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Document o f The World Bank
FOR OFFICIAL USE ONLY
Report No: 39432-VN
PROJECT APPRAISAL DOCUMENT
ON A
PROPOSED CREDIT
IN THE AMOUNT OF SDR 137.2 MILLION (US $207.7 MILLION EQUIVALENT)
TO THE
SOCIALIST REPUBLIC OF VIETNAM
FOR A
MEKONG DELTA TRANSPORT INFRASTRUCTURE DEVELOPMENT PROJECT
April 23,2007
Transport, Energy and Mining Unit Sustainable Development Department East Asia and Pacific Region
This document has a restricted distribution and may be used by recipients only in the performance o f their off icial duties. I t s contents may not otherwise be disclosed without World Bank authorization.
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ADB AusAID CPS DA DP DPI DPL DQCM DST EL4 EIRR EMDP EMP EMPF ENPV FA FMM GDP GMS GoV GSO
ICA ICB IDA IFR IWTC IWWP .E3 IC MBD MBER M&E MoF MONRE MOT MPI MT MTO NCB
c
HDM-4
CURRENCY EQUIVALENTS (Exchange Rate Effective March 3 1,2007)
Currency Unit = Vietnamese Dong (VND) 16,010Dong = US$1 US$1.51326 = SDRl
FISCAL YEAR January 1 - December31
ABBREVIATIONS AND ACRONYMS
Asian Development Bank NLF
Designated Account PMB Displaced Persons PTD
AustralianAgfflcyforIntemsdionalDevelopmenNpV Country Partnership Strategy PDOT
Department of Planning and Investment PER Department of Personnel and Labor PMU- Depart For Quality control and Management 1 PMUW Department of Science and Technology PPC Environmental Impact Assessment PPMUs Economic Internal Rate of Return PSC Ethnic Minority Development Plan QCBS Environment Management Plan RED model Ethnic Minority Policy Framework RPF Economic Net Present Value RMMS Financing Agreement Financial Management Manual RNIP Gross Domestic Product RP
Government o f Vietnam RSC General Statistics Office RT2/RT3 Road Planning Model SA Investment Climate Assessment SBV International Competitive Bidding SEDP International Development Association S I L Interim Financial Report SOE Inland Waterway Transport Cost Model SOEs I n l a n d W ~ y a n d P o r t W i o n p r O j e C t STD Japan Bank for International Cooperation Model Bidding Document TDSI Model Bid Evaluation Report VINAMARINE Monitoring and Evaluation VIWA(S) Ministry of Finance
Ministry of Transport Ministry o f Planning and Investment VRA
Multi-modal Transport Operator WTO National competitive bidding
Greater Mekong Sub-region RRMU
TA
Ministry of Natural Resources V H L S S
Multi-modal Transport WBI
National Logistics Forum Net Present Value Provincial Department of Transport Project Management Board Provincial Treasury Department Public Expenditure Review ’.
Project Management Unit No. I/ waterways
Provincial People Committee Provincial Project Management Units Project Steering Committee Quality- and cost-based selection Roads Economic Decision model Resettlement Policy Framework Road Management and Maintenance Systems Road Network Improvement Project Resettlement plan Regional Road Management Unit Regional Support Center Second and Third Rural Transport Projects Social Assessment State Bank of Vietnam Socio-Economic Development Plan Specific Investment lending State-Owned Enterprises Statement of Expenditures State Treasury Department Technical assistance Transport Development Strategy Institute Vietnam Maritime Administration Vietnam Inland Waterway Administration (South) Vietnam Household Living Standard Survey Vietnam Roads Administration World Bank Institute World Trade Organization
Vice President: James W. Adams Acting Country Director: Laurent Msellati
Sector Manager: Junhui Wu Task Team Leader: Simon David Ellis
FOR OFFICIAL USE ONLY
VIETNAM Mekong Delta Transport Infrastructure Development Project
CONTENTS
Page
A . STRATEGIC CONTEXT AND RATIONALE ..................................................................... 1 Country and Sector Issues .................................................................................................. 1
Rationale for Bank Involvement ......................................................................................... 4
Higher Level Objectives to Which the Project Contributes ............................................... 5
1 . 2 . 3 .
B . PROJECT DESCRIPTION ..................................................................................................... 5 1 . 2 . 3 . 4 . 5 .
Lending Instrument ............................................................................................................. 5
Project Components ............................................................................................................ 6
Alternatives Considered and Reasons for Rejection ......................................................... -9
Project Development Objective and Key Indicators .......................................................... 5
Lessons Learned and Reflected in the Project Design ....................................................... 8
C . IMPLEMENTATION ............................................................................................................ 10 1. Partnership Arrangements ................................................................................................ 10
2 . 3 .
Institutional and Implementation Arrangements .............................................................. 10
Monitoring and Evaluation o f OutcomesResults ............................................................ 11 4 . Sustainability .................................................................................................................... 12
Critical Risks and Possible Controversial Aspects ........................................................... 12
Loadcredit Conditions and Covenants ............................................................................ 13 5 . 6 .
D . APPRAISAL SUMMARY ..................................................................................................... 14 1 . Economic and Financial Analyses .................................................................................... 14 2 . Technical .......................................................................................................................... 15
3 . Fiduciary ........................................................................................................................... 16
4 . Social ................................................................................................................................ 17
5 . Environment ..................................................................................................................... 18
6 . Safeguard Policies ............................................................................................................ 19
7 . Policy Exceptions and Readiness ..................................................................................... 19
s
This document has a restricted distribution and may be used by recipients only in the performance o f their of f ic ia l duties . I t s contents may not be otherwise disclosed without Wor ld Bank authorization .
Annex 1: Country and Sector Background ............................................................................... 20
Annex 2: Major Related Projects Financed by the Bank and/or other Agencies .................. 25
Annex 3: Results Framework and Monitoring ......................................................................... 27
Annex 4: Detailed Project Description ...................................................................................... 30
Annex 5: Project Costs ................................................................................................................ 39
Annex 6: Implementation Arrangements .................................................................................. 41
Annex 7: Financial Management and Disbursement Arrangements ..................................... 49
Annex 8: Procurement Arrangements ....................................................................................... 64
Annex 9: Economic and Financial Analysis .............................................................................. 78
Annex 10: Safeguard Policy Issues ............................................................................................. 96
Annex 11: Project Preparation and Supervision .................................................................... 104
Annex 12: Documents in the Project File ................................................................................ 105
Annex 13: Statement of Loans and Credits ............................................................................. 106
Annex 14: Country at a Glance ................................................................................................ 108
Map: IBRD 34803
VIETNAM
MEKONG DELTA TRANSPORT INFRASTRUCTURE DEVELOPMENT PROJECT
PROJECT APPRAISAL DOCUMENT
EAST ASIA AND PACIFIC
EASTE
Date: April 23,2007 Acting Country Director: Laurent Msellati Sector Manager: Junhui Wu
Team Leader: Simon David Ellis Sectors: Roads and highways (40 percent); Ports, waterways, and shipping (40 percent); General transportation sector (20 percent) Themes: Trade facilitation and market access (P); Rural services and infrastructure (P); Infrastructure services for private sector development (P); Small and medium enterprise support (S) Environmental screening category: A Project ID: PO83588
Lending Instrument: Specific Investment Loan
[ ] Loan [XI Credit [ ] Grant [ ] Guarantee [ ] Other:
For Loans/Credits/Others: Total Bank financing (US$m.): 207.7 Proposed terms: Standard, with 40-year maturity and 10 years grace period
Financing Plan (US$m) Source Local Foreign Total
BORRO WEFURECIPIENT 79.4 0 79.4 INTERNATIONAL DEVELOPMENT 20.5 187.2 207.7 ASSOCIATION AUSTRALIAN AGENCY FOR 13.2 11.8 25.0 INTERNATIONAL DEVELOPMENT Total: 113.1 199.0 312.1
Borrower: Socialist Republic o f Vietnam Vietnam
Responsible Agency: The Ministry o f Transport 80 Tran Hung Dao St. Hanoi Vietnam
Project implementation period: Start: November 30,2007 End: June 30,2013 Expected effectiveness date: November 30, 2007 Expected closing date: December 30,2013
[ ]Yes [XINO Does the project depart from the CAS in content or other significant respects? Ref: PAD A.3 ., Does the project require any exceptions from Bank policies? Re$ PAD D. 7 Have these been approved by Bank management? I s approval for any pol icy exception sought from the Board? Does the project include any critical risks rated “substantial” or “high”? Re$ PAD C.5 Does the project meet the Regional criteria for readiness for implementation? Re$ PAD D. 7 Project development objective Re$ PAD B.2, Technical Annex 3 The development objective o f the project i s to improve access to markets by businesses, farmers and the poor with lower logistics costs resulting from the alleviation o f key physical and institutional bottlenecks o f the main transport corridors in the Mekong Delta region.
[ ]Yes [XINO [ ]Yes [XINO [ ]Yes [XINO
[XIYes [ ] N o
[XIYes [ ] N o
Project description Re$ PAD B.3.a, Technical Annex 4 The Project will have four main components (net o f taxes):
Component A: National Road Corridors (US$100.3 mill ion) aims to improve the standard o f national trunk roads connecting the main economic hub o f the Mekong Delta.
Component B: National Waterway Corridors (US$99.3 mill ion) aims to improve the standard o f trunk waterways connecting the Northern and Coastal Delta areas to Can Tho and HCMC.
Component C: Connecting the Poor to the Supply Corridors (US$96.3 mill ion) by improving the feeder waterways, roads, ports, and landing stages at the district and provincial levels to link poorer and more distant producer communities to the main supply corridors.
Component D: Institutional Support to Ministry o f Transport (US$6.9 mill ion) to provide consultancy services on multi-modal transport, institutional support to the Vietnam Inland Waterways Administration, training and project implementation support.
Which safeguard policies are triggered, if any? Re$ PAD D. 6, Technical Annex 10 Environmental Assessment (OP/BP 4.0 1) Cultural Property (OP 4.1 1) Involuntary Resettlement (OP/BP 4.12) Indigenous Peoples (OP/BP 4.10)
Significant, nonstandard conditions, if any, for: Re$ PAD C. 7 Loadcredit effectiveness:
1. An integrated financial management software program for recording and reporting financial transactions under the Project, acceptable to the Association, shall have been developed and adopted by PMU1 and PMU-W.
2. FM manual will be prepared for the MDTIDP project and adopted by PMU-1 and PMU-W. The manual will set out in detail the structure, procedures, reporting, and coordination between different levels o f MDTIDP financial management.
3. Relevant staff o f PMU-1 and PMU-W shall have completed training, satisfactory to the Association, in the areas o f financial management, procurement, disbursements and safeguard procedures.
4. VRA and V I W A shall have adopted the Project Implementation Plan acceptable to the Association.
Disbursement conditions applicable to participation o f provinces in Component C o f project:
1.
2.
3.
4.
5.
The relevant PDOT has appointed or hired sufficient accounting and finance staff with relevant qualifications and experience or knowledge.
The relevant PPMU has developed an integrated financial management software to facilitate the preparation o f Project financial statements and interim financial reports; and relevant staff shall have received training on use o f such software.
The relevant PPMU shall have prepared and adopted the Financial Management Manual.
Relevant staff in the concerned PPMU shall have received financial management training, including training on: budget planning and monitoring; government procedures; Project disbursement procedures; Project accounting and reporting procedures; strengthening o f internal control; asset accounting, management and control; and use o f financial management software.
The relevant PPMU shall have adopted the Project Implementation Plan.
Covenants applicable to project implementation:
1. The borrower shall furnish to IDA an annual work program and budget for activities related to each project components and each participating province by December 15 in the preceding year. The proposed program should include a l i s t o f roads, bridges, waterways, and or port facilities to be improved under the project.
2. Project implementation will fol low the Project Implementation Plan acceptable to IDA; revisions in this plan will require IDA no objection.
3. The Borrower shall carry out at six month intervals during project implementation an Integrated Project Implementation Audit o f selected project components to determine if the quality o f construction, and compliance with project fiduciary and safeguard procedures are satisfactory. Such audits shall be carried out in accordance with terms o f reference satisfactory to IDA and copies o f the audit shall be made available to IDA promptly upon
their completion. Should either the Borrower or IDA determine that any such audit identifies any significant lapse in internal controls, quality o f outputs realized or any significant delay in execution o f the works contracts under the project, the Borrower shall prepare and submit to IDA for i t s review and comments a time-bound action plan for remedy o f the identified problems; and shall, promptly after IDA has discussed the results o f the review with the Borrower, take al l necessary action to carry out the time-bound action plan, taking into account IDA’S comments on such plan.
A. STRATEGIC CONTEXT AND RATIONALE
1. Country and Sector Issues
1, recent years:
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Vietnam’s transport and logistics system has supported impressive economic progress in
The Gross Domestic Product (GDP) has grown at 6 percent per year since 2000 and grew by 8.4 percent in 2005, the highest level in nine years;
There has been a continuation in rapid poverty reduction with poverty rates falling from 37 percent in 1998 to 20 percent in 2004; and
There has been strong export growth o f 13 percent per year from 2000 to 2004 and an increase o f 22.4 percent in 2005. The top six exports are: oil, garments, agriculture (including rice), footwear, seafood, and wood products.
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2. expenditure running at 10 percent o f GDP and 5 percent for transport alone. As a result, the extent and quality o f the transport network has improved dramatically. The main national roads, ports and airports have been upgraded and 84 percent o f the rural population i s connected by all weather road access. However, investments in the rail and waterways sectors have lagged behind and there are increasing capacity constraints on the existing networks. When manufacturing f i r m s were consulted for the 2005 Investment Climate Assessment (ICA), more than 40 percent highlighted national and provincial roads as the main infrastructure constraint to their business. The figure for the Mekong Delta was 50 percent.
Vietnam has one o f the World’s highest levels o f infrastructure investment with annual
3. In the push for World Trade Organization (WTO) accession, and regional integration, the National Assembly has passed an impressive array o f new legislation which has created an increasingly open competitive environment for multi-modal transport operations. A multi-modal transport regulatory review financed by the Public Private Infrastructure Advisory Facility (PPIAF) supported this view and did not recommend any major changes to the existing legislation. However, the review stressed that if the legislation i s to meet i t s potential, improved coordination among ministries, modal agencies, and the private sector i s desperately required in al l aspects o f planning and policy.
Mekong Delta
4. enterprises, and several cooperatives contribute to the vibrant economy o f the Mekong Delta. The region produces about 45 percent o f Vietnam’s agricultural products while utilizing just 3 1 percent o f the country’s agricultural land. More than half o f the entire area o f the region (2.1 million ha) i s under rice cultivation. Known as the country’s rice basket, the Mekong Delta produces about half o f the rice consumed in Vietnam and 80 percent o f rice exports. I t also produces about 40 percent o f the country’s seafood and 50-60 percent o f i t s seafood exports.
Millions o f small farmers, thousands o f private businesses, over 700 state-owned
5. Poverty remains a critical problem for the region. Despite a considerable decline in poverty since 1998, there are s t i l l nearly four million people living in poverty in the Mekong Delta. This i s the highest concentration o f poor people o f any o f Vietnam’s seven regions.
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Additionally, the Mekong Delta has the highest percentage o f people vulnerable to relapsing into poverty through adverse economic shocks. The Mekong Delta i s also prone to natural disasters, which contributes to a precarious existence for the poor.
6. The government aims to stimulate growth in the region, to fight poverty, and to reduce the urbanization pressure on Ho Chi Minh City (HCMC). A key part o f their strategy has been to promote the city o f Can Tho as an economic hub for the region. This has been successful to the extent that the economy o f the Mekong Delta i s growing rapidly and the products, as well as the markets o f the region, are diversifying away from the traditional reliance on rice. For example:
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Agricultural diversification: aquaculture industries, fruit and vegetable farming, etc;
Downstream diversification: local processing, canning and packing o f produce, etc;
Quality enhancement: new central r ice collection points, well-equipped fishing ports, and International Standards Organization certified seafood packing plants, to reduce product loss and increase value;
Manufacturing and service industries: industrial parks are expanding and the delta i s emerging as a destination for eco-tourism; and
Market diversification: increased international trade and new export markets.
0
0
Transport Sector Issues in the M e k o n g Delta
7. the road system. There are no railways in the region. The waterways system consists o f 4,800 km o f navigable waterways; 1,600 km for the main corridors; and carries around 70 percent o f the freight volume in terms o f tonne-km. The road system comprises 28,000 km, including 1,700 km o f national roads, and carries around 30 percent o f tonne-km. Broadly, in terms o f logistics, the waterways carry the region’s important but lower market value bulk goods, such as rice, cement, building materials, and fertilizer, while roads carry goods with higher market value (and more time-sensitive), including seafood, other perishables, and manufactured goods.
The region’s strategic freight transport needs are met by the inland waterways system and
8. The provincial network i s also underdeveloped; only 35 percent o f the provincial road network i s paved, and only 10 percent o f rural roads are paved. There are large areas o f the delta that are not served by roads and the communities are reliant on the waterways and motorcycle tracks. The high costs o f road building in an area where embankments must be high and bridges frequent indicate that accessibility i s a real constraint. As a result the level o f rural accessibility in the Mekong Delta i s the lowest in the country with only 57 percent o f the population having access to an all weather road compared to 84 percent for the country as a whole (VLSS 2004 data).
9. 0
0
Infrastructure bottlenecks in the logistics system include:
Slow and expensive rural transport l inks from farms to freight aggregation points;
Poor access to provincial feeder routes from aggregation points to the trunk roads and waterways in some peripheral areas;
2
0 Growing congestion on National Highway 1 , the dominant trunk road, and quality deficiencies on other main roads, often caused by bridge loading constraints;
Lack o f major northern and southern canals providing high capacity barge routes to reduce transport costs and relieve pinch-points on the central canal routes;
Insufficient and poorly managed landing stages which act as interchange points between road transport and waterway transport at commune, district, and provincial levels; and
Lack o f infrastructure that would allow penetration o f 40 foot containers beyond Can Tho.
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10. Institutional Capacity. The national road network in the Delta i s managed by Regional Road Management Unit 7 (RRMU-7) which i s one o f four RRMUs under the Vietnam Roads Administration (VRA). The capacities o f planning and prioritization are currently poor, but recent support from the Asian Development Bank (ADB) and the on-going Bank financed Road Network Improvement Project (RNIP) i s providing support to VRA, and their RRMUs, to enhance their network planning, management, and maintenance roles. In recent years, the allocation for maintenance o f national roads has increased substantially from VND 592 billion in 2002 to VND 946 billion in 2004. Maintenance finance has grown roughly in l ine with capital expenditure over the last five years; however, these allocations s t i l l only represent 50 percent o f VRA’s estimates o f need. The situation i s made worse by the outstanding debt that has accumulated in VRA and which has to be gradually repaid from these allocations.
1 1. Provincial level roads are managed by the 13 provincial departments o f transport which report to the Provincial Peoples Committees (PPC). The provinces have also struggled to plan under budget constraint, which has led to debt problems and inadequate allocations to recurrent expenditure. The 2004 Public Expenditure Review (PER) estimated that recurrent expenditure at the provincial level i s growing at an average o f about 24 percent per annum, but that this only accounts for 3 -4 percent o f total transport budgets. The provinces are reliant on community contributions and on labor particularly for the routine maintenance o f roads. The recently completed Bank financed Second Rural Transport Project (RT2) supported provincial capacity building and the introduction o f a maintenance management system that will be followed through with this operation.
12. (VIWA). The waterways located in the Mekong Delta are the responsibility o f VIWA-South (VIWA-S). V IWA currently has a cumbersome organizational structure which does not respond to the modern requirements for efficient waterways and ports management. V IWA wants (i) to reorganize to give greater accountability to VIWA-S and i ts waterway management stations; (ii) to make the ports authorities more independent and commercial; and (iii) improve cost recovery capability in the sector to cover operations and maintenance expenditures. The recently completed Bank-financed Inland Waterways project (IWWP) developed, improved management systems, and provided maintenance equipment. However, the maintenance budget, although increasing, i s s t i l l less than 50 percent o f i t s stated requirement.
The national waterways are managed by the Vietnam Inland Waterways Administration
13. such there are road bridges without sufficient clearance for barges, poor bank protection on waterways causing the road embankments to collapse, and insufficient road access to ports and
Multi-modal Planning and coordination. Planning between modes has been poor and as
landing stages. Most port development has been undertaken independently by provincial governments with the advantage o f at least some competition, but with the disadvantage o f duplication o f facilities. Users have stated a preference for better rather than more facilities; they would like to see new berths, additional storage space, container handling equipment, and improved road access. Above all, users want to see an over haul in the management o f these facilities to be more responsive to their needs. The majority o f facilities are currently operated by provincial enterprises that lack the necessary knowledge or incentives to provide the most efficient and cost-effective services.
14. multi-modal transport operators (MTO). The two main modes operating in the Mekong Delta are open for private truck and barge operators. Private participation in ports infrastructure and operations i s at an early stage and there i s private ownership and management o f other parts o f the supply chain. The challenge now i s to create a forum where the private and public sectors can agree on their respective roles in an increasingly dynamic environment difficult for government to control.
The regulatory environment i s now relatively open for private sector participation o f
2. Rationale for Bank Involvement
15. multi-modal transport and logistics services, has requested Bank support in the financing and planning o f multi-modal transport systems in both the Mekong and the Red River Deltas. Despite substantial transport investments in the Deltas, Vietnam’s rapid economic growth over the past decade i s resulting in serious transport bottlenecks and investment demands that are beyond the reach o f government’s own resources. The availability o f two major transport modes in waterways and roads and the numerous interfaces between them make the Deltas ideal regions for enhancing multimodal transport efficiency.
The Government o f Vietnam, in i ts increasing awareness o f the benefits o f efficient
16. This i s the f i rs t operation o f the type in Vietnam and the complex issues involved in the policy and planning for multi-modal transport and logistics services are new to the government. The Bank brings expertise in the various aspects o f designing efficient multi-modal projects including regulatory frameworks, regional planning techniques, private sector participation, and institutional arrangements. This project will serve as a demonstration o f how multi-modal transport projects can be developed and designed and also play a major role in raising awareness o f multimodal transport. The Bank has also contributed to a project design that addresses economic growth but also l i n k s peripheral areas to the main supply corridors providing opportunities for more socially inclusive growth. The Bank has been especially instrumental in helping the government design two pilot multi-modal transport corridors to demonstrate the benefits o f improved policy, regulation and infrastructure.
17. contributes to the development o f the Mekong Delta by building on previously financed IDA investments in national roads, provincial roads, waterways, and port facilities. This operation wi l l not only extend the improvements to the transport network, but will also build on the institutional and capacity building initiatives started in previous operations.
While this project introduces a new approach to transport planning in Vietnam, it further
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3. Higher Level Objectives to Which the Project Contributes
18. The project will support three o f the four main pillars o f the Vietnam Country Partnership Strategy (CPS) (FY07-FY 1 l), Le., business development, social inclusion and governance. The project will contribute directly to the proposed CPS sub-themes focusing on (i) efficient and reliable infrastructure services; (ii) better access to and use o f key rural infrastructure services; and (iii) improved effectiveness o f public resources management.
19.
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The program also directly supports:
The Government’s Socio-Economic Development Plan (SEDP) for 2006-2010 in which the transport sector i s required to provide better coordination and planning between modes;
The Government’s Transport Sector Strategy;
The requirements o f World Trade Organization (WTO) accession through an improved environment for trade facilitation and private sector investments; and
I s linked with the IDA-funded customs modernization project and supports the objectives o f the Greater Mekong Sub-region (GMS) for improved regional economic integration.
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B. PROJECT DESCRIPTION
1. Lending Instrument
20. The project will be financed with a specific investment loan.
2. Project Development Objective and key Indicators
21. farmers and the poor with lower logistics costs resulting from the alleviation o f key physical and institutional bottlenecks o f the main transport corridors in the Mekong Delta region.
The development objective o f the project i s to improve access to markets by businesses,
The key performance indicators for the above development objectives are:
Reduced number o f respondents to the Investment Climate Survey citing transport as a constraint in the Mekong Delta;
Percentage reduction in rice supply chain costs along the Northern Trans Mekong Waterways corridor;
Percentage reduction in freight transport times on improved project highway and waterway corridors;
Increased level o f rural accessibility in the Mekong Delta as defined by the percentage o f people living within 2 km o f an all weather road and reduced number o f communes lacking year round basic access;
Increase in the number o f km o f waterways under active management and maintenance in the Mekong Delta; and
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f) Effectiveness o f a newly established National Logistics Forum (NLF) as evidenced by a draft code o f multi-modal transport industry practice, including model multi-modal transport operators contract documents.
3. Project Components
23. and resettlement but are net o f taxes. Annex 4 provides a detailed project description with the associated investment costs.
The Project wi l l have four main components. The costs include base costs, contingencies,
Component A: National Road Corridors (US$100.3 million)
24. economic hub o f the Mekong Delta. There are two sub-components:
(i)
The component wi l l improve the standard o f national trunk roads connecting the main
National Road Corridor Improvements, amounting to approximately US$94.7 million, wi l l rehabilitate existing alignments by widening and upgrading the roads to a Class 11, Class 111, or Class IV standard o f approximately 98 km o f national highways (including 13.52 km under NH 53,40.85 km under NH 54, and 43.89 km under NH 91). Works will also include construction o f 22 bridges, provision o f culverts, and raising the road levels where required in flood prone areas; and
Financing for Detailed Engineering Designs and Construction Supervision for the national road component, estimated to cost approximately US$5.6 million.
(ii)
Component B: National Waterway Corridors (US$99.3 million)
25, and Coastal Delta areas to Can Tho and HCMC. There are two sub-components:
(i)
The component will improve the standard o f trunk waterways connecting the Northern
Improvements to National Waterway Corridors, amounting to approximately US$93.5 million, wi l l support investments on the main supply corridors to improve the standard and connectivity o f the canal network, concentrating on l i n k s in both the Northern Trans Mekong corridor (253km) and the Southern Coastal corridor (1 53km). These corridors will be improved to Class I11 standard and include dredging to the required widths and depths, bank protection in selected areas, a ship lock, bridge improvements (raising and rehabilitation), and provision o f 24-hour aids to navigation; and
Financing for Detailed Engineering Designs and Construction Supervision for the national waterway component, estimated to cost approximately US$5.8 million.
(ii)
Component C: Connecting the Poor to the Supply Corridors (US$96.3 million)
26. district and provincial levels to link poorer and more distant producer communities to the main supply corridors. The following three sub-components wi l l be directed to this objective:
(i)
The component will improve the feeder waterways, roads, ports, and landing stages at the
Investments in Provincial Roads and Feeder Canals, amounting to US$84.8 million, will focus on connecting the secondary road and waterway network to the main transport corridors. A total o f approximately 3 15 km o f secondary roads, including 1 18 bridges,
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will be upgraded to an all-weather standard in the thirteen provinces. Improvements will be carried out along the existing alignments by upgrading the roads through providing structural overlays, or through complete reconstruction where the existing road structure has collapsed or where there are earth roads. Two feeder canals in An Giang and Ca M a u provinces with a total length o f 58 km will also be upgraded. The improvements will include widening and deepening o f the canal sections to a class IV standard, bank protection in selected areas, raising o f bridges where required and provision o f aids to navigation.
Demonstration Investments in Provincial Ports, Landing Stages and inter-modal facilities amounting to US$5.8 million, will finance improvements to provincial port facilities and rural landing stages. Finance will be used to pi lot new institutional and management arrangements, including attracting the private sector, and to support a range o f physical improvements designed to demonstrate improved inter-modal linkages. These improvements may include new wharfs, storage facilities, rice drying facilities and road l i nks . Consultants engaged to provide institutional support to VIWA (Component D2) will assist provinces to identify investment requirements, prepare business cases and develop a framework to promote long term financial sustainability.
Feasibility Studies, Design, Supervision, and Advisory Services amounting to US$5.7 million will finance two main areas o f work for each o f the 13 participating provinces: (a) feasibility studies needed for sub-projects not yet appraised, detailed design that will not be completed under pre-project activities, and construction supervision for al l provincial sub-projects; and (b) a Regional Support Centre located at the Southern Transportation College in Can Tho will oversee implementation o f provincial-based components o f the project and develop a program to build capacity o f the technical and management sk i l ls o f government personnel.
(ii)
(iii)
Component D: Institutional Support to Ministry of Transport (US$6.9 million)
27. (MOT):
Four sub-components will provide institutional support to the Ministry o f Transport
(9
(ii)
(iii)
Support to MOT on Developing Multi-modal Transport. To enhance the efficiency o f multi-modal transport, the project will support the relevant departments in MOT in the development o f appropriate policies and planning frameworks. The consulting services are estimated to cost US$l.6 million.
Institutional support to VIWA. To more effectively carry out i t s roles and responsibilities as managers o f the inland waterways network in Vietnam the project will finance support to VIWA. The consulting services are estimated to cost US$l.6 million, including studies to improve asset management and cost recovery, and advice on the reorganization o f VIWA including the ports authorities and waterway management stations.
Training. A training budget o f US$1 .O mil l ion will be coordinated by the Department o f Personnel and Labor (DPL) for use at approved MOT training institutes. The training wil l include project management, business processes, asset management techniques, and multi-modal transport planning.
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Project Audit Services, costing approximately U S $ l . 1 million, will facilitate two types o f independent audits: (a) Integrated Project Implementation Audit Services, in which independent consultants will be procured to conduct semi-annual reviews that provide heightened technical, fiduciary, safeguards and general project monitoring; and (b) a Project Financial Audit, in which independent external auditors will conduct annual project financial audits.
Preparation for Future Projects. The sub-component will finance the detailed design services for the Northern Delta Transport Development Project in the amount o f US$l.6 million.
Lessons Learned and Reflected in the Project Design
The Bank has financed operations in national roads, waterways, ports, and rural roads in the Mekong Delta. A substantial experience has been gained which i s reflected in project design as discussed below:
29. owners (i.e., provinces and modal administrations) principally because central Project Management Units (PMUs) have by-passed their authority. In l ine with recent changes in government policy this operation will be fully decentralized to the project owners, and as such, the PMUs will implement the projects under the authority o f the provinces, VRA, and VIWA. It is believed that this will increase the chances o f subsequent maintenance o f investments and increase the impact o f capacity building activities. Technical assistance i s included in the project to help these agencies take on their new responsibilities.
Project Ownership. Previous operations have struggled to engage fully with the project
3 0. Institutionalizing Capacity Building Activities. A recent World Bank Institute (WBI) report o f capacity building programs in the transport sector highlighted that previous projects have tended to conduct training activities through project consultants which has l imited the longer-term sustainability o f these initiatives. In line with the recommendations o f the WBI report, this project will conduct trainings through MOT training institutes and using MoT/Government o f Vietnam (GOV) approved curricula.
3 1. Delta have tended to be made without consideration for other modes, the increasing use o f container transport or the move to larger vessels on the waterways. A particular example has been the construction o f bridges without sufficient strength to take container traffic or sufficient height and width to allow large vessels to pass underneath. This project has been prepared as a multi-modal operation to address the specific planning, policy, infrastructure, and service requirements o f the Mekong Delta.
Multi-modal Planning. Previous single mode infrastructure investments in the Mekong
32. the provincial level, the project found evidence o f collusion amongst bidders. This project addresses the risk o f corruption and collusion through a plan to improve transparency and fairness in procurement which builds on the MOT approved plan for the third rural transport project (RT3). The main elements o f the action plan for this project include an integrated project implementation audit with consistent enforcement, wider advertising o f bid opportunities, a
Corruption and Collusion. In RT2, which also had c iv i l works contracts implemented at
8
register o f de-barred bidders, provision for complaints, dissemination and training, disclosure o f contract award information, and greater community participation in planning and procurement. Project consultants will also support with the preparation o f bid documents, provide reports on contractor qualifications and produce independent bid evaluation reports.
33. o f poor design, supervision, and construction quality. This project will achieve quality construction through: (a) additional emphasis on construction supervision through training and by oversight by an independent advisory consultant; (b) carrying out independent integrated audits which include fiduciary, safeguards and technical quality; (c) encouraging local communities to become more involved in monitoring procurement and construction activities; and (d) implementing the plan to improve fairness and transparency in procurement.
Quality of Construction. Quality has been an issue in past projects due to a combination
34. Sustainable Maintenance Practice. The most significant risk for inadequate maintenance finance i s at the provincial level. This project will support a national initiative, being developed under RT3, to build capacity at the provincial level for improved network management and maintenance. National roads maintenance i s being supported by the IDA funded RNIP. Waterways maintenance will be supported through this project by initiatives to improve cost recovery and to ro l l out the maintenance management tools developed under the IWWP.
5. Alternatives Considered and Reasons for Rejection
3 5. For the main institutional alternatives, consideration was given to project implementation arrangements involving both national and provincial roads and waterways infrastructure. Consideration was given to the use o f one implementing agency to capture the synergies between modes; however, this was later rejected in favor o f the greater efficiency o f implementation using specialized PMUs. It was also considered to break the operation into smaller projects focusing on different parts o f the transport system, Le., national roads, waterways, and provincial infrastructure. This was rejected because the multi-modal synergies o f the project would be lost as would be the institutional focus on multi-modal transport policy and planning.
36. For the provincial infrastructure, various options were considered, namely: (i) full centralization - with PMU-1 and PMU-W implementing the provincial roads and the feeder canals sub-components respectively; (ii) partial decentralization - with those provinces assessed as sufficiently strong implementing their sub-components, but with the centralized agencies implementing the sub-components within those provinces assessed as requiring additional strengthening; and (iii) full decentralization - with al l 13 provinces being given responsibility for implementing their sub-components and additional support directed to provinces with less capacity. Given the government’s move towards greater decentralization, the desire for greater provincial ownership and a push towards simplifying implementation arrangements, the fully decentralized option was chosen.
9
C. IMPLEMENTATION
1. Partnership Arrangements
37. The project will be co-financed with the Australian Agency for International Development (AusAID) who will fund US$25 million. These funds will be used to support a defined percentage o f Component C o f the project and there will be separate accounting and reporting o f the IDA and AusAID funds. The Mekong Delta i s a focus area for IDA and AusAID and the proposed project components supplement other investments by the Government and donors in the Mekong Delta region. The project wil l also facilitate integration o f the Greater Mekong Sub-region for which coordination will be required with ADB and the Mekong River Commission.
38. An active government-donor partnership group regularly brings together the key actors to discuss strategic issues for the transport sector and coordinate support. Capacity building activities under the project will be carried out in l ine with an agreed framework developed by the transport partnership group in Vietnam. This partnership sets out sectoral areas in which each development partner will concentrate, as wel l as the regional focus for training support.
39. Partnership will also be important for the various government agencies if multi-modal transport and trade facilitation are to be maximized. The project steering committee under the project will address the inter-modal and inter-ministerial coordination activities o f the project.
2. Institutional and Implementation Arrangements
40. The MOT will act as the “line agency” for the national infrastructure components. The line agency will approve the national investment programs and procurement plans. The VRA will be the “project owner” for the national highways component and VIWA the “project owner” for the national waterways component. These modal administrations will be fully delegated by the “line agency” for the day-to-day management o f their respective components with PMU-1 and PMU-W being the “implementing units” reporting directly to the “project owners.” The “implementing uni ts” will advertise, evaluate, award contracts, and subsequently manage implementation o f their components. These steps will require necessary approvals fiom the “project owners” at the various stages.
41. agencies” and be responsible for approving respective investment programs, based on agreed criteria, and procurement plans. The respective Provincial Department o f Transport (PDoTs) will be the “project owners” o f the respective provincial infrastructure programs. The respective Provincial Project Management Units (PPMUs) will be the “implementing units” for the provincial infrastructure components and will advertise, receive, evaluate, produce evaluation reports, award and sign contracts and subsequently manage implementation o f their components but will require approvals from the respective project owners (Le,, PDoTs) at the various stages.
For the provincial infrastructure component the respective PPCs will be the “line
42. project, reporting to the GoV and fulfilling the requirements o f the World Bank.
The MOT will have overall responsibility for overseeing the implementation o f the
10
(0
43.
(9
(ii)
(iii)
44.
The MOT will establish a Project Steering Committee (PSC), which will be chaired by an MOT Vice-Minister and consist o f representatives o f Ministry o f Planning and Investment (MPI), Ministry o f Finance (MoF), State Bank o f Vietnam (SBV), Ministry o f Natural Resources and Environment (MONRE), Department o f Planning and Investment (DPI), VR4, VIWA, and representatives from some o f the 13 Provinces. The PSC’s mandate i s to address cross-ministerial issues, multi-modal issues and to oversee project management and monitor the implementation progress o f the overall project. The PSC will form a Standing Coordinating Group (SCG) consisting o f VRA, VIWA, PMU-1, and PMU-W who wi l l be responsible for the day-to-day management and coordination o f the project, the SCG will also act as the secretariat for the PSC.
A summary o f the responsibilities o f each “implementing unit” i s set out below:
PMU-1 and i t s consultants wi l l have responsibility for implementation o f the national roads (Component A). At all stages it wi l l report to, and require the approval of, VR4.
PMU-W and i ts consultants will have responsibility for implementation o f the national waterways (component B). At all stages it will report to, and require the approval of, VIWA. PMU-W will also be responsible for the implementation o f the consultancy services under the Institutional Support to MOT (Component D), and the Regional Support Center (Component C3ii).
The PPMUs in each o f the 13 project provinces, and their consultants, will have responsibility for all aspects o f their respective provincial roads, bridges, feeder canal, and landing stages works programs. At all stages, the PPMUs wi l l report to, and require the approval of, the respective PDoTs.
Training activities will be managed by PMU-W but, through Ministerial Decree, the training department in DPL will be responsible for the overall coordination o f the training program.
45. identified and wi l l be ready for implementation at project effectiveness including all the necessary engineering, procurement, and safeguards documentation. Phase two combines a series o f identified investments plus a programmatic element which will be identified during project implementation. The programmatic element relates to the provincial infrastructure (Components C 1 and C2). Detailed preparation work for the second phase will commence once the project has started.
The project wi l l be implemented in two phases. The f i rs t phase o f investments has been
3. Monitoring and Evaluation of Outcomes/Results
46. impacts o f improved policy, regulation, and infrastructure. The first corridor will be the Northern Trans Mekong Waterway Corridor from HCMC to Rach Gia (250 km) which carries mainly agricultural product, building materials, and clinker. The second corridor will be the NH- 91 from Can Tho to the Cambodian border (120 km) which will be improved to accommodate 40 foot containers. This corridor i s located next to various industrial parks, Can Tho Port, and the
MOT has requested close monitoring o f two project multi-modal corridors to evaluate the
11
Bassac River. A comprehensive Monitoring and Evaluation Framework will be developed for these corridors through Component D 1 o f the project.
47. movements, freight rates, efficiency o f port operations, supply chain analysis (time/quality/cost), and impacts on industrial and agricultural producers to improve access to supply corridors. The monitoring will be undertaken by the consultants advising MOT o n multi-modal transport (Component Dl), and the findings will be transmitted to the PSC.
This M&E framework will address a range o f multi-modal indicators including fkeight
48. will be reviewed by DPI, with assistance o f other key MOT departments. The monitoring indicators will be reported in six monthly project progress reports and based on consultant reports and project management systems within each o f the implementing agencies.
Information pertaining to the monitoring and assessment o f the progress o f the M D T I D P
4. Sustainability
49. management and maintenance o f the network and the ability o f MOT and provincial agencies to plan and operate multi-modal transport networks. The quality o f construction will be addressed as set out in Section B4. The Project will address management and maintenance issues on the waterways through a technical assistance program and the implementation o f a River Management Information System f i rst developed under the IDA funded IWWP. The technical assistance program will also seek means to increase the cost recovery capability in the waterways sector. For provincial infrastructure where lack o f maintenance is the greatest concern, a regional support center in Can Tho, established under this Project, will provide the facilities, equipment, and training to improve maintenance management. As national roads maintenance is being addressed through the IDA funded RNIP, this Project will focus on investments in the rehabilitation o f national road network in the Mekong Delta region.
The sustainability o f the Project will depend on construction quality, the subsequent
50. There are also technical assistance programs to assist relevant agencies with the planning o f multi-modal transport and in providing an enabling regulatory environment for service provision. These services will also support provinces develop sound-management plans for port facilities, evaluating the options for private concessions, before investments are approved by MOT and IDA.
5. Critical Risks and Possible Controversial Aspects
5 1. there i s a risk that the coordinating activities o f the PSC may be inadequate to meet the development objectives. Furthermore, Vietnam is considered high risk with regard to procurement environment. Both o f these major risks can be mitigated through enhanced internal controls, as outlined in the Action Plan to improve transparency and fairness (see Annex S), as well as adequate technical assistance to support the project design.
The project risks are substantial. This i s the first multi-modal project in Vietnam and
12
Risk Risk Level Risk Mitigation Measures To Project Development Objectives
The project wil l provide technical assistance to support
through the running of the PSC and lay the foundation for the formation o f a National Logistics Forum The project wil l provide technical assistance to improve cost recovery in the waterways sector and roll-out maintenance management systems to the provinces. The Bank has on-going dialogue with MOT, MoF and MPI on mechanisms to increase maintenance finance. The project wil l provide technical assistance to improve management at ports and landing stages. I t wil l also work on the regulatory framework to provide a better environment for private sector involvement.
Coordination o f multi-modal H MOT develop sustainable coordination mechanisms infrastructure i s inadequate.
Funds for maintenance wi l l be insufficient for the long-term protection o f assets.
Multi-modal transport facilities are poorly managed and hence limit the effectiveness of infrastructure investments.
S
S
To Component Results The project wil l adopt integrated project implementation audits, wil l adopt an action plan to improve fairness and
consultants to increase provincial capacity. An internal audit function i s to be set up within the MOT whose mandate wi l l cover the MDTIDP. The project wil l provide technical assistance to assist PMUs and PPMUs in project implementation. There wil l also be an on-going program o f training courses to enhance overall capacity. The project wil l finance 100 percent o f eligible expenditures for civil works, goods and consultancy services. Counterpart finds for resettlement wil l be allocated through the national budget. Each implementing agency has relatively few contracts to administer which are similar in size to domestically funded projects. Advisory services wi l l support project implementation. Technical assistance wil l be provided to heighten attention to design and quality construction through on- the-j ob training and additional oversight. Integrated implementation audits wil l monitor technical issues.
Fiduciary risks increase with increasingly decentralized H transparency in procurement and provide advisory implementation.
Implementation delays caused by slow procurement, land acquisition, and counterpart funds.
S
Decentralized implementing agencies have insufficient capacity to implement the project.
Design and construction quality are poor.
M
S
OVERALL RISK LEVEL S
Risk rating - H (High Risk), S (Substantial Risk), M (Modest Risk), N (Negligible or low risk).
6. Loadcredit Conditions and Covenants
52. Conditions for credit effectiveness: 0 An integrated financial management software program for recording and reporting
financial transactions under the Project, acceptable to the Association, shall have been developed and adopted by P M U 1 and PMU-W.
13
e
e
a
53 9
e
e
a
FM manual will be prepared for the MDTIDP project and adopted by PMU-1 and PMU- W. The manual will set out in detail the structure, procedures, reporting, and coordination between different levels o f MDTIDP financial management.
Relevant staff o f PMU-1 and PMU-W shall have completed training, satisfactory to the Association, in the areas o f financial management, procurement, disbursements and safeguard procedures.
VRA and VIWA shall have adopted the Project Implementation Plan acceptable to the Association.
Covenants applicable to project implementation:
The borrower shall furnish to IDA an annual work program and budget for activities related to each project components and each participating province by December 15 in the preceding year. The proposed program should include a l ist o f roads, bridges, waterways, and/or port facilities to be improved under the project.
Project implementation will fol low the Project Implementation Plan acceptable to IDA; revisions in this plan will require IDA no objection.
The Borrower shall carry out every six months an Integrated Project Implementation Audit o f selected project components to determine if the quality o f construction, and compliance with project fiduciary and safeguard procedures are satisfactory. Such audits shall be carried out in accordance with terms o f reference satisfactory to IDA and copies o f the audit shall be made available to IDA promptly upon their completion. Should either the Borrower or IDA determine that any such audit identifies, any significant lapse in internal controls, quality o f outputs realized, or any significant delay in execution o f the works contracts under the project, the Borrower shall prepare and submit to IDA for i t s review and comments a time-bound action plan for remedy o f the identified problems; and, promptly after IDA has discussed the results o f the review with the Borrower, take al l necessary action to carry out the time-bound action plan, taking into account IDA’S comments on such plan.
D. APPRAISAL SUMMARY
1. Economic and Financial Analyses
54. the road and waterway network in the Mekong Delta using a transport planning model, TRANSCAD, to identify the major routes, main modal transfer points and to predict future transport growth. This highlighted a number o f road and waterway corridors that would cause future constraints unless improved. In the second phase, these individual investments were subject to a standard economic analysis. For the national roads, costs and benefits were determined using the Highways Design and Management model 4 (HDM-4). For the waterways, the Inland Waterways Transport Cost model (IWTC) was used. Table 1 provides a summary o f the N e t Present Value (NPV) and Economic Internal Rate o f Return (EIRR) for the national infrastructure improvements are presented below.
The economic analysis was carried out in two phases. The first phase involved modeling
14
Table 1: Summary of Economic Analysis Length NPV ERR (km) (In million o f US$) (In percent) Infrastructure Improvement
National Roads Improvements NH53-3 4.6 2.7 21.0 NH53-10 with light ferry 8.9 8.3 74.0 NH54-5-8 40.9 6.9 19.0 NH9 1-1,2 43.9 45.1 25.0
Northern Trans Mekong and parts o f Southern Coastal corridor
National Waterways corridor Improvements
43 6 86.5 24.0
55. the national network. The initial selection o f routes for the provincial network was based on connectivity to the main supply corridors, poverty, and accessibility criteria, and the policy requirement to involve al l provinces in the Mekong Delta. The Roads Economic Decision model (RED) was then used to calculate the expected benefits from these improvements. At the provincial level there are four road l i n k s in the program where it was not possible to calculate the likely benefits using RED. All o f these road l i n k s provide new all-weather access and hence there i s no existing traffic. The other 10 road l i n k s had EIRRs o f between 17 and 92 percent. The provincial river ports to be financed will be identified during appraisal but a requirement for their inclusion i s that they are both economically and financially justifiable. The local level landing stages will also be identified during implementation, and be selected based on a multi- criteria analysis.
The modeling o f the Mekong Delta transport network using TRANSCAD only captured
2. Technical
56. and upgrading the roads to a Class 11, Class 111, or Class IV standard fol lowing the highway design standards o f Vietnam (TCVN 4054-1998), as supplemented by AASHTO standards. Present traffic on the selected roads ranges between 300 and 2000 vehicles per day (four-wheel vehicles) with an estimated average growth rate o f about 7 percent over the next ten years. Given the high level o f non-motorized and two-wheeler traffic, al l improved roads (except for those in very l o w traffic remote areas) will include paved shoulders to enhance road safety. Where possible there will be segregation o f non-motorized traffic either through the provision o f sidewalks or physical measures on the roads. Works will also include rehabilitating and/or constructing bridges and culverts and raising the road levels where required in flood prone areas.
Improvements to national roads will be carried out on the existing alignment by widening
57. The waterway corridors will be improved to Class I11 standard with a bottom width o f 26- 30 meters. An exception will be the Cho Gao canal which, s t i l l being a Class I11 canal, will have a bottom width o f 55 meters to further reduce congestion in th is busy area. The proposed improvements will generally include dredging to the required widths and depths, bank protection in selected areas, bridge improvements (raising and rehabilitation) and provision o f 2 4 - h o ~ aids to navigation. Feeder canals will be dredged to a Class IV standard.
15
58. the need to optimize benefits from the proposed investments, it was considered that improving all-weather connectivity and accessibility and improving the riding quality o f selected roads within the delta would take priority over road widening. Road upgrading will take place along existing alignments and will also include rehabilitating or constructing bridges and culverts and raising road levels where required in flood prone areas. The improved roads will be constructed with either single-lane (3.5 m) or two-lane (6.0 m) bituminous surface treated (BST) paved carriageways with a 1 .O m paved shoulders on each side.
Considering the l o w motorized traffic volumes on most o f the provincial roads, as wel l as
3. Fiduciary
59. high risk level is partly because o f the overall procurement environment in Vietnam and partly because o f the decision to fully decentralize the provincial component o f the project to the PPMUs under the control o f the PPCs. Although a number o f these provinces have experience with donor-funded projects, some do not. The highest risks identified so far are: (i) misunderstanding o f the applicable procurement procedures by implementing agencies unfamiliar with Bank procurement procedures; and (ii) manipulation o f the procurement process and collusion among bidders.
Procurement. The overall procurement risk o f the project i s considered to be high. This
60. and PMU-W, have extensive experience with IDA procurement and are judged to have the necessary capacity to undertake the procurement activities.
The implementation units responsible for the national components o f the project, PMU-1
6 1. procurement has been developed joint ly by the Bank and Borrower; and the Project includes significant technical assistance to help each o f the implementing agencies in implementation o f their respective components. The action plan has already been adopted in RT3 which i s also being managed by MOT. All o f the consultancy packages include procurement support and procurement training. Technical assistance will also be provided for the preparation o f bidding documents and subsequent evaluation o f proposals.
To mitigate the above risks, an action plan to improve fairness and transparency in
62. i s assessed as substantial before mitigation and moderate after mitigation. The substantial r isk before mitigation i s primarily due to limited financial management capacity, lack o f effective auditing, inadequate counterpart funding due to budget constraints and potential corruption arising from procurement. The Project will address the overall fiscal environment by working with provinces to a) improve budgeting and monitoring through the development o f medium- term expenditure frameworks; b) establish internal audit functions; and c) conducting a range o f independent financial and performance audits.
Financial Management. The inherent risk to the project from the financial environment
63. The Project control risk i s assessed as moderate. PMU-1 and PMU-W already have financial functions that are adequately staffed. Both PMU-1 and PMU-W financial staff have experience managing IDA financed and domestically financed projects. The accountants in PMU-1 , PMU-W and Chief Accountants o f the PPMUs have an educational background (bachelor degree) and experience in accounting. They are assessed as having the capacity to
16
undertake the project as their current workload i s reducing with other projects coming to completion during 2006 (PMU-W) and 2007 (PMU-1).
64. At the PPMU level, the accounting staff wi l l be assigned either from the Project Management Board for Investment Projects (PMB) or from PDOT. PPMU staff must be capable o f formulating and implementing budgets, maintaining project accounts and preparing financial reports. Each PPMU wi l l have at least one financial officer and one assistant to handle accounting and reporting. These two persons will have adequate qualifications and relevant experience to fulfill fiduciary requirements consistent with IDA requirements.
65. The financial management assessment identified a number o f weaknesses at the PDOT level: (a) lack o f experience in managing donor funded projects; (b) basic accounting systems, with some, particularly Can Tho, not having an accounting system at all; (c) weak budgeting and reporting; (d) no internal audit function and inconsistent external audit requirements; and (e) accounting software where used lacks adequate security systems. The Financial Management Action Plan set out in Annex 7 i s designed to address these weaknesses, and ensure that capacity i s enhanced to address current financial management deficiencies.
4. Social
66. rural supply chains and access to the main supply corridors will increase farm gate prices and hence social and economic outcomes. In particular, the social assessment for the project highlighted the importance that rural communities place on all weather roads access in a region which has the lowest levels o f accessibility in the country. However, the project will pose substantial resettlement impacts due to required land acquisition for rehabilitation, improvement, and widening o f national highways, provincial roads, waterways, bridges, and ship locks. A Resettlement Policy Framework (RPF) has been developed in compliance with the requirements o f the Bank’s OP 4.12 on Involuntary Resettlement and will be approved by the client. The RPF will be applied for all subprojects for the entire project l ife. According to the results o f inventory, almost 2,840 Displaced Persons (DPs) will be affected under the road subprojects and 7,245 DPs affected by the waterway subprojects in the f i rst phase.
The project i s expected to lead to positive social outcomes. It i s expected that improved
67. will only need to move within their existing lands and not to resettlement sites or wi l l lose only a part o f their land assets. O f those households impacted during the f i rst phase o f the project about 15 percent wi l l need to be relocated to new sites. These households wi l l be moved to resettlement sites being developed by the Government for households affected by annual floods and other development activities that include all required infrastructure - access and internal roads; power; safe drinking water from wells; solid waste management; and sewage management that i s commonly applied throughout the project area.
Although the project wi l l involve a significant resettlement program, most households
68. minority communitieshouseholds in the project areas, including Khmer, Cham, Hoa, Ngai, and Tay. An Ethnic Minority Policy Framework (EMPF) has been developed and will be approved by the client that complies with Bank’s OD 4.20 Indigenous Peoples. The EMPF will be applied
The results o f the social surveys showed that the Project would impact a number o f ethnic
17
to develop Ethnic Minor i ty Development Plans (EMDPs) for a l l subprojects involving ethnic minority peoples. An E M D P has been prepared for the f i rs t phase implementation, o f the waterways, national highways, and provincial roads.
5. Environment
69. environmental consultant to prepare an environmental impact assessment to meet the requirements o f projects with an A Classification. The A Classification was based on the practicality that project interventions would most likely be irreversible and could have adverse impacts on hydrology and agriculture in the project area. Accordingly and given that the Project i s dealing with multiple modes o f transport and wil l be implemented in a phased approach, the Environmental Impact Assessment (EIA) includes an overall impact assessment o f the Project, a specific impact assessment for the subprojects identified for the f i rst phase, and an environmental framework governing the impact assessment process for the subsequent phase o f the project. Based on the results o f the EIA, an Environmental Management Plan (EMP) has been developed with the specifications o f the environmental management and supervision arrangements, mitigation measures, monitoring and reporting programs, budget estimates and capacity building requirements. The development o f the environmental framework benefited from the extensive experience with the renovation and improvement o f roads and waterways in the country and project area in particular under a number o f other IDA- and other donor-assisted as well as national projects. The init ial environmental assessment was disclosed o n August 23, 2006.
In compliance with Bank OP4.01 , the Borrower commissioned an independent
70. to drainage and short-term disturbance o f water quality and aquatic species as a result o f canal dredging, spoil disposal (acid sulfate, in particular), and the noise and vibration from piling works for structures built in the water and adjacent to the waterways that also can affect local communities during the construction period. For road rehabilitation, dust emission, noise, air pollution from earth filling and excavation works, hot mixing plants, material stockpiling and disposal o f unused spoil are major impacts. These impacts are evaluated as short-term and confined within the construction period.
The major environmental impacts o f waterway upgrading are potential long-term impacts
71. impact, provided the mitigation measures recommended in the E M P are properly implemented. The transport routes under MDTIDP are not in proximity o f sensitive ecosystems (national park, natural reserves) or historical and cultural sites. During EIA preparation public consultation with project affected people and local relevant stakeholders was under-taken, and their feedback taken into consideration when designing appropriate mitigation measures.
The EIA concluded that the Project will not have significant adverse environmental
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6. Safeguard Policies
Safeguard Policies Triggered by the Project Yes N o
Environmental Assessment (OP/BP 4.01) [XI [ I Natural Habitats (OPBP 4.04) [ I [XI Pest Management (OP 4.09) [I [XI Cultural Property (OPN 1 1.03, being revised as OP 4.1 1) [ I Involuntary Resettlement (OPBP 4.12) [XI [ I Indigenous Peoples (OP/BP 4.10) [XI [ I Forests (OP/BP 4.36) [ I [XI Safety o f Dams (OPBP 4.37) [ I [XI Projects in Disputed Areas (OPBP 7.60)* [I [XI Projects on International Waterways (OPBP 7.50) [ I [XI
[XI
7.
72.
73.
1.
2. 3.
4.
5.
6.
7.
8.
Policy Exceptions and Readiness
Policy Exceptions: this project does not require any exceptions from Bank policies.
Readiness Criteria:
Fiduciary (financial management and procurement) arrangements in place - Yes.
Project staff appointed by MOT and consultant selection underway - Yes.
Counterpart funds budgetedreleased - Budgeted but not released.
Tender documents for first year's procurement prepared and approved - Consultant selection for detail design and tender documents completed.
Disclosure requirements met - Yes.
Results assessment arrangements completed: M&E institutional obligations spelled out; M&E capacity in place; indicators specified; baseline data collected - Yes.
Co-financing agreements signed - Agreements prepared but not signed.
Land acquisition plans ready - Yes for first-phase program.
* By supporting the proposedproject, the Bank does not intend to prejudice the final determination of the parties' claims on the disputed areas
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Annex 1: Country and Sector Background VIETNAM: Mekong Delta Transport Infrastructure Development Project
1. recent years:
Vietnam’s transport and logistics system has supported impressive economic progress in
The Gross Domestic Product (GDP) has grown at 6 percent per year since 2000 and grew by 8.4 percent in 2005, the highest level in nine years;
There has been a continuation in rapid poverty reduction with poverty rates falling from 37 percent in 1998 to 20 percent in 2004; and
There has been strong export growth o f 13 percent per year from 2000 to date and an increase o f 22.4 percent in 2005. The top six exports being: oil, garments, agriculture (including rice), footwear, seafood, and wood products.
0
2. expenditure running at 10 percent o f GDP and 5 percent for transport alone. As a result, the extent and quality o f the transport network has improved dramatically. The main national roads, ports, and airports have been upgraded and 84 percent o f the rural population i s connected by all weather road access. However, investments in the rail and waterways sectors have lagged behind and there are increasing capacity constraints on the existing networks. When manufacturing f i r m s were consulted for the 2005 Investment Climate Assessment (ICA), more than 40 percent highlighted national and provincial roads as the main infrastructure constraint to their business. The figure for the Mekong Delta was 50 percent.
3. In the push for World Trade Organization (WTO) accession, and regional integration, the National Assembly has passed an impressive array o f new legislation which has created an increasingly open competitive environment for multi-modal transport operations. A multi-modal transport regulatory review financed by the Public Private Infrastructure Advisory Facility (PPIAF) supported this view and did not recommend any major changes to the existing legislation. However, the review stressed that for the legislation to succeed, improved coordination between ministries, modal agencies, and the private sector i s required in all aspects o f planning and policy.
Vietnam has one o f the World’s highest levels o f infrastructure investments with annual
Mekong Delta
4. 40,000 km2, about 12 percent o f Vietnam’s area. I t s population and labor force o f around 17 million and 9 million respectively account for about 22 percent o f Vietnam’s totals. The region i s inhabited by four ethnic groups: the Viet (or Kinh) (about 90 percent); the Khmer (5-6 percent), the Chinese (3-4 percent), and a small Cham minority (less than 1 percent). The region contributed 17 percent to Vietnam’s GDP in 2004 and poverty rates vary from a low o f 15-1 7 percent in the provinces neighboring HCMC (Ben Trey Long An, and Tien Giang) to a high o f the 32-38 percent in the 3 southern provinces (SOC Trang, Tra Vinh, and Ca Mau). The average for the Delta as a whole i s 24 percent compared to a national average o f 29 percent.
5. Millions o f small farmers, thousands o f private businesses, over 700 state-owned enterprises, and several cooperatives contribute to the vibrant economy o f the Mekong Delta.
The Mekong Delta region contains 13 o f Vietnam’s 64 provinces and has an area o f
20
The region produces about 45 percent o f Vietnam’s agricultural products while utilizing just 3 1 percent o f the country’s agricultural land. More than hal f o f the entire area o f the region (2.1 mi l l ion ha) is under rice cultivation. Known as the country’s rice basket, the Mekong Delta produces about ha l f o f the rice consumed in Vietnam and 80 percent o f rice exports. It also produces about 40 percent o f the country’s seafood and 50-60 percent o f its seafood exports.
6. Poverty remains a critical problem for the region. Despite a considerable decline in poverty since 1998, there are s t i l l nearly four mi l l ion people living in poverty in the Mekong Delta. This is the highest concentration o f poor people o f any o f Vietnam’s seven regions. Additionally, the Mekong Delta has the highest percentage o f people vulnerable to relapsing into poverty through adverse economic shocks. The Mekong Delta i s also prone to natural disasters, which contributes to a precarious existence for the poor.
7. The government aims to stimulate growth in the region, to fight poverty, and to reduce the urbanization pressure on Ho Chi Minh City (HCMC). A key part o f their strategy has been to promote the city o f Can Tho as an economic hub for the region. This has been successful to the extent that the economy o f the Mekong Delta i s growing rapidly and the products as well as the markets o f the region are diversifying away from the traditional reliance on rice. For example:
0
0
0
Agricultural diversification: aquaculture industries, fmit and vegetable farming, etc;
Downstream diversification: local processing, canning and packing o f produce, etc;
Quality enhancement: new central rice collection points, well-equipped fishing ports and International Standards Organization certified seafood packing plants, to reduce product loss and increase value;
Manufacturing and service industries: industrial parks are expanding and the delta i s emerging as a destination for eco-tourism; and
Market diversification: increased international trade and new export markets.
0
0
8. planned by the government. The proposed Bassac river improvement project, if it i s implemented, will increase the cargo carrying capacity o f the River by opening i t s entrance for larger maritime vessels to access the region hub port o f Can Tho. The government hopes that this will stimulate economic activity in the Mekong Delta and reduce the pressure on H C M C ports and traffic congestion. The planned Ho Chi Minh Expressway through the central part o f the delta, from H o Chi Minh to Rach Gia and Cau M a u i s scheduled to be open in 2010 and will relieve congestion on NH1, These projects will go hand-in-hand with an overall upgrade o f the roads and waterways in the Delta.
To support the growing transport demand in the Delta two major projects are being
Transport Sector Issues in the M e k o n g Delta
9. The region’s strategic freight transport needs are met by the inland waterways system and the road system. There are no railways in the region. The waterways system consists o f 4,800 k m s o f navigable waterways, 1,600 k m s for the main corridors, and carries around 70 percent o f the freight volume in terms o f tonne-kms. The road system comprises 28,000 km, including 1,700 km o f national roads, and carries around 30 percent o f tonne-km. Broadly, in terms o f
21
logistics, the waterways carry the region’s important but lower market value bulk goods, such as rice, cement, building materials, and fertilizer, while roads carry goods with higher market value (and more time-sensitive), including seafood, other perishables, and manufactured goods.
10. The 18 million inhabitants o f the Mekong Delta rely on just two major routes into HCMC. The road network i s dominated by National Highway 1 ; and the waterway network i s dominated by the central waterway through the Cho Gao canal. Both routes are becoming bottlenecks and there i s an immediate requirement to provide alternative routes by improving the standard o f the rest o f the national highways and to provide a Northern and Coastal corridor on the waterways.
1 1. The provincial network i s also underdeveloped; only 35 percent o f the provincial road network i s paved, and only 10 percent o f rural roads are paved. There are large areas o f the delta that are not served by roads and the communities are reliant on the waterways and motorcycle tracks. The high costs o f road building in an area where embankments must be high and bridges frequent indicate that accessibility i s a real constraint. As a result, the level o f rural accessibility in the Mekong Delta i s the lowest in the country with only 57 percent o f the population having access to an all weather road compared to 84 percent for the country as a whole (VLSS 2004 data).
12.
0
0
Infrastructure bottlenecks in the logistics system include:
Slow and expensive rural transport l inks from farms to freight aggregation points;
Poor access to provincial feeder routes from aggregation points to the trunk roads and waterways in some peripheral areas;
Growing congestion on National Highway 1 , the dominant trunk road, and quality deficiencies on other main roads, often caused by bridge loading constraints;
Lack o f major northern and southern canals providing high capacity barge routes to reduce transport costs and relieve pinch-points on the central canal routes;
Insufficient and poorly managed landing stages which act as interchange points between road transport and waterway transport at commune, district, and provincial levels; and
Lack o f infrastructure that would allow penetration o f 40 foot containers beyond Can Tho.
0
0
0
13, Institutional Capacity. The national road network in the Delta i s managed by Regional Road Management Unit 7 (RRMU-7) which i s one o f four RRMUs under the Vietnam Roads Administration (VRA). The capacities o f planning and prioritization are currently poor, but recent support from the Asian Development Bank (ADB) and the on-going Bank financed Road Network Improvement Project (RNIP) i s providing support to VRA, and their RRMUs, to enhance their network planning, management, and maintenance roles. In recent years, the allocation for maintenance o f national roads has increased substantially from VND 592 billion in 2002 to VND 946 billion in 2004. Maintenance finance has grown roughly in line with capital expenditure over the last five years; however, these allocations s t i l l only represent 50 percent o f VRA’s estimates o f need. The situation i s made worse by the outstanding debt that has accumulated in VRA and which has to be gradually repaid from these allocations.
22
14. report to the Provincial Peoples Committees. The provinces have also struggled to plan under budget constraint, which has led to debt problems, and inadequate allocations to recurrent expenditure. The 2004 Public Expenditure Review (PER) estimated that recurrent expenditure at the provincial level i s growing at an average o f about 24 percent per annum but that this only accounts for 3 - 4 percent o f total transport budgets. The provinces are reliant on community contributions and labor particularly for the routine maintenance o f roads. The recently completed Bank financed Second Rural Transport Project (RT2) supported provincial capacity building and the introduction o f a maintenance management system that will be followed through with this operation.
15. (VIWA). The waterways located in the Mekong Delta are the responsibility o f VIWA-South (VIWA-S). VIWA currently has a cumbersome organizational structure which does not respond to the modern requirements for efficient waterways and ports management. VIWA wants to (i) reorganize to give greater accountability to VIWA-S and its waterway management stations; (ii) make the ports authorities more independent and commercial; and (iii) improve cost recovery capability in the sector to cover operations and maintenance expenditures. The recently completed Bank financed Inland Waterways Project (IWWP) developed improved management systems and provided maintenance equipment, but although the maintenance budget, increasing, it i s s t i l l less than 50 percent o f i t s stated requirement.
16. Multi-modal Planning and coordination. Planning between modes has been poor and as such there are road bridges without sufficient clearance for barges. Poor bank protection on waterways i s causing the road embankments to collapse and insufficient road access to ports and landing stages. Most port development has been undertaken independently by provincial governments with the advantage o f at least some competition, but with the disadvantage o f duplication o f facilities. Users have stated a preference for better rather than more facilities; they would like to see new berths, additional storage space, container handling equipment, and improved road access. Above all, users want to see an over haul in the management o f these facilities to be more responsive to their needs. The majority o f facilities are currently operated by provincial enterprises that lack the necessary knowledge or incentives to provide the most efficient and cost effective services.
17. Regulation. The regulatory environment i s now relatively open for private sector participation o f multi-modal transport operators (MTO). The two main modes operating in the Mekong Delta are open for private truck and barge operators. Private participation in ports infrastructure and operations i s at an early stage and there i s private ownership and management o f other parts o f the supply chain. The challenge now i s to create a forum where the private and public sectors can agree on their respective roles in an increasingly dynamic environment difficult for government to control.
18. The main outstanding issue relates to the completion and enforcement o f the implementing regulations. There are s t i l l inconsistencies between different laws and decrees which allows for too much interpretation by officials, which increases the possibility for rent seeking and in turn increases costs and uncertainty for transport operators. Informal payments are a major cost to the transport industry in Vietnam.
Provincial level roads are managed by the 13 provincial departments o f transport which
The national waterways are managed by the Vietnam Inland Waterways Administration
23
19. As the Table 1.1 below shows, it i s the road sector that has the most to do in terms o f i ts existing laws and decrees. Currently, their emphasis i s on traffic regulations and there i s a need to add more focus on competitive provision o f transport services. The Road Act also needs to be revised to match the evolving requirements o f the Vietnam Road Administration. The waterways sector needs better regulations to govern planning and also a better framework to govern pricing and cost recovery. At the moment revenues collected by the sector are miniscule.
Table 1.1: Status of Current Transport Regulations
Basic Policies Policy Implementation
International Shipping Costal Shipping Ports and Related Infrastructure Road Transport Services Road Infrastructure Inland Water Transport Services Inland Waterway Infrastructure Multimodal Transport
V V V n.a. V V n.a. V
n n v x U
V V x n.a. V
V V u n.a. V
V V n.a. n.a. n.a.
n.a. n.a. x x X
n.a. n.a. U x X
V u n V V n n V V n x U
x n x X
x u x X
V a n n V n x U
u n u n V - Good - Fair
x - Poor n.a. - Not applicable/significant
20. Transport safe@. The most obvious observation about the road traffic i s the movements o f conflicting streams o f different road user groups (cars, motorcycles, bicycles, and pedestrians) competing for the same road space. Paved shoulders or footpaths are generally not available or too narrow and there i s a lack o f enforcement o f land use restrictions in the right o f ways resulting in severe encroachment on the carriageway. As a consequence traffic accidents are a major issue. Accident data indicate that about 1000 people die on National Highways in Mekong delta region alone (Source RRMU7). For NH-91, one o f the project roads, there are 57 fatalities a year which i s 1.3 fatalities per kilometer per year. These figures are almost certainly underestimated. As a comparison; statistics from V IWA show about 150-200 fatal accidents a year on the Mekong delta region waterways. The IDA financed Road Safety Project i s addressing national level road safety issues and also i s financing a “safe highway” in the Mekong Delta. This project wi l l focus on appropriate engineering designs, creating space for pedestrians and non-motorised transport users and providing physical segregation where appropriate.
24
Annex 2: Major Related Projects Financed by the Bank and/or Other Agencies VIETNAM: Mekong Delta Transport Infrastructure Development Project
Bank-Financed Projects
Ongoing Sector Issue Supervision Ratings
IP* DOT
Mekong Transport and Flood Reform basic institutional aspects o f road M S M S Protection (Cr ,344 8-VN)
(Cr.3843-VN) for national roads.
(Cr.4073-VN) safety activities in Vietnam. Rural Transport I11
Reduction (Cr.3 572-VN)
Infrastructure (Cr. 3 5 3 2-VN)
management and improve access in Mekong Delta. Road Network Improvement Project Improve road management and maintenance funding
Vietnam Road Safety Project Strengthen NTSC to manage and coordinate road S S
M S S
Improve access to rural areas
in North o f Vietnam.
infrastructure projects in Central Vietnam.
Northern Mountains Poverty Strengthen capacity for CDD infrastructure projects S S
Community Based Rural Strengthen capacity for community involvement in S S
OED Evaluation Completed Sector Issue Out- Sustain ID
come -ability Impact
Rural Transport Project (Cr.2929- VN) Highway Rehabilitation Project (Cr.2549-VN) Second Highway Rehabilitation Project (Cr.NO13-VN) Urban Transport Improvement Project (Cr.3 125-VN)
Improve access to remote rural areas, sustain M S L M
Reduce rehabilitation backlog; build institutional S L M
Reduce rehabilitation backlog; increase the volume MS L M
Strengthen decentralized authority, expand capacity, MS L S
adequate maintenance.
capacity; strengthen road maintenance operations.
o f periodic maintenance; build institutional capacity.
and improve operating conditions o f urban transport.
Inland Waterways and Port Improve main inland waterway route in Mekong A A A
Second Rural Transport Project Improve access to remote rural areas, sustain A A A
Rehabilitation (Cr.3000-VN)
(Cr. 3 3 06-VN)
Delta and strengthen operations and management.
adequate maintenance.
Pipeline Sector Issue
Promote Bus Rapid Transit in Hanoi and strengthen the institutional framework for public transport. Hanoi Urban Transport Project
Northern Delta Infrastructure Develop multi-modal transport in the Red River Development Project Delta area. Poor Communes Infrastructure and Improve livelihoods in the country’s poorest and Livelihoods most marginalized communes.
S = Satisfactory; MS- Moderately Satisfactory; L=Likely; SB = Substantial; M = Modest; NR = Not Rated *-Implementation progress; t - Development objective; A - not yet available
25
Other Development Agencies
Agency Project Status Duration
Second Road Improvement
Third Road Improvement
GMS: Ho Chi Minh City-Phnom Penh Highway
GMS: East-West Corridor
Provincial Roads Improvement
Central Region Transport Network
GMS: Kunming-Haiphong Corridor
GMS: Southern Coastal Corridor
Implementation o f Sector Development Policy (Road Information and Management System)
National Highway No. 5 Improvement Project
National Highway No. 1 Bridge Rehabilitation Project
Ha i Van Tunnel Construction Project
National Highway No. 10 Improvement Project
National Highway No. 18 Improvement Project
Second National Highway No. 1 Bridge Rehabilitation Project
Transport Infrastructure Development Project in Hanoi
Saigon East-West Highway Construction Project
Binh Bridge Construction Project
Red River (Thanh Tri) Bridge Construction Project
Bai Chay Bridge Construction Project
National Highway No. 1 Bypass Road Construction Project
Can Tho Bridge Construction Project
Third National Highway No. 1 Bridge Rehabilitation Project
National Highway No.3 Improvement Project
ADB
JBIC
JICA Traffic Safety Program
JBICBFID Transport sector coordination
NZBFID Transport Safety Design Work
Completed
Ongoing
Ongoing
Ongoing
Ongoing
Preparation Stage
Preparation Stage
Concept Stage
Consultants presently being recruited
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Ongoing
Proposed
Ongoing
Ongoing
Design
1997-2003
1998-2005
1998-2005
2000-2005
2001-2006
2005-20 10
2005-20 10
2006-201 1
2004-2005
1996-2004
1996-2005
1997-2007
1998-2007
1 99 8-2 00 8
1999-2004
1999-2006
2000-2007
2000-2007
2000-2008
2001-2008
2001-2009
2001-2009
2003-2009
2005-
2004-2005
2003-
2004-2005
26
Annex 3: Results Framework and Monitoring
VIETNAM: Mekong Delta Transport Infrastructure Development Project
Results Framework
PDO
Improve access to markets by businesses, farmers and the poor with lower logistics costs resulting from the alleviation of key physical and institutional bottlenecks o f the main transport corridors in the Mekong Delta region.
Intermediate Outcomes
Component A Improved transport services along the main road supply corridors o f the Mekong Delta.
Component B Improved freight services along the main waterway supply corridors o f the Mekong Delta.
Component C Improved connectivity of rural producers and communities to the main supply corridors.
Component D Effective institutions at the national and provincial level able to plan and regulate efficient multi-modal transport.
Project Outcome Indicators
Reduced number o f respondents to the investment climate survey citing transport as a constraint
Reduced rice supply chain costs between Rach Gia and Saigon port
Reduced time from commune to the nearest wholesale market in the Mekong Delta
Formation of a National Logistics Forum
Intermediate Outcome Indicators
Reduced road freight and passenger times along NH-9 1.
Reduced traffic fatalities on NH-9 1
Reduced barge freight times on the Northern Trans Mekong.
Increased volumes of container traffic on the Northern Trans- Mekong Corridor.
Increase in the percentage of people living within 2 km of an al l weather road in the Mekong Delta.
A set of modal transport regulations that support multi-modal transport and a common multi-modal decree.
An effective planning authority preparing plans that facilitate efficient multi-modal transport.
Use of Project Outcome Information
To inform policy makers about the efficiency of supply chains in the
Mekong Delta facilitating improved policy in trade facilitation.
Use o f Intermediate Outcome Monitoring
To better target investments and transport regulation to remove transport constraints from the main corridors.
27
Arrangements for Results Monitoring
0
0
Project Outcome Indicators
Reduced rice supply chain costs - Rach Gia producers to Saigon Port Reduced number of respondents to ICA citing transport as a constraint Reduced time from commune to the nearest wholesale market in the Mekong Delta (mins) Intermediate Outcome
Indicators
PMU- 1
PMU-1 reDort
50 98 Quarterly re
12 22 Quarterly
1 YR1 1 YR2 1 YR3
Reduced barge freight times from Rach Gia to ?* surveys HCMC (mins) Increased volume o f
Reduced road freight times on NH-9 1 (mins)
Reduced accident fatalities on NH-9 1 (percentage reduction from base value) Increased number of container movements on NH-91 Der dav
Multi-modal consultants
(Dl)
Length of national road rehabilitated (km)
daily container traffic on Northern Trans Mekong Corridor Reduced accident rates in Mekong Delta (accidents per 100
I Target Values
VIWA-S VIWA-S 0 5 20 Annual surveys
VIWA-S VIWA-S 0.0023 0.0020 0.00 18 Annual surveys
YR4 1 YR5
vessels) Length of waterway improved 0
1
PMU-w PMU-w report 20 80 200 320 401 Quarterly
I 40
I 25
Data Collection and Reporting Frequency I Data I Responsibility
and Collection for Data Reports I Instruments I Collection
I I
Multi-modal consultants
(D1) surveys
I I I
Investment Annual Climate
Component A Investments on National Road
Number of bridges replaced Component B
World Bank Assessment
1 VHLSS 1 GSO Every two years
? * I 1 I Consultant I 1 ~ m u a l 1 surveys
Police 57 I I 1 20% I 1 45% 1 Annual 1 reports
Multi-modal consultants
(D1)
RRMU-7
Multi-modal consultants
(D1)
PMU- 1
PMU-I
28
0 Number o f bridges raised and improved Component C Investments to Connect the Poor to the Supply Corridors
pMu-w pw-w 9 18 Quarterly report
- Population in the Mekong Delta within 2km of an al l weather
VHLSS GSO
Length of road improved to al l weather standard (km)
Length of feeder waterways improved
Number o f rural landing
improved stages/provincial ports
Institutional Support to the Ministry of Transport and Provinces
0
0
0
150
20
3
-I- Annual
315 Quarterly
58 Quarterly
7 Quarterly
Annual
Annual
..
Formation of a National Logistics Forum
MOT issues plan that highlights the main multi-modal linkages and main current and h ture container routes Number of k m s of waterway under active management increased MOT approved curriculum for Multi- modal transport
2900
Advisory consultant
(C4i)
Consultant reports
Advisory consultant reports
consultant reports
Multi-modal consultants reports
Multi-modal consultants
(D1)
Consultant surveys
consultants surveys
Personnel and material
?* These data will be collected once the multi-modal consultants under Component D1 o f the project have mobilized.
29
Annex 4: Detailed Project Description
VIETNAM: Mekong Delta Transport Infrastructure Development Project
1. The Project will have four main components; the costs include base costs, contingencies and resettlement activities but are net o f taxes, the detailed investment tables are base cost only.
Component A: National Road Corridors (US$100.3 million) 2. main economic hub o f the Mekong Delta. This component will be implemented by the PMU-1, There will be two sub-components:
This component i s designed to improve the standard o f trunk roads connecting to the
Table 4.1: Description o f National Road Components Bridge
Length (Number (km) and NH Section Name Name Description o f Improvements Base Cost"
($ mil) length)
Phase I-Year 1-4 Widening on both sides and upgrade to AC 4-lane Class I1 standard. (Formation width: 17.0 m; carriageway width 14.0 m; divider width 1.0 m, shoulder width 0.5 m paved plus 0.5 m verge) Widen and upgrade to AC 2-lane Class IV standard over earth road with the addition o f one lane. 1 new
m; carriageway width 6.0 m; shoulder width 1 .O m paved plus 0.5 m verge)
Widen and upgrade from l-lane to AC 2-lane Class IV
6.0 m; shoulder width 1.0 m paved plus 0.5 m verge)
NH 53-3
N H 5 3 Km56.000 4.610 5.9 2 for 205
- 60.610
NH 53-10
8.910 1 for 13 m landing stage for ferry included (Formation width: 9.0 2.7 NH 53 K m 130.440 -139.350
NH 54-5,6,7, 8
K m 85.000 NH 54 40.854 for 296 standard, (Formation width: 9.0 m; carriageway width 14.1
-125.854 Phase I Program 54.374 7 bridges 22.7
Phase II-Year 2-6 K m 7-12-Widen and upgrade to AC 4-lane highway to Class I1 standard (Formation 4~3,5mc/w;lrn median;2x2.5m service lanes; 2x2m footways = 25m.
highway to Class I11 standard, (Formation width: 12.0 m; carriageway width 7.0 m; shoulder width 2.0 m paved plus 0.5 m verge)
NH 91-1,2
43.89 15 K m 12-50.889-Widen and upgrade AC 2-lane 36.5 NH91 Km7.000 -50.889
Phase I1 Program 43.890 15 bridges 36.5 Total, National Highways 98.264 22 bridges 59.2
1/ Estimated cost i s base cost, excluding contingencies and resettlement.
Sub-component AI: National Road Corridor Improvements (US$94.7 million).
3. o f national highways, including 13.52 km under NH 53, 40.85 km under NH 54, and 43.89 km
Improvement works will be undertaken to rehabilitate and upgrade approximately 98 km
30
under NH 91. Improvements will be carried out on the existing alignment by widening and upgrading the roads to a Class 11, Class 111, or Class IV standard following the highway design standards o f Vietnam (TCVN 4054-1 998), as supplemented by AASHTO standards.
4. vehicles) with an estimated average growth rate o f about 7 percent over the next 10 years. Given the high level o f non-motorized and two-wheeler traffic, all improved roads (except in very low traffic remote areas) wi l l include paved shoulders for improved road safety. Works wi l l also include rehabilitating and/or constructing bridges and culverts and raising the road levels where required in flood prone areas. NH-91 i s an important strategic route North o f Can Tho. It serves Can Tho port, a number o f industrial parks and i s the route to the Cambodian border. Bridges will be upgraded along this corridor to accept 40 foot containers. Near industrial parks the large volumes o f pedestrians and cyclists entering and leaving these sites will be segregated from the through traffic, street lighting will also be provided.
Present traffic on the selected roads ranges between 300 vpd and 2000 vpd (four-wheel
Sub-component A2: Design and Supervision (US$5.6 million).
5. for Phases I and I1 for the national road component.
To finance the detailed engineering designs for Phase I1 and the construction supervision
Component B: National Waterway Corridors (US$99.3 million)
6. areas to Can Tho and HCMC. This component will be implemented by the PMU-W. There wi l l be two sub-components:
To improve the standard o f trunk waterways connecting the Northern and Coastal Delta
Sub-component Bl: Improvements to National Waterway Corridors (US$93.5 million). 7. Investments on the main supply corridors are foreseen to improve the standard and connectivity o f the canal network (including the major landing stages), concentrating on l inks in both the Northern Trans Mekong corridor (also known as Corridor 2) and the Southern Coastal corridor (also known as Corridor 3). None o f the corridors provide good transport continuity at present, and improvements will help improve region-wide accessibility, relieve congestion on the main corridors, reduce transportation costs and support economic development in the provinces. The following principal corridors will be improved:
0 Northern Trans Mekong Corridor: Through Ho Chi Minh City-Tan An-Cai Dau-C. Rach Gia (253 km).
Parts o f Southern Coastal Corridor: Gia Rai-Bac Lieu-Dai Ngai (1 03 km) and Cho Gao Canal (50 km).
These corridors will be improved to Class I11 standard with a bottom width o f 26-30
0
8. meters. The Cho Gao Canal wi l l also be improved to Class I11 but will have a 55-meter bottom width to further reduce congestion in this busy area. The proposed improvements will generally include dredging to the required widths and depths, bank protection in selected areas, bridge improvements (raising and rehabilitation), and provision o f 24-hour aids to navigation. Improvements to the Northern Trans Mekong corridor wi l l also include the installation o f a ship
31
lock at Rach Chanh to remove a major bottleneck caused by an anti-salinity sluice gate at this location.
9. Once improved, these corridors will be able to accept convoys o f fully loaded 300 DWT barges over their entire length. The replacement o f bridges will also improve the movement o f people and goods crossing the canals.
Sub-Component B2: Design and Supervision (US$5.8 million).
10. for Phases I and I 1 for the national waterway component.
To finance the detailed engineering designs for Phase I1 and the construction supervision
Table 4.2: Description of National Waterway Components.
Bottom Base cost” Minimum
($ mil) Width Depth (m) Description o f Improvements Quantity Section Name ( M 0 . 1 (m)
Phase I-Year 1-4
Northern Trans Mekonp Corridor: Class 3, Lenpth I73 km Km 80-253 173 26-30 3 Widening, deepening and bank protection works 20.8
Remove old bridge, construct 9 steel one-lane
navigation Bridges 14 bridges and lift 4 bridges to Sdadapt aids to 5.4
Phase I Program 26.2
Phase 11-Year 2-6 Northern Trans Mekonp Corridor: Class 3, Lenpth 80 km
Km 0-80 80 30 3 Widening, deepening and bank protection works 12.3
4.0
Remove old bridge, construct 3 RC 1-lane bridges, lift one bridge to Sdadapt aids to navigation and construct of Nhi Thien Duong concrete bridge
Bridges 5
1 Construction o f ship lock at Rach Chanh 6.5 Ship lock Construction
Southern Coastal Corridor: Class 3, Length 148 km
Widening, deepening and bank protection works 9.4 Km 35-80 45 55 3 Km 207-3 10 103 26 3 Equipment SuppIv and Installation - - _ _ -
2.0 Navigation aids: Corridors 2, 3, and feeder canals Navigation Aids 1,783
Phase I1 Program 34.1 Total, Inland Waterway Corridors 60.3 1/ Estimated cost i s base cost, excluding contingencies and resettlement.
Component C: Connecting the Poor to the Supply Corridors (US$96.3 million).
1 1. To improve the feeder waterways, roads, ports and landing stages at the district and provincial levels to link poorer and more distant producer communities to the main supply corridors. This component will be part financed by AusAID.
32
Sub-component Cl: Investments in Provincial Roads and Feeder Canals (US$84.8 million).
12. A key objective o f the project i s to connect, through the secondary road and waterway network, areas o f economic activity and areas with high concentration o f poverty to the main transport corridors. The short l i s t o f roads and waterways was screened based on their connectivity to main transport corridors, service to areas with higher potential agriculture productivity, service to areas with high poverty density, and equitable distribution within the delta provinces. An initial program o f 205 km o f secondary roads, including 78 bridges, and 58 km o f feeder waterways has been identified for improvement in 13 provinces. There i s a further $15.0 mi l l ion o f additional finance that has been pre-allocated to eight o f the higher need provinces to extend their program. It i s estimated that this will add a further 1 10 km o f roads and 40 bridges.
13. Priority has been given to provide all-weather connectivity and improved road surface quality over widening o f provincial roads given the generally l o w quality o f current roads and tracks and l o w traffic volumes. Accordingly, improvements will generally be carried out along existing alignments by upgrading the roads through structural overlays or through complete reconstruction where the existing road structure has collapsed or where they are earth roads. Work will also include rehabilitating or constructing bridges and culverts, raising road levels where required in flood prone areas and providing erosion protection from neighboring waterways. Improved roads will be constructed with either single-lane (3.5 m) or two-lane (6.0 m) bituminous surface treated (BST) paved carriageways, depending on existing conditions and traffic demands. All roads will have 1 .O m paved shoulders on each side. Support provided to provinces through Components C3 and D 3 for the preparation o f transport plans and annual development and maintenance work plans will facilitate sub-project sustainability by giving sufficient weight to maintenance.
14. in each o f An Giang and Ca M a u provinces with a total length o f 58 k m s (see Table 4.3). The improvements will include widening and deepening o f the canal sections to a class IV standard, bank protection in selected areas, raising o f bridges where required and provision o f aids to navigation (to be procured under Component Bl).
Appraised provincial waterway sub-projects include the improvement o f one feeder canal
15. programmatic basis, within a budget allocation for each province. The latter has been established on the basis o f hal f o f the funding for provincial roads being allocated equally between provinces and attributing the remaining hal f in proportion to the level o f inaccessibility and poverty in each province. This approach provides relatively more funding per capita in provinces where communities currently have poor access to roads and where poverty i s more severe (see Table 4.3). Additional sub-projects will be identified from the list o f roads screened during preparation for this project and will be financed subject to a satisfactory feasibility study procured under Component C3(i) under the guidance o f the regional support center.
The $15 mi l l ion o f additional finance will be used to select sub-projects on a
33
Identified Subprojects
Province Base Cost" (US$ mil)
Bridge Section Length (Number and Description o f Improvements Name (km) length)
Sub-projects to be Total
Identified
Base Cost" Base Cost" (US$ mil) (US$ mil)
2.65
o.53
Approaching roads o f bridges
Upgrading o f Mac Can Dung Canal
DT941 2.60 13 for405 m only An Giang
31.00
Single lane (3.5 m) CN-CDV 8S0 for 299 carriageway w/ shoulders
3.18
3.14 I
2.85
2.62
cs- Single lane (3.5 m) 26'36 for 280 carriageway w/ shoulders BacLieu HCMR
Ben Tre DT 884 13.72 5 for 292 m wi shoulders Two-lane (6.0 m) carriageway
- . I I
2.10 4.95
2.62
Ca M a u Thoibinh- 9,50 Single lane (3.5 m) Uminh for 25 carriageway w/ shoulders - .
26.80 Uugrading o f Ong Dinh Canal 0.53 l.1° I 6s31 1.54 I
I 3.68 Single lane (3.5 m)
Approaching roads o f bridges 2.23
2.35 Single lane (3.5 m)
2.90 Single lane (3.5 m)
Can Tho TT-TL 11.90 10 for 342 m carriageway w/ shoulders
Dong Thap DT 841 1.40 7 for 398 m only
Hau Giang DT 928 24.40 1 for 82 m carriageway w/ shoulders
Kien Giang BN-TH 16.85 12 for 270 m w/ shoulders
3.68
1 .oo 3.23
1.60 3.95
2.40 5.30
LongAn DT835B 11.97
- I
3.31 Two-lane (6.0 m) carriageway Tien Giang DT 865 13.05 6 for 243 m w/ shoulders
1.81 1 1.60 1 3.41 Two-lane (6.0 m) carriageway w/ shoulders
3.31
Single lane (3.5 m) SOC Trang DT 04 15.30 8 for 181 m carriaeewav w/ shoulders
2.45 Single lane (3.5 m) Vinh Long DT 909 21.40 2 for 81 m carriageway w/ shoulders
2.95 I 3.00 I 5.95
2.20 4.65
38.63 Provincial Roads
Provincial Waterways 56.80 1.06 Total 262.05 39.69
78 bridges for 205'25 3,086 m
1.12
3.03
Single lane (3.5 m)
Single lane (3.5 m) 4.15
for 38 carriageway w/ shoulders
DT 915 20'oo for 150 carriageway w/ shoulders
TN 8.30 Tra Vinh
15.00 54.69
15.00 54.69
34
Sub-Component C2: Investments in Provincial Ports, Landing Stages and inter-modal facilities (USSS. 8 million).
16. stages. Finance will be used to pi lot new institutional and management arrangements and to support a range o f physical improvements designed to demonstrate improved inter-modal linkages. Consultants engaged to provide institutional support to VIWA (Component D2) will assist provinces to identify investment requirements, prepare business cases, and ensure financial sustainability. Approximately US$2.2 mi l l ion (base cost) has been allocated to finance improvements to provincial ports infrastructure. Investments may include new wharfs, storage areas, road access, or equipment. The business cases will describe forecast demand, port charges, capital and recurrent costs, social and environmental impacts, and a financial analysis. Projects should have a financial internal rate o f return in excess o f the market cost o f capital.
This component will support improvements to provincial port facilities and rural landing
17. rural producers to the main transport networks. There are over 1,000 landings owned by private operators, VIWA, and provincial governments in the participating provinces. The number o f landing stages i s sufficient to meet current and anticipated needs, though the landings generally have poor inter-modal and support infrastructure and operate to a large extent in a relatively informal manner.
A further US$2.8 mil l ion will finance pi lot improvements to rural landing stages to link
18. Improvements will occur only at existing landings, and will include improved l i n k s to the road network, storage facilities, rice drying and similar facilities, and rehabilitation o f landing stages. Improvements in physical infrastructure wil l be complemented by enhanced management through the use o f community-based organizations. Sub-projects should recover operating and maintenance costs from user fees to ensure sustainability.
Sub-Component C3: Feasibility Studies, Design, Supervision and Advisory Services (US$.% 7 million).
19. To finance two main areas o f work for each o f the 13 participating provinces:
i) Feasibility study, design, and supervision for sub-projects (US$3.0 million). This will finance feasibility studies needed for sub-projects not yet appraised, detailed design that will not be completed under pre-project activities, and construction supervision for al l provincial sub- projects.
i i ) Regional Support Centre (US$2.7 million). The Centre, which will be located at the Southern Transportation College in Can Tho, will perform two functions: (a) support for implementation o f provincial-based components o f the project; and (b) management o f a program to develop the technical and management ski l ls o f government personnel. The Project Implementation Support will provide assistance to provinces for:
0 Sub-project identification and preparation, including assisting in the identification o f additional sub-projects and preparation o f proposals;
35
0 Sub-project implementation support, including assisting provinces to recruit and manage design and supervision consultants, provision o f guidance on environmental and social safeguards and project approval processes and review subproject design proposals and contract documentation;
Support tendering and contracting o f works by provinces, provincial management o f implementation works, and preparation o f subproject implementation reports;
Provide support for the development o f provincial transport programs, including the roll out o f V M ’ s Provincial Road Management and Maintenance System, preparation o f podlanding stage maintenance management systems, and preparation o f transport infrastructure expenditure programs; and
Preparation and implementation o f a monitoring and evaluation program for provincial project activities, provision o f advice to provinces on implementing the system and consolidation o f provincial data for use by the Integrated Project Implementation Audit (Component D4i), and updating project programs and plans as needed.
The Training Program will involve establishing training needs, developing a training
0
0
0
20. program (including courses, executing organizations, attendees, schedule and curricula), providing training to course presenters, and facilitating and coordinating training course implementation. Maximum use will be made o f currently available courses, training materials and institutions.
Component D: Institutional Support to Ministry of Transport (US$6.9 million).
2 1. four areas.
This component will provide institutional support to the Ministry o f Transport (MOT) in
Sub-component Dl: Support to MOT on Developing Multi-modal Transport (US$l. 6 million). 22. transport. The work wi l l include:
To support the various agencies within M O T to enhance the efficiency o f multi-modal
Support the development o f national policies and planning for multi-modal transport drawing on experience with national and regional multi-modal transport strategies adopted in other countries.
Review the recommendations o f the Multi-modal Transport Regulatory Review completed in 2006 and support implementation o f agreed actions.
Support the capacity development (including training of) policymakers and operators involved with multi-modal transport operations
Use the Mekong Delta as a demonstration region to identify supply chains for several major commodities, bottlenecks in public infrastructure, market failure in the transport industry, and government failure in the provision and management o f public infrastructure and regulation o f transport service providers.
Monitor key logistics indicators on two pilot corridors in the Mekong Delta.
Support the Secretariat o f the MDTIDP Project Steering Committee.
36
Sub-component 0 2 : Institutional support to Vietnam Inland Waterway Administration (WWA) (US$l.6 million). 23. inland waterways network in Vietnam. The main areas o f support include:
0
To finance support to V I W A to more effectively carry out i t s tasks as managers o f the
Assisting provinces to prepare business cases for development o f provincial ports and Feasibility Studies for development o f landing stages to be financed under Component C2.
Institutional studies and advice to inform the reorganization o f V IWA including the ports authorities and waterway management stations.
Asset management and maintenance including the institutionalization o f the River Management Information System VIWA-S and studies to recommend improved cost recovery in the sector.
0
0 Institutionalization o f waterway standards. 0 Improving safety on the waterways and better integrating the needs o f rural waterways
users.
Support to inland waterways school in the South to further develop their curriculum in the areas identified above.
T h i s component will also assist port authorities at the provincial level to improve their
0
24. capacity in port administration and management and enhance the efficiency o f port operation by promoting the private sector’s participation. The following activities will be addressed as part o f this work:
0 Assess functions, services, finance, and institutional framework o f the river ports and landing stages at the Mekong Delta.
Assess the current status o f the regulatory framework o f port operations, and formulate a strategy to improve the framework.
Formulate a strategy to achieve sustainable financing and operations o f landing stages and river ports in the Mekong Delta.
Design a program for institutional strengthening in the public sector.
0
0
Sub-component 0 3 : Training (US$l.O million). 25. This component will implement training programs identified in Component C3(ii), D1 and D2 o f the project. It wi l l be coordinated by the DPL and will use approved MOT training curriculum where available and curricula developed in Component C3(ii), D 1 and D2 in other cases. The training programs will be provided by the following MOT training institutes:
0 University o f Transportation in Ho Chi Minh City - Multi-modal transport issues.
0 Inland Waterway Training School No. 2 - Management and operation o f waterways and related facilities.
Southern Transportation College in Can Tho - Support for provinces, covering introduction and use o f road maintenance management systems, transport plan preparation,
0
37
provincial financial management, and other skil ls needed by provinces to implement sub- projects.
Institute for Transport Administration and Management Cadres in Hanoi - Project management and core business processes (procurement, FM, safeguards, etc.).
0
Sub-component 0 4 : Project Audit Services (US$l.l million). 26. i ) Integrated Project Implementation Audit Services (US$O. 7 million). Independent consultants will be hired to conduct semi annual reviews o f the status o f a l l project elements and bring together progress under one report to be presented prior to each supervision mission. These services are designed to provide heightened fiduciary, safeguards and general project monitoring through:
Social and environmental monitoring, financial management and procurement, and technical quality.
A semi-annual summary o f the status o f a l l project components.
A review on progress towards meeting the projects overall objectives and key performance indicators.
To finance the following two types o f independent audits:
0
0
0 Internal audit assistance.
i i) Project Financial Audit (US$O. 4 million) - Independent external financial auditors acceptable to the IDA will prepare and submit to the Bank audited financial statements and audit reports within six months o f each financial year. The internal audit function within the implementing agencies i s the responsibility o f the respective implementing agencies but support will be provided under Component D4(i) for reviewing internal control systems, making recommendations for improvements and monitoring remedial actions taken. The internal audit reports will be available on semi-annual basis to IDA and the project external auditors.
Sub-component D5: Preparation of a follow-up project (US$l.6 million).
27. Transport Development Project.
This component will finance the detailed design services for the proposed Northern Delta
38
Annex 5: Project Costs VIETNAM: Mekong Delta Transport Infrastructure Development Project
Table 5.1: Summary Project Costs and Financing (US$ million)
Project Cost By Component Local Foreign Total
A. National Road Corridors 32.80 55.07 87.87 B. National Waterway Corridors 30.09 56.78 86.87 C. Connecting the Poor to the Supply Corridors 30.59 53.56 84.15 D. Institutional Support to Ministry o f Transport 1.78 4.67 6.45 IOC 3.50 0 3.50
Total Baseline Cost 98.76 170.08 268.84 Contingencies
Physical Contingencies Price Contingencies Contingency on GOV financing
Tax Total Project Costs’’
Total Project Costs inc. Taxes
6.62 11.30 17.92 4.85 8.26 13.11 6.72 0 6.72
116.95 189.64 306.59 0 5.43
3 12.02 Total Financing Required 232.65
1/ O f the total project costs (net o f taxes) IDA i s to fund US$207.65million (68 percent) and Aus AID U S 2 5 million (8 percent) and GoV US79.36 million (24 percent). The shares o f project costs including taxes are IDA (67 percent), AusAID (8 percent) and GoV (25 percent).
39
Table 5.2: Project Costs and Funding by Component (US$ million)
Financing IDA Aus AID GOV Total
Component A - National Highway Corridors 74.58 25.74 100.32
Component
Sub-component A 1 - National Highway Corridor Improvements Sub-component A2 - National Highway Design and Supervision Contingencies
59.15 5.32
10.11
23.40 82.55 5.32
2.34 12.45
Component B - National Waterway Corridors Sub-component B 1 - National Waterway Corridor Improvements Sub-component B2 - National Waterway Design and Supervision Contingencies
76.08 60.34
5.43 10.31
23.21 99.29 21.10 80.2 1
5.43 2.1 1 12.42
Component C - Connecting the Poor to the Supply Corridors Sub-component C1 - Investment in Provincial Roads and Feeder Canals Sub-component C2 - Investments in Provincial Ports and Landing Stages Sub-component C3i - Provincial Program Design and Supervision Sub-component C3ii - Support for development o f Regional Support Center Contingencies
50.13 25.00 36.49 18.20
21.13 96.26 19.21 73.90
3.34 1.66 5.00
1.83 0.92 2.75
1.67 0.83 2.50
1.92 12.1 1 6.80 3.39
Component D - Institutional Support to Ministry of Transport Sub-component D1 - Support for developing Multi-modal Transport Sub-component D2 - Institutional Support to VIWA Sub-component D3 - Training Sub-component D4i - Integrated Project Implementation Audit Sub-component D4i i - Financial Audit Service Preparation o f NTIDP Contingencies
Incremental Administration
Contingencies
6.87 1 .so
6.87 1 .so
1 S O 0.95 0.64 0.36 1 S O 0.42
1 S O 0.95 0.64 0.36 1 .so 0.42
3.50 3.50
0.35 0.35
Sub-total (Works, consultancy and GoV costs) 180.02 21.61
27.63 3.39 15.95 1.97 11.68 1.43
67.21 268.84
6.72 37.75 17.92 13.1 1
6.72 6.72 73.93 306.59
5.43 5.43
Sub-total (Contingencies) Physical Price Contingency on GoV Financing
Sub-total Taxes Total
207.65 25.00
- - .... 207.65 25.00 79.36 312.02 Source:
40
Annex 6: Implementation Arrangements
VIETNAM: Mekong Delta Transport Infrastructure Development Project
Organizations Responsible for Project Implementation
1. The MOT will act as the “line agency” for the national infrastructure components. The line agency will approve the national investment programs and procurement plans. The VRA will be the “project owner” for the national highways component and V I W A the “project owner” for the national waterways component. These modal administrations will be fully delegated by the “line agency” for the day-to-day management o f their respective components with PMU-1 and PMU-W being the “implementing units” reporting directly to the “project owners.” The “implementing units” wi l l advertise, receive, evaluate, produce evaluation reports, award and sign contracts, and subsequently manage implementation o f their components but will require necessary approvals from the “project owners” at the various stages.
2. For the provincial infrastructure component the respective PPCs will be the “line agencies” and be responsible for approving respective investment programs and procurement plans. The respective “PDoTs” wi l l be the “project owners” o f the respective provincial infrastructure programs. The respective PPMUs will be the “implementing units” for the provincial infrastructure components and will advertise, receive, evaluate, produce evaluation reports, award and sign contracts and subsequently manage implementation o f their components but will require approvals from the respective “project owners” (i.e,, PDoTs) at the various stages.
3. reporting to the GoV and fulfilling the requirements o f the World Bank.
MOT will have overall responsibility for overseeing the implementation o f the project,
4. MOT Vice-Minister and consist o f representatives o f MPI, MoF, MONRE, SBV, DPI o f MOT, VRA, VIWA, and representatives from some o f the 13 Provinces. The PSC’s mandate i s to address cross-ministerial issues, multi-modal issues, oversee project management, monitor the implementation progress and provide coordination o f the overall project. The PSC wi l l form a Standing Coordinating Group (SCG) consisting o f VRA, VIWA, PMU-1, and PMU-W who will be responsible for the day-to-day management and coordination o f the project; the SCG will also act as the secretariat for the PSC:
0 Coordination and liaison between the Project Owners, their Implementing Units, and other ministries on behalf o f the PSC;
Coordination o f the review o f the technical and financial audit reports, social and environmental monitoring reports, the Project evaluation and monitoring reports, other Project related studies and reports;
Ensuring that the Project related policy and institutional reforms are achieved; and
Monitoring the Project’s physical and financial progress.
The MOT will establish a Project Steering Committee (PSC), which will be chaired by a
0
0
0
5. A summary o f the responsibilities o f each “implementing unit” i s set out below:
41
0
0
0
6.
PMU-I and i t s consultants wi l l have responsibility for all aspects o f the national roads corridor component, including planning, programming, budgeting, design, procurement, implementation, supervision, monitoring, evaluation, and coordinatiodliaison with IDA. I t wi l l be responsible for the award o f and signature to, contracts for national highways. PMU-1 wi l l engage consulting services to assist it in the design and supervision o f the national highways program. At all stages it will report to, and require the approval of, VR4.
PMU- W and i t s consultants wi l l have responsibility for all aspects o f the national waterway corridors component (including bridges). The responsibilities are as with PMU- 1 above. PMU-W wi l l also be responsible for management o f the Institutional Strengthening component as well as the sub-component for support to the development o f the Regional Support Center, which will include the engagement, contracting and supervision o f the various technical assistance/consulting services and training packages (see below). At all stages it will report to, and require the approval of, VIWA.
The PPMUs in each o f the 13 project provinces w i l l have responsibility for all aspects o f their respective provincial roads, bridges, feeder canal, and landing stages works programs. The responsibilities are as with PMU-1 above. The PPMUs will engage consulting services to assist them in the design and supervision o f their provincial roads and feeder canal programs. Overall support to each o f the 13 provinces will be provided under Advisory Consultants attached to the Regional Support Center and engaged by PMU-W (see Sub-Component C3ii). The Advisory Consultants will be responsible for oversight, advice, assistance and general capacity building support to the PDoTs/PPMUs and local supervision consultants to be engaged by the PPMUs. At all stages, the PPMUs will report to, and require the approval of, the respective PDoTs.
The consulting services to be engaged under Component D wi l l support project implementation and provide institutional support, namely:
0
0
0 Training (Sub-Component D3); and 0 Independent audit (to carry out Integrated project implementation audit and external
financial audit for all project implementing agencies (Sub-Components D4i and D4ii).
7. As outlined earlier to simplify procurement and management arrangements, PMU-W wi l l contract and manage all o f the above consulting services packages. Sub-Component D3 will also be managed by PMU-W but, through Ministerial Decree, the training department in DPL wi l l be responsible for the overall coordination o f the training program. The project wi l l be implemented in two phases. The first phase o f investments wi l l be ready for implementation at project effectiveness including all the necessary engineering, procurement, and safeguards documentation. Preparation o f the second phase will commence once the project has started.
Support to MOT for developing multi-modal transport (Sub-Component Dl);
Institutional support to V IWA (Sub-Component D2);
42
43
Responsibilities of the Implementing Agencies and Other Stakeholders
8. Though MOT will serve as the executing or l ine agency for the MDTIDP, implementation o f the various components will be delegated to respective implementing agencies who will report to and, at key steps, require the approval o f the “project owners,” namely V U , VIWA, and the 13 PDoTs. The specific responsibilities to be ascribed to each o f these organizations are summarized in Table 6.1 :
Table 6.1: Summary o f Organizational Responsibilities
Implementation Functions
Legal responsibility for project Executing Agency for components A, B, and D
Constituent Reporting Agency Relationship
Transport Policy Delegation o f responsibility Formation of Project Steering Committee
Office of the Prime Minister
Ministry of Transport (MOT)
Approval o f key project reports such as FSs/CIRs and overall project procurement plans Executing agency for component C
Approval of key project reports such as FSs/CIRs and overall project procurement plans Oversee management and implementation of overall project Address cross-ministerial issues
Form SCG to manage day-to-day coordination Oversight o f policy compliance Review al l key reports including Feasibility Studies (FSs) Review and approve overall investment program and procurement plan Ensure interests of a l l stakeholders are reflected in project outcomes
Office o f the Prime Delegation o f responsibility Minister
13 Provincial Peoples Committees
Vice Minister, Ministry o f Transport
Vice Minister,
Transport
Project Steering Committee 0 Address multi-modal issues
Department of Planning and Ministry of Investment of MOT Department o f Vice Minister, Approval of training plans and training packages Personnel and Ministry o f Coordination with training institutions for al l project training initiatives Labour Transport
Project Owner of national highways component Appraisal o f procurement plans, designs and cost estimates Monitoring quality of works Review and approve Quarterly Reports for component A
0 Approval of bidding documents, bid evaluation standard and bid results
Vietnam Roads Vice Minister, Authority Ministry of
Transport ( V W
for Component A Project Owner o f national waterways component
0 Appraisal of procurement plans, designs and cost estimates Monitoring quality of works
0 Review and approve Quarterly Reports for components B and D Approval of bidding documents, bid evaluation standard and bid results for Component B and D Project Owners of provincial transport infiastructure components
Vice Minister, Ministry of Transport
Vietnam Waterways Authority (VIWA)
Provincial 0 Appraisal o f procurement plans, designs, and cost estimates Departments o f Provincial People’s Monitoring quality of works Transport Committees Review and approve Quarterly Reports for components C (PDoTs) Approval of bidding documents, bid evaluation standard, and bid
results for Component C
44
Constituent Reporting Implementation Functions Agency Relationship National Highways (Component A)
Project Management VRA Unit 1 (PMU-1)
e
e e e
e e e e
e e
~.
Implementation o f above Component Coordination o f activities with PMU-W and PPMus Liaison with and reporting to the World Bank Preparing and submitting to VRA all studies, designs, bid plans, bid documents, contract documents, etc., for approval Selection of design and supervision consultants Prequalification o f contractors (if required) Evaluation o f bids and award of contracts Implementation o f land acquisition and resettlement plans together with PPC Monitoring o f construction progress and quality Submission o f Quarterly Reports to MoT,-VR& and WB as required
Main Waterway Corridors (Component B) and TNConsulting Services (Sub-Component C4ii and Component D)
Project Management Unit - VIWA Waterways (PMU-W)
e e e
e
e e e e
e
e
Implementation of above Componenthub-components Coordination of activities with PMU-1 and PPMUs Liaison with and reporting to the World Bank Preparing and submitting to VIWA (MOT for Component D) al l studies, designs, bid plans, bid documents, contract documents, etc., for approval Selection of design and supervision consultants Prequalification of contractors Evaluation o f bids and award of contracts Implementation o f land acquisition and resettlement plans together with PPC Monitoring o f construction progress and quality Submission of Quarterly Repork to MoT,VIWA, and WB as required
Provincial Roads and Feeder Canals (Component C) e e
e
e
Provincial e Project Management Provincial Depts of e Units (PPMUs) Transport e
(13) e
e
e
e
Coordination o f activities with PMU-1-and PMU-W Liaison with PMU-W on engagement o f consultants (Sub-Component C4i by PPMUs and C4ii by PMU-W) Implementation o f Component Liaison with and reporting to the World Bank Preparing and submitting to PDoTs for review, al l studies, designs, bid plans, bidding documents, contract documents, etc., Selection o f design and supervision consultants Evaluation of bids and award of contracts Implementation o f land acquisition and resettlement plans together with PPC Coordination of resettlement and compensation activities for component and Components A1 and B 1 Monitoring of construction progress and quality Submission of Quarterly Reports to MOT, PPCsPDoTs, and WB as required
Features of Administrative Arrangements for Project Implementation
Improvement of Fairness and Transparency
9. A plan to improve fairness and transparency has been developed which recognizes the inherent r isks o f implementing a project in 13 provinces and in two waterway corridors, where
45
availability o f skills and experience may be low. Risk management in this context includes measures related to procurement, financial management, and the supervision o f implementation.
10. Attachment 2. The Action Plan that has been prepared i s based on an examination o f the overall project cycle, to identify where problems are most likely to occur and what mitigation measures are l ikely to be most effective. The plan may be further developed with regard to approval o f sanctions in the event o f problems being identified.
The Action Plan to Improve Fairness and Transparency i s set out in Annex 8,
1 1. MOT such as RT3.
The plan to be adopted for MDTIDP is based on the plans adopted for other projects in
Emphasis on Achieving Improved Quality
12. The project will give substantial emphasis to improving construction quality control, through the introduction o f a multi-faceted program that involves the fol lowing components:
a.
b.
C.
d.
e.
The introduction o f the Plan to Improve Fairness and Transparency that will target corrupt practices that directly result in reduced construction quality, and provide penalties for those found to be involved in such practices, including Contractors, Consultants, and the staff o f government agencies. It i s expected that this will result in significant improvements to quality o f construction.
One o f the actions set out in the Plan i s to introduce a new mechanism for bidding o f c iv i l works whereby independent consultants hired under the project will be required to review all procurement activities under Components Al, B1, C1 and C2.
Strengthening the powers and authority o f the Construction Supervision Consultants (CSC) that will allow them to reject defective works and/or refuse payments for defective works and also build their longer-term capacity. This will be achieved by not only strengthening Terms o f Reference o f CSC, but also by providing other support to PPMUs and local CSC through the Regional Support Center to be developed with the assistance o f international consultants to be engaged to assist in this development. A Procurement Advisor will also be part o f this international consultants team. The advisor will be required to review and advise on al l procurement processes carried out by the 13 respective provinces. In addition, the integrated project audit consultants (see below) will carry out periodic reviews o f progress and procedures adopted.
Provide for an independent program o f Integrated Project Implementation Audits, to be conducted by consultants to be contracted by PMU-W.
Promote public awareness o f the project and encourage local communities and stakeholders to become actively involved in observing and commenting on what they may regard as issues o f quality and corruption. A complaints mechanism will be developed, that will fol low up and report on al l complaints, and whose effectiveness and performance will in turn be monitored and publicly reported on. These activities will be supported by the RSC.
46
13. These important new initiatives are being further developed in this project, and their performance will be closely monitored to identify ways o f strengthening and refining the measures for use in subsequent projects.
Project Design and Supervision
14. contracted by PMU-1 and funded under an on-going project (RNIP).
The design and bidding documents for Phase I is being carried out by consultants
15. Supervision Consultants (DSCs) will be engaged for each o f the respective components/sub- components. Final engineering designs will be checked and approved by MOT, VRA, or VIWA as appropriate, and reviewed by the Bank. Project economic and environmental feasibility will be reviewed after design completion to ensure project acceptability for inclusion in the work program.
For the design o f Phase I1 and the construction supervision o f Phase I and 2, Design and
16. engaged by PMU-1; (ii) for M a i n Waterway Corridors - to be engaged by PMU-W; and (iii) for Provincial Roads and Feeder Canals - to be engaged by each o f the 13 Mekong Delta provinces.
DSC assignments are envisaged under the Project: (i) for National Highways - to be
Environmental Safeguards
17. project implementation. E M P outlines the main guidelines and procedures for a range o f environmental and social impact activities and aspects including stakeholder consultation, land and building acquisition, resettlement, and isolated vulnerable peoples (ethnic minorities). The guidelines are based on a combination o f GoV procedures and regulations and World Bank operational directives. The EMP also includes screening procedures, monitoring procedures and an institutional action plan for enhancing the involvement o f MDTIDP Project.
An Environmental Management Plan defines the safeguard procedures to be used during
18. overseen by PMU-l/PMU-W/PPMUs - working for the respective project owners (Le., VRA, VIWA, and 13 PDoTs).
The environment management will be implemented by construction contractors and will be
Social Safeguards
19. A Resettlement Policy Framework and an Ethnic Minorities Framework detail how the land acquisition and compensation procedures are to be carried out and how ethnic minority households affected by the project are to be dealt with. These frameworks can be found in project files.
Phase I Work Program
20. For al l projects to be implemented in Phase I, preparation o f feasibility studies, preliminary engineering, economic evaluation, environmental, and social aspects have already been completed. Preparation o f final engineering design and bidding documents i s being prepared by consultants engaged by PMU-1 with funding from RNIP. The economic, environmental, and social feasibility o f each sub-projecthontract package will be checked by the responsible PMU following completion o f final designs and cost estimation for each project.
47
Phase 11 Work Program
2 1. Phase 11. The detailed design and bidding documents for Phase I1 will be carried out as initial activities o f the project and funded with project funds. The consulting assignments will not only include the detailed design o f Phase I1 sub-projects/contract packages but also the construction supervision o f Phase I sub-projects/contract packages as well as, subsequently, Phase I1 sub- projects/contract packages.
During initial project preparation, draft works programs were identified for Phase I and
Arrangements for Reporting
22. and bi-annual supervision reports prepared by each implementing agency and brought together in a consolidated progress report by PMU-W acting for DPI. Periodic Progress Reports will be prepared by all o f the Technical Assistance Consultants carrying out their respective assignments. These reports, once reviewed and approved by the l ine agency/project owners as appropriate, will then be submitted to the IDA.
Implementation will be monitored through the Quarterly Interim Financial Reports (IFR),
23. The IDA will conduct Supervision Missions every six months, and wi l l conduct a mid-term review after about 24 months o f implementation. The Bank wi l l work closely with PMU-l/PMU- W and PDoTs to review the performance o f technical assistance consultants.
Arrangements for Monitoring and Evaluation
24. The DPI within the MOT, in consultation with constituent implementation agencies- including PMU-1 , PMU-W and PPMUs/PDoTs-will prepare, prior to Credit Effectiveness, a comprehensive Monitoring and Evaluation Framework. The implementing agencies will use, collaboratively, the specific technical, social, and economic indicators defined in the Financing Agreement to assess project progress and effectiveness. The monitoring o f such indicators wi l l be integrated into the day-to-day work routines o f the project implementing agencies.
25. will anchor the agenda o f all Project Steering Committee meetings. The key performance indicators which wi l l serve as the basis for the monitoring system elicit information on the performance o f all key facets o f the project.
Information pertaining to the monitoring and assessment o f the progress o f the MDTIDP
Implementation Schedule
26. closing in 20 13. Construction will be arranged in two phases over a total o f about four years. The six-year project period includes the lead-in times for initial procurements and the final contracts defects liability periods, as well as time for final disbursement o f Credit funds. The implementation schedule i s included in the Project Implementation Plan which can be found in project fi les.
The project will be implemented over a six-year period commencing in mid 2007 and
48
Annex 7: Financial Management and Disbursement Arrangements
VIETNAM: Mekong Delta Transport Infrastructure Development Project
Country Issues
1. represented some level o f fiduciary risk. The 2005 PER-IFA recognized improvements in transparency and accountability arising from (i) a new audit law (May 2005) which will enhance oversight by the National Assembly and Provincial People’s Councils over public finances and increase public access to information on government finances; (ii) the new decree on independent audit (March 2004) which regulates the status o f auditors and audit firms and define the value o f audit results; and (iii) the accounting law (2003) which establishes the legal framework for Vietnamese Accounting Standards for public and private sectors on the basis o f international standards.
The 200 1 C F A A for Vietnam concluded that the public financial management system
2. management. The key challenges include: (i) implementation o f the legislative frameworks which are largely in place; (ii) strengthening the effectiveness o f the State Audit o f Vietnam; (iii) streamlining the internal control framework; (iv) building financial management capacity, particularly at the sub-national level; and (v) adopting international public sector accounting standards.
However, the PER-IFA identifies a large agenda for improvement in public financial
3. projects in Vietnam. The risks relate particularly to procurement; however, the weaknesses in internal control and financial monitoring and oversight, combined with capacity weaknesses, increase, the inherent risk o f mis-use o f funds.
Recently, corruption and collusion have been highlighted as significant risks in transport
Risk Assessment and Mitigation
4. before mitigation and moderate after mitigation. The project specific control risk taking into account the risk mitigation measures that are to be implemented for the project i s assessed as moderate (see Table 7.1).
The inherent risk to the project from the financial environment is assessed as substantial
Implementation Arrangements
5. There will be 15 project implementing units: PMU-1, PMU-W, and 13 PPMUs in 13 project provinces. Each P M U P P M U will be separately responsible for the financial management relevant to the project components that they are implementing. The provincial components will be fully decentralized. Technical assistance i s included in the project to support a l l implementing agencies at the provincial level. The D P I and the PPCs will oversee the financial management o f the national infrastructure components and provincial components respectively through (a) reviewing the budget and work plan from the components; (b) review the financial statements f rom components; and (c) supervise and direct the internal audit function.
49
Table 7.1: Critical Risk and Mitigation Measures Risk After Mitigation
Risk Risk Mitigation Measures Incorporated into Condition of Rating Project Design Negotiation,
Board or Effectiveness
Risk
Inherent Risk Capacity building in MTEF and road planning and budgeting, implementation and monitoring,
Performance expenditure reviews at least annually. (i) proper budget preparation and submission from the PMUs and PPMUs; (ii) IDA will fund 100 percent of eligible
and technical assistance). The risk for the counterpart fund for land acquisition and resettlement however remains unmitigated (i) Annual financial audit by external auditor; (ii) performance audit by external auditor; (iii) function of internal audit function within the MOT; and
Moderate commitment control and debt management; Moderate Country level: Overall Fiscal Environment
GoV may be unable to meet its funding obligations due Moderate expenditure (which are all civil works, goods Substantial to budgetary constraints
Entity and Project level: Funds may not be used efficiently and economically and for purposes intended
Moderate Substantial . .
(iv) enhanced accounting and reporting system. (i) ICB applied for a l l contracts at and above Entity and Project level:
Potential corniption mainly arising fiom procurement
US$2 m (work), US$O. 1 m (goods); (ii) prior review for contracts with value of US$0.2 m or more (work), US$O. 1 m ore more (service); and (iii) implementation of anti-conuption plan- See Annex 8 Each PPMU has relatively few contracts to administer which are similar in size to
support project implementation. Capacity Building plan to be implemented for PPMU
Substantial Moderate
Entity and Project level: the PPMU may not have necessary capacity to Moderate domestically project. Advisory services will Moderate implement the project
Overall Inherent Risk Substantial Moderate Control Risk
(i) Budgets are prepared on a quarterly basis by all PMUs and PPMUs; (ii) Financial budgets to be linked with physical operating plan; and (iii) variances to be analysed and reported by all PMUs and PPMUs Funds wi l l flows directly from the IDA to the designated accounts maintained at a commercial bank acceptable to IDA whose signatories are management of PMU-I, PMU-W and PPMUs. Finance staff required to have appropriate
PPMUs will be supported by advisory consultant and regional support center. Operational manual will be in place and training on project management will be organized.
Moderate 1. Budgeting Substantial
Negligible Moderate 2. Funds Flow
Moderate Moderate experience and qualifications.
Moderate
3. Staffing
4. The PPMUs do not have experiences managing the similar projects. The capability of the PPMUs
Moderate
50
Risk After Mitigation
Risk Risk Mitigation Measures Incorporated into Condition of Rating Project Design Negotiation,
Board or Effectiveness
Risk
staff may not be adequate A consistent set of accounting policies and procedures to be set up and applied in al l implementing agencies (which will be detailed in a Financial Management Guidance). Training of the accounting policies and procedures to be organized for the staff. Internal audit function will be set up within the
5. Accounting Policy and Procedures Moderate Moderate
6. Internal Audit MOT as part o f MOT Inspectorate whose mandate to cover the internal audits o f all Moderate Moderate
components o f MDTIDP Annual Financial Audit of the project’s
7. External Audit Negligible financial statements by independent auditors; Performance (technical and financial) audits annually The current system to be updated so that (a) consistent report requirements for all
the project physical progress; and (c) a l l reports can be automatically prepared by the System FM software to be set up and used in al l
8. Reporting and Monitoring Substantial implementing agencies; (b) there i s a link with Moderate
Moderate Moderate implementing agencies 9. Information Systems
Overall Control Risk Moderate Moderate
6. i.
.. 11.
a.
b.
C.
d.
... 111.
Specific Financial Management responsibilities are as follows:
PMU-1 will have responsibility for financial management o f Component A - National Highway Corridors.
PMU-W will have responsibility for Financial management o f Component B - National Waterways Corridor and Component D - Institutional Support to Ministry o f Transport. Regarding to Component C - Connecting the Poor to the Supply Corridors, the responsibility o f the PMU-W includes the followings:
Be the account holder for a Designated account maintained to receive funds from Development Partners (IDA and AusAid) and transfer to the PPMU.
Consolidate the withdrawing applications from the PPMUs, prepare as consolidated withdrawing application to be sent to IDA for disbursements.
Consolidate the quarterly Interim Financial Reports (IFRs) from the PPMUs into consolidated reports and send to IDA.
Consolidate the annual financial statements from PPMUs, arrange for the audit for the consolidated financial statements o f Component C and send to IDA.
PPMUs wil l have responsibility for the financial management o f Component C. However, the external auditor wi l l be appointed by PMU-W and wi l l not be the responsibility o f the PPMUs.
51
Staffing of PMUs and PPMUs
7. PMU-1 and PMU-W financial staff have experience managing both IDA financed and domestically financed projects. Some PPMUs have had experience o f managing RT2 where they had responsibility for contract management and contract claims, but not in all aspects o f financial management accounting, control and reporting. The accountants in PMU-1 , PMU-W and Chief Accountants o f the PPMUs have accounting educational background (bachelor degree) and experiences. They are assessed as having the capacity to undertake the MDTIDP as their current workload i s reducing with other projects coming to completion during 2006 (PMU-W) and 2007
PMU-1 and PMU-W already have financial functions that are adequately staffed. Both
(PMU- 1 ).
8. At the PPMU level, the accounting staff will be assigned either from the Project Management Board for Investment Projects (PMB) or assigned from PDOT. PPMU staff must be capable o f formulating and implementing budgets, maintaining project accounts and preparing financial reports. Each PPMU would have at least one financial officer and one assistant to handle accounting and reporting. These two persons wi l l have adequate qualifications and relevant experience to fulfill the fiduciary requirements o f IDA.
9. A modified se l f assessment questionnaire was prepared and issued to the PPMUs to complete. The questionnaire formed the basis for assessment o f the FM arrangements and capacity o f each o f the participating provinces. Visits to two o f the provinces (Vinh Long and Can Tho) have also been undertaken to review the FM arrangements based on the questionnaire responses. The major findings o f the analysis to date are:
0
0
Lack o f experiences in managing donor funded projects.
Inconsistent accounting system. Some PDoTs (Can Tho in particular) do not have any accounting system.
0 Weak budgeting and reporting, 0
0
N o internal audit function, external audit requirements are not consistent.
Accounting software i s used in a number o f PDoTs. However, the integrity and security o f the software are variable and questionable.
10. reporting, monitoring o f financial performance, disbursements and preparation o f annual financial statements. The PPMUs will receive training in the following areas:
PPMU staff require capacity building in budgeting, bank account management, financial
i. .. 11.
111. ... iv.
V.
vi.
vii.
Budget planning and monitoring;
IDA and government procedures in F M and disbursement applicable for the project;
Accounting and reporting for the project;
Strengthening internal control;
Asset accounting, management and control;
Use o f financial management software;
English training.
52
1 1. be made and will be repeated annually.
The training programs (i) to (vi) will be provided to all PPMUs before disbursements can
Budgeting
12. Currently budgeting systems in MOT are weak. In PMU-1 and PMU-W, the annual procurement plan serves as the basis for financial planning. In PMBs, there i s no link between the two. The budgets in PMU-W and PMU-1 are broken down by contract.
13. An annual work plan will be prepared by PMU-1, PMU-W, and 13 PPMUs. The work plan o f PMU-1 and PMU-W will be submitted to the DPI o f M O T for consolidation and MOT’S approval. The work plan o f PPMU will be approved by the PPC. The approved plans will then be submitted to the MoF for allocation o f funds. Project budgeting wi l l follow GoV policies and procedures.
Accounting
14. Investment projects which i s based on MOF Decision 2 14. Most o f the PMBs also use the same system but there are some differences. For example, Ben Tre uses a system based on MOF Circular 12 1 (applied for Administrative Agencies) and Can Tho just uses a single entry accounting system and does not prepare any reports.
The current accounting system used in PMU-1 and PMU-W i s the Accounting System for
15. The current charter o f accounts o f the PMUs will need to be revised, even for those regulated by Decision 2 14, in order to meet the Project financial management requirements to report by project component, activity, and disbursement category. Accounting systems and procedures will have to be established, including filing o f documents and system records. The recording o f fixed assets will also have to be improved.
Internal Controls
16. The PSC wi l l be responsible for ensuring that an adequate internal control framework i s in place and operating. Within each PMU, the Project Director will be responsible for implementing these internal controls.
17. and reporting structures; (ii) segregation o f duties; (iii) defined and documented financial processes and procedures; (iv) regular timely reconciliations; (v) security and safeguarding o f cash and assets; (vi) timely reporting, review and monitoring; (vii) timely remedial actions and follow up on financial issues, variances and audit findings; and (viii) proper documentation and retention o f project financial records and documents.
The project’s internal control system wi l l include: (i) clearly defined F M responsibilities
18. (FMM) which will be updated regularly to take into account any changes in procedures. The F M M must be reviewed annually to ensure it i s up-to-date and relevant.
The project’s internal controls will be documented in the Financial Management Manual
19. Mekong Transport and Flood Protection Project has signed a contract with a contractor to develop
Currently, there are no FMM at PMU-1, PMU-W, and 13 PPMUs. PMU-1, under the
53
a FMM in accordance with a Terms o f Reference accepted by IDA. An FMM will be prepared for the project and adopted by PMU-1 and PMU-W as a condition o f effectiveness.
Funds Flow and Disbursement Arrangements
20. The IDA credit will finance 100% o f eligible expenditures for Components A, B and D o f the project. For Component C o f the project the IDA credit and AusAID grant will be pooled in a designated account held by PMU-W. For component C the IDA credit will finance 67 percent o f eligible expenditures and AusAID will finance 33 percent. Table 7.2 details the funds allocation.
Table 7.2: Allocation o f IDA credit and AusAID grant
Amount o f AusAID
(In million o f U.S. dollars)
Amount o f Credit Allocated Grant Allocated Percent o f Expenditures to be Financed by IDA (In million o f U.S. dollars) Expenditure Category
Component A (PMU-1) Works 59.15 100 Goods 0 100 Consultant services 5.32 100 Training and workshops 0 100 Unallocated 10.11 100
Total 74.58 Component B and D (PMU-W)
Works 58.34 100 Goods 2.0 100 Consultant services 10.93 100
Unallocated 10.73 100 Training and workshops 0.95 100
Total 82.95 Component C (13 PPMUs - PMU-W procures RSC)
Component C1 and C3i An Giang Works 2.12 1.06 67 Consultant services Bac Lieu Works Consultant services Ben Tre Works Consultant services Ca M a u Works Consultant services Can Tho Works Consultant services Dong Thap Works Consultant services Hau Giang Works Consultant services
0.11
3.30 0.17
1.75 0.10
4.22 0.2 1
2.45 0.12
2.15 0.11
2.63 0.13
0.05
1.65 0.08
0.87 0.05
2.09 0.11
1.23 0.06
1.08 0.05
1.32 0.07
67
67 67
67 67
67 67
67 67
67 67
67 67
54
Kien Giang Works Consultant services Long An Works Consultant services SOC Trang Works Consultant services Tien Giang Works Consultant services Tra Vinh Works Consultant services Vinh Long Works Consultant services
3.54 0.18
2.27 0.11
3.97 0.20
2.21 0.1 1
2.77 0.14
3.10 0.16
Sub-total works 36.49 Sub-total consultant serv 1.83
1.76 0.09
1.14 0.06
1.98 0.10
1.10 0.06
1.38 0.07
1.55 0.08
18.20 0.92
67 67
67 67
67 67
67 67
67 67
67 67
Summary Component C Works 39.00 19.45 67 Goods 0.83 0.4 1 67 Consultant services 3.5 1.75 67 Training and workshops 0 0 67 Unallocated 6.8 3.39 67
Disbursement Methods
2 1. The project will use the following disbursement methods:
67 67
Component C2 Works 2.51 1.25 67 Goods 0.83 0.4 1 67
Component C3ii Consultant services 1.67 0.83 67
Reimbursement: IDA may reimburse the borrower for expenditures eligible for financing pursuant to the Loan Agreement (“eligible expenditures”) that the borrower has prefinanced from i t s own resources.
Advance: IDA may advance loan proceeds into a designated account o f the borrower to finance eligible expenditures as they are incurred and for which supporting documents will be provided at a later date.
Direct Payment: IDA may make payments, at the borrower’s request, directly to a third party (e.g., supplier, contractor, and consultant) for eligible expenditures.
Special Commitment: IDA may pay amounts to a third party for eligible expenditures under special commitments entered into, in writing, at the borrower’s request and on terms and conditions agreed between the Bank and the borrower.
55
22. The Disbursement Deadline Date will be four months after the Closing Date o f the project.
Reporting on Eligible Expenditures Paid from the Designated Accounts. 23, will be submitted monthly, with the following documentation:
Withdrawal applications reporting eligible expenditures paid from the designated account
a
a
24.
Use o f Statement o f Expenditures (SOEs). For: (a) goods costing less than US$lOO,OOO equivalent per contract; (b) works costing less than US$200,000 equivalent per contract; (c) for services o f individual consultants costing less than US$50,000 equivalent per contract; (d) for services o f consulting f i r m s under contracts costing less than US$lOO,OOO equivalent per contract; and (e) workshops, training and incremental operating costs, withdrawals under the Financing Agreement will be made on the basis o f Statements o f Expenditure. The related payment documents will be made available for the required audits, as well as to the Bank supervision missions upon request.
Other Expenditures: All other expenditure above the SOE thresholds will be submitted on the basis o f full documentation which will include copies o f receipts, supplier invoices, bills o f lading, etc.
Applications for direct payment: contract and purchase records evidencing the eligible expenditures, e.g., copies o f contracts, purchase orders, supplier invoices, receipts will be submitted together with the withdrawal application setting out clear payment instructions. The minimum application value for direct payment requests will be set in the project disbursement letter.
25, reimbursement o f eligible expenditures will be submitted to with the same documentation as required for reporting o f eligible expenditures paid from the designated accounts.
Applications for reimbursement: withdrawal applications reporting eligible expenditures for
26. that conditions for release o f payments committed for withdrawal have been met.
Special Commitments: the commercial bank provides i t s confirmation directly to the Bank
27. project with details as follows:
a
Designated Accounts: it i s proposed that three designated accounts be maintained for the
Designated Account A: account holder i s PMU-1. This Designated account is used to receive funds from IDA for the activities managed by PMU-1 which is the Component A- National Highway Corridors.
Designated Account B: account holder i s PMU-W. This Designated account i s used to receive funds from IDA for the activities managed by PMU-W which are the Component B- National Waterway Corridors and Component D- Institutional Support to Ministry o f Transport.
Designated Account C: account holder i s PMU-W. This Designated account i s an intermediate account to receive funds from IDA and AusAid and transfer to the sub- Designated accounts held by the PPMU which i s the component C- Connecting the Poor to the Supply Corridors.
28. Each implementing agency will manage the funds for the components that they will implement. PMU-1 and PMU-W will manage their bank accounts, prepare and submit withdrawal
a
a
56
applications to the Bank, control payments for eligible expenditures to suppliers and beneficiaries in accordance with the Financing Agreement from their designated accounts (Account A and Account B respectively). PMU-W will prepare the consolidated withdrawal application for the 13 PPMUs, transfer the requested funds to the PPMUs’ bank accounts, and manage the Designated Account C. Thirteen PPMUs will individually manage their accounts, prepare and submit withdrawal applications to PMU-W, controlling payments in accordance with the Financing Agreement.
29.
0 Designated Account A held by PMU-1 US$5 mi l l ion
0 Designated Account B held by PMU,W US$lO mi l l ion
Designated Account C held by PMU-W US$5 mi l l ion
0 Sub-Designated Account held by each PPMU US$0.5 mi l l ion
The ceiling for the designated and sub-designated accounts will be:
Counterpart Funds
30. o f MOT and submitted to M o F for budget allocation. The counterpart funds for provincial components will be approved by the PPCs and submitted to M o F for budget allocation. The counterpart funds will be made available for the PMUs and PPMUs at the Central State Treasury (PMU-1 and PMU-W) and Provincial State Treasury (PPMUs). Each PMU and PPMUs will have an account at State Treasury and payments to contractorshuppliers will be made upon approval o f State Treasury on the payment claims.
Counterpart funds for the national infrastructure components will be approved by the D P I
Retroactive Financing
3 1. expenditures made prior to the date o f the Financing Agreement but after appraisal date, for urgently required contracts, goods, and consulting services. The procurement procedures shall be in accordance with the Bank’s Procurement Guidelines in order for the eventual contracts to be eligible for Bank retroactive financing, and the normal review process by the Bank shall be followed.
Retroactivefinancing in the aggregate amount o f US$2,000,000 has been provided for
Funds flow to Contractors and Beneficiaries from the Designated Accounts
32. Two designated accounts held by PMU-1 and PMU-W will be established in a commercial bank acceptable to the Association for the activities implemented by these PMUs. AusAid will j o i n the Bank to finance Component C o f the project. Because AusAid funds will be administered by the Association there will only be one Designated Account maintained at PMU-W to receive funds from IDA and AusAid and transfer to PPMUs. The IDA and AusAid funds will be accounted and recorded separately at PMU-W but the PPMUs will account for the funds as a single source. IDA will request AusAid for fund transfer based on: (i) the payment from that jo int fund; and (ii) sharing percentage o f AusAid in that jo int fund. The deposit for the f i rst quarter will be made on the basis o f the funds requirement for the f i rs t six months and then quarterly.
57
From Designated Accounts to suppliers and benejkiaries
Commercial Bank
33. Funds flow arrangements for payments from the designated accounts to suppliers and beneficiaries will be in principle the same for the PMU-1 , PMU-W, and the PPMUs. Government procedures for processing o f payment claims will apply, i.e., the PMUs will prepare and check payment claims, the claims will then be submitted to the relevant treasury department (central or provincial) which will check validity o f funds use and approve for payment. The claim will be returned to the project unit which will then prepare and issue the cheque or bank order to make the payment to the supplierheneficiary from their designated account. The following steps are proposed (see Figure 1 for the fund flows for the components managed by PMU-1 and PMU-W and Figure 2 for fund flows for the components managed by 13 PPMUs).
State Central/
Figure 1: Fund Flows the Components Managed by PMU-1 and PMU-W
Contractors 4
I I Provincial Treasury
Consultants f-l I I
t
2. 3. 4. 5. 6. 7. 8. 9.
IDA disbursed monies to the Designated Accounts o f the PMUs at commercial bank Contractor submit certificates, invoices to Consultant. Consultant reviews, certifies, and then submit to PMUs. PMUs reviews, certifies, and then submit to State CentraWrovincial Treasury (ST). ST checks, approves, and send back to PMUs. PMUs send the request for payments to the ST and commercial bank The commercial bank makes payment to the Contractors. ST makes payment to Contractors.
58
Figure 2: Fund Flows for the Components Managed by 13 PPMUs
Consultants I I +
Contractors
1, PPMU prepares the withdrawing application and send to PMU-W. 2. PMU-W prepares the consolidated withdrawing application and send to IDA. 3, IDA disbursed monies to the Designated Account of the PMU-W at commercial bank. 4. PMU-W instructs the Commercial Bank to transfer monies to the PPMU bank accounts. 5. Commercial Bank transfer monies to the PPMU bank account at Commercial Bank. 6. Contractor submit certificates and invoices to Consultant. 7. Consultant reviews, certif ies and then submit to PPMU (PMB). 8. PPMU (PMB) reviews, certifies and then submit to STD. 9. STD checks, approves and send back to PPMU (PMB). 10. PPMU (PMB) send the request for payments to the STD and commercial bank, 1 1. The commercial bank makes payment to the Contractors.
12. STD makes payment to Contractors.
59
Financial Reporting and Monitoring
34. Quarterly Interim Financial Reports (IFRs). IFRs will be prepared by PMU-1PMU-W and each PPMUPDoTs for monitoring o f financial performance o f the project in a format agreed between the representatives o f GoV and IDA. PMU-W wi l l also prepare the consolidated IFRs for al l PPMUs based on the IFRs sent by the PPMUs. An integrated financial management software program for reporting and reporting financial transactions under the Project, acceptable to the Association, shall have been developed and adopted by PMU1, PMU-W as a condition o f effectiveness and by the PDOTs as a condition o f disbursements.
35. o f each quarter to the Bank. PMU-W, as described above i s required to prepare and submit the IFRs for the components managed by 13 PPMUs. The IFRs will cover al l project activities, including counterpart funding and will include:
Financial reports (analysing expenditures against budgets)
0 Sources and Uses o f Funds by expenditure category;
0 Uses o f Funds by project activitieskomponents; and
0 Designated Account Statements (and Project Account Statements if applicable);
Contract monitoring reports
0
0 Procurement Process Monitoring.
PMU-1 and PMU-W will be required to submit IFRs to the Bank within 45 days o f the end
Implementation Progress by contract (combined with Contract Monitoring); and
The IFRs are not required to be audited.
3 6. financial statements covering the portion o f the project components and activities for which they are responsible, Le., there will be annual financial statements from PMU-I, PMU-W and the 13 PPMUs. In the case o f PPMUs, the consolidated financial statements for a l l 13 PPMUs will be prepared by PMU-W. The financial statements must be prepared on a modified cash basis in accordance with international and national accounting standards.
Annual Project Financial Statements. Each project management unit will prepare annual
37. 0
The Project Financial Statements wi l l consist of:
A Statement o f Sources and Uses o f Funds/Cash Receipts and Payments which recognizes al l cash receipts, cash payments, and cash balances controlled by the entity; and separately identify payments by third parties on behalf o f the entity.
The Accounting Policies Adopted and Explanatory Notes. The explanatory notes should be presented in a systematic manner with items on the Statement o f Cash Receipts and Payments being cross referenced to any related information in the notes. Examples o f this information include a summary o f fixed assets by category o f assets and a schedule o f credivgrant withdrawals, listing individual withdrawal applications; and
A Management Assertion that Bank funds have been expended in accordance with the intended purposes as specified in the relevant World Bank legal agreement.
0
0
60
38. six months o f the end o f each financial year.
The annual financial statements are required to be audited and submitted to the Bank within
Audit Arrangements
39. External Audit. The Project annual financial statements wi l l be audited in accordance with international auditing standards by independent auditors and TORS acceptable to IDA. There wi l l be three audit reports required for three financial statements (for PMU-1 , PMU-W, and for the consolidated Financial Statements o f 13 PPMUs). For each set o f financial statements, the auditor would express a single audit opinion covering the Project Accounts, the use o f SOEs and the Designated Accounts. In addition, a management letter addressing any internal control weaknesses o f the implementing agencies (PMU-I , PMU-W, and PPMUs) wi l l also be provided by the auditor together with the audit reports.
40. wi l l appoint the auditor at the early stage, within six months after the singing o f the DCA, following IDA procurement procedures. The audit contract will cover the annual financial statements for ALL project implementing agencies. The cost o f audits will be financed from project funds. The annual financial statements and audit reports will be made publicly available through the MOT and PPCs’ web-site.
The PMU-W will be responsible for engagement and management o f the audit contract. I t
4 1. Integrated Project Implementation Performance Audits. Integrated Project Implementation Performance Audits wi l l also be undertaken through the l i fe o f the MDTIDP project on a semi- annual basis with emphasis on assessment o f proper use and accountability o f funds, procurement, the physical implementation o f the project, social and environmental monitoring and the availability o f funds to the transport sector as a whole and at provincial levels.
Table 7.3: Schedule of Audit Report
Audit Report Due Date
PMU- 1 : Project Specific Financial Statements Management Letter PMU-w: Project Specific Financial Statements Management Letter PPMUs: 1 Consolidated financial statements for 13 PPMUs Management Letter
June 30 (and six months o f
closing date) June 30
(and six months of closing date)
June 30 (and six months of
closing date)
Six-monthly PMU-w Integrated Project Implementation Performance Audits
Internal audit.
42. Typically a donor funded project i s subject to (a) annual financial audit done by an independent auditor (as required by donor, occurring after the year end); (b) Investment audit to check the finalization o f investment expenditure o f the project, done by an independent auditor (not applied for all project, only done at the request o f the MoF/MoT or the People Committee, occurring after
There was no internal audit function within the PMUs, PPMUs, or within MOT as a whole.
61
the project completes); (c) Audit o f State Audit o f Vietnam (not for a l l projects, occurring after the completion o f the project); (d) inspection o f the project (by Governmental Inspectorate, on an ad- hoc basis, occurring only when there i s a problem with project management or implementation); and (e) inspection o f the Department o f Finance o f MOT or People Committee (occurring after the year end, only for the counterpart fund).
43. adds l i t t l e value to prevent exceptions; (b) except for the financial audit (required by the donor), there i s no frequent/ periodical audits and/or inspection; and (c) there is neither internal audit function within the Project nor within MOT
It i s noted that (a) al l audits occur after the year end or the completion o f the project which
44. In addition to the integrated implementation performance audit, there would be an internal audit function for the Project. Internal audit function needs to be set up for the MOT as a division o f the Ministry’s Inspectorate. The initial terms o f reference for the function are to perform the internal audit function for MDTIDP and RT3 projects which will be prepared and reviewed. In the longer term, it would carry out the internal audit function for al l projects implemented by MOT regardless o f the sources o f funds (from donors or from government). A consultant will be hired to provide a capacity building program to the Internal audit function which includes development o f audit methodology, audit manual, and training for internal auditors.
Supervision Plan
45. As the FM risk i s assessed as moderate, supervision o f project financial management will be performed at least once a year. The supervision will review the project’s financial management system, including but not limited to operation o f Designated Account, Statement o f Expenditures, internal controls, reporting and fol low up o f audit findings and mission’s findings. The financial management supervision will be conducted by IDA’S financial management specialist staff.
Strengths and Weaknesses
46. According to the Financial Management Questionnaire received from the provinces and discussion with PMU-1 , PMU-W, Vinh Long, and Can Tho PDoT, the following strengths and weaknesses have been observed.
Strengths: 0 The Financial Management function has been set up as a division o f the P M U or PMB
within PDoT and except for Can Tho, accounting systems have been set up for al l PMUs and PPMUs;
The basis for internal control procedures (for example, segregation o f duties between procurement, payment and accounting function, or annual assets inventory procedures) are in place.
0
Weaknesses: 1. There was no comprehensive FMM at PMU-1 , PMU-W, and PPMUs although an FMM is
currently being prepared in PMU-1;
62
.. 11. The implementing agencies do not have integrated financial management software. PMU-1
i s currently developing such software and it wi l l be important that PMU-W and the other PPMUs adopt something similar before project effectiveness.
PPMU staff lack knowledge and experience o f implementing IDA funded projects. PPMU staff wi l l need training on IDA regulations and requirements for financial management and disbursement
There i s no internal audit function set up at MOT, PMUs, or PPMUs. An internal audit function should be set up as a part o f the Ministry’s Inspectorate which will initially perform the internal audit function o f MDTIDP and RT3.
iii.
iv.
Table 7.4: Conditionality and FM Action Plan
Action Responsibility To Be Comdeted Bv
Staffing PDOTs appoint sufficient accountinglfinance staffing with relevant qualifications and experience or basic knowledge for-capacity building acceptable to IDA.
Sofmare Development of integrated financial management software should be made in implementing units in PMU-1, PMU-W and PPMUs. The additional improvements in the software should facilitate the preparation of project financial statement and also the quarterly Interim Financial Reports.
Manual and Training FM manual wi l l be prepared for the MDTIDP project and adopted by PMU-1 and PMU-W. The manual will set out in detail the structure, procedures, reporting and coordination between different levels of MDTIDP project in financial management aspect. FM Manual FM manual adopted by the PPMUs Financial Mananement Training Relevant staff o f PMU-1 and PMU-W shall have completed training, satisfactory to the Association, in the areas of financial management, procurement, disbursements and safeguard procedures. The financial management training for PPMUs should have been conducted including budget planning and monitoring; Government procedures in FM and disbursement for the project; Accounting and reporting for the project; Strengthening internal control; Asset accounting, management and control; Use of financial management software External Audit Appoint an independent external auditor for all implementing agencies with terms o f reference acceptable to IDA. Internal Audit Function Set up an internal audit function as a division of the MOT’S inspectorate with terms of reference, scope and methodology
PDOTs
PMU-1, PMU-w
PPMUS
PMU-I, PMU-w
PPMUs
PMU-1, PMU-w
PPMU
PMU-w
MOT
Disbursement
Effectiveness
Disbursement
Effectiveness
Disbursement
Effectiveness
Disbursement
6 months after the DCA signing
12 months after
effectiveness of the DCA. acceptable to IDA
63
Annex 8: Procurement Arrangements
VIETNAM: Mekong Delta Transport Infrastructure Development Project
A. Procurement Guidelines
1. Procurement will be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated M a y 2004 and “Guidelines: Selection and Employment o f Consultants by World Bank Borrowers” dated M a y 2004, and the provisions stipulated in the Financing Agreement (FA). For contracts procured through the National Competitive Bidding (NCB) procedure, the procedures listed in the Annex to the FA shall be applicable. For each contract financed by the Credit, the different procurement methods and consultant selection methods, estimated costs, prior review requirements and time frame have been agreed between the Borrower and IDA in the procurement plan detailed in Attachment 1 to this Annex. The procurement plan will be updated at least annually, or as required to reflect the actual project implementation needs and improvements in institutional capacity.
Procurement Methods: 2. The procurement methods to be applied are as shown in Table 8.1.
Bidding Documents
3. For I C B contracts for works estimated to cost over US$lO mi l l ion the Standard Bidding Documents for Works (SBDW) - May 2005. For I C B contracts estimated to cost between US$2- 10 mi l l ion the World Bank’s Standard Bidding Documents for Procurement o f Works Smaller Contracts - M a y 2004 may be used. Contracts estimated to cost less than US$2 mi l l ion will be procured following National Competitive Bidding (NCB) procedures and the sample documents for N C B works developed by the World Bank, Vietnam Office, will be used, modified for M D T I D P contracts as appropriate and acceptable to the Bank. For Goods contracts procured under I C B procedure, the Bank’s Standard Bidding Documents for Goods (May 2005) will be used. For goods contracts procured through the N C B and Shopping procedures, the sample bidding documents for N C B and Shopping developed by the World Bank Vietnam Office will be used. The Bank’s Standard Request for Proposals (SRFP) will be used for the hiring o f consulting f i l T l S .
For I C B contracts, the project will use the World Bank’s Standard Bidding Documents.
Domestic Preference
4.
B. Eligibility Issues
For goods and works contracts procured under ICB, domestic preference would apply.
State Owned Enterprises (SOEs).
5. Government-owned enterprises in Vietnam shall be eligible to participate in bidding only if they can establish that they are legally and financially autonomous, operate under commercial law, and are not a dependent agency o f the Borrower or the procuring entity. In particular, SOEs under the direct supervisory authority o f the Ministry o f Transport (MOT) shall be excluded from any
64
bids for civil works, the direct supervisor bids for civil works, security units which
goods, or services under the project. State-Owned Enterprises (SOEs) under *y authority of a Provincial People’s Committee shall be excluded from any goods, and services which are procured by the respective PPMU. Military or belong to the Ministry of Public Security shall not be permitted to bid.
Table 8.1: Procurement Methods Expenditure
Category Procurement Method
International Competitive Bidding (ICB): Al l Contracts at and above US$2 million.
Depending on the volume and nature of works, prequalification of bidders may be required for the ICB works procurement, with prior agreement of the Bank.
National Competitive Bidding (NCB): Contracts below US$2 million.
Force Account: For installation of Aids to Navigation
Civil Works Note: (Improvement, Rehabilitation)
Goods (port and navigation aids
equipment)
International Competitive Bidding (ICB): Contracts at and above US$200,000 per contract. National Competitive Bidding (NCB): Contracts below US$200,000 but at and above US$30,000 per contract.
Shopping (S): Contracts for procurement o f goods, e.g., office equipment including computers, printers, vehicles, below US$30,000 per contract. Note: Three quotations from at least three qualiJed suppliers shall be obtained as stated in Article 3.5 of the Guidelines on Procurement under IBRD Loans and IDA Credits.
Quality and Cost Based Selection (QCBS): Consulting services for contracts at and above US$lOO,OOO. Selection Based on Consultant Qualifications (CQS): For small contracts estimated to cost less than US$lOO,OOO per contract for which the need for preparing and evaluating competitive proposals i s not justified.
For assignments of a standard or routine nature where well-established practices and standards exist.
Consulting Services
(Firms and Least-Cost Selection (LCS): Individuals)
Selection o f Individual Consultants (IC): For individual consultants in accordance with Section V o f the Consultant Guidelines. Al l training will be conducted in-country. Note: Cost of training materials (printing), rental facilities, transportation, food and board, and tuition for trainees will follow Statement of Expenditures (SOE) procedures. Content of training, estimated cost for workshops and lists of trainees will be approved by the Bank before any expenditure.
Training
C. Procurement Reviews
Prior Review of Goods and Works 6. The following contracts are subject to prior review by the Bank:
65
(a) Each contract for works estimated to cost the equivalent o f US$300,000 or more, and each contract for goods estimated to cost the equivalent o f US$200,000 or more. In reviewing these documents, the procedures set forth in paragraphs 2,3, and 4 o f Appendix 1 to the Guidelines
Post Review of Goods and Works 7. paragraph 5 o f Appendix 1 to the Guidelines shall apply. At least one in five contracts wi l l be post-reviewed.
Prior Review of Consulting Services 8.
(a)
With respect to each contract not governed by the above, the procedures set forth in
The following contracts are subject to prior review by the Bank:
With respect to each contract for the employment o f consulting f i rms estimated to cost the equivalent o f US$lOO,OOO or more, the procedures set forth in paragraphs 2,3, and 4 o f Appendix 1 to the Consultant Guidelines shall apply.
(b) With respect to each contract for the employment o f individual consultants estimated to cost the equivalent o f US$50,000 or more, the report on the comparison o f the qualifications and experience o f candidates, terms o f reference and terms o f employment o f the consultants shall be furnished to the Association for i t s prior review and approval. The contract shall be awarded only after the said approval shall have been given. The provisions o f paragraphs 2, 3, and 4 o f Appendix 1 to the Consultant Guidelines shall also apply to such contracts.
Post Review of Consulting Services 9. forth in paragraph 5 o f Appendix 1 to the Consultant Guidelines shall apply. At least one in five contracts will be post reviewed.
With respect to each contract not governed by the above procedures, the procedures set
Procurement Plan 10. The procurement plan for Phase 1 (first two years o f the Project) i s attached (see Attachment 1). The PIP also includes the Indicative Procurement Plan for Phase 2. The Procurement Plans wi l l be reviewed and approved annually by the World Bank and will be monitored and implemented in accordance with the Bank’s guidelines and the project legal agreement. All procurement under the project shall be carried out in accordance with the agreed plans, as updated at least annually.
Institutional Arrangements and Procurement Responsibilities
1 1. be allocated to 15 “implementing un i t s or project management units’’ directly reporting to, and seeking approvals from, the 15 respective “project owners” (Le., V U , VIWA, and 13 PPCsPDoTs): (i) Project Management Unit-1 (PMU-1) for Component A; (ii) Project Management Unit - Waterways (PMU-W) for Component B, C3ii and D; and (iii) Provincial Project Management Units (PPMUs) for Component C.
Direct responsibility for project implementation and day-to-day management oversight wi l l
66
Assessment o f Implementing Agency Capacities to Implement Procurement
12. The procurement environment in Vietnam in general i s considered to be o f high risk (see CPAR-October 2002, updated in December 2004). A Procurement Capacity Assessment (PCA) was conducted by IDA for PMU-1 , PMU-W, and the 13 Provincial Project Management Units (PPMUs) within the Provincial Departments o f Transport (PDoTs) under Provincial People’s Committees. Procurement questionnaires were sent to the respective PMUs and the responses analysed. From this analysis the overall procurement risk rating was also confirmed as high.
13. This high r isk level is mainly due to the decision taken to fully decentralise the provincial roads (1 3 provinces) and feeder canals (2 provinces) sub-components o f the project, to Provincial Project Management Units within Provincial Departments o f Transport. Whereas a number o f these provinces do have experience with donor-funded projects, some do not. The highest risks which have been identified so far are: (i) misunderstanding o f the applicable procurement procedures by the implementing agencies that are not familiar with Bank procurement procedures; and (ii) manipulation o f the procurement process and collusion among bidders.
14. To mitigate the above risks an Anti-Corruption Framework and Plan have been developed jo int ly by the Bank and Borrower and the Project includes significant technical assistance to help each o f the implementing agencies in implementation o f their respective components. The various TA packages al l include procurement support and procurement training.
Procurement Training Plan
15. condition o f project negotiation. The World Bank Hanoi Office procurement specialists will provide initial procurement training for project procurement staff. By project effectiveness, the project procurement staff are expected to receive sufficient procurement training. Priority o f the init ial procurement training will be given to PMU-1 , PMU-W, and procurement staff o f provinces that will participate in Phase 1 o f the project.
The identificatiodselection o f procurement staff at al l levels will be completed as a
16. whose provincial programs are to be carried out in Phase 2. A Regional Support Centers (RSC) will be financed out o f the fund allocated to Component C3 o f the project. The RSC will receive adequate procurement training from Consultants before delivering procurement training to P P M U staff. Training materials will be developed by the Consultants in consultation with the procurement specialist o f the World Bank Hanoi Office.
During the project life, procurement training will be provided to the remaining PPMUs
17. The procurement training will be designed based o n the needs o f the procurement staff.
D. Plan to Improve Fairness and Transparency in Procurement
18. o f implementing 3 major project components across 13 provinces with 15 Project Management Units, where availability o f skills and experience may be low. Risk management in this context includes measures related to procurement, financial management, and the supervision o f implementation.
The Plan to improve fairness and transparency in procurement recognizes the inherent risks
67
19. for MDTIDP (attached), and will be referenced in the Financing Agreement. The Action Plan that has been prepared i s based on an examination o f the overall project cycle, to identify where corruption is most likely to occur, and what mitigation measures are likely to be most effective.
The detailed Plan to improve fairness and transparency in procurement has been prepared
20.
e Empowerment o f Recipients.
e
e
e
e Complaints handling system.
e Clear definition o f remedies.
2 1. The Borrower and the Bank are agreed that the framework and actions outlined below shall be implemented under the MDTIDP in order to reduce the possibility o f corruption, collusion, and nepotism.
Emphasis on Achieving Improved Quality
The Action Plan i s structured on the basis o f six-key elements:
Empowerment o f Civ i l Society for oversight and feedback.
Establishment o f procurement policies to mitigate collusion.
Building strong task teams with effective tools.
22. The project will give substantial emphasis to improving construction quality control, through the introduction o f a multi-faceted program that involves the following components:
a. The introduction o f an action plan that will target corrupt practices that directly result in reduced construction quality, and provide for penalties for those found to be involved in such practices, including Contractors, Consultants, and the staff o f government agencies. It is expected that this will result in significant improvements to quality o f construction
Strengthening the powers and authority o f the Construction Supervision Consultants that will allow them to reject defective works and/or refuse payments for defective works.
Provide for an independent program o f Integrated Project Implementation Audits, to be conducted by consultants to be contracted by PMU-W acting for DPI.
Promote public awareness o f the project, and encourage local communities and stakeholders to become actively involved in observing and commenting o n what they may regard as issues o f quality and corruption. A complaints mechanism will be developed, that will fo l low up and report on al l complaints, and whose effectiveness and performance will in turn be monitored and publicly reported on.
These important new initiatives are being introduced in this project, and their performance
b.
c.
d.
23. will be closely monitored to identify ways o f strengthening and refining the measures for use in subsequent projects.
68
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77
Annex 9: Economic and Financial Analysis
VIETNAM: Mekong Delta Transport Infrastructure Development Project
Introduction
1. An economic analysis was carried out’ to (a) help determine the optimum combination o f physical investments in roads, waterways and related facilities for the Project; and (b) ensure that the optimum combination o f investments meets the economic and/or social efficiency criteria as explained below. A summary o f the results o f analysis o f the National-level infrastructure i s presented below.
Summary of Results
Economic Net Economic Internal Present Value
(In millionUS$) (In percent) Rate o f Return Financial Cost” Length
(Km) (In million US$) Project Component
National Infrastructure NH53-3 4.6 8.0 2.7 NH 53 - 10 8.9 3.6 8.3 NH 54 - 5 to 8 40.8 20.2 6.9 N H 9 1 1-2 43.9 56.6 45.1
Sub-Total 98.2 88.4 63.0 Waterway Corridors I1 and I11 436 88.2 86.5
Total National 176.6 149.5
An Gang - DT 941 Bac Lieu - CS-HCMR Ben Tre - DT 884 Ca Mau - CN-CDV Ca Mau - Thoibinh-Uminh Can Tho - ‘IT-TL Dong Thap - DT 841 Hau Giang - DT 928 Kien Gang - BN-TH Long An - DT 835B SOC Trang - DT 04 Tien Giang - DT 865 Tra Vinh - TN Tra Vinh - DT 915 Vinh Long - DT 909
2.6 26.4 13.7 8.5 9.5
11.9 1.4
24.4 16.8 12.0 15.3 13.0 8.3
20.0 21.4
Provincial Infrastructure 2.6 3.6 2.8 3.1 2.6 16.5 3.1 1.3 1.5 0.8 3.6 -1.8 2.2 -0.2 2.3 4.2 2.8 1.2 1.8 12.0 2.9 2.7 3.2 23.8 1.1 6.0 3.0 -1.3 2.4 -1.0
21 74 19 25
24
27 27 88 17 18 n.m n.m
38 19 69 26 70 92 n.m n.m
Total Provincial 205 37.9 70.9 1/ Excluding contingencies n.m: not meaningful-existing road constraints means there i s little or no existing traffic.
2. involved the modeling o f traffic o n the main roads and waterways in the Mekong Delta to compare the potential investment alternatives in primary (national level) infrastructure and ultimately identify the ones to be financed. Stage 2 involved the identification and selection o f
A two-stage process was followed to arrive at the optimum investments. Stage 1
’ The economic analysis was carried out as part o f the feasibility study for this project. Two references: “Mekong Transport Infrastructure Development Project. Feasibility Study Report.” June 2006, Louis Berger Group; “Mekong Transport Infrastructure Development Project. Appendix 4: Economic Analysis and Traffic.” February 2006, Louis Berger Group.
78
secondary infrastructure (feeder roads and ancillary infrastructure). Figure 1 provides a schematic overview o f the approach followed in identifying the project investments.
Figure 1- Methodology for Selecting Project Components
OD Travel Matrices (zones, nodes, links)
\ / WitMwithout proposed improvements Currenflrojected
Transport Model
Traffic volumes
Identification of National road I improvements
Identification o f National lWW improvements
Linkages to national infrastructure
Agricultural intensity/
considerations rural accessibility efficiency considerations
considerations considerations
Identification of improvements in secondary infrastructure
National Level Infrastructure
Methodology 3. basis for determining time and vehicle operating costs and savings were estimated using a transport model; (ii) user and agency recurrent costs for national roads and national inland waterways were estimated using the Highway Development and Management (HDM4) model and the Inland Waterway Transport Cost (IWTC) model respectively; (iii) capital costs were estimated as per Vietnamese designs and standards; and (iv) environmental and resettlement costs were estimated following the Bank’s guidelines.
To identify the investments in national level infrastructure, (i) traffic volumes used as a
79
4. model and a standard transport planning program, TRANSCADe2 Data requirements for the model included (a) the definition o f economic zones to model traffic movements in the project area; (b) the definition o f the national road and waterway networks with and without the project’s improvements using l i n k s and nodes, speeds, etc.; and (c) current and projected traffic movements within, as well as in and out of, the Mekong Delta.
Zones 5. and complexity. Twenty three zones were used, three o f which were external to reflect international trade with Thailand, Cambodia and the rest o f the world. The 20 zones within Vietnam were distributed as follows: one for each o f the 13 provinces, five for the key economic centerdports o f the Mekong Delta, one for HCMC, and one for the rest o f Vietnam.
Freight and passenger movements were modeled using a disaggregate transport planning
The number o f zones reflected the desired balance between socioeconomic homogeneity
National Transport Network 6. L i n k s were also created to model ferry crossings on national roads and transshipment at intermodal transfer points at ports and landing stages. In particular, a link for the planned H C M C expressway was added in the 201 0 and 2025 scenarios. Links were also included to reflect the proposed improvements to the mouth o f the Bassac River (not in the scope o f this project). The Bassac River project was assumed to be completed by 201 8. Following a preliminary screening, five waterway corridors and seven national road segments were identified by GoV and the Bank as candidates for improvement.
Ma in roads and waterways were defined in a conventional manner using l i n k s and nodes.
Transport Demand 7. groups were estimated for each province. For the freight analysis, commodities were divided into eleven groups: rice/paddy, sugar, fishery products, fertilizer, cement, sand, stone, wood, steel, coal, and refined oil. A surplus/deficit approach was used to estimate production and consumption by commodity for each o f the Mekong Delta’s 13 provinces. A province would be a net exporter (importer) o f a commodity if it were in a net surplus (deficit) situation. Estimating production and consumption volumes for each o f the commodities was based o n secondary data f rom GoV and the Bank and was supplemented by market/transport surveys to identify the origin, destination and volumes o f long-distance flows (excluding intra-provincial flows).
Current Demand. Base year volumes and flows for passengers and certain commodity
8. Modal Split. Table 9.1 shows the split for commodity flows based on origin-destination (OD) survey^.^ Notwithstanding the importance o f travel time and cost as determinants o f the modal split, mode choice was largely influenced by the value o f the commodity transported, and the logistics services available at the origin and destination. For relatively light weight, high value and time sensitive products, road transport i s the preferred mode. Steel has an unusually high road transport share because a large proportion o f the steel requirements o f the Mekong Delta are shipped by road from the Southeastern Region. The distribution o f fieight traffic for
~~ ~
A transport planning model combining analysis with GIS presentation features. Twenty-four hour counts were carried out for three days at ten stations on the national roads and at Can Tho and
My Tho ports. These were complemented by existing data and validated through interviews with fleet operators.
80
roads and inland waterways based on OD surveys and secondary data is presented in Tables 9.2 and 9.3 respectively.
Table 9.1: Modal Split of Commodity Flows
Road Waterway Type o f Commodity Transport Transport
(In percent) (In percent) Rice 7 93 Sugar 18 82 Fishery Products 63 37 Fertilizer 1 99 Cement 3 97 Construction materials 1 99 Refined oi l 4 96 Coal 14 86 Wood 22 78 Steel 36 64
Table 9.2: Distribution of Road Freight Traffic and Average Load
Vehicle Type Share Average Load in Tons (In percent)
Light truck and pickups 11.5 Medium truck (2 axles) 60.7 Heavy truck (3 axles) 23.2 Articulated truck (>4 axles) 4.6
1.3 4.7 8.0 9.9
Table 9.3: Distribution of Inland Waterway Freight Traffic and Average Load ~~ ~
Average Traffic Share Percent o f
(In Tons) (In percent) Load Empty Vessels Vessel Size
<5 Tons 2 4.8 46 5-50 Tons 9 26.8 47 51-100 Tons 11 74.8 44 101-200 Tons 13 150.0 47 201-300 Tons 15 25 1 .o 46 301-500 Tons 24 398.9 47 3 0 0 Tons 29 501.8 46
9. and ending in different provinces. Consequently, the analysis o f inter-provincial passenger transport demand was l imited to roads only. Generation and attraction models were developed to estimate the number o f trips generated by each zone using representative socio-economic data (population, average income, etc.). Table 9.4 shows passenger modal split and vehicle occupancy rates based on OD surveys. While motorcycles typically account for 80-90 percent o f total trips on the national roads in the project region, these trips are typically intra-provincial. Therefore, motorcycles were not included as a mode when modeling inter-provincial movements. Their presence was however taken into account to reflect their use o f road space. A gravity trip distribution model was developed to estimate the number o f trips between each pair
Most passenger trips on the waterways are intra-provincial with only a few trips starting
81
of zones using passenger and freight trip generations and attractions. The model was calibrated using actual traffic flows from the OD surveys.
Table 9.4: Distribution of passengers per vehicle type for long distance (inter- provincial) trips
Vehicle Type Average Number o f Passenger per Vehicle
Passenger
(In percent)
Car 7.0 3.7 Small Bus 42.5 12.1 Large Bus 50.5 33
10. Future Demand. Traffic projections were developed for 2010 and 2025. Traffic for the remaining years was extrapolated on the basis o f the 20 10 and 2025 projections. Traffic growth was broken down into two main categories: (i) growth o f normal traffic, the growth that would occur without improving the transport network; and (ii) generated traffic, which occurs as a result o f network improvement. This covers both more use by existing users as well as new use by diverted users.
1 1. growth in population and commodity consumption and production. Future intra-provincial traffic flows were directly linked to provincial GDP growth projections. Through 201 1, intra- provincial trips by auto were projected to grow as fast as provincial GDP and trips by motorcycles to grow 50 percent faster (demand elasticity with respect to GDP o f 1 .O and 1.5 respectively). Beyond 201 1, the growth rate o f intra-provincial trips by auto was projected to increase slightly (demand elasticity o f 1,125) to reflect the increase in auto ownership associated with the anticipated rise in income levels. The projected faster rate o f growth in auto trips was at the expense o f that for motorcycle trips which were projected to grow at a slower rate (demand elasticity o f 1 .O).
Normal Traffic. Future inter-provincial flows were determined on the basis o f expected
12. Generated Traffic. Major improvements by the project were primarily to accommodate the growth in the existing levels o f traffic but were also expected to generate additional traffic. When generated traffic was projected to be in the order o f 20 percent o f normal traffic, the interventions considered were: (i) upgrading a road in poor condition; or (ii) upgrading and widening a six-meter surface treatment pavement into a seven-meter asphalt concrete pavement with increased shoulders. In the case o f generated traffic o f about 30 percent o f normal traffic for a surface-treated single lane, an upgrade to a two-lane asphalt concrete road was considered. I f a road i s impassable, as i s the case with NH53-10, generated traffic followed the pattern o f the road section to which i t was linked. Generated traffic was allocated to the road sections during the first year after operation and was assumed to grow at the same rate as normal traffic thereafter.
13. Tables 9.5 and 9.6 show aggregate projected traffic growth rates (both intra- and inter- provincial) for the Mekong Delta and for some o f the National roads under consideration respectively, while Tables 9.7 and 9.8 show detailed 2005 traffic levels for a few key National road segments and waterway management stations. A small increase in road transport’s share i s expected in the future particularly for light-weight high-value goods (see Table 9.9).
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Table 9.5: Current and Projected Traffic Levels and Growth Rates
Growth Rates Traffic Levels (In percent) (In million ton-km)
2005-2025 2005 2025 Freight on national roads 9.3 3.1 18.7 Freight on waterway network 4.9 32.0 83.6
Table 9.6: Average traffic growth rates for the period 2006-2025 (In percent)
NH91-2 NH53-3 NH53-10 NH54 5-8 2006-2010
Motorcycles 9.8 7.0 7.0 7.0 Autos 8.5 7.4 4.7 Other passenger vehicles 9.2 9.9 4.7 Freight vehicles 7.1 6.4 4.7 Bicycles 6.6 4.7 4.7 4.7
2011-2025 Motorcycles 5.9 4.2 4.2 4.2 Autos 19.6 12.1 12.1 19.6 Other passenger vehicles 9.1 6.3 4.2 4.2 Freight vehicles” 7.4 4.7 4.2 4.2 Bicycles 5.9 4.2 4.2 4.2
Table 9.7: 2005 Traffic Levels for Select National Road Segments (Average Annual Daily Traffic-AADT)
Pickup and Medium Heavy Large Articulated Minibus LightTruck Truck Truck Bus Truck Car Motorcycle
NH9 1-2 Inter-provincial Intra-provincial Total NH91-2
Inter-provincial Intra-provincial Total NH53-3
Inter-provincial Intra-provincial Total NH53-10 NH54-5to8 Inter-provincial Intra-provincial Total NH54-5-8
NH53-3
NH53-10
15 653 668
3 39 42
67 294 361
83 329 412
154 264 418
10 135 145
1 21 22
14,349 14,349
37 447 484
68 462 530
82 137 219
121 193 314
27 7
34
30 88 118
4 2 6
1 1,697 11,697
3,792 3,792
51
51 3,624
3,624 55 55
75
75 43
43 53
53 23
23
83
Table 9.8: 2005 Traffic Levels at key Waterway Management Stations broken down by Vessel Size
<100-200T 201-500T >500T Total Annual Daily Average
Station Corridor Count Tonnage Counts Tonnage Counts Tonnage Counts Tonnage Counts Tonnage
Binh Nouc
Cho Gao
SOC Trang
Chau Phu
Triton
Bac Lieu
Cam Au
Cao Lanh
M Y h
104,388 3,675,600
253584 9,766,032
145293 4,438,989
134699 4,738,975
170529 5,900,175
11754 389,047
18307 403,021
144175 3,978,500
80300 1,323,125
28,404
13 1,948
9,83 1
8,420
4,392
682
665
16,790
2,920
~~
5,246,950
25,235,188
2,028,907
1,150,350
906,800
90,164
99,940
3,084,250
474,500
~~~~ ~ ~
8,884 3,167,000 141,676 12,089,550
78,840 21,991,250 464,371 56,992,469
2,281 698,071 157,405 7,165,967
143,119 5,889,325
174,921 6,806,975
12,436 479,171
18,971 502,961
2,920 730,000 163,885 7,792,750
83,220 1,797,625
388 33,122
1,272 156,144
431 19,633
392 16,135
479 18,649
34 1,313
52 1,378
449 21,350
228 4,925
Table 9.9: Projected Change in Road Transport’s Share
Projected Change Projected Change in Road Transport’s
Share by 2010 in Road Transport’s
Share by 2025 Type o f Commodity
(In percent) (In percent)
Low value -heavy 0.5-1.5 High value - light 2.5-5.0
2.0-5.0 9.0-15
User and Agency Costs.
14. HDM4 and I W T C models were used to estimate user and agency costs for the national roads and waterways under consideration. Inputs for the two models included traffic volumes (from Transcad) and the estimated capital costs. Key assumptions are presented in Tables 9.10 through 16 below.
Table 9.10: Average Freight Operators Fares, 2004 (VND/ton-km)
Food Frozen Goods Cement Fertilizer Other
Road 2,675 1,246 1,429 2,434 1,308
Waterway 502 1,667 497 430 444
Table 9.11: Average Transport Cost by Vehicle, 2004 (VND per Km unless otherwise indicated)
Vehicle Type Transport Cost
Container 20 feet (-16 tons) Container 40 feet (-30 tons) Car/Taxi
35,000 45,000 6,500
Bus (VND per passenger !an) 350
84
Table 9.12: Port Handling Costs Fixed Annual Post Handling Cost Costs (US$/year) (US$/ton) Port List
Can Tho 2 8 8,462 0.77 M y Thoi 5 1,282 0.96 Cao Lanh 32,051 0.96 Hon Chong 19,23 1 1.60 Sa Dec 19,23 1 0.91 M y Tho 26,000 0.77 Rach Gia 32,000 2.50
Table 9.13: Assumptions Underlying the Estimation of Vehicle Operating Costs
Vehicle Attributes Pickup and Medium Heavy Large Articulated Truck Truck Bus Truck Car Motorcycle Minibus Light Truck
Pass. Car Space Equiv. No. of Wheels No. of Axles Tire Types Base No. of Recaps Retread Cost Annual km Working Hours Average Life in Years Private Use No. of Passengers Work-Related Passenger Trips Equivalent Standard Axles Operating Weight (Tons)
New Vehicle Replacement Tire Gasmiesel p/L Lubricating Oil p/ L Maintenance Laborhour Crew Wages phour Annual Overhead (1)
1 .o 4 2
Radial-ply 1.3
15% 12,000 400 10
100% 2.0
75%
0 1.2
14,530 42
0.50 1.83 2
0.78 41 1
0.5 2 2
Bias-ply 1.3
8,000 320 10
100% 1.3
75%
0 0.2
15%
926 18
0.50 1.83 0.5 0
219
1.2 4 2
Radial-ply 1.3
15% 25,000 1,000
10 0% 10.0
0%
0.02 2.2
17,880 55
0.48 1.67
2 0.65 983
Basic Characteristics
1 .o 1.4 4 6 2 2
Radial-ply Bias-ply 1.3 1.3
15% 15% 25,000 40,000 1,000 1,600
10 12 0% 0% 2.0 0
0% 75%
0.05 1 .oo 2.0 7.5
Economic Unit Cost (US%) 15,410 28,850
55 105 0.48 0.48 1.67 1.67
2 2 0.50 0.63 933 2,177
1.6 10 3
Bias-ply 1.3
15% 86,000 1,667
12 0% 0
0%
2.28 13.0
49,300 145 0.48 1.67
2 0.88
32,136
1.6 6 3
Bias-ply 1.3
15% 60,000 1,500
10 0% 40
75%
0.89 10.0
52,800 145 0.48 1.67
2 0.84 3,456
1.8 18 5
Bias-ply 1.3
60,000 2,000
12 0% 0
0%
2.79 28.0
15%
80,750 165 0.48 1.67
2 1.07
4,015 Annual Interest 12% 12% 12% 12% 12% 12% 12% 12%
Source: The Louis Berger Group - based on RNIP Study Note (1): Based on 2 percent o f new vehicle cost and annual h: (i) 1 cent for Motorcycles; (ii) 2.5 cents for cars 4wD, pickups, microbuses and small trucks, and (iii) 4 cents for medium buses, medium trucks, and big trucks.
Table 9.14: Average Speed Estimates
National Highway Average Speed (km/h) Good condition 45 Fair condition 35 Poor condition 25
Vessel Type Sel f Propelled Vessel (SPV) 11 Barge Convoy (BC) 7
85
Table 9.15: Vehicle Operating Costs ($US/km)
Large Medium Heavy Articulated Buses Trucks Trucks Tracks Road Average I P Motorcycles Cars PickupsLGV Minibuses Condition
Good 3 0.03 0.21 0.17 0.22 0.45 0.26 0.45 0.67 Fair 5 0.03 0.22 0.18 0.24 0.47 0.28 0.49 0.74 Poor 7 0.04 0.23 0.2 0.25 0.51 0.31 0.53 0.81 Verv Poor 10 0.04 0.25 0.23 0.29 OS9 0.35 0.6 0.92
15. Construction material prices were obtained from Monthly Announcement o f Material Price o f each province. The equipment rental rate was based on the Construction Equipment Tariff and Labor costs from Construction Labor Salary Tariff. The Unit Cost was then calculated as the combination o f equipment, labor, and material components. Recurrent maintenance costs were based on the Preliminary Engineering Design Report prepared by the Louis Berger Group in 2003 for the Road Network Improvement Project (RNIP). Costs were updated as necessary.
Table 9.16: Maintenance and Upgrading Costs” (financial cost per kilometer unless otherwise indicated)
cost (In US. dollars)
Routine maintenance 1,400 Patching 8 per m2 Edge repair Thin overlay 25 mm Surface dressing simple 20 mm Reconstruct AC two lanes, including raising embankments and widening shoulders for NH9 1-2
11 per m2 7.9 per m2 3.41 per m2
607,332
Upgrade to AC standards and widen carriageway and shoulders for NH53-3: 1,089 215,319 332,542 433,054
Upgrade to AC standard for NH53-7&8: Upgrade to ST standards with the addition o f one lane for NH53-10: Upgrade to AC standards with the addition o f one lane for NH54: 1/ Upgrading costs include detailed design, supervision, resettlement and physical contingencies
Cost of National Road and Waterway Components 16. national infrastructure. Design and supervision cost was estimated at 9 percent o f the base cost. The cost o f resettlement and land acquisition for NH91-2 varied between 24 and 45 percent o f the base cost. Land acquisition and resettlement costs for N H 9 1 were the highest as a share o f the base cost as well as per km. This was due to the fact that N H 9 1 has one o f its ends in Can Tho. Land prices and residential densities increase closer to Can Tho. Monitoring and administration costs, a total o f US$4.5 mi l l ion were proportionately allocated to each road project based on i t s share in the base cost.
Tables 9.17 and 9.18 present the total cost for each o f the proposed interventions in
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Table 9.17: Financial Cost Estimates for the National Highways, excluding contingencies (In US$ million)
NH 53-3 NH 53-10 NH 54-5 to 8 N H 9 1 1-2 (AC-4 lanes) (ST-low-cost ferry) (AC) (AC)
Length (kms) 4.61 8.91 40.85 43.89
Base Cost 5.9 2.7 14.1 36.5
0.53 0.24 1.27 3.28
1.44 0.66 4.57 16.26
0.10 0.05 0.25 0.63
8.0 3.6 20.2 56.6
Design and Supervision Land Acquisition and Resettlement Monitoring and Administration Total (excluding contingencies) AC: Asphalt concrete; ST-Surface treatment
17. Least Available Depth and Least Available Width improvements by means o f widening and deepening o f the waterways through dredging. Unit costs o f dredging have varied significantly over the past decade in response to large changes in demand and supply and fue l prices. Taking into account the rates currently applied for dredging contracts in Viet Nam, international unit rates and worldwide experience o f similar projects, a unit rate US$2.27/m3 for dredging was used. This rate i s inclusive o f disposal.
About 60 percent o f the cost for the proposed waterway improvements i s attributed to the
Table 9.18: Financial Cost Estimate for Upgrading Corridors 2 and 3 to Class 111, excluding contingencies (In US$ million)
Upgrading Corridor 3 to Class I11 Upgrading Corridor 2 to Class I11
1. Aids to navigation 1.4 0.6 2. Bridges (total 19) 3. Slope protection 4. Dredging work 5. Ship lock (at Rach Tranh)
Base Cost Design and Supervision Land acquisition and resettlement Monitoring and administration
9.4 3.5
29.6 6.5
50.4 4.5
19.6 0.9
0.0 1.3 8.1 0
10.0 0.9 1.5 0.4
75.4 12.8 Total (excluding financial and physical contingiencies)
Traffic Safety 18. with 1,036 reported road fatalities in 2004 and 670 in 2005.4 Extrapolation o f the statistics from RRMU7 and Can Tho PDOT suggests that 45 annual road fatalities are concentrated in a 5 1 km stretch o f NH91 between Can Tho and Vam Cong/Lo Te. (This i s one o f the road sections considered for improvement under the Project). Statistics from V IWA show about 150-200 fatal accidents a year on the waterways in the Mekong Delta.
About 700-1,000 people die on National roads in the Mekong Delta region every year,
Source: RRMU~
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19. A conservative approach was used in estimating the costs related to road accidents. Accidents were divided into three broad categories: fatalities, injuries and property damage. For each type o f accident, the cost was aggregated as the sum o f five components: lost output, medical, suffering, property damage, and administrative.’ Table 19 shows the cost per category.
Table 9.19: Cost of Accidents
Accident categories cost (US$)
Fatal Injury Property damage
1 1,200 3,300 140
20. Table 20 shows average accident rates for different widths o f roads based on international experience. Adding a lane, a shoulder or increasing the width o f a lane typically results in lower accident rates. Using the international norms as a basis for estimating the change in rate o f accidents would be misleading as accident rates in Vietnam are significantly higher than international averages. As no accurate or comprehensive statistics on road accidents exist in Vietnam, the section o f NH91 that i s known for i t s high incidence o f fatalities was used to develop some estimates o f the savings attributed to the project.
Table 9.20: Accident Rates Based on International Experience (Number o f accidents per 100 million vehicle k m s )
Road Sections Single lane Two lanes Wide two-lane Four + lanes
Fatal 3 .O 2.0 1 .o 1 .o Injury 98.0 65.0 48.0 31.0 Damage only 461.0 305.0 232.0 145.0
21. The analysis o f NH91 indicated that the number o f fatalities i s almost 30 time international norms. Improving road safety has been an important factor in selecting this road for improvement. W h i l e international norms were considered to be too l o w for use in Vietnam, the rate o f accidents NH9 1 was considered not representative o f the rest o f the National highway network in the Mekong Delta. Consequently, it was assumed that Vietnam’s accident rates across the Delta were six times higher than international averages and would drop to three times the averages with the project. In the case o f NH91 , the high accident rate (30 times the international average) was only assumed to occur in a 10 km section o f the road radiating from the city. This section can be characterized by high population densities, substantial road encroachment, and a high level o f mixed traffic with substantial increases during the morning and evening peak hours. Accident rates for the rest o f the road were assumed to be six times international averages. The resulting weighted average for accident rate for NH91 was 1 1.5 times the international average. Table 9.2 1 shows the number o f accidents per 100 mi l l ion km with and without the project as used in this analysis. The increase in the rate o f accidents with the project for NH3-10 i s attributed to the fact that the road section i s in poor condition and i s only used by bicycles and motorcycles. Once paved, larger vehicles will use the road and accident rates will rise.
’ For methodology and estimates, see “The Cost o f Road Traffic Accidents in Viet Nam,” ADB-ASEAN Regional Road Safety Program, Accident Costing Report: A C 10,2004.
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Table 9.21: Assumed Accident Rates for the National Roads Improved Under the Project (number o f accidents per 100 million vehicle k m s )
Road Sections NH53-3 NH53- 10 NH54 NH9 1 Without With Without With Without With Without With Project Project Project Project Project Project Project Project
Fatal 12 3 0.3 3 18 6 23 3 Injury 390 144 9.8 144 588 195 747.5 144 Damage only 1830 696 46.1 696 2766 915 3507.5 696
Economic Parameters and Conversion Factors 22. conversion factors for transport user costs as wel l as for construction costs for both the road and waterway components.
The economic discount rate used for the project i s 12 percent. Table 9.22 shows the
Table 9.22: Weighted Economic Conversation Factors Construction Costs Transport
User Costs Roads 0.85 0.89 Waterways 0.88 0.94
Results 23. proved to be economically viable. Table 9.23 shows the breakdown o f the returns to the investments in these four road sections. The rates o f return vary from a l o w o f 19 percent in the case o f NH54 to a high o f 74 percent in the case o f NH53-10. The total Economic N e t Present Value (ENPV) for al l four sections i s US$63 million. The high returns to the investment in NH53-10 are due to the fact that this segment o f the road is in poor condition at present and is used only by motorcycles and bicycles. When this road project i s completed, it will not only enable trucks, buses and autos to use this section but will afford them overall better access and utilization o f NH53 and NH54 through the ferry terminal at Cai Tu. The increase in the volume and mix o f traffic is also the reason that the rate o f accidents i s expected to increase with the project. The major benefit o f N H 9 1 is by far the reduction in accidents. As mentioned above, the current rate o f fatalities in the section close to Can Tho is about 30 times higher than international norms. These are expected to come down to about 3 times the international norms.
Out o f the seven National road sections considered for inclusion in the project, four
Table 9.23: Economic Costs and Benefits for the National Road Interventions ($US million unless otherwise indicated)
EIRR (%I
NH53-3 4.5 -0.2 3.6 0.7 0.2 2.5 2.7 21 NH53-10 2.2 0.2 5.2 0.9 5.5 -1.0 8.3 74 NH54 12.1 -0.5 10.1 2.4 2.2 3.7 6.9 19 NH9 1 35.1 -0.4 19.2 13.4 2.4 44.8 45.1 25
PV o f Cost Increase
Capital Recurrent
PV of User Cost Reduction
MT 'OC Time (time and VOC)
ENPV Accident
M T NM
M T VOC: motorized vehicle operating costs; NM: non motorized
89
24. Table 9.24 shows that the largest proportion o f the Project’s benefits are motorized vehicle operating cost savings, averaging 45 percent o f the economic benefits. Bicycle users stand to gain the most from improving NH54 which i s in poor condition and only used by bicycles and motorcycles. The savings associated with the expected reduction in the rate o f accidents on NH91 dominate the benefits o f improving this road at 56 percent o f the total.
Table 9.24: Distribution o f Benefits to Users (In percent)
NM Time and VOC Reduction in Savings Accidents M T VOC Savings M T Time Savings
NH53-3 NH53-10 NH54 N H 9 1
Average
52 49 55 24 45
10 9 13 17 12
3 52 12 3 17
35 -9 20 56 26
25. Inland Waterways and Port Modernization (IWPM) project has led to improvements on the central corridor which leads from HCMC to Can Tho and further on to Ca Mau and Kien Long, bottlenecks in the southern and northern corridors limit the vessel size which can be used along these corridors. As a result, heavy bulk cargo, l ike clinkers and cement, i s mainly transported through the congested central corridor in order to use economical type o f vessels.
Tables 9.25-9.27 show the results o f the analysis for the main waterways. While the
26. It i s expected that the improvement o f the waterways would result in an immediate rerouting o f a proportion o f the existing waterway transport to the improved waterways resulting in cost reductions. The savings in the transport costs associated with the improvement are due to reduced waiting time, higher sailing speeds, larger lot sizes and reduced labor and fuel costs. There wi l l also be a gradual shift to larger vessels for the long haul transport along the improved corridors as operators replace the vessels in their fleets. Table 9.25 shows the expected reduction in transport user costs following the improvements. Benefits from the reduction in accidents on the waterways have not been taken into account in the analysis.
Table 9.25: Transport Costs per t-km in 2025 (in US$)/t-km Savings in
Transport Costs Average Transport Costs
Class I11 Class I11 Route Existing situation (US$/t-km) (US$/t-km (US$/t-km)
Corridor I1 (km 0-253) 0.060 0.047 0.013
0.065 Corridor I11 (km 0-80 and km 207-3 10) 0.059 0.006
27. Five waterway corridors were initially analyzed to identify the most economically viable interventions. Corridor I1 in the north o f the Delta proved to be the backbone for HCMC bound and originating traffic for the northern region, while preliminary analysis o f Corridor 111, largely in the southern part o f the Delta, indicated the potential for promising investments. Table 26 shows that the combined ENPV from investing in Corridors I1 and I11 i s US$86.5 million. The
90
improvements to Corridor I1 , while significantly more costly than those to Corridor 111, resulted in larger savings in transport user costs than those generated by Corridor I11 improvements. The model simulations indicated that traffic on Corridor I1 alone would more than double within a decade as a result o f the proposed improvements.
Table 9.26: Economic Costs and Benefits for the Two Main Waterway Interventions (US$ million unless otherwise indicated)
Economic Internal Rate Improvements User Costs Cost Savings Maintenance” Net Present of Return
(In percent)
PV o f System- Incremental PV Incremental PV o f Wide Transport o f Transport User Capital and Economic
(compared to (compared to Costs (compared to Value base case) base case base case)
Base Case: N o improvements 5,025.5 n.a. n.a. n.a. n.a.
Corridor I1 4,924.7 100.8 55.5 45.3 23
Corridors I1 and I11 4,874.7 150.8 64.3 86.5 24
Corridor I11 in the presence o f n.a. 50.0 8.8 41.2 26 Corridor I1
na: not applicable 1/ Maintenance costs in the base case were taken at US$2,100/Km per annum. Wh i le a recently completed inland waterway study indicated an annual cost o f US$1,900/Km, an additional US$200/Km was added to cover the maintenance of bridges on the waterways. Maintenance cost with the project was assumed to be slightly higher at US$2,200/Km to reflect additional dredging to the wider and deeper sections.
28. considered corridors, i s particularly important in the first ten years or so o f the project before the proposed improvements to the mouth o f the Bassac River have taken place. Once the Bassac River project has been implemented, the importance o f the improvements to Corridor 111 increases as more vessels use Corridor I11 to access the Eastern Sea on their way to other parts o f Vietnam or East Asia. Nevertheless, Corridor I1 remains important for the northern region o f the Delta for traffic originating from, or destined for, HCMC.
The contribution o f the improvements to Corridor 11, the most heavily trafficked o f the
29. improvement. Dredging and bank protection works are by far the largest contributors to the Project’s benefits.
Table 9.27shows the distribution o f the benefits o f investing in the waterways by type o f
Table 9.27: Breakdown in Transport Cost Savings for the Waterway Corridors (In percent)
Proposed improvements Corridor 2 Corridor 3 Dredging and Bank Protection 79.5 91.5 Aides to Navigation 18.1 4.9 Bridges and Locks 2.4 3.6
Total 100 100
30. vessels on the main corridors. As the improvements will attract and generate traffic on the main
The direct beneficiaries o f the waterway improvements are the operators o f the larger
91
waterways, traffic on the secondary waterways will also increase resulting in benefits to the smaller vessel owners as well. In addition to the benefits to the vessel owners/operators and given the competitiveness o f the waterway transport industry, a large proportion o f the savings in transport costs i s expected to be channeled back to the consumers o f the transported goods. Residents in remote and rural areas in particular are likely to reap the benefits o f the lower transport costs in the form o f higher farm gate prices for their products.
Sensitivity Analysis
3 1. A sensitivity analysis was carried out to assess the impact o f changes in key variables on the viability o f the proposed improvements to the National roads and waterways. All four road components can withstand an increase in capital cost o f about 50 percent. NH3-10 and NH91 in particular can withstand a doubling o f the investment cost. This i s due to the large benefits generated by the two projects: the large reduction in accident costs associated with the improvement to N H 9 1 and the large benefits from completing a missing link in the highway in the case o f NH53-10. All four projects can withstand a reduction in user benefits o f up to 35 percent and remain viable with a simultaneous 20 percent increase in costs and a 20 percent reduction in benefits (see Table 9.28).
Table 9.28: Sensitivity Analysis o f the ENPV o f the National Road Investments (In million o f U.S. dollars)
Increase in Capital Costs NH53-3 N53-10 NH54 NH9 1
Base Case Base Case Base Case Base Case ENPV: 2.72 ENPV: 8.25 ENPV: 6.88 ENPV: 45.09
Decrease in User
Benefits (In percent)
10% 20% 30% 10% 20% 30% 10% 20% 30% 10% 20% 30%
-10 1.58 1.14 0.70 6.99 6.79 6.58 5.63 4.38 3.13 33.65 30.19 26.72 -20 0.88 0.44 0.00 5.92 5.72 5.52 3.78 2.53 1.28 25.67 22.21 18.74 -30 0.17 (0.26) (0.70) 4.86 4.66 4.46 1.94 0.69 (0.56) 17.70 14.23 10.77 -40 (0.53) (0.97) (1.41) 3.80 3.60 3.40 0.10 (1.15) (2.40) 9.72 6.23 2.79
32. investments are robust. Given the expected large benefit stream, the project can withstand more then the doubling o f the capital cost. This provided reassurance given the potential fluctuation in the dredging cost. Based on the analysis o f dredging cost rates in the region and beyond, the rate o f US$2.27 per cubic meter was used for the project. The highest rate in South East Asia estimated to be 2.70 would not affect the viability o f the project6 Waterway investments are more sensitive to changes in the benefit stream although it would take a 27 percent reduction in benefits before the ENPV turns negative. Given how fast traffic has been growing in the Mekong Delta and in Vietnam in general, the risk o f lower than expected traffic growth i s minimal. Nevertheless, if benefits were to drop 20 percent and costs to increase 10 percent, the waterway projects would remain economically viable.
A sensitivity analysis indicates that the expected results o f the Inland waterway
The highest rate i s in Annex L in Appendix 12F: Waterway Studies o f the Final Report o f the Feasibiltiy Study 6
conducted by the Louis Berger Group, Inc. (June 2006).
92
Table 9.29: Sensitivity Analysis of the ENPV of the National Waterway Investments (Thousands of U.S. dollars)
Base Case: ENPV i s U S $86,480 thousand
Increase in Capital Costs 5 yo 10% 15% 20%
-5% 75,673 72,404 69,134 65,865 - 10% 61,350 58,081 54,812 5 1,543 - 15% 42,O 15 38,746 35,476 32,207
20,101 16,832 13,563 10,293 -20% -25% ($1,812,314) ($5,081,570) ($8,350,826) ($1 1,620,081) -30% ($2 1,534,520) ($24,803,776) ($28,073,032) ($3 1,342,288)
Decrease in User Benefits
Local level infrastructure
Methodology 33. high concentration o f poverty to the main transport corridors. Investments in national infrastructure, the major transport arteries, are typically identified on the basis o f economic efficiency criteria as explained above. Secondary transport infrastructure however plays the dual role o f enhancing efficiency as well as providing connectivity and access to the main supply corridors and markets. Consequently, selection was based on a combination o f poverty, agricultural production and rural accessibility, equity and efficiency considerations. The short l i s t o f roads and waterways was screened based on their connectivity to main transport corridors, service to areas with higher potential agriculture productivity, and high poverty density and equitable distribution within the delta provinces
A key objective o f the project i s to connect areas o f economic activity and areas with
Roads 34. preliminary list o f candidate roads for improvements totaling 2,666 km was selected. This was further reduced using connectivity to the main supply corridors as a criterion to ensure that the benefits o f multimodal connectivity are achieved. Improving the resulting length o f roads could s t i l l not be accommodated within the budget envelope o f the project. This required further prioritization.
Drawing from provincial development plans and consultations with local governments, a
35. Prioritization at the provincial level was carried out with the help o f two indices: an agricultural intensity/rural accessibility index and a poverty index. Since agricultural value added accounted for about one hal f o f the Delta’s GDP, an agricultural index calculated as the total agricultural production served by a road divided by i ts area was developed and used to reflect access o f agricultural output to markets. The poverty index associated with a particular road was defined as the number o f poor at the district level served by the road divided by the area o f the district(s). The number o f poor was estimated by multiplying the incidence o f poverty as obtained from the VHLS by the population o f the districts. The two indices were used to limit the roads under consideration for investment f rom each province to less than 100 km. Priority was also given to improving all-weather connectivity and improving road surface quality over widening o f provincial roads given the generally l o w quality o f current roads and tracks and l o w traffic volumes. This resulted in 1205 Km and 78 bridges at a base cost o f US$36.8 mil l ion. There i s a further US$15.0 mi l l ion o f additional finance that has been pre-allocated to eight o f
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the higher need provinces to extend their program. It i s estimated that this will add a further 1 10 km o f road and 40 bridges and will be implemented in Phase 2 o f the project.
36. The resulting 205 km that were identified for implementation in Phases 1 and 2 were subjected to a cost benefit analysis using the Roads Economic Decision (RED) modela7 Within the budget constraint and ensuring that every province participated in the project, provincial shares were established on the basis o f hal f o f the funding for provincial roads being allocated equally between provinces and attributing the remaining hal f in proportion to the level o f inaccessibility and poverty in each province. This approach provides relatively more funding per capita in provinces where communities currently have poor access to roads and where poverty is more severe. The additional Phase 2 subprojects will be identified from the l i s t o f roads screened during preparation for this project in the same way.
Feeder Waterway and PortsLanding Stages 37. Due to the extensive nature o f the secondary waterway network in the Mekong Delta, these waterways are the preferred mode for most freight flows. These feeder waterways connect the more remote inland areas with the main waterways and thus provide ways and means for socio-economic enhancement o f the lesser developed areas. Feeder waterways furthermore play an important role in connecting roads and waterways and thus provide opportunities for multi- modal transport in the Mekong Delta. One o f the ends o f freight flows on feeder waterways i s generally a landing stage available in a commune, and the other end i s a larger landing facility in a town or a port, where handling equipment i s available to unloadlload the cargo and transfer i t to another transport mode for a longer haul to the final destination. Transfer i s done after grouping the cargo in larger lots; or primary processing (e.g., milling o f paddy, freezing fish products,etc.) to larger capacity vessels or trucks.
38. initially proposed after consultation with several stakeholders including MOT, PMU-1 , PMU-W, VIWA-S, and the concerned PDOTs. The various options were assessed using a multi-criteria analysis (MCA). The following are the six criteria used to identify feeder waterways:
0
. cost.
39. The selection and improvement o f provincial river port projects will take place in Phase 2 o f the Project and will be purely on the basis o f economic efficiency criteria. Investments may include new wharfs, storage areas, and equipment. About US$2.2 mi l l ion have been allocated to provincial ports. The Project will also test new institutional and management arrangements for these ports. In addition to their economic viability, the selected ports will be expected to be financially sustainable.
To select the feeder waterways that would be improved under the Project, a long l i s t was
Connectivity with main inland waterways;
Provision o f access to isolated, or poor areas, or areas o f high agricultural production;
Condition and volume o f traffic;
Minimization o f resettlement and negative environmental impacts;
Enhancement o f multimodal transport; and
’ RED i s a spreadsheet based model designed to help evaluate investments in low-volume roads using consumer surplus.
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40. producers to the main transport networks. There are over 1,000 landings owned by private operators, V IWA and provincial governments in the participating provinces. The number o f landing stages i s sufficient to meet current and anticipated needs, but the landings generally have poor intermodal and support infrastructure and operate to a large extent in a relatively informal manner. Improvements will occur only at existing landings, and will include improved l i n k s to the road network, storage facilities, rice drying and similar facilities, and rehabilitation o f landing stages. Improvements in physical infrastructure will be complemented by enhanced management through the use o f community-based organizations. Sub-projects should recover operating and maintenance costs from user fees to ensure sustainability.
A further US$2.8 million will finance improved rural landing stages to link rural
Results 41. Table 9.30 shows the key characteristics for the provincial roads selected for improvement under the Project. Four o f the selected roads have marginal negative economic NPVs. DT-9 15 serves the poorest catchment area o f all selected roads with the second highest population. DT-909 and TT-TL serve areas o f relatively large populations and areas that are poorer than average.
Table 9.30: Key Characteristics o f the Provincial Roads Selected for Improvement Length NPV IRR cost IRI Poverty Pop (Km) (Million) (In percent) (Mill.) Index Served Road ID Road Name
1 -AG 2-BL 2-BT 2-CM 1 -CM 4-CT 2-DT 3-HG 4-KG 3-LA 1-ST 1 -TG 2-TV 6-TV
DT-94 1 CS-HCMR DT-884 CN-CDV TB-UM TT-TL DT-84 1 DT-928 BN-TH DT-835B DT-04 DT-865 TN DT-9 15
2.60 26.36 13.72 8.50 9.50
11.90 1.40
24.40 16.85 11.97 15.30 13.05 8.30
20.00
3.64 27 3.11 27
16.47 88 1.30 17 0.80 18
-1.82 n.m. -0.16 n.m. 4.20 38 1.22 19
12.04 69 2.73 26
23.84 70 5.98 92
-1.34 n.m.
2.583 6.0 68 2.797 7.0 101 2.570 12.6 146 3.074 12.0 24 1.508 9.0 17 3.609 10.0 139 2.183 15.0 108 2.307 9.0 123 2.840 10.8 106 1.777 11.9 125 2.892 17.1 121 3.245 14.0 82 1.098 20.0 117 2.965 15.0 180
3,927 42,610 60,324 48,322 32,119 50,526 4,164 58,467 40,242 26,517 208,183 109,716 47,645 133,09 1
1 -VL DT-909 2 1.40 -1.04 n.m. 2.397 13.3 135 78,160 n.m: not meaningful- existing road constraints means there i s l i t t le or no existing traffic.
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Annex 10: Safeguard Policy Issues
VIETNAM: Mekong Delta Transport Infrastructure Development Project
A. Social Safeguard Policy Issues
Social Assessment (SA) 42. A social assessment has been conducted in the project affected area in a number o f selected districts in all 13 provinces which aimed to provide a comprehensive, participatory framework for deciding which issues should receive priority for attention and how operationally useful information can be gathered and used. It consists (i) in defining the macro level socio- economic profile o f Mekong Delta; and (ii) in carrying out a stakeholders and institution analysis in the context o f MDTIDP in order to (1) identify key stakeholders and establish an appropriate framework for their participation in the selection o f the project components, their design and implementation; (2) identify and prioritize social issues; and (3) establish a participatory process by ensuring that the project objectives and incentives for change are acceptable to the range o f people intended to benefit from it. The SA used various tools for data collection and analysis, including literature review, key informant interview, field surveys by using techniques o f Participatory Rural Appraisal (PRA), focus group discussions, public and community consultations (both in formal and informal settings), institutional review. The SA also helped determine whether Bank social safeguard policies with respect to involuntary resettlement and indigenous people are triggered by the project.
M a c r o Level Socioeconomic Profile o f Mekong Delta 43. The Mekong Delta i s one o f the regions with the highest concentration o f the poor in the country with approximately 2.6 million poor people, or 18 percent o f Vietnam’s poor, making the region the second only to the North Central region. It i s estimated that the Mekong Delta has the highest percentage o f the population who “would be unable to sustain a serious adverse shock.” This group o f population does not fall under the poverty line, but would fall back into poverty when adverse economic shocks hit because they have l i t t le assets to use as a cushion. In a region where people heavily rely on agricultural activities, land i s an invaluable asset. Commonly, landlessness i s highly associated with poverty, and it i s on an increasing trend. The population o f landlessness among the poor, accounting for 39 percent, i s significantly higher than the average o f the Mekong Delta. People in the Mekong Delta suffer severe limitation o f access to social infrastructures in general. The health sector faces severe resource constraints although it has a higher incidence o f health problems compared to other regions. Supply o f clean water i s in shortage. Education i s available but the cost o f attending schools makes it difficult for poor children to enroll. O f people aged 15 and above, over 45 percent not yet completed primary education, and this rate i s significantly higher than the national average o f 27 percent. Among the poor, only 5 percent has an education over primary school. Many hamlets lack access to all weather roads. Ca Mau province faces the most severe limitation with only 28 percent o f the hamlets having reasonable access to all weather roads. This followed by Bac Lieu, Hau Giang, and SOC Trang provinces.
L a n d Acquisition and Resettlement 44. Efforts are made to avoid and mitigate resettlement impacts. However, the project i s anticipated to pose severe resettlement impacts due to required land acquisition for rehabilitation, improvement and widening o f national and provincial roads and waterways, including some
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bridges and ship-locks. The level o f land acquisition for the first year subprojects on both roads and waterways are presented in the table bellow.
45. laws and World Bank OP 4.12. Safeguard documents prepared in accordance with this framework for the whole l i fe o f the project wi l l be subject to review by the World Bank. Two Resettlement Plans (RPs), one for roads and one for waterways, have been prepared for the f i rs t phase subprojects in accordance with the RPF. The RPs have been prepared in close consultation with Displaced Persons (DPs), relevant local authorities, and key stakeholders. The R P s provide adequate budgets for resettlement and compensation, as well as adequate institutional arrangements and mechanisms for implementation monitoring and grievance redress. The R P s were adopted by the government following the government’s approval o f the project RPF. The total compensation and resettlement cost for MDTIDP waterway subprojects i s estimated at US$16 million for the first phase implementation plan. The amount needed for national highways and provincial road i s US$4.2 million has been specified in the Road-RP for the first year implementation.
The Resettlement Policy Framework (RPF) was developed in accordance with Vietnam
Table 10.1: Resettlement Impacts by MDTIDP for the First Phase Implementation Plan National and Loss o f Loss o f Loss o f Loss o f Number
Land (m2) (m2) DPHHs Waterways Residential Agric.Land o f Number
o f DPHHs Provincial Residential Agric. Roads Land (m2) Land (m2)
1,191 23,294 540 Long An 17,400 22,434 121 NH53-3 (Tra Vinh)
8,957 271,126 105 1 Tien Giang 139,66 1 226,304 1,934 (Tra Vinh)
5,935 126,910 868 Dong Thap 253,863 16,155 2,148 DT884 (Ben Tre)
1,513 92,853 249 An Giang 152,320 324,866 2,785 DT04 (SOC Trang)
0 23,555 132 Kien Giang 20,308 157,294 257 (Ca Mau) Total 18,050 578,215 2,840 583,552 747,052 7,245
NH54-5-8
CN-CDV
Ethnic Composition 46. makes up over 90 percent o f the Mekong Delta’s population. Among the majority Kinh population, a number o f ethnic minority groups live in the region. The Khmer i s the largest ethnic minority group in the Mekong Delta (6 percent o f the region’s population). O f the total Khmer population present in Vietnam, over 97 percent i s living in the Mekong Delta. This i s followed by Chinese (or Hoa, one percent), and the rest includes Cham, Tay, Ngai, Gia Rai, and so forth, yet the populations o f these groups are very small. Most o f the ethnic minority groups are found in the following nine provinces o f the 13 Mekong Delta provinces: An Giang, Bac Lieu, Ca Mau, Can Tho, Hau Giang, Kien Giang, SOC Trang, Tra Vinh, and Vinh Long Provinces.
The Kinh (Viet), which comprises approximately 85 percent o f the national population,
47. number o f Khmer households i s located. In these provinces, the Khmer minorities comprise from 10 to 30 percent o f the provincial population. Most o f the Khmer population resides in
Kien Giang, SOC Trang, and Tra Vinh Provinces are the three provinces where the largest
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remote districts, communes, and villages. For example, large proportions o f the populations in Tra C u District (Tra Vinh Province), and o f Kim Son Commune (one o f the communes that make up Tra C u District), which are considered as a remote commune and a remote village, respectively, i s o f the Khmer ethnic group. The Khmer ethnic group comprises over 60 percent o f Tra C u District’s total population, and nearly 100 percent o f Kim Son Commune. Their standard o f living i s generally lower than the Chinese minority population and the majority Kinh. An Ethnic Minority Policy Framework (EMPF) i s developed and will be approved by the client that complies with Bank’s O D 4.20 Indigenous Peoples. An EMDP i s prepared for the first year implementation for both waterways and national highways and provincial roads.
Stakeholder Analysis 48. Stakeholder groups are identified, including donor, government policymakers, implementing agencies, interested groups in public sector, intended beneficiaries, displaced persons, organized interest groups. W h i l e the GoV and MOT focus to remove bottlenecks o f the current transport network to improve the overall connectivity in the Mekong Delta region as it i s the most important paddy production area o f the country. However, other groups are more interested in the improvements o f the specific transport infrastructure they are in charge of. VRA and VIWA prefer the investments to be divided largely between roads and waterways. Provinces prefer more investments in the priority roads and waterways o f their own rather than the overall connectivity for the whole region. The communities are interested in the improvements o f the transport infrastructure in their respective communes/villages. I t i s clear that the proposed project requires land acquisition and compensation. Numbers o f Displaced Persons (DPs) will be affected by the project and the issue o f resettlement and land acquisition the concern that was most often expressed by the community members during the consultation process.
S
Gender 49. the population relies on agricultural production. Women’s income in the agriculture sector is reported to be significantly lower than men. In the quickly developing aquaculture sector o f shrimp farming, women are more disadvantaged because it is considered the work o f men. The incidence o f poverty among women headed households i s higher than the average, while about 38 percent o f al l surveyed households fel l below the poverty line, the incidence i s over four percentage points higher among women headed households, at about 42 percent. However, the income i s just one aspect o f the multi-dimensional vulnerability o f women in the Mekong Delta. Within the household, the traditional role o f women i s to take care o f most o f the daily housekeeping issues, including cooking, washing, taking care o f children, raising the livestock, al l o f which places a heavier burden on women. O n the other hand, the only role that was clearly identified as men’s work is building or repairing the house which is considered as the “big” activity in life. Other household roles, such as making decisions on important issues such as spending, fanning, selling products, wage labor, attending village meetings are reportedly done by both male and female members.
Women are identified as one o f the vulnerable groups in the region where the majority o f
Development Strategies 50. The lack o f o f f farm employment opportunities i s one o f the most concerning issues in the Mekong Delta. Thus, the implementation o f the project will take into consideration the potential for utilizing paid local labor. Furthermore, prioritizing income earning opportunities
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for the poor and other vulnerable groups, such as female headed households and ethnic minority peoples, would improve their living standards. Increasing the benefits to local communities will also require more comprehensive assistance to boost the agricultural productivity in the l imited land space available. This should include agricultural extension services and small credit programs accessible by vulnerable groups and ethnic minorities. Routine maintenance activities are crucial not only for keeping the infrastructure in good condition, but also so that the roads and waterways bring lasting benefits to the end users and communities. In this regard strong institutions are required that can plan and finance these activities. Finally, it i s hoped that the project will bring lower transport costs both to business and rural communities. Improved infrastructure should attract new operators and create a competitive environment where prices are kept l o w and service quality and safety kept high.
Environment Safeguards
5 1. environmental consultant to prepare an environmental impact assessment to meet the requirements o f projects with an A Classification. The A Classification was based on the practicality that project interventions would most likely be irreversible and could have adverse impacts on hydrology and agriculture in the project area. Accordingly and given that the Project i s dealing with multiple modes o f transport and will be implemented in a phased approach, the EIA includes an overall impact assessment o f the Project, a specific impact assessment for the subprojects identified for the first phase, and an environmental framework governing the impact assessment process for the subsequent phase o f the project. This approach was taken, for it has proven to be (1) an effective strategy under other Bank-assisted transport projects in Vietnam, (2) one that provides the amount o f detailed guidance acceptable to the borrower, and (3) one with which the borrower has had experience implementing under other projects. This was thus the preferred option over developing a more general strategic or regional environmental assessment strategy for transport improvement and development.
In compliance with Bank OP4.0 1, the Borrower commissioned an independent
52. Based on the results o f the EIA, an Environmental Management Plan (EMP) has been developed with the specifications o f the environmental management and supervision arrangements, mitigation measures, monitoring and reporting programs, budget estimates and capacity building requirements. The environmental framework was developed to a large extent based on extensive experience with the renovation and improvement o f roads and waterways in the country and project area in particular under a number o f other IDA- and other donor-assisted as well as national projects. That experience was also applied in conjunction with site specific evaluations in the preparation o f the EIA and the EMP for the first phase o f the project for the investments in improvement o f the selected roads and waterways. The option to focus on the improvement o f only existing transport corridors versus constructing new ones also minimizes environmental impacts. No critical natural habitats, wi ldl i fe sanctuaries or protected areas are in the vicinity o f any o f planned activities during both phases o f the project, and thus it would not adversely impact those areas.
53. relevant national technical guidelines and national and international experience. O f the national experience, the Bank has assisted with the financing and supervision o f a number o f similar projects in the project area that have pertained to road and waterway transport, resulting in clear understandings o f the potential impacts, how to minimize those impacts and means to mitigate them effectively. That experience largely places the responsibility o f environmental mitigation
The EIA report addressed the potential environmental impacts and risks fol lowing
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within the construction contracts that are based on detailed project design which i s then monitored by an independent professional consultant. In addition, the PMU-1 and PMU-W responsible for managing project implementation o f road and waterways activities, respectively, will each hire an environmental specialist to guide the overall process.
54. With regard to alternatives considered under the project, there were three key alternatives related to environmental considerations. They include (i) not doing the project versus doing it; (ii) constructing new versus improving existing transport corridors; and (iii) widening the road- and waterways on one or two sides. Not doing the project would result in (a) more traffic congestion and (b) slower travel rates that would lead to increased air and water pollution. Constructing new versus improving existing transport routes would result in greater disturbance to the natural and agricultural environment; greater need for spoil disposal and resource use such quarried rock, sand, asphalt etc.; and would need much greater inputs - bridges, culverts and drainage canals to minimize impacts to hydrology and drainage. By widening the corridors to the degree possible only on one side, would minimize the impacts natural habitats on the other side. In the case o f waterways, this can be highly significant in areas where the canal banks provide ecosystems for the spawning and nurturing o f juveniles o f aquatic species along the waterways.
55. adverse environmental impact with specifically prescribed mitigation measures for each:
The EIA identified the following main civil works and operational activities as having an
Waterway dredging and disposal o f dredging material, including acid sulfate spoil; Impacts due to ship lock construction; Erosion control o f waterway banks and road embankments; Excavation, blasting, earth fill ing and quarry operation for road upgrading; Piling work for building structures in water bodies; Noise and dust control; Construction worker camp management; Construction materials storage areas; Concrete batching, asphalt hot mix plants; Traffic safety management during construction and operation; Management o f materials at landing centers, including spills; Water supply and sanitation at resettlement sites.
56. significant o f these impacts and their mitigation are as follows:
For the road rehabilitation and widening the experience to date with regard to the most
57. Noise and Vibration. The Vietnam noise standard (TCVN 5949) specifies the allowable noise emissions based on distance and locality - industrial, residential or rural. Those standards would be applied to all machinery and vehicles emitting noise. Moreover, in the vicinity o f schools and hospitals/clinics, acoustical barriers would be used to lower noise to acceptable limits for those more sensitive areas. Similarly, for vibration particularly related to pile driving and heavy vehicle movement, these activities would be limited to daytime hours and would be temporary with impacts in any particular locale for limited periods. In addition, communities would be advised and consulted in advance o f activities involving noise and vibration; and workers would be provided noise protection equipment.
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58. development would not adversely affect drainage. With road improvement and widening, adequately sized culverts would be used so as to preclude any flooding due to road improvements. In some cases, larger culverts will be installed in areas where older culverts were in adequate; and
Drainage. A critical aspect o f road construction will be to assure that any road
59. bridge work is underway and also indicate reduced speeds through those areas. In al l areas during construction, safe and well-marked vehicle passage will be provided either on finished road areas or temporary diversion lanes. During operation, appropriate speed limits will be established with speed control devices installed, as needed.
Traffic Safety. During construction, signs will advise vehicles o f areas where road and
60. o f these impacts and their mitigation are as follows:
For the waterway upgrading the experience to date with regard to the most significant
61. seasonal flood levels for placement o f buildings, agriculture, road beds, etc. The method to dispose o f the spoil is to build embankments - about 1 - 1.5 m high -- to contain it in enclosed areas while it dewaters to prevent spillage into undesired areas or into wells or water supply or drainage channels. These sites will be large enough for sediments within run-off water to be retained and settled before f lowing back to the canal from where it came. Depending upon the soil properties, in some instances, plastic liners are used to prevent seepage. This method also controls the spillage o f acid sulfate soils located in some areas traversed by waterways to be improved under the project which, when used for agriculture, require a few years o f widely known management practices in the area to improve it to highly productive soil. Households and villages that elect to receive the spoil are paid for their involvement in the construction o f the impoundments and for the use o f the land for spoil disposal in addition to gaining the benefit o f the higher ground. Also, care will be taken to prevent impedance to draining and back flooding o f rain water, assuring adequate drainage i s provided. Site-specific consultation with villages and local government staff will be conducted as part o f the designing o f spoil disposal sites;
Spoil Disposal. There is high demand for fill in the Mekong Delta for raising land above
62. will disturb and adversely impact water quality in the canals; however, impacts to water quality or mainly in the immediate vicinity o f the where the dredging activity takes place and i s short- lived - 24-48 hours -- after the dredging i s completed. During these periods, f ish and other mobile organisms, in particular, will move away from the affected area and return when the water quality improves. There is no experience with fish ki l ls as a result o f dredging practices in the project area. Also, in most areas, canals are widened only on one side to reduce impacts to aquatic habitat while at the same time reducing resettlement needs. Moreover, by retaining the canal bank on one side, the reseeding o f organisms on the other will be natural and more rapid. In some areas cage fish culture i s conducted during the wet season in canals. Dredging affecting those areas would be scheduled for the dry season. Experience to date has also shown that any incremental increase in salinity intrusion as a result o f waterway improvement works i s negligible but will be monitored under the project;
Disturbance of Water Quality, Aquatic Habitats and Aquatic Organisms. Dredging
63. dredgers i s less than that o f much o f the existing canal boat traffic. Nevertheless, al l dredgers used under the project will be checked to determine whether they are in compliance with national
Waterway Dredging and Pile Driving Noise and Safety. From experience, the noise o f
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regulations and then rechecked annually. Only dredgers that are in compliance will be used under the project. For pi le driving, there will be relatively few locations where piles are needed for new or upgraded bridges and other structures and that would be in the vicinity o f villages or other sound sensitive entities (e.g., schools and hospitals or clinics). Where they are needed and where noise and vibration would be an adverse factor to people, the dredging activities will be limited to daytime hours and when near schools and health facilities, those entities will be advised in advance to take necessary precautions; and, in the case o f schools, pile driving will be limited to the periods when school i s not in session. While waterway works are underway, signs will be posted along the canals advising ships to be aware and direct them to safe passage and to slow down when passing through those areas;
64. Disposal of Used Engine Oil and Other Wastes. It will stipulated in the construction contracts that it i s the contractors responsibility to manage al l wastes generated as a result o f their activities - oils, solid wastes and those that concern worker camps. There is o i l recycling conducted in much o f the Mekong Delta making waste o i l management feasible as is there are solid waste management services. Worker camps would be provided with drinking water and managed sanitation facilities. During operation, engine o i l wastes will be collected and recycled. The current price paid by the collecting companies i s about VND2,500(US$O. 12)/liter;
65. Waterway Bank Protection and Erosion Control. The banks along the waterways will be stabilized where necessary using a number o f interventions - vegetative stabilization; water- tolerant wooden structures; rock-filled gabions; concrete reinforcement. These interventions will control erosion that will otherwise increase due to the wakes from the increased boat traffic.
66. Chanh in Tien Giang Province. This lock will replace an existing salinity control sluice gate that needs to be opened for ship transport through the dike where it i s positioned. As a result o f the need to control salinity mainly during the dry season, bottlenecks exist with back o f ships waiting for a favorable tide. When open and the tide level i s higher than the internal waters during the dry season, salt or brackish water can f l ow past the sluice gate into the freshwater zone. The ship lock will improve transport and, to some degree, salinity intrusion over the current situation. Any incremental adverse impact from the establishment o f this structure will be negligible;
Ship Lock Impacts. Under the project only one ship lock will be constructed in Rach
67. developed along the waterways. These will be equipped with waste holding and spill management facilities.
Environmental Management of Landing Centers. Some landing centers will be
68. concerning a total o f 10,085 households for the first phase; however, o f these, most will only need to move within their existing lands and not to resettlement sites or will lose only a part o f their land assets. O f those households impacted during the first phase o f the project about 15 percent will need to be relocated to new sites. These households will be moved to resettlement sites being developed by the Government for households affected by annual floods and other development activities that include al l required infrastructure - access and internal roads; power; safe drinking water from wells; solid waste management; and sewage management that i s commonly applied throughout the project area. Similarly, for construction worker camps,
For resettlement, The project will also involve a significant resettlement program
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proper water supply and sanitation will be provided as well as catering to assure that the workers do not depend on wildl i fe for sustenance.
69. provided the mitigation measures are properly implemented. The transport routes under MDTIDP are not close to sensitive ecosystems (national park, natural reserves) or historical and cultural sites. The Environmental Management Plan has specified the environmental management and supervision organizations and responsibilities, mitigation measures, monitoring and reporting programs, budget estimates and capacity building requirements. During EIA preparation, public consultation with project affected people, local relevant stakeholders and local officials was undertaken, and their feedback taken into consideration when designing appropriate mitigation measures. Detailed mitigation plans will be a required element o f each c iv i l works contract financed under the project and will be described in the detailed designs prepared for each contract. These plans will be reviewed and approved when satisfactory by the environmental specialists to be hired by PMU-1 and PMU-W as a requirement toward entering into the contract.
The EIA concluded that the proposed project will not have significant adverse impacts,
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Annex 11: Project Preparation and Supervision
VIETNAM: Mekong Delta Transport Infrastructure Development Project
Planned Actual PCN review 02/09/2004 02/06/2004 Initial PID to PIC 03/09/2004 03/09/2004 Initial ISDS to PIC 08/01/2006 08/01/2006 Appraisal 10/09/2006 10/09/2006 Negotiations 0 111 6/2007 0411 812007 Board/RVP approval 03/27/2007 0511 712007 Planned date of effectiveness 0710 112007 Planned date of mid-term review 07//0 1/20 10 Planned closing date 06/30/20 13
Key institutions responsible for preparation of the project:
Project Management Unit 1 - (PMU-1) 308 Minh Khai St. Hanoi, Vietnam HCMC, Vietnam
Project Management Unit - Waterways 331 Nguyen Trai St., District 1
Bank staff and consultants who worked on the project included: Name Title Unit
Simon David Ellis Sr. Transport Specialist. TTL EASTE Baher El-Hifnawi Paul Amos Michele Audige Marc Juhel Chris Banes Richard Scheiner Dung Anh Hoang Quang Ngoc Bui Margaret Png Edward Daoud Ronald D. Zweig Chaohua Zhang Vinh Quoc Duong Cung Van Pham Hiet Thi Hong Tran Quyen Do Duong Christopher De Serio Nga Thi Viet Nguyen
Sr. Transport Economist Lead Transport Specialist Lead Transport Specialist (Peer Reviewer) Lead Transport Specialist(Peer Reviewer) Engineering Consultant Consultant, Ports and Waterways Engineer Operations Officer Operations Officer Senior Counsel Senior Finance Officer Senior Agricultural Ecologist Senior Social Sector Specialist Environmental Specialist Financial Management Specialist Procurement Specialist Finance Analyst Senior Program Assistant Program Assistant
Bank fimds expended to date on project preparation:
1. Bank resources: US$469,055
2. Trust funds: - 3. Total: US$469,055
Estimated Approval and Supervision costs:
1.
2.
Remaining costs to approval: US$20,000 Estimated annual supervision cost: US$65,000
EASTE TUDTR TUDTR TUDTR
EASTE EASSO LEGEA LOAG 1 EASRE EASSO EASRE EAPCO EAPCO LOAG 1 EASTE EACVF
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Annex 12: Documents in the Project File VIETNAM: Mekong Delta Transport Infrastructure Development Project
FY03-FY06 Country Assistance Strategy (CAS)
Government’s Socio-Economic Development Plan (SEDP) for 2006-201 0 Investment Climate Assessment. (Draft) May 2006.
Mekong Delta Poverty Analysis. AusAID. October 2004.
Vietnam: Deepening Reforms for Rapid Export Growth (Draft)
Vietnam Living Standards Survey 2004
Vietnam - Logistics Development, Trade Facilitation & the Impact on Poverty Reduction. June 2002
East Asia Integrates: A Trade Policy Agenda For Shared Growth - Chapter 9: Trade in Sectors Important to the Poor: Rice in Cambodia and Vietnam and Cashmere in Mongolia
Vietnam: Multimodal Transport Regulatory Review. Final Report - April 2006. Meyrick and Associates in association with Transport Development and Strategy Institute (TDSI). PPIAF Grant No. A01 0304ILITMTIRFNN.
Country Procurement Assessment Report. World Bank. October 2002 (updated December 2004)
MDTIDP Feasibility Study. Louis Berger. June 2006. (PHRD TF053 120)
Resettlement Policy Framework. Louis Berger. August 2006. (PHRD TF053 120)
Resettlement Action Plan. Louis Berger. August 2006. (PHRD TF053 120)
Environmental Mitigation Plan (Vol. 1). Louis Berger. August 2006. (PHRD TF053 120)
Environmental Impact Assessment (Vol. 2 - Roads and Vol. 3 - Waterways). Louis Berger. August 2006. (PHRD TF053 120)
Ethnic Minority Development Plan. Louis Berger. August 2006. (PHRD TF053 120)
Ethnic Minority Development Framework. Louis Berger. August 2006. (PHRD TF053 120)
Project Procurement Assessment. World Bank.
Project Financial Management Assessment. World Bank.
105
Annex 13: Statement of Loans and Credits VIETNAM: Mekong Delta Transport Infrastructure Development Project
Original Amount in US$ Millions
Difference between expected and actual
disbursements
Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d
P104097 P101608
PO82295 PO85071 PO84871 PO79663 PO79344 PO77287 PO75407 PO73361 PO74688 PO74414 PO80074 PO73763 PO82604 PO82627
PO85080 PO6605 1 PO85260 PO88362
PO70197 PO59663 PO65898
PO44803
PO75399
PO71019
PO5 1838
PO59936
PO73778
PO73305 PO72601 PO66396
PO62748
PO42927
2007 2007
2007 2006 2006 2006 2006 2006 2006 2006 2005 2005 2005 2005 2005 2005
2005 2005 2005 2005
2004 2004 2004
2003
2003
2003
2002
2002
2002
2002 2002 2002
200 1
2001
VN - Program 135 Phase 2 Support Credit VN-Avian & Human Influenza Control &Prep VN-COASTAL CITIES ENVMT SANIT. Customs Modernization VN-TRANS & DISTRIB 2 VN-Mekong Regional Health Support Proj V N -1CT Development VN-RRD RWSS VN-RT3 VN -Natural Disaster Risk Mngt Project VN-RURAL ENERGY 2 VN - GEF Forest Sector Development Proj VN-GEF-RURAL ENERGY 2 VN-WATER SUPPLY DEV. VN-HIV/AIDS Prevention Project Payment System and Bank Modernization 2 VN-ROAD SAFETY VN - Forest Sector Development Project VN-EFA Support Program VN-Avian Influenza Emergency Recovery Pr VN-URBAN UPGRADING VN-ROAD NETWORK IMPROVT VIETNAM WATER RESOURCES ASSISTANCE VN-PRIMARY EDUC FOR DISADVANTAGED CHILRE Public Financial Management Reform Proj.
ENERGY
DEVELOPMENT VN -Northem Mountains Poverty Reduction VN-GEF-System Energy Equitization- Renewa VN-Regional Blood Transfusion Centers VN - Rural Finance I1 Project
EQUITIZATION & RENEWAB VN - COMMUNITY BASED RURAL INFRA. VN-MEKONG TRANSPORTELOOD PROT.
VN-GEF DEMAND SIDE MGMT &
VN-PRIMARY TEACHER
VN-SYSTEM ENERGY,
0.00 50.00 0.00 20.00
0.00 124.70 0.00 65.90 0.00 200.00 0.00 70.00 0.00 93.72 0.00 45.87 0.00 106.25 0.00 86.00 0.00 220.00 0.00 0.00 0.00 0.00 0.00 112.64 0.00 0.00 0.00 105.00
0.00 31.73 0.00 39.50 0.00 50.00 0.00 5.00
0.00 222.47 0.00 225.26 0.00 157.80
0.00 138.76
0.00 54.33
0.00 0.00
0.00 19.84
0.00 110.00
0.00 0.00
0.00 38.20 0.00 200.00 0.00 225.00
0.00 102.78
0.00 110.00
106
0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.00 0.00
0.00 0.00 0.00
0.00
0.00
0.00
0.00
0.00
0.00
0.00 0.00 0.00
0.00
0.00
0.00 0.00
5.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 9.00 5.25 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00
0.00 0.00
0.00
0.00
5.50
0.00
0.00
4.50
0.00 0.00 0.00
0.00
0.00
0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00
0.00 0.00 0.00
0.00
0.00
0.00
2.39
0.00
0.00
0.00 0.00 0.00
0.00
0.00
50.71 20.30
126.74 66.58
200.14 71.60 87.20 45.75
108.92 79.20
217.36 8.50 4.95
109.56 26.96 99.57
29.26 48.67 32.13 2.10
202.77 208.98 149.25
155.68
50.54
2.80
7.60
25.93
3.52
37.57 20.46
186.31
47.27
52.67
0.00 0.00
0.00 -0.25 13.33 -1.82 2.24 2.99 6.00
-6.45 57.11 2.50 0.20 7.72
-1.06 41.50
6.02 6.60 0.00 1.88
5.93 105.19 30.84
44.87
38.68
1.80
6.75
-2.65
3.52
26.65 -64.07 144.14
24.64
35.65
0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00
0.00 0.50 0.00 0.00 0.00
28.00
0.00 0.84 0.00 0.00
0.00 0.00 0.00
1.48
-0.00
0.00
5.59
0.00
0.00
0.00 0.00
72.00
0.00
3.41
PO52037 2001 VN-HCMC ENVMTL SANIT. 0.00 166.34 0.00 0.00 0.00 150.17 96.71 87.97 PO42568 2000 VN - COASTAL WetlProt Dev 0.00 31.80 0.00 0.00 0.00 3.70 1.72 1.72 PO51553 1999 VN-3 CITIES SANITATION 0.00 80.50 0.00 0.00 7.40 26.03 27.24 23.56 PO04845 1999 VN - MEKONG DELTA WATER 0.00 101.80 0.00 0.00 0.00 26.71 21.47 -8.53 PO04828 1999 VN-HIGHER EDUC. 0.00 83.30 0.00 0.00 0.00 16.41 9.83 10.45 PO45628 1998 VN-TRANSMISSION & DISTR 0.00 199.00 0.00 0.00 39.69 36.30 67.43 5.08
Total: 0.00 3,693.49 0.00 29.25 49.48 2,846.87 764.85 232.07
VIETNAM STATEMENT OF IFC’s
Held and Disbursed Portfolio In Millions o f U S Dollars
FY Approval Company
Com m itted Disbursed
IFC IFC
Loan Equity Quasi Partic. Loan Equity Quasi Partic.
2003 2002 2002 2002 2005 1998 1997 2004 2005 2001 2006 2003 2004 2005 2006 2002 2003 2007
ACB-Vietnam CyberSoft Dragon Capital F-V Hospital Khai Vy MFL Vinh Phat Nghi Son Cement
Olam Paul Maitland RMIT Vietnam
SABCO Sacombank Sacombank
Sacombank S acom bank VEIL VEIL VEIL
0.00 0.00 0.00 5.00 6.00 0.13 10.09 20.00 7.20 7.25 20.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
5.02 0.00 0.00 0.06 0.00 0.00 0.00 1 .05 0.00 0.00 3.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1.88 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.77 0.00 0.00 2.3 1 0.00 0.00 2.05 0.00 0.00 3.05 0.00 0.00 0.00 2.00 0.00 7.41 0.00 0.00 6.15 0.00 0.00
0.00 5.02 0.00 0.06 0.00 0.00 5.00 0.00 0.00 0.00 0.13 0.00
10.09 0.00 20.00 0.00 7.20 0.00 3.50 0.00 0.00 0.00 0.00 2.77 0.00 2.3 1 0.00 2.05 0.00 3.05 0.00 0.00 0.00 7.41 0.00 6.15
0.00 0.00 1 .05 3.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 1.88 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total portfolio: 75.67 28.82 6.05 1.88 45.92 28.82 6.05 1.88
Approvals Pending Commitment
FY Approval Company Loan Equity Quasi Partic.
2000 MFL-AA 0.00 0.00 0.00 0.00 2006 CCS-Asia 0.02 0.00 0.00 0.00
2000 Interflour 0.01 0.00 0.00 0.01 2006 CII-Vietnam 0.00 0.00 0.00 0.00
2000 MFL Mondial 2002 F-V Hospital
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1999 MFL Minh Minh 0.00 0.00 0.00 0.00 1999 MFL Chau Giang 0.00 0.00 0.00 0.00
Total pending commitment: 0.03 0.00 0.00 0.01
107
Annex 14: Country at a Glance VIETNAM: Mekong Delta Transport Infrastructure Development Project
..
.. "
..
POVERTY and SOCIAL
40
30
20
10
0
Eas t A s h 6 Low-
Vletnam Pac l f l c I ncome ZOO6 Population, mid-year (millions) 83 0 GNIpercapita (Atlasmethod US$) 620 GNI(Atlas method US% billions) 514
Average annual growth, IgSS.06
Population (% 11 Laborforce(% 2 1
M o s t recent est imate ( l a tes t year aval lable, lS99-06)
P overty (%of population below nationalpo verty line) 29 Urban population (%of tofalpopulation) 26 Life epc tancy at birth (pars) 70 Infant mortality(per 1OOOllve births) I7 Child malnutrition (%ofchildren under5) 28 ACCESS to animproved watersource (%ofpopulafion) 85 Literacy (%ofpopulation age ?5Y 90 Gross pnmary enrollment (%of school-agepopulation) 98
M ale D 1 Female 94
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1986 1996
GDP (US$ billions) 'Ml 207 Gross capltal formatlo n/GDP 27 1 Exports of goods and SeNlCeS/GDP 32 8
Gross national savingslGDP P 2
Current account balance/GDP -38 - 0 5 Interest payments/GDP 0 0 0 4 Total debUGDP 0 4 1226
Present valueof debt/GDP Present valueof debt/exporls
Gross damestic savings/GDP 8 0
Total debt seNice/expocports 4 7
1986-96 1986-06 2004 (average annualgrowth) GDP 6 5 6 9 7 7 GDP percapita 4 3 5 8 6 8 Exports of goods and services 252 158 278
1885 1827 3,067
0 9 13
41 70 29 15
79 91 m 115 ln
2004
452 35 6 664 28 3 32 2
-3 8 0 7
39 4 2 6
341 50 4
2 353 580
1364
I 9 2 3
30 59 80 39 75 62 E4 m 99
2006
52 4
2006 2006-09
8.4 7.5 7.4 6.4 15.0 15.0
Jevelopment diamond'
Life expectancy
GNI Gross
capita enrollment per primary
Access to improvedwatersource
- Vfefnam _ _ Low-incomegroup
Economlc rat ios '
Trade
1
Indebtedness
I -Vietnam .- Low-incomegroup
STRUCTURE o f the ECONOMY
(%of GDP) Agnculture Industry
services
Household final consumption expenditure General gov't final consumption expenditure
M anufactunng
ImpOitS Of goods and SeNlCES
(average annualgrowth) Agnculture Industry
M anufactunng SENICES
Household final consumption expenditure General gov't final consumption emenditure Gross capital formation Imports O f goods and SENICES
1986 I996
40.2 27.2 27.4 28.8 20.5 15.0 32.5 44.1
.. 73.8
.. 8.2
.. 419
1986-96 Isss -OS
3.5 4.1 7.3 D.0
8.4 5.7
.. 5.2
.. 3.8 25.8 9.8 24.2 6.5
4.3 no
2004
226 40.1 20.3 38.2
85.3 6.4
73.6
2004
3.5 0 . 2 0 . 1 7.5
7 1 7 8
D.5 25.2
/G rowth o f cap l ta l and GDP (%) I
00 01 02 03
2006 IG rowth o f expor ts and Impor t s (Oh) I
I W 01 02 03 04 05 -Exports - - O - l m p O r t S
Note: 2005 data are preliminary estimates. This table was producedfrom the Development Economics LDB database. 'Thediamonds showfourkey indicators inthecountry(in bold) cornparedwithits income-groupaverage. ndata aremissing,thediamondwiil
be incorndele.
108
1985
507
930
B A L A N C E O f P A Y M E N T S atsss
-4%
.8# 52
Current account balance 2 3 4
265 265
2 0 0
1996
9 0
23 3 6 0 0 7
1996
5.Q% 547
2m3 1785 7 593
855 2 097
I)R 213 m
2004
7 8 7 9
23 I 6 6 4 4
2004
26 503 $50
s 67l M%42 31954
3 574 8 E24
217 x16 737
zorte
8 3 8 4
2005
NguyeNguyen Van Tieiep CanaCanal
DonDong Tieien CanaCanal
My ThTho R.
Bo LaLai R.
Luong R
Luong R.
HaHam
Bassac RBassac R.
CailoCailon
R.
TreremR.
ManMang
Thi
Thit
R.Co Chien R
Co Chien R.
Ca
Can
Gui
oG
uioc
R.
Mekong R.
NORRTHHEERRNN TTRANS--MMEEKKOONG CORRIDDOOR
SOOUUTHHERNN CCOOAASSTTAALL COORRRRIIDDOORRCA MAUCA MAU
KIENKIENGIANGGIANG
BAC LIEUBAC LIEU
SOCSOCTRANGTRANG
CANCANTHOTHO
AN GIANGAN GIANG
DONG THAPDONG THAP LONG ANLONG AN
TRA VINHTRA VINH
BEN TREBEN TRE
VINH VINH LONGLONG
TIEN GIANGTIEN GIANG
BINHBINHDONGDONG
T.P. HOT.P. HOCHI MINHCHI MINH
Cho GaoCho GaoCanalCanal
Hon DatHon Dat
Kien Kien LuongLuong
Ha Ha TienTien
Thoi BinhThoi Binh
Nam CanNam Can
Hoa LuuHoa Luu
Tan HiepTan Hiep
Tra OnTra On
Tam BinhTam Binh
Cho LachCho Lach
My ThuanMy Thuan ThanhThanhVinhVinhDongDong
VinhVinhThuanThuan
Cai SanCai San
Binh LongBinh Long
ChoChoGaoGao
Gia RaiGia Rai
LapLapVoVo
Ho Chi Minh CityHo Chi Minh City
Biên HòaBiên Hòa
Thu DãuThu DãuMôtMôt
Tan AnTan An
Bac LiêuBac Liêu
My ThoMy Tho˜̃
Cà MauCà Mau
Rach GiáRach Giá
Long XuyênLong Xuyên
Sóc TrangSóc Trang
Trá VinhTrá Vinh
Cân Tho'Cân Tho'
Vi ThanhVi Thanh
Cao LanhCao Lanh
Bên TreBên Tre
Vinh LongVinh Long˜̃
NORTHERN TRANS-MEKONG CORRIDOR
SOUTHERN COASTAL CORRIDORCA MAU
KIENGIANG
BAC LIEU
SOCTRANG
CANTHO
AN GIANG
DONG THAP LONG AN
TRA VINH
BEN TRE
VINH LONG
TIEN GIANG
BINHDONG
T.P. HOCHI MINH
HAUGIANG
DONGNAI
Cho GaoCanal
Hon Dat
Kien Luong
Ha Tien
Thoi Binh
Nam Can
Hoa Luu
Tan Hiep
Tra On
Tam Binh
Cho Lach
My Thuan ThanhVinhDong
VinhThuan
Cai San
Binh Long
ChoGao
Gia Rai
LapVo
Ho Chi Minh City
Biên Hòa
Thu DãuMôt
Tan An
Bac Liêu
My Tho˜
Cà Mau
Rach Giá
Long Xuyên
Sóc Trang
Trá Vinh
Cân Tho'
Vi Thanh
Cao Lanh
Bên Tre
Vinh Long˜
C A M B O D I A CAMBODIA
Nguyen Van Tiep Canal
Dong Tien Canal
My Tho R.
Bo Lai R.
Luong R.
Ham
Bassac R.
CailonR.
TremR.
Mang
Thit
R.Co Chien R.
Can
Gui
ocR.
Mekong R.G u l f
o fT h a i l a n d
106° °
10°
107°
105°
10°
9°
105°
9°
Area of map
Ho ChiMinh City
100° 105°
20°
15°
10°
20°
15°
10°
100° 105°
THAILAND
CAMBODIACAMBODIACAMBODIA
VIETNAM
LAOP.D .R .
MYANMAR
C H I N A
G u l f o f
T h a i l a n d
G u l f o f
T o n k i n
Hanoi
This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries.
0 10 20 30
KILOMETERS
PROJECT WATERWAYS, DREDGED
PROJECT WATERWAYS, NOT DREDGED
PROJECT NAVIGATION LOCKS
PROJECT BRIDGES
PROJECT BANK PROTECTION WORKS
PROJECT ROADS
PROJECT RIVER FERRY TERMINAL
SELECTED CITIES AND TOWNS
PROVINCE CAPITALS
NATIONAL CAPITAL (INSET)
NATIONAL ROADS
OTHER ROADS
RIVERS/CANALS
MAJOR WATERWAY CORRIDORS
SEAPORTS
PROVINCE BOUNDARIES
INTERNATIONAL BOUNDARIES
MAY 2007
VIETNAM
MEKONG DELTA TRANSPORTINFRASTRUCTURE DEVELOPMENT PROJECT
IBRD 34803