evaluation Subtotal , ,460.1 E. Vehicles and equipment 1. Vehicles Vehicles for Outputs 2 and Vehicles for CBDRM Subtotal Equipment Equipment for Output Equipment for Outputs 1 and Subtotal Subtotal F. Services EMP and RP preparation Workshops - Output Subtotal G. Consultants - Project implementation , ,456.6 H. Consultants - Output ,021.6 I. Project Implementation and Management , ,720.6 Total PROJECT COSTS , , , , , , ,644.7

22 17 F. Detailed Cost Estimates by Year ($ 000) Totals Including Contingencies Total A. Regional Data, Infromation and Knoweldge Based for the Management of Floods and Droughts Enhanced 1. Design Criteria in Mekong Delta Assessment of Cross-border Flood Management Options Subtotal , ,329.5 B. Water Management Infrastructure Upgraded Upgrading of Primary Canals in the Plain of Reeds , , , , Mekong River Bank Protection in Thuong Thoi Tien Tow n , , , , Water Resources System in Bai Rai Phu An Orchard , , , , Upgrading of Salt Water Intrusion Protection System in Go Gong , , , ,763.6 Subtotal 2, , , , , ,611.0 C. Capacity for Community-based Disaster Risk Management , , , ,906.1 D. Effective Project Implementation , , , ,798.1 Total PROJECT COSTS 3, , , , , , ,644.7

23 Cummulative Disbursements ($'000) 18 G. Disbursement S-curve 70, , , , , , , Year of Implementation

24 19 H. Fund Flow Diagram Ministry of Finance Ministry of Agriculture and Rural Development Asian Development Bank AusAID ICD Banking and Finance Department ICD Directorate of Water Resources National Treasury MARD CPO Hanoi MARD CPMU Can Tho ICB, NCB, Shopping, Services Implementation Consultants FGIA Service Providers 2 accounts (MRC, CSO, Research FGIAs Institutes) Provincial Treasury TIEN GIANG DARD - PPMU DONG THAP DARD - PPMU NCB, Shopping, Services SGIA 2 accounts SGIA 2 accounts NCB, Shopping, Services SGIAs Contractors Operations and payments Suppliers Reporting Fund flows Notes: ADB Asian Development Bank, AusAID Government of Australia, CPMU Central Project Management Unit, CPO Central Project Office, CSO civil society organizations, DARD Department of Agriculture and Rural Development; FGIA first generation imprest account; ICB international competitive bidding; ICD International Cooperation Department, MARD Ministry of Agriculture and Rural Development, MRC Mekong River Commission, NCB national competitive bidding; PPC Provincial People Committee; PPMU Provincial Project Management Unit; SGIA second generation imprest account. Source: ADB Fact Finding

25 20 V. FINANCIAL MANAGEMENT 26. The project finance and accounting functions will be performed by qualified and experienced staff both at central level and in participating provinces. Except for Dong Thap, most accountants in the EA and IAs have been trained in ADB loan disbursement procedures. In addition, the project will provide training and written guidelines, especially in ADB procedures, particularly to the two PPMUs. The project will prepare terms of reference that define duties, responsibilities, lines of supervision, and limits of authority for all officers, managers, and staff. The following responsibilities will be performed by different units or persons: authorization to execute a transaction; (ii) recording of the transaction; and (iii) custody of assets involved in the transaction. The bank reconciliation will be prepared by someone other than those who approve payments. Accounting software must be capable of generating reports identifying expenditures in accordance with project components, expenditure accounts, disbursement categories, and sources of funds. A project financial manual will be prepared to be applicable for the project and acceptable to ADB. 27. Controls will be in place concerning the preparation and approval of transactions, ensuring that all transactions are correctly made and adequately explained. The chart of accounts will be able to account for and report on project activities and disbursement categories. The cost allocations to the various funding sources will be made accurately and in accordance with established agreements. The general ledger and subsidiary ledgers will be reconciled and in balance. Accounting software to standards acceptable to ADB for the CPMU and PPMUs that can accommodate electronic transfer of accounting data from PPMUs to the CPMU will be used to facilitate timely reporting. All accounting and supporting documents will be retained on a permanent basis in a defined system that allows authorized users easy access. Regular monitoring and internal audit functions will be built up to monitor transactions along the line from central government to provincial, and subproject levels. Such control procedures will be documented in the project finance and administration manual. 28. The financial management assessment was undertaken during the PPTA. The conclusions were that the existing institutional arrangements of EA and IAs are appropriate for the entity and the Project. The funds flow arrangements are clearly determined- from ADB to Ministry of Finance, to Ministry of Agriculture and Rural Development, and to the two provincial departments of agriculture and rural development. The existing accounting standards, systems and policies are generally suitable for the entities and also for the Project. The accounting and invoicing procedures and internal controls exist in the EA and IAs. Nevertheless, there are certain shortfalls in the financial management capacity in the EA and IAs: no project implementing units (PIU) is found in the organizational structures of the provincial departments of agriculture and rural development; some accountants in the EA and IAs do not have experience in ADB loan disbursement procedures although they have implemented several externally funded projects during the last decade. As the accountants at the provincial level do not conduct ADB loan disbursement directly, they do not have exposure to the related procedures; most accounting staff in the IAs are familiar with the entity accounting, but not the project accounting, especially external financed project accounting; the current project budget system in the EA and IAs is not consistent with the costing principle of ADB; the current financial statements for domestic projects are not consistent with the financial statements of the Project (ADB) in the EA and IAs and the IAs project accounting systems have not been computerized. Thus, the financial statements are prepared by using the Excel Spreadsheets or manually. Financial management assessments concluded that the existing organizational structures of EA and IAs are generally suitable for the implementation of the project and fund flow arrangements

26 21 are clear. There are shortfalls such as the lack of experience with ADB project management for some IAs, however this will be addressed through training. A. Disbursement 29. The ADB loan and Government of Australia grant proceeds will be disbursed in accordance with ADB s Loan Disbursement Handbook (2007, as amended from time to time), 5 and detailed arrangements agreed upon between the Government and ADB. 30. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS), 6 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. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB. 1. Imprest Accounts 31. After ADB loan and Government of Australia grant effectiveness, the Government will open two First-Generation Imprest Accounts (FGIA) in US dollars, one for the ADB loan and the other for the Government of Australia grant, in a bank acceptable to the Government and ADB. 7 The FGIAs will be operated in accordance with ADB's Loan Disbursement Handbook (January 2007, updated from time to time). ADB disbursement procedures will be followed for drawing loan and grant funds that will be affected through the first generation imprest accounts managed by the CPMU under the supervision of the Central Treasury. Funds in the first generation imprest accounts will be used to pay for eligible project expenses encountered by the CPMU and to establish advances in the second-generation imprest accounts (SGIA) in US dollars in each project province that will be controlled by PPMUs under the supervision of the provincial treasury. A PPMU will open two SGIAs, one to receive ADB funds and the other to receive AusAid funds. In total, the Project will have 2 FGIAs and 4 SGIAs The maximum ceiling of the imprest accounts "in aggregate" will not at any time exceed the estimated ADB financed expenditures to be paid from the respective imprest account for the next 6 months or 10% of the respective loan or grant amount, whichever will be lower. 33. The request for initial advance to each FGIA should be accompanied by an Estimate of Expenditure Sheet 9 setting out the estimated expenditures for the first six (6) months of project implementation, and submission of evidence satisfactory to ADB that the FGIA has been duly opened. For every liquidation and replenishment request of the FGIA, the borrower will furnish to ADB (a) Statement of Account (Bank Statement) where the FGIA is maintained, and (b) the Imprest Account Reconciliation Statement (IARS) reconciling the above mentioned bank statement against the EA s records The CPMU Director and the Chief Accountant will be responsible and accountable to the Central Treasury and ADB for managing the budget and for all expenditures related to the 5 Available at: 6 Available at: 7 Bank charges (in relation to the imprest accounts) may be financed by the ADB/AusAid financing. 8 Bank charges may be financed by the ADB loan and AusAid grant. 9 Available in Appendix 29 of the Loan Disbursement Handbook. 10 Follow the format provided in Appendix 30 of the Loan Disbursement Handbook.

27 22 project in accordance with the conditions of the Loan and Grant Agreements, Government and ADB regulations, and other legal documents. 35. SGIAs will be opened and managed by the PPMUs in the two provinces of Tien Giang, and Dong Thap. The amount to be deposited into each of the SGIAs will be equivalent to 6 months estimated expenditures to be financed through the respective SGIA. 36. The PPMUs will prepare liquidation and replenishment requests for their SGIAs. These will be submitted to the CPMU, which will consolidate the requests before sending them to the Ministry of Finance (MOF). The use of SGIA and all disbursements will be made in accordance with ADB s Loan Disbursement Handbook (2007, as amended from time to time). 37. The imprest accounts will be replenished to ensure liquidity of funds. CPMU will ensure that all SGIAs will be audited as part of the regular annual audits of project accounts. 2. Direct Payment and Statement of Expenditures 38. If required, loan and grant proceeds may be disbursed directly to contractors and consultants by ADB, in accordance with the approved contracts between the executing agency or the implementation agencies and the contractors, using direct payment procedures. ADB's statement of expenditures (SOE) procedure may be used to reimburse eligible expenditures and to liquidate advances to the FGIA and SGIA for individual payments up to $100,000. Sample forms for withdrawal of loan proceeds, replenishment of imprest accounts, and SOE can be downloaded from the ADB website. 11 SOE records should be maintained and made readily available for review by ADB's disbursement and review missions or upon ADB's request for submission of supporting documents on a sampling basis, as well as for independent audit. 12 CPMU will be responsible for ensuring that SOEs are operated in accordance with ADB's requirement. 39. Payments made directly from CPMU and PPMUs will be supervised and authorized by the Treasury (at central and provincial levels respectively) upon receipt of payment documents. Based on the payments that have been authorized by the provincial treasury, each PPMU will prepare withdrawal applications with associated payment documents/statements and the SGIA balance sheet (using the CPMU format) and submit these to the CPMU. Upon receipt of reimbursement applications and payment documents from PPMUs, the CPMU will prepare an aggregated withdrawal application and submit to the MOF for endorsement. Authorized withdrawal applications will be forwarded to ADB for processing and for replenishment of the first generation imprest accounts. 40. Before the submission of the first withdrawal application, the borrower shall submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. The borrower is to consolidate claims to meet this limit for 11 Available at: 12 Checklist for SOE procedures and formats are available at: