Pakistan: National Highway Network Development in Balochistan Project

Transcription

1 National Highway Network Development in Balochistan Project (RRP PAK 47281) Project Administration Manual Project Number: Loan Grant Number: June 2014 Pakistan: National Highway Network Development in Balochistan Project

2 Contents ABBREVIATIONS ii I. PROJECT DESCRIPTION 1 II. IMPLEMENTATION PLANS 1 A. Project Readiness Activities 1 B. Overall Project Implementation Plan 2 III. PROJECT MANAGEMENT ARRANGEMENTS 2 A. Project Implementation Organizations Roles and Responsibilities 2 B. Key Persons Involved in Implementation 3 C. Project Organization Structure 4 IV. COSTS AND FINANCING 5 A. Detailed Cost Estimates by Expenditure Category 6 B. Allocation and Withdrawal of Loan Proceeds 7 C. Detailed Cost Estimates by Financier 7 D. Detailed Cost Estimates by Outputs/Components 8 E. Detailed Cost Estimates by Year 9 F. Contracts and Disbursements S-curve 10 G. Fund Flow Diagram 11 V. FINANCIAL MANAGEMENT 13 A. Financial Management Assessment 13 B. Disbursement 14 C. Accounting 15 D. Auditing 15 E. Public Disclosure of Audited Financial Statements 16 VI. PROCUREMENT AND CONSULTING SERVICES 16 A. Advance Contracting and Retroactive Financing 16 B. Procurement of Works and Consulting Services 17 C. Procurement Plan 17 D. Consultant's Terms of Reference 18 VII. SAFEGUARDS 19 A. Environment 19 B. Involuntary Resettlement 19 C. Indigenous Peoples 21 VIII. GENDER AND SOCIAL DIMENSIONS 21 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 22 A. Project Design and Monitoring Framework 22 B. Monitoring 23 C. Evaluation 25 D. Reporting 25 E. Stakeholder Communication Strategy 25 X. ANTICORRUPTION POLICY 27 XI. ACCOUNTABILITY MECHANISM 27 XII. RECORD OF PAM CHANGES 27 Appendixes

3 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 National Highway Authority (NHA) is 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 NHA 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.

4 Abbreviations ADB = Asian Development Bank ADF = Asian Development Fund AFS = audited financial statements CQS = consultant qualification selection DMF = design and monitoring framework EMP = environmental management plan ICB = international competitive bidding IEE = initial environmental examination LAR = land acquisition and resettlement NCB = national competitive bidding NGOs = nongovernment organizations PAM = project administration manual PIU = project implementation unit QCBS = quality- and cost based selection RRP = report and recommendation of the President to the Board SOE = statement of expenditure SPS = Safeguard Policy Statement SPRSS = summary poverty reduction and social strategy TOR = terms of reference ii

5 I. PROJECT DESCRIPTION 1. The proposed project will rehabilitate the existing two-lane national highway of Zhob Mughal Kot (National Highway No. 50: 81 km) and Qila Saifullah Waghum Rud (National Highway No. 70: 120 km) in Balochistan. Local community facilitation centers will also be developed along the project roads to better integrate local communities into the improved mobility through rehabilitated project roads. 2. Impact and Outcome. The impact of the project will be accessible, affordable, and safe national highway network in Balochistan. The outcome will be reduced transport cost from Balochistan to the political and industrial centers of the country. 3. Outputs. The output will be (i) rehabilitated two-lane national highway of Zhob Mughal Kot (National Highway No. 50; 81 km) and Qila Saifullah Waghum Rud (National Highway No. 70; 120 km); and (ii) 5 community facilitation centers along the project roads. II. IMPLEMENTATION PLANS A. Project Readiness Activities Project Readiness Activities Indicative Activities Qtr4 Qtr1 Qtr2 Qtr3 Qtr4 Qtr1 Qtr2 Responsible Complete review of detailed design Nov NHA Prepare bid documents of 4 contract packages Jun NHA/ADB Complete bid evaluation and obtain ADB s clearance May NHA/ADB Approve advance recruitment of supervision consultant Dec ADB Prepare request for proposal for supervision consultancy May NHA/ADB Complete technical and financial evaluation and obtain ADB s clearance May NHA/ADB Allocate government counterpart funds (budgetary considerations) Jun MOF/ NHA Approve and disclose safeguards documents Dec ADB/NHA Post resettlement plan May ADB/NHA Post IEE Jan ADB/NHA ADB Board approval Jun ADB Loan signing Sep EAD/ADB Government legal opinion provided Nov EAD Loan effectiveness Dec ADB ADB = Asian Development Bank, IEE = initial environmental examination, LARP = land acquisition and resettlement plan, MOF = Ministry of Finance, NHA = National Highway Authority. 1

6 B. Overall Project Implementation Plan A. DMF Two-lane roads of Zhob-Mughal Kot and Qila Saifullah-Waghum Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Resettlement activities Execution of civil works Community development centers B. Management Activities Procurement plan key activities to procure contract packages Consultant selection procedures Environment management plan key activities Communication strategy key activities Annual/Mid-term review Project completion report III. PROJECT MANAGEMENT ARRANGEMENTS A. Project Implementation Organizations Roles and Responsibilities Project implementation organizations Project Steering Committee (established for implementation of MFF: National Trade Corridor Highway Improvement Program) National Highway Authority (Executing Agency) Management Roles and Responsibilities Provide guidance on and oversight to the overall implementation and performance of the project. Resolve issues and conflicts that would compromise quality of results, investment cost or project completion time. Approve the annual activity plan. Review implementation progress and resolve issues. Depute/appoint staff for project implementation unit. Review performance of consultants and contractors. Convening meeting on quarterly basis or as and when required. Overall project management; finalizing surveys, designs, bidding documents, and contract awards. Overall construction supervision with the consultants, quantity and quality validation of civil works. Ensuring timely agreed counterpart funds and approval of higher authorities for project activities. Monitoring and evaluating project activities and outputs, including periodic review, 2

7 Project implementation organizations Management Roles and Responsibilities preparation of review and progress reports reflecting issues and time-bound actions taken (or to be taken), and their timely submission to ADB. Preparing regular periodic progress reports, monitoring and evaluation reports, and project completion report and their timely submission to ADB. Endorsing to ADB through EAD the authorized staff in EA with approved signatures for processing payments and maintaining the imprest account(s). Establishing a sound financial management system, submitting timely withdrawal applications to ADB, conducting timely financial audits as per agreed timeframe, submitting audited project account reports, and taking recommended actions. Processing and submitting to ADB any request, when required, for reallocating the loan proceeds. Involving community villages along the project roads and civil society representatives in designing community facilitation centers and implementing them. Publicly disclosing project outputs and procurement results. Quality assurance of works, and services of consultants and counterpart staff. Ensuring compliance with all loan covenants and reporting to ADB. Preparing, implementing, and monitoring safeguards in accordance with the Resettlement Plans and IEEs, ADB s SPS (2009), and Loan Agreement. Establishing a grievance redress mechanism with a dedicated grievance staff to address all subproject-related grievances. Ensuring projects' sustainability during post-implementation stage and reporting to ADB on the achieved development impacts. ADB Assisting NHA in providing timely guidance at each stage of the project implementation. Reviewing all the documents that require ADB approval. Conducting regular project review missions, a midterm review, and project completion mission. Processing withdrawal applications and releasing eligible funds. Updating regularly the project performance review reports with the assistance of NHA. Updating and posting on ADB website the project information for public disclosure, and the safeguards documents in accordance with the ADB SPS (2009). Ministry of Finance/Economic Affairs Division (EAD) Monitoring the project implementation and providing respective coordination and facilitation. Budgeting, allocating and releasing counterpart funds. Endorsing to ADB the authorized staff with approved signatures for WAs processing. Processing and submitting to ADB any request, when required, for reallocating the loan proceeds. ADB = Asian Development Bank; EA = executing agency; IEE = initial environmental examination; MOF = Ministry of Finance; NHA = National Highway Authority; PIU = project implementation unit; SPS = Safeguards Policy Statement; WA= withdrawal application. B. Key Persons Involved in Implementation Executing Agency National Highway Authority (NHA) Shahid Ashraf Tarar Chairman Telephone: address: chairman@nha.gov.pk Borrower and Oversight Agency Economic Affairs Division Ms. Sabina Qureshi Deputy Secretary Telephone:

8 ADB Transport & Communications Division (CWTC) Central and West Asia Department Mission Leader Xiaohong Yang Director Telephone No.: address: xyang@adb.org Dong-Soo Pyo Lead Transport Specialist Telephone No.: address: dspyo@adb.org C. Project Organization Structure 4. Figure 3.1 depicts the proposed organizational structure for implementation of the project. The steering committee constituted for the supervision of the MFF: National Trade Corridor Highway Improvement Program will also act as a steering committee for the project playing the role spelled out in Section III-A. 5. NHA will be the executing agency (EA), which has the mandate for planning, designing and implementing transport projects for national highways as well as policy and regulatory authority over the sector. The Project Implementation Unit (PIU) will be responsible for overall implementation of construction including supervision of contractors and supervision consultants and day-to-day monitoring of project implementation in accordance with the provisions of the PAM and related legal agreements. 6. With the concurrence of the Ministry of Communications and ADB, NHA will be responsible for appointing a General Manager for the PIU with overall responsibility for the fulfillment of the PIU's mandate. In addition, the PIU will comprise two project directors, two engineers, a project monitoring and evaluation expert, a social safeguard specialists, an environmental specialists and two administrative staff with the experience and motivation necessary for successful implementation of each project. 4

9 Figure 3.1: Organization Chart Steering Committee NHA ADB PIU Engineering Monitoring and Evaluation Safeguards Accountant Administrative Support Construction Supervision Consultants Civil Works Contractors 7. Implementation details of the community facilitation center component are in Appendix 1. IV. COSTS AND FINANCING 8. The project is estimated to cost $235 million (Table IV.1). Table IV.1: Project Investment Plan ($ million) Item Amount a A. Base Cost b 1. Resettlement Cost Civil Works Community Facilitation Centers Supervision Consultant 9.0 Subtotal (A) B. Contingencies c 26.3 C. Financing Charges During Implementation d 5.5 Total (A+B+C) a Includes taxes and duties of $16 million to be financed from government resources. b In March 2014 prices. c Physical contingencies computed at 10% for civil works. Price contingencies computed at 1.8% 2.2% on foreign exchange costs and 7.5% 9.0% on local currency costs includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Includes interest and commitment charges. Interest during construction for ADB loan(s) has been computed at the 3-year forward London interbank offered rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. Sources: NHA and ADB estimates. 5

10 9. The financing plan is in Table IV.2. Table IV.2: Financing Plan Source Amount ($ million) Share of Total (%) Asian Development Bank Ordinary capital resources (loan) Government Total Source: ADB estimates. A. Detailed Cost Estimates by Expenditure Category $ million Foreign Local Total % of Total Exchange Currency Cost Base Cost A. Base Cost a 1. Resettlement Cost Civil Works a. Zhob-Mughal Kot b. Qila Saifullah- Waghum Rud Community Facilitation Centers 4. Supervision Consultant Taxes and Duties Total Base Cost (A) B. Contingencies b 1. Physical Price Subtotal (B) C. Financial Charges during Construction c 1. Interest during Implementation Commitment Charge Subtotal (C) Total Project Cost (A+B+C) a In March 2014 prices. b c Physical contingencies computed at 10% for civil works. Price contingencies computed at 1.8% 2.2% on foreign exchange costs and at % on local currency costs includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. Includes interest and commitment charges. Interest during construction for ADB loan(s) has been computed at the 3-year forward London interbank offered rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. 6

11 B. Allocation and Withdrawal of Loan Proceeds PERCENTAGE OF ADB CATEGORY FINANCING Amount Allocated ($) Basis for Withdrawal from the Loan Item Category Subcategory Percentage Account of total expenditure 1 Resettlement Cost 1,000, claimed* 2 Civil Works 172,200, of total expenditure claimed 3 Community Facilitation Centers 5,000, of total expenditure claimed* 4 Consulting Services 9,000, of total expenditure claimed* Financial Charges during Implementation 5,500, of amount due 5 6 Unallocated 2,300, Total 195,000,000 *Exclusive of local taxes and duties. C. Detailed Cost Estimates by Financier ADB Government Amount % of Cost Amount % of Cost Total ($ million) Category ($ million) Category Cost A. Base Cost a 1. Resettlement Cost b Civil Works a. Zhob-Mughal Kot b. Qila Saifullah Waghum Rud 3. Community Facilitation Centers b 4. Supervision Consultant b Total Base Cost (A) B. Contingencies c 1. Physical Price Subtotal (B) C. Financial Charges during Construction d 1. Interest during Implementation Commitment Charge Subtotal (C) Total Project Cost (A+B+C) a In March 2014 prices. b c d Net of taxes and duties. Physical contingencies computed at 10% for civil works. Price contingencies computed at % on foreign exchange costs and at % on local currency costs includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. Includes interest and commitment charges. Interest during construction for ADB loan(s) has been computed at the 3-year forward London interbank offered rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. 7

12 D. Detailed Cost Estimates by Outputs/Components Zhob-Mughal Kot Qila Saifullah- Community Total Waghun Rud Facilitation Centers Cost Amount % of Cost Amount % of Cost Amount % of Cost ($ million) ($ million) Category ($ million) Category ($ million) Category A. Base Cost a 1. Resettlement Cost b Civil Works Community Facilitation Centers b 4. Supervision Consultant b Total Base Cost (A) B. Contingencies c 1. Physical Price Subtotal (B) C. Financial Charges during Construction d 1. Interest during Implementation Commitment Charge Subtotal (C) Total Project Cost (A+B+C) a In March 2014 prices. b c d Net of taxes and duties. Physical contingencies computed at 10% for civil works. Price contingencies computed at % on foreign exchange costs and at % on local currency costs includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. Includes interest and commitment charges. Interest during construction for ADB loan(s) has been computed at the 3- year forward London interbank offered rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. 8

13 E. Detailed Cost Estimates by Year A. Base Cost a Total Cost ($ million) Resettlement Cost b Civil Works Community Facilitation Centers b Supervision Consultant b Total Base Cost ()A) B. Contingencies c 1. Physical Price Subtotal (B) C. Financial Charges during Construction d 1. Interest during Implementation Commitment Charge Subtotal (C) Total Project Cost (A+B+C) % of Total Project Cost a b c d In March 2014 prices. Net of taxes and duties Physical contingencies computed at 10% for civil works. Price contingencies computed at % on foreign exchange costs and at % on local currency costs includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. Includes interest and commitment charges. Interest during construction for ADB loan(s) has been computed at the 3-year forward London interbank offered rate plus a spread of 0.5%. Commitment charges for an ADB loan are 0.15% per year to be charged on the undisbursed loan amount. 9

14 F. Contracts and Disbursements S-curve Contract Awards Disbursements Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Q4 Total Total Total Source: ADB estimates. 10

15 G. Fund Flow Diagram Figure 4.3: Fund Flow Diagram Borrower Ministry of Finance ADB WITHDRAWAL APPLICATION DIRECT PAYMENT National Highway Authority PIU Imprest Account Contractors Consultants 11

16 Amount exceeding Amount less than or equal to $100,000 equivalent Contractor Consultants PIU NHA ADB Initial Advance Direct Payments & Replenishments WA for Initial Imprest Account Advance Initial Imprest Account Advance paid IPC prepared to Verification of IPC Verification and certification for payment and supporting documents IPC preaudited and processed for payment Contractor s bank account Check for payment from imprest account Imprest Account Replenishment of imprest account processed WA and SOE for replenishment of imprest account Payment processed for direct payment to contractor Legend Process Flow Documents Flow Funds Flow WA for Direct Payment to contractor prepared 12

17 A. Financial Management Assessment V. FINANCIAL MANAGEMENT 10. As a part of a series of background assessments, diagnostics, and discussion papers commissioned by ADB to underpin the development of its Country Partnership Strategy (CPS) ( ) for Pakistan, ADB conducted a risk assessment of country level systems with focus on public sector management, procurement, and corruption mitigation measures. Activities under the project will seek to further minimize and mitigation these risks through training, restructuring, and institutional strengthening. On the whole, the financial management capacity of NHA is adequate and no major issues are noted. 11. Key financial management assessment findings and lessons learned from the ongoing National Trade Corridor Highway Investment Program are as follows: Particulars A. Funds Flow Arrangements Table 5.1: Summary of the Financial Management Assessment Conclusions Funds flow arrangements are adequate but timely provision of counterpart funds to NHA is likely to pose a challenge. Nonetheless, NHA has enough capability to smoothly operate under the ongoing project. B. Staffing NHA is staffed with experienced financial specialists. Within NHA, a PIU has been established to implement the project. The PIU headed by the General Manger is staffed with financial specialists who are trained on ADB financial management procedures. C. Accounting Policies and Procedures D. Internal and External Audits E. Reporting and Monitoring NHA and PIU s accounting policy is based on the Pakistan National Accounting Standards which are in line with International Accounting Standards. NHA s internal audit department undertakes the required internal auditing of the PIU. Both NHA s financial statement accounts and project financial statements are audited by independent external auditors on an annual basis in accordance with the ISA, which complies with the requirements of ADB. NHA comply with the reporting requirements of the MOF, and other government bodies. Current PIU's quarterly progress reports are being regularly submitted to ADB. ADB = Asian Development Bank; ISA = International Standards on Auditing; NHA = National Highway Authority; PFRs = periodic funding requests; PIU = project implementation unit. 12. Risk Analysis: During the implementation phase, the PIU might face some risks that can generally be divided in two main categories: (i) country level; and (ii) organization/project level. Unavailability or delay in the release of counterpart funds can be attributed as major country specific risk for the project. There are no major financial management risks once the PIU is adequately staffed and trained. Barring the security situation, key risk mitigation measures set out in Table 5.2 will be in place before loan effectiveness. All such measures will be reviewed and updated throughout the project implementation. 13

18 Table 5.2: Risk Assessment and Mitigation Measures Risk Risk Assessment* Risk Mitigation Measures Inherent Risk 1. Country-specific Risks S MOC and NHA will ensure the timely release of counterpart funds, as per loan covenants. EAD will mobilize IFI s grant funding for government s portion of the project financing. 2. Entity-specific Risks M Extensive training of PIU staff on ADB procedures will be carried out. 3. Project-specific Risks M Security in project areas. Security insurance measures and costs are embedded in civil works and consultants contracts. Overall Inherent Risk M Control Risk 1. Implementing Entity M Organizational capacity augmentation with the induction of experienced PIU staff will support the existing organizational structure. 2. Funds Flow S Almost all disbursement will be made through direct payment to contractors and consultant except for $1.0 million of resettlement cost. 3. Staffing M Dedicated and qualified accounting and financial management staff at PIU level will be recruited. 4. Accounting Policies and Procedures M Accounting Policy is in line with the national and international accounting standards and meets the requirements of ADB. 5. Internal Audit M NHA s internal auditor will audit PIU s project financial statements. 6. External Audit M Audit of the project financial statements will be done in accordance with the International Standards on Auditing, by an independent auditor acceptable to ADB. 7. Reporting and Monitoring M PIU will regularly report in accordance with ADB requirements on inherent adequate control mechanisms. Timeliness of such reports will be ensured through regular monitoring and follow-up actions by ADB. Overall Control Risk M * H High, S Substantial, M Moderate, N Negligible or Low. ADB = Asian Development Bank; EAD = Economic Affairs Division; MOC = Ministry of Communication; NHA = National Highway Authority; PIU = project implementation unit Source: ADB estimate. B. Disbursement 13. The Loan proceeds will be disbursed in accordance with ADB s Loan Disbursement Handbook (2012, as amended from time to time), and detailed arrangements agreed between the government and ADB Pursuant to ADB's Safeguard Policy Statement (2009) (SPS), 2 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. ADB will ensure that the project is in compliance with applicable national laws and regulations and will be bound by the prohibited investment activities list. 15. To facilitate project implementation through timely release of loan proceeds, the EA, through PIU, will establish an imprest account promptly after loan effectiveness at a commercial 1 Available at: 2 Available at: 14

19 bank acceptable to ADB. 3 The ceiling of the imprest account will not at any time exceed 10% of the loan amount. The imprest account is to be used exclusively for the ADB s share of eligible expenditures. The currency of the imprest account will be US Dollar. The EA, through PIU, who established the imprest account in its name is accountable and responsible for proper use of advances to the imprest account. The initial and additional advances to the imprest account may be requested based on 6 months estimated expenditures to be financed through the imprest account. The imprest account will be established, managed, and liquidated in accordance with ADB s Loan Disbursement Handbook and detailed arrangements agreed by the Government and ADB. ADB s Loan Disbursement Handbook describes which supporting documents should be submitted to ADB and which should be retained by the government for liquidation and replenishment of an imprest account. 16. The statement of expenditure (SOE) procedure will be used to reimburse eligible expenditure and to liquidate and replenish the imprest account for individual payments of $100,000 equivalent and below. SOE records should be maintained and made readily available for review by ADB's disbursement and review mission or upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit. 17. PIU (refer to Para. 8) will be responsible for (i) preparing disbursement projections, (ii) requesting budgetary allocations for counterpart funds, (iii) collecting supporting documents, and (iv) preparing and sending withdrawal applications to ADB. Before the submission of the first withdrawal application, the government 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 $100,000 equivalent, under reimbursement and imprest fund procedures, unless otherwise approved by ADB. Individual payments below this amount should generally be paid from the imprest account, or by the EA and subsequently claimed to ADB through reimbursement. ADB reserves the right not to accept withdrawal applications below the minimum amount. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. C. Accounting 18. PIU will maintain separate project financial statements and records by funding source for all expenditures incurred on each project under the project. Project financial statements prepared by PIU annually will follow International Financial Reporting Standards. D. Auditing 19. PIU will cause the annual project financial statements for the project to be audited by an auditor acceptable to ADB in accordance with International Standards on Auditing. Such audited project financial statements, the audit report (which includes an opinion on whether the audited project financial statements presents fairly, in all material respects, the cash receipts and disbursements of the loan) and a management letter (which sets out the deficiencies in the internal control of the Project that were identified in the course of the audit, if any) will be submitted in the English language to ADB within 6 months of the end of the fiscal year by PIU. The annual audit report will also include an opinion on the use of the loan proceeds and compliance with the financial covenants of the Loan Agreements as well as on the use of the 3 The bank charges incurred in the operation of the imprest account may be financed from the loan proceeds. 15

20 procedures for the imprest account and statement of expenditures. 20. The Government and PIU have been made aware of ADB's policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. The ADB s Policy on delayed submission of audited project financial statements is summarized as follows: When audited project financial statements are not received by the due date, ADB will write to the executing agency advising that (i) the audit documents are overdue; and (ii) if they are not received within the next six months, requests for new contract awards and disbursement such as new replenishment of imprest accounts, processing of new reimbursement, and issuance of new commitment letters will not be processed. When audited project financial statements have not been received within 6 months after the due date, ADB will withhold processing of requests for new contract awards and disbursement such as new replenishment of imprest accounts, processing of new reimbursement, and issuance of new commitment letters. ADB will (i) inform the executing agency of ADB s actions; and (ii) advise that the loan may be suspended if the audit documents are not received within the next six months. 21. ADB reserves the right to verify the financial statements for each project under the project to confirm that the share of ADB's financing is used in accordance with ADB's policies and procedures. E. Public Disclosure of Audited Financial Statements 22. ADB will disclose the audited project financial statement and the auditors opinion on the project financial statements within 30 days of the receipt from NHA by posting them on the ADB website. VI. PROCUREMENT AND CONSULTING SERVICES A. Advance Contracting and Retroactive Financing 23. All advance contracting and retroactive financing will be undertaken in conformity with ADB s Procurement Guidelines (2013, as amended from time to time) (ADB s Procurement Guidelines) 4 and ADB s Guidelines on the Use of Consultants (2013, as amended from time to time) (ADB s Guidelines on the Use of Consultants). 5 The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. The borrower and NHA have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the Project. 24. Advance contracting. Advance contracting was allowed for procurement of civil work contractors and recruitment of supervision consultants. NHA will proceed with tendering, bid evaluation for civil work packages, and technical and financial evaluation of consultant proposals before loan effectiveness. 25. Retroactive financing. Retroactive financing will be considered for the resettlement cost of $1.0 million, equivalent to 0.5% of the total ADB loan, incurred before loan effectiveness, 4 Available at: 5 Available at: 16

21 but not more than 12 months before the signing of the loan agreement. B. Procurement of Works and Consulting Services 26. All procurement of works will be undertaken in accordance with ADB s Procurement Guidelines. International competitive bidding procedures will be used for civil works contracts estimated to cost $5 million or more. An 18-month procurement plan indicating threshold and review procedures, works, and consulting service contract packages is in Section C. 27. All consultants will be recruited according to ADB s Guidelines on the Use of Consultants. 6 The terms of reference for all consulting services are detailed in Section D. An estimated 2,382 person-months (73 international, 2,309 national) of consulting services are required for construction supervision. Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method with a standard quality: cost ratio of 80:20. C. Procurement Plan Project Name: National Highway Network Development in Balochistan Project Number: Approval Number: Country: Pakistan Executing Agency: National Highway Authority Project Financing Amount: $235 million Implementing Agency: National Highway Authority ADB Financing: $195 million Non-ADB Financing: $40 million Date of First Procurement Plan: Date of this Procurement Plan: a. Methods, Thresholds, Review and 18-Month Procurement Plan 1. Procurement and Consulting Methods and Thresholds 28. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of works. Method Procurement of Works Threshold International Competitive Bidding (ICB) for Works Above $5,000,000, Consulting Services Method Comments Quality and Cost Based Selection (QCBS) 80:20 2. ADB Prior or Post Review 29. Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the project. Procurement Method Prior or Post Comments Procurement of Works ICB Works Prior Recruitment of Consulting Firms Quality- and Cost-Based Selection (QCBS) Prior 6 Checklists for actions required to contract consultants by method available in e-handbook on Project Implementation at: 17

22 3. Works Contracts Estimated to Cost More Than $5 Million Works Contracts Estimated to Cost More Than $5 Million 30. The following table lists works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description Zhob Mughal Kot Package 1 (49 km) Zhob Mughal Kot Package 2 (32 km) Qila Saifullah Waghum Rud Package 1 (70 km) Qila Saifullah Waghum Rud Package 2 (50 km) Contract Value ($ million) Procurement Method Prequalification of Bidders (y/n) Advertisement Date (quarter/year) 51.9 ICB N III/ ICB N III/ ICB N III/ ICB N III/2014 Comments 4. Consulting Services Contracts Estimated to Cost More Than $100, The following table lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description Design review and construction supervision Contract Value ($ million) Recruitment Method Advertisement Date (quarter/year) International or National Assignment 9.0 QCBS (80:20) II/2014 International Comments b. Indicative List of Packages Required Under the Project 32. The following table provides an indicative list of all procurement (goods, works and consulting services) over the life of the project. Contracts financed by the Borrower and others should also be indicated, with an appropriate notation in the comments section. General Description Estimated Value (cumulative) ($ million) Estimated Number of Contracts Procurement Method Domestic Preference Applicable Works ICB No General Description Consulting Services Estimated Value (cumulative) ($ million) Estimated Number of Contracts Recruitment Method Type of Proposal QCBS/International FTP Comments Comments D. Consultant's Terms of Reference 33. The supervision consultants will consist of 73 person-months of international consultants and 2,309 person-months of national consultants. Consultant s terms of reference are in Appendix 2. 18

23 VII. SAFEGUARDS A. Environment 34. The National Highway Authority (NHA) shall ensure that the design, construction, operation and maintenance of roads to be financed under the project are carried out in accordance with Asian Development Bank s (ADB) Safeguard Policy Statement (SPS, 2009), the applicable laws and regulations in Pakistan, and the initial environment examination (IEE). The NHA shall ensure that potential adverse environmental impacts arising from the project are minimized by implementing all the mitigation and monitoring measures in the environment management plan (EMP). The NHA shall ensure that: (i) (ii) (iii) (iv) (v) The EMP is to be updated based on surveys of the alignment once the detailed design is available and prior to the implementation of civil works; NHA has sufficient resources to implement and record the implementation of the EMP; NHA, with the help of a construction supervision consultant, will submit to ADB semi-annual environmental reports for the project within 3 month of the close of each half of the calendar year during project implementation, and the reports will include a review of the progress on environmental measures in the IEE and EMP, monitoring of such measures, problems encountered and remedial measures taken; The detailed engineering design and civil works and other contracts for the project incorporate applicable environmental measures identified in the IEE and the EMP; and Civil works contractors need to prepare a site-specific EMP that reflect their understanding and commitment to address environmental issues, and are supervised by the construction supervision consultant to ensure their compliance with the requirements of the IEE and the EMP. B. Involuntary Resettlement 35. Land Acquisition and Resettlement: The government through NHA shall ensure that new land acquisition is avoided as much as possible, resettlement impacts are minimized by restricting clearance of available ROW limits to the extent of clearly defined construction limits on each side of centerline of existing carriageway, resettlement and all other activities under the project are carried out in full compliance with all applicable laws and regulations of Pakistan, ADB s SPS (2009), and the resettlement plan (RP) prepared for sub-projects. NHA shall ensure that: (i) the RPs for both subprojects are finalized/updated based on design review and demarcation of construction limits on each side of center line of existing carriageway; (ii) finalized and updated, implementation ready RPs duly endorsed by NHA are disclosed to affected persons in their local language in accordance with the ADB s SPS (2009); (iii) the RPs updated and finalized following the final engineering design are submitted to ADB for review and clearance prior to award of any civil works contract; (iv) all land and rights of way required by the project shall be cleared and made available in a timely manner (in accordance with the schedule as agreed in the relevant civil works contract); (v) the activities of the civil works contractor for the project road are in compliance with the approved RPs. and (iv) no physical displacement or economic displacement shall occur and no road section or part of a road section is handed over to the civil works contractor until: (a) the draft RPs are updated, finalized, and endorsed by ADB; (b) compensation at full replacement cost has been paid to affected persons in accordance with 19

24 the updated and finalized RP for relevant project components or sections that are ready to be constructed; (c) other entitlements listed in the updated and finalized RPs have been provided to affected persons; and (d) RP implementation report is submitted to ADB and determined as satisfactory. 36. According to resettlement plans, there will be no land acquisition and key resettlement impacts include partially affected structures (permanent structures and temporary thatched sheds/kiosk) and trees encroached right-of-way. All identified assets (structures and trees) are owned by 351 affected households (encroachers) with 2,798 affected persons (86 affected households with 612 affected persons in Zhob Mughal Kot road and 265 affected households with 2,186 affected persons in Qila Saifullah Loralai Waighum Rud road. The impact analysis reflect that (i) no affected household will face 10% or more loss of his productive assets and (ii) no any affected household will be displaced physically due to execution of project civil works. All the affected households will restore/rehabilitate their structures by reconstruction of lost parts at the same place outside of the right-of-way and will not be displaced physically or economically. The project impacts will be temporary and transitory in nature, hence irrespective of number of APs the projects are placed under category B for IR safeguards. 37. Change to the scope, location or alignment of the project road shall be avoided and if during design review or implementation of the project, any such change to the scope, location or alignment of road is identified, shall not be made without prior approval of ADB. Any new LARrelated impacts as a result of final detail engineering design or changing in project scope, location or alignment will require a new LARP which should be submitted to ADB for its approval. The additional plan should be prepared following ADB s SPS and its required guidelines. No construction activities shall be commenced in the sections with new/additional LAR impacts before full implementation of ADB approved LARP is confirmed and cleared by ADB. Any new LAR impacts must be kept minimal so as not to cause changes in the project s involuntary resettlement categorization from B (limited impacts) to A (significant impact). 38. Grievance Redress: In addition, the NHA, shall ensure (i) efficient grievance redress mechanisms are in place and functional prior starting RP implementation and contractor s mobilization to assist affected persons resolve queries and complaints, if any, in a timely manner; (ii) all complaints are registered, investigated and resolved in a manner consistent with the provisions of Grievance Redress Mechanism as agreed in ADB approved RPs, iii) the Complainants/aggrieved persons are kept informed about status of their grievances and remedies available to them and iv) adequate staff and resources are available for supervising and monitoring the implementation progress of the RP. 39. Information Disclosure: Information sharing and disclosure are tools to engage local communities and the projected affected population during project planning, development and implementation aimed to promote understanding about project activities and discuss way forward for fruitful solutions of developmental problems such as local needs, problems and prospects of resettlement. NHA shall ensure the resettlement plan and monitoring reports are disclosed by: (i) uploading the draft and ADB approved final resettlement plans on NHA and ADB websites, (ii) placing hard copies of approved resettlement plan in the offices of PMU, EALS, and PIU/Project Director Offices at Zhob and Loralai, (iii) and translating the executive summary of ADB approved resettlement plans, bearing information on project impacts, asset valuation, entitlements, compensation budget and provisions with institutional arrangements in place and providing to the affected community. 40. Since consultations were carried out at preparatory stage of the project and resettlement 20

25 plans, however for continued information sharing, NHA shall ensure that: (i) the Land Acquisition and Resettlement Unit with support from Supervision Consultants conduct additional consultations during updating and implementation of the RPs, (ii) the affected persons are informed about, (a) resettlement impacts, asset valuation, entitlements and compensation payment modalities with time lines, (b) Rehabilitation and income restoration measures suggested for the project affected persons and, (c) grievance redress mechanism put in place with status of redress of grievances, (iii) Liaison is maintained with affected persons and community, and consultation meetings are held regularly with surrounding communities and project affected persons including women and vulnerable groups to share project related information during project implementation period. 41. Monitoring and Evaluation: RP implementation shall be monitored internally by NHA with support of a Resettlement Specialist mobilized through Construction Supervision Consultant following monitoring parameters specified in the RPs. Land Acquisition and Resettlement Units in PIU will conduct day to day internal supervision and monitoring of RP implementation progress to ensure compliance with the provisions of the RPs for each subproject. During RP implementation phase, the monitoring results shall be consolidated into quarterly monitoring reports and shared with ADB for review and clearance. Once RP implementation is completed, bi-annual monitoring reports will be prepared and submitted to ADB for review and clearance. Upon clearance of monitoring reports by ADB, these will be disclosed by uploading on NHA and ADB websites. 42. The overall responsibility to oversee RP implementation rest with NHA through its Environment, Afforestation, Land and Social (EALS) Wing headed by GM ELAS located in NHA headquarters. However, at project level, Project Implementation Unit (PIU) will have support of Land Acquisition and Resettlement Unit (LARU) headed by GM project for finalization/updating of resettlement plans, RP implementation and monitoring of resettlement activities. The LARU will be supported by a Resettlement Specialist mobilized through supervision consultants to carry-out its functions including RP finalization/updating, implementation and monitoring complained with ADB safeguard requirements. 43. Pursuant to ADB's Safeguard Policy Statement (2009), ADB funds may not be applied to the activities described on the ADB s Prohibited Investment Activities List set forth at Appendix 5 of the Safeguard Policy Statement. C. Indigenous Peoples 44. The project is screened as category C project for Indigenous peoples planning requirement under SPS 2009 and the NHA shall ensure that sub-projects financed under the loan do not have any indigenous peoples impacts within the meaning of the Safeguard Policy Statement (2009). And if during design review or implementation, any change to the scope, location or alignment of road with prior approval of ADB, causes to have any such impacts, NHA shall take all steps required to ensure that the Project complies with the applicable laws and regulations of Pakistan and the ADB s Safeguard Policy Statement VIII. GENDER AND SOCIAL DIMENSIONS 45. The main works during civil works will be implemented with use of heavy machinery, with limited use of unskilled labour. However, execution of civil works may generate limited employment and business opportunities for local communities during execution of civil works. During implementation NHA will incorporate provisions in bidding documents and civil work 21

26 contracts that contractors shall (i) comply with Pakistan s applicable labor laws and related international treaty obligations and not employ child labor, (ii) provide safe work conditions and separate sanitation facilities for male and female workers, (iii) provide equal wage to male and female workers for work of equal value, (iv) provide employment opportunities for women and, (v) carry out programs of preventing HIV/AIDS, illicit drugs and human trafficking at workers campsites. Furthermore, NHA with the support of the construction supervision consultants and contractors shall conduct awareness raising campaign for public and workers about health safety and social issues, preventive measures on HIV/AIDS and sexually transmitted diseases, illicit drugs and human trafficking etc. 46. Although the bidding document will include clauses ensuring gender equalities in wages, it is unlikely for women to participate in project civil works or road side business due to established socio-cultural practices in the province and along the project roads. IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION A. Project Design and Monitoring Framework DESIGN AND MONITORING FRAMEWORK Design Summary Impact Accessible, affordable, and safe road network in Balochistan Performance Targets and Indicators with Baselines Annual road traffic growth rate in Balochistan 50% higher than GDP growth rate in Pakistan from 2018 to 2020 Daily vehicle-kilometers from Quetta to Peshawar through N50 and from Quetta to Multan through N70 increased by 50% in the 1 st full year of operation of two project roads Data Sources and Reporting Mechanisms National economic statistics NHA traffic statistics Assumptions and Risks Assumption Government s development agenda for balanced provincial development intact and adequate development budget allocated for Balochistan. Government s investments for transport sector in Balochistan sustainably financed. Outcome Reduced transport cost from Balochistan to the political and industrial centers of the country Outputs Two-lane roads of Zhob Mughal Kot and Qila Saifullah Waghum Travel time from Quetta to Islamabad, Peshawar, and Multan reduced to 28 hours, 25 hours, and 22 hours, respectively by 2018 from 33 hours, 30 hours, and 38 hours, respectively in 2013 Total of 201 km roads rehabilitated by 2017 with IRI no higher than 4 (Zhob Mughal Kot = 81 km and Qila Saifullah Waghum = 120 km). Supervision consultant s baseline survey NHA traffic statistics Supervision consultant s project progress report and project completion report Risk Poor security and political instability deteriorates and disrupts free flow of traffic. Risks Few internationally qualified contractors and consultants are interested in the work. The procurement 22