Project Administration Memorandum
Project Number: 35242 Loan Number: 2188-BAN/2189-BAN(SF) August 2006
BAN: Gas Transmission and Development Project
The project administration memorandum is an active document, progressively updated and revised as necessary, particularly following any changes in project or program costs, scope, or implementation arrangements. This document, however, may not reflect the latest project or program changes.
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ASIAN DEVELOPMENT BANK
PROJECT ADMINISTRATION MEMORANDUM
For the
GAS TRANSMISSION AND DEVELOPMENT PROJECT
For
PEOPLE’S REPUBLIC OF BANGLADESH
LOAN 2188-BAN/2189-BAN(SF)
17 July 2006
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CURRENCY EQUIVALENTS (as of 22 September 2005)
Currency Unit – taka (Tk) Tk1.00 = $0.0155 $1.00 = Tk64.45
ABBREVIATIONS ADB – Asian Development Bank BAPEX – Bangladesh Petroleum Exploration and Production Company Limited BGFCL – Bangladesh Gas Fields Company Limited BGSL – Bakhrabad Gas Systems Limited DSCR – debt-service coverage ratio EA – executing agency EMP – environmental management plan EMR – Energy and Mineral Resources Division ERC – Energy Regulatory Commission ICB – international competitive bidding GSRR – Gas Sector Reform Road Map GSLRP – Gas System Loss Reduction Plan GTCL – Gas Transmission Company Limited LIB – Limited international bidding MDG – millennium development goals MOF – Ministry of Finance MPEMR – Ministry of Power, Energy and Mineral Resources O&M – operation and maintenance Petrobangla – Bangladesh Oil, Gas, and Mineral Corporation PCU – Project Coordination Unit PGCL – Pashchimanchal Gas Company Limited PRSP – Poverty Reduction Strategy Paper PSC – production sharing contract QCBS – quality and cost based selection RP – resettlement plan ROR – rate of return SCADA – Supervisory Control and Data Acquisition SGC – state-owned gas companies SGFL – Sylhet Gas Fields Limited TA – technical assistance TGTDCL – Titas Gas Transmission and Distribution Company Limited
WEIGHTS AND MEASURES km – Kilometer MMCFD – million cubic feet per day
NOTES (i) The fiscal year FY of the Government and its agencies ends on 30 June.
(ii) In this report, "$" refers to US dollars.
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CONTENTS
PAGE
LOAN PROCESSING HISTORY v
DESIGN AND MONITORING FRAMEWORK vi
I. PROJECT DESCRIPTION 1 A. Project Area and Location B. Impact and Outcome C. Project Components
II. COST ESTIMATES AND FINANCING PLAN 2 A. Cost Estimates B. Financing Plan C. Allocation of Loan Proceeds
III. IMPLEMENTATION ARRANGEMENTS 4 A. Executing and Implementing Agencies
IV. IMPLEMENTATION SCHEDULE 5
V. DETAILED COST ESTIMATES AND FINANCING PLAN DURING IMPLEMENTATION 5
VI. CONSULTANT RECRUITMENT 5
VII. PROCUREMENT 6
VIII. DISBURSEMENT PROCEDURES 6
IX. PROJECT MONITORING AND EVALUATION 6
X. REPORTING REQUIREMENTS 7
XI. AUDITING REQUIREMENTS 7
XII. MAJOR LOAN COVENANTS 8
XIII. KEY PERSONS INVOLVED IN THE PROJECT 8
XIV. ANTICORRUPTION 8
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APPENDIXES PAGE
1. Detailed scope of Part D 10 2. Detailed Cost Estimates 13 3. Contract Packages List 15 4. Organizational Chart for Project Implementation 17 5. Project Implementation Schedule 18 6. Detailed Project Cost during Implementation 20 6a Detailed Financing Cost during Implementation 20 7. Quarterly and Yearly Contract Awards and Disbursements Projection 21 8. Outline Terms of Reference for Consulting Services 22 9. Recruiting Consulting Firms for Loan Project Using QCBS 24 10. CRAM Frame and Flow Chart 25 11. Format for Quarterly Progress Report 27 12. Format for Project Account 32 13. Format for Project Completion Report 33 14. Audit Letter 35 15. Major Loan Covenants 38 16. Key Persons responsible for the Project 44
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BAN: GAS TRANSMISSION AND DEVELOPMENT PROJECT
PROJECT ADMINISTRATION MEMORANDUM
LOAN PROCESSING HISTORY
MILESTONE EVENT DATES a. Approval of PPTA - 28 April 2004 b. Fact Finding - 26 February 2005 – 13 March 2005 c. Management review meeting (MRM) - 11 April 2005 d. Appraisal mission - 16-23 May 2005 e. Staff review committee meeting (SRC) - 24 June 2005 f. Loan negotiations - 19-20 September 2005 g. Board circulation - 4 October 2005 h. Board consideration and approval - 27 October 2005 i. Loan agreement signing - 18 June 2006 j. Loan effectiveness -
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DESIGN AND MONITORING FRAMEWORK
Design Performance Targets/Indicators Data Assumptions Summary Sources/Reporting and Risks Mechanisms Impact Assumption Increased pace of Increased economic growth Government of Continued focus by the economic development Bangladesh annual Government to reform reports on per-capita the gas sector and income and labor develop gas productivity in project infrastructure areas
Outcome Assumption Enhanced use of Increased use of gas from 1,400 million Ministry of Power, Continued strong natural gas by cubic feet per day (MMCFD) to additional Energy, and Mineral energy demand consumers, industry, 360 MMCFD at peak gas demand Resources (MPEMR) and commercial users data and statistics Risk Increased percentage of population System operations Adequate gas using gas as primary fuel from 6% to report from gas production in the fields 10% by 2012 entities
Outputs Assumption 1. Improved and Construction of about 353 kilometers Project reports from Timely implementation expanded gas (km) of new transmission pipelines for the executing agency of project transmission and transmitting 330–360 MMCFD and the implementing distribution network agencies, consultants’ Natural gas price system in project Installation of compressors at Ashuganj, progress reports, and rationalized areas Muchai, and Elenga with throughputs of review missions 370–890 MMCFD Appointment of Consultants’ progress competent sector Construction of a new gas distribution reports and review regulators network of about 280 km in the Rajshahi missions City and its adjoining areas in western Risks Bangladesh Unavailability of counterpart funding for construction as well as 2. Field appraisal of Five three-dimensional seismic survey Project reports from operation and gas fields to update reports from Bakhrabad, Kailastila, the implementing maintenance estimated gas Rashidpur, Sylhet, and agency, consultants’ reserves and Titas progress reports, and Unwillingness of gas determine exact review missions sector enterprises to location for future restructure exploration activities
3. Enhanced financial Formulation and implementation of the Annual reports of gas performance, gas sector reform road map (GSRR), a sector entities governance and program to reduce system losses to 6% efficiency indicators of in 2005, 4% by 2007, and 2% by 2010 the gas sector utilities through capacity Efficient operation and management of Annual reports of gas building and gas entities. Debt service coverage ratio sector entities implementation of the of 1.2 from 2007 onward and self- GSRR to attract financing ratio of 30% from 2008 onward
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Design Performance Targets/Indicators Data Assumptions Summary Sources/Reporting and Risks Mechanisms private sector Introduction of policies and regulations MPEMR reports of investments to streamline processes and attract private sector private sector investment participation in the gas sector.
4. Improved ambient Improved ambient and indoor air quality Ministry of Health and indoor air quality (baseline to be determined during project statistics on through provision of implementation) respiratory health in cleaner fuel project areas
Activities with Milestones Inputs 1.1 Recruitment of implementation consultants (by January 2006) Asian Development 1.2 Turnkey contractor selection (by June 2006) Bank (ADB): $230 1.3 Survey, land acquisition, land transfer, and other resettlement-related activities (by million ($225 million December 2009) from ordinary capital 1.4 Material procurement (by April 2010) resources and $5 1.5 Design, manufacture, supply, and transportation (by December 2008) million from the Asian 1.6 Site development, buildings, and other civil works (by June 2010) Development Fund) 1.7 Construction and installation (by June 2010) $5 million equivalent 1.8 Testing and commissioning (by June 2010) Norwegian grant. 1.9 Human resource development activities to ensure sustainability of all project components (training from June 2007 to June 2008) Government/Executing Agency: $178 million
2.1 Recruitment of expert services (by July 2006) Project management – 2.2 Material procurement and transport (by October 2006) 9 ADB review missions 2.3 Field operations (by February 2009) and 18 person-months 2.4 Data processing, interpretation, and report preparation (by June 2009) of ADB staff oversight
3.1 Recruitment of consultants (by January 2006) Government 3.2 Building of capacity for financial performance, governance, operations efficiency, and contribution in kind - GSRR (by June 2010) $25 million
4.1 Collect baseline data on indoor air quality (by June 2006) 4.2 Annual update of baseline data (by June 2010)
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GAS TRANSMISSION AND DEVELOPMENT PROJECT
I. PROJECT DESCRIPTION
A. Project Area and Location
1. The Project consists of (i) construction of gas transmission pipelines in Monohardi- Dhanua and in the western area of Bangladesh; (ii) Appraisal survey of gas fields in the north- east and the east of Bangladesh; and (iii) construction of a gas distribution network in Rajshahi City and its adjoining area.
B. Impact and Outcome
2. The main impact of the Project is meeting gas requirements to support the country’s economic growth. The primary outcome is to improve and expand the natural gas infrastructure; in particular gas transmission and distribution network systems, by providing the most needed investment and field appraisal support for gas sector companies. The Project will also improve sector governance and ensure long-term financial viability and improve efficiency indicators of gas sector entities through institutional strengthening and implementation of the GSRR.
3. The Project and the associated gas sector reform road map (GSRR) will enhance the role of the private sector in natural gas-related activities including (i) upstream gas development; (ii) gas transmission and distribution; and (iii) metering, audit, and operation and maintenance activities. The private sector will also have an enhanced role in gas-based or related industries, power plants, and other manufacturing and processing activities. The Project’s physical investments are the most urgent requirements of the Government’s gas sector investment program.
C. Project Components
4. The Project components are as follows:
(i) Part A. Gas transmission expansion and reinforcement. Five subcomponents will transmit gas to the consumption centers including less developed regions of the country.
(a) Part A-1 Ashuganj-Manohardi-Dhanua-Elenga-Jamuna Bridge east bank gas transmission pipeline1 (30-inch-diameter, 51 km) and installation of compression facilities at Ashuganj (west) and Elenga (AJGTP) (b) Part A-2 Hatikumrul-Ishwardi-Bheramara gas transmission pipeline (24-inch- diameter2, 87 km) (HBGTP). (c) Part A-3. Bonpara-Rajshahi gas transmission pipeline (12-inch-diameter, 50 km) (BRGTP) (d) Part A-4. Bheramara-Khulna gas transmission pipeline (20-inch-diameter, 165 km) (BKGTP) (e) Part A-5. North south system expansion (NSSE), installation of compressors at Ashuganj South and Muchai
1 Excluding Ashuganj-Monohardi section, which is under construction using Government funds, and the existing Dhanua-Elenga section. 2 The pipeline size maybe increased to 30-inch-diameter during the design stage if such change is proven prudent.
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(ii) Part B. Field appraisal. Five producing gas fields will be appraised to upgrade the estimated gas in place and also to determine the exact location for future drilling activities. A three-dimensional (3-D) survey of the existing gas fields at Rashidpur, Kailastila, and Sylhet in the northeast (owned by the SGFL, and Titas and Bakhrabad gas fields (owned by the BGFCL) in the east will be undertaken. No new exploration activities will be involved.
(iii) Part C. Rajshahi gas distribution network. Construction of a gas distribution network about 280 km. of 1- to 8-inch-diameter gas distribution pipelines in Rajshahi City and its adjoining area. This network will subsequently be expanded to 350-400 km.
(iv) Part D. Capacity building. Strengthen the policy-making and technical capabilities of EMRD and assist gas sector institutions to undertake reform and restructuring while ensuring efficient implementation of the Project. This component will support corporate governance, institutional strengthening, financial management, operational improvement, human resource development and technical expertise of gas companies to improve sector efficiency and performance. The tentative scope of part D is in Appendix 13.
II. COST ESTIMATES AND FINANCING PLAN
A. Cost Estimates
5. The total project cost is estimated at $413 million equivalent comprising $235 million in foreign exchange, and $178 million equivalent in local currency. The cost includes physical and price contingencies, and financing charges in accordance with ADB’s guidelines and procedures. The cost estimates by component and subproject are summarized in Table 1; detailed cost estimates are in Appendix 2.
Table 1: Project Cost Estimates ($ million) Component Foreign Exchange Local Currency Total Cost % Total Cost % Total Cost % Total A. Gas Transmission A1: Ashuganj-Jamuna Bridge Gas 53.4 12.9 30.0 7.3 83.4 20.2 Transmission Pipeline (AJGTP) A2: Hatikumrul-Bheramara Gas 30.0 7.3 26.0 6.3 56.0 13.6 Transmission Pipeline (HBGTP) A3: Bonpara-Rajshahi Gas Transmission 12.0 2.9 12.4 3.0 24.3 5.8 Pipeline (BRGTP) A4: Bheramara Khulna Gas Transmission 44.0 10.7 48.4 11.7 92.4 22.4 Pipeline (BKGTP) A5: North-South System Expansion 31.6 7.7 16.3 3.9 47.9 11.6 (NSSE) B. Field Appraisal 13.2 3.2 9.9 2.4 23.0 5.6 C. Rajshahi Gas Distribution Network 8.6 2.1 8.2 2.0 16.8 4.1 D. Capacity Building 11.7 2.8 2.4 0.6 14.1 3.4 E. Contingencies* 13.6 3.3 23.6 5.7 37.2* 8.9 F. Financial Charges 16.9 4.1 1.2 0.3 18.1 4.4 Total 235.0 56.8 178.3 43.2 413.3 100.0 *Includes local price contingency.
3 Petrobangla will submit the revised scope to ADB by 15 August 2006 for review.
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Sources: Bangladesh Petroleum Exploration and Production Company Limited, Gas Transmission Company Limited, and Pashchimanchal Gas Company Limited.
B. Financing Plan
6. A loan of $225 million from ADB’s ordinary capital resources (OCR loan) will finance the investment components (parts A, B, C, and D.24) and will have a 20-year term including a grace period of 5 years, an interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR)-based varying lending facility, a commitment charge of 0.75%, and the usual conversion options, and other terms and conditions set forth in the loan and project agreements (in amounts as indicated in Table 1) under subsidiary loan agreements, with terms and conditions acceptable to ADB. The OCR loan will be re-lent to the executing agencies (EAs) in local currency at a rate of 5% for a period of 15 years inclusive of a grace period of 5 years. The foreign exchange risk of the loan will be assumed by the EAs during the life of the respective subsidiary loans, and thereafter by the Borrower. The Government will provide the local currency cost of $178 million through loan and equity contributions. The financing plan is in Table 2.
7. A second loan in various currencies in Special Drawing Rights equivalent to $5 million from ADB’s Special Funds resources (ADF loan) will finance the foreign exchange costs of the capacity-building component (part D.1) and will have a repayment period of 32 years, including a grace period of 8 years; an interest charge of 1% during the grace period and 1.5% thereafter; and other terms and conditions set forth in the loan and project agreements. The ADF loan proceeds will be re-lent to Petrobangla under a subsidiary loan agreement, on the same terms as those for ADF loans. The Borrower will bear the foreign exchange risk of the loan under a subsidiary loan. The Norwegian Government is providing for a $5 million grant for Capacity Building component (part D.1) of the Project. ADB will administer the grant subject to its standard 2% administration charge.
Table 2: Financing Plan ($ million) Source Foreign Local Total % Exchange Currency Cost ADB-OCR 225.0 225.0 55.0 ADB-SF 5.0 5.0 1.0 Norway 5.0 5.0 1.0 Government 178.0 178.0 43.0 Total 235.0 178.0 413.0 100.0 ADB = Asian Development Bank, OCR = ordinary capital resources, SF = special fund. Source: Asian Development Bank.
C. Allocation of Loan Proceeds
8. Loan proceeds have been allocated according to the contract packages identified in Appendix 3 and further detailed in Schedule 3 of the Loan Agreements. The Loan proceeds will be withdrawn from the Loan account on the basis of the percentages provided in Tables 3 and 4.
4 Implementation of system loss reduction plan.
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Table 3 Allocation of Loan Proceeds Loan 2188-BAN
Percentage of Bank Financing Amount Categories ($ million) 01A Part A(1), (2), (3), and (5) 100 % of foreign expenditure 120.57 01B Part A(4) 100% of foreign expenditure 43.93 02 Part B 100% of foreign expenditure 12.36 03 Part C 100% of foreign expenditure 8.57 04 Part D(2) 100% of foreign expenditure 1.60 05 Project Management 100% of foreign expenditure 1.00 06 Training/Fellowships 100% of foreign expenditure 2.30 07 Consulting Services 100% of foreign expenditure 4.44 08 Interest and Commitment 100% of amounts due 16.80 Charge 09 Unallocated 13.43 Total 225.00
Table 4 Allocation of Loan Proceeds Loan 2189-BAN(SF)
Percentage of Bank Amount (millions) Categories Financing SDR US$ equivalent 01 Equipment 100 % of foreign 1.06 1.56 expenditure 02 Training/Fellowship 100% of foreign 0.52 0.76 expenditure 03 Consulting Services 100% of foreign 1.60 2.36 expenditure 04 Interest Charge 100% of amounts due 0.09 0.13 05 Unallocated 0.13 0.19 Total 3.40 5.00
III. IMPLEMENTATION ARRANGEMENTS
A. Executing and Implementing Agencies
9. Part A will be executed by by the Gas Transmission Company Limited (GTCL); part B by Sylhet Gas Fields Limited (SGFL) and Bangladesh Gas Fields Company Limited (BGFCL), with Bangladesh Petroleum Exploration and Production Company Limited (BAPEX) as Implementing Agency (IA); part C by Pashchimanchal Gas Company Limited (PGCL); and part D (including the Norwegian grant) by Bangladesh Oil, Gas, and Minerals Corporation (Petrobangla) in coordination with EMRD and the concerned entities. The day-to-day project implementation will be undertaken/supervised by the project management units (PMU) set up specifically for the Project by the EAs and headed by senior officers. Petrobangla will establish a project
5 coordination unit (PCU) to coordinate all project-related matters in association with PMUs. The existing steering committee in EMRD, which monitors and supervises all foreign-funded projects, will also monitor the progress of the Project. The organizational chart for project implementation including PCU and PMUs of the Project of the EAs is in Appendix 4.
IV. IMPLEMENTATION SCHEDULE
10. The Project will be completed in 5 years. Implementation of the Project started in November 2005, and the last subcomponent will be completed in mid-2010. The project implementation schedule is in Appendix 5 and 5a.
V. DETAILED COST AND FINANCING PLAN DURING IMPLEMENTATION
11. The PCU will prepare detailed Project cost estimates of foreign exchange costs and local costs in the format shown in Appendix 6 and 6a. A detailed financing plan for the Project, with estimated financing requirements each year for the major project components, will also be prepared by the PCU. These tables will be revised and updated annually or more often if necessary, based on progress with contract awards and actual implementation of the Project. These will be attached to the quarterly progress reports to ADB.
12. The PCU will also prepare annually the forecast for contract awards and disbursements under the Project on a quarterly basis for one year ahead, in the format shown in Appendix 7. This will be submitted to ADB by 15 January of each year.
VI. CONSULTANT RECRUITMENT
13. All consultants will be engaged by the EAs in accordance with ADB’s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for engaging domestic consultants. The quality-and cost-based selection (QCBS) method will be used. Consultants will be engaged as a firm or on an individual basis, as necessary. Consulting services will be required for (i) project implementation support in the installation of compressors and the Supervisory Control and Data Acquisition (SCADA) system; (ii) support for 3-D field survey in part B; and (iii) capacity building and training of relevant gas sector entities in part D. Part C will not require any consulting services. The Project will require a total of 262 person-months of international and 305 person-months of domestic consulting services. The EAs were allowed to initiate advance recruitment action during appraisal. Appendix 8 gives an outline of the terms of reference (TOR) for consulting services expected under the Project5. The outline procedures for recruiting consultants following the QCBS procedure is given in Appendix 9.
14. ADB has devised a Consultant Recruitment Activity Monitoring (CRAM) to monitor the activities in recruiting the consultant and to avoid delays. Indicative CRAM frames based on forecasted scheduling of recruitment for consulting packages are to be prepared by the EAs with ADB’s assistance prior to commencement of recruitment. CRAM identifies the main activities in the recruitment process, the time normally required for each activity and target dates for completing each activity. The EA and ADB use CRAM to identify delays and take prompt action to get the recruitment process back on schedule. Appendix 10 shows an example of a CRAM frame and a flow chart of the CRAM process.
5 Appendix 8 will be revised in accordance with Petrobangla’s proposal to be submitted to ADB by 15 August 2006.
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VII. PROCUREMENT
15. The equipment materials, and services financed from the proceeds of the ADB loans will be procured in accordance with ADB’s Guidelines for Procurement on the basis of either international competitive bidding (ICB) or limited international bidding (LIB) depending on the contract size. Procurement will be carried out separately for each part of the Project by the concerned EA/IA. Each supply contract, estimated to cost the equivalent of $500,000 or more, will be awarded on the basis of ICB. Each supply contract estimated to cost less than the equivalent of $500,000 can be awarded on the basis of LIB. Turnkey contracts estimated to cost the equivalent of $500,000 or more will be awarded on the basis of ICB, and turnkey contracts with an estimated cost of less than $500,000 can be awarded on the basis of LIB. The list of agreed procurement package is provided in Appendix 3. ADB’s standard bidding documents will be used in procuring ADB-financed goods and services.
VIII. DISBURSEMENT PROCEDURES
16. Disbursement of loan funds under the Project will be in accordance with ADB’s Handbook on Disbursement. ADB’s commitment letter and direct payment procedures will be utilized.
17. Disbursement for part B will be allowed only after submission to ADB of the signed agreement on implementing arrangements between BGFCL, SGFL, and BAPEX. Disbursement for the BKGTP subcomponent (part A4) will be allowed only after GTCL furnish to ADB the approved initial environmental examination (IEE) and the resettlement plan (RP).
IX. PROJECT MONITORING AND EVALUATION
18. ADB will monitor implementation of all components of the Project through (i) quarterly progress reports to be submitted by PCU; (ii) ADB’s review missions and midterm review mission as mentioned in paras. 20-22. Performance will be evaluated on the basis of performance indicators stipulated in the Design and Monitoring Framework.
A. Inception Mission
19. An inception mission was fielded during 10-18 July 2006 to discuss and finalize this PAM, and to ensure that all administrative matters pertaining to the Project are properly in place and working relationships are established between concerned Bank staff and EA’s staff. Details relating to report requirements, accounting system, compliance with loan covenants, disbursement procedures and withdrawal applications were clarified during the mission.
B. Review Mission
20. Review missions will be conducted to monitor overall progress of the Project, review expenditures and cost estimates and most importantly discuss problems and issues causing delays in project implementation. The review missions will also monitor the overall performance of the EAs. The first review mission is tentatively set in December 2006 and succeeding review missions will be fielded by ADB as and when required but at least twice a year.
C. Midterm Review Mission
21. In addition to the normal periodic reviews, ADB and the Government will undertake a midterm review 2 years after project implementation has begun. The midterm review will include
7 a detailed evaluation of the project scope, implementation arrangements, resettlement, consultation with affected persons, and achievement of scheduled targets, progress on policy reforms, and capacity-building measures.
X. REPORTING REQUIREMENTS
A. Quarterly Progress Report
22. The PCU will prepare regular progress reports for the respective components of the Project and submit them to ADB on a quarterly basis within 30 days from the end of each quarter. The reports will contain a narrative description of progress made during the period, changes to the implementation schedule if any, problems or difficulties encountered and the remedial action taken, the performance of the project implementation consultants where applicable, and the work to be carried out in the upcoming period. The reports will also include a summary financial account for the Project consisting of project expenditures to date. ADB will review the implementation and operation of the Project based on these reports and meet with PCU and PMU staff, to discuss progress of the Project. A sample format of the report is in Appendix 11.
B. Audited Financial Reports
23. Each EA shall maintain separate accounts for the Project and for its overall operations, and have its annual financial statements, including the income statement, balance sheet, and cash flow statement, audited by a professional auditing firm acceptable to ADB. The audited Project accounts and audited corporate financial statement shall be submitted to ADB within 6 months of the close of the financial year. In addition, Each EA shall submit its unaudited financial statements within 6 months of the close of the financial year. A sample format of the Project Account is in Appendix 12.
C. Project Completion Reports
24. Within three months from completion of their respective components, each EA shall submit to ADB through the PCU, a project completion report. Upon project completion, PCU, with the assistance of the Eas, shall submit to ADB a comprehensive Project Completion Report on the overall impact of the Project. The report shall be composed of the execution and initial operation of the Project, including its cost, the performance of the EAs of their obligations under the Loan Agreement and the accomplishment of the purpose of the Loan. The format of the report is in Appendix 13.
XI. AUDITING REQUIREMENTS
25. The accounting, auditing, and reporting systems and procedures for the Project will be established in accordance with accounting principles and practices satisfactory to ADB. The EAs will maintain separate accounts for the project components. Independent auditors acceptable to ADB will audit the project accounts and related financial statements annually. Certified copies of such audited accounts and financial statements of each EA in English will be submitted to ADB not later than 6 months after the end of the financial year to which they relate. The annual audit report will include a separate audit opinion on the use of the other expenditure procedures. All Eas were informed about ADB’s policy on submission of audited financial statements and possible penalties for delayed submission. An audit letter (Appendix 14) has been sent to Economic Relations Division, Ministry of Finance on 5 July 2006.
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XII. MAJOR LOAN COVENANTS
26. The major loan covenants which have been agreed among the Government, the EAs and ADB, to be complied with against the dates shown where applicable are in Appendix 15.
XIII. KEY PERSONS INVOLVED IN THE PROJECT
27. The key persons responsible for the implementation/administration of the Project are in Appendix 16.
XIV. ANTICORRUPTION
28. Consistent with its commitment to good governance, accountability, and transparency, ADB reserves the right to investigate directly, or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB’s 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 the Executing Agency and all contractors, suppliers, consultants and other service providers as they relate to the Project.
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AGREED
For the Asian Development Bank For the Executing Agencies and Implementing Agency
For Part A
(SGD) (SGD) Mr. Toshihiro Takano Mr. Manjur Morshed Talukder Project Specialist Managing Director Gas Transmission Co. Ltd.
For Part B
(SGD) Mr. Md. Muqtadir Ali Managing Director Sylhet Gas Fields Ltd.
(SGD) Mr. Md. Shahidul Abedin Managing Director Bangladesh Gas Fields Company, Ltd.
(SGD) Mr. Md. Jamaluddin Managing Director Bangladesh Petroleum Exploration and Production Co. Ltd.
For Part C
(SGD) Mr. Md. Quamrul Islam Managing Director Pashchimanchal Gas Company, Ltd.
For Part D
(SGD) Mr. M. Musharraf Hossain Bhuiyan Chairman Bangladesh Oil, Gas and Mineral Corp. (Petrobangla)
10 Appendix 1
CAPACITY BUILDING SCOPE OF WORK (TENTATIVE)6
1. The objective of the institutional development component is to support the gas sector institutions to undertake the reform and restructuring while ensuring efficient implementation of the Project. It will help strengthen the policy formulation and monitoring capabilities in the Energy and Mineral Resources (EMR) Division of the Ministry of Power, Energy and Mineral Resources to support the implementation of the Gas Sector Reform Roadmap (GSRR)7. It will support corporate governance, institutional development, financial management, operational improvement and human resource development of the state gas companies (SGCs) for improving sector efficiency and performance. In particular, it will strengthen their capabilities in institutional and financial management, and encourage private sector involvement in the gas sector. It will also assist the SGCs implement a comprehensive system loss reduction plan to reduce and/or maintain their unaccounted for gas to below 2% of purchases.
2. Four main activities proposed by Petrobangla to be carried out under Part D are (i) capacity development of Hydro Carbon Unit (HCU), (ii) upgradation of data center at BAPEX, (iii) implementation of loss reduction plan, and (iv) development of institutional capacity of gas sector entities including EMRD and Petrobangla.
A. Capacity Development of Hydro Carbon Unit (HCU)
3. HCU was established in 1994 and acts as the technical arm of EMRD for upstream gas activities and has the following objectives: (i) assessment of reserve and undiscovered resource at regular intervals; (ii) data management in the gas sector; (iii) overview and observation on production sharing contracts; (iv) internal and regional gas market analysis; (v) formulation of exploration and depletion policy; and (vi) establishment of contact forums for the private sector. To strengthen overall gas sector planning and policy making, GOB intends to make HCU a regular part of EMRD. HCU requires further capacity building to promote gas sector development. Recruitment of consulting services for the following activities was proposed by GOB as scope of work to be financed under Part D of the Project:
i. Oil and gas exploration and development
(a) Reserve and resource estimation of oil and gas at regular intervals (b) Updating and expansion of data management (c) Production and depletion forecasting (d) Domestic and regional gas market analysis (e) Planning, monitoring of exploration, production and development activities (f) Providing opinion, suggestions to the Ministry on PSC and Joint Venture Agreement (JVA) including policy formulation
6 During ADB’s inception mission (10 to 18 July 2006) the scope of work of Part D of the Project was discussed. The Mission was provided with TPP/DPP for these tasks. Based on the information provided, tentative scope of work of Part D is described in the following paragraphs. It was agreed that the details of scope of work will be finalized by Petorbangla in coordination with related entities and will be submitted to ADB for its concurrence by 15 August 2006. This appendix will be revised once the scope of work is finalized by Petrobangla. 7 EMR has received support under the World Bank’s ongoing Power Sector Development TA and EMR agreed to further refine the areas where no overlap to cover the scope of this subcomponent..
Appendix 1 11
(g) Establish contact forums with private sector and suggest appropriate policy initiatives to attract more private investment in the energy sector (h) Initiate, participate and recommend in sectoral reforms and regulatory framework (i) Establish international cooperation with the international petroleum institutions and ensure technology transfer
ii. Petroleum refining and marketing
(a) Review and monitor activities of petroleum refining, storage and distribution (b) Review of acts rules, regulations and assist the ministry in formulating new policies (c) Assist the Ministry in overviewing and monitoring of activities involved in petroleum refining, marketing and other related activities
iii. Mining
(a) Review of resource assessment (b) Provide opinion and suggestion on mining procedures (c) Review of acts, rules, regulations and assist the Ministry in formulating new policies, acts, rules and regulations (d) Review of coal mining, coal development strategy, coal bed methane and other minerals including hardrocks development activities
B. Upgradation of the Data Center
4. The data center of BAPEX preserves geological, geophysical, well data and other related documents of natural gas. The main scope of work is to improve data management system through:
(a) Transcription of magnetic tapes into suitable high density media (b) Conversion of seismic sections, well logs, maps and reports into digital data. (c) Storing and management of digital seismic and log data
C. System Loss Reduction Program
5. The Government agreed that TGTDCL, with advice from consultants appointed under the ADB’s Techcnical Assistance, would maintain the level of system losses in its franchise area to 2% of less by 30 June 1995 and beyond. However, TGTDCL could not maintain system loss to the stipulated level. Its system loss level ranged from 6% to 9%.
6. The main objective is to improve operational performance in the distribution system of two regional sales area of TGTDCL through reduction of system loss or unaccounted for gas. Main goal of this Project is to reduce the system loss within two isolated sales area (Area 1: Narayanganj, Fatullah, Munshiganj & Area 2: Sonargaon) to 2% or below by 2010. The following are the activities proposed by TGTDCL.
(a) Install 604 nos. of turbine meters in the DRSs and CMSs (b) Procure 5 nos. of mobile meter calibration units for onsite meter calibration (c) Consulting services on the on the operational and management aspects of system loss reduction program. TOR of the services will include: (i) strengthening of system operation; (ii) improvement of loss control; (iii) modernization of customer service; (iv) improvement of general office management; and (v) human resource development.
12 Appendix 1
D. Development of institutional capacity of gas sector entities
7. The main objective is human resource development of EMRD, Petrobangla, GTCL, SGFL, BGFCL, BAPEX and PGCL through local and foreign training. Foreign training will include both managerial and engineering field. Petrobangla proposed 218 person-weeks of foreign training to be financed under the loan with a total amount of approximately US$ 2 million.
8. Detailed description of the proposed training and objective, justification shall be prepared by Petrobangla for ADB’s review.
Appendix 2 13
DETAILED COST ESTIMATES (During Appraisal)
$ million Item Foreign Local Total Exchange Currencyg Cost I. Base Costa Part A: Gas Transmission A. Ashuganj-Jamuna Bridge East Gas Transmission Pipeline 1. Land acquisition and resettlement 0.0 2.6 2.6 2. Route survey, EIA and RP 0.0 0.0 0.0 3. Construction works 3.7 6.7 10.4 4. Equipment 47.0 0.0 47.0 5. Consulting services and training 2.7 0.1 2.8 6. Overhead 0.0 0.7 0.7 7. Taxes and duties 0.0 19.8 19.8
B. Hatikumrul-Bheramara Gas Transmission Pipeline 1. Land acquisition and resettlement 0.0 5.6 5.6 2. Route survey, EIA and RP 0.0 0.1 0.1 3. Construction works 8.1 10.1 18.2 4. Equipment 21.8 0.0 21.8 5. Consulting services and training 0.1 0.1 0.2 6. Overhead 0.0 1.0 1.0 7. Taxes and duties 0.0 9.1 9.1
C. Bonpara-Rajshahi Gas Transmission Pipeline 1. Land acquisition and resettlement 0.0 2.1 2.1 2. Route survey, EIA and RP 0.0 0.0 0.0 3. Construction Works 1.5 5.1 6.6 4. Equipment 10.4 0.0 10.4 5. Consulting services and training 0.1 0.3 0.4 6. Overhead 0.0 0.4 0.4 7. Taxes and duties 0.0 4.4 4.4
D. Bheramara-Khulna Gas Transmission Pipeline 1. Land acquisition and resettlement 0.0 13.1 13.1 2. Route survey, EIA and RP 0.0 0.1 0.1 3. Construction Works 7.5 17.2 24.7 4. Equipment 36.4 0.0 36.4 5. Consulting services and training 0.1 0.2 0.3 6. Overhead 0.0 1.8 1.8 7. Taxes and duties 0.0 16.0 16.0
E. North-South System Expansion 1. Land acquisition and resettlement 0.0 1.9 1.9 2. Route survey, EIA and RP 0.0 0.0 0.0 3. Construction works 5.0 4.1 9.1
14 Appendix 2
4. Equipment 23.0 0.3 23.3 5. Consulting services and training 3.6 0.2 3.8 6. Overhead 0.0 0.2 0.2 7. Taxes and duties 0.0 9.7 9.7
Part B: Field Appraisal A. EIA and resettlement plan 0.0 0.0 0.0 B. Equipment 10.2 0.4 10.6 C. Area survey 3.0 8.8 11.8 D. Taxes and duties 0.0 0.6 0.6
Part C: Rajshahi Gas Distribution Network A. Land acquisition and resettlement 0.0 1.5 1.5 B. Route survey, EIA and RP 0.0 0.1 0.1 C. Construction works 0.0 2.1 2.1 D. Equipment 8.6 0.4 9.0 E. Consulting services and training 0.0 0.1 0.1 F. Overhead 0.0 0.5 0.5 G. Taxes and duties 0.0 3.5 3.5 Part D: Institutional Strengthening D-1: Petrobangla, SGC and EMRD A. Equipment 1.6 0.3 1.9 B. Consulting services and training 8.1 0.5 8.6 C. Taxes and duties 0.0 0.1 0.1 D-2:System Loss Reduction A. Equipment 1.6 0.3 1.9 B. Consulting services and training 0.4 0.5 0.9 C. Taxes and duties 0.0 0.7 0.7 Subtotal (I) 204.4 153.6 358.0 II. Contingencies A. Physicalb 13.6 10.0 23.6 B. Pricec 0.0 13.6 13.6 Subtotal (II) 13.6 23.6 37.2 III. Financing Charges A. Interest during constructiond 15.7 1.2 16.8 B. Commitment chargese 1.3 0.0 1.3 C. Front-end feesf 0.0 0.0 0.0 Subtotal (III) 16.9 1.2 18.1 Foreign exchange loss 0.0 0.0 0.0 Total Project Cost 235.0 178.3 413.3 EIA = environmental impact assessment, EMRD = Energy and Mineral Resources Division, Petrobangla = Bangladesh Oil, Gas, and Minerals Corporation, RP = resettlement plan, SGC = state-owned gas company. a In mid-2005 prices. b Physical contingency is provided at 5% of base cost estimate for all expenditure category except for compressors for which physical contingency is at 10% of base cost estimate. c Price contingency is based on 0% on foreign exchange costs and 4.5% on local currency costs and includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. d Interest during construction has been estimated at ADB’s London interbank offered rate-based interest rate. e Commitment charge is based on 0.75% of the undisbursed funds, accruing in increasing proportions: 15% in the first year, 45% in the second year, 85% in the third year, and 100% thereafter. f Front-end fee is not included. g Includes taxes and duties of $63.9 million equivalent, estimated at 45% of the total cost of imported equipment and materials. Sources: Gas Transmission Company Limited, Bangladesh Oil, Gas, and Mineral Resources, and Bangladesh Petroleum Exploration Company Limited
Appendix 3 15
CONTRACT PACKAGE LIST
Equipment and Materials
Item Contract Type Procurement Estimated Value Mode ($ million) Part A: Gas Transmission Component A. Ashuganj- Jamuna Bridge East 1. Line Pipe Supply ICB 14.7 2. Induction Bends Supply ICB 0.7 3. Coating Materials Supply ICB 1.1 4. Valves Supply ICB 1.2 5. Scraper Traps Supply LIB 0.3 6. Miscellaneous Fittings Supply ICB 0.6 7. Cathodic Protection Materials Supply LIB 0.3 8. Pipeline Construction (river crossing Turnkey ICB 3.8 portion) 9. Instrumentation Supply ICB 1.6 10. Compressor Stations at Elenga Turnkey ICB 14.0 B. Hatikumurul-Bheramara 1. Line Pipe Supply ICB 10.9 2. Induction Bends Supply LIB 0.1 3. Coating Materials Supply ICB 1.3 4. Valves Supply ICB 0.9 5. Scraper Traps Supply LIB 0.3 6. Miscellaneous Fittings Supply LIB 0.4 7. Cathodic Protection Materials Supply LIB 0.5 8. Pipeline Construction (river crossing Turnkey ICB 8.1 portion) 9. City Gas Station (Bheramara) Turnkey ICB 2.2 C. Bonpara-Rajshahi 1. Line Pipe Supply ICB 4.3 2. Induction Bends Supply LIB 0.2 3. Coating Materials Supply LIB 0.4 4. Valves Supply LIB 0.4 5. Scraper Traps Supply LIB 0.1 6. Miscellaneous Fittings Supply LIB 0.2 7. Cathodic Protection Materials Supply LIB 0.2 8. Pipeline Construction (river crossing Turnkey ICB 1.5 portion) 9. CGS (Rajshahi), DRS (Putia, Natore) Turnkey ICB 3.2 D. Bheramara – Khulna Gas Transmission Pipeline 1. Line Pipe Supply ICB 20.1 2. Induction Bends Supply ICB 1.1 3. Coating Materials Supply ICB 2.2 4. Valves Supply ICB 1.1 5. Scraper Traps Supply LIB 0.2 6. Miscellaneous Fittings Supply ICB 0.7 7. Cathodic Protection Materials Supply LIB 0.5 8. Pipeline Construction (river crossing Turnkey ICB 7.5 portion) 9. CGS (Khulna), TBS (Kushtia, Jhenaidah, Turnkey ICB 7.9 Jessore) 10. SCADA Turnkey ICB 8.4 E. North-South System Expansion A. Compressor Stations at Ashuganj, (South Turnkey ICB 41.0 and West) and Muchai
16 Appendix 3
Item Contract Type Procurement Estimated Value Mode ($ million)
Part B: Field Appraisal A. Package 1 - Data Acquisition Equipment Supply ICB 7.4 B. Package 2 – Other equipments Supply LIB 4.7
Part C: Rajshahi Gas Distribution Network A. Package 1 - Line pipe Supply ICB 7.1 B. Package 2 –Line pipe materials (valves, Supply ICB 1.4 fittings, meter, regulators and relief valves, odorizing unit, filter separator, coating materials, slam shut valve etc. ) C. Cathodic Protection Materials Supply LIB 0.2
Part D: Capacity Building A. Turbine meter Supply ICB 1.3 B. Mobile on-site meter calibration unit Supply LIB 0.3 C. Computer and accessories (printer, Supply LIB 0.2 plotter, digitizer) D. Software Supply LIB 0.14 E. Office Equipment (photocopier, projector, Supply Shopping 0.02 UPS, Fax machine, PABX and camera) F. Data management system Supply ICB 1.4
CGS = city gas station, DRS = district regulating station, ICB = international competitive bidding, LIB = limited international bidding, SCADA = supervisory control and Data Acquisition, TBS = town border station. Sources: Gas Transmission Company Limited, Bangladesh Oil, Gas, and Mineral Resources, and Bangladesh Petroleum Exploration Company Limited.
Consulting Services
Item Selection Method Estimated Value ($ million)
Part A: Gas Transmission Component 1. Project Implementation Support QCBS 3.3
Part B: Field Appraisal 1. Consulting/Engineering Services QCBS 0.8
Part D: Capacity Building8 1. HCU a) Individual consultant for preparation of scope of work 0.05
2. Data Center a) Data Conversion QCBS 0.8
3. Loss Reduction a) System Loss Reduction QCBS 0.4 QCBS = Quality and Cost-based Selection. Sources: Gas Transmission Company Limited, Bangladesh Oil, Gas, and Mineral Resources, and Bangladesh Petroleum Exploration Company Limited.
8 To be prepared by Petrobangla for ADB’s concurrence.
Appendix 4 17
Organizational Chart for Project Implementation
Project Coordinating Unit (Petrobangla)
Mr, Nazrul Islam Head, PCU
PMU PMU PMU PMU PMU PMU Gas Transmission Co. Sylhet Gas Field Bangladesh Gas Fields Pashchimanchal Gas Bangladesh Oil, Gas Bangladesh Petroleum Ltd. Limited Co. Ltd. Co. Ltd. and Mineral Exploration & Corporation Production Co. Ltd.
Mr, Md, Mr. Md. Mr. Ahmed Hossain Engr. Md. Rezaul Mr. Anwar H. Khan Mr. Anwarur Rahman Mostafizur Rahman Akhtaruzzaman Head, PMU Islam Khan Head, PMU Head, PMU Head, PMU Head, PMU Head, PMU
18 Appendix 5
PROJECT IMPLEMENTATION SCHEDULE 2005 2006 2007 2008 2009 2010 Activity J ASOND JFMAMJJASOND JFMAMJJASOND JFMAMJJASOND JFMAMJJASOND JFMAM J Part A: Gas Transmission Expansion and Reinforcement 1. North South System Expansion (NSSE) Survey, land acquisition (Muchai) / land transfer (Ashuganj) Site development, buildings and other civil works Consulting services Turnkey contractor selection Design, manufacture, supply and installation Testing and commissioning (Muchai/Ashuganj South)
2. Ashuganj-Jamuna Bridge East Gas Transmission Pipeline (AJGTP) a. Gas Transmission Pipeline Survey, land acquisition, and other resettlement activities Site development, buildings and other civil works Design, engineering and document preparation Material procurement and transportation Construction and river crossing by horizontal directional drilling Testing and commissioning b. Compressor Stations (Ashuganj West/Elenga) Land transfer from RPGCL & LPGL (BPC) Site development, buildings and other civil works Design, manufacture, supply and installation Testing and commissioning (Ashuganj West/Elenga)
3. Hatikumrul-Bheramara Gas Transmission Pipeline (HBGTP) Survey, land acquisition, and other resettlement activities Site development, buildings and other civil works Design, engineering and document preparation Material procurement and transportation Construction and river crossing by horizontal directional drilling Testing and commissioning 4. Bonpara-Rajshahi Gas Transmission Pipeline (BRGTP) Survey, land acquisition, and other resettlement activities Site development, buildings and other civil works Design, engineering and document preparation Material procurement and transportation Construction and river crossing by horizontal directional drilling Testing and commissioning 5. Bheramara-Khulna Gas Transmission Pipeline (BKGTP) Survey, land acquisition, and other resettlement activities Site development, buildings and other civil works Design, engineering and document preparation Material procurement and transportation Construction and river crossing by horizontal directional drilling Testing and commissioning Part B : Field Appraisal 1. Material procurement and transportation 2. Expert services 3. Field operations 4. Data processing, interpretation and report preparation Part C: Rajshahi Area Gas Distribution 1. Survey, land acquisition, and other resettlement activities 2. Site development, buildings and other civil works 3. Design, engineering and document preparation 4. Material procurement and transportation 5. Construction 6. Testing and commissioning Part D: Capacity Building 1. Consulting services 2. Equipment 3. Training BPC = Bangladesh Petroleum Corporation, LPGL = Liquified Petroleum Gas Ltd., RPGCL = Rupantarita Prakritik Gas Co. Ltd. Source: Asian Development Bank, Gas Transmission Company Limited, Bangladesh Gas Fields Company Limited, Sylhet Gas Fields Company Limited, Bangladesh Petroleum Exploration and Production Company, and Pashchimanchal Gas Company Limited.
Appendix 5a 19
PROJECT IMPLEMENTATION SCHEDULE (As agreed during Inception Mission)
2006 2007 2008 2009 2010 Activity JFMAMJJASOND JFMAMJJASOND JFMAMJJASOND JFMAMJJASOND JFMAMJJASOND Part A: Gas Transmission Expansion and Reinforcement 1. North South System Expansion (NSSE) Survey, land acquisition (Muchai) / land transfer (Ashuganj South & West) Site Development, Buildings and Other Civil Works Engagement of Consulting Firm Consulting Services Turnkey Contractor Selection Design, Manufacture, Supply and Installation Testing and Commissioning (Muchai/Ashuganj South & West) Operation & Maintenance 2. Ashuganj-Jamuna Bridge East Gas Transmission Pipeline (AJGTP) a. Gas Transmission Pipeline Survey and Land Acquisition Site Development, Buildings and Other Civil Works Design, Engineering and Document Preparation Material Procurement and Transportation Construction and River Crossing by Horizontal Directional Drilling Testing and Commissioning b. Compressor Stations (Elenga) Land Transfer from RPGCL Site Development, Buildings and Other Civil Works Turnkey Contractor Selection Design, Manufacture, Supply and Installation Testing and Commissioning (Elenga) Operation & Maintenance
3. Hatikumrul-Bheramara Gas Transmission Pipeline (HBGTP)
Survey and Land Acquisition Site Development, Buildings and Other Civil Works Design, Engineering and Document Preparation Material Procurement and Transportation Construction and River Crossing by Horizontal Directional Drilling Testing and Commissioning 4. Bonpara-Rajshahi Gas Transmission Pipeline (BRGTP) Survey and Land Acquisition Site Development, Buildings and Other Civil Works Design, Engineering and Document Preparation Material Procurement and Transportation Construction and River Crossing by Horizontal Directional Drilling Testing and Commissioning 5. Bheramara-Khulna Gas Transmission Pipeline (BKGTP) Survey and Land Acquisition Site Development, Buildings and Other Civil Works Design, Engineering and Document Preparation Material Procurement and Transportation Construction and River Crossing by Horizontal Directional Drilling Testing and Commissioning SCADA ( For all the above components) Engagement of Consulting Firm Consulting Services Turnkey Contractor Selection Design, Manufacture, Supply and Installation Testing and Commissioning (Muchai/Ashuganj South & West) Operation & Maintenance PART - B : APPRAISAL AND FIELD DEVELOPMENT Material Procurement and Transportation Expert Services Field Operations Data Processing, Interpretation and Report Preparation PART C: Rajshahi City Gas Distribution Survey and Land Acquisition Site Development, Buildings and Other Civil Works Design, Engineering and Document Preparation Material Procurement and Transportation Construction Testing and Commissioning PART D: Institutional Development Consulting Services Equipment Training BPC = Bangladesh Petroleum Corporation, LPGL = Liquified Petroleum Gas Ltd., RPGCL = Rupantarita Prakritik Gas Co. Ltd.
20 Appendix 6 and 6a
Appendix 6
DETAILED COST - DURING IMPLEMENTATION
During Appraisal Actual (todate) Actual (on project completion) Foreign Local Foreign Local Foreign Local Exchange Currency Total Exchange Currency Total Exchange Currency Total Component
Part A Part A1 53.4 30.0 83.4 Part A2 30.0 26.0 56.0 Part A3 12.0 12.4 24.4 Part A4 44.0 48.4 92.4 Part A5 31.6 16.3 47.9 171.0 133.1 304.1
Part B 13.2 9.9 23.1 Part C 8.6 8.2 16.8 Part D 11.7 2.4 14.1 Base Cost Total 204.4 153.6 358.0
Contingencies Physical 13.6 10.0 23.6 Price - 13.6 13.6 Contingency Total 13.6 23.6 37.2 Subtotal 218.0 177.2 395.2
Front-End Fee - - - IDC and Commitment Charge 16.9 1.2 18.1
Total Project Cost 235.0 178.3 413.3
Appendix 6a
DETAILED FINANCING PLAN - DURING IMPLEMENTATION
During Appraisal Actual (todate) Actual (on project completion) Foreign Local Foreign Local Foreign Local Exchange Currency Total % Exchange Currency Total % Exchange Currency Total %
Source
ADB 230.0 - 230.0 56 Norway 5.0 - 5.0 1 Government - 178.3 178.3 43 Total 235.0 178.3 413.3 100
WORKSHEET FOR QUARTERLY AND YEARLY CONTRACT AWARDS/COMMITMENTS AND DISBURSEMENT PROJECTIONS ($ Million) Ref. PAI Nos. 4.13. Issued in July 1992 and 6.1. Issued in October 1990 PROJECTIONS MADE IN: Jan-07 (Month, Year) PROJECT: BAN: GAS TRANSMISSION AND DEVELOPMENT PROJECT 2188 OCR Contracts Awarded LOAN NO. SEGMENT NO. FUNDS (OCR, SF) QUARTER 1 QUARTER 2 BAN TOTAL PROJECTED FOR THE on Previous Year COUNTRY (Acronym) YEAR ______(s) January, February, March April, May, JuneQUARTER 3 July, August, September October, November, December Month Awarded/ QUARTER 4 Month, Year Commited or To be QP QP QPMonth Awarded/ QP Ref. Contract Awarded 1 QAContract 1 Value QAMonth Awarded/ QA Commited or To be QA Month Awarded/ Disbursement Line Category CONTRACT/COMMITMENT ITEM Disbursement Disbursement Disbursement Disbursement QP(Bank Financed) QPQP Commited QP or To beQP QP QP Commited or To QP Contract Value/ Amount Related no. Amount Related to Amount Related to Amount Related Amount Related to QAAwarded/ QA Commited Awarded/ Commited QAAwarded/ Commited QA be Awarded/ Commitment to the Contract/ the Contract/ the Contract/ to the Contract/ the Contract/ 1 Contract Value/ Contract Value/ Contract Value/ Contract Value/ (9)=(1+3+5+7) Commitment QACommitment (2) QA Commitment (4) CommitmentQA (6) QA Commitment (8) Commitment (1) Commitment (3) Commitment (5) Commitment (7) - - (10) = ( 2+4+6+8 ) - 2
3
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7
8
9
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TOTAL OF THIS PAGE ___ OF ___PAGES ------GRAND TOTAL (LAST PAGE) - -
1
In accordance with the allocation of loan proceeds as defined in the loan documents, or any other deatiled breakdown if found useful. 7 Appendix QA = Quarterly Actual (already awarded/commited/disbursed, when projections are prepared). QP = Quarterly Projected (to be awarded/commited/disbursed), when projections are prepared).
21
22 Appendix 8
OUTLINE TERMS OF REFERENCE FOR CONSULTING SERVICES
A. Project Implementation Support (Part A)
1. Consulting services will be required for implementation support in the (i) construction of compressor stations, and (ii) installation of equipment for the Supervisory Control and Data Acquisition (SCADA) system for the gas transmission component of the Project. More details are in Supplementary Appendix D. The executing agencies (Eas) will be allowed to recruit consultants either as a firm or on an individual basis. However, consultants for project implementation, field appraisal, corporate management and finance, diversification of shareholding, and management information system (MIS) will be recruited through a firm.
2. Consulting services to support the installation of compressors and SCADA will involve the following tasks:
(i) Prepare and complete the technical design for compressor stations and the SCADA system for all the subprojects under the loan. (ii) Prepare bidding documents for the packages in (i). (iii) Assist the Gas Transmission Company Limited (GTCL) in evaluating bids and awarding contracts for the packages in (i). (iv) Assist GTCL in supervising the construction of the facilities and guide the contractors in conforming with the specifications. (v) Assist GTCL in incorporating environmental mitigating measures into the contract documents, supervise and monitor the implementation of environmental mitigating measures, and improve overall environmental management. (vi) Assist GTCL in monitoring and supervising resettlement and social issues.
B. Field Appraisal (Part B)
3. Five gas fields will be surveyed to delineate the reservoir, appraise proven reserves, and possibly upgrade probable reserves to proven reserves. The Bangladesh Petroleum Exploration Company Limited (BAPEX) will acquire the necessary hardware and software for 3- D surveys and conduct the surveys. Consulting services will be required to ensure that BAPEX develops 3-D capability and integrates 3-D surveys into its operations. The envisioned consulting services will complement the maintenance and training provided as part of the principal procurement package, with emphasis on “firmware” aspects of 3-D data acquisition, processing, and interpretation. The consultants will provide:
(i) direct assistance in initial system testing and control surveys, and direct assistance during field surveys; (ii) in-country orientation on 3-D data acquisition theory and practice, data processing, interpretation, and troubleshooting.
Appendix 8 23
C. Capacity Building (Part D)
4. The objective of part D is to help the sector institutions undertake reform and efficiently implement the Project.9 .
9 The TORs of the consulting services under Part D is now under preparation by Petrobangla in coordination with sector companies and HCU. This portion of PAM will be revised based on Petrobangla’s proposal subject to ADB’s concurrence.
24 Appendix 9
Recruiting Consulting Firms for Loan Projects Using QCBS
CONSULTANT EXECUTING AGENCY ADB
Advertises project in User division lists newspapers, etc. project in ADBBO
Discusses Terms of Reference Appraisal mission discusses terms of reference Developed terms of reference
Reviews ADBBO or Receives expressions User division provides advertisement and sends of interest list of firms from DACON expression of interest Prepares long list of consultants
CSC prepares shortlist, SUBMISSION 1 User division reviews & approves if RFP, and evaluation criteria, $600,000
Receives RFP and Sends RFP to User division sends prepares technical shortlisted comments/approval to EA & financial proposals consultants
Submits technical Receives proposals, stores and unopened financial financial proposals proposals
CSC members evaluate technical proposals
CSC meeting ranks User division reviews & approves if technical proposals, prepares SUBMISSION 2 $600,000
Advises consultants whose User division sends Receives proposals did not meet comments/approval EA's advice minimum technical requirement to EA
Arranges to attend Advises technically qualified opening or nominates consultants of time,date, Receives copy
SELECTION a representative and place for opening of notification (attendance is optional) financial proposals
Publicly opens financial proposals
Evaluates financial proposals
CSC ranks proposals, prepares User division reviews & approves if ranking report, and SUBMISSION 3 $600,000
Sends representative to Invites first-ranked consultant Sends approval contract negotiations to contract negotiations to EA
Negotiates contract, submits User division to ADB minutes of negotiations SUBMISSION 4 reviews and and draft contract approves
Sends approval Receives Finalizes contract and sends to EA signed contract copies to consultant and ADB Receives
CONTRACTING Unsuccessful consultants signed contract receive advice and unopened Advises unsuccessful consultants, financial proposals returns unopened financial proposals, issues notice to Selected consultant proceed to selected consultant starts work
Appendix 10 25
Consultant Recruitment Activity Monitoring (CRAM)
A. Loan No. and Title Loan 2188-BAN Gas Transmission Devt. Project Last edited by: B. Contract Budget (US$) 3,080,000 C. Selection Method QCBS on D. Type of Technical Proposal Full E. Executing Agency (EA) Gas Transmission Co. Ltd. F. EA Contact Person Mr. Manjur Morshed Talukder, Managing Director G. Loan Supervision Division of RM SAEN H. ADB Project Officer P. Abeygunawardena InitialsL PA Project Assistant: Carmencita A. Roque I. ADB COCS Officer Mineo Maruyama Initials: MM J. Actual Date of Short-Listing (SL) by EA
NORM Planned Actual Deviation Responsible ActivityCal. Cal. Achived Cum. Cum. Explanation and Action Staff Dates Days Days Days Days Date Days Days 1 2 3 4 5 6 7 8 9 10 11
1 EA submitting shortlist to ADB 10 2 ADB CSC-SL meeting 7 3 Signing of the CSC-SL minutes 5 4 ADB sending approval of the shortlist to EA 2 5 EA issuing RFP 7 6 Proposal submission 45 7 EA CSC-EV meeting 21 8 EA submitting technical evaluation report to ADB 10 9 ADB CSC-EV meeting 7 10 Signing of CSC-EV meeting 5 11 ADB sending approval of technical evaluation to EA 2 12 EA issuing invitation for public opening 7 13 Public opening 14 14 EA signing of overall ranking minutes and submitting to ADB 21 15 ADB-CSC-OR meeting 7 16 Signing of CSC-OR minutes 5 17 ADB sending approval of overall ranking to EA 2 18 EA issuing invitation for contract negotiations 3 19 Commencement of contract negotiations 14 20 Completion of contract negotiations 14 21 EA submitting negotiated contract to ADB 21 22 ADB approval of the negotiated contract 5 23 EA signing of the contract 14 24 Consultant mobilization 14 Total number of days 262 Footnotes: a. Activity NORMS [column 3] are based on calendar days b. The base date for planning and monitoring is the date of Short-Listing by EA c. PLANNED dates, days and cumulative days [columns 5 and 6 respectively] are derived from the NORMS and are computed as calendar days d. ACTUAL achieved dates [column 7] are input by the responsible project officer from the concerned User Division e. DEVIATIONS are computed in calendar days and cumulative calendar days [columns 10 and 11]
Guide for completing CRAM sheet: a. Row A-J and column 2-6 are completed by ADB b. Columns 7and 8 are completed by the EA c. Columns 8-11 are automatically generated by ADB's CRAM System based on Column 7 inputs
26 Appendix 10
USING CRAM FOR LOAN PROJECTS
COSO USER DIVISION Executing Agency
Develops a standard CRAM Creates a CRAM frame by Receives the CRAM frame te mpla te inputting loan data
During fact-finding/appraisal mission, ADB proejct officer discusses with the EA the consultant recuitment schedule based on CRAM targets.
Inputs scheduled shortlisting date in the system to generate Receives the CRAM fram e with Receives a CRAM frame for recuitment schedule. recruitment schedule for logging in the system. S e nds t he CRA M fra me wit h confirmation at CSC-SL. recruitment schedule to EA.
Sends the confirmed CRAM frame to ADB together with shorlitst and RFP documents.
Assigns a staff to be responsible for monitoring recruiment process, if not already done.
Inputs actual date of each Checks planned activity on activity. Takes appropriate Assigned staff reports to ADB daily basis and sends action where actual date the actual date of each activity reminder to the user division exceeds planned date. under EA's supervision and for action if planned activity is Inputs explanation/reason and explains any delays. not achieved on schedule. action taken.
Receives Monthly CRAM Distributes CRAM frames on Receives Monthly CRAM frames and forward copies to a monthly basis to Directors frames and takes action when the EA. Takes action when of user divisions. needed. needed.
When the recruitment process is com pleted, stores completed CRAM frames in database.
Evaluates CRAM frames When the recruitment annually and if requred, process is completed, makes Receives a completed CRAM proposes recomm endation for a hard copy of CRAM frame fram e and inserts it into the streamlining recruitm ent and places it in the project file project file. process. and sends a copy to EA.
Appendix 11 27
Pro Forma of the Executing Agency’s Project Progress Report
A. Introduction and Basic Data
Provide the following:
• ADB loan number, project title, borrower, executing agency(ies), implementing agency(ies); • total estimated project cost and financing plan; • status of project financing including availability of counterpart funds and cofinancing; • dates of approval, signing, and effectiveness of ADB loan; • original and revised (if applicable) ADB loan closing date and elapsed loan period based on original and revised (if applicable) loan closing dates; and • date of last ADB review mission.
B. Utilization of Funds (ADB Loan, Cofinancing, and Counterpart Funds)
Provide the following:
• cumulative contract awards financed by the ADB loan, cofinancing, and counterpart funds (commitment of funds to date), and comparison with time-bound projections (targets); • cumulative disbursements from the ADB loan, cofinancing, and counterpart funds (expenditure to date), and comparison with time-bound projections (targets); and • reestimated costs to completion, need for reallocation within ADB loan categories, and whether an overall project cost overrun is likely.
C. Project Purpose
Provide the following:
• status of project scope/implementation arrangements compared with those in the report and recommendation of the President (RRP), and whether major changes have occurred or will need to be made; • an assessment of the likelihood that the immediate development objectives (project purpose) will be met in part or in full, and whether remedial measures are required based on the current project scope and implementation arrangements; • an assessment of changes to the key assumptions and risks that affect attainment of the development objectives; and • other project developments, including monitoring and reporting on environmental and social requirements that might adversely affect the project’s viability or accomplishment of immediate objectives.
D. Implementation Progress
Provide the following:
• assessment of project implementation arrangements such as establishment, staffing, and funding of the PMO or PIU;
• information relating to other aspects of the EA’s internal operations that may impact on the implementation arrangements or project progress;
28 Appendix 11
• progress or achievements in implementation since the last progress report;
• assessment of the progress of each project component, such as, - recruitment of consultants and their performance; - procurement of goods and works (from preparation of detailed designs and bidding documents to contract awards); and - the performance of suppliers, manufacturers, and contractors for goods and works contracts;
• assessment of progress in implementing the overall project to date in comparison with the original implementation schedule—quantifiable and monitorable target, (include simple charts such as bar or milestone to illustrate progress, a chart showing actual versus planned expenditure, S-curve graph showing the relationship between physical and financial performance, and actual progress in comparison with the original schedules and budgets, the reference framework or guidelines in calculating the project progress including examples are also attached); and
• an assessment of the validity of key assumptions and risks in achieving the quantifiable implementation targets.
E. Compliance with Covenants
Provide the following:
• the borrower’s compliance with policy loan covenants such as sector reform initiatives and EA reforms, and the reasons for any noncompliance or delay in compliance; • the borrower’s and EA’s compliance with financial loan covenants including the EA’s financial management, and the provision of audited project accounts or audited agency financial statements; and • the borrower’s and EA’s compliance with project-specific loan covenants associated with implementation, environment, and social dimensions.
F. Major Project Issues and Problems
Summarize the major problems and issues affecting or likely to affect implementation progress, compliance with covenants, and achievement of immediate development objectives. Recommend actions to overcome these problems and issues (e.g., changes in scope, changes in implementation arrangements, and reallocation of loan proceeds).
Appendix 11 29
Framework and Guidelines in Calculating Project Progress
A. Introduction
1. To ensure that all implementation activities are reflected in measuring implementation progress against the project implementation schedule, the term “physical completion” in the PPR has been changed to “project progress.”
2. Physical and pre-commencement activities are considered in calculating project implementation progress. These activities, which may include recruitment of consultants, capacity building, detailed design, preparation of bid and prequalification documents, etc., could constitute a significant proportion of overall implementation and therefore should be counted.
3. Each activity in the implementation schedule will be weighted according to its overall contribution (using time as a reference) to progress of project implementation. These weights will then be used to calculate the percentage of project progress along the entire time span of the project. This is to provide a holistic view of the pace of implementation.
B. Framework for Compiling Activity List and Assigning Weights
4. As implementation activities and their corresponding weights will vary according to the type of project, sector, and country, sector divisions or RMs will be responsible for determining and including them in the project administration memorandum. The actual project implementation progress of these activities should be reported regularly through the EA’s quarterly project progress report. To ensure ADB- wide consistency, the following framework has been established; its application will be monitored through the PPR.
1. Compilation of Activity List
5. Sector divisions or RMs concerned should identify major implementation activities and include them in the implementation schedule, which is attached as an appendix in the report and recommendation of the President (RRP). The implementation schedule should follow the critical path of the project’s major activities in project implementation taking account of various country, sector, and project constraints.
2. Assignment of Weights
6. Corresponding weights for each activity should be assigned to ensure that “project progress” measures the percentage of achievement (nonfinancial except when the project has credit components) for all events during the entire duration of the implementation schedule. To avoid disproportionate assignment of weights, to the extent possible these should be evenly distributed along the implementation schedule. When activities are concurrent, avoid “double counting.”
3. Computation of Project Progress
7. Once all activities are identified and corresponding weights assigned, project progress should be calculated using the following steps:
(i) Determine the actual percentage progress (nonfinancial) of each activity. (ii) Multiply these percentages by the assigned weight of each activity to arrive at the weighted progress. (iii) Add up the resulting weighted progress of all activities to determine the project progress.
30 Appendix 11
Implementation Schedule with Activities and Weights
Yr1 Yr2 Yr3 Yr4 Yr5
A
a B
b C d c D ef A C T I V E S A
E
1. Sum of all weights should equal 100 percent (a+b+c+d+e+f+g = 100%) 2. When calculating the percentage of “project progress,” all completed activities should be counted as accomplished, regardless of when they were scheduled to be completed. For example, when calculating the percentage of “project progress” after year 3, if activity D is completed in year 3 rather than in year 2, it should still be included in the computation. 3. Total weight of each activity is as follows: Activity A–a; Activity B–b; Activity C–c; Activity D–d; and Activity E–e + f +g 4. Project progress of a project is the summation of the actual percentage of progress for each activity multiplied by the total weight of each activity.
Appendix 11 31
Sample Implementation Schedule
(a) (b) (a) x (b) Activities Year 1 Year 2 Year 3 Year 4 Assigned Actual Weighted Weight Progress Progress Establish PIU 5% 100% 6% Establish Accreditation Board, etc. 5% 0% 0% Appoint Staff and Budget 4% 75% 3%
Adopt Architecture Plans 2% 100% 2%
Shortlist Consulting Firms 6% 100% 6% Prepare Fellowship Program 6% 76% 4% Prepare Civil Works Tendering 30% 0% 0% Civil Works: Classrooms, Dorms, etc. 6% 0% 0% Procurement of Furniture and Equipment 16% 10% 2% Field Work of Consultants 7% 0% 0% Provide Fellowships 6% 0% 0% Conduct Study Tours 6% 0% 0% Provide Curriculum Standards 6% 0% 0% Total Weight 100% Imp. Progress 24%
(a) Assigned weight for each activity (b) Actual progress of each activity (a) x (b) weighted progress for each activity Project progress = sum of all weighted progress for each activity
32 Appendix 12
Notes: One statement should be prepared in the currency of the Borrower. Another Statement should also be prepared in USD equivalent using appropriate exchange rate.
SAMPLE REPORT FORMAT PROJECT ACCOUNT
LOAN NO. ______:______FOR THE PERIOD______(in US$ million)/(in local currency million)
ADB FINANCED GOVERNMENT FINANCED TOTAL ADB AND GOVT FINANCED Expenditure Category */Foreign Local Foreign Local Foreign Local Exchange Currency Total Exchange Currency Total Exchange Currency Total For Current Period
1. Civil Works 2. Equipment and Materials 3. Training 4. Consulting Service 5. Taxes/VAT 6. Overhead 7. Interest Charges
Total
Cumulative Since Start of Project
1. Civil Works 2. Equipment and Materials 3. Training 4. Consulting Service 5. Taxes/VAT 6. Overhead 7. Interest Charges
Total
Note: Exchange Rate used: ______*/ As applicable, please provide details of each expenditure category as supplementary statements.
Appendix 13 33
Format for Project Completion Report
Suggested Topics for Project Completion Reports to be prepared by Borrowers
I. PROJECT DESCRIPTION
A. Objectives
B. Components (or subprojects for sector and multiprojects)
C. Implementation methods
D. Description and justification of changes in components (or subproject appraisal criteria) or implementation methods
II PROJECT IMPLEMENTATION
A. Compare original and actual implementation schedules. Indicate delays, length and causes of delays, and remedial action taken.
B. Compare cost estimates made during appraisal and actual costs (foreign and local). Local currency costs incurred, appropriate exchange rates for their conversion into US dollars, and the foreign exchange costs financed by cofinanciers must be compiled correctly with reference to audited project accounts. Indicate factors that contributed to any significant overruns or underruns.
C. State problems or difficulties in recruiting consultants, with reference to ADB procedures. Assess the consultant’s work and the working relationship between the executing agency (EA) and the consultant. Use of a logical framework is strongly recommended.
D. State problems or difficulties encountered in procuring goods and services (including civil works) with reference to ADB procedures. Assess the supplier’s or contractor’s performance under the contract.
E. Give the extent of compliance of the borrower and EA with loan covenants, with reasons for noncompliance or delays in compliance and the remedial actions taken.
F. State reasons for any delays in loan utilization. Evaluate the appropriateness of the disbursement methods used. Justify the reallocation of loan proceeds.
G. State problems or difficulties with subproject appraisal. Evaluate the EA’s performance and capacity to appraise subprojects.
34 Appendix 13
III. INITIAL OPERATIONS
A. Describe initial operations of the project and transitional problems encountered from project completion to initial operations.
B. Describe measures taken to ensure continued smooth operation of the project relative to management, staffing, funding, and maintenance of project facilities.
C. Analyze the prospects of the project benefits being realized.
IV. EVALUATION OF THE ASIAN DEVELOPMENT BANK’S PERFORMANCE
A. Assess ADB’s performance in supervising project implementation. Include comments on the adequacy of the consultants’ terms of reference and appropriateness of specifications in tender documents. Evaluate the effectiveness and timeliness of assistance extended by ADB to solve implementation problems.
B. Comment on problems encountered with ADB’s procedures. Note the measures taken to resolve these problems and suggest changes in procedures and requirements.
Appendix 14 35
Economic Relations Division 5 July 2006 Ministry of Finance People’s Republic of Bangladesh Sher-e-Bangla Nagar Dhaka 1207, Bangladesh Fax No. (880-2) 8113088
Attention: Mr. M. Ismail Zabihullah Secretary
Dear Mr. Zabihullah
Subject: Loan 2188-BAN(SF)/2189-BAN: Gas Transmission and Development Project - Financial Reporting and Auditing Requirements
This letter is to ensure your timely compliance with the loan covenants and the quality of financial information as required by ADB. ADB's Handbook for Borrowers on the Financial Governance and Management of Investment Projects Financed by the ADB (the Booklet) is enclosed to guide you.
The Asian Development Bank (ADB), by its Charter, is required to ensure that the proceeds of any loan made, guaranteed, or participated in by ADB are used only for the purposes for which the loan was approved. ADB requires accurate and timely financial information from its borrowers to be assured that the expenditures incurred on a project were in fact for the purposes stated in the loan agreements.
The requirements are stipulated in Section 7.03 of the ADB’s Ordinary Operations Loan Regulations and Section 6.04 of the Special Operations Loan Regulations. For this particular loan, the requirements are also stipulated in Sections 2.06, 2.08 and 2.09 of the Project Agreement dated 18 June 2006 between ADB and Gas Transmission Company Ltd. (GTCL), Sylhet Gas Fields Ltd. (SGFL), Bangladesh Gas Fields Company Ltd. (BGFCL), Pashchimanchal Gas Company Ltd. (PGCL), and Bangladesh Oil, Gas and Mineral Corporation (Petrobangla). For ease of reference, copies of the Loan Regulations, Loan Agreements and Project Agreement are enclosed for onward transmission by your Office to your Executing Agencies (EAs) and the auditors concerned, together with a copy of this Letter.
The following are the main requirements:
• ADB requires the EAs to maintain separate project accounts and records exclusively for the Project, to ensure that the loan funds were used only for the objective set out in the aforesaid Loan Agreement. The project accounts comprise of full audited financial statements including its detailed specification of investments as well as cost expenditures financed by the ADB.
The first set of project accounts to be submitted to the ADB should cover the fiscal year ending 30 June 2007. As stipulated in the Project Agreements, they are to be submitted up to six months after the end of the fiscal year. For this loan, the deadline is by 31 December 2007. A sample report format, together with explanatory notes, is attached as Annex A.
• The accounts and records for the Project must be consistently maintained in accordance with sound accounting principles. Please stipulate that your External Auditor is to express an opinion on whether the financial report has been prepared using international or local
36 Appendix 14
generally accepted accounting standards and whether they have been applied consistently. ADB prefers that project accounts to use international accounting standards prescribed by the International Accounting Standards Committee. Please advise your external auditor to also comment on the impact of any deviations, by the executing agencies from international accounting standards. • Please ensure that your external auditor specifies in the Auditor’s Report the appropriate auditing standards they used, and direct them to expand the scope of the paragraph in the Auditor’s Report by disclosing the key audit procedures followed. Your external auditor is also to state whether the same audit procedures were followed for all supplementary financial statements submitted.
ADB wishes that auditors conform to the international auditing standards issued by the International Federation of Accountants. In cases where other auditing standards are used, please request your external auditor to indicate in the Auditor’s Report the extent of any differences and their impact on the audit.
• The external auditor’s opinion is also required on whether
- the proceeds of the ADB’s loan have been utilized only for the project in accordance with the Loan Agreement; - the financial information contains data specifically agreed upon between the People’s Republic of Bangladesh (GOB)/GTCL/SGFL/BGFCL/PGCL/Petrobangla and the ADB to be included in the financial statements; - the financial information complies with relevant regulations and statutory requirements; and - compliance has been met with all the financial covenants contained in the Loan or Project Agreements.
• The Auditor’s Report is to clearly state the reasons for any opinions that are qualified, adverse, or disclaimers.
• Actions or deficiencies disclosed by the external auditor in its report are to be resolved by GOB/GTCL/SGFL/BGFCL/PGCL/Petrobangla within a reasonable time. The external auditor is to comment in the subsequent Auditor’s Report on the adequacy of the corrective measures taken by the GOB/GTCL/SGFL/BGFCL/PGCL/Petrobangla in the subsequent Auditor’s Report.
Compliance with these ADB requirements will be monitored by future review missions and during normal project supervision and followed up regularly with all concerned, including the external auditor.
Yours sincerely,
(SGD) Thevakumar Kandiah Director, Energy Division South Asia Department
Attachments: 1. Loan Regulations 2. Loan Agreements 3. Project Agreement 4.. ADB’s Handbook for Borrowers on the Financial Governance and Management of Investment Projects Financed by ADB
Appendix 14 37
cc: 1. Mr. M. Musharraf Hossain Bhuiyan Chairman Bangladesh Oil, Gas and Mineral Corporation (Petrobangla) Petrocentre, Kawran Bazar, Dhaka Fax No. (880-2) 811-1613
2. Mr. Manjur Morshed Talukder Managing Director, Gas Transmission Co., Ltd. Red Crescent-Borak Tower Level 4-6 71-72 Elephant Road, Dhaka Fax No. (880-2) 935-8100
3. Mr. Md. Muqtadir Ali Managing Director, Sylhet Gas Fields Ltd. House 4/10, Iqbal Road Block A, Mohammadpur, Dhaka-1207 Fax No. (880-2) 811-9040
4. Mr. Md. Shahidul Abedin Managing Director Bangladesh Gas Fields Co. Ltd. House 75, Road 6 Old DOHS, Banani, Dhaka Fax No. (880-2) 831-6267
5. Mr. Md. Quamrul Islam Managing Director Pashchimanchal Gas Co. Ltd. Flat #2B House #109, Maszid Road Old DOHS, Banani, Dhaka 1230 Tel No. (880-2) 891-5374
(Please provide a copy of this letter to the EA’s respective auditors)
6. Country Director, BRM
38
LOAN 2188-BAN/2189-BAN(SF): GAS TRANSMISSION AND DEVELOPMENT PROJECT 15 Appendix MAJOR LOAN COVENANTS
Project Specific Covenants Reference Date Due Responsible Status of Compliance Agency Project Implementation 1. Within one month of the effective date, LA, Sch.6, One month after SGFL/BGFCL/and This will be monitored after loan SGFL, BGFCL and BAPEX, as the para.1(b) loan effectivity. BAPEX becomes effective. implementing agency for Part B of the Project shall enter into a project implementation contract to specify the implementation schedule and implementation arrangements, including respective roles and responsibilities with regard to consultants selection, procurement, resettlement plan, environmental management plan, project performance monitoring system, and reporting. Financial 1. The Borrower shall take necessary LA, Sch. 6, measures, including permitting tariff para. 9(a) increase when required, to enable during and (b) the life of the Project: From FY 2005; GOB/GTCL/SGFL, (i) GTCL, and SGFL to maintain a self- From FY 2008 BGFCL financing ratio of at least 30 percent from FY 2005 and thereafter; BGFCL to maintain the self financing ratio of at least 30 percent from FY 2008 and thereafter; and, From FY 2005 GOB/GTCL/SGFL/ (ii) GTCL, SGFL and BGFCL to BGFCL maintain a debt-service ratio (as defined in Section 2.17 of the Project Agreement) of not less than 1.2 times estimated debt-service
Project Specific Covenants Reference Date Due Responsible Status of Compliance Agency requirement from fiscal year 2005 and thereafter.
2. GTCL, BGFCL, and SGFL shall from time PA Section From FY 2005; GTCL/SGFL to time take all such measures as shall be 2.16 From FY 2008 BGFCL required to produce based on a five-year moving average, funds from the internal sources as contribution to the capital expenditures at a level equivalent to not less than thirty percent (30%) of its capital expenditures starting from FY 2005 and thereafter for GTCL and SGFL, and starting from FY 2008 and thereafter for BGFCL.
3. GTCL, BGFCL shall not incur any debt, if PA Section From FY 2005 GTCL/BGFCL after the incurrence of such debt the 2.16 internal cash generation of the company would be less than 1.2 times the estimated debt-service requirement from fiscal year 2005 and thereafter. Sector 1. The Borrower shall ensure that: LA, Sch 6, Ongoing activity GOB/Petrobangla (i) GSRR is implemented in accordance para.5 with the schedule outlined, and the Borrower consults ADB prior to making any adjustments to GSRR; (ii) ADB is kept informed of the action program of the Borrower for natural gas exploration and development, and major investment programs, and specific exploration and development 15 Appendix works to be carried out by Petrobangla, companies and international oil companies; and (iii) The draft Gas Act, acceptable to ADB, 30 June 2006 is submitted to the Parliament for 39
40
Project Specific Covenants Reference Date Due Responsible Status of Compliance 15 Appendix Agency consideration, and the revised Energy Policy of 1996 is submitted to the Cabinet for approval by 30 June 2006. 2. The Borrower shall ensure that by 31 LA Sch. 6, 31 December GOB/Petrobangla December 2005, the tariff determination at para 7 2005 the end user level is transferred to the ERC, according to Chapter 7, Section 34 (1) Tariff of the Borrower’s Act No. 13 of 2003, and tariffs for gas transmission, operation, and distribution companies are set at an adequate level to cover operating cost, maintenance and depreciation, and financing costs. Environmental 1. The Borrower through GTCL, SGFL, LA, Sch. 6, Before GTCL/SGFL/BGFCL/ BGFCL, PGCL and Petrobangla shall para. 12 construction PGCL and ensure that the design, construction and begins Petrobangla operation of all Project facilities comply with the environmental laws and regulations of the Borrower and environmental laws and regulation of the Borrower and the environmental policies and regulations of ADB, specifically ADB’s Environmental Policy (2002), and the environmental mitigation measures and the environmental management plans (EMPs) described in the IEEs and in the Summary IEE are implemented for the Project. These include (a) binding requirements for the contractors to fully reinstate local roads and infrastructure and agricultural lands to at least their original condition; (b) monitoring o EMPs implementation by external monitors to be hired by the Project Executing Agencies, and (c) incorporation of environmental
Project Specific Covenants Reference Date Due Responsible Status of Compliance Agency safeguards and practices in a model construction contract with contractors.
2. The Borrower shall ensure that a Project LA, Sch. 6, During project GOB Performance Monitoring System (PPMS) para. 16 implementation is established to assess Project implementation and progress, and to measure Project impacts and outcome. The Borrower shall also ensure that routine air quality monitoring by its Department of Environment shall be used to indicate improvement in air quality.
Social 1. The Borrower through GTCL and PGCL LA Sch. 6, a,b,d,e,f - Before GOB/ GTCL/PGCL shall ensure that land acquisition and para. 10 start of resettlement activities under the Project construction; are implemented strictly in accordance c – 2 months after with the Resettlement Framework and the effective date; Resettlement Plans. This will include (a) all land and rights-of-way required for the Project are acquired and made available in a timely manner; (b) compensations are provided and disbursed to affected persons prior to possession of land and assets on the basis of replacement cost in a manner satisfactory to ADB; (c) within two months of the effective date, an independent auditor, acceptable to ADB,
is hired by each of GTCL and PGCL to 15 Appendix undertake external monitoring of the activities under the RP, and to report regularly on the progress; (d) grievance redressal committees, comprised of representatives of local authorities, 41
42
Project Specific Covenants Reference Date Due Responsible Status of Compliance 15 Appendix Agency affected person, local communities, and senior officials of the respective Project Executing Agency, are set up to address concerns and grievances of the local communities and affected persons; (e) adequate information are disseminated, and affected persons are regularly consulted; and (f) any changes to the Resettlement Framework and RP become effective only after review and approval by ADB and are disclosed to affected persons. 2. The Borrower shall ensure that by 31 LA Sch. 6, 31 December GOB December 2005, the Resettlement Plan para. 11 2005 for Part A(iv) is prepared based upon a detailed final design, measurement and survey and is submitted to ADB for review and approval. In all cases compensations to affected persons shall be at replacement cost. 3. The Borrower shall ensure that all LA Sch. 6, Before start of GOB Resettlement Plans are updated, if para. 12 construction required, based on the detailed design, measurement and survey, submitted to ADB for review and approval, and disclosed to the affected persons prior to commencing construction works. Others 1. The Project Executing Agency shall furnish PA, Section 30 days after end Each EA and 31 January 2007 ADB quarterly progress reports on the 2.08b of each quarter consolidated by th execution of the Project and on the commencing 4 Petrobangla operation and management of the Project quarter of 2006 facilities 2. Promptly after physical completion of the PA, Section Three months Petrobangla The Project is expected to be Project, but in any event not later than 2.08(c) after project completed in June 2010.
Project Specific Covenants Reference Date Due Responsible Status of Compliance Agency three months thereafter or such later date completion date. as ADB may agree, a Project Completion Report shall be prepared and submitted to ADB. 3. The Project Executing Agency shall PA, Section 6 months after end GTCL/SGFL/PGCL/ First submission due in December (maintain) separate accounts for the 2.09 of FY. BGFCL/Petrobangla 2007. Project; (ii) have such accounts and related financial statements (balance sheet, statement of income and expenses, and related statements) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iii) furnish to ADB promptly after their preparation, but in any event not later than six (6) months after the close of the fiscal year to which they relate, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto, including the auditor’s opinion.
Appendix 15 Appendix 43
44 Appendix 16
KEY PERSONS RESPONSIBLE FOR THE PROJECT
The following are the key persons responsible for the implementation/administration of the project:
For the Borrower:
Name Position Address Contact Numbers Mr. M. Ismail Zabihullah Secretary Economic Relations Division, Tel. No. (880-2) 811 2641/ Ministry of Finance (880-2) 911 0219 Fax No. (880-2) 811 3088
For the Executing Agency:
Name Position Address Contact Numbers Mr. M. Musharraf Hossain Chairman Bangladesh Oil, Gas and Tel. No. (880-2) 811-4972 Bhuiyan Mineral Corporation Fax No. (880-2) 811-1613 (Petrobangla) Petrocentre, 3 Kawran Bazar, Dhaka-1215
Mr. M. Nazrul Islam Head, PCU Bangladesh Oil, Gas and Tel No. (880-2) 811-4971 Mineral Corporation Fax No. (880-2) 811-2194 (Petrobangla) Email strategic01.planning@ Petrocentre, 3 Kawran Bazar, Petrobangla.org.bd Dhaka-1215
Mr. Anwar H. Khan Head, PMU Hydrocarbon Unit Tel No. (880-2) 812-8223 BTMC Building (First Floor) Fax No. (880-2) 812-8224 7-9, Karwan Bazar Email [email protected] Dhaka-1215 Bangladesg
Appendix 16 45
Mr. Manjur Morshed Managing Director Gas Transmission Co. Ltd. Tel, No. (880-2) 936-2800 Talukder Red Crescent – Borak Tower Fax No. (880-2) 935-8100 (Level 4 to 6) 71-72 Old Elephant Road Dhaka
Mr. Md. Mostafizur Head, PMU GTCL Tel. (880-2) 935 4929 Rahman Fax (880-2 935 8100 Mr. Md. Muqtadir Ali Managing Director Sylhet Gas Fields Limited Tel No. (880-2) 815 2577 House 4/10, Iqbal Road, Fax No. (880-2) 811 9040 Block-A, Mohammadpur, Dhaka 1207 Email [email protected]
Mr. Md. Akhtaruzzaman Head, PMU SGFL To be advised
Mr. Shahidul Abedin Managing Director Bangladesh Gas Fields Tel No. (880-2) 882 0275 Company, Ltd. Fax No. (880-2) 831 6267 House 75, Road 6 Old HOHS, Banani Dhaka
Mr. Ahmed Hossain Head, PMU BGFCL To be advised
Mr. Md. Quamrul Islam Managing Director Pashchimanchal Gas Tel No. (880-2) 875 4776/ Company Ltd. (PGCL) (880-2) 63820 Flat #2B House #109, Fax No. (880-2) 875 4776 Mashjid Road, Old DOHS, (880-2) 63820 Banani, Dhaka 1206 Email [email protected]
Engr. Md. Rezaul Islam Head, PMU PGCL (same as above) Khan Mr, Md. Jamaluddin Managing Director Bangladesh Petroleum Tel No. (880-2) 934 5255 Exploratiion and Production Fax No. (880-2) 935 5704 Co. Ltd. Email: Shahjalal Tower (4th Floor) [email protected] 80/A-B Siddeshwai Circular Road, Malibagh, Dhaka 1217
Mr. Anwarur Rahman Head, PMU BAPEX Tel No. (880-2) 832 2789
For the Asian Development Bank:
Name Position Address Contact Numbers Mr. Thevakumar Kandiah Director, SAEN Asian Development Bank Tel. (632) 632-6301 South Asia, Energy Division Fax (632) 636-2338 6 ADB Avenue Email [email protected] Mandaluyong City 1550 Metro Manila Philippines Mr. P. Abeygunawardena Principal Project Asian Development Bank Tel. (632) 632-6363 Economist South Asia, Energy Division Fax (632) 636-2338 6 ADB Avenue Email: Mandaluyong City [email protected] 1550 Metro Manila Philippines
46 Appendix 16
Mr. Toshihiro Takano Project Specialist Asian Development Bank Tel. (632) 632-5530 South Asia, Energy Division Fax (632) 636-2338 6 ADB Avenue Email [email protected] Mandaluyong City 15550 Metro Manila Philippines Ms. Carmencita A. Roque Assistant Project Asian Development Bank Tel. (632) 632-6844 Analyst South Asia, Energy Division Fax (632) 636-2338 6 ADB Avenue Email [email protected] Mandaluyong City 1550 Metro Manila Philippines