ASIAN DEVELOPMENT BANK

PROJECT ADMINISTRATION MEMORANDUM (FIRST DRAFT)

For the

WESTERN BASINS WATER RESOURCES MANAGEMENT PROJECT

For

ISLAMIC REPUBLIC OF AFGHANISTAN

LOAN 2227-AFG(SF)/GRANT 0033-AFG

21 June 2007

Preface

This Project Administration Memorandum (PAM) was prepared by the Asian Development Bank (ADB) to assist the Government in implementing the Western Basins Water Resources Management Project (the Project), for which the ADB’s Board of Directors approved a Loan and Grant of SDR42,446,000 and US$14,500,000, respectively, on 21 December 2005. This PAM is based on: (i) the Report and Recommendation of the President to the Board of Directors on the Proposed Loan and Asian Development Bank Fund Grant to the Islamic Republic of Afghanistan for the Project dated November 2005; (ii) the Financing Agreement between the Government and ADB dated 9 March 2006; and (iii) the ADB’s relevant guidelines. In case the provisions in this PAM differ from those of the above mentioned documents, the provisions of the Financing Agreement, relevant ADB guidelines, and the RRP will prevail over the PAM in the respective order. The PAM is an active document, and should be progressively revised and/or updated as and when necessary (eg. following any changes in project scope, costs, or implementation arrangement). It is, however, suggested that changes be added/introduced to the PAM as an addendum, rather than replacing original provisions. This will help reconcile historical records and in preparing future project completion reports.

3

CURRENCY EQUIVALENTS (as of 3 March 2006)

Currency Unit – Afghanistan Afghani (AF)

AF1.00 = $ 0.0199

$1.00 = AF50.24

ABBREVIATIONS

ADB – Asian Development Bank ADF – Asian Development Fund BWC – basin water committee EIRR – economic internal rate of return EMP – environmental management plan ICB – international competitive bidding IEE – initial environmental examination ISA – initial social assessment IWRM – integrated water resource management LCB – local competitive bidding M&E – monitoring and evaluation MAAHF – Ministry of Agriculture, Animal Husbandry, and Food MEW – Ministry of Energy and Water MMI – Ministry of Mines and Industry MOF – Ministry of Finance MRRD – Ministry of Rural Reconstruction and Development NEPA – National Environmental Protection Agency NGO – nongovernment organization O&M – operation and maintenance OFWM – on-farm water management PIC – project implementation committee PMU – project management unit PSC – project steering committee R&U – rehabilitation and upgrading RBA – river basin authority TA – technical assistance

NOTES

(i) The fiscal year of the Government ends on 31 March. (ii) In this report, "$" refers to US dollars.

CONTENTS Page Loan and Grant Processing History

ii

Project Design and Monitoring Framework

iii

I.

Project Description

1

A. Project Area and Location 1 B. Objectives and Scope 1 C. Project Components 1 D. Special Features 2 II.

Cost Estimates and Financing Plan

3

A. Detailed Cost Estimates and Financing Plan 3 B. Use and Allocation of Loan and Grant Proceeds 4 III.

Implementation Arrangements

6

A. Executing and Implementing Agencies 6 B. Project Management Organization 5 IV.

Implementation Schedule

8

V.

Cost Estimates and Financing Plan During Implementation

8

VI.

Consultant Recruitment

9

VII.

Procurement

11

VIII.

Disbursement Procedures

14

IX.

Project Monitoring and Evaluation

16

X.

Reporting Requirements

17

XI.

Auditing Requirements

17

XII.

Major Loan and Grant Covenants

17

XIII.

Key Persons Involved in the Project

17

XIV.

Anticorruption

18

XV.

Other Matters

18

Appendixes

19

ii

LOAN PROCESSING HISTORY

Milestone Event

Dates

a.

Approval of PPTA (TA No. 4420-AFG)

:

26 October 2004

b.

Feasibility study

:

July 2005

c.

Fact-finding

:

11 July to 2 August 2005

d.

Management review meeting

:

15 September 2005

e.

Pre-Appraisal mission (upgraded to Appraisal Mission on 14 November 2005)

:

29 September to 18 October 2005

f.

Staff review committee

:

16 November 2005

g.

Loan negotiations

:

22 November 2005

h.

Board circulation

:

29 November 2005

i.

Board consideration and approval

:

21 December 2005

j.

Financing agreement signing

:

9 March 2006

k.

Cofinancing arrangement finalized and agreements signed, if any

:

25 August 2006 (CIDA Grant 0052)

l.

Loan effectiveness, including conditions (include available dates)

:

31 May 2006

iii

PROJECT DESIGN AND MONITORING FRAMEWORK1

Design Summary

Performance Targets/Indicators

Data Sources/Reporting

Mechanisms

Assumptions and Risks

Impact Improve rural livelihoods in the Hari Rud and Murghab River Basin (project area).

1. Income for rural residents in subproject areas improved by 60% 4 years after subproject completion monitored annually 2. Poverty levels subproject areas reduced by 25% 5 years after subproject completion monitored annually 3. Food security in project districts improved 2 years after subproject completion monitored annually

1. Government statistics/ reporting 2. World Food Program and other development partner statistics/reporting 3. Project monitoring and evaluation (M&E) activities by project management unit (PMU) 4. Mirabsa and communities through participatory M&E

Assumptions Strengthened integrated water resource management (IWRM), improved irrigation service delivery, and enhanced agricultural practices to increase the productivity of irrigated agriculture will improve rural livelihoods. Risks 1. Increases in crop production and income may not be measurable within the project time frame. 2. Other socioeconomic, cultural, or political factors may prevent and divert intended project impacts.

Outcome 1. Strengthened institutional framework and capacity for IWRM and development 2. Improved performance of irrigation system in the Hari Rud and Murghab River Basin 3. Improved effectiveness of mirabs and communities to manage and provide operation and maintenance (O&M) for their irrigation systems 4. Improved water management by farmers at the farm level

5. Improved yields of irrigated wheat and fodder (ADF grant)

1. Planned surface water allocation and basin management processes institutionalized by end of Project; sustainable development of irrigated agriculture with groundwater starting by end of Project in the Hari Rud River Basin 2. Increased equity and efficiency of water distribution (especially at tail end), expanded spring irrigation area by 25%, and summer or perennial irrigation area to be at least 30% of irrigable area in subprojects 3. Self-sustaining mirab/ community irrigation organization maintaining and upgrading irrigation systems in all subprojects by end of Project; increase resource flows to mirabs by 33% by end of Project (Asian Development Fund [ADF] grant) 4. Field application efficiency of water at farm level increases by 15% in areas that received on-farm water management (OFWM) training by end of Project (ADF grant) 5. Consistent average wheat yields of at least 2.8 tons/hectare (ha) in subprojects

1. Government statistics/ reporting 2. World Food Program and other development partner statistics/reporting 3. Project M&E activities by the PMU 4. Mirabs and communities through participatory M&E 5. Diplomas and other evidence of successful capacity development activities 6. Asian Development Bank (ADB) review missions 7. Reporting by Afghanistan Resident Mission

Assumptions 1. Government will make adequate and appropriate staff available for training and participation. 2. Government is committed to pursue project objectives over the life of the Project. 3. Mirabs and local communities interested and cooperative in project interventions. Risk Chronic drought, disease, or other technical concerns thwart project objectives.

1 As agreed during appraisal.

iv

Design Summary

Performance Targets/Indicators

Data Sources/Reporting

Mechanisms

Assumptions and Risks

6. Increased cropping intensity and yields for second season horticulture 7. Increased income-generating opportunities for rural women and landless 8. Improved capacity for IWRM, irrigation, and water resources management and development, agricultural productivity, and project management

within 2 years after rehabilitation and upgrading (R&U) 6. Cropping intensities increase by average of 300% and yields by 20% for summer season horticulture crops (ADF grant) 7. Over 2,000 women and the landless have improved livelihoods from income generating activities (ADF grant) 8. At least 20 professional and technical people trained for various river basin management tasks, 30 professional and technical people trained for various irrigation engineering tasks, at least 12 professional and technical people trained for agriculture and livelihood services, at least 400 mirabs trained for water management, and at least 3,500 farmers to receive training for improved water management and agricultural practices

Outputs Component 1 1. Functioning and sustainable management institution or a river basin authority (RBA) for the Hari Rud River 2. Defined and agreed entitlements for water allocation for the Hari Rud River Basin 3. A surface and groundwater model and other decision support tools for the Hari Rud River Basin 4. A groundwater regulatory/management framework

Component 2 5. A participatory irrigation R&U process that involves mirabs and all the community

1. An RBA consistent with Government policy in place by end of the Project 2. Entitlement registry in place and basin irrigation scheduling procedures in place by project end 3. Groundwater permitting and management information system in place by project end 4. Groundwater policy drafted and enforcement mechanisms in place by the end of Project 5. Community 95% satisfied with R&U activities, community contributions to R&U resources in all subprojects, and consultation and confirmation with women over nonirrigation infrastructure in all subprojects 6. 100% of targeted R&U completed by year 7 of the

1. Government statistics/ reporting 2. Development partner statistics/reporting 3. Project M&E activities by the PMU 4. Mirabs and communities through participatory M&E 5. Consultants reports 6. Existence of training materials, etc. 7. Contract awards 8. ADB review missions 9. Reporting by Afghanistan Resident Mission

Assumptions 1. Water users will abide by policies of RBA and agree to entitlements for water allocation. 2. Water modeling activities are technically feasible. 3. Modalities can be found to implement and enforce the groundwater regulatory/ management framework. 4. Community members will be willing to participate in the R&U and provide a 10% contribution. 5. Suitable subproject sites and communities can be found. 6. Security situation allows project implementation. Risks 1. Contracting civil works may be beyond the capacity of the local contractors but not of interest to international contractors. 2. Farmers may be reluctant to participate in improved cropping techniques. 3. Women will be reluctant to participate in project activities 4. Consultants may be of poor quality

v

Design Summary

Performance Targets/Indicators

Data Sources/Reporting

Mechanisms

Assumptions and Risks

6. 45,000 ha of irrigation R&U in the Hari Rud River Basin and 10,000 ha in the Murghab River Basin 7. New irrigation and water resources development projects in the western basins

8. Capacity development program and ongoing technical and institutional support for mirabs 9. Preparation of resettlement plans as needed for subprojects

Component 3 10. Detailed farm survey of the lower Hari Rud River Basin 11. Mirab and farmer capacity building programs for OFWM and enhanced cropping opportunities 12. Menu of income-generating activities for the landless women and with training program and ongoing technical support

Component 4 13. Comprehensive capacity development program for all project stakeholders 14. Effective PMU 15. Functional Irrigation Department in Heart

Project 7. At least 15 water resources development projects implemented by the end of the Project or equivalent amount of additional R&U 8. At least 90% of mirabs in all subprojects involved in capacity development activities

9. Resettlement plans as needed that are fully compliant with ADB guidelines 10. Statistically valid stratified sample for lower Hari Rud River Basin with report and recommendations by year 1.5 of the Project 11. Training materials, trainers, delivery strategies, and M&E in place for OFWM and enhanced cropping opportunities subcomponent activities by year 2.5 of Project 12. Training materials, trainers, delivery strategies, and M&E in place for livelihoods subcomponent activities by year 2.5 of Project 13. Detailed capacity development program with materials and delivery mechanisms in place by year 2 and international training completed by year 5 of the Project.

14. All PMU reporting and financial management activities on schedule and satisfactory to ADB by year 1 of the Project 15. MEW fully staffed and capable of managing project activities by year 6 of the Project

Activities with Milestones Component 1: – IWRM 1.1 Field reconnaissance and development of surface/basin model – by year 3

Inputs 1. ADB will provide (i) inception

vi

Design Summary

Performance Targets/Indicators

Data Sources/Reporting

Mechanisms

Assumptions and Risks

1.2 Field reconnaissance and development groundwater model and irrigation demonstrations – by year 3

1.3 Develop geographic information system and other management information systems – by year 3

1.4 Basin water resource development plan – by year 5 1.5 Form river basin committee and formalize RBA – by years 1 and 7 1.6 Develop process and initial registry for water allocation entitlement system – start in

year 2 and finish by year 6 1.7 Develop demonstration groundwater irrigation facilities – years 3 to 6 1.8 Research and draft groundwater regulatory framework – years 2 to 6

Component 2: Water Resources and Irrigation Development 2.1 Contract and initiate survey contract for Hari Rud schemes – years 1 to 3 2.2 Develop contract and tender for design and technical support – year 1 to 3 2.3 Start community consultation and design work for 3 project preparatory technical assistance subprojects and other Hari Rud schemes – start year 1 to year 5 2.4 Commence contracting and start civil works – years 1 and 2 2.5 Develop technical and management options for improving irrigation system delivery in the western basins 2.6 Start reconnaissance in the Murghab River Basin and finalize investment plan – years 2

and 5 2.7 Finalize investment plan for water resources development subcomponent – start in year 2 and finish in year 5 2.8 Develop core mirab training program – year 1 – deliver training until year 7 2.9 Develop and deliver mirab technical and institutional backstopping services – years 2 to 7 2.10 Complete R&U on 45,000 ha in the Hari Rud River Basin and 10,000 ha in the

Murghab River Basin by year 7 2.11 Complete an additional 7,000 ha of R&U or 10 water resources development projects in the western basins by year 7 2.12 Preparation of resettlement plans as needed.

Component 3: Agriculture and Livelihood Services 3.1 Enumerate detailed farm survey in the lower Hari Rud River Basin and analyze

results – year 1 3.2 Assess technical options for OFWM and develop program delivery modalities – year 2 3.3 Research and develop interventions and delivery modalities for the enhanced

cropping opportunities subcomponent – year 2 3.4 Research and develop interventions and delivery modalities for the income-

generating opportunities for the livelihoods activities – year 2 3.5 Start program delivery for all programs under component 3 – beginning year 3;

refine program activities years 3 to 7

Component 4: Capacity Development and Project Management 4.1 Start recruitment of ministry staff and domestic consultants to support the Project –

immediately after loan negotiations and through year 1 4.2 Develop overall framework and plan for capacity development program -

immediately after loan negotiations and through year 1 4.3 Start domestic training program for ministry staff, nongovernment organizations, and

other training of trainers who will provide capacity development service in components 1, 2, and 3 – year 1

4.4 Screen candidates and start enrollment procedures for international training programs – years 1 to 4, final international training to be completed by year 6

4.5 Deliver capacity development activities through other components: years 2 to 7 4.6 Establish project steering committee, project implementation committee, PMU, and

project office in Kabul – year 1 4.7 Establish project office in Obe – year 1 and possible office in Badghis Province – year 3 4.8 Finalize safeguard procedures and ensure implementation arrangements for

resettlement and environment – year 1 and execute throughout the program

mission, (ii) at least 2 review missions per year for the first 3 years, (iii) midterm review mission by December 2009, (iv) ongoing support from the Afghanistan Resident Mission, (v) $14.5 million in ADF grant financing, and (vi) $60.5 in ADF loan financing. 2. The Government of Afghanistan will provide (i) by year 3 support counterpart staff to be trained through the Project, and (ii) office space and land as may be available for project facilities. 3. Project participants will provide (i) time and support for planning and executing subproject interventions, (ii) a portion of in-kind R&U development costs, and (iii) labor and finances for ongoing system management and O&M. 4. The private sector will provide contracting capacity to execute 55,000 to 65,000 ha of R&U and water resources infrastructure under project tenders. 5. Consulting input is 892 person-months: 468 international and 424 domestic.

a Mirab is the traditional community water manager.

1

I. PROJECT DESCRIPTION

A. Project Area and Location 1. The Western Basins Water Resources Management Project (the Project) will support

infrastructure development, strengthening of institutional frameworks, and capacity development

for water resources management and irrigated agriculture in the western basins of Afghanistan

(Badghis, Ghowr, and Herat provinces), mainly comprising the Hari Rud River Basin, which

includes Herat, and the Murghab River Basin.

B. Objectives and Scope 2. The overall goal of the Project is to improve rural livelihoods in the Project area through

strengthened integrated water resource management (IWRM), improved irrigation service

delivery, enhanced agricultural practices and increased productivity of irrigated agriculture. The

primary objectives of the Project are to (i) improve IWRM and water management at all levels;

(ii) rehabilitate, upgrade and develop irrigation and water resources infrastructure; (iii) support

improved agriculture productivity and rural livelihoods; and (iv) develop capacity and strengthen

institutional frameworks for IWRM and irrigated agriculture.

C. Project Components 3. The Project consists of the following 4 components (Appendix 1 provides a complete

description of each component):

• Component 1 - Integrated Water Resource Management: (i) support IWRM and basin

management through technical activities, which include, but not limited to surface water

investigations, groundwater investigations and establishment of basin management

information systems; (ii) undertake water allocation planning studies, and support

development of basin master plans; and (iii) enhance IWRM institutional and capacity

development. In particular, the Project will support the establishment of the River Basin

Authority (RBA) (due within 6 years of the Effective Date), which shall be responsible for

management of the Government’s water resources, and development of a groundwater

regulatory framework consistent with the Government’s policy (due within 7 years of the

2

Effective Date) to manage sustainable development of basin groundwater and to protect

karez1 and spring water supplies.

• Component 2 – Water Resources and Irrigation Development: (i) support irrigation

rehabilitation and upgrading in the Hari Rud and Murghab river basins; (ii) support water

resources development; and (iii) support mirab development and strengthen mirabs’

capacity for operation and maintenance (O&M). Rehabilitation and upgrading and

development of all subprojects will be fully participatory with mirabs and the community

involved in the identification, design, management, and O&M of the civil works. Given the

number of irrigation schemes requiring rehabilitation and upgrading in the western basins

and the need for flexibility with project implementation, a sector-like approach will be used

for subproject selection based on criteria with an indicative investment plan to be refined

during the Project (Appendix 2).

• Component 3 – Agriculture and Livelihood Support Services: (i) assist in improving on-farm

water management; (ii) enhance cropping opportunities; and (iii) support livelihood

opportunities for women and the landless.

• Component 4 – Capacity Development and Project Management: (i) strengthen capacity of

the Ministry of Energy and Water (MEW), Ministry of Agriculture, Animal Husbandry, and

Food (MAAHF), river basin authority (RBA), and other project participants; and (ii) support

the establishment of a Project Management Unit (PMU).

D. Special Features 4. The Asian Development Fund (ADF) support for the ADB contribution to the Project is a

blend of grant ($14.5 million) and loan ($60.5 million). The use of the grant financing is vital to

the redevelopment of irrigated agriculture and the national economy, and is consistent with

ADB’s country strategy and program in that it supports natural resource management and relies

on building capacity, establishing appropriate policy and institutional frameworks, and

rehabilitating essential infrastructure. The grant will be used to support the agricultural and

livelihood services component, and the mirab development and O&M subcomponent, which

provide critical value addition to development impact and poverty reduction as part of the

1 A karez is an indigenous water supply system that captures subsurface flow by tunneling horizontal shafts into the

side of hills or mountains.

3

Project. The grant funds will be managed with the same oversight as the ADB loan funds, and

separate M&E of grant funded activities will be undertaken.

II. COST ESTIMATES AND FINANCING PLAN

A. Detailed Cost Estimates and Financing Plan 5. The Project is estimated to cost $87.6 million equivalent inclusive of taxes, duties, and

interest during implementation (Table 1). Appendix 3 provides the detailed cost estimates.

Table 1: Cost Estimates

($ million) Item Foreign

Exchange Local

Currency Total Cost Percent

1. Integrated Water Resources Management 5.5 2.4 7.9 10 2. Water Resources and Irrigation Development 17.9 34.8 52.7 68 3. Agriculture and Livelihood Services 2.2 6.3 8.5 11 4. Capacity Building and Project Management 4.2 4.4 8.6 11 Subtotal (Base Costs)a 29.8 47.9 77.7 100 1. Physical Contingenciesb 1.0 0.9 1.9 2 2. Price Contingenciesc 1.6 4.5 6.1 8 3. Interest during Implementationd 1.9 0.0 1.9 3 Total 34.3 53.3 87.6 113

a Late 2005 prices including taxes and duties. b Physical contingencies: 0% on civil works since subprojects will be executed to the limit of project funds, and

10% on all other expenditure accounts. c Price contingencies: 2.8 falling to 1.9% on foreign exchange and 5.0% on local currency. d Interest during implementation is based on the 1% interest. Source: Report and Recommendation of the President to the Board of Directors (RRP) on a Proposed Loan and Asian Development Fund Grant for the Western Basins Water Resources Management Project.

6. ADB has approved on 21 December 2005 a Loan of SDR42.446 million and a Grant of

$14.5 million from ADB’s Special Funds resources to help finance the Project. The loan will

have a 40-year term, including a grace period of 10 years, and an interest charge of 1% per

annum. The total amount of the interest charge during the grace period will be capitalized and

charged to the loan account. The ADB loan and grant will finance $34.3 million of the foreign

exchange costs and $40.7 million of the local currency costs (Table 2). The community will fund

$7.8 million equivalent of the local costs through in-kind labor. Under ADB’s special lending terms,

the Government is exempt from directly contributing to the project financing exclusive of local

taxes and duties, which will be paid by the Government.2 The Government will bear the foreign

exchange risk. Details of the financing arrangement for the Project are also in Appendix 3.

2 Cofinancing is currently being pursued. Once this is confirmed, ADB’s Special Funds loan resources will be

canceled and an equal amount substituted with cofinancing funds. The Government has been consulted and confirmed this arrangement.

4

Table 2: Financing Plan ($ million)

Source

Foreign Exchange

Local Currency

Total Cost

Percent

Asian Development Bank Loan 29.7 30.8 60.5 69 Asian Development Bank Grant 4.6 9.9 14.5 17 Project Participantsa 0.0 7.8 7.8 9 Governmentb 0.0 4.8 4.8 5 Total 34.3 53.3 87.6 100 a Contribution of communities for labor. b Local taxes and duties. Source: RRP on the Proposed Loan and Asian Development Fund Grant for the Western Basins Water Resources Management Project

B. Use and Allocation of Loan and Grant Proceeds 7. The Government shall apply the Loan and Grant to the financing of eligible expenditures

on the Project in accordance with the provisions of the Financing Agreement for the Project

dated 9 March 2006. The goods and services to be financed, the Loan and Grant financing

percentages for such goods and services, and the respective allocation of amounts of the Loan

and Grant among different categories are provided in Tables 3A and 3B, which may be

amended from time to time by agreement between the Government and ADB in accordance

with paragraph 6, Schedule 3A, and paragraph 4, Schedule 3B of the Financing Agreement.

The Loan and Grant proceeds must not be used to finance local taxes.

8. All goods and services to be financed out of the proceeds of the Loan and Grant must be

procured in accordance with the provisions of Schedules 4 and 5 of the Financing Agreement,

and the relevant ADB guidelines for the procurement of goods and use of consulting services.

ADB may refuse to finance a contract where goods or services have not been procured under

procedures substantially in accordance with those agreed between the Government and ADB,

or where the terms and conditions of the contract are not satisfactory to ADB.

9. The Government shall cause all goods and services financed out of the proceeds of the

Loan and Grant to be used exclusively in the carrying out of the Project.

10. Loan and Grant account closing date. The closing date for withdrawals from the Loan

and Grant Accounts shall be 30 September 2013, or such other date as may from time to time

be agreed between the Government and ADB.

5

Table 3A

Allocation and Withdrawal of Loan Proceeds (SDR million)

Category

Amount Allocated ADB

Financing Number Item Category Subcategory Basis for Withdrawal

1

Civil Works

24.205

1A Rehabilitation & Upgrade 23.433 100% of total expenses* 1B Project Offices 0.772 100% of total expenses* 2 Vehicle & Machinery 2.035 81% of total expenses* 3 Equipment 0.912 59% of total expenses*

3A Project Equipment 0.912 100% of total expenses* 4 Training/Fellowships 2.666 84% of total expenses* 5 Consulting Services 6.244 67% of total expenses* 6 Project Implementation 4.280 70% of total expenses* 7 Interest Charge 1.333 100% of amounts due 8 Unallocated 0.771

Total

42.446

* Exclusive of local taxes. Source: Financing Agreement dated 9 March 2006.

Table 3B Allocation and Withdrawal of Grant Proceeds

($ million)

Category Amount Allocated

ADB Financing

Number Item Category Subcategory Percentage of Total*

1 Vehicles & Machinery

0.700

19%

2 Equipment 0.900 91% 2A Mirab Development 0.900 100% 3 Training/Fellowships 0.700 16% 4 Materials 4.600 100% 5 Consulting Services 4.300 33% 6 Project Implementation 2.600 30% 7 Unallocated 0.700

Total

14.500

* Exclusive of local taxes. Source: Financing Agreement dated 9 March 2006.

6

11. Reallocation of Loan and Grant Proceeds. Notwithstanding the allocation of Loan and

Grant proceeds and the withdrawal percentages set forth in these Tables and subject to

paragraph 5 of Schedules 3A and 3B of the Financing Agreement:

• if the amount of the Loan and/or Grant allocated to any Category appear to be

insufficient to finance all agreed expenditures in that Category, ADB may, by notice to

the Government, (i) reallocate to such Category, to the extent required to meet the

estimated shortfall, amounts of the Loan and/or Grant which have been allocated to

another Category but, in the opinion of ADB, are not needed to meet other expenditures,

and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the

withdrawal percentage applicable to such expenditures in order that further withdrawals

under such Category may continue until all expenditures thereunder shall have been

made; and

• if the amount of the Loan and/or then allocated to any Category appears to exceed all

agreed expenditures in that Category, ADB may, by notice to the Government, reallocate

such excess amount to any other Category.

III. IMPLEMENTATION ARRANGEMENTS

A. Executing and Implementing Agencies 12. The Executing Agency for the Project is the Ministry of Finance (MOF). The Project

Implementing Agencies are:

• MEW (Irrigation Department) – shall be responsible for all water resources management

activities and irrigation rehabilitation and upgrading;

• MAAHF – shall be involved in the delivery of the agricultural support services, and

• Ministry of Mines and Industry (MMI) – in collaboration with MEW, shall be responsible

for carrying out groundwater activities.

B. Project Management Organization 13. The MEW and MAAHF, with assistance from ADB and the project consultants, will

identify and depute professional and technical staff to establish and sustain the Irrigation

Department and the RBA after project completion. If MEW and MAAHF cannot identify and

depute the above-mentioned staff, then within 3 years of the Effective Date, MEW and

MAAHF shall sanction the posts and engage these staff on as permanent employees. The

Government shall ensure than staff hired for the Project and who receive international training

7

through the Project will remain throughout the Project period and remain with MEW and MAAHF

for an adequate period of time to ensure the sustainability of the Project benefits.

14. Project Steering Committee (PSC). The Government shall establish a PSC in Kabul,

co-chaired by the Minister or Deputy Minister of MEW and MOF, and comprised of

representatives from the Ministry of Foreign Affairs (MFA), MAAHF, MMI, Ministry of Rural

Reconstruction and Development (MRRD) and other relevant ministries at deputy-minister or

equivalent level. The PSC shall meet at lease once a year or more frequently at the request of

the Chair to provide policy guidance and review project performance. 15. PMU and Project Offices. MEW will establish a PMU within 3 months of effectiveness

in Herat with representation from MAAHF, MEW, MMI, MOF, the Governor of Heart’s Office, and

the project consultants. The PMU will be housed within MEW in Herat, and shall be headed by a

Project Director, appointed by MEW. The Project Director shall report to the Deputy Minister of

MEW (Head of Irrigation) and shall be responsible for overall project activities. Unless otherwise

agreed between PSC and ADB, the PMU will have about 30 professional staff, 43 technical staff,

and 54 support staff. The PMU shall be responsible for day-to-day project management, including,

but not limited to:

• Consultants/NGO recruitment

• Procurement

• Compliance of subprojects with ADB’s safeguard policies

• Financial management

• Monitoring and evaluation

• Submission of quarterly progress reports and annual reports through MOF

• Provision of overall inter-agency coordination for project activities

16. The PMU will establish within 1 year of the Effective Date, (i) a project office in Obe,

Herat Province, to support project activities in the upper Hari Rud River Basin, and (ii) a project

office in Kabul to coordinate activities with MOF and MEW until MEW has sufficient capacity to

manage activities under the Project. Within 3 months of opening of the project offices in Obe

and Kabul, MEW shall appoint deputy project directors for each of the project offices respectively.

17. Project Implementation Committee (PIC). The Project Director shall form a PIC

within 3 months of the Effective Date. The PIC shall be chaired by the representative of the

Governor’s Office of Heart, and shall comprise high-ranking technical officers from MEW,

MAAHF, MMI, MOF, MRRD, Ministry of Women’s Affairs (MWA), provincial authorities

8

(including representatives of the governors’ offices of Bhadghis and Ghowr once subprojects

are located there), and development partners. The PIC shall coordinate project implementation

and technical issues. The PIC will have the Project Director as its secretary and will meet at

least twice a month or more frequently at the request of the secretariat or chair. The PIC will

have overall responsibility for resettlement, while the PMU will manage the day-to-day activities

and development and implementation of any resettlement plans. The PIC shall be responsible

for selection of subprojects, while evaluation of subprojects shall be done by PMU.

18. Management Cell. MEW with assistance from PMU shall, within 1 year of the Effective Date¸ establish a management cell in Heart, supported by a Basin Water Committee

(BWC) comprising representatives from MEW, MOF, MMI, MAAHF, MRRD, provincial and

municipal authorities of the Government, mirabs and other stakeholders to plan and execute

technical functions associated with Component 1. MEW staff shall be trained for technical and

planning functions to serve as a secretariat to BWC and RBA.

19. Subproject Selection and Approval. Subprojects shall be selected by the PIC,

evaluated by the PMU, and approved by MEW in Kabul. Selection of the first 5 subprojects shall

be approved by ADB, and if found acceptable, further subproject selection will not require ADB

approval. However, if ADB determines that a subproject did not meet the agreed selection

criteria, the Government shall be required to refund to ADB any payment made from the Loan or

the Grant to finance such subproject and to provide the financing from its own or other

resources.

IV. IMPLEMENTATION SCHEDULE

20. The Project will be implemented over 7 years, from 2006 to 2013 (Appendix 4). The first

year will be largely devoted to start-up activities, including staffing the PMU, procurement of

goods and services (consultants, office facilities, office equipment, etc), and various other

preparatory tasks. Construction of subprojects prepared under the PPTA for the Project3 will be

initiated in year 1, while other subprojects will be prepared in years 1 to 3 with construction

commencing immediately thereafter.

V. COST ESTIMATES AND FINANCING PLAN DURING IMPLEMENTATION

21. MEW and the PMU, with assistance from project consultants, will update the project cost

estimates and financing plan annually, or more often if necessary, based on actual contract

3 The subprojects include rehabilitation of the Jui Nau Canal, and Sri Pul and Yahia Abad systems.

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awards and project implementation (Appendix 5). The updated tables will be attached to the

quarterly and annual progress reports that would be submitted to ADB.

22. MEW and the PMU, with assistance from project consultants, will also prepare annual

forecasts of contract awards and disbursements on a quarterly basis for one year ahead, in the

format shown in Appendix 6. Such forecasts will be submitted to ADB no later than 15 January

each year of project implementation.

VI. CONSULTANT RECRUITMENT

23. The Project will require an estimated 892 person-months of consulting services: 468

international and 424 domestic. The expertise required and terms of reference are in Appendix

7. Consultants will be selected in accordance with ADB’s Guidelines on the Use of Consultants.

The selection and engagement of the consultants shall be made without any restriction against,

or preference for, any particular consultants or any particular class of consultants. The

consultants shall be selected and engaged as a firm by the Government using quality-and-cost-

based selection (QCBS) method as follows:

• Invitation for technical and financial proposals. The invitation to submit technical and

financial proposals, or request for proposals (RFP), and all related documents shall be

approved by ADB before they are issued. For this purpose, three copies of the draft RFP,

the names of consultants to be shortlisted, the proposed criteria for evaluation of both

proposals, a draft consultancy contract, and other related documents shall be submitted to

ADB.4 A period of at least 45 days shall be allowed for submission of both proposals for full

technical proposals, and at least 35 days for simplified technical proposals. A copy of the

final RFP as issued together with all related documents, shall be furnished to ADB for

information promptly after issuance. The validity period for the technical and financial

proposals as provided in the RFP shall usually not exceed 3 months from the date specified

for submission of the technical and financial proposals. The approval of the ADB shall be

obtained for any request to extend such validity period. Except as ADB may otherwise

agree, the validity period, including any extensions, shall not exceed a maximum total period

of 6 months. If the contract is not signed within the validity period in accordance with the

4 ADB’s Standard Request for Proposals (SRFP) must be used for engaging ADB-financed consulting services. The

SRFP, including contract formats, can be downloaded from the ADB’s website (www.adb.org/Consulting/documents.asp). The website also contains a checklist of documents that need to be submitted to ADB for approval.

10

ADB’s Guidelines on the Use of Consultants, the selection shall be invalid and the selection

and engagement process as provided in this paragraph shall be followed again.

• Evaluation and scoring of technical proposals. Immediately after the technical proposals

have been evaluated and scored, approval of ADB shall be obtained to the evaluation and

scoring of the technical proposals. For this purpose, ADB shall be furnished with 3 copies of

the technical proposals.

• Public opening of financial proposals. The financial proposals of the firms whose

technical proposals meet the minimum qualifying technical score shall be opened publicly

after adequate notice is given to such firms or their representatives to attend the opening of

the financial proposals.

• Evaluation and scoring of financial proposals and ranking of technical and financial proposals. After the financial proposals have been evaluated and scored, the ranking of the

technical and financial proposals shall be made. Before negotiations are started with the

first-ranked consultants, approval of ADB shall be obtained to the evaluation and scoring of

the financial proposals and the ranking of the technical and financial proposals. For this

purpose, ADB shall be provided with three copies of (i) the evaluation and scoring of the

financial proposals, and (ii) the ranking of the technical and financial proposals.

• Execution of contract. After the conclusion of negotiations but before the signing of the

contract, ADB shall be furnished with the contract as negotiated for approval. Promptly after

the contract is signed, ADB shall be furnished with three copies of the signed contract. If

any substantial amendment of the contract is proposed after its execution, the proposed

changes shall be submitted to ADB for prior approval.

24. Any individual consultants that would be selected and engaged by the Government shall

follow the following procedures:

• A list of the candidates together with their qualifications and their ranking and a draft

contract shall be furnished to ADB for approval before the selection of consultants.

• Promptly after the contract is negotiated, ADB shall be furnished with a copy of the draft

negotiated contract for approval. As soon as the contract is signed, ADB shall be furnished

with three copies of the signed contract.

• If any substantial amendment of the contract is proposed after its execution, the proposed

changes shall be submitted to ADB for prior approval.

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25. Non-governmental organizations (NGOs) may be engaged to support activities related to

Component 3 and mirab development, O&M subcomponent of Component 2, and other

activities necessary for implementation of the Project. Selection and engagement of prequalified

NGOs may be done in accordance with procedures acceptable to ADB. If there is a limited

number of NGOs, direct negotiation may be used in selection and engagement of NGOs,

subject to prior approval of ADB.

VII. PROCUREMENT

26. To minimize delays and problems in procurement, but before commencing any

procurement activities under the Project, MEW/PMU should provide to ADB for approval a list or

lists of the goods to be procured, the proposed grouping of these goods (consideration should

be given to item compatibility, time of need, supplier capability, likelihood of wider competition,

and capability of MEW/PMU to handle a number of contracts), and the proposed number and

scope of civil works contracts to be awarded. In preparing such list(s), MEW/PMU may use as

basis the indicative contract packages in Appendix 8.

27. ADB’s procurement procedures (as detailed in the "Guidelines for Procurement under

Asian Development Bank Loans" dated November 2004 [Guidelines for Procurement] as

amended from time to time) must be followed in respect of any contract in which the proceeds of

the Loan and Grant will be used to finance either the whole or part of the contract. Procurement

shall be made without any restriction against, or preference for, any particular supplier or

contractor or any particular class of suppliers or contractors, except when domestic preference

is applied.

28. International Competitive Bidding (ICB). Each civil works contract estimated to cost

the equivalent of more than $1,000,000 and each supply contract for equipment or materials

estimated to cost the equivalent of more than $500,000 shall be awarded on the basis of

international competitive bidding as described in Chapter II of the Guidelines for Procurement.

In this context:

• There shall be submitted to ADB, as soon as possible, and in any event not later than 90

days before the issuance of the first invitation to bid for the Project, a General Procurement

Notice (which ADB will arrange to publish separately) in such form and detail and containing

such information as ADB shall reasonably request.

• Procurement actions shall be subject to review by ADB in accordance with the procedures

set forth in Chapter IV of the Guidelines for Procurement. Each draft invitation to bid, to be

12

submitted to ADB for approval, shall reach ADB at least 21 days before it is issued and shall

contain such information as ADB shall reasonably request to enable ADB to arrange for the

separate publication of such invitation (i.e. the draft bidding documents shall show all

important conditions of bidding including the proposed bidding period and the proposed

delivery period.

• As soon as the invitation to bid has been advertised, ADB shall be furnished with a report on

the advertising procedures followed. Such report shall show, inter alia, the name of the

newspaper in which the invitation was advertised and the date of such advertising. In

addition, the report shall list to whom the bidding documents were transmitted; how they

were transmitted (locally, by hand or surface mail, and abroad, by air mail); and the date of

such transmittal. A copy of the invitation to bid as issued and a copy of the newspaper

• The advertisement as published shall also be enclosed with the report.

• As soon as the bids received have been evaluated, ADB’s approval shall be obtained to the

proposal for award of contract before a contract is awarded or a letter of intent is issued. For

this purpose, ADB shall, promptly after the bid evaluation but at least 30 days prior to

expiration of bid validity, be furnished with three copies of (i) an account of the public

opening of the bids; (ii) a summary and evaluation of the bids; (iii) the proposal for award

(together with the consultants' recommendations, where applicable); (iv) a draft contract or a

draft letter of acceptance if such draft differs substantially from the draft previously submitted

to, and approved by, ADB; and (v) an appropriate certificate of the eligibility of the proposed

contract where required by ADB. In case the bidding procedure allows for more than one

stage, the ADB’s approval of the results of the evaluation at each stage shall be obtained

before the results are communicated to the bidders.

• Promptly after each contract is awarded, ADB shall be furnished with three copies of the

contract as executed. If the final contract proposed to be executed differs substantially from

the draft contract previously approved by ADB, or if any substantial amendment of the

contract is proposed after its execution, the proposed changes shall be submitted to ADB for

prior approval.

29 ADB’s standard bidding documents (SBDs) for ICB, which can be downloaded from the

ADB website (www.adb.org/Procurement/prequalification-bid-documents.asp) must be used.

Modifying or departing from the SBDs must be minimal and consistent with the Guidelines for

Procurement; subject to ADB approval; and introduced only through bid data sheets, and the

special conditions of contract and conditions of particular application.

13

30. International Shopping. Each supply contract for equipment or materials estimated to

cost the equivalent of $300,000 but not more than $500,000 (other than minor items) shall be

awarded on the basis of international shopping as described in Chapter III of the Guidelines for

Procurement. In this context:

• Each draft invitation to bid and related bid document shall be submitted to ADB for approval

before they are issued.

• Notwithstanding paragraph 3.03(b) of the Guidelines for Procurement, any award of contract

shall be subject to prior ADB approval.

31. Domestic Preference. In comparing bids under ICB, a margin of preference may be

provided, at the option of the Government and in accordance with the provisions of the

Attachments to Schedule 4 of the Financing Agreement, for:

• goods manufactured in Afghanistan, provided that the bidder offering such goods shall have

established to the satisfaction of the Government and ADB that the domestic value added

equals at least 20 percent of the ex-factory bid price of such goods; and

• civil works to be carried out by eligible domestic contractors, as defined by ADB.

32. Local Competitive Bidding (LCB). Each civil works contract estimated to cost the

equivalent of $1,000,000 or less shall be awarded on the basis of LCB among prequalified

contractors in accordance with the Government’s standard procurement procedures and

acceptable to ADB. Civil works estimated to cost the equivalent of less than $500,000 may be

implemented by communities through an in-kind contribution to subprojects to be coordinated

through PMU.

33. For the first 3 contracts to be awarded under LCB, the selection and engagement of

contractors shall be subject to the approval of ADB. As soon as the bids received have been

evaluated, the proposal for award of contract shall be submitted to ADB for approval. For this

purpose, ADB shall be furnished with three copies of (i) an account of the public opening of

bids; (ii) a summary and evaluation of the bids; (iii) the proposal for award; and (iv) a draft

contract or a draft letter of acceptance. Promptly after each contract is awarded, ADB shall be

furnished with three copies of the contract as executed.

34. For subsequent contracts, bid evaluation and award of contracts shall be subject to post

review by ADB. However, if the award or terms of any such contract are not subsequently

approved by ADB, the Government will be required to refund to ADB any payment made from

14

the Loan or the Grant to finance such contract and to provide the financing from its own or other

resources.

35. Direct Purchase. Civil works contract estimated to cost the equivalent of $100,000 or

less, and certain minor or off-the-shelf goods and materials estimated to cost, in the aggregate,

the equivalent of $100,000 or less, may be procured through direct purchase in accordance with

procedures acceptable to ADB. After award, three copies of each contract for such items shall

be furnished to ADB.

36. Rehabilitation Works. Rehabilitation works involving numerous structures or activities

on subprojects may be bundled into contract packages for procurement either through ICB or

LCB.

VIII. DISBURSEMENT PROCEDURES

37. Loan and Grant proceeds will be disbursed in accordance with the ADB’s Loan

Disbursement Handbook dated January 2001 (as amended from time to time), and Schedules

3A and 3B of the Financing Agreement. To avoid delays in disbursement, and as soon as the

Financing Agreement becomes effective, the Government should submit to ADB sufficient

evidence of the authority of the person(s) who will sign withdrawal applications on behalf of the

Government, together with the authenticated specimen signature of each authorized person

(any subsequent change in the list of authorized representatives must be reported immediately

and authenticated specimen signatures of new representatives must also be provided to ADB).

For all withdrawals, ADB must receive a withdrawal application in the prescribed form, and

signed by the Government’s duly authorized representative(s). A withdrawal application is a

written request from the Government to ADB to pay funds against the Loan and Grant Accounts,

and consists of (i) the application itself, in letter form, in 2 copies (Appendixes 3, 5, and 19 of the

Loan Disbursement Handbook provide sample formats), (ii) summary sheet(s) for each category

claimed (Appendixes 4 and 6 of the Loan Disbursement Handbook provide sample formats),

and (iii) supporting documents, if required. The application must reach ADB before the specified

Loan and Grant closing date.

38. Imprest Account. Except as ADB may otherwise agree, the Government shall establish

immediately after the Effective Date, an imprest account at Da Afghanistan Bank. The imprest

account shall be established, managed, replenished and liquidated in accordance with the Loan

Disbursement Handbook. The initial amount to be deposited into the imprest account shall not

15

exceed the equivalent of six months expenditures or 10 percent of the Loan and the Grant

amount, whichever is lower. For this purpose, a signed withdrawal application for imprest

account (Appendix 19 of the Loan Disbursement Handbook) must be submitted to ADB together

with a statement of the estimated ADB share of project expenditures (Appendix 20 of the Loan

Disbursement Handbook). As eligible expenditures are incurred and paid from the imprest

account, the Government requests liquidation/replenishment of the account by submitting a

withdrawal application duly supported by documents, as required, and the corresponding bank

statement and reconciliation statement (Appendix 21 of the Loan Disbursement Handbook).

Withdrawal applications must be prepared in the currency of the account.

39. Advances to the imprest account are to be gradually reduced within 1 year before the

Loan and Grant closing date, or when the undisbursed balance of the Loan and Grant, including

outstanding commitments, is equal to twice the amount of advance, whichever comes first. This

is to ensure than sufficient time is provided for the Government to obtain supporting

documentation for clearing the outstanding advances before the Loan and Grant accounts are

closed. The form to be used is shown in Appendix 22 of the Loan Disbursement Handbook. The

Government must promptly refund to ADB, in the currency of the account, any balance of the

advance not liquidated at the time of Loan and Grant closing.

40. The statement of expenditures (SOE) procedure may be used for reimbursement of

eligible expenditures and to liquidate advances provided into the imprest account, in accordance

with the Loan Disbursement Handbook. Any individual payment to be reimbursed or liquidated

under the SOE procedure shall not exceed the equivalent of $50,000. Paragraphs 9.28 to 9.23

of the Loan Disbursement Handbook describe the SOE procedure in detail.

41. Other Disbursement Procedures. The following disbursement procedures may also be

used under the Project:

• Direct payment procedure. ADB, at the request of the Government, pays a designated

beneficiary directly (Chapter 7 of the Loan Disbursement Handbook provides details);

• Commitment procedure. ADB, at the Government’s request, provides an irrevocable

undertaking to reimburse a commercial bank for payments made or to be made to a supplier

against a letter of credit financed from the Loan and Grant accounts (Chapter 8 of the Loan

Disbursement Handbook provides details); and

• Reimbursement procedure. ADB pays from the Loan and Grant accounts to the

Government’s account or, in some cases, to the project account, for eligible expenditures

16

which have been incurred and paid for by the Project out of its budget allocation or its own

resources (Chapter 9 of the Loan Disbursement Handbook provides details).

42. Withrawal application forms and other loan financial information can also be downloaded

from the ADB’s Loan Financial Information System (LFIS) at http://lfis.adb.org. MEW/PMU may

request access to the LFIS from this site, or by accomplishing and sending the request form in

Appendix 9.

IX. PROJECT MONITORING AND EVALUATION

43. MEW and the PMU will establish performance monitoring and evaluation (M&E) systems

and procedures consistent with ADB’s Project Performance Management System within 4 months of the Effective Date. The M&E system to be developed for the Project should use as

basis the quantified and time-bound targets, indicators, risks, and assumptions contained in the

Project’s design and monitoring framework (page iii) to monitor and evaluate the Project’s

performance. Progress toward the performance targets and assessment of risks and

assumptions are tracked and should be inputted in the Project’s progress reports that would be

submitted to MOF and ADB. These reports, combined with findings during regular field review

missions, will then form the basic inputs for the ADB’s Project Performance Report (Appendix

10).5 During implementation, the design and monitoring framework should be reviewed and,

when needed, adjusted to reflect changing circumstances and environments so that the

intended outcome can be achieved.

44. For subprojects, baseline information will be collected as part of the subproject feasibility

assessment process with assistance from the project consultants. Thereafter, surveys will be

conducted regularly. The scope of the survey, quantity and quality of data, and frequency of

collection will be guided by project management needs for progressive feedback on

implementation status and early warning on situations that might jeopardize development

objectives. Subproject monitoring will be conducted by the PMU, MEW, mirabs, and others as

needed, and will be reviewed closely by ADB.

45. During the initial 3 years of the Project, ADB and the Government will carry out at least semi-

annual reviews to (i) determine if implementation arrangements are in place and appropriate, (ii)

assess progress in capacity development, (iii) review subproject selection and implementation,

(iv) ensure compliance with ADB safeguard policies, and (v) assess any unforeseen impacts.

17

ADB and the Government will undertake a comprehensive mid-term review (MTR) by December

2009 to identify problems in implementation arrangements and define needed changes to

achieve the Project objectives. The Government shall ensure that 2 months prior to MTR, PMU

submits a detailed progress report on Project implementation to ADB.

X. REPORTING REQUIREMENTS

46. MEW and PMU shall prepare monthly financial statements and quarterly progress

reports on (i) physical and financial progress of activities against the targets, (ii) progress on the

institutional and capacity aspects, (iii) issues affecting project implementation and their

corrective measures, and (iv) other agreed upon monitoring parameters. A pro forma of the

project progress report is in Appendix 11. MEW and PMU will prepare a comprehensive annual

report and submit all reports to ADB through the MOF not later than 2 months after the reporting

period. Within 3 months of physical completion of the Project, the Beneficiary will submit a

comprehensive project completion report in ADB’s standard format (Appendix 12) with

additional details as may be requested by ADB.

XI. AUDITING REQUIREMENTS

47. MOF, MEW and PMU shall (i) maintain separate accounts for the Project, including

separate accounts for the Loan and the Grant; (ii) have such accounts and related financial

statements audited annually, in accordance with appropriate auditing standards consistently

applied, by independent auditors whose qualifications, experience and terms of reference are

acceptable to ADB; (iii) furnish to ADB, as soon as available but in any event not later than 6

months after the end of each related fiscal year, the unaudited project accounts and financial

statements, certified copies of such audited accounts and financial statements and the report of

the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and

the Grant proceeds and compliance with the financial covenants of the Financing Agreement as

well as on the use of the procedures for imprest account/statement of expenditures), all in the

English language; and (iv) furnish to ADB such other information concerning such accounts and

financial statements and the audit thereof as ADB shall from time to time reasonably request.

XII. MAJOR LOAN AND GRANT COVENANTS

48. The loan and grant covenants, which have been agreed between the Government and

ADB, to be complied with against the dates shown where applicable, is in Appendix 13.

5 The PPR is ADB’s tool for monitoring implementation progress and assessing the likelihood that projects will

18

XIII. KEY PERSONS INVOLVED IN THE PROJECT

49. The key persons of the Government, (cofinancier forthcoming), and ADB who are

responsible for the implementation/administration of the Project are listed in Appendix 14.

Update this listing promptly when changes occur.

XIV. ANTICORRUPTION

50. ADB defines corruption as the “abuse of public or private office for personal gain.” ADB

will systematically identify, in consultation with its member countries opportunities for reducing

corruption as part of its broader emphasis upon promoting good governance and sound

development management. The institutional arrangements and reporting mechanisms referred

to in this PAM are put in place to enable monitoring and accounting of the use of ADB

resources. The ADB’s Anticorruption Policy sets the guidelines and procedures in addressing

corrupt practices. Anyone coming across evidence of corruption associated with the Project

must contact the ADB’s Office of the Auditor General (which will investigate such allegations) at

the following address:

Anticorruption Unit Office of the Auditor General Asian Development Bank 6 ADB Avenue, Mandaluyong City 0401 Metro Manila, Philippines Telephone: (632) 632 5004 Facsimile: (632) 632 2152 Email: anticorruption@adb.org

XV. OTHER MATTERS 51. ADB documents and publications that are relevant to the implementation and

administration of this Project are listed in Appendix 15.

deliver their intended outputs and achieve their desired outcome.

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APPENDIXES

1 Project Components 2 Subproject Selection Criteria 3 Cost Estimates and Financing Plan 4 Implementation Schedule 5 Detailed Costs and Financing Arrangement During Implementation 6 Worksheet for Quarterly & Yearly Contract Awards/Commitment & Disbursement

Projections 7 Consulting Services Requirements 8 Indicative Contract Packages 9 Form for Request for LFIS Web Access

10 Project Performance Report 11 Pro Forma of the EA’s Project Progress Report 12 Suggested Topics for Project Completion Report 13 Major Covenants 14 List of Key Persons Involved in the Project 15 List of Documents Relevant to Project Administration