Project Administration Manual

Project Number: 38594 Loan and/or Grant Number(s): L2573 May 2011

People's Republic of China: Guiyang Integrated Water Resources Management (Sector) Project

Contents
ABBREVIATIONS I. II. PROJECT DESCRIPTION IMPLEMENTATION PLANS A. Project Readiness Activities B. Overall Project Implementation Plan PROJECT MANAGEMENT ARRANGEMENTS A. Project Implementation Organization Roles and Responsibilities B. Key Persons Involved in Implementation C. Project Organization Structure COSTS AND FINANCING A. Project Investment Plan B. Detailed Cost Estimates by Expenditure Category C. Detailed Cost Estimates by Expenditure Category and Financier D. Allocation and Withdrawal of Loan Proceeds E. Contract and Disbursement S-curve G. Fund Flow Diagram FINANCIAL MANAGEMENT A. Financial Management Assessment B. Disbursement C. Accounting D. Auditing PROCUREMENT AND CONSULTING SERVICES A. Advance Contracting and Retroactive Financing B. Procurement of Goods, Works and Consulting Services C. Procurement Plan D. Consultant's Terms of Reference SAFEGUARDS A. Environmental Impacts and Benefits B. Social Demension III - 1 - - 3 - - 3 - - 4 - - 5 - - 5 - - 6 - - 7 - - 8 - - 10 - 10 - 10 - 11 - - 12 - - 13 - - 14 - - 14 - - 14 - - 16 - - 16 - - 17 - - 17 - - 17 - - 19 - - 27 - - 35 - 17 - - 19 - - 38 - - 38 - - 40 - - 43 - - 43 - - 44 - - 45 - - 46 -

III.

IV.

V.

VI.

VII.

VIII. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION A. Project Design and Monitoring Framework B. Monitoring C. Evaluation D. Reporting IX. X. XI. ANTICORRUPTION POLICY ACCOUNTABILITY MECHANISM RECORD OF PAM CHANGES

Project Administration Manual Purpose and Process The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. The Guiyang municipal government (GMG) is wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADBs policies and procedures. ADB staff is responsible to support implementation including compliance by GMG of its obligations and responsibilities for project implementation in accordance with ADBs policies and procedures. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan Agreement. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreement, the provisions of the Loan Agreement shall prevail. After ADB Board approval of the project's report and recommendations of the President (RRP) changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

II

Abbreviations ADB EA EARF EIA EIR EIRR EMDF EMDP EMP EPB FAR FIRR FSR GAP GFB GMG GPFD IA ICB IEE IWRM LIBOR MLR NCB NGO O&M PES PIO PLG PMO PPMS PRC QCBS RF SEIA SIEE SOE TA WRB WRS WSC WUA WUG Asian Development Bank executing agency environmental assessment and review framework environmental impact assessment environmental impact report economic internal rate of return ethnic minorities development framework ethnic minorities development plan environmental management plan Environmental Protection Bureau feasibility assessment report financial internal rate of return feasibility study report gender action plan Guiyang Finance Bureau Guiyang municipal government Guizhou Provincial Finance Department implementing agency international competitive bidding initial environmental examination integrated water resources management London interbank offered rate Ministry of Land Resources national competitive bidding nongovernment organization operation and maintenance payment for environmental service project implementing office project leading group project management office project performance management system Peoples Republic of China quality and cost-based selection resettlement framework summary environmental impact assessment summary initial environmental examination statement of expenditures technical assistance Water Resources Bureau water resources system water supply company water users association water users group

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I.

PROJECT DESCRIPTION

1. The proposed Project supports the policies and plans of the Government of the People's Republic of China (PRC) and Guiyang municipal government (GMG) for introducing integrated water resources management (IWRM) in Guiyang Municipality. The Project will finance a slice of the Guiyang Integrated Water Resources Master Plan (20062020, the Master Plan), a mediumterm investment plan for Guiyang Municipality. While the Master Plan is mainly focused on structural interventions and covers the whole range of water sector investments, including wastewater treatment and flood management, the Project will focus its activities on five segments of the Master Plan: (i) urban water supply, (ii) rural water supply and irrigation, (iii) irrigation system rehabilitation, (iv) soil and water conservation, and (v) small water storage structures. The Project will also address nonstructural interventions including institutional strengthening and capacity development, stakeholder participation, water tariff adjustments, integrated information management system, hydrological monitoring center, and other demandmanagement measures. The Project will be implemented over a 6-year period, 20102016. The Project will follow the sector investment approach and finance six core subprojects that have already been prepared, as well as an undetermined number of noncore subprojects that will be prepared and approved during project implementation. 2. Guiyang Municipality lies in the mountainous watershed that separates the Yangtze River Basin to the north from the Pearl River Basin to the south. While there are adequate natural water resources in Guiyang Municipality, significant problems relate to the following: (i) The difficulties in capturing sufficient quantities of water and its distribution to users. Much of the water drains into rivers as quick surface flows through numerous short creeks and streams that run deep in valleys, or through fast-flowing deep aquifers (groundwater rivers) through the limestone layers (karst areas). The poor condition of urban water supply infrastructure and Guiyang Municipalitys rapidly increasing urban population. This combination has seriously stretched the existing water supply capacity, resulting in reduced water pressure and water rationing in dry periods. The shortage of water for potable use and irrigation in the surrounding rural area, constraining the improvement of rural resident incomes and living standards. Only about half of the households in rural areas of Guiyang Municipality have piped water supply and about 420,000 rural residents face potable water shortages. The fragmented management in the Guiyang Municipality water sector. There is vertical fragmentation with different responsibilities between provincial, municipal, and district/county levels; and there is horizontal fragmentation with responsibilities for water sector management split between different functional departments of each level of government.

(ii)

(iii)

(iv)

3. GMG has given a commitment to develop solutions based on IWRM. GMG has also formulated the Master Plan, which covers all aspects of infrastructure needs while recognizing some of the deficiencies of current water sector management, including fragmented institutional arrangements and inadequate attention to water demand management. Investments under the Master Plan will focus predominantly on supply side interventions, but there is a need for parallel efforts in institutional reform and demand management, which will be addressed by the Project.

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4. The Project will provide extensive water resources benefits that will affect about 1.6 million residents or 45% of the total population of Guiyang Municipality. At project completion, expected benefits will include (i) increases in urban water supply of 40 million cubic meters (m3) per year; (ii) increases in rural water supply of 94.8 million m3 per year; (iii) improvement in the existing irrigation area of 10,773 hectares (ha) and an increase in the irrigation area of 18,815 ha; (iv) increased irrigation coverage from 0.3 mu to 0.5 mu per capita; (v) soil conservation treatment to an area of 800 square kilometers (km2) of land at risk of erosion; and (vi) provision of 105,100 small water storage tanks in rural areas to collect spring and rainwater for drinking, irrigation, and livestock. It is estimated that about 240,000 rural beneficiaries will be given access to safe drinking water as a result of the Project and about 59,200 farmers will benefit from improved irrigation services. 1. Impact and Outcome

5. The Project will support an area and time slice of the Master Plan, the achievement of which will contribute to sustainable and inclusive socioeconomic growth in Guiyang Municipality with corresponding reductions in poverty, especially in rural areas where the problem is endemic. The outcome of the Project will be that water supply and demand in Guiyang Municipality are balanced in a sustainable manner. 2. Outputs

6. The outputs include (i) improved water quality; (ii) increased supply of water for domestic, industrial, and irrigation purposes; (iii) improved water use efficiency; and (iv) improved institutional and technical capacity to manage water resources. The inputs and activities designed to achieve these outputs include a range of nonstructural and structural measures for improving the management of water resources, and reducing shortages of water for domestic use and irrigation. Nonstructural measures include institutional strengthening and capacity development; stakeholder participation and water tariff adjustments; integrated information management system; hydroglogic monitoring center; construction of reservoirs and water supply schemes; and the upgrading of agricultural irrigation systems, soil and water conservation, and rainwater collection and storage structures. These measures will significantly improve water services in Guiyang Municipality.

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II. A.

IMPLEMENTATION PLANS

Project Readiness Activities

2009 2010 O N D J F M A M J J A S Responsibility ADB, PMO ADB, PMO

Indicative Activities Advance contracting actions Retroactive financing actions Establish project implementation arrangements ADB Board approval Loan signing Government legal opinion provided Government budget inclusion Loan effectiveness

ADB ADB

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B. 7.

Overall Project Implementation Plan

The project was approved on 29 October 2009 and will be closed on 30 June 2016.
2010 2011 2012 2013 2014 2015 2016

Activity Guiyang Integrated Water Resources Management Yudongxia Water Supply Subproject Land Acquisition and Resettlement Design and Bidding Civil Works Construction Equipment Procurement and Installation Acceptance and Commissioning Jinlong Reservoir Subproject Land Acquisition and Resettlement Design and Bidding Civil Works Construction Equipment Procurement and Installation Acceptance and Commissioning Liaojuzhai Reservoir Subproject Land Acquisition and Resettlement Design and Bidding Civil Works Construction Acceptance and Commissioning Wudang Irrigation Rehabilitation Subproject Land Acquisition and Resettlement Design and Bidding Civil Works Construction Equipment Procurement and Installation Acceptance and Commissioning Huanxi Soil and Water Conservation Subproject Land Acquisition and Resettlement Design and Bidding Civil Works Construction Acceptance and Commissioning Xifeng Small Water Storage Tanks Design and Bidding Civil Works Construction Commissioning First Batch Noncore Subprojects ADB and Domestic Review and Approval Land Acquisition and Resettlement Design and Bidding Civil Works Construction Equipment Procurement and Installation Acceptance and Commissioning Second Batch Noncore Subprojects ADB and Domestic Review and Approval Land Acquisition and Resettlement Design and Bidding Civil Works Construction Equipment Procurement and Installation Acceptance and Commissioning Third Batch Noncore Subprojects ADB and Domestic Review and Approval Land Acquisition and Resettlement Design and Bidding Civil Works Construction Equipment Procurement and Installation Acceptance and Commissioning Fourth Batch Noncore Subprojects ADB and Domestic Review and Approval Land Acquisition and Resettlement Design and Bidding Civil Works Construction Equipment Procurement and Installation Acceptance and Commissioning Legend: External Tasks Progress

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III.

PROJECT MANAGEMENT ARRANGEMENTS

The project management office (PMO), under the overall direction and guidance of the 8. project leading group headed by the vice mayor of Guiyang Municipality, will coordinate project implementation work through the various design institutes and implementing agencies responsible for day-to-day implementation arrangements. The PMO will be responsible for directing project preparation activities, monitoring resettlement, managing environmental impacts, monitoring project progress and project impacts, and assisting participating districts and counties in implementing their subprojects. The PMO is comprised of staff primarily from Guiyang Municipal Water Resources Bureau, as well as representatives of the Guiyang Finance Bureau, the Development and Reform Commission, the Resettlement Office, and other line agencies of GMG. A. Project Implementation Organization Roles and Responsibilities Management Roles and Responsibilities
overall project planning, management, and implementation oversees preparation and implementation of the Project coordinates project implementation work through the various design institutes and IAs responsible for dayto-day implementation arrangements responsible for supervising project preparation activities, monitoring resettlement, managing environmental impacts, monitoring project progress and project impacts, and assisting participating districts and counties in implementing their subprojects recruits project implementation consultants, a dam construction advisory panel, and other institutions and experts to assist the PMO in project implementation, monitoring, and evaluation coordinates subproject preparation and implementation within its jurisdiction serve as IAs for their respective subprojects Overall project administration Orientations to GMG and implementing agencies including district, county and municipal governments and Disbursement of ADB loan proceeds

Project Implementation Organization

GMG Project Leading Group Project Management Office

Implementing Agencies ADB

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B.

Key Persons Involved in Implementation Officer's Name: Zheng Yong Position: Deputy Director General Telephone: 851 5522212 Email address Office Address

Executing Agency Guiyang Municipal Government

ADB Division Director

Mission Leader

Mission Leader (alternate)

Project Analyst

Mr. Kunhamboo Kannan Director, Agriculture, Environment, and Natural Resources Division, East Asia Department Telephone No. +63 2 632 4444 local 6139 Fax No.: +63 2 636 2534 Email address: kkannan@adb.org Office Address: Asian Development Bank, 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Mr. Yoshiaki Kobayashi Water Resources Management Specialist, Agriculture, Environment, and Natural Resources Division, East Asia Department Telephone No. +63 2 632 4444, local 6255 Fax No.: +63 2 636 2534 Email address: yoshikobayashi@adb.org Office Address: see above Mr. Qingfeng Zhang Principal Water Resources Management Specialist Agriculture, Environment, and Natural Resources Division East Asia Department Telephone No. +63 2 632 4444 local 6219 Fax No.: +63 2 636 2534 Email address: qingfengzhang@adb.org Office Address: see above Ms. Cynthia Carreon Project Analyst, Agriculture, Environment, and Natural Resources Division, East Asia Department Telephone No. +63 2 632 4444 Email address: ccarreon@adb.org Office Address: see above

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C.

Project Organization Structure

GMG (Guiyang Municipal Government)

PLG (Project Leading Group)

PMO (Project Management Office)

Water Resource Bureau Finance Bureau Development and Reform Commission Environment Protection Bureau Resettlement Office Land Resources Bureau

Design Institutes and Implementing Agencies

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IV.

COSTS AND FINANCING

The Project investment cost is estimated at $439.2 million equivalent, including taxes 9. and duties of $14.1 million equivalent. 1 Total project costs by component are summarized in the following table: A. Project Investment Plan Table: Project Investment Plan
Item A. Base Costb 1. Urban Water Supply a. Core subprojects b. Noncore subprojects 2. County, Township, and Irrigation Water Supply a. Core subprojects b. Noncore subprojects 3. Irrigation System Rehabilitation a. Core subproject b. Noncore subprojects 4. Soil and Water Conservation a. Core subproject b. Noncore subprojects 5. Small Water Storage Structures a. Core subproject b. Noncore subprojects 6. Project Management and Capacity Development a. Municipal Level Project Management b. Integrated Water Resources and Management, and Capacity Building Subtotal (A) Contingenciesc Financing Charges During Implementationd Totale Amounta

($ million)
58.1 9.5 10.8 158.1 1.1 43.3 0.7 40.7 0.3 55.8 4.1 11.6 394.1 27.9 17.2 439.2

B. C.
a b

Includes taxes and duties of $14.1 million. In 2009 prices. Base costs include the cost of environmental protection measures. c Physical contingencies computed at 5% for all costs other than beneficiary contributions. Price contingencies computed by year and expenditure type based on domestic and foreign price escalation factors prescribed by the Asian Development Bank. Price contingencies are not included for beneficiary contributions. d Interest during implementation computed at the 5-year forward London interbank offered rate plus a spread of 0.2% for 6 years for the Asian Development Bank loan and 5.97% for the local bank loan. e Numbers may not sum precisely because of rounding. Source: Asian Development Bank estimates.

The taxes and duties, specifically for categories to be financed 100% from counterpart resources.

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B. 10.

Detailed Cost Estimates by Expenditure Category

Detailed cost estimates and assumptions are shown below. Table: Detailed Cost Estimates by Expenditure Categorya
Foreign Exchange % Total Base Costs %

Local Item

Foreign ($ Million)

Total

A. Investment Costsb 1. Civil Works 61.0 Structures and Buildings 119.4 119.4 238.8 50.0 1.0 2. Other Civil Works 1.6 1.6 3.2 50.0 3. Equipment and Materials Equipment 5.1 20.4 25.5 80.0 6.0 Office Materials and Supplies 0.1 0.5 0.6 80.0 0.0 Subtotal (Equipment and 5.2 20.9 26.1 80.0 7.0 Materials) 4. Land Acquisition and Resettlement 14.0 55.8 0.0 55.8 0.0 Compensation 5.0 5. Environment Protection 19.9 0.0 19.9 0.0 6. Implementation Consulting Services International Consultants 0.0 0.7 0.7 100.0 0.0 National Consultants 1.8 0.0 1.8 0.0 0.0 Subtotal (Implementation Consulting Services) 1.8 0.7 2.5 28.0 1.0 7. Staff Costs Staff 1.0 0.0 1.0 0.0 0.0 5.0 8. Research, Investigation, and Design 20.9 0.0 20.9 0.0 9. Training and Capacity Building 1.4 0.5 1.9 25.0 0.0 3.0 10. Project Management 12.7 0.0 12.7 0.0 3.0 11. Beneficiary Laborc 11.2 0.0 11.2 0.0 Total Baseline Costs 251.1 143.0 394.1 36.0 100.0 Physical Contingenciesd 11.8 7.0 18.8 37.0 5.0 Price Contingenciesd 5.5 3.6 9.1 4.0 2.0 Total Project Costs 268.4 153.7 422.0 36.0 107.0 e 16.6 0.0 16.6 0.0 4.0 Interest During Implementation Commitment Charges 0.5 0.0 0.5 0.0 0.0 Total Costs to be Financed 285.6 153.7 439.2 35.0 111.4 Note: Figures may not add up to totals because of rounding. a In 2009 prices. b Includes taxes and duties of $14.1 million. c Will cover activities that the farmers will undertake under the soil and water conservation and small water storage structures. d Contingencies will be financed by the Government. Physical contingencies were computed at 5% of base costs. Price contingencies were computed using foreign escalation factors of 1.9% for 2009, 1.0% for 2010, 0.0% for 2011, 0.3% for 2012 and 0.5 thereafter, and a local escalation factor of 0.8% for 2009, 1.0% for 2010, 1.5% for 2011, and 2.0% thereafter. e Includes interest during construction computed at the 5-year forward London interbank offered rate, with a spread of 0.2%, and a commitment charge of 0.15% for the Asian Development Bank loan and 5.97% for 3 years for the commercial bank loan. Source: Asian Development Bank estimates.

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C.

Detailed Cost Estimates by Expenditure Category and Financiera Table A4.2: Detailed Cost Estimate by Expenditure Category and Financier ($ million) Asian Development Bank Commercial Bank Beneficiaries The Government Total Amount % Amount % Amount % Amount % Amount %

Item

Local Foreign (excluding Duties and Exchange taxes) Taxes

A. Investment Costs 1. Civil Works Structures and buildings 2. Other Civil Works 3. Equipment and Materials Equipment Office Materials and Supplies Subtotal Equipment and Materials 4. Land Acquisition and Resettlement Compensation 5. Environment Protection 6. Implementation Consulting Services International Consultants National Consultants Subtotal Implementation Consulting Services 7. Staff Costs 8. Research, Investigation, Design 9. Training and Capacity Building 10. Project Management 11. Beneficiary Labor
Total Project Costs

123.8 0.0 22.0 0.5 22.5 0.0 0.0 0.7 1.8 2.5 0.0 1.1 0.0 0.0 150.0 0.0 0.0 150.0

51.9 0.0 86.4 86.4 86.4 0.0 0.0 100.0 100.0 100.0 0.0 60.0 0.0 0.0 38.1 0.0 0.0 34.2

11.6 0.1 0.0 0.0 0.0 8.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 20.0 0.0 0.0 20.0

4.9 1.6 0.0 0.0 0.0 14.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.1 0.0 0.0 4.5

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 11.2 11.2 0.0 0.0 11.2

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 2.9 0.0 0.0 2.6

103.4 3.1 3.5 0.1 3.5 47.5 19.9 0.0 0.0 0.0 20.9 0.8 12.7 0.0 212.9 27.9 16.6 0.5 258.0

43.3 98.4 13.6 13.6 13.6 85.1 100.0 0.0 0.0 0.0 100.0 40.0 100.0 0.0 54.0 100.0 89.5 100.0 58.7

238.8 3.2 25.5 0.6 26.1 55.8 19.9 0.7 1.8 2.5 20.9 1.9 12.7 11.2 394.1 27.9 16.6 0.5 439.2

54.4 0.7 5.8 0.1 5.9 12.7 4.5 0.2 0.4 0.6 4.8 0.4 2.9 2.6 89.7 6.4 3.8 0.1 100.0

119.4 1.6 20.4 0.5 20.9 0.0 0.0 0.7 0.0 0.7 0.0 0.5 0.0 0.0 143.0 16.6 0.5 143.0

110.1 1.5 0.8 0.0 0.8 55.8 19.9 0.0 1.8 1.8 20.9 1.2 12.7 11.2 237.0 0.0 0.0 237.0

9.3 0.1 4.3 0.1 4.4 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.0 0.0 14.1 0.0 0.0 14.1

Contingencies Interest During Implementation Commitment Charges

Total

Note: Figures may not sum precisely because of rounding. Source: Asian Development Bank estimates.

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D.

Allocation and Withdrawal of Loan Proceeds

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS ADB FINANCING BASIS Total Amount Allocated for ADB Financing ($) Percentage of ADB Financing from the Loan Account

Number 1 2

Item

Category Works 123,900,000 51.9 percent of total expenditure Equipment and 22,500,000 86.4 percent of total expenditure Materials 3 Consulting Services 2,500,000 100 percent of total expenditure* Implementation 4 Training and Capacity 1,100,000 60 percent of total expenditure Building Total 150,000,000 * Exclusive of taxes and duties imposed within the territory of the Borrower.

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E.
Q1 Quarterly Contract Award Cumurative Disbursement Quarterly Cumurative
150.0 140.0 130.0 120.0 110.0 -

Contract and Disbursement S-curve

Q4
15.0 15.0 7.0 7.0

2011 Q2 Q3
-

Q1
15.0 7.0

2012 Q2 Q3
15.0 7.0 15.0 7.0

Q4
15.0 30.0 15.0 22.0

Q1
30.0 22.0

2013 Q2 Q3
30.0 22.0 30.0 22.0

Q4
20.0 50.0 15.0 37.0

Q1
10.0 60.0 37.0

2014 Q2 Q3
10.0 70.0 37.0 10.0 80.0 37.0

Q4
20.0 100.0 37.0 74.0

Q1
100.0 74.0

2015 Q2 Q3
100.0 74.0 30.0 130.0 74.0

Unit: Million US$ 2016 Q4 Q1 Q2

20.0 150.0 37.0 111.0 150.0 111.0 150.0 39.0 150.0

Contract Award and Disbursement Projection

Amount (Million US$)

100.0 90.0 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Cumurative Contract Award

Cumurative Disbursement

2011

2012

2013

2014

2015

2016

Year/Quarter

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F.

Fund Flow Diagram FLOW OF FUNDS AND LENDING ARRANGEMENTS

ADB ADB Loan MOF (on behalf of the Government) Relending a Guizhou Finance Bureau for GPG Onlending

ADB Lending Repayments of ADB Loan Project Disbursements

Guiyang Finance Bureau for GMG

PMO

Contractors and Consultants

ADB funds will be onlent on the same terms and conditions as those received by the MOF.

ADB = Asian Development Bank, GMG = Guiyang municipal government, GPG = Guizhou provincial government, MOF = the Ministry of Finance, PMO = project management office. Source: Asian Development Bank.

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V. A.

FINANCIAL MANAGEMENT

Financial Management Assessment

During project preparation, financial management assessments were conducted, 11. covering implementation arrangements, sustainability, and fiduciary risks and mitigation strategy. Based on these financial management assessments, each IA, PIO, and local finance bureau will be assisted in establishing a sound and solid financial management system at the beginning of project implementation, which will be in line with the Guidelines on the Financial Governance and Management of Investment Projects Financed by ADB. 2 A customized financial management manual has been prepared, which incorporates both domestic regulations and ADB policies and requirements to guide the financial management operations of all IAs. On this basis, along with the provision that the capacity strengthening is implemented early during implementation, the Projects financial management arrangements are considered satisfactory. B. Disbursement

12. The Loan proceeds will be disbursed in accordance with ADBs Loan Disbursement Handbook (2007, as amended from time to time), 3 and detailed arrangements agreed upon between the Government and ADB. 13. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS), 4 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB. 14. A project imprest account will be set up by the Guizhou Provincial Finance Department (GPFD) in a commercial bank acceptable to ADB after loan effectiveness. The initial amount to be deposited into the imprest account shall not exceed the equivalent of 10% of the total loan amount, or the estimated expenditures to be financed from imprest account for the first 6 months of implementation, whichever is lower. GPFD will be responsible for management, monitoring, maintenance, and reconciliation of the imprest account. SOE will be used only at GPFD level to request withdrawals from ADB or otherwise clarify the use of SOE by IAs. Disbursements from the imprest account will be supported by appropriate withdrawal applications and related documentations. Such documentations will demonstrate, among other things, that the goods/services (i) were produced in and procured from ADB members, and (ii) are eligible for ADB financing. 15. To ensure that adequate loan proceeds are available on a timely basis, Guiyang Finance Bureau (GFB) will maintain close coordination with GPFD. Measures to be taken to accelerate internal review and verification for withdrawal applications include the following: (i) GPFD will have at least two authorized representatives to sign withdrawal applications; (ii) GFB, the county/district financial bureaus, the PMO, and county/district PIOs will establish written procedures with specified time frames for review and verification of withdrawal applications
2 3 4

ADB. 2002. Guidelines on the Financial Governance and Management of Investment Projects Financed by ADB. Manila. Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf

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submitted by subprojects; and (iii) GPFD, GFB, and the local financial bureaus will release project funds immediately after receiving them to avoid delay in implementation. 16. Funds flow and disbursement arrangements between GMG (including Guizhou Finance Bureau and Guiyang Finance Bureau), local districts, GZWRDC and county finance bureaus, and contractors, suppliers, and consultants are detailed in the table below.
Procedures Direct Payment Funds Flow and Disbursement Arrangements Each county finance bureau will collect required supporting documents from contractors and/or suppliers directly or through the PIO, and send them to GFB. For consulting services, vehicles, and project management equipment which will be directly engaged or procured by the PMO and PIO, GFB will collect required supporting documents from consultants and/or suppliers directly or through the PMO and PIO. (ii) GFB will submit to GPFB withdrawal application together with a summary sheet and the required supporting documents. (iii) GPFB will sign the withdrawal application and summary sheets and submit to ADB (iv) ADB will pay the contractors, consultants, and/or suppliers directly. (i) GMG and/or county governments will initially fund eligible expenditures from their own resources. (ii) Each county finance bureau will collect required supporting documents from contractors and/or suppliers directly or through the PIO, and send them to GFB. For consulting services, vehicles, and project management equipment which will be directly engaged or procured by the PMO and PIO, GFB will collect required supporting documents from consultants and/or suppliers directly or through the PMO and PIO. (iii) For those expenditures that exceed $200,000/payment, GFB will submit to GPFB withdrawal application together with summary sheet and the required supporting documents. For those expenditures that do not exceed $200,000/payment, GFB will submit to GPFB withdrawal application together with SOE form. GFB will not have to submit the supporting documents to ADB, but should maintain such documents and make them available for ADB review upon request. (iv) GPFB will sign the withdrawal application and summary sheets/SOEs and submit to ADB (v) ADB will disburse loan proceeds to GPFB. (vi) GPFB will reimburse the expenditures and/or transfer the loan proceeds to GFB which will transfer to the county finance bureaus. The county finance bureaus will reimburse the expenditures. (i) GPFB on behalf of GMG will set up an imprest account in a commercial bank acceptable to ADB. (ii) Each county finance bureau will receive from the PIOs estimated expenditures for the first six months of project implementation and submit them to GPFB, through GFB. For consulting services, vehicles, and project management equipment which will be directly engaged or procured by the PMO and PIO, GFB will receive the estimated expenditures from the PMO and PIO, and submit them to GPFB. (iii) GPFB will submit to ADB a signed withdrawal application together with an estimate of expenditure sheet and evidence satisfactory to ADB that the imprest account has been duly opened. (iv) ADB will disburse initial advance to the imprest account. (v) GPFB will pay the suppliers and/or consultants from the imprest account and/or transfer the imprest fund to the relevant municipal finance bureaus which will transfer to the county finance bureaus. The county finance bureaus will pay the contractors and/or suppliers from the transferred imprest fund. (vi) For liquidation and replenishment of the imprest account, each county finance bureau will collect required supporting documents from contractors and/or suppliers directly or through the PIOs, and send them to GFB. For consulting services, vehicles, and project management equipment which will be directly engaged or procured by the PIO and PMO, GFB will collect required supporting documents from consultants and/or suppliers directly or through the PIO and PMO, and submit them to GPFB. (vii) As eligible expenditures are incurred and paid from the imprest account, GPFB will submit to ADB a withdrawal application for the liquidation and replenishment, SOE form, and the required supporting documents, if any (only for those expenditures that exceed $200,000/payment). For those expenditures that do not exceed $200,000/payment, GPFB (i)

Reimbursement

Imprest Fund

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will not have to submit the supporting documents to ADB, but should maintain such documents and make them available for ADB review upon request. Together with these documents, GPFB will also submit to ADB the corresponding bank statement and imprest account reconciliation statement. (viii) ADB will liquidate and replenish the imprest account.

C.

Accounting

17. The PMO and each IA will maintain records and accounts that identify the goods and services financed from the loan proceeds, financing resources received, expenditures incurred for the Project, and use of local funds. The accounts will be established and maintained in accordance with sound accounting principles and internationally accepted accounting standards. D. Auditing

18. The annual project accounts of GMG and the IAs will be audited by auditors acceptable to ADB. Audit coverage will include a special audit of project accounts, including separate opinions on (i) utilization of funds deposited in the Projects imprest account; (ii) the use of the SOE procedure, including whether the amount claimed is duly supported and verified; (iii) whether the EA is operating the imprest account in accordance with ADB procedures; (iv) procurements undertaken through community participation and force account; and (v) compliance with financial covenants specified in the loan and project agreements. The audit reports, management letter, and related financial statements will be submitted to ADB not later than 6 months after the end of the fiscal year to which they relate, or the project closing date if earlier. ADB has informed the Government of its policy on the submission of audit reports, which covers failure to submit audited project accounts and financial statements by the due date. A formal warning will be issued for audited accounts more than 6 months overdue, and disbursements will be suspended for audited accounts that are 12 months overdue.

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VI. A.

PROCUREMENT AND CONSULTING SERVICES Advance Contracting and Retroactive Financing

All advance contracting and retroactive financing will be undertaken in conformity with 19. ADBs Procurement Guidelines (February 2007, as amended from time to time) (ADBs Procurement Guidelines) 5 and ADBs Guidelines on the Use of Consultants (2007, as amended from time to time) (ADBs Guidelines on the Use of Consultants). 6 The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. The borrower, executing and implementing agencies have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the Project. 20. Advance contracting. The following items were identified as eligible for advance contracting: (i) civil works for the Yudongxia reservoir/dam construction ($0.98 million), (ii) civil works for Jinlong small reservoir/dam construction ($0.62 million), (iii) civil works for small water storage tanks ($1.18 million), (iv) civil works for irrigation system rehabilitation subprojects and rural water supply subprojects ($0.07 million), (v) civil works for soil and water conservation subprojects ($0.28 million), and (vi) capacity development and training ($0.40 million). All contracts for advance action will be undertaken in accordance with ADBs Procurement Guidelines and Guidelines on the Use of Consultants (2007, as amended from time to time). The Government has also been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the Project. 21. Retroactive financing. The retroactive financing shall be applied up to 20% of the ADB loan amount with respect to expenditures incurred not earlier than 12 months before the signing of the loan agreement. During the appraisal mission, it was identified that about $3.53 million equivalent would be required for retroactive financing. B. Procurement of Goods, Works and Consulting Services

22. All procurement of goods and works will be undertaken in accordance with ADBs Procurement Guidelines. 23. Major contracts for equipment and materials valued at $1 million equivalent or more will be awarded through ADBs international competitive bidding procedure. Smaller packages for equipment and materials valued at less than $1 million equivalent will be procured following the national competitive bidding procedure in accordance with the PRCs Tendering and Bidding Law (1999), subject to modifications agreed upon with ADB. Civil works contracts estimated to cost $10 million equivalent or more will be carried out using international competitive bidding, while those costing less than $10 million equivalent will be carried out using national competitive bidding. Shopping will be allowed for goods contracts valued at $100,000 equivalent or less, and for civil works contracts valued at $200,000 or less. Small civil works contracts valued at $100,000 equivalent or lessfor subprojects involving small-scale reservoirs, irrigation system rehabilitation, soil and water conservation, and small water storage tanksmay be carried out on a force account basis or through community participation, whenever practicable, to ensure sustainability and to achieve the Projects social objectives. 7 The procedures, specifications,
5 6 7

Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf In the case of the small subprojects, it is only when community participation would not be practical that force account would be considered as a last resort, particularly when the works are scattered in remote locations for

- 17 -

and contract packaging should facilitate such participation, provided it is efficient to (i) involve local communities and/or nongovernment organizations (NGOs), (ii) use more local knowledge and materials, and (iii) employ labor-intensive and other appropriate technologies. The relevant sections of ADBs Anticorruption Policy (1998, as amended to date) will be included in all procurement documents and contracts. 24. Before the start of any procurement ADB and the Government will review the public procurement laws of the central and state governments to ensure consistency with ADBs Procurement Guidelines. 25. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Section C. 26. All consultants and nongovernment organizations (NGOs) if appropriate, will be recruited according to ADBs Guidelines on the Use of Consultants. 8 The terms of reference for all consulting services are detailed in Section D. 27. The Project will support a total of 24 person-months of international consulting services and 171 person-months of national consulting services during the first 4 years of project implementation to support the PMO, local PIOs, and IAs in project implementation and capacity development. 9 The consultants will strengthen their project implementation capabilities to ensure that (i) the subproject IAs are able to function as effective project management units; (ii) noncore subprojects utilizing ADB loan finance can be appraised and approved in a timely manner, based on agreed evaluation criteria; (iii) the implementation of water demand management activities will promote more efficient use of water among all categories of users; and (iv) social, resettlement, and environmental impacts are monitored and mitigated. Capacity development for IAs will be achieved through consultant inputs under the Project and TA for Strengthening Water Resources Management in Guiyang, hands-on training on project facilities, training in the PRC, and international training financed by the loan. This type of capacity development is not new to the PRC, so national experts have the knowledge to provide costeffective support. However, the overall capacity development program is large and diverse, and international consultants will provide general direction to the programs content. An international consulting firm will be recruited in accordance with ADBs Guidelines on the Use of Consultants using the quality and cost-based selection method (80:20) with full technical proposals to carry out the international and national consulting services. Detailed design, and engineering and construction supervision, financed with the Governments counterpart funds, will be carried out by qualified local design institutes recruited by the local IAs.

8 9

which no local contractors express interest, and when no nongovernment organizations or community-based organizations can participate. If force account is to be used for the small subprojects, prior ADB approval is required. Checklists for actions required to contract consultants by method available in e-Handbook on Project Implementation at: http://www.adb.org/documents/handbooks/project-implementation/ Twenty person-months of national consulting services are being used to support the following activities during the second phase of the TA for strengthening water resources management in Guiyang: (i) development of an information management system, (ii) demand management initiatives, and (iii) training for capacity building of IAs involved in the Project.

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C.
A.

Procurement Plan

Process Thresholds, Review, and 18-Month Procurement Plan 1. Project Procurement Thresholds

28. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works. Procurement of Goods and Services
Procurement Method ICB Works ICB Goods NCB Works NCB Goods Shopping Works Shopping Goods Exceptional Methods: CP and/or FA To be used above/below ($) >/= $10,000,000 >/= $1,000,000 < $10,000,000 > $200,000 < $1,000,000 > $100,000 </= $200,000 </= $100,000 Small civil works packages of $100,000 equivalent or less, in subprojects involving (i) small water storage tanks, (ii) water and soil conservation, (iii) irrigation system rehabilitation, and (iv) small-scale reservoirs, may be carried on through CP in procurement and/or on a FA basis. The FA is proposed as these works are small and scattered in remote locations for which qualified construction firms are unlikely to bid at reasonable prices. The CP is a desirable method in these small subprojects to ensure sustainability and ownership of farmers and to achieve the Projects social benefits since CP can (i) call for the participation of local communities, and (ii) employ laborintensive and other appropriate technologies.

The CP should be applied first so that it is only when CP would not be practical that FA would be considered as a last resort, particularly when the works are scattered in remote locations for which no local contractors express interest, and when no NGOs or community-based organizations can participate. ADB must be satisfied that the construction facilities are efficient and the executing agency and implementing agencies are capable of undertaking the works quickly and to the required quality, at reasonable cost. CP = community participation, FA = force account, ICB = international competitive bidding, NCB = national competitive bidding.

2.

ADB Prior or Post Review

29. Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the Project.
Procurement Method Procurement of Goods and Works ICB Works ICB Goods NCB Works NCB Goods SP for Works SP for Goods CP and/or FA Recruitment of Consulting Services QCBS Consultant Qualification Selection Prior or Post Prior Prior Post Post Post Post Post Prior Prior Comments

ADBs prior review and approval is required for the first NCB bidding documents for goods and for works.

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ADB = Asian Development Bank, CP = community participation, FA = force account, ICB = international competitive bidding, NCB = national competitive bidding, NGO = nongovernment organization, QCBS = quality and cost-based selection, SP = shopping.

3.

Goods and Works Contracts Estimated to Cost More than $1 Million under the Core Subprojects

30. The following table lists goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.
Ref Contract 1. 1.1 1.1.1 1.1.2 1.1.3 Contract Procurement Value Method a ($000) Yudongxia Water Supply Subproject Civil works Reservoir/Dam 8,764.0 NCB constructionb Description Curtain grouting (reservoir areas) 4,075.1 NCB Expected Date of Advertisement Prior Review Comments

December 2009 December 2009

yes no

Yes, if it is the first NCB civil works

Sewage 2,379.6 NCB February 2010 no interception and collecting system 3,806.5 NCB February 2010 no 1.1.4 Water treatment c plant construction 1.1.5 Water delivery 4,238.7 NCB February 2010 no system 1.2 Goods 1.2.1 Water treatment 4,165.8 ICB September 2010 yes plant equipment 1.2.2 Water delivery 4,766.0 ICB September 2010 yes system pipes and other goods and their installation 2. Jinlong Small-Scale Reservoir Subproject 2.1 Civil works 4,632.0 NCB December 2009 no 2.1.1 Reservoir/Dam d construction 2.1.2 Canals, tunnel, 2,500.0 NCB December 2010 no pump station ICB = international competitive bidding, NCB = national competitive bidding. a $1 = CNY6.85 b Includes dam, spillway, tunnel, buildings, water intake, temporary works, saddle dam, public facilities, dam observation equipment and its installation, electric equipment, river regime automatic forecast system, and survey and technical design. c Includes tanks, buildings, temporary works, survey, and design. d Includes dam, spillway, tunnel, buildings, water intake, temporary works, public facilities, dam observation equipment and its installation, electric equipment, river regime automatic forecast system, and survey and technical design

4.

Consulting Services Contracts Estimated to Cost More than $100,000

31. The following table lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.
Ref Contract Description Contract Value a ($000) Recruitment Method Advertisement Date International or National Assignment Comments

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Ref Contract 1.

Description Project Implementation Consultants

Contract Value a ($000) 2,512.7

Recruitment Method QCBS (Quality Cost 80:20)

Advertisement Date March 2010

International or National Assignment A team of international and national experts

Comments

QCBS = quality and cost-based selection. a $1 = CNY6.85

5.

Goods and Works Contracts Estimated to Cost Less Than $1 Million and Consulting Services Less Than $100,000 Under the Core Subprojects

32. The following table groups smaller-value goods, works, and consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.
Ref Contr act A. 1. 1.1 1.1.1 1.2 1.2.1 1.2.2 1.2.3 2. 2.1 Contract Procurement Value Method a ($000) Civil Works, Goods, and Related Services Description Yudongxia Water Supply Subproject Civil works Roads and access 833.3 NCB roads Goods Reservoir metal 292.0 NCB structuresb Reservoir mechanic 654.7 NCB and electric equipment Vehicles 51.0 SP Jinlong Small-Scale Reservoir Subproject Goodsmetal works, 249.0 NCB mechanic and electric equipment Liaojiuzhai Small-Scale Reservoir Subproject Civil works 289.5 NCB Reservoir/Dam c construction Irrigation canals, 102.6 SP inverted siphon, pump station Wudan Irrigation System Rehabilitation Civil works Qiankanjing primary 242.6 NCB canal and Huanghuashao canals Dongnong branch 47.4 SP canals 121.7 SP Lizi and Huangchenshan branch canals Wanpeng branch 92.1 SP canals Sanjiangdagou 111.5 SP primary and branch canals Goodshydrological 20.0 SP forecast equipment d Huaxi Soil and Water Conservation Expected Date of Advertisement Prior Review Comments

December 2009 March 2010 March 2010 March 2010 March 2010

no yes no no no Yes, if it is the first NCB goods

3. 3.1 3.1.1 3.1.2

December 2010 December 2010

no no

4. 4.1 4.1.1

March 2010

no

4.1.2 4.1.3 4.1.4 4.1.5 4.2 5.

March 2010 March 2010 March 2010 March 2010 September 2010

no no no no no

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Ref Contr act 5.1 5.1.1 5.1.2 5.1.3 6. 6.1

Description

Contract Value ($000)a

Procurement Method NCB SP NCB/SP

Expected Date of Advertisement April 2010 April 2010 April 2010

Prior Review no no no

Comments

CP/FA December 2009 no about 250 tanks CP = community participation, FA = force account, NCB = national competitive bidding, SP = shopping. a $1 = CNY6.85 b Includes gates, hoist, and other metal works and their installation. c Includes dam, spillway, tunnel, buildings, water intake, temporary works, gates, public facilities, dam observation equipment and its installation, electric equipment, river regime automatic forecast system, and survey and technical design. d Excluding beneficiary contributions.

Civil works Slope water control 240.5 works Terrace works 69.8 Trees and vegetation 228.4 measures Xifeng Small Water Storage Tanks Civil works 292.0

B.

Indicative List of Packages Under the Noncore Subprojects

33. The following table groups goods, works, and consulting services contracts for all indicative noncore subprojects, which are subject to be further evaluated by ADB.
Est. Value ($000) 1,077.4 1,656.2 397.1 757.2 839.0 356.1 Est. No. of Procurement Contracts Method Comments

No. Name of Subproject Reservoir Subprojects A. Urban Water Supply 1. Wenggang Reservoir

Location

General Description

Est. Value (CNY000) 7,380.0 11,345.2 2,720.0 5,187.0 5,747.3 2,439.5

Huaxi

2.

Xiaolongtan Reservoir

Huaxi

Reservoir/Dam construction Canal systems Metal structures Reservoir/Dam including metal structures Canal systems Reservoir metal structures

1 1 1 1 1 1

NCB NCB NCB NCB NCB NCB

B.

Rural Water Supply and Irrigation B1 County Water Supply 1. Jianchaogou Reservoir

2.

Baian River Reservoir

Reservoir/Dam Works for treatment plant (including equipment) Reservoir metal structures Kaiyang Reservoir/Dam Metal structures Reservoir/Dam Pipe system Reservoir metal structures Wudang Reservoir/Dam Reservoir metal structures Huaxi

Xifeng

18,210.0 11,620.5

2,658.4 1,696.4

1 1

NCB NCB

1,470.0 25,395.3 2,111.1 20,778.3 14,412.0 1,152.8 4,799.7 4,855.2

214.6 3,707.3 308.2 3,033.3 2,103.9 168.3 700.7 708.8

1 1 1 1 1 to 2 1 1 1 to 2

NCB NCB NCB NCB NCB NCB NCB NCB

B2 Township Water Supply 1. Limu Reservoir

2.

Jinjiaqing Reservoir

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No. 3. 4. 5. 6. 7.

Name of Subproject Baizhitian Reservoir Chuandong Reservoir Beilongzhai Reservoir Hexi Reservoir Gejiazhai Reservoir

Location Wudang Wudang Qingzhen Qingzhen Qingzhen

8.

Xiguan Reservoir

Qingzhen

9.

Machanghe Reservoir

Qingzhen

10. Zhongqilin Reservoir 11. Shili Industrial Corridor

Qingzhen Xiuwen

12. Liangchahe Reservoir

Xifeng

13. Zhongba Reservoir 14. Majiaqing Reservoir 15. Gaodong Reservoir 16. Maozhulin Reservoir 17. Shamulin Reservoir 18. Jianshang Reservoir 19. Zhanjiawan Reservoir 20. Yunwan Reservoir

Xifeng Xifeng Xifeng

General Est. Value Description (CNY000) Water treatment 1,650.0 plant Reservoir/Dam 6,362.5 Pipe system 2,161.7 Reservoir/Dam 5,788.7 Pipe system 2,974.9 Reservoir/Dam 5,953.3 and canal systems Reservoir/Dam 7,984.0 Pipe system 6,163.9 Metal structures 3,885.5 Reservoir/Dam 31,750.9 Pipe system 5,247.6 Reservoir metal 6,085.0 structures Reservoir/Dam 27,803.9 Pipe system 13,273.3 Reservoir metal 19,375.1 structures Reservoir/Dam 6,900.0 Pipe system 11,674.9 Reservoir metal 1,579.9 structures Reservoir/Dam 25,459.6 Pipe system 7958.4 Reservoir/Dam 7,535.0 and canal systems Water treatment 9,065.0 plant Reservoir/Dam 54,411.1 Pipe system 1,810.2 Reservoir metal 6,742 structures Reservoir/Dam 5,934.6 Pipe system 3,576.2 Reservoir/Dam 2,784.2 20,379.7 1,038.6 8,849.0 3,941.8 6,899.7 3,517.3 5,692.7 7,700.2 2,075.3 5,205.1 5,314.9

Est. Est. No. Value of Procurement Method Comments ($000) Contracts 240.9 1 NCB 928.8 315.6 845.1 434.3 869.1 1165.5 ,899.8 567.2 4,635.2 766.1 888.3 4,058.9 1,937.7 2,828.5 1,007.3 1,704.4 230.6 3,716.7 1,107.9 1,100.0 1,323.4 7,943.2 264.3 984.2 866.4 522.1 406.5 2,975.1 151.6 1,291.8 575.4 1,007.3 513.5 831.1 1,124.1 303.0 759.9 775.9 1 1 1 1 1 1 1 to 2 1 1 1 1 1 1 to 2 1 1 1 to 2 1 1 1 to 2 1 to 2 1 to 2 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB ICB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB

Reservoir/Dam Pipe system Kaiyang Reservoir/Dam Pipe system Kaiyang Reservoir/Dam and pipe systems Kaiyang Reservoir/Dam and pipe system Kaiyang Reservoir/Dam and pipe system Xiuwen Reservoir/Dam Pipe system

B3 Irrigation, Human, and Livestock Water Supply 1. Yunguan Reservoir Nanming Reservoir/Dam Pipe system

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No. Name of Subproject 2. Pingshan Reservoir 3. 4. 5. 6. 7. 8. 9. Guanyinshan Reservoir Daping Reservoir Longqing Reservoir Daqing Reservoir Xintao Reservoir Damaixi Reservoir Ciguchong Reservoir

Location Baiyun Huaxi Huaxi Wudang Wudang Wudang Qingzhen Qingzhen Xiuwen Xiuwen Xiuwen Xiuwen Xiuwen Xiuwen Xiuwen Xiuwen Xiuwen Kaiyang

10. Baixi Reservoir 11. Liubaishui Reservoir 12. Heying Reservoir 13. Hualang Reservoir 14. Chagou Reservoir 15. Dayan Reservoir 16. Linjiawan Reservoir 17. Xinmin Reservoir 18. Qinggou Reservoir 19. Xiaoshangou Reservoir C. 1. 2. 3. 4. 5. 6. 7. 8. Irrigation System Rehabilitation Shatian Irrigation YanshanMaijia Irrigation System Huaxi Irrigation System

General Description Reservoir/Dam Pipe system Reservoir/Dam Metal structures Metal structures Reservoir/Dam Pipe system Reservoir/Dam Metal structures Pipe system Reservoir/Dam Pipe system and Reservoir/Dam Pipe system and Reservoir/Dam Pipe system Reservoir/Dam Pipe system and Reservoir/Dam Pipe system Reservoir/Dam Pipe system and Reservoir/Dam Pipe system Reservoir/Dam Pipe system Reservoir/Dam Pipe system Reservoir/Dam Pipe system Reservoir/Dam Pipe system and Reservoir/Dam Pipe system and Reservoir/Dam Pipe system and Reservoir/Dam Civil works Civil works Civil works

Est. Value (CNY000) 4,582.5 3,460 1,440.0 1,749.5 4,988.2 2,230.9 3,543.6 1,364.1 1,355.6 3,795.1 6,247.0 24,290.0 2,546.4 6,964.6 8,990.1 565.3 1,422.8 9,340.0 17,720.0 1,364.4 2,658.2 2,429.5 3,754.6 3,305.6 6,171.5 1,813.1 3,596.2 1,731.9 9,570.0 5,130.0 12,420.0 42,230.0 2,410.0 78,190.0 9,940.0 52,010.0 9,880.0 4,110.0

Est. Est. No. Value of Procurement Method Comments ($000) Contracts 1 NCB 669.0 505.1 210.2 255.4 728.2 325.7 517.3 199.1 197.9 554.0 912.0 3,546.0 371.7 1,016.7 1,312.4 82.5 207.7 1,363.5 2,586.9 199.2 388.1 354.7 548.1 482.6 900.9 264.7 525.0 252.8 1,397.1 748.9 1,813.1 6,165.0 351.8 11,414.6 1,451.1 7,592.7 1,442.3 600.0 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 various various various various 1 various various various various various NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB NCB/SP NCB NCB NCB NCB NCB NCB SP NCB NCB NCB SP NCB NCB/SP/CP/ FA NCB/SP/CP/ FA NCB/SP/CP/ FA NCB/SP/CP/ FA SP NCB/SP/CP/ FA NCB/SP/CP/ FA NCB/SP/CP/ FA NCB/SP/CP/ FA NCB/SP/CP/ CP/FA may be used for small works of less than $100,000

Baiyun Baiyun Huaxi

Qingzhen Midsize Qingzhen Civil works Irrigation System Metal structures Xiuwen Midsize Xiuwen Civil works Irrigation System Xifeng Irrigation System Xifeng Civil works Wengjing System Yangchang System Qiankanqing Irrigation Kaiyang Civil works Irrigation Kaiyang Civil works Irrigation Wudang Civil works

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No. Name of Subproject Location 9. System 10. Wudang Midsize Wudang Civil works Irrigation System Metal structures D. Soil and Water Conservation 1. Upstream and Civil works Midstream of Nanming River Catchment 2. Maotiao River Qingzhen Civil works Catchment Wudang Civil works 3. Water Resource Areas of Three Northern Counties Xiuwen Civil works

General Description

Est. Value (CNY000) 32,120.0 1,310.0 159,400.0 36,710.0 9,730.0 19,900.0 19,540.0 19,530.0

Est. Value ($000)

Est. No. of Procurement Contracts Method Comments FA 4,689.1 various NCB/SP/CP/ FA 1 SP 191.2 various various various various various various NCB/SP/CP/ CP/FA may FA be used for small works NCB/SP/CP/ of less than FA $100,000 NCB/SP/CP/ FA NCB/SP/CP/ FA NCB/SP/CP/ FA NCB/SP/CP/ FA CP/FA/SP CP/FA/SP CP/FA/SP CP/FA/SP CP/FA/SP (i) Various small packages each costing $100,000 or less. (ii) Materials may be included in civil works packages.

23,270.1 5,359.1 1,420.4 2,905.1 2,852.6 2,851.1

Kaiyang Civil works Xifeng E. 1. 2. 3. 4. 5. Small Water Storage Tanks Xifeng Wudang Qingzhen Xiuwen Kaiyang Civil works

Civil works Civil works Civil works Civil works Civil works

15,790.0 40,920.0 84,240.0 75,870.0 165,740.0

2,305.1 5,973.7 12,297.8 11,075.9 24,195.6

various various various various various

F. Management System 1. Civil Works 1.1 Integrated Management Center 2. Goods 2.1 Office and Management Equipment 2.2 Water Quality Monitoring Equipment 2.3 Information Collection System 2.4 Information Transmission System 2.5 Network System 2.6 Automatic Control System 2.7 Software 2.8 Equipment for 46 Water Users Associations 3. Consulting Services 3.1 Training and Capacity Building 3.2. Design, Survey,

18,000.0

2,627.7

National Non-ADB accepted Financing procedures NCB/SP NCB/SP ICB/NCB NCB/SP NCB/SP NCB/SP NCB/SP NCB/SP QCBS Non-ADB

3,500.0 6,500.0 24,000.0 3,200.0 4,000.0 3,800.0 3,700.0

510.9 948.9 3,503.6 467.2 583.9 554.7 540.1 620.0 1,100.0

1 to 2 1 to 2 3 to 4 1 to 2 1 to 2 1 to 2 1 to 2 7 2 to 3

Use

national

- 25 -

Est. No. of Procurement Contracts Method Comments financing, about 10% of the total base costs ADB = Asian Development Bank, CP = community participation, FA = force account, ICB = international competitive bidding, NCB = national competitive bidding, NGO = nongovernment organization, QCBS = quality and cost-based selection, SP = shopping. Source: Asian Development Bank. General No. Name of Subproject Location Description Monitoring, and accepted Engineering Supervision procedures Est. Value (CNY000)

Est. Value ($000)

C.

National Competitive Bidding

34. The Borrowers Law of Tendering and Bidding of the Peoples Republic of China promulgated by Order No. 21 of the President of the Peoples Republic of China on 30 August 1999, is subject to the following clarifications required for compliance with the guidelines: (i) All invitations to prequalify or to bid shall be advertised in the national press, or official gazette, or a free and open access website in the Borrowers country. Such advertisement shall be made in sufficient time for prospective bidders to obtain prequalification or bidding documents and prepare and submit their responses. In any event, a minimum preparation period of 30 days shall be given. The preparation period shall count (a) from the date of advertisement, or (b) when the documents are available for issue, whichever date is later. The advertisement and the prequalification and bidding documents shall specify the deadline for such submission. Qualification requirements of bidders and the method of evaluating the qualification of each bidder shall be specified in detail in the bidding documents, and in the prequalification documents if the bidding is preceded by a prequalification process. If bidding is preceded by a prequalification process, all bidders that meet the qualification criteria set out in the prequalification document shall be allowed to bid and there shall be no limit on the number of prequalified bidders. All bidders shall be required to provide a performance security in an amount sufficient to protect the Borrower/Project Executing Agency in case of breach of contract by the contractor, and the bidding documents shall specify the required form and amount of such performance security. Bidders shall be allowed to submit bids by mail or by hand. All bids shall be opened in public; all bidders shall be afforded an opportunity to be present (either in person or through their representatives) at the time of bid opening, but bidders shall not be required to be present at the bid opening. All bid evaluation criteria shall be disclosed in the bidding documents and quantified in monetary terms or expressed in the form of pass/fail requirements. No bid may be rejected solely on the basis that the bid price falls outside any standard contract estimate, or margin or bracket of average bids established by the Borrower/Project Executing Agency. Each contract shall be awarded to the lowest evaluated responsive bidder, that is, the bidder who meets the appropriate standards of capability and resources and whose bid has been determined (a) to be substantially responsive to the bidding documents, and (b) to offer the lowest evaluated cost. The winning bidder shall not be required, as a condition of award, to undertake responsibilities

(ii)

(iii) (iv)

(v) (vi) (vii) (viii) (ix)

- 26 -

(x)

(xi)

(xii)

for work not stipulated in the bidding documents or otherwise to modify the bid as originally submitted. Each contract financed with the proceeds of the Loan shall provide that the suppliers and contractors shall permit ADB, at its request, to inspect their accounts and records relating to the performance of the contract and to have said accounts and records audited by auditors appointed by ADB. Government-owned enterprises in the Borrowers country may be permitted to bid if they can establish that they (a) are legally and financially autonomous, (b) operate under commercial law, and (c) are not a dependent agency of the Borrower/Project Executing Agency. Re-bidding shall not be allowed solely because the number of bids is less than three. D. Consultant's Terms of Reference

1.

Introduction

35. This document sets out the terms of reference for loan consulting services needed to ensure the smooth implementation of the Guiyang Integrated Water Resources Management Project (GIWRMP). The formal Client for the consulting services will be the Guiyang Project Management Office (GPMO), although the consulting services will be provided to a number of different implementing agencies operating at the municipal, county/district and township levels. As Client, GPMO will act in a coordinating and supervisory role, ensuring the consulting services are provided in a timely and effective manner. 2. Project Background

The GIWRMP is an ADB supported initiative to improve the availability of water 36. resources in Guiyang Municipality and to introduce practical measures to implement the concepts of integrated water resources management at both the municipal and more localized levels. The GIWRMP is utilizing an ADB sector loan in the sum of US$150million. Guiyang municipal government has prepared and approved the Guiyang Integrated Water Resources Management Plan to guide the development of the water sector within the municipality. It is this sector plan that underpins the Project and the application of an ADB sector loan. 3. The Project

37. The GIWRMP comprises 6 core sub-projects which have been pre-approved by ADB as part of the loan approval process. Some basic details on each of the individual core subprojects are as follows: Urban Water Supply Component, Yudongxia Reservoir (18.6 Mm3 capacity) and water treatment and supply (32.9 Mm3/y) in Wudang and Yunyan Districts of Guiyang Municipality; Township and Rural Water Supply Component, Jinlong Reservoir (4.18 Mm3 capacity) and water supply (3.22 Mm3/y for County township and 5,490 rural village population) in Xiuwen County and irrigation water supply (6,468 mu farmland), and Liaojiuzhai Reservoir (183,000 m3 capacity) and irrigation water supply (1,800 mu) in rural Xifeng County;

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Midsize Irrigation System Rehabilitation Component, 29 km of primary and secondary irrigation canal improvements for 6,980 mu farmland in six villages of Shuitian town in northern Wudang District; Small Scale Water Storage Component, 250 storage structures in Shiqiao Village of Xiaozhaiba Town in rural Xifeng County; and Soil and Water Conservation Component, 15 km2 catchment area of Huaxi reservoir located in Shiban Town upstream of Nanming River. 38. The core sub-projects have an estimated total cost of CNY 520 million and will utilize US$33 million of the planned ADB loan. The balance of the ADB loan will be used to help finance other sub-projects within the sector plan as referred to above. 4. Objectives of the Proposed Consulting Services 4.1 39. General

The objectives of the consulting services are to give support and advice so that: The approval of sub-projects to be financed from the uncommitted part of the ADB loan (i.e., the non-core subprojects) can be obtained in a timely manner. Project implementation of the core sub-projects proceeds in accordance with the agreed project implementation plan and that sufficient skills and knowledge transfer is achieved to allow subsequent implementation of the non-core sub projects; The establishment and capacity building of sustainable institutions/user groups to provide for project sustainability, and project design and implementation arrangements that include for the active participation of water users; and Implementation of water demand management activities to promote the more efficient use of water amongst all categories of user. 4.2 Objectives for the Approval of Non-Core Sub-projects

40. The objectives of this part of the consulting services are to assist GPMO and their appointed design and other related institutes to prepare documents in accordance with ADB requirements to facilitate timely approval of non core subprojects. Specifically these objectives include: selection of suitable non-core sub-projects in accordance with agreed selection criteria for use of the ADB loan timely preparation of ADB format sub-project feasibility studies in accordance with agreed sub-project assessment criteria timely preparation of required ADB safeguard documents. 4.3 Project Management and Implementation Support Objectives

41. The objectives of this part of the consultancy are to assist GPMO, local PMOs and the IAs to improve their ability to successfully implement the different components of the Project. Specifically these objectives include: The development of realistic and well considered project plans and project management systems Efficient procurement in accordance with ADB procedures - 28 -

The assessment of project effectiveness and the management of related social and environmental issues. 4.4 Institutional and Capacity Building Objectives

42. The objectives of this part of the consultancy are to assist the IAs and local PMOs to create implementation arrangements for each sub-project that provides for financial and management sustainability of the project facilities. Specifically these include: Deciding asset ownerships arrangements most suited to local circumstances and creating long term stakeholder commitment; Encouraging active stakeholder participation in the above decisions and in determining arrangements for the operation and management of project facilities; Ensuring the interests of disadvantaged groups are safeguarded in the operations and management arrangements and in the allocation of water rights. enhancing the standard of corporate governance and management transparency in the IAs and in water user and other community based groups Undertake required training to ensure local project institutions can operate effectively in accordance with their defined roles and responsibilities. 4.5 Water Demand Management Objectives

43. The objectives of this part of the consultancy are to ensure that the demand side of integrated water resources management is given due emphasis so that water is used efficiently and without undue waste of water: Specifically the objectives include: Appropriate use of pricing as a tool for water demand management. Improved public awareness in water saving Increased recycling of water by industrial users Improvements in the efficiency of irrigation systems Reductions in water leakage in urban areas. 5. Scope of Work

44. The Consultant will work with GPMO, designated IAs, local Water Bureau and community organizations, to provide assistance and advice on the following: 5.1 Preparation and Approval of Non-Core Subprojects Assist as needed in the preparation of non-core sub projects suitable for ADB financing by giving advice on the application of agreed selection criteria. Provide training in the financial and economic analysis of projects in accordance with relevant ADB guidelines Provide advice and support in the preparation of resettlement plans based on the agreed resettlement framework (RF) Provide advice and support in the preparation of indigenous peoples plans based on the agreed Indigenous peoples framework (EMDF) Provide advice and support in the preparation of environmental safeguard documents in accordance with ADB environmental guidelines Provide training in all the above - 29 -

Liaise with ADB as requested by the Client in order to expedite sub project approvals. 5.2 Project Management and Implementation Support The development of comprehensive project implementation plans and procedures for monitoring and control. The introduction of document control and contract management systems Help establish International Competitive Bidding (ICB), Local Competitive Bidding (LCB) and International Shopping (IS) contract procedures in accordance with the ADB's Guidelines on Procurement. The development of reporting procedures to the ADB, including those covering construction progress, loan withdrawals and disbursements, covenant compliance and institutional development. Provide training and on-the-job guidance on the above items Establish a Project Performance Monitoring System (PPMS) including its design, data collection and analysis procedures, and the provision of training in its use. Undertake a review of the independent resettlement monitoring and reporting arrangements and the reports so produced. Recommend actions necessary to ensure compliance with approved resettlement plans. Provide training in resettlement monitoring in accordance with ADB requirements and follow up advice and support to local IAs. Develop and implement an environmental monitoring program and reporting procedures to ensure appropriate mitigation measures are undertaken during the project construction and operational phases of the project facilities. Provide training in environmental monitoring in accordance with ADB requirements and follow up advice and support to local IAs. Undertake a review of arrangements for monitoring project impacts on Indigenous Peoples in accordance with ADB requirements. Provide appropriate training, and follow up advice and support to local IAs. 5.3 Arrangements to Secure Project Sustainability Provide advice on the establishment of suitable operations and management arrangements for individual sub projects Conduct training and capacity building needs analysis in order to formulate relevant programs, including but not necessarily restricted to: Community participation, and participatory approaches in project design, operations and management Gender awareness and the inclusion of women financial procedures, record keeping and management management training computing asset operations and maintenance

Design, agree and implement a training program based on the results of the above analysis. Design, for implementation by Guiyang Municipal Government, a socio- economic survey to regularly measure customer satisfaction with water services and willingness to pay. - 30 -

Provide advice on arrangements for corporate governance and transparency of establishing water allocations, and how these arrangements can be made more effective. Prepare, agree, and implement a program of training with particular emphasis on integrated water resources management and to include overseas and in country training. Liaise and cooperate with the ADTA consultants appointed by ADB for investigating and implementing integrated water resources management based reforms. 5.4 Water Demand Management Improvements Review the current water efficiency performance of the Guiyang water sector having regard to international and PRC benchmarks. Taking the PPTA work as a base, review existing tariff structures and levels to assess the economic efficiency of current arrangements and make appropriate recommendations for improvements that would better utilize pricing as a demand management tool. In conducting this work due regard must be paid to social considerations. Develop a methodology for the periodic review of water sector tariffs so that the various different interests of the local government, customers, and the IAs are safeguarded. This methodology to include: compliance with national and provincial level pricing regulations and guidance systematic examination of customer affordability(industrial and domestic) review of company performance in terms of service and efficiency providing for the financial viability of the IAs. review and justification of any cross-subsidization in pricing surveys of customer satisfaction and willingness to pay and other uses of public consultation in the price setting process setting a defined timetable for price reviews

Develop proposals for a program of activities to improve public awareness of water and related environmental issues, including measures to improve willingness to pay water and (especially) wastewater charges, water saving methods, improved individual behaviours and responsibility etc Work with the Guiyang Water Saving Office to establish an industry advisory service to reduce industrial water consumption. Work with Guiyang Water Resources and Agricultural Bureau to develop farmer awareness programs for improving the efficiency of irrigation systems, and consider the training and resourcing needs to implement such programs. Examine the arrangements for managing water leakage in urban water networks and make recommendations for improvements, including the provision of appropriate technology and training. 6. 45. Reporting and Timetable The consultancy shall be programmed for three years duration.

46. Within two months of the commencement of the consultancy a brief inception report shall be prepared. This inception report will at its simplest, confirm the project is to be undertaken in accordance with the Consultant's technical proposal. If the Consultant intends to conduct the - 31 -

work in a different manner or to a different program than included in the technical proposal, this will be identified in the inception report. This will include an updated overall work plan, if appropriate. Three copies of the inception report will be submitted in English only (one for onward transmission to ADB). 47. During the consultancy the Consultant will prepare, in a format and reporting cycle acceptable to the Client, a quarterly progress report detailing both programmed and actual progress against the overall work plan. Three copies of these reports will be submitted in English. 48. Recommendations under this TOR requiring Client or Implementing Agency agreement are to be presented in report format with an appropriate level of justification to support the recommendations made. These reports will be submitted in triplicate in English and Chinese with additional Chinese copies provided as necessary for proper consideration of the proposals. 49. At the conclusion of the consultancy the Consultant will submit a final report that must identify how the Consultant has discharged their obligations under the consultancy, the progress made, key outstanding issues, and a future development path. Three copies will be submitted in English and Chinese with additional Chinese copies provided as necessary for proper consideration of the proposals. 7. Indicative Resourcing

50. An indicative resourcing schedule has been prepared based on the needs of the IAs as assessed during the project preparation phase. This is shown in Table 1 below: Table 1: Indicative Resources Needed for Loan Consulting Services
Area of Expertise Project leadership and coordination Technical, Procurement and Progress reporting support Economic Analysis Financial management Community participation and gender awareness Water demand management Resettlement plans & monitoring Ethnic minority plans & monitoring Environmental assessments and monitoring Total International Person Month 3 3 9 3 3 3 24 Domestic Person Month 36 24 12 12 12 36 9 9 9 159

8.

Facilities to be Provided by the Client

51. The Client shall make the following available to the Consultant for the duration of the consultancy assignment, the costs of which should be priced for in the Consultants Financial Proposal and a provisional sum of US100,000 should be allowed for this: Furnished, serviced, clean office accommodation with running water, together with telephone and access to fax, printing and photocopying facilities. A dedicated liaison officer, with good English language skills, with whom the Consultant would liaise on a day to day basis. - 32 -

Qualified counterpart personnel available to work full time, if required, with each specialist the Consultant provides. Administrative support including a secretary and a clerk, who shall preferably have some spoken English language skills. These staff shall assist international staff obtain visas, resident permits and other official documents required, also to make travel arrangements to project sites, fix meetings, and give other general assistance requiring Chinese speaking skills. Access to all data, including documents, reports, accounts, drawings and maps, and permissions to enter works and offices, as appropriate and necessary to undertake the work. Drivers and vehicles as required. 9. 52. Facilities to be Provided by the Consultant The Consultant shall include in the financial proposal the following general items: All staff and personnel costs, including international and local travel, housing accommodation and subsistence. A sum of $50,000 should be allowed for local travel costs. Office equipment (but not basic office furniture), computer equipment and related hardware (printers etc) and software necessary for the effective conduct of the consultancy, including an allowance for consumables. The make and specification of all equipment shall be approved by the Client. The equipment and software will become the property of the Client at the end of the consultancy contract. Financial proposals should allow a sum of $20,000 for this. Arrangements and financial provision for in country training programs to be reimbursed at cost. A sum of $50,000 to be allowed for this. Arrangements and financial provision for overseas study visits to modern utility companies to be reimbursed at cost. A sum of $200,000 to be allowed for this. The provision of a fully qualified interpreter to work with the Consultant on a full-time basis. The costs of all report and document preparation and printing. 53. 10. Items to be reimbursed at cost must be clearly indicated in the financial proposal. Guidance in the Preparation of Technical Proposals

54. The Consultant is requested to make any comments on and suggestions for improvement to these Terms of Reference in the Technical Proposal. The financial implications, if any, of these suggestions should be clearly indicated in the Financial Proposal. These suggestions will then be dealt with at negotiation stage. 55. In the technical proposal the Consultant should demonstrate a clear understanding of the Client's requirements and indicate inter-relationships between the different tasks within the assignment. An indicative program of work and for the deployment of the various specialists should be provided. 56. The technical proposal should include a methodology and proposed assessment criteria under which the Client and the Company can measure the performance of the Consultant in the conduct of the consultancy work. This must include assessment of work quality as well as - 33 -

timeliness of output. In submitting such assessment criteria the Consultant accepts its use in measuring their own performance. 11. 57. Indicative Budget Table 2 shows and indicative budget for the Project. Table 2: Indicative Budget
Item International Consultancy (24 months @ $20,000/mo) National Consultancy (159 months @ $4,000/mo) Office Facilities Overseas training Local training Equipment Local transport Total Budget $ 480,000 $ 636,000 $ 100,000 $ 200,000 $ 50,000 $ 20,000 $ 50,000 $ 1,536,000

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VII. A.

SAFEGUARDS

Environmental Impacts and Benefits

58. The Projects environmental impact and benefits are evaluated in general terms and cumulatively for the Master Plan as a whole. The environmental assessments of individual core subprojects provide a more detailed assessment of environmental benefits and impacts at the subproject level. A summary environmental impact assessment (SEIA) covering the core subprojects was categorized as environmental category A and a summary initial environmental examination (SIEE) covering the remaining three core subprojects were prepared in accordance with the PRCs environmental assessment technical guidelines and ADBs Environment Policy. 10 The soil and water conservation activities of the Project provide the most obvious and direct environmental benefits. For the other activities, especially the construction of reservoirs, there is a trade-off between development and livelihood benefits, and adverse environmental impacts, which will occur while under construction and during operation of the subproject facilities. However, each subproject environmental assessment concludes that the overall balance is favorable, and that the adverse environmental impacts are manageable with appropriate mitigation measures that have been identified and incorporated in the subprojects environmental management plan (EMP). The environmental assessment of noncore subprojects to be prepared and implemented under the Project will be undertaken in accordance with the provisions of the EARF that have been agreed with the EA. B. Social Dimensions 1. Poverty Reduction and Social Benefits

59. Guizhou Province is one of the poorest provinces in the PRC, with the second lowest rural income and the lowest level of urban income of any province. In 2008, about 4.6% of the municipalitys urban population lived under the municipalitys absolute poverty line for urban areas and about 3.9% of the rural population lived under the absolute poverty line for rural areas, and received conditional support from the Government. The rural population living at less than CNY1,200 per person per year was estimated at 25%. 11 The Project covers 71 towns and townships out of the total 77 towns and townships in Guiyang Municipality, including 18 poverty towns and townships designated by Guizhou Province, five of which are designated class A poverty towns and townships with an average annual income of less than CNY785 per person. The Project has specific provisions to target women and ethnic minorities, considered particularly vulnerable. In Guiyang Municipality, about 430,000 people, primarily in rural areas, lack satisfactory domestic water supplies, with the burden of water collection falling mainly on women. The Project will provide rural households with opportunities to improve their agricultural income by increasing the surface of irrigated land, allowing them to change from low-yield crops

10

The environmental impact assessment and initial environmental examination reports for individual subprojects used methodologies and standards consistent with relevant guidelines established by the Ministry of Environmental Protection, in compliance with applicable laws and regulations. The individual environmental impact assessment and initial environmental examination reports have been prepared in accordance with the PRC domestic procedures. ADB reviewed the SEIA and posted it on the ADB website on 21 August 2006. 11 The national line for absolute poverty in the PRC has been set at CNY1,196 for 2009, which means that 25% of the rural population is now considered absolutely poor and entitled to special support by the Government. This poverty line corresponds to the former international poverty line of $1 per day, while the new international poverty line of $1.25 per dayadopted by ADBcorresponds roughly to CNY1,600.

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and subsistence farming to higher-value crops. The Project will also reduce non-income poverty by providing reliable domestic water supply to households. 60. Labor opportunities will be provided to local communities. The PMO and IAs will ensure that contractors hire local labor, in particular ethnic minorities and women, for skilled and unskilled work as much as possible. 2. Gender and Development

61. The Project will promote the inclusion of women during subproject design in WUA membership and leadership, and in other project activities that are important for their participation. To achieve this, targets are set for the participation of women and the benefits they will derive from the Project. Quotas of at least 30% are set aside for women in (i) projectfinanced training activities, (ii) job opportunities created by the Project, and (iii) participation in public consultation processes for the planning of noncore subprojects. To enhance womens participation in project leadership, the All-China Womens Federation is included in the PLG at the PMO (municipal) and IA (district and county) levels, and at the village level a quota is set for at least 30% for womens participation in WUAs. In the small-scale water tank subcomponent, a quota of at least 30% will target poor women and households headed by women. In addition, the Projects emphasis on active participation in community-managed infrastructure will present women with new opportunities and challenges that will further change the traditional division of gender roles in local communities and require targeted training and skills transfer interventions. The Project will also provide gender-awareness training to project management staff to promote womens participation in key areas. The monitoring of gender-disaggregated data and genderspecific indicators is part of monitoring and evaluation of project impacts. 3. Land Acquisition and Resettlement

62. Resettlement impacts were assessed in detail for the six core subprojects, and the selected noncore subprojects were screened for potential impacts, of which 48 subprojects may involve land acquisition and resettlement. For the entire Project, it is estimated that about 6,300 persons will be affected by land loss; and about 12,800 mu of land will be acquired for the Project, of which about 5,900 mu (46%) is cultivated land. The houses of about 1,200 persons will have to be relocated. For the core subprojects, the resettlement impacts are relatively small except for the Yudongxia reservoir subproject. The Guiyang PMO has prepared and ADB has approved the resettlement plan for the Yudongxia subproject and three resettlement plans for the Jinlong, Liaojiuzhai, and Wudang subprojects. No resettlement plans are required for the other two core subprojects, as these do not involve land acquisition or involuntary resettlement. Based on satisfactory resettlement experience in Guizhou Province, the EA and local governments were assessed to have the capacity to manage resettlement impacts properly. The IAs will fund the resettlement costs according to the standards set out in the resettlement plans, based on national policies and local regulations. Entitlements will be provided to affected persons before demolition and ground leveling commence, and before any loss of land. A resettlement information booklet was distributed to those affected through village offices, and the resettlement plans for the four core subprojects were made available at the village offices. 63. Compensation for land acquisition, residential housing, and nonresidential housing will be paid to all users regardless of whether titled or not. For land acquisition, compensation includes land compensation, resettlement subsidy, and compensation for young crops. The land compensation will be paid to the affected village and/or affected persons and the resettlement subsidy and other compensation for individual asset loss will be paid to the affected persons. - 36 -

For small businesses and housing demolition, compensation will be paid directly to owners in cash according to the appraised value of the land and fixed property assets. Income losses resulting from reduced production/sales and wages caused by the Project will be assessed and compensated to affected persons in cash. 64. For subsequent noncore subprojects, resettlement plans will be prepared based on the detailed engineering designs and resettlement impact surveys. A resettlement framework providing procedural guidelines for the EA and IAs to follow has been agreed upon between GMG and ADB. The PMO, assisted by the IAs, will be responsible for monitoring resettlement plan implementation and submitting progress reports to ADB. A regular reporting system will be established to ensure that key resettlement activities are implemented on schedule. The PMO will also engage a domestic institute to conduct independent monitoring and evaluation of resettlement implementation and report progress semi-annually, to evaluate results through annual survey updates and reports for 2 years after completion of resettlement. Monitoring and evaluation reports will be submitted to Guiyang PMO and ADB for review and follow up action, if required. 4. Ethnic Minorities

65. EMDPs have been prepared for four of the core subprojects. About 200 ethnic minority persons in each of these four subprojects will have their livelihoods affected by the Project, although the overall impact of the Project will be beneficial to the ethnic minority communities as a result of improved water supplies and consequential livelihood benefits. Ethnic minority villages will be specifically targeted for the provision of small water storage tanks, and special provisions will be made in resettlement plans, where construction activity has a serious impact on ethnic minority communities. An ethnic minorities development framework (EMDF) for the subsequent noncore subprojects has also been prepared. The PMO, assisted by the IAs, will be responsible for preparing the EMDPs for the noncore subprojects, as required, and monitoring the implementation of all EMDPs.

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VIII.

PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION A. Project Design and Monitoring Framework
Performance Targets and/or Indicators Gross value of agricultural production increases from CNY3.8 billion in 2006 to CNY6.1 billion by 2020 Rural poverty incidence in Guiyang Municipality is reduced to 20% by 2020 compared with 2004 poverty incidence of 28.7%a Urban poverty incidence in Guiyang Municipality is reduced to 3.0% by 2020 compared with 2004 poverty incidence of 4.3% Data Sources and/or Reporting Mechanisms Guiyang Municipality government statistics Assumptions and Risks Assumptions Government continues to promote sustainable development Farmers have access to adequate rural financing and marketing infrastructure Risks Drought and excessive climate variation Rural to urban migration of people exceeds forecasts

Design Summary Impact Sustainable and inclusive socioeconomic growth in Guiyang Municipality

Outcome Water supply and demand in Guiyang Municipality are balanced in a sustainable manner

Total available water resources increase from 0.9 billion m3 per year to 1.4 billion m3 per year by 2016 94% of surface water quality targets met by 2016 No adverse cumulative environment impacts reported as a result of project activities

WRB statistics Guiyang Municipality government statistics EPB monitoring data TA 4912-PRC completion report Project completion report EPB monitoring data

Assumptions Government encourages a participatory approach to water resources management Incentives for effective interagency coordination are introduced Financing is identified for the other activities under the Master Plan Risk Resistance to tariff reforms Assumptions Community support can be enlisted to help construct and maintain rural water infrastructure Pollution control measures to be paid by the wastewater generators The EMPs, RPs, and EMDPs are adequately carried out Risk Unforeseen ground construction conditions and

Outputs 1. Improved water quality

By the end of the project implementation (2016): Percentage of rural households in the project area with access to drinking water (at national drinking water standards) increases from 71.5% to 90.0% (by 240,000 beneficiaries)

WRB statistics Internal and external monitoring and evaluation reports of EMPs, RPs, GAP, and EMDPs Water saving office data Water supply company data Project progress reports

2. Increased supply of water for domestic, industrial, and irrigation purposes

Total reservoir capacity increases from 184.0 million m3 to 366.6 million m3 Area of irrigated land increases from 557,600 mu to 839,825 mu Irrigation efficiency increases from 45%50% to 65%70% Non-revenue water reduced

3. Improved water use efficiency

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Design Summary 4. Improved institutional and technical capacity to manage water resources

Performance Targets and/or Indicators from 30% to 20% WUAs established and operational in all irrigation districts by 2013. About 30% target for womens membership and leadership. Effective coordination mechanism for water resources management established by 2016 Hydrological monitoring center and integrated information management system established by 2013

Data Sources and/or Reporting Mechanisms

Assumptions and Risks

PMO fully staffed and equipped by the beginning of project implementation (2010) Activities with Milestones 1. Establish project management and monitoring systems and carry out institutional strengthening and capacity development (contributes to achieving outputs 1, 2, 3, and 4). a. Establish and equip municipal and local PMOs on a rolling basis according to subproject phasing. b. Establish WUAs (where applicable). c. Train key government staff at municipal, county, and district levels to plan, design, implement and monitor structural and nonstructural IWRM works according to the PRC regulations and ADB safeguards (on a rolling basis according to subproject phasing). d. Supervise and monitor subproject implementation by municipal and local project management offices. e. Strengthen municipal project management capacity (technical, financial, administration, and implementation) for annual work planning and the successful implementation and monitoring and evaluation of the Project according to project performance management system principles (throughout project implementation). f. Establish an integrated information management system for water sector management. g. Establish a municipal hydrological monitoring center. Milestones: PMOs for all noncore subprojects have been established in 2009. Capacity development milestones to be defined in inception report of loan consultants. Construct one medium-sized and two small reservoirs for urban water supply (contributes to achieving output 2). 3. Construct up to 43 small reservoirs for rural water supply and irrigation (contributes to achieving output 2). 4. Rehabilitate and upgrade up to nine irrigation schemes (contributes to achieving outputs 2, 3, and 4). 5. Carry out soil and water conservation up to 800 km2 (contributes to achieving outputs 1 and 2). 6. Construct up to 105,100 small water storage tanks (contributes to achieving output 2). Milestones for activities 26, to be carried out on a rolling basis in accordance with the project implementation schedule (Appendix 9), include: a. Prepare FSRs for each selected subproject. b. Prepare environmental impact report/environment impact assessment and EMP for each noncore subproject in accordance with PRC laws and regulations and ADB environmental safeguard policies. c. Prepare required social safeguard documents as needed (RP and/or EMDP). d. Prepare detailed engineering designs for each selected subproject. e. Acquire land where needed to accommodate civil works, temporarily or permanently relocate affected persons, and provide compensation and other social and economic 2.

Inputs ($ million) ADB sector loan: 150.0 Guiyang Municipal Government: 258.0 Guiyang Municipal Commercial Bank: 0.0 Beneficiaries: Total Cost: 11.2 439.2

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Performance Targets Data Sources and/or Design Summary and/or Indicators Reporting Mechanisms Assumptions and Risks rehabilitation measures for affected persons in accordance with PRC laws and regulations and ADB resettlement and ethnic minorities safeguard policies. f. Construct water resources infrastructure. g. Monitor and evaluate implementation of EMPs, RPs, GAP, and EMDPs. ADB = Asian Development Bank, TA = advisory technical assistance, EMDP = ethnic minority development plan, EMP = environment management plan, EPB = Environment Protection Bureau, FSR = feasibility study report, GAP = gender action plan, IWRM = integrated water resources management, m3 = cubic meter, PMO = project management office, PRC = Peoples Republic of China, RP = resettlement plan, WRB = Water Resource Bureau, WUA = water users association. a The targets of poverty incidence reduction included here came from discussions and consultations with local governments, and they represent the general social and economic objectives that the municipality aims to achieve by 2020.

B. 1.

Monitoring

Project performance monitoring

66. The major project performance monitoring indicators include project progress, results of capacity development, water resources management performance and related service levels, the social impact of the Project, user satisfaction with water availability, quality and price, and relevant economic and health data to monitor project impacts. 67. At the beginning of project implementation, the PMO, in consultation with the IAs and with the assistance of consultants, will develop comprehensive PPMS procedures to generate data systematically on inputs and outputs of project activities; and the socioeconomic, health, and environmental indicators to measure project impacts. The PMO will refine the PPMS framework, confirm achievable targets, firm up monitoring and recording arrangements, and establish systems and procedures no later than 6 months after project inception. 68. Under the PPMS framework, baseline and progress data will be reported at the requisite time intervals by the IAs to the PMO, including semiannual reporting on the environmental management plan. The PMO will be responsible for analyzing and consolidating the data through its management information system. The PPMS will be designed to permit adequate flexibility to adopt remedial action regarding project design, schedules, activities, and development impacts. The PMO, with assistance from the consultants, will monitor and assess activities, and report to ADB on a quarterly basis on the physical implementation and financial aspects of the Project to ensure that impacts are monitored and reported in line with ADB requirements. Key issues and progress on social and environmental safeguard aspects will be briefly included in the project quarterly progress report, and the external monitoring and evaluation on the resettlement and environmental ambient quality changes will be reported on a semiannual basis. 69. Project management arrangements will need to be further refined to take into consideration lessons on involving NGOs in project activities, in particular in assessing their institutional capacity and experience of interacting with government agencies and communities. Their work will be closely monitored by the monitoring and evaluation specialist within the PMO. Where NGOs will be working with resettled communities, the impact of their involvement will also be captured in the monitoring of the resettlement process. In the contracts to be negotiated with the NGO, their reporting requirements to ADB on the community mobilization work will be specified. Project implementation consultant inputs will also be closely monitored and tied to specific outputs. - 40 -

2.

Compliance monitoring:

70. In addition to the standard assurances, the Government and GMG have given the following specific assurances, which have been incorporated in the draft legal documents: 1. (i) Integrated Water Resources Management GMG will ensure that the principles of IWRM under the Master Plan and developed under the TA for Strengthening Water Resources Management in Guiyang are carried out under the Project. In particular, GMG will ensure that the IWRM strategic action plan agreed between GMG and ADB (Supplementary Appendix S) is implemented in a timely manner. Key activities to be implemented will include (a) establishment of an effective water sector management structure, (b) shift from the current supply management to demand management, (c) greater public participation in water resources management, (d) improvement in information management and sharing among relevant agencies, and (e) capacity building in water management in Guiyang Municipality. (PA, Schedule, para. 4) GMG will ensure that the subproject selection criteria and implementation procedures (including prior ADB approval requirements) agreed upon with ADB are followed, including environmental and social safeguard requirements under the EARF, EMP, resettlement framework, and EMDF. (PA, Schedule, para. 5) Within 3 months of the loan effectiveness date, GMG will appoint a dam safety panel of eminent national engineers, which will review the detailed design of proposed subprojects involving the construction of dams, oversee dam construction, and confirm to ADB that the design and construction of the dams meet international safety standards. (PA, Schedule, para. 10) GMG will itself cause the finance and price bureaus of each local county participating in the Project, to undertake annual reviews of water tariffs, and to establish tariffs based on financial and economic objectives (including the financial sustainability of water services, and the use of price as a water demand management tool where appropriate), subject to compliance with laws and regulations in the PRC. In the event the tariff is not set at a level allowing for financial viability and sustainability of a subproject, GMG will ensure that the county governments will provide the necessary subsidy. For urban water supply, tariffs will be established, and if necessary, adjusted to ensure full repayment of O&M, interest charges, the greater of depreciation or debt repayment, and a reasonable profit margin. (PA, Schedule, para. 11) GMG will ensure that each local county government (through its poverty bureau): (a) reviews the impact of increased water and wastewater tariffs on the poor, and in urban areas; and (b) maintains the provision of the water tariff waiver under minimum living standard scheme to protect the basic living standard of the poor. (PA, Schedule, para. 12) GMG will ensure that WUAs are established in a timely manner for all reservoir and irrigation core and noncore subprojects. (PA, Schedule, para. 13) Social Safeguards GMG, through the relevant local governments and IAs, will ensure that (a) all land and rights-of-way required by the Project are made available in a timely manner; (b) the resettlement framework and resettlement plans are implemented promptly in accordance with their terms, all applicable PRC laws and regulations, - 41 -

(ii)

(iii)

(iv)

(v)

(vi)

2. (i)

(ii)

(iii)

(iv)

and ADBs Involuntary Resettlement Policy (1995); (c) all affected persons are given adequate opportunity to participate in resettlement planning and implementation; (d) counterpart funds are provided on a timely basis for land acquisition and resettlement activities; (e) any financial obligations in excess of the resettlement plan budget estimates are met; and (f) compensation and resettlement assistance are given to the affected persons prior to dispossession and displacement to ensure that those affected will be at least as well off as they would have been in the absence of the Project. (PA, Schedule, para. 14) GMG, through the local level PIOs, will ensure that (a) the resettlement plans prepared for the core subprojects are updated based on detailed designs, disclosed to the affected persons and resubmitted to ADB for concurrence prior to commencement of civil works; (b) resettlement plans for noncore subprojects are prepared in accordance with the resettlement framework based on detailed design, disclosed to affected persons, and submitted to ADB for approval prior to commencement of civil works; and (c) ADB is advised of any significant material changes in project scope or other causes and this is reflected in an updated resettlement plan to be submitted to ADB for its approval. With respect to any updated resettlement plans, GMG will disclose such updated resettlement plans to affected persons prior to ADB approval. (PA, Schedule, para. 15) GMG, through the Guiyang PMO, will ensure that (a) adequate staff and resources are committed to resettlement monitoring and supervision, and ADB is provided with quarterly reports on implementation, and a resettlement completion report for all the reservoir subprojects; (b) an independent agency acceptable to ADB is engaged to monitor and report progress semiannually, and to evaluate results through annual survey updates and reports for 2 years after completion of resettlement; (c) external monitoring reports are submitted to ADB and the Guiyang PMO for review and comments; and (d) a summary of the final resettlement audit for the Yudongxia reservoir subproject is provided to ADB. (PA, Schedule, para. 16) GMG will ensure that the GAP is implemented in a timely manner over the entire project period, and that adequate resources are allocated for this purpose. Implementation of the GAP will be closely monitored, and progress will be reported in the quarterly progress reports submitted to ADB. (PA, Schedule, para. 18) Environment Management For those water supply dam subprojects, particularly the Yudongxia dam, GMG will ensure an appropriate classification of environmental protection zone and determine and stipulate related regulations for preserving water quality of the respective reservoir. Such regulations may include land use zoning and control of chemical fertilizers/pesticides use, wastewater discharge, and aquaculture development in the environmental protection zone area. To ensure the preservation of the income and livelihood of local communities that may be affected by such regulations, GMG will ensure that a PES mechanism to maintain the agreed level of water quality by providing sufficient compensation to upstream government and affected communities is established and implemented. (PA, Schedule, para. 20) GMG will cause each local government and the IAs to construct, operate, maintain, and monitor the project facilities in strict conformity with (a) all applicable laws and regulations, including national and local regulations and - 42 -

3. (i)

(ii)

standards for environmental protection, health, labor, and occupational safety; and (b) ADBs Environment Policy and the environmental mitigation and monitoring measures detailed in the approved EIAs, initial environment examinations, SEIA, SIEE, and EMP for the Project. (PA, Schedule, para. 21) 4. (i) Others The PMO, in consultation with the IAs, will prepare and submit to ADB for review and concurrence, a training plan for informing (e.g., on IWRM principles such as water sharing) and empowering local communities to be implemented under the Project. (PA, Schedule, para. 23) GMG will ensure that proper financial management systems are established and implemented by the IAs in accordance with domestic regulations, ADBs Guidelines for the Financial Management and Analysis of Projects, and the customized financial management manual prepared for the Project, and incorporating domestic regulations and ADB policies and requirements. (PA, Schedule, para. 24)

(ii)

3. 4.

Safeguards monitoring: See para. 70. Poverty and Social action plans: See para. 70. C. Evaluation

71. It is envisaged that ADB review missions will be undertaken twice per year, for the first 2 years and once a year thereafter. ADB and the Government will undertake a midterm review 3 years after the start of project implementation. This review will reassess in detail the likelihood of achieving the Projects impact, outcome, and outputs; and include a detailed evaluation of the scope, implementation arrangements, resettlement, achievement of scheduled targets, and progress with capacity development measures. Feedback from the PPMS activities will be analyzed. D. Reporting

72. The PMO, on behalf of GMG will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system. The progress report shall include (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (ii) a project completion report within 3 months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency AFSs, together with the associated auditor's report, should be adequately reviewed.

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IX.

ANTICORRUPTION POLICY

73. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project. 12 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADBs anticorruption debarment list are ineligible to participate in ADBfinanced activity and may not be awarded any contracts under the Project. 13 74. To support these efforts, relevant provisions of ADBs Anticorruption Policy are included in the loan regulations and the bidding documents for the project. In particular, all contracts financed by ADB in connection with the project shall include provisions specifying the right of ADB to audit and examine the records and accounts of GMG, implementing agencies, all contractors, suppliers, consultants, and other service providers as they relate to the project. 75. The Project includes measures to mitigate these risks and verify assumptions that include (i) extensive stakeholder consultation during the design of subprojects; (ii) regular tariff reviews and adjustments by the Government following national guidelines as well as public awareness programs; (iii) an examination of the GMG budget to assess availability of counterpart funding; (iv) formal commitment from GMG to introduce IWRM-based reforms; and (v) implementation of training, capacity development, and community support programs. ADB review missions will monitor compliance with the financial and operational covenants to ensure financial sustainability of the water utility companies. Experienced national and international consultants will provide advice and support to mitigate specific construction and other implementation risks.

12 13

Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

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X.

ACCOUNTABILITY MECHANISM

76. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism. 14

14

For further information see: http://compliance.adb.org/.

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XI.
Dates 16 March 2011 1 May 2011

RECORD OF PAM CHANGES

PAM Changes Finalized during a special loan and TA administration mission conducted from 15 to 16 March 2011. Fund flow diagram on P13, (iii) of Reimbursement of Funds Flow and Disbursement Arrangement on P15 ($100,000 $200,000), and para. 36 (ADB loan amount $100 million $150 million) were revised at PMOs suggestion.

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