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Tripartite Portfolio Review Meeting

Bengaluru

Dated: 8th November 2008

J&K Economic Reconstruction Agency J&K Govt. Nodal Agency for Implementing External Aided Projects

Economic Reconstruction Agency (ERA) Government of Jammu and Kashmir, ist Floor Cottage Arts Emporium, Boulevard, Srinagar

13C/C, Near Aquaf Market Gandhinagar, Jammu, J & K 180004 Tel.: 0191-2549664/2455412/2455198 Fax:0191-2547133/ 2455153 Email: contact@jkera.org

http://www.jkera.org

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Contents

Loan 2151-IND

1 Financial Progress.

2 Action Taken Report.

3 Points of Discussion.

4. Snapshot of achievements.

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Loan 2151-IND Financial Progress

A. Contracts Awarded(Rs. In Crores)

Jammu No: of Contracts Costs

Transport 12 199.11

Urban (Including Equipment for J&K)

25 291.61

Total Jammu 37 490.72

Kashmir

Transport 43 405.54

Urban 8 189.58

Total Kashmir 51 595.12

Total 88 1085.85

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Loan 2151-IND Financial Progress

B. Disbursements

Disbursement-2008 (million US dollars)

Allocated in Loan 250

Achieved upto 31st Dec. 2007 33.2

Performance 2008 11.25In respect of WA,s of Dec.2007 and Jan. 2008

Imprest liquidated (2.53M$)

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Loan 2151-IND Financial Progress

B. Disbursements Disbursements in pipelineDate of Dispatch

Amount(Rs. In crores)

In respect of WA,s upto July 2008 only

1. 29-09-2008 11,41,53,627.00

2. 07-10-2008 92,18,174.00

3. 20-10-2008 1,03,34,226.00

4. 20-10-2008 12,23,87,771.00

5. 20-10-2008 9,28,33,738.00

6. 21-10-2008 2,71,99,924.00

7. 21-10-2008 3,43,72,685.00

8. 22-10-2008 1,58,58,196.00

9. 31-10-2008 99,76,432.00

10 31-10-2008 16,68,50,087.00

Total 60,31,84,860.00

Converted amount in US Dollars (1$ =Rs.48)

12.56 M$*

Total (2008) 23.81 M$

* Submission of WA,s to CAAA was interrupted for 3 months due to civil strife.

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Loan 2151-IND Financial Progress

B. Disbursements

Disbursements Target

Target 2008 40.30

Achievement displayed by LFIS website 11.24

Achievements in respect of WA’s under process in respect of period upto July 08 (Previous Slide)

12.56

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Loan 2151-IND Financial Progress

B. Disbursements Disbursements Anticipated (Rs. In Crores)

Aug. 2008 10.42

Sept.2008 22.89

Oct. 2008 19.98

Nov. 2008 25.00

Total 78.29

Converted amount into US Dollars (1$=Rs. 48) 16.31 M$*

Total 40.12 M$

* Appreciation of Dollar also makes Target achievement difficult in Dollar Terms.

Remarks: Upto June, 2008 tempo had been built up but it was slowed down due to interruption caused by civil strife for well over 2 months. Tempo is again building up slowly due to a number of measures taken.

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Loan 2151-IND Financial Progress

Rs. In Crores

3.66 14.2854.01

87

175

315

419.6 438.38

0

50

100

150

200

250

300

350

400

450

500

Expenditure (Exponential Growth )

Rupees In Crores 3.66 14.28 54.01 87 175 315 419.6 438.38

31/12/2005 30/06/2006 31/12/2006 30/06/2007 31/12/2007 30/06/2008 31/10/200831/12/2008 (Projected)

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Areas of Concern

Major issues identified and Present Status thereon

Issue: 01 DEA/MoUD has always been expressing

serious concern about overall low cumulative Disb. since date of loan effectiveness

Inspite of political and topographic constraints the disbursement of loan component under 2151-IND which was very low in 2005 and 2006 has further gone up from 45M$ as EA has submitted WAs upto July 2008 worth about 23M$.

By end of calendar year we are hopeful to achieve the Disb. Target set for 2008 i.e. about 40 M$ which will finally take the figure to 75M$ at the end of 2008.

Achievement would have been higher but for the interruption caused by civil strife for about 3 month in peak working season. Disb. Target achievement has steadily progressed from 59% (2006) to 85%(2007) and now we expect 100%(2008)

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Areas of Concern

Major issues identified and Present Status thereon

Issue: 02 A serious concern was raised by controller

CAAA at Ooty about dual system of routing Disb. partly by replenishment of Imprest and partly by Direct reimbursement of Expenditure from Counterpart funds and it was suggested to adopt one system only.

10th Governing Body of ERA has considered the proposal on 16-09-2008 and done away with the system of replenishment of Imprest of 2.53 M$ which stands liquidated.

Now there will be no violation of Loan Covenant due to delay in passing on credit of reimb. Of Imprest within 30 days of release by ADB.

Possibility of any double processing of reimb. one from Imprest and other from Expenditure will also be avoided.

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Areas of Concern

Major issues identified and Present Status thereon

Issue: 03 Concern was expressed to strengthen

Contract Management which includes Implementation, regular monitoring of Resettlement and Environmental management plans.

Governing Body in its 10th meeting held on 16-09-2008 has given approval to direct engagement of Contract Specialist who is in position solving various problems of Contract Implementation which has helped to push the project forward. The following measures deserve mention:

Across the board extension to all Sub Projects with escalation under Force majeure clause

Formal extension after evaluation of delay attributable to Employer, Consultant & Contractor granted.

Quarterly escalation allowed on the basis of confirmed previous RBI Index

Governing Body has also approved the position of Director Environment & Safeguards besides strengthening of Environmental sections. Recruitment of positions created is under process.

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Areas of Concern

Major issues identified and Present Status thereon

Issue: 04 DEA/ADB has been always expressing serious

concern about frequent transfers of key officers.

10th Governing Body has also deliberated on the issue and given instructions to handpick key officers from a panel and retain them till project completion.

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Areas of Concern

Major issues identified and Present Status thereon

Issue: 05 ADB advised EA to resolve the issue of

staffing of PIU and consultants to ensure good quality supervision.

10th Gov. Body (16-09-2008) has approval creation of 75 new positions of DPMs, APMs, Junior Engineers Accounts Assistants, Urban Policy Specialist (Director Central), Environmental Staff, Support Staff, Director Environment and Safeguards for Loan 2151-IND, 2331-IND.

Requirements of consultants for revision of

their strength within the overall Budget for capacity building is under process.

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Areas of Concern

Major issues identified and Present Status thereon

Issue: 06 Concern was expressed in concluding the

process of land acquisition for Srinagar SWM sub-project (Achan Landfill Site) and B.C. Road Flyover.

Award finalized for acquisition of Achan Land. Rs. 1.40 crores made available by State Planning and Development Department placed at the disposal of Collector Land Acquisition ERA for payment to beneficiaries.

Land has formally been taken over and given to contractor for construction of approach road.

Contract for scientific Landfill site has also been awarded as advised by ADB for 14.58 Crores.

Due to objections of Traffic and other Line Deptt,s, the design prepared by CTA for B.C Road Flyover needs modification which will be done by DSC,s of Loan 2 after mobilisation. (Negotiations concluded for Jammu)

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Areas of Concern

Major issues identified and Present Status thereon

Issue: 07 Delay in recruitment of project

consultants for loan 2 Even by following QBS system

ERA encountered problem of getting same consultants in Kashmir whose performance in Loan-I was not upto mark.

Tough conditions of penalty and time bound deliverables are not acceptable to consultants.

Negotiation deadlocked. ERA wants to seek advise from ADB whether in case of failure of negotiation we can go for rebidding of DSC for Kashmir (Loan-2) using already shortlisted consultants of J&K.

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Points for Discussion

Delay in Award of Sewerage Contract under Loan 2331-IND (Loan-2)

ChronologyS.No. Event Date

i) IFB No. JKUSDIP Jammu/NCB-01 27-12-2007

ii) TBER submission to ADB 10-07-2008

iii) ADB approval to TBER 24-07-2008

iv) Opening of Price Bid 11-08-2008

v) M/s. Ramky-C&C-SE (JV) even though technically responsive for all 3 contracts for about Rs. 100 crores in stand alone condition, but failed to meet the criteria for award of multiple contracts, Even if found lowest in more than 1 contract would be entitled to award of only one contract so PBER Committee recommended award of WW/03 for Rs. 39,96,42,327 (above 9 m$)

01-09-2008

vi) ADB wanted PBER of all 3 lots to determine lowest evaluated bidder on the basis of least cost combination.

12-09-2008

vii) ERA on the basis of approval of TAC sent a detailed proposal justifying relaxation of clause 1.2 of section 3 Vol 1 to enable award of all the 3 contracts to Lowest Bidder M/s Ramky-C&C-SE whose bid was 62 crores lower than the other bidder. PBER of WW/01 and WW/02 were also forwarded to ADB.

30-09-2008

viii) ADB responded by stating that Technical Qualification criteria cannot be changed after deadline of submission of bids as such action after the date might deprive other prospective bidders.

10-10-2008

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Points for Discussion

Delay in Award of Sewerage Contract under Loan 2331-IND

(Loan-2) Options now available

Option-1Award one contract package on the basis of lowest cost combination and rebid the other two with a relaxed/same criteria.

Option-2Rebid all the three packages with a relaxed/same criteria

QuestionsIf the same J.V. M/s Ramky-C&C-SE who at present failed to meet the financial criteria for award of multiple contracts shall again become eligible for award of more contracts, if found lowest as and when fresh bid for other two or all the three packages are invited but at a higher cost, how can officers of ERA who are accountable to State Govt. laws and State Legislature defend themselves against incurring higher expenditure.

Under the IFB terms in case of a JV all the participating partners are individually and collectively responsible for successful delivery of the contract then why get bogged down by a legalistic view of failure of turnover criteria of a single partner.

In case of a difference of perception/opinion of local ADB PSU is it not correct to take the issue to a higher forum for appropriate decision. So far as borrowing client is concerned TAC is the highest forum of EA to decide about any matter pertaining to contract and it had decided to award all the three contract package to JV in relaxation of Technical Qualification norms, subject to same being approved by ADB. But ADB did not agree and referred to failure of turnover criteria of a single JV partner

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Points for Discussion

Suggestion for TPRM

Due to appreciation of Dollar the undisbursed loan component is likely to make available additional resource to the extent of Rs. 200 crores. Will ADB/DEA agree to award some more contracts in Urban/Transport sector which stand already apprised under Loan 2151-IND and in which case even IFB’s were issued but later kept on hold

ADB may kindly advise the status of J&K Transport Loan and its PPTA which has been listed for 2010 in Country Operations and Business Plan 2008-2010.

Is it possible to conclude PPTA in 2009 and also negotiate the loan.

The life of PSU of ADB is expiring on 31st Dec 2008. The timely advice of PSU in the matters of procurement, presentation of cases to ADB, variations and contract implementation issues is of great help to EA. So we would like to extend the facility of PSU after 31st Dec 2008.

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Images

Wanpoh-Chawalgam Aharbal Road (District Kulgam)

Bitumen Macdamization going on using Paver Sensor

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Images

Water harvesting in dry areas of Jammu

achieved for the first time

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Thanks for

Your Time

JAMMU

KASHMIR