Bangladesh: Khulna Water Supply Project

Transcription

1 Khulna Water Supply Project (RRP BAN 42171) Project Administration Manual Project Number: Loan Number: XXXX May 2011 Bangladesh: Khulna Water Supply Project

2 Contents I. PROJECT DESCRIPTION 1 II. IMPLEMENTATION PLANS 1 A. Project Readiness Activities 1 B. Overall Project Implementation Plan 4 III. PROJECT MANAGEMENT ARRANGEMENTS 5 A. Project Stakeholders Roles and Responsibilities 5 B. Key Persons Involved in Implementation 5 C. Project Organization Structure 6 IV. COSTS AND FINANCING 7 A. Detailed Cost Estimates by Expenditure Category 8 B. Allocation and Withdrawal of Loan Proceeds 9 C. Detailed Cost Estimates by Financier 10 D. Detailed Cost Estimates by Outputs/Components 11 E. Detailed Cost Estimates by Year 12 F. Contract and Disbursement S-curve 13 G. Funds Flow Diagram 14 V. FINANCIAL MANAGEMENT 15 A. Financial Management Assessment 15 B. Disbursement 15 C. Accounting 16 D. Auditing 16 VI. PROCUREMENT AND CONSULTING SERVICES 16 A. Advance Contracting 16 B. Procurement of Goods, Works and Consulting Services 16 C. Procurement Plan 17 D. Consultant's Terms of Reference 17 VII. SAFEGUARDS 17 A. Environmental Safeguards 17 B. Social Safeguards (Involuntary Resettlement) 18 VIII. GENDER AND SOCIAL DIMENSIONS 19 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 22 A. Project Design and Monitoring Framework 22 B. Evaluation 22 C. Reporting 23 D. Stakeholder Communication Strategy 23 X. ANTICORRUPTION POLICY 23 XI. ACCOUNTABILITY MECHANISM 24 XII. RECORD OF PAM CHANGES 24

3 ANNEXES Annex A Procurement Plan 25 Annex B Outline TOR of Consultants 29 Annex C Design and Monitoring Framework 45 Project Administration Manual Purpose and Process Khulna Water Supply Project is jointly financed ADB, JICA, and the Government. The procedures and guidelines in the Project Administration Manual are applicable to the components to be financed by ADB and the Government. For the components to be financed by JICA and the Government, applicable procedures and guidelines are described in Operational Matters and Agreed Points (Appendix 7 of the joint mission MOU). The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with the 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 executing and implementing agencies are wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB s policies and procedures. ADB staff is responsible to support implementation including compliance by executing and implementing agencies 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 CBO = community-based organization CMSC = Corporate Management Support Consultant CQS = consultant qualification selection DMA = District Metering Areas DMF = design and monitoring framework DSC = Design & Supervision Consultants ECA = Environmental Conservation Act ECR = Environmental Conservation Rules EIA = environmental impact assessment EMP = environmental management plan ERD = Economic Relations Division GAP = Gender Action Plan ICB = international competitive bidding IEE = initial environmental examination JICA = Japan International Cooperation Agency KCC = Khulna City Corporation KWASA = Khulna Water Supply and Sewerage Authority LGD = Local Government Division M&E = monitoring and evaluation MLGRDC = Ministry of Local Government, Rural Development, and Cooperatives MOF = Ministry of Finance NCB = national competitive bidding NGOs = nongovernment organizations OHT = overhead tanks PAI = project administration instructions PAM = project administration manual PMU = project management unit PIU = project implementation unit QBS = quality based selection QCBS = quality- and cost based selection QPR = Quarterly Progress Report RRP = Report and Recommendation of the President to the Board of Directors SOE = statement of expenditure SPRSS = Summary Poverty Reduction and Social Strategy SPS = Safeguard Policy Statement SWTP = surface water treatment plant TOR = terms of reference

5 I. PROJECT DESCRIPTION 1. Project. The Project will develop a sustainable water supply system in Khulna city. Khulna city relies entirely on groundwater and the project will introduce surface water as the main water source to avoid excessive groundwater abstraction. The project will also strengthen corporate management systems of the Khulna Water Supply and Sewerage Authority (KWASA). The impact of the project will be improved urban services in Khulna. The outcome of the project is that majority of households in Khulna have reliable access to potable water. The outputs of the Project are presented below. The Project will be cofinanced on parallel basis by Asian Development Bank (ADB) and Japan International Cooperation Agency (JICA). JICA will finance most activities under Output 1, while ADB s funding will be mostly utilized to finance activities under Output 2 and Output 1: Augmented and sustainably managed water sources in Khulna city. Activities under Output 1 include construction of intake facilities, a surface water treatment plant, an impounding reservoir and a raw water transmission main, which will be financed by JICA; and rehabilitation of deep tube wells and monitoring of groundwater, which will be financed by ADB. Quality of raw water will be carefully monitored and appropriately mixed with water stored in the impounding reservoir to meet quality standards, particularly salinity level. Groundwater will be carefully monitored and the abstraction will be limited to a sustainable level. 3. Output 2: Extended and efficiently managed distribution network in Khulna city. Activities under Output 2 will be financed by ADB and include expansion of distribution network, construction of a clear water transmission main, and establishment of zonal offices. The current system covers only part of the city, which will be expanded to the entire Khulna city. The distribution networks will be organized in five blocks managed by zonal offices, and blocks will be further divided into District Metering Areas(DMA). Amounts of inflow, outflow, and consumption will be diligently monitored for each DMA to identify and minimize leaks. 4. Output 3: Professional and sustainable corporate management of KWASA. Activities under Output 3 will be financed by ADB and include capacity building programs and consulting services for developing and strengthening KWASA s corporate management system. The Project will strengthen KWASA s corporate management system, since KWASA has been recently established with limited financial and human resources. The Project will support the implementation of various activities under the first 5-year business plan, which includes a capital investment plan, financial plan, and human resource development plan. In addition to the expansion of service areas, volumetric tariff and other charges will be introduced to enhance revenues. Human resources will be gradually expanded and adequate training will be provided for professional management of the water supply system. II. IMPLEMENTATION PLANS A. Project Readiness Activities Action Due Responsibility DPP clearance ECNEC approval of DPP 15 June 2011 PC Steering Committee and PMU

6 2 Action Due Responsibility Notification to expand the Steering Committee 20 June 2011 LGD is issued Notification to establish the PMU is issued 20 June 2011 LGD Appointment of PMU staff 15 August 2011 KWASA Loan processing (ADB) Management review meeting [completed] ADB Loan negotiations [completed] ERD, ADB ADB Board's project approval 14 June 2011 ADB Loan signing 30 June 2011 ADB, ERD Loan effectiveness 15 July 2011 KWASA, ERD Loan processing (JICA) Loan negotiations [completed] JICA, ERD Project approval [completed] Safeguard Endorsement of safeguard documents [completed] KWASA Cut-off date (section 3 notice) for land 20 June 2011 KWASA, Deputy acquisition Commissioner s office Consultancy recruitment (ADB) Invitation of EOI [completed] KWASA Deadline of EOI [completed] KWASA Draft short list and RFP sent to ADB [completed] KWASA RFP issued 20 June 2011 KWASA Consultancy recruitment (JICA) Invitation of EOI [completed] KWASA Draft short list and RFP sent to JICA completed KWASA RFP issued 20 June 2011 KWASA ADB = Asian Development Bank, DPP = Development Project Proforma, ECNEC = Executive Committee for National Economic Council, EOI = expression of interest, ERD = Economic Relations Division, FD = Finance Division, GOJ = Government of Japan, JICA = Japan International Cooperation Agency, KWASA = Khulna Water Supply and Sewerage Authority, LGD = Local Government Division, PC = Planning Commission. PEC = Project Evaluation Committee, PMU = Project Management Unit, RFP = request for proposal, SLA = subsidiary loan agreement. Readiness filters Filters Fact finding mission Before loan negotiations Status Finalize draft invitation documents Consultant selection for critical packages finalized up to Bid Evaluation Report EOI request issued and short list being prepared. Prepare procurement plan Endorsed procurement plan [Completed] Procurement plan prepared and agreed Finalize draft PQ Endorsed draft PQ Not applicable Finalize draft bidding Endorsed bidding documents Bidding document being

7 3 Filters Fact finding mission Before loan negotiations Status documents prepared by Executing Agency with consultant s support Prepare disbursement plan Endorsed disbursement plan [Completed] Disbursement plan prepared Prepare draft land acquisition and resettlement plan Endorsed land acquisition and resettlement plan [Completed] Resettlement plan, including plans for land acquisition, finalized DPP is in the final stage of approval Draft DPP prepared by Approval of DPP by the Executing Agency government BER = Bid Evaluation report, DPP = Development Project Proforma, TOR = terms of reference, PQ = Prequalification.

8 4 B. Overall Project Implementation Plan ADB = Asian Development Bank, DD = Detailed Design, DPP = Development Project Proforma, JICA = Japan International Cooperation Agency, PQ = Pre-qualification. Note: The table shows the schedule up to 2014, though the project will be completed in December Major works will be completed in the middle of 2016, followed by minor works (expansion of service connections).

9 5 III. PROJECT MANAGEMENT ARRANGEMENTS A. Project Stakeholders Roles and Responsibilities Project Stakeholders Central Level Inter-ministerial Steering Committee Management Roles and Responsibilities Provide policy guidance and supervise the overall project implementation Ensure smooth inter-ministry/agency coordination Executing Agency KWASA (PMU) Implement the project, including procurement and supervision of works Report the progress of the Project ADB Jointly monitor and advise overall project implementation Reviews and issues no-objection for procurement of ADB-funded components Provide funding for eligible claims of ADB-funded components JICA Jointly monitor and advise overall project implementation Reviews and issues no-objection to procurement of JICA-funded components Provide funding for eligible claims of JICA-funded components B. Key Persons Involved in Implementation Executing Agency KWASA KWASA ADB Division Director Project Team Leader Officer's Name: M.D. Abdullah Position: Managing Director Telephone: address: Office Address: 1062/1ka, Khan-A-Sabur Road, Khulna- 9100, Bangladesh. Officer's Name: Jaglul Haider Position: Deputy Managing Director Telephone: address: Office Address: 1062/1ka, Khan-A-Sabur Road, Khulna- 9100, Bangladesh. Staff Name: M. Teresa Kho Position: Director, SAUW Telephone No.(632) address: Staff Name: Masayuki Tachiiri

10 6 JICA Project Team Leader Position: Urban Development Economist, SAUW Telephone No. (632) address: Staff Name: Kotohi Inoue Position: Deputy Director, South Asia Division 4, South Asia Department; Tel: C. Project Organization Structure 5. The following chart shows the organizational structure of the Project implementation. Figure 1: Project Organizational Structure Inter-ministerial Steering Committee (Chaired by LGD) Managing Director Deputy MD -Technical KWASA Corporate Management Support Consultant Project Director Project Management Unit Project manager-adb PMU Project manager-jica PMU Design and Supervision Consultant - ADB Design and Supervision Consultant - JICA ADB = Asian Development Bank, JICA = Japan International Cooperation Agency, KWASA = Khulna Water Supply and Sewerage Authority, LGD = Local Government Division, PMU = Project Management Unit. 6. Inter-ministerial Steering Committee. The Steering Committee established for the feasibility study commissioned by Japan International Cooperation Agency (JICA) will be expanded and become the inter-ministerial Steering Committee of the Project. The interministerial Steering Committee will include Local Government Division (LGD) under Ministry of Local Government, Rural Development and Cooperatives (MLGRDC), Department of Environment (Khulna Division) under Ministry of Environment and Forest, Economic Relations Division (ERD) and Finance Division under Ministry of Finance, Implementation, Monitoring and

11 7 Evaluation Division (IMED) under Planning Commission, KWASA, and KCC. The interministerial Steering Committee will be chaired by the Secretary of LGD. The inter-ministerial Steering Committee will meet at least every four months or as and when necessary. The interministerial steering committee will be responsible for policy guidance, supervision of implementation and smooth inter-ministerial coordination for the Project. 7. Executing Agency and Project Management and Coordination Unit (PMU). KWASA will be the executing and implementing agency and will be responsible for the execution of the Project. A PMU will be established at KWASA to assist KWASA in implementing the Project, including selection of consultants, procurement of goods and works, supervision of works, and monitoring and reporting of project implementation, including compliance with safeguard and other assurances. The PMU will be headed by a full-time Project Director preferably in the rank of Chief Engineer, supported by two full-time Project Managers preferably in the rank of Superintending Engineer. One Project Manager will be responsible for components funded by ADB and one Project Manager will be responsible for components funded by JICA. Each project manager will be supported by Senior Accounting Officer (1), Accounting Officer (1), Executive Engineer (1), Assistant Engineer (2), Sub-Assistant Engineer (4), Project Technician (4), and Computer Operator (1). Including shared Rehabilitation and resettlement officer (1), Environmental Engineer (1), and office assistants and support staff, the PMU will have 43 staff. 8. Subsidiary Loan Agreement. KWASA will enter into a subsidiary loan agreement with the Ministry of Finance (MOF). The subsidiary loan agreement will set out the financial terms and conditions, acceptable to ADB. The term includes 30 years or repayment period including a grace period of 8 years, and an interest rate of 2% per annum. The subsidiary loan will be in local currency and the Government will bear the foreign exchange risk. IV. COSTS AND FINANCING 9. The Project is estimated to cost $364 million. The Government has requested a loan in various currencies equivalent to SDR 46,927,000 (equivalent to $75.00 million) from ADB s Special Funds resources to help finance the Project. The loan will have a 32-year term, including a grace period of 8 years, an interest charge 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. The ADB loan of $75.00 million equivalent or 21% of the Project cost will be used to finance civil works (56% of the gross-tax claim), equipment and vehicles (100% of the net-tax claim), and consulting services (100% of the net-tax claim). JICA will provide 15,729 million yen ($184 million equivalent) to finance civil works and consultants. The Government will provide $105 million, to finance the cost for land acquisition and taxes, and part of civil works and equipment.

12 A. Detailed Cost Estimates by Expenditure Category 8 Table 1. Cost Estimates by Expenditure Category ( in US $) % of total cost Including Taxes % of total cost A. Base Cost 1. Civil Works and Equipment 238,889, % 293,688, % 2. Consultants 18,210, % 21,778, % 3. Resettlement Cost 5,926, % 5,926, % 4. Administration Cost 1,614, % 1,614, % Sub-total A 264,641, % 323,008, % B. Contingencies 1. Physical 13,603, % 13,603, % 2. Price 24,266, % 24,266, % Sub-total B 37,869, % 37,869, % C. Financing Charges During Implementation 1. Interest During Implementation 2,655, % 2,655, % Sub-total C 2,655, % 2,655, % D Tax and duties 58,366, % Grand Total 363,532, % 363,532,849 Note: Numbers may not sum precisely because of rounding %

13 B. Allocation and Withdrawal of Loan Proceeds Item Total Amount Allocated for ADB Financing (SDR) Percentage and basis for withdrawal from the Loan Account Works 35,531, % of total expenditure Equipments 580, % of total expenditure* Resettlement Costs (other than land acquisition and asset compensations cost) 235, % of the total expenditure* Incremental costs 434, % of the total expenditure* Consulting Services 4,596, % of the total expenditure* Interest during Construction 1,617, % of the total expenditure* Unallocated 3,934,000 Total 46,927,000 * Exclusive of taxes and duties imposed within the territory of the Borrower. Note: Numbers may not sum precisely because of rounding. 9

14 C. Detailed Cost Estimates by Financier 10 Table 2. Cost Estimates By Financier (in US $) ADB JICA GoB % of Cost Category Total % of Cost Category Tax Non-Tax Total % of Cost Category A. Base Cost 1. Civil Works and Equipment 57,711, % 145,871, % 54,798,786 35,306,831 90,105, % 293,688, Water Intake Facility - 81,501, % 24,599,970-24,599, % 106,101, SWTP and Impounding Reservoir - 64,369, % 19,428,907-19,428, % 83,798, Development of Monitoring Wells 128, % - 23,903 78, , % 230, DTW Rehabilitation 165, % - 29, , , % 296, Distribution Reservoirs and OHTs 13,137, % - 2,450,496 8,037,136 10,487, % 23,624, Clear Water Transmission Main 16,568, % - 3,097,652 10,136,470 13,234, % 29,802, Distribution Network Improvement 25,833, % - 4,825,805 15,804,332 20,630, % 46,463, Connection for LIC 1,060, % - 194, , , % 1,904, Office Equipment and vehicles 818, % - 147, , , % 1,466, Consultants 7,345, % 10,865, % 3,567,974-3,567, % 21,778, Design Supervision Consultants - JICA - 10,865, % 1,629,796-1,629, % 12,495, Design Supervision Consultants - ADB 5,118, % - 1,352,498-1,352, % 6,470, Groundwater Monitoring 182, % - 48,486-48, % 230, Corporate Management Support 2,044, % - 537, , % 2,581, Resettlement Costs 375, ,551,380 5,551, % 5,926, Land and Assets ,551,380 5,551, % 5,551, Resettlement Costs 375, % , Administration Cost 694, % , , % 1,614,410 Sub-total A 66,126, % 156,736, % 58,366,760 41,778, ,145, % 323,008, B. Contingencies Physical 2,885, % 8,760, % - 1,957,770 1,957, % 13,603, Price 3,402, % 18,467, % - 2,395,558 2,395, % 24,266,056 Sub-total B 6,288, % 27,227, % - 4,353,328 4,353, % 37,869, C. Interest During Implementation 2,585, % ,817 69, % 2,655,237 Sub-total C 2,585, % ,817 69, % 2,655, Total Project Cost (A+B+C) 75,000, % 183,964, % 58,366,760 46,201, ,568, % Note: Numbers may not sum precisely because of rounding. 363,532,849 Total

15 D. Detailed Cost Estimates by Outputs/Components Table 3. Cost estimates By Outputs and Components (in US $) Output 1 Output 2 Output 3 GRAND TOTAL (Output 1+2+3) A. Base Cost 1. Civil Works and Equipment 146,343,916 89,481,896 3,063, ,889, Consultants 11,047,602 5,118,300 2,044,700 18,210, Land and Resettlement Costs 3,348,622 2,578,115-5,926,737 Compensation 3,348,622 2,202,758-5,551,380 Resettlement costs - 375, , Administration Cost - - 1,614,410 1,614,410 Sub-total A 160,740,141 97,178,311 6,722, ,641,363 B. Contingencies Physical 8,976,148 4,474, ,190 13,603, Price 18,803,293 5,116, ,492 24,266,056 Sub-total B 27,779,441 9,590, ,682 37,869,489 C. Interest During Implementation 85,601 2,406, ,814 2,655,237 Sub-total C 85,601 2,406, ,814 2,655,237 D. Taxes 45,760,950 11,724, ,352 58,366,760 Total Project Cost (A+B+C+D) 234,366, ,899,955 8,266, ,532,849 Note: Numbers may not sum precisely because of rounding. 11

16 E. Detailed Cost Estimates by Year 12 Table 4. Cost Estimates by Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Total ADB Loan A. Base Cost 1. Civil Works and Equipment 1,070,688 7,657,662 14,304,515 13,388,385 15,866,060 5,424,128 57,711, Consultants 2,378,837 1,758,286 1,677, , , ,500 7,345, Resettlement 150, , , Administration Costs 106, , , , , ,799 53, ,196 Sub-total A 257,059 3,781,421 9,522,748 16,088,700 14,407,070 16,481,259 5,588,027 66,126,285 B. Contingencies 96, ,826 1,378,577 1,465,804 1,948, ,017 6,288,295 C. Interest During Implementation 42, , , , , ,855 2,585,419 Total ADB Loan 257,059 3,921,015 10,320,061 17,817,076 16,405,902 19,178,988 7,099,899 75,000,000 JICA Loan 75,000,000 A. Base Cost 1. Civil Works and Equipment 31,006,238 62,012,476 41,637,037 10,923, , ,871, Consultants 4,269,521 1,129,866 2,094,456 2,302,156 1,069, ,865,308 Sub-total A 4,269,521 32,136,103 64,106,932 43,939,193 11,992, , ,736,653 B. Contingencies 487,609 4,318,422 10,562,074 8,818,788 2,985,515 55,457 27,227,865 Total JICA Loan 4,757,130 36,454,526 74,669,006 52,757,982 14,978, , ,964,518 GOB Land Acquisition 2,286,031 2,595, ,724 5,551,380 Physical Works and Equipments 655,028 4,684,822 8,751,248 8,190,776 9,706,573 3,318,385 35,306,831 Physical Contingencies 109, , , , , ,919 1,957,770 Price Contingencies 151, , , , , ,987 2,395,558 Administration Cost 141, , , , , ,571 70, ,214 Taxes 123,268 1,358,846 10,994,241 22,016,842 15,852,382 6,785,123 1,236,059 58,366,760 Interest 476 4,121 11,589 16,865 18,365 18,402 69,817 Total GoB 2,550,870 5,013,212 17,192,116 31,764,638 25,098,348 17,843,609 5,105, ,568,330 Grand Total (ADB+JICA+GOB) 2,807,930 13,691,357 63,966, ,250,720 94,262,231 52,000,618 12,553, ,532,849 Note: Numbers may not sum precisely because of rounding.

17 13 F. Contract and Disbursement S-curve 100.0% 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% Disbursement Award 30.0% 20.0% 10.0% 0.0% 3Q Q Q Q Q Q Q Q Q Q Q Q Q 2017

18 14 G. Funds Flow Diagram ADB MOF Fund Flow Document Flow (ii) (v) (vi) KWASA s imprest account at central bank (viii) (ix) KWASA s imprest account at commercial bank KWASA s project account at commercial bank (iii) (i) (vii) (iv) (vii) (iv) Contractors, consulting firms, and goods suppliers (Direct payments in foreign currencies) Contractors, consulting firms, and goods suppliers (Other payments) ADB = Asian Development Bank, KWASA = Khulna Water Supply and Sewerage Authority, MOF = Ministry of Finance, PMU = Project Management Unit. For Direct payments in foreign currencies (i) Contractors and consultants issue claims to PMU (ii) PMU send request to ADB for direct payments together with contractors' and consultants' invoices (iii) ADB makes direct payment to contractors and consultants For Other payments (iv) Contractors and consultants issue claims to PMU (v) PMU request imprest advance, liquidation or replenishment (vi) ADB makes payments to imprest account (vii) PMU makes payment (viii) PMU request the MOF to release the counterpart funds (ix) MOF makes payments to PMU

19 15 A. Financial Management Assessment V. FINANCIAL MANAGEMENT 10. A financial management assessment was conducted for the Project, covering the executing agency and the implementing agencies. 1 The financial management assessment identified training needs of concerned staff and other support requirement to ensure appropriate procedures and standards of funds flow, accounting, reporting, and audit. The Project will provide these support through consulting services. B. Disbursement 11. The loan proceeds will be disbursed in accordance with ADB s Loan Disbursement Handbook (2007, as amended from time to time), 2 and detailed arrangements agreed upon between the Government and ADB. Pursuant to ADB's Safeguard Policy Statement (2009), 3 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. 12. The loan proceeds will be disbursed through direct payment, reimbursement, imprest fund procedures (advance payment, liquidation and replenishment). KWASA will choose appropriate disbursement methods depending on the nature of payment. KWASA is responsible for (i) preparing disbursement projections, (ii) requesting budgetary allocations for counterpart funds, (iii) keeping supporting documents, and (iv) preparing and sending withdrawal applications to ADB. 13. Foreign currency payments for consultants, goods, suppliers, and contractors may be paid directly by ADB. The PMU will submit the withdrawal application for direct payment together with the approved invoices and documentation to ADB in accordance with the ADB's Loan Disbursement Handbook. 14. KWASA will, immediately after the loan effectiveness, establish an imprest account at the Bangladesh Bank to receive funds from ADB in US dollars. KWASA will open another imprest account at a commercial bank acceptable to ADB, which will receive funds converted into Bangladesh Taka from the imprest account at the Bangladesh Bank. The imprest account ceiling will not exceed the lower of (i) the estimated expenditure to be financed from the imprest account for the first six months of Project implementation, or (ii) the equivalent of 10% of the Loan amount. The statement of expenditure (SOE) procedure may be used to reimburse eligible expenditures or liquidate advances provided into the imprest account for payments less than $100,000 equivalent. The 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 Before the submission of the first withdrawal application, the PMU should submit to ADB 1 Financial Management Assessment (accessible from the list of linked documents in Appendix 2). 2 Available at: 3 Available at: 4 Checklist for SOE procedures and formats are available at:

20 16 sufficient evidence of authority of the person(s) who will sign withdrawal applications on behalf of the borrower, together with authenticated specimen signatures of each authorized person. The minimum amount per withdrawal application is US$100,000, unless otherwise approved by ADB. The PMU is to consolidate claims to meet this limit for replenishment of imprest account claims or other payments. Withdrawal applications and supporting documents must demonstrate, among other things, that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. No withdrawals shall be made until the following conditions have been satisfied: (i) The Borrower shall have established the SC, in accordance with the PAM; and (ii) The Borrower shall have established the PMU and shall have appointed the PD and PM in accordance with the PAM. C. Accounting 16. KWASA will maintain separate project accounts and records by funding source (ADB, JICA, and the Government) for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices. D. Auditing 17. KWASA will cause the detailed project accounts to be audited in accordance with International Standards on Auditing, by an independent auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within six months of the end of each fiscal year by KWASA. The annual audit report will include a separate audit opinion on the use of the imprest accounts, the project accounts and the SOE procedures. The Government has been made aware of ADB s policy on the requirements for satisfactory and acceptable quality of the audited accounts and their timely submission. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB s financing is used in accordance with ADB s policies and procedures. VI. PROCUREMENT AND CONSULTING SERVICES A. Advance Contracting 18. All advance contracting will be undertaken in conformity with ADB s Procurement Guidelines (April 2010, as amended from time to time) 5 and ADB s Guidelines on the Use of Consultants (2010, as amended from time to time). 6 The Government has been advised that approval of advance contracting does not commit ADB to finance the Project. 19. Advance Contracting. Advance contracting is allowed for selection of consulting services, including (i) request for EOI, (ii) short-listing, (iii) request for proposals, and (iv) evaluation of proposals; and for procurement of minor goods and works, including (a) prequalification, (b) tendering, and (c) bid evaluation. B. Procurement of Goods, Works and Consulting Services 20. Procurement of Goods and Works. All procurement of goods and works will be undertaken in accordance with ADB s Procurement Guidelines. International competitive bidding (ICB) procedures will be used for civil works contracts and goods supply contracts valued at 5 Available at: 6 Available at:

21 17 $1.0 million or higher. National competitive bidding (NCB) procedure will be used for works contract and goods supply contracts valued at $100,000 or higher, and below $1.0 million. Shopping may be used for works and goods supply contracts worth less than $100,000. One package for deep exploratory well development will be procured through direct contracting to the Geological Survey of Bangladesh 7, since it is the sole entity capable to conduct very deep drillings required. ADB and the Government will review the public procurement laws of the Government to ensure consistency with ADB s Procurement Guidelines. The detail procedures of procurement will be found in Project Administration Instructions (PAI). The most relevant sections of PAI 8 for the Project are PAI 3.03 (ICB) and PAI 3.04 (NCB). 21. Consultant Selection. All consultants, community-based organizations (CBOs) and nongovernment organizations (NGOs) will be recruited according to ADB s Guidelines on the Use of Consultants. 9 Consulting services are required to (i) support project management, (ii) carry out detailed design and construction supervision, including monitoring for safeguards compliance, and (iii) provide institutional and capacity development programs. Two major consulting services will be engaged through quality- and cost-based selection (QCBS) method with a standard quality/cost ratio of 80/20 and full-technical proposals. One small package will be selected through Consultants Qualification Selection method with simplified technical proposal. The most relevant sections of PAI 10 are PAI Procurement Capacity of the Executing Agency. A procurement capacity assessment was conducted for the executing agency. 11 The procurement capacity assessment identified training needs of concerned staff and other support requirements to ensure appropriate procedures and standards. The Project will provide this support through consulting services. C. Procurement Plan 23. An 18-month procurement plan indicating threshold and review procedures, tentative contract packages, and national competitive bidding guidelines is in Annex A. D. Consultant's Terms of Reference 24. Draft outline terms of references (TORs) of consultants are in Annex B. VII. SAFEGUARDS A. Environmental Safeguards 25. The Executing Agency prepared an Initial Environment Examination (IEE) as part of the feasibility study, including an environmental management plan (EMP), which meets the requirements under the Government s Environmental Conservation Act (ECA, 1997) (recently amended-amendment 2000), the Environmental Conservation Rules (ECR,1997), and other 7 The EA and the Project Team examined the availability of domestic companies which can carry out the very deep drilling (600m) and found there are no such companies. Since it requires to mobilize specialized equipment and the contract size is not large ($100,000), it is unlikely that international companies show interest and submit competitive bids. Geological Survey of Bangladesh is a government entity specializing in geological investigation and have equipment and experience in very deep drilling Checklists for actions required to contract consultants by method available in e-handbook on Project Implementation at: Procurement Capacity Assessment (accessible from the list of linked documents in Appendix 2).

22 18 relevant government laws (e.g., forest, labor, etc.), ADB s Safeguard Policy Statement (2009), JICA s Guidelines for Environmental and Social Considerations (2002). The Project will use the same IEE and EMP which cover the entire Project, regardless of funding sources. According to the Government s regulations, the documents are referred to as an environmental impact assessment (EIA); however, since the Project is Category B, ADB requires only an IEE in accordance with its safeguard policy. The EIA will serve as IEE under the ADB s safeguard policy. The following are institutional roles and responsibilities to ensure the implementation of the EMP during design and construction stages. 26. Project Management Unit. The PMU, with assistance from the environmental specialist of the consultant team is to (i) confirm existing IEE/EMP are updated based on detailed designs; (ii) confirm whether the EMP is included in bidding documents and civil works contracts; (iii) provide oversight on environmental management aspects of the Project and ensure EMPs are implemented by contractors; (iv) establish a system to monitor environmental safeguards including monitoring the indicators set out in the monitoring plan of the EMP; (v) ensure compliance with all Government rules and regulations regarding site and environmental clearances as well as any other environmental requirements (e.g., No Objection Certificates), as relevant; (vi) review, monitor and evaluate the effectiveness with which the EMPs are implemented, and recommend necessary corrective actions to be taken as necessary; (vii) submit semiannual monitoring reports to ADB; (viii) ensure timely disclosure of the final IEE/EMP in locations and form accessible to the public, and (ix) address any grievances brought about through the Grievance Redress Mechanism in a timely manner as per the IEE. 27. Civil Works Contracts. The Government will ensure that civil works contracts and bidding documents under the Project include specific provisions requiring contractors to comply with all environmental mitigation and monitoring measures specified in the EMP and environmental clauses in contract documents. EMP will be included in these documents and verified by the PMU. Contractors are to carry out all environmental mitigation measures outlined in their contracts including any environmental monitoring requirements, as stated in the EMP. B. Social Safeguards (Involuntary Resettlement) The Executing Agency prepared a draft Resettlement Plan that meets the requirements under the Government s Acquisition and Requisition of Immovable Property Ordinance (1982), ADB s Safeguard Policy Statement (2009), JICA s Guidelines for Environmental and Social Considerations (2002). The Resettlement Plan is prepared for the entire Project, regardless of funding sources. The cost related to land acquisition and resettlement/rehabilitation will be borne by the Government. The PMU is to ensure that any physically or economically displaced persons are compensated prior to displacement. The following are institutional roles and responsibilities to ensure Resettlement Plan are implemented during design and construction stages: 29. Project Management Unit. The PMU is to (i) conduct internal monitoring of the resettlement process to ensure smooth implementation; (ii) update resettlement plan during the detailed design stage; (iii) implement the Resettlement Plan with support from consultants and support staff; 13 (iv) conduct meaningful consultations with stakeholders and affected persons; 12 The project will have no impact on indigenous peoples; ADB's Indigenous People's requirements are thus not applicable. 13 Implementation of the Resettlement Plan will be facilitated by a consulting firm.

23 19 (v) provide timely payments of compensation and other entitlements as per the Resettlement Plan are made before displacement occurs; (vi) ensure all training and capacity building activities are provided to affected persons by linking them to relevant local Government training programs and institutions; (vii) ensure all grievances are addressed and when necessary activate the Grievance Redress Committee; and (viii) submit monitoring results as part of quarterly progress reports to ADB that describe the progress of the implementation of resettlement activities and any compliance issues and corrective actions. 30. Inter-Ministerial Steering Committee. The inter-ministerial steering committee will discuss land acquisition and resettlement issues if/when there is a significant delay or difficulty in such activities in order to expedite the process in accordance with Resettlement Plans. The committee will ensure all grievances will be addressed in a timely manner through the project grievance redress mechanism outlined in the Resettlement Plans. 31. Civil Works Contracts. The Government will ensure that bidding documents and civil works contracts under the Project include specific provisions requiring contractors to comply with all (a) applicable labor laws and core labor standards on (x) prohibition of child labor as defined in national legislation for construction and maintenance activities, on (y) equal pay for equal work of equal value regardless of gender, ethnicity or caste, and on (z) elimination of forced labor; and (b) the requirement to disseminate information on sexually transmitted diseases including HIV/AIDS to employees and local communities surrounding the Project sites. VIII. GENDER AND SOCIAL DIMENSIONS 32. Gender. The detail of the gender aspects of the Project is described in the Gender Action Plan (GAP), for which appropriate resources will be allocated under the Project. The Project will improve access to safe water, which will (i) reduce the burden of woman who tends to fetch water for the whole family, and (ii) improve health conditions of city dwellers. Low income households may form a water user group to share a tap, where women will be encouraged to play a major role. Women will have an equal opportunity to participate in training programs to be supported under the Project. Efforts to reduce wage inequality between men and women and to ensure core labor standards will be in place. Women will have an equal opportunity in employment as PMU staff and construction laborers. Awareness raising and training activities will include women. GAP will be mostly implemented by the PMU with support of consultants. Monitoring of GAP implementation will be carried out by the PMU with support of consultants, which will be reported to ADB through Quarterly Progress Report (QPR). The evaluation of GAP implementation will be carried out as part of preparation of the Project Completion Report by the PMU and the following project evaluation.

24 GENDER ACTION PLAN Activities Indicators and Targets Responsibility Time 20 Output 1: Augmented and sustainably managed water sources 1.1 Conduct consultation sessions in selected wards in Khulna City, with community members on infrastructure planning and implementation issues, including compensation for land acquisition and resettlement, ensuring that every session includes female landowners, female household heads (FHHs), and other affected women from other groups. 1.2 Include relevant clauses in the bidding documents on core labor standards (equal pay for work of equal value, occupational health and safety, water supply, sanitation, segregated shelter and facilities), and monitor their implementation 50 citizens (target: 30% women) consulted during each consultation sessions (15), for a total of 750 community members consulted All female landowners and female headedhouseholds (FHHs) affected by the project, assured of equal compensation (target: 100% women) Relevant clauses on core labor standards included in bidding documents of all contracts (100%) PMU staff supported by consultants Years 1-2 PMU Year Employ women, including indigenous women, as laborers in earthwork, construction and maintenance work, and enforce the core labor standards including equal pay for work of equal value, occupational health and safety, water supply, sanitation, segregated shelter and facilities 1.4 Orient all PMU staff and contractors on gender-related aspects of core labor standards (equal wages, occupational health and safety, water supply, sanitation) Output 2: Extended and efficiently managed distribution network 2.1 Conduct awareness-raising seminars in selected wards in Khulna City, on public hygiene, economic use of water, and gender-related issues in water and sanitation Core labor standards enforced in all contracts (100%), especially those relating to equal pay for work of equal value. All PMU staff (100%) and contractors oriented on gender related aspects of core labor standards 100 citizens (target: 75% women), 2 rounds for each ward (15), for a total of 3,000 PMU Contractors PMU staff contractors PMU staff supported by consultants Years 2-7 Year 1-2 Years Conduct community consultations in selected wards, on issues related to connection fees, tariffs and other charges 2.3 Provide individual connections with a low subsidized connection charge to women headed households 100 citizens (target: 50% women) oriented in each ward (15), for a total of 1,500 on issues of connection fees, tariffs and other charges Number of women-headed households with individual connection will increase from 2,876 connections to 14,187 connections PMU supported consultants PMU supported consultants staff by staff by Years 2-7

25 Activities Indicators and Targets Responsibility Time 2.4 Establish communal taps managed by Water User 1,500 number of communal taps established PMU staff Years 2- Groups (WUGs) in low-income areas where individual in strategic locations in low-income supported by 6 connections are not feasible communities (target: 30% women consultants representation and 30% women in leadership positions) 2.5 Conduct ward level trainings, on the O&M and management of communal water taps Output 3: Professional and sustainable corporate management 3.1 Recruit/promote women at various levels of PMU/KWASA with equal opportunity with men 3.2 Include gender considerations in Water Supply and Sanitation Training Modules and implement them 3.3 Ensure that all technical training provided to female staff in PMU/KWASA 3.4 Collect sex-disaggregated baseline data and report the gender results 3.5 Monitor and report progress on the implementation of the GAP covering resettlement, compensation, core labor Members of all water user group (100%) trained on O&M and management of communal water taps (target: 50% women representation) Promote recruitment and promotion of female staff under equal opportunity. Women/men ratio in staff recruitment and promotion will be monitored. One module or section on gender-specific issues in Water Supply and Sanitation included in all training modules Promote participation of female staff in training under equal opportunity (target: 100% of women participation). Sex-disaggregated baseline information and data collected Collected data is complied and reported in quarterly progress report. Quarterly progress report on the implementation of the project-specific GAP PMU staff supported by consultants PMU staff KWASA PMU KWASA PMU staff supported by consultants PMU supported Years 2-5 Through out project impleme ntation Through out project impleme ntation standard and women s participation and benefits consultants FHH = female-headed household, GAP = Gender Action Plan, KWASA = Khulna Water Supply and Sewerage Authority, O&M = operations and maintenance, PMU = Project management unit. staff by 21

26 Social Development and Participation. The social aspects of the Project are described in the Summary Poverty Reduction and Social Strategy (SPRSS). Among the major findings of the social assessment is lack of access to piped water, and concerns with the affordability to use the new system. The Project will provide household connections with a low connection charge to promote individual connections even for the poor. For low income communities where individual connection is not a practical solution, water user groups will be formulated to manage communal taps. The tap will be metered and KWASA will collect the bill through caretaker of the tap chosen from the user group. Another benefit of the Project is employment opportunities in construction, which will be open for unskilled men and women. Specific measures will be taken by the executing agency to ensure enforcement of core labor standards on the work camps/site. The evaluation will be carried out as part of preparation of the Project Completion Report by the PMU and the following project evaluation. IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION A. Project Design and Monitoring Framework 34. The Design and Monitoring Framework (DMF) is in Annex C. 35. Monitoring of Indicators. Within 9 months of loan effectiveness, the PMU with support of consultants will establish a project performance monitoring system in line with the targets, indicators, assumptions and risks described in the DMF. The baseline data corresponding to indicators and targets set out in the DMF will be updated during the detailed design stage within 12 months of loan effectiveness, including disaggregated data by income levels and sex as required. After the initial baseline survey, the PMU with support of consultants will conduct annual survey and quarterly monitoring of indicators, and submit the results in Quarterly Progress Reports (QPRs) to ADB and JICA throughout the project implementation. QPRs will include these indicators and provide information necessary to update ADB's project performance reporting system Monitoring of Compliance with Loan Covenants. Status of compliance with loan covenants, including policy, legal, financial, economic, environmental, and others, will be monitored and reported by the PMU through the quarterly progress reports, which will be consolidated and submitted to ADB by the PMU. The results will be reviewed in detail during ADB's review missions. In particular, status of the implementation of safeguard measures described in EMPs and Resettlement Plans, as well as measures described in SPRSS and GAP, will be monitored and reported by the PMU through the QPRs. B. Evaluation 37. Within 36 months after the effectiveness, ADB will conduct a mid-term review to identify problems and constraints encountered and suggest measures to address them, including appropriateness of scope, design, implementation arrangements, schedule of activities and compliance with safeguard and other covenants. Within 6 months of physical completion of the Project, the PMU will submit a project completion report to ADB ADB's project performance reporting system is available at: 15 Project completion report format available at: Sector-Landscape.rar