ANNEX Action Fiche for Technical Cooperation Facility II for Palau

ANNEX Action Fiche for Technical Cooperation Facility II for Palau 1. IDENTIFICATION Title Technical Cooperation Facility CRIS no. FED/2013/024-369 Total cost 180,000 (6.2% of NIP A envelope) EDF contribution 180,000 Aid method management mode Project approach decentralised management DAC code 15010 Sector Economic and Development Planning 2. RATIONALE Sector Context The Republic of Palau is located in the north Pacific about 340 km East of the Philippines. It has a land area of 525 km 2 and an exclusive economic zone (EEZ) of 600,000 km 2. Its population is around 20,000, about 25% of whom are foreign workers. Palau achieved independence in 1994. EU assistance to Palau began in June 2000 when the country joined the ACP Group and signed the Cotonou Agreement. The delivery of EU development cooperation was initially slow, caused in part by the country's limited knowledge of European Development Fund (EDF) procedures, but also by the lack of attention the Delegation was able to afford at that time. Implementation capacity within the government is limited. The additional complexity of managing EU programmes often exacerbates an already over-stretched administration. The project will provide needed technical assistance, operational and capacity building support to the office of the National Authorising Officer (NAO) of Palau to facilitate the implementation of actions under the National Indicative Programme 2008-2013 and programming of the 11 th EDF. It will provide long-term technical and funding assistance to augment the NAO's capacity to fulfil obligations under the Cotonou Agreement and in accordance with EU rules and regulations governing external assistance and short to medium-term technical assistance requirements in matters related to the EDF. It will also fund the organization of, and attendance to, necessary conferences and seminars for training and capacity building of government officials and non-state actors on topics related to the priorities of the ACP-EU Partnership Agreement. The project will aim generally to strengthen donor coordination in Palau, and particularly in the 10 th EDF focal sector of renewable energy. The NAO will identify priorities and coordinate support and actions within Palau. Lessons Learnt - For the efficient implementation of EDF programmes in Palau it is essential to provide technical assistance to the government and, in particular, to the NAO. Prior to joining the ACP-EU group Palau had little experience of the European Development Fund or of EU Development Assistance. Currently, Palau's own resources cannot deal with the complexity of EU cooperation. Lessons learned from other Pacific islands clearly show that technical assistance and financial and operational support to the NAO most often results in enhanced programme performance, at least in terms of financial commitment and disbursement. 1

Similarly, the government lacks in-house capacity to address macro-economic issues or issues related to Public Finance Management (PFM) reform. - The 10 th EDF NIP has placed technical personnel in Palau to facilitate the implementation of its renewable energy focal sector. Additionally the TCF will facilitate the coordination of current and pipe-lined EDF funded regional programmes in particular, Strengthening Pacific Economic Integration Through Trade (SPEITT), Development of sustainable tuna fisheries in Pacific ACP countries phase 2 (DEVFISH II), Scientific Support for the Management of Coastal and Oceanic Fisheries in the Pacific Islands Region (SCICOFISH), Deep Sea Minerals in the Pacific Islands Region (DSM), Global Climate Change Alliance (GCCA) and Disaster Risk Reduction programmes. Donor Coordination Significant bilateral partners include US, Japan, and Taiwan. Palau s ties with Asia, particularly Japan, are expanding rapidly. The US and Japan maintain embassies in Palau. The United States (US) is by far the most important contributor to Palau's economy donating in the region of 63% of total transfers. This is followed by Taiwan and Japan. Currently the EU contributes about 1% of Official Development Assistance (ODA) ( 0.6 million). Australia's aid programme to Palau is administered from Pohnpei, Federated States of Micronesia (FSM), while the Asian Development Bank oversees its programmes from Manila. There is no resident EU Member State in Palau. EU development cooperation continues to be managed from the Suva Delegation 5,000 km to the South. The lack of physical presence in Palau and, indeed, the entire North Pacific, makes coordination efforts difficult. This project will assist government in its efforts to coordinate donor aid assistance more effectively. 3. DESCRIPTION Objectives The overall objective of the proposed project is to assist the government attain its objectives as described in its National Development strategy in general and the EU-Palau Country Strategy Paper 2008-2013 in particular. Purpose The project purpose is to support the identification, formulation, and implementation of actions under the current NIP and other EDF funds, including the upcoming 11 th EDF and to assist government strengthen its macro-economic policy and public finance management systems so that the country may become eligible for EU budget support. Expected results and main activities The expected results are: 1. Enhanced capacity of government, and in particular the NAO, to identify, implement, monitor and report on EDF programmes in accordance with EU rules and procedures and improved macroeconomic policy and PFM reform process. 2. Skills improved among project/programme stakeholders and increased visibility and awareness of EDF Programmes and the role of the Office of the NAO. 3. Improved country attendance at EU related conferences and seminars. Activity 1: Technical Assistance Facility 2

This activity will enhance government capacity to develop and monitor macroeconomic policy, to assist planned PFM reforms and help government attain EU budget support eligibility. This activity will also provide much of the operational support and resource requirements to the NAO office as it undertakes 10 th EDF contracting and 11 th EDF programming. Activity 2: Training Support for Projects and Programmes This activity will finance various educational actions such as seminars or awareness-raising activities and curriculum development prior to or during the formulation of a project or programme identified in the NIP in accordance with EDF procedures. Activity 3: Conferences and Seminars This activity includes: (a) more general short-term training and capacity building activities for ACP officials and/or non-state actors on topics related either to the priorities of the ACP-EU Partnership Agreement (structural adjustment, democracy, environment, poverty reduction, trade, development assistance, aid coordination, etc.) or to EDF or other EU administrative and financial procedures, (b) direct support of improving national and state government coordination efforts related to sustainable development, energy policy and renewable energy enhancement and other ACP-EU Partnership Agreement priorities, and (c) participation by ACP officials or non-state actors in EDF/EU related international meetings or seminars on development, national and state government coordination of environmental, energy or trade themes. Stakeholders Key stakeholders for the TCF are: - the NAO office and Budget Division - the Division of Energy will benefit indirectly as a result of being the primary collaborator of the NAO and the implementing and key advisory agency of the 10 th EDF. - the State Utilities will benefit as a result of more effective communication and coordination of 10 th EDF efforts. - Non-State Actors (NSA) will benefit indirectly as a result of more timely administration of EDF and budget line funding. - the EU will benefit indirectly as a result of efficiency gains in programme delivery. - the country, in general, will benefit as greater efficiency in EDF delivery could trigger additional future resources. Risks and assumptions - It is assumed that the development cooperation between the EU and Palau remains congenial in the spirit of partnership and mutual respect. Indeed, Palau will seek to enhance this development cooperation across a number of sectors and in a broad range of areas moving forward. - Capacity building support may be undermined by the early departure of trained counterpart staff. It is a common occurrence in governments which draw on a very small pool of skilled and well-educated professionals that the acquisition of more specialist knowledge leads to rapid promotion within government or exit from the public service altogether. This risk can be mitigated by involving as many officials as possible in the capacity building programme and by organising knowledge transfer that does not unduly rely on individuals but on systems. Crosscutting issues 3

The project will adopt a gender neutral policy with regards to recruitment. None of the envisaged project activities are considered to be detrimental to the environment. The project will have a positive impact on good governance and ODA coordination through the technical assistance provided. 4. IMPLEMENTATION ISSUES Implementation method The TCF will be implemented by decentralised management. The overall responsibility for the implementation of the project will be the National Authorising Officer, who may request the Commission to implement technical assistance contracts under Article 23.6 of Annex IV to the Cotonou Agreement. For procurement undertaken by the NAO the Commission will control ex ante the contracting procedures for contracts > 50,000 and ex post for procurement 50,000. Through the signing of programme estimates, payments may be decentralised for operating costs and contracts up to the following ceilings: Works Supplies Services Grants < 300,000 < 300,000 < 300,000 < 100,000 The Technical Assistance to NAO will coordinate the Programme estimates (PE) and implementation of the TCF. In accordance with the Partnership Commitments of the Paris, Accra and Busan Declarations the TCF will use existing structures within government and will provide support for capacity building by training government employees assigned as counterparts to the TA to the NAO. The change of management mode constitutes a substantial change except where the Commission "re-centralises" or reduces the level of tasks previously delegated to the beneficiary country, international organisation or delegate body under, respectively, decentralised, joint or indirect centralised management. Procurement award procedures All contracts implementing the action must be awarded and implemented in accordance with the procedures and standard documents laid down and published by the Commission for implementation of external operations, in force at the time of the launch of the procedure in question. Participation in the award of contracts for the present action shall be open to all natural and legal persons covered by the 10 th EDF Financial Regulation. All programme estimates must respect the procedures and standard documents laid down by the Commission, in force at the time of the adoption of the programme estimate in question. The EDF financial contribution covers the ordinary operating costs deriving from the programme-estimates. Budget and calendar The estimated cost of these activities including provisions for contingencies, are broken down as follows: 4

Activity Cost ( ) Technical Assistance Facility 120,000 (Expertise required including: fees, living allowances, necessary equipment, travel and reimbursable expenses) Training Support for Projects & Programmes 10,000 (including Supplies and equipment, rental of premises and incidental expenditures) Conferences and Seminars 15,000 (including incidental expenditures, flights, registration, per diem) EU visibility 2,000 Audit 10,000 External Evaluation 15,000 Contingencies * 8,000 TOTAL 180,000 * Contingencies may only be used with prior written approval of the Commission. Timetable The operational implementation phase of the project will span 42 months as from signature of the Financing Agreement, followed by a 24-month closure period. Any balance of funds remaining available shall be automatically cancelled 6 months after the end of the period of execution of the Financing Agreement. The contracts and programme estimates through which the Financing Agreement is implemented must be signed by both parties no later than three years from the date of the entry into force of the Financing Agreement. This deadline cannot be extended. This restriction does not apply to contracts for audit or evaluation of this facility, which may be signed later. Performance monitoring The main indicator will be the commitment and disbursement of resources available under the 10 th EDF NIP. This will involve the successful identification, formulation, implementation and evaluation of actions under the 10 th EDF focal sector programme. Monitoring will be conducted through periodic visits by EU Delegation staff and external Resultoriented Monitoring (ROM) missions. Evaluation and audit An evaluation of this technical cooperation facility may be conducted toward the end of the period of implementation. A provision for annual audits of PEs and a final project audit are included in the budget. Indicators for the final evaluation will include: A functioning NAO office Commitment and disbursement rates No. and quality of missions completed A fully committed 11 th EDF National Indicative Programme Communication and visibility All activities conducted under this initiative will highlight the EU s financial support. Contractors under this TCF will familiarise themselves with the EU Visibility Guidelines. The TA will be responsible for ensuring EU visibility for the TCF as well as all other EU funded programmes and projects in Palau. 5