Project Administration Memorandum

Project Number: 42186 Loan Number: 2455-CAM(SF) Grant Number: 0116-CAM(SF) October 2008

CAM: Emergency Food Assistance 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.

CURRENCY EQUIVALENTS (as of 1 August 2008)

Currency Unit – riel/s (KR)

KR1.00 = $0.000242 $1.00 = KR4,120

ABBREVIATIONS

ADB – Asian Development Bank ADF – Asian Development Fund AQIP – Agriculture Quality Improvement Project CPMU – central project management unit EA – executing agency ECLC – early childhood learning center FAO – Food and Agriculture Organization GACAP II – Second Governance Action Plan, 2005–2008 GDP – gross domestic product IA – implementing agency IFAD – International Fund for Agricultural Development IMF – International Monetary Fund MAFF – Ministry of Agriculture, Forestry and Fisheries MEF – Ministry of Economy and Finance MOC – Ministry of Commerce MOEYS – Ministry of Education, Youth and Sports MOWA – Ministry of Women Affairs MOWRAM – Ministry of Water Resources and Meteorology MRD – Ministry of Rural Development NCDM – National Committee for Disaster Management NFSTF – National Food Security Task Force NGO – nongovernment organization PCDM – provincial committee for disaster management PFM – public financial management PPMS – project performance monitoring system PPMU – provincial project management unit SFFSN – National Strategic Framework for Food Security and Nutrition SGIA – second-generation imprest account SOE – statement of expenditure TA – technical assistance TWGAW – Technical Working Group on Agriculture and Water UNDP – United Nations Development Programme USAID – United States Agency for International Development VDC – village development committee WFP – World Food Programme

NOTES

(i) The fiscal year (FY) of the Government and its agencies ends on 31 December. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2008 ends on 31 December 2008.

(ii) In this report, "$" refers to US dollars.

CONTENTS

Page

Loan and Grant Processing History

Design and Monitoring Framework

I. Introduction

II. Project Description A. Project Area and Location B. Impact and Outcome C. Outputs D. Special Features

III. Cost Estimate and Financing Plan A. Detailed Cost Estimate B. Financing Plan C. Allocation of Loan and Grant Proceeds

IV. Implementation Arrangements A. Executing and Implementing Agencies B. Project Management Organization

V. Implementation Schedule

VI. Consultant Recruitment

VII. Procurement

VIII. Disbursement Procedures

IX. Project Monitoring and Evaluation

X. Reporting Requirements

XI. Auditing Requirements

XII. Major Loan and Grant Covenants

XIII. Implementation of the Accompanying TA

XIV. Anticorruption

APPENDIXES

1. List of Selected Communes 2. Screening and Selection Process and Beneficiary Eligibility Criteria 3. Detailed Cost Estimates (by Expenditure and by Financier) 4. Project Implementation and Fund Flow Program

5. Accompanying TA and Terms of Reference of Consulting Services 6. Procurement Plan 7. Pro Forma of the Executing Agency's Project Progress Report 8. Governance Risk Mitigation Measures 9. Major Loan and Grant Covenants

ADDENDUM

I. Major Change in Project Scope, Financing Plan and Cost Allocation II. Amendments to the Financing Agreement

iii

LOAN AND GRANT PROCESSING HISTORY

a. PPTA Approval - Not required b. Fact-Finding - 23 June–4 July 2008 c. Management Review Meeting (MRM) - 22 August 2008 d. Appraisal Mission - Not required e. Staff Review Committee (SRC) Meeting - Not required f. Loan Negotiations - 2–3 September 2008 g. Board Circulation - 25 September 2008 h. Board Consideration and Approval - 2 October 2008 i. Loan Agreement Signing - 9 October 08 j. Loan Effectiveness - 14 October 08

Conditions of Loan Effectiveness

There are no additional conditions for loan effectiveness aside from the purposes of Section 9.04 of the Loan Regulations and Grant Regulations.

Design and Monitoring Framework

Design Performance Targets Data Sources and/or Assumptions and Summary and/or Indicators Reporting Mechanisms Risks Impact Assumptions

Reduced Target beneficiary Reports of the National • Macroeconomic and vulnerability of food- households not falling Institute of Statistics (NIS) political stability insecure households below food poverty line • Strong Government in the target ($0.42 per capita per day) Provincial and district commitment to provinces statistics covering poverty reduction Increased local supply economic activities and and household reserve of poverty status Risks food Project baseline and • Lack of coherent periodic survey and strategies and monitoring data provided policies in by independent NGO and addressing food NCDM security • Nontransparency in Post-project survey by the management of NCDM public resources Outcome Assumption

Improved access to National emergency food Annual report on • Effective institutional sufficient food by security and response agriculture production by support and food-insecure system prepared and MAFF coordination by Cambodians in the adopted NCDM, PCDM, and short term Periodic survey of relevant line 10% yield increase of rice beneficiaries in the ministries (e.g., by target farmers in the Project provinces by MAFF, MRD, Project provinces from the partner NGOs and NCDM MOWRAM, MOEYS pre-crisis level by 2010 and MOWA)

Operational national food Risk security response system • Inadequate storage and distribution system for food, fertilizer and rice seeds Outputs Assumption

1. Increased 89,000 households Progress reports of the • Grains, fertilizer, and availability of food to reached through food provincial coordination seeds can be readily vulnerable distribution and food-for- offices in each Project procured from local households work program province sources

Rice consumption needs Reports of MAFF on Risks of 3–4 months for the agricultural production • Delay in delivery of target population are met and rural development food, fertilizer, and

rice seeds by 3.6 million labor days suppliers exchanged and claimed Reports of MOEYS and for food/cash under the WFP on the school • Government failure food-for-work scheme feeding programs to establish food

Design Performance Targets Data Sources and/or Assumptions and Summary and/or Indicators Reporting Mechanisms Risks

2. Support the input 50,000 farmers are Reports of Ministry of storage and food needs of provided with fertilizer, Labor and Vocational reserve system smallholders and rice seeds, and extension Training on employment marginal farmers services situation

3. Capacity A consolidated national development for food framework and an crisis and project implementation system to management handle food security is prepared

Activities with Milestones Inputs 1. Food Made Available to Vulnerable Households Loan and Grant 1.1. Identification of target groups for free food distribution and food-for-work ADB: $35.0 million program, by end of September 2008 1. Materials: $31.524 1.2. Procurement of rice, transport, and storage for free distribution, by end of million October 2008 2. Equipment and Vehicles: 1.3. Procurement of rice, transport, and storage for food-for work program, by $423,100 end of January 2009 3. Consulting Services: $2.278 million 1.4. Free rice distribution to target groups, by end of November 2008 4. Recurrent Cost: 1.5. Free food distribution or cash transfer to selected urban poor in Phnom $385,800 Penh, by end of November 2008 5. Interest During 1.6. Provision of food to Government’s school feeding and take home ration Implementation: $388,500 programs, continuous throughout the Project period Government: 1.7. Provision of food to children in selected early childhood learning centers $5.081 million ($3.54 (ECLCs), continuous throughout Project period million for taxes and duties 1.8. Organization of target groups for food-for-work program, by end of January and $1.543 million for 2009 recurrent costs) 1.9. Organization of technical support and management of food-for-work TA: $1.6 million program, by end of January 2009 ADB: $1.5 million 1.10 Baseline survey conducted in seven Project provinces through Government: $0.10 million NGOs/NCDM, by November 2008

2. Input Needs of Smallholders and Marginal Farmers Supported 2.1. Identification of target groups (farmers) for subsidized seed and fertilizer distribution, by end of January 2009 2.2. Procurement, transport, and storage of seed, by end of January 2009 2.3. Procurement, transport, and storage of fertilizer, by end of January 2009 2.4. Sale of seed and fertilizer at subsidized prices to target beneficiaries at the beginning of production season, from January 2009 to the end of project period

3. A National Food Security Response System in Place and Operational 3.1. Establishment of an independent monitoring system to oversee target- group selection, distribution of food and inputs, organization and management of the food-for-work program, and compliance with fiduciary requirements, by end of September 2008 3.2. Development of a system of emergency food reserve and rapid response, by end of Project period 3.3. Strengthening project management and monitoring capacity of the executing agency and implementing agencies through on-the-job training and workshops, throughout the project period ECLC = early childhood learning center; MAFF = Ministry of Agriculture; Forestry and Fisheries; MOEYS = Ministry of Education, Youth and Sports; MOWA = Ministry of Women Affairs; MOWRAM = Ministry of Water Resources and Meteorology; MRD = Ministry of Rural Development; NCDM = National Committee for Disaster Management; NGO = nongovernment organization; NIS = National Institute of Statistics; PCDM = provincial committee for disaster management; WFP = World Food Programme.

I. INTRODUCTION

1. This Project Administration Memorandum (PAM) was prepared by the Asian Development Bank (ADB) for the implementation of the Emergency Food Assistance Project (the Project), for which ADB’s Board of Directors approved a Loan and Grant of SDR11.126 million and $17.50 million, respectively. This PAM is based on:

i. The loan agreement signed by the Government and ADB on 9 October 2008.

ii. The Report and Recommendation of the President to the Board of Directors on a proposed loan and grant to Cambodia for the Emergency Food Assistance Project dated September 2008.

iii. Relevant ADB guidelines

iv. Government of Cambodia Standard Operating Procedures and Manuals.

2. In case the provisions in this PAM differ from those of the above-mentioned documents, the provision in the Loan Agreement, relevant guidelines and the Report and Recommendation of the President will prevail over the PAM in their respective order.

3. The PAM is an active document, progressively updated and revised as and when necessary, particularly following any changes in project costs, scope, or implementation arrangements. The changes are added as an addendum and shown after the appendixes.

II. PROJECT DESCRIPTION

A. Project Area and Location

4. The target of the ADB assistance will be mainly the Tonle Sap Basin, which has been the main priority for medium- to long-term ADB intervention under the Tonle Sap Initiative, considering the high incidence of poverty and greater vulnerability of the basin ecosystem. The project will support seven provinces in the Tonle Sap Basin — Banteay Meanchey, Battambang, Kampong Chhnang, Kampong Thom, Odor Meanchey, Pursat, and Siem Reap. In addition, the Government plans to extend its social safety-net program to extremely vulnerable slum communities (Beungkok, Stung Meanchay, and Riverside) in Phnom Penh.

B. Impact and Outcome

5. The expected impact is reduced vulnerability of food-insecure households in Cambodia. The expected outcome is improved access to sufficient food by food-insecure Cambodians in the target provinces. The Project will improve the immediate food security of an estimated 500,000 poor and vulnerable people affected by higher food prices through higher food intake. The lowest quintile of farmers (the poorest 20% of the national population), who are also net food buyers, will be able to increase food production, and employment and income of households with limited purchasing power will increase. The Project will reduce the poverty of low-income groups and contribute to the efforts of the Government to strengthen the safety-net programs for poor and vulnerable population in the face of rising food prices. The Project will emphasize improving access of the poor to food, income, and livelihood support. It will assist in relieving fiscal pressures caused by a sharp rise in safety-net program expenditure.

C. Outputs

6. Three expected outputs are (i) increased availability of food to vulnerable households; (ii) supported input needs of smallholders and marginal farmers; and (iii) an operational national food security response system. The Project consists of three components:

7. Component 1: Compensatory Consumption Support. Under this component food will be provided for free distribution among selected families and for the food-for-work program. This component will encompass:

(i) identification of target groups for free food distribution and the food-for-work program; (ii) procurement of rice, transport, and storage; (iii) free rice distribution to target groups; (iv) free food distribution (cash transfer or voucher system) to selected urban poor in Phnom Penh; (v) provision of food to the Government’s school feeding and take home ration programs to benefit students in grades 1 to 4 and families of selected girl students in grades 4 to 6; (vi) provision of food to children in selected early childhood learning centers (ECLCs); (vii) organization of target groups for the food-for-work program; and (viii) organization of technical support and management of the food-for-work program.

Activities under the food-for-work program will include rehabilitation of small tertiary irrigation canals and village roads, which will mainly involve manual dredging, resurfacing, cutting grass, and filling up road holes within the existing right-of-way. The rehabilitation of small tertiary irrigation canals will help optimize the Project assistance by completing the essential package of water–seed–fertilizer that will contribute to increased production in the coming crop seasons. The rehabilitation of village roads will help enhance connectivity among villages and communes, ensuring better access to markets and social services. Construction of new canals or roads will not be undertaken under this food-for-work program. Specific work accounts will be identified during implementation based on the needs assessment and selection criteria. It is envisaged that each individual work account will not exceed $5,000. The program will comply with national labor laws and regulations, particularly on child labor, and provide equal pay for equal work regardless of gender and ethnicity.

8. Component 2: Productivity Enhancement Support. Under this component, seed and fertilizer will be sold to selected farmers at subsidized prices. This component will include:

(i) identification of target groups (farmers) for subsidized seed and fertilizer distribution; (ii) procurement, transport, and storage of seed and fertilizer; and (iii) sale of seed and fertilizer at subsidized prices to target beneficiaries.

Smallholders and marginal farmers, the majority of whom are net food buyers, will receive subsidized fertilizer and seed together with extension services, and, where feasible, these will be combined with supplementary irrigation which will be enhanced by field channels and subsidiary canals rehabilitated under the food-for-work program.

9. Component 3: Capacity Development for Emergency Response to Food Crisis and Project Management. This component has three parts:

(i) establishment of an independent monitoring system to oversee target-group selection, distribution of food and inputs, organization and management of the food-for-work program, and compliance with fiduciary requirements; (ii) establishment of a system of emergency food reserve and rapid response, which will involve (a) surveys and diagnosis of the current nationwide food security situation; (b) institutional analysis of the food procurement, storage, transportation, and distribution system; (c) essential hardware and logistics support and related facilities to enhance the capacity of NCDM and PCDMs in the Project provinces to respond to the food crisis; and (d) baseline surveys and monitoring and data collection in the Project areas; and (iii) strengthening financial management capacity of the executing agency (EA), implementing agencies (IAs), and provincial project management units (PPMUs) in Project management and monitoring.

These are designed to enhance the Government’s longer-term capability to deal with food emergencies, and provide support to ongoing efforts at sustaining the growth of productivity by minimizing the impacts of natural disaster.

D. Special Features

10. ADB’s Framework of Response to the Soaring Food Prices. The design of the proposed Project follows ADB’s response to the soaring food prices presented in Soaring Food Prices, Response to the Crisis1 which was released by the President of ADB at its Annual Meeting in Madrid in May 2008. The Project provides a strong link between short-term emergency relief assistance and medium- to long-term production and productivity growth, generating a supply response together with institution building for food emergency response.

11. Consultation, Coordination, and Partnerships. The Project was designed in close consultation with the Government, civil society, and development partners active in Cambodia both at the central level and Project provinces. The Project preparation team visited seven provinces2 and 11 communes3 holding in-depth discussion with officials, civil society members, local government representatives, and beneficiaries in order to assess the need for assistance, and issues related to food emergency preparedness, immediate productivity increase, method of identification of beneficiaries, and fiduciary controls. The needs assessment was shared with, and feedback on the Project design was obtained from, development partners including representatives of the World Bank, European Commission, UNDP, WFP, FAO, and Deutsche Gesellschaft für Technische Zusammenarbeit (German Agency for Technical Cooperation). The

1 ADB. 2008. Soaring Food Prices, Response to the Crisis. Manila. 2 Banteay Meanchey, Battambang, Kampong Chhnang, Kampong Thom, Odor Meanchey, Pursat, and Siem Reap. 3 Village Ka Chap in commune Achar Lek of Stung Suen district in Kampong Thom province, Pre Ta Hu commune in Stung Suen district in Kampong Thom province, Saeng Sok commune in Kralanh district of Siem Reap province, village Chok Chombok of Samrong district in Odor Meanchey province, Bossbov commune in Serei Saophoan district of Banteay Meanchey province, Kok Balagnk commune in Mongkoi Borei district of Banteay Meanchey province, Chrey commune in Mong Russei district in Battambang province, Sandan commune in Krakor district in Pursat province, village Tra Pand Krapeo in commune Tac Hout of Rolie Phier district of Kampong Chhnang province, and Pea Ny commune in Kampong Trach district of Kampong Chhnang province.

World Bank and European Commission are expected to complement the Government’s effort to provide food, inputs, and income assistance to the vulnerable population using the Project- developed methodology. In addition, the Project will provide a special opportunity for deepening Government and NGO partnership.

12. Disaster and Emergency Assistance Policy (DEAP). The Project will be implemented pursuant to the DEAP4 and in accordance with the Action Plan5 for its implementation, which defines disaster as a series of disruptions to the functioning of a community or a society causing widespread human, material, economic or environmental losses that exceed the ability of the affected community or society to cope using its own resources. ADB's Disaster and Emergency Assistance Policy, expressly contemplates the inclusion of quick-disbursing components in emergency assistance loans to finance immediate and urgent procurements.6 The draw down for the retroactive financing and the advance to the imprest account will be quick-disbursing as provided under the policy.

13. One-off Emergency Measure. All interventions are one-off short-term emergency measures, while long-term measures, such as operational national food security response systems and productivity enhancement programs, are in place. The proposed one-off subsidy on rice seeds and fertilizers will help farmers recover and maintain and increase crop yields, enabling reinvestments of surplus in the succeeding crop seasons, and ensuring adequacy of community food-grain stocks. The Government, ADB, and a number of development partners are working together on policy issues and productivity enhancement concerns in agriculture, particularly in the Tonle Sap Basin. The one-off support for a national food security response system will help the Government develop a more sustainable safety-net program to tackle food emergencies in the future through the implementation of component 3 and the attached TA.

14. Participatory Selection of Beneficiaries. The screening and/or selection process will be conducted by commune councils with support from village chiefs. The process will be subject to supervision and monitoring by an independent monitor acceptable to ADB. Project beneficiaries will be selected through a participatory process using criteria set by the Project. Conflicts arising from target-group selection will be referred to respective commune councils for resolution. The list of selected communes is in Appendix 1, and the screening and/or selection process and beneficiary eligibility criteria are in Appendix 2.

4 ADB. 2004. Disaster and Emergency Assistance Policy. Manila 5 ADB 2008. Action Plan for Implementing ADB’s Disaster and Emergency Assistance Policy. Manila (IN.103-08, 23 April 2008). 6 ADB’s Procurement Guidelines (2007, as amended from time to time). Manila. Section v3.18. Procurement under Disaster and Emergency Assistance provide exemption for emergency assistance that is adopted for the Project.

III. COST ESTIMATES AND FINANCING PLAN

A. Detailed Cost Estimates

15. The project investment cost is estimated at $40.08 million, including taxes and duties of $3.54 million (Table 1). Detailed cost estimates are in Appendix 3.

Table 1: Project Investment Plan ($ million) Item Amounta A. Base Costb 1. Compensatory Consumption Support 19.36 1.1. Free Food Distribution 8.36 1.2. Food for Work Program 11.00 2. Productivity Enhancement Support 15.00 2.1. Seed 8.72 2.2. Fertilizer 6.28 3. Capacity Development and Project Management 4.58 Subtotal (A) 38.94 B. Contingenciesc 0.75 Physical Contingencies 0.38 Price Contingencies 0.37 C. Financing Charges During Implementationd 0.39 Total (A+B+C) 40.08 a Includes taxes and duties of $3.54 million. b In June 2008 prices. c Physical contingencies computed at 1% for all expenditure categories. Price contingencies computed at 2% on local currency and foreign exchange costs. d Includes interest charges. Interest during implementation is computed at 1% per annum. Source: Asian Development Bank estimates.

B. Financing Plan

16. ADB will provide a loan of $17.5 million equivalent in special drawing rights and a grant not exceeding the equivalent of $17.5 million, both from its Special Fund resources, to finance 87.32% of the total Project cost. The Government will finance taxes and duties of $3.54 million, and recurrent costs of $1.54 million accounting for 12.68% of the total Project cost. The loan and grant will finance the Project on a joint basis. The loan portion will carry an interest rate of 1% per year, a maturity of 40 years and a grace period of 10 years, with repayment of principal at 2% per year for the first 10 years after the grace period, and 4% per year thereafter. The Government will bear the foreign exchange risk related to the loan. Interest charges on the loan are to be capitalized. The summary financing plan is in Table 2, and details are in Appendix 3.

Table 2: Financing Plan Total Source % ($million) Asian Development Bank ADF Loan 17.50 43.66 Asian Development Bank ADF Grant 17.50 43.66

Government of Cambodia 5.08 12.68 Total 40.08 100.00 ADF = Asian Development Fund. Source: Asian Development Bank estimates.

17. Cambodia is eligible for Asian Development Fund (ADF) grants. Cambodia’s fiscal and foreign exchange resources as well as donor funds are inadequate to meet wide-ranging emergency requirements arising from soaring food, input, and energy prices. Cambodia’s debt sustainability analysis suggests the need to channel a significant portion of development assistance in grants for years to come.

18. Cofinancing Opportunities. The Government has requested financing from other development partners, especially from the World Bank. During a needs assessment mission, a number of development partners showed their willingness to complement ADB’s fund for emergency food assistance. The World Bank has recently held discussions with ADB on needs assessment and cofinancing. It has indicated that up to $40 million from its poverty reduction grant operation could be made available for Cambodia, and it is willing to work with ADB and the Government in using these funds for additional activities under the Project.

C. Allocation of Loan and Grant Proceeds

19. Table 3 and 4 sets forth the categories of goods, works, consulting services and other items of expenditure to be financed out of the proceeds of the loan/grant and the allocation of amounts of the loan/grant to each such category. Except as ADB may otherwise agree, the items of the Categories and Subcategories listed in the tables shall be financed out of the proceeds of the loan and grant on the basis of the percentages set forth in the table.

Table 3: Allocation and Withdrawal of Loan Proceeds CATEGORY ADB FINANCING Amount Allocated (SDR) Percentage and Basis for Item Withdrawal from the Loan Category Subcategory Account 1 Materials 10,879,000 1A Food-for-works Program 2,129,000 30% of total expenditure 1B Seed 5,085,000 90% of total expenditure 1C Fertilizer 3,665,000 90% of total expenditure 2 Interest Charge 247,000 100% of amounts due Total 11,126,000

Table 4: Allocation and Withdrawal of Grant Proceeds CATEGORY ADB FINANCING Amount Allocated ($) Percentage and Basis for Item Withdrawal from the Grant Category Subcategory Account 1 Materials 14,412,000 1A Free Distribution of Food Program 7,670,000 90% of total expenditure 1B Food-for-Works Program 6,742,300 60% of total expenditure 2 Vehicles 321,000 2A 4WD Vehicles 229,000 100% of total expenditure* 2B Motorbikes 92,000 100% of total expenditure* 3 Office Equipment 102,000 90% of total expenditure 4 Consulting Services 2,278,700 100% of total expenditure 5 Project Management 386,000 5A Recurrent Expenditures 275,000 20% of total expenditure Operation and Maintenance of 5B Equipment and Vehicles 111,000 20% of total expenditure Total 17,500,000 * Exclusive of local taxes and duties

IV. IMPLEMENTATION ARRANGEMENTS

A. Executing and Implementing Agencies

20. The Project will utilize existing effective delivery mechanisms and institutions, and enhance their capacity as appropriate. MEF will be the Project EA, while the proposed IAs will be: (i) MAFF for the seed and fertilizer assistance; (ii) Ministry of Rural Development (MRD) for the food-for-work program; (iii) MOWRAM for the food-for-work program; (iv) MOC for the emergency food security system; (v) NCDM and PCDMs in seven Project provinces for overall coordination, management, and distribution of food and input assistance, and establishment of the emergency food security reserve and rapid response system; (vi) MOEYS for the school feeding program; (vii) MOWA for the ECLC feeding program; and (vii) commune councils and village development committees (VDCs) for identification of target groups and distribution of food and inputs.

The Project implementation and funds flow diagram are in Appendix 4.

21. The National Food Security Task Force (NFSTF), headed by MEF and with representation from concerned Government ministries and agencies and key development partners, will provide overall policy guidance to Project implementation.

B. Project Management Organization

22. A central project management unit (CPMU), led by a Project director, will be established at MEF to oversee daily implementation. Provincial project management units (PPMUs) will be established in all seven Project provinces, and will be responsible for organizing Project activities comprising target-group selection, procurement, storage, and distribution of food, rice seeds, and fertilizer in their respective provinces, and reporting to the CPMU on all matters relating to the Project management in their respective provinces. In view of the fast-track processing under the Disaster and Emergency Policy, and procurement requirements of the Project, the Government established the CPMU and appointed the Project director immediately after the signing of the memorandum of understanding, and has advised ADB thereon.

23. Technical support units will be established at each implementing ministry or department. Interministerial and interdepartmental coordination will be assured by NCDM at the central level and by the PCDM (chaired by the provincial governor) at the provincial level. Selected commune councils, assisted by respective VDCs, will be responsible for receiving, storing, and distributing (free) rice, seed, and fertilizers to the target groups in accordance with a list of potential beneficiaries prepared through a participatory process by commune councils and VDCs, and agreed upon by the PCDM on the basis of the criteria outlined in Appendix 2.

24. The food-for-work program will be implemented through available effective existing Government structures of MRD, MOWRAM, MOEYS, and MOWA in the Project areas, including the commune councils. Where such capacities are lacking, other competent organizations, including UN agencies, will be contracted to implement the food-for-work program. MAFF will provide extension services to assist farmers in the optimal utilization of the seed, fertilizers, and water package. Quality control of rice, seed, and fertilizers will be carried out jointly by designated departments of MAFF and MOC.

25. Preparation of the list of target beneficiaries and procurement and distribution of rice, seed, and fertilizers will be supervised and monitored by independent monitors reporting to ADB and NFSTF (paragraph 38), and technically supported by qualified experts from the respective IAs, as may be required. Consultant support will be provided to the respective IAs for capacity- building purposes and to ensure timely execution of Project activities. NCDM will receive support to develop a framework to establish a national emergency food security reserve and rapid response system, including expansion of existing community rice banks.

26. The Government envisages closer guidance and supervision by ADB throughout the implementation of the Project. In view of the emergency nature of the Project, the Government has requested ADB to administer the specialist inputs and consulting services. To ensure timely implementation, staff at ADB headquarters will work closely with staff at the ADB Cambodia Resident Mission, which will assign one dedicated staff member to monitor Project compliance with ADB requirements to ensure quality control and accelerated implementation through regular follow-up, and provide guidance to the relevant IAs on project implementation matters. Extended missions by ADB will be required to provide constant supervision during the early phase of Project implementation. ADB will redeploy one professional staff member to the resident mission early 2009, and a staff consultant experienced in audit will also be recruited. The Tonle Sap Initiative Coordination Unit, based at the Cambodia Resident Mission, will assist the resident mission in providing necessary oversight functions.

V. IMPLEMENTATION SCHEDULE

27. The Project implementation period will be from 1 October 2008 to 31 March 2011. The Project implementation plan is shown in Table 5 below.

Table 5: Project Implementation Plan Component/Activities Time Frame Responsibility Component 1 - Compensatory Consumption Support

Identification of target groups for free food To be completed by end Commune councils distribution and food-for-work program August 2008 and village chiefs supervised by independent monitors Procurement of rice, transport, and storage for To be completed by end MEF and Rice free distribution September 2008 Millers’ Associations supervised by independent monitors Procurement of rice, transport, and storage for Starting in October 2008 to MEF and Rice food-for work program be completed by end January Millers’ Associations 2009 supervised by independent monitors Free rice distribution to target groups Starting in September 2008 to Commune councils be completed by end and village chiefs November 2008 supervised by independent monitors Free food distribution or cash transfer to Starting in September 2008 to Commune councils selected urban poor in Phnom Penh be completed by end supervised by November 2008 independent monitors Organization of target groups for food-for-work To be completed by end Provincial MRD and program January 2009 MOWRAM in collaboration with commune councils and village chiefs Organization of technical support and To be completed by end Provincial MRD and management of food-for-work program January 2009 MOWRAM

Component 2 – Productivity Enhancement Support Identification of target groups (farmers) for To be completed by end Commune councils subsidized seed and fertilizer distribution January 2009 and village chiefs supervised by independent monitors Procurement, transport and storage of seed To be completed by end MEF, AQIP Seed January 2009 Company and Rice Seed Producers’

Component/Activities Time Frame Responsibility Associations supervised by independent monitors Procurement, transport and storage of fertilizer To be completed by end MEF and fertilizer January 2009 dealers supervised by independent monitors Sale of seed and fertilizer at subsidized prices to To be completed by end Commune councils target beneficiaries February 2009 and village chiefs supervised by independent monitors

Component 3 – Capacity Building for Emergency Response to Food Crisis

Establishment of an independent monitoring To be established by mid- MEF, NCDM and system to oversee target group selection, August 2008 PCDM in consultation distribution of food and inputs, organization and with ADB management of food-for-work program, and compliance with fiduciary requirements Development of a system of emergency food To be initiated in October NCDM, PCDM and reserve and rapid response 2008 and completed by end MoT with assistance project period of experts recruited under the project and TA Strengthening capacity of the executing agency To be initiated in October Experts recruited (EA) and implementing agencies 2008 and completed by end under the project and project period TA

VI. CONSULTANT RECRUITMENT

28. The Project will require 325 person-months of consulting services, comprising 75 person-months of international consultants and 250 person-months of national consultants. The Project will also provide independent monitoring services by local NGOs. It is proposed that the cost of consulting services and independent monitoring will be financed by both the allocated fund under component 3 and an attached TA project for strengthening the Government’s capacity to respond to food crisis and improving food security, and enhancing fiduciary oversight of the Project. All consultants, including the independent monitors, will be recruited by ADB in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time). Para 41 describes the technical assistance and Appendix 5 provides cost estimates and a financing plan; outline terms of reference for consultants are provided in Appendix 5.

VII. PROCUREMENT

29. The Project will entail the procurement of rice, seed, fertilizers, vehicles, office equipment, and a large number of community-based civil works under the food-for-work program. All procurement to be financed under the Project will be carried out in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time). Retroactive financing for a maximum of 30% of the total loan and grant amounts will be considered for eligible

11 expenditure incurred not earlier than 22 August 2008, provided that the expenditure is in compliance with the following conditions: (i) it is in accordance with acceptable procedures specified by ADB, (ii) it is verified by ADB, (iii) it is certified by MEF, and (iv) the certification is acceptable to ADB. ADB will audit the use of the loan proceeds in accordance with its fiduciary responsibilities and verify the accuracy of Government certification. The Government has been advised by ADB that provision of retroactive financing does not commit ADB to finance any part of the Project.

30. No international procurement is envisaged under the Project. Rice will be procured directly from a list of prequalified and approved rice millers who will be selected based on capacity assessment and financial status. This selection will be conducted in consultation with provincial and central rice millers associations. Procurement of rice will involve multiple awards for partial quantities based on the needs of the provinces and various programs. In accordance with the Procurement Guidelines, suppliers will be invited to quote prices linked to the market price. These contracts may also include delivery options. Fertilizer will also be procured in phases. National competitive bidding procedures, acceptable to ADB, will be adopted. Similar procedures will also be adopted for procurement of vehicles. Flexible procedures pursuant to the provisions under ADB’s Procurement Guidelines will be adopted.

31. During 2000–2008, AusAID assisted in developing and implementing the Agriculture Quality Improvement Program (AQIP) which developed a number of seed production centers that were successful in developing high-yielding rice seeds suitable for Cambodia. Subsequently, the AQIP Seed Company was incorporated as a registered commercial entity. This entity is largely owned by the private sector, with some ownership maintained by research institutes. The company has developed a commercially viable business for the production and distribution of high-quality rice seeds. Regional production centers have been established which provide cleaned, tested, and packaged rice seeds to farmers, dealers, government, and nongovernment agencies. Under this Project, procurement of the rice seeds will be serviced by the AQIP Seed Company following direct contracting procedures, along with provision for direct procurement of rice seeds from local seed producers associations. The food-for-work program will involve a large number of small, community-based small contracts for which compensation will be in the form of food, in accordance with existing procedures under various government programs as well as under UN-sponsored programs. Before the commencement of any procurement activity under national competitive bidding, ADB and the borrower will review the relevant agency’s capacity to ensure compliance with ADB’s Procurement Guidelines. The procurement plan is in Appendix 6.

VIII. DISBURSEMENT PROCEDURES

32. Project funds will flow from ADB to MEF (CPMU), which will establish a Project imprest account at the National Bank of Cambodia. The initial ceiling of the imprest account will be the lower of the estimated expenditures to be funded from the imprest account for the first 6 months, or 10% of the grant or loan amount. A specific increase in these ceilings may be sought at a later time based on the needs of the Project. Funds will flow to various IAs to finance the activities they are individually responsible for. Each PPMU will establish a second generation imprest account (SGIA) at the National Bank of Cambodia. A total of seven SGIAs (one for each PPMU) will be opened under the Project. The initial ceiling of each SGIA will be equivalent to 6 months estimated expenditures to be funded from the imprest account, or $50,000, whichever is lower. Funds will flow to subproject bank accounts held at the various IAs to finance the activities they are individually responsible for. The IA’s will be required to submit full supporting documentation to the CPMU or PPMU as the basis of funding the accounts. The CPMU and each PPMU will open two sets of imprest accounts (one for the grant fund and another for the

12 loan fund, as appropriate). The SOE procedure will be used to liquidate and replenish the imprest accounts for eligible expenditures. Any individual payment to be reimbursed or liquidated under this procedure shall not exceed the equivalent of $50,000. SOE documentation will be retained at the CPMU and PPMUs. Imprest account and SOE records will be audited during the annual audit process. All disbursements will be in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time). The EA and IAs will be responsible for managing and administering the imprest account in accordance with ADB’s Loan Disbursement Handbook.

IX. PROJECT MONITORING AND EVALUATION

33. Project Performance Monitoring System. A project performance management system (PPMS) will be developed on the basis of the Project design and monitoring framework to examine the Project’s technical performance, evaluate delivery of Project facilities, assess achievement of Project objectives, and measure the Project’s social, economic, financial, and institutional impacts. The EA will be responsible for developing and operating the PPMS with information provided by PPMUs and IAs, and will report monthly to ADB. Progress monitoring, safeguard monitoring, and benefit monitoring and evaluation will be carried out during project implementation. Post-evaluation review will be carried out 3 years after project completion. Baseline, covering both target and control groups, and periodic surveys will be carried out through subcontracting competent local NGOs, who will collect data disaggregated by income group, gender, types of vulnerability, and other characteristics as appropriate. The EA will maintain a Project-specific webpage, in English and Khmer, on its official website for wider dissemination of procurement and distribution-related information, and to provide a feedback mechanism. Consultant services will be provided to assist the EA and IAs to develop and implement the PPMS.

34. In addition, an independent monitoring system will be established to conduct monitoring of beneficiary screening and selection, and project procedures, including fiduciary compliances. The independent monitors will report to NFSTF and ADB. The CPMU, together with PPMUs and IAs, will establish the baseline indicators at the commune level within 3 months of Project inception from secondary sources, baseline survey, and participatory observations.

35. Project Review. ADB will conduct regular reviews throughout Project implementation, at least twice a year. The reviews will assess implementation performance and achievements of Project outcomes and objectives, examine financial progress, identify issues and constraints affecting the Project, and work out time-bound action plans for their resolution. Given the implementation period and emergency nature of the Project, no midterm review will be conducted unless ADB and the Government deem it necessary.

X. REPORTING REQUIREMENTS

36. The IAs will provide the CPMU with monthly and quarterly progress reports, as appropriate, which will be consolidated into a single progress report for the Project. The consolidated report will be submitted to ADB. A Project completion report providing a detailed evaluation of the Project design, costs, performance, social and economic impact, and other details as requested by ADB, will be prepared by the CPMU and submitted to ADB within 3 months after completion of the project. A proforma of an EA’s progress report is in Appendix 7.

XI. AUDITING REQUIREMENTS

37. The EA will maintain records and accounts adequate to identify the goods financed by the loan proceeds. Project accounts will be set up in accordance with sound accounting principles. The EA will ensure that the consolidated Project accounts and related financial statements will be audited annually by an independent audit authority of Cambodia. The audited reports and related financial statements in English will be submitted to ADB not later than 6 months after the end of the fiscal year to which they relate. In addition to the Government audit, for the procurement of goods financed from the loan and grant, ADB or its agents will undertake a special audit which could involve independent financial and performance auditing and review to ensure transparency, financial integrity, and objective performance assessment of the goods procured and distributed from this loan. A separate audit opinion is to be issued on the use of imprest accounts, including SGIAs, and the use of SOE procedure. Financial and performance monitoring and review, including spot checks, will be conducted from time to time during and after the Project period and be carried out by external private sector auditors or by ADB.

38. Strong Oversight Mechanisms to Manage Fiduciary Risks. Emergency assistance must be supported by sound financial management and operational procedures, as well as monitoring and evaluation mechanisms. The Cambodia Resident Mission will closely monitor compliance with ADB’s requirements under the Project to reduce fiduciary risks in the implementation of the safety-net programs. Strengthened fiduciary risk mitigation measures, such as quality government audit assurance, as well as performance audits and independent monitoring by local NGOs, will be adopted under the proposed project. Considering the Government’s expanded safety-net programs, joint fiduciary oversight arrangements will be established with the participation of ADB, independent audit experts, and the Government. To strengthen field monitoring of food and input distribution and execution of the food-for-work program, the Government has agreed to utilize the services of competent NGOs as independent monitors who will report directly to the NFSTF and ADB. The Project quarterly report will cover the progress and expected completion date of the procurement of food grains, and on their distribution through different safety-net programs.

39. Governance issues are of major concern in the Project. Necessary safeguards and supervision will be provided under the attached TA to ensure transparent food procurement and distribution operations. The Cambodia Resident Mission will closely monitor anticorruption measures undertaken by the EA, and will carry out random checks on procurement and accounts of the EA, IAs, and PPMUs, and inspect procurement activities and storage facilities under the Project. Other anticorruption measures will include (i) strict financial management with submission of annual audited accounts and internal audit report by the EA; (ii) strengthened Government monitoring; (iii) strong Project supervision; (iv) periodic reviews of accounts and statements of expenditure (SOEs); (v) close monitoring of the investments and safety-net programs under the Project; and (vi) close coordination of the Project with the proposed Public Financial Management for Rural Development Project7. The list of specific governance risk mitigation measures that have been taken into consideration in designing the Project is in Appendix 8.

7 ADB. 2007. Technical Assistance to the Kingdom of Cambodia for Preparing the Strengthening of Public Financial Management for Rural Development. Manila.

XII. MAJOR LOAN AND GRANT COVENANTS

40. A list of major loan covenants agreed for the project by the Government and ADB, which should be complied with, are in Appendix 9. The list of covenants should be included as an attachment to the progress reports reflecting the latest status.

XIII. IMPLEMENTATION OF THE ACCOMPANYING TA

41. An attached TA project of $1.6 million will strengthen the Government’s capacity to deal with food crises and related emergencies. ADB will finance $1.5 million of the TA project on a grant basis from its TA funding program, and the Government will contribute $100,000. The TA fund, together with the allocated fund under component 3, will help (i) establish an independent monitoring system to oversee target-group selection, distribution of food and inputs, organization and management of the food-for-work program, and compliance with fiduciary requirements; (ii) develop a system of emergency food reserve and rapid response; (iii) strengthen financial management capacity of the EA, IA, and PPMUs, including capability to deal with food emergencies; and (iv) manage and monitor Project implementation. The TA will finance international and national consulting services and independent monitoring services in conjunction with the consulting services financed through the Project funds. Appendix 5 provides cost estimates and a financing plan. The outline terms of reference is in Appendix 5. Consultants will be recruited by ADB in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). Retroactive financing for a maximum of 30% of the TA amounts will be considered for eligible expenditure incurred not earlier than 22 August 2008.

XIV. ANTICORRUPTION

42. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the Government of Cambodia. 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. The Government and the EA agree to cooperate with any such investigation and extend the necessary assistance, including access to all relevant books and records, as well as engagement of independent experts that may be needed for satisfactory completion of such investigations. 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 EA and all contractors, suppliers, consultants, and other service providers as they relate to the Project. The Project incorporates several specific anticorruption measures, including (i) strict financial management with strengthened Government accounting, auditing, monitoring, and independent monitoring and review by TA consultants; (ii) strong project supervision of public procurement and distribution of food grains financed from this loan with appropriate consultancy input; (iii) delegation of project administration to the Cambodia Resident Mission; and (iv) random and independent spot checks by ADB officials and the project consultants.

Appendix 1 Page 1

List of Selected Communes

Province District Commune

Banteay Meanchey Mongkol Borei Kouk Ballangk Koy Maeng Sambuor Srah Reang Ta Lam Phnum Srok Nam Tau Ponley Phnum Dei Preah Netr Preah Prasat Rohal Tean Kam Tuek Chour Ou Chrov Nimitt Paoy Paet Ou Bei Choan Serei Saophoan Bos Sbov Mkak Thma Puok Banteay Chhmar Kouk Romiet Kouk Kakthen Svay Chek Sla Kram Svay Chek Ta Phou Malai Tuol Pongro Ta Kong Total - Banteay Meanchey 8 25

Province District Commune Battambang Aek Phnum Prey Chas Kaoh Chiveang Samlout Ta Taok Ou Samrel Kampong Lpou Mean Cheay Samlout Sung Ta Sanh Sampov Lun Sampou Lun Angkor Ban Ta Sda Santepheap Serei Maen Cheay Chrey Sema Phnum Proek Phnum Proek Pech Chenda

Appendix 1 Page 2

Province District Commune Chakrei Barang Thleak Ou Rumduol Kamrieng Kamrieng Boeng Reang Ou Da Trang Ta Saen Ta Krai Total - Battambang 5 26

Province District Commune Kampong Chhnang Baribour Anhchanh Rung Chhnok Tru Kampong Preah Kokir Chol Kiri Chol Sar Kaoh Thkov Kampong Os Peam Chhkaok Prey Kri Kampong Chhnang Phsar Chhnang Kampong Chhnang Ph'er Khsam Kampong Leaeng Chranouk Dar Phlov Tuk Pralay Meas Samraong Saen Kampong Tralach Ampil Tuek Thma Edth Rolea B'ier Kouk Banteay Prasneb Tuek Hout Sameakki Mean Chey Chhean Laeung Peam Svay Chuk Tuek Phos Kbal Tuek Krang Skear Total - Kampong Chhnang 8 27

Province District Commune Kampong Thom Baray Ballangk Chranieng Sou Young Svay Phleung Kampong Svay Chey Kampong Svay

Appendix 1 Page 3

Province District Commune Stueng Saen Ou Kanthor Kampong Krabau Prey Kuy Prey Ta Hu Srayov Prasat Balangk Kraya Sa Kream Sala Visai Tuol Kreul Chhuk Koul Sraeung Sandan Dang Kambet Mean Chey Sandan Sochet Tum Ring Santuk Kakaoh Stoung Banteay Stoung Chamnar Kraom Chamnar Leu Msar Krang Popok Pralay Preah Damrei Samprouch Total - Kampong Thom 7 32

Province District Commune Otdar Meanchey Anlong Veaeng Anlong Veaeng Trapeang Tav Banteay Ampil Ampil Kouk Khpos Kouk Mon Chong Kal Chong Kal Krasang Samraong Bos Sbov Koun Kriel Samraong Ou Smach Trapeang Prasat Trapeang Prasat Preah Pralay Tumnob Dach Total - Otdar Meanchey 5 14

Province District Commune Pursat Bakan Boeng Bat Kandaol Khnar Totueng

Appendix 1 Page 4

Province District Commune Me Tuek Ta Lou Kandieng Anlong Vil Kanhchor Srae Sdok Sya Krakor Ansa Chambak Kampong Pou Ou Sandan Svay Sa Tnaot Chum Phnum Kravanh Phteah Rung Rokat Santreae Samraong Sampov Meas Chamraeun Phal Kaoh Chum Svay at Veal Veaeng Ou Saom Krapeu Pir Anlong Reab Pramaoy Thma Da Total - Pursat 6 25

Province District Commune Siem Reap Angkor Chum Kouk Doung Koul Nokor Pheas Srae Khvav Chob Ta Trav Peak Snaeng Svay Chek Banteay Srei Khun Ream Rumchek Run Ta Aek Tbaeng Chi Kraeng Anlong Samnar Kampong Kdei Khvav Kouk Thlok Kraom Kouk Thlok Leu Lveaeng Ruessei Pongro Kraom Pongro Leu Ruessei Lok Sangvaeuy Kralanh Chonloas Dai

Appendix 1 Page 5

Province District Commune Krouch Kor Roung Kou Sambuor Saen Sokh Snuol Sranal Puok Sasar Sdam Doun Kaev Kdei Run Reul Yeang Prasat Bakong Ballangk Siem Reab Chong Khnies Soutr Nikom Popel Ta Yaek Srei Snam Klang Hay Tram Sasar Moung Slaeng Spean Svay Leu Boeng Mealea Kantuot Khnang Phnum Svay Leu Ta Siem Varin Prasat Lvea Krang Srae Nouy Svay sa Varin Total - Siem Riep 11 51

Provinces Districts Communes 7 50 200

Urban Slums in Phnom Penh

1. Stung Meanchey

2. Beungkok

3. Riverside

Appendix 2 Page 1

Screening and Selection Process and Beneficiary Eligibility Criteria

A. Screening and Selection Process

1. Target groups will be households and individuals from selected communes and villages in 7 project provinces (Banteay Meanchey, Odor Meanchey, Battambang, Kampong Chhnang, Kampong Thom, Pursat, and Siem Reap) and three slums (Stung Meanchey, Beungkok and the Riverside) in Phnom Penh. The screening/selection process will be conducted by commune councils with support from village chiefs. The process will be subject to the supervision and monitoring by an independent monitor acceptable to the ADB. Project beneficiaries will be selected through a participatory process using criteria set by the project.

B. Eligibility Criteria for Food Compensation Component

1. Free Distribution of Food Target households will be selected from among the permanent residents living in the Project communes with one of the following backgrounds:

(i) Households with no land and no income sources (ii) Old-aged people (>65 years of age) with no support (iii) Poor households having old-age dependants (>65 years of age) (iv) Female-headed households (v) The handicapped (physical and chronic illnesses like TB and HIV/AIDS) (vi) Vulnerable school children (vii) Pregnant and lactating mothers (viii) Small family fishermen (ix) Ethnic minority groups (x) Fixed salary workers

2. Food-for-Work Program

2. Categories of households and individuals eligible under WFP-implemented food-for-work schemes with priority given to landless households, daily casual laborers, and migrant families.

3. School Feeding Scheme

3. Students in primary schools with school feeding program, and children in selected early childhood learning centers (ECLCs).

C. Eligibility Criteria for Productivity Enhancement Component – Subsidized Seed and Fertilizer Distribution

(i) Permanent residents living in selected communes (ii) Poor households owning/having access to crop land less than one hectares (iii) Having adequate labor capacity (iv) Net food buying farm households with family size of larger than four persons.

Appendix 3 Page 1

Detailed Cost Estimates

Table 3.1: Detailed Cost Estimates by Expenditure Category

% Total Item KR Million $ '000 Base Foreign Local Total Foreign Local Total Costs A. Investment Costs 1. Materials 0.0 123,692.4 123,692.4 0.0 30,923.1 30,923.1 79.4 a. Food for Free Distribution 0.0 30,092.4 30,092.4 0.0 7,523.1 7,523.1 19.3 b. Food for Work 0.0 39,600.0 39,600.0 0.0 9,900.0 9,900.0 25.4 c. Rice Seed 0.0 31,382.8 31,382.8 0.0 7,845.7 7,845.7 20.2 d. Urea Fertilizer 0.0 22,617.2 22,617.2 0.0 5,654.3 5,654.3 14.5 2. Equipment and Vehicles 0.0 1,660.0 1,660.0 0.0 415.0 415.0 1.1 a. 4WD Vehicles 0.0 900.0 900.0 0.0 225.0 225.0 0.6 b. Motorbikes 0.0 360.0 360.0 0.0 90.0 90.0 0.2 c. Office Equipment 0.0 400.0 400.0 0.0 100.0 100.0 0.3 3. Consulting Services 4,470.0 4,470.0 8,940.0 1,117.5 1,117.5 2,235.0 5.7 a. Support to Establish Food Security System 1,830.0 1,830.0 3,660.0 457.5 457.5 915.0 2.4 b. Consulting Services for Capacity Development 2,640.0 2,640.0 5,280.0 660.0 660.0 1,320.0 3.4 4. Duties and Taxesa 0.0 13,883.6 13,883.6 0.0 3,470.9 3,470.9 8.9 Subtotal (A) 4,470.0 143,706.0 148,176.0 1,117.5 35,926.5 37,044.0 95.1 B. Recurrent Costs 1. Project Management Support Staff Remuneration 0.0 5,400.0 5,400.0 0.0 1,350.0 1,350.0 3.5 2. O&M of Equipment and Vehicles 0.0 2,168.0 2,168.0 0.0 542.0 542.0 1.4 Subtotal (B) 0.0 7,568.0 7,568.0 0.0 1,892.0 1,892.0 4.9 Total Base Costs 4,470.0 151,274.0 155,744.0 1,117.5 37,818.5 38,936.0 100.0 C. Contingencies 1. Physical Contingencies 44.7 1,498.7 1,543.4 11.2 374.7 385.9 1.0 2. Price Contingencies 42.7 1,443.7 1,486.4 10.7 360.9 371.6 1.0 Subtotal (C) 87.4 2,942.4 3,029.8 21.8 735.6 757.5 1.9 Total Project Costs 4,557.4 154,216.4 158,773.8 1,139.3 38,554.1 39,693.4 101.9 D.Interest During Implementation 1,553.8 0.0 1,553.8 388.5 0.0 388.5 1.0

Total Project Cost (A+B+C+D) 6,111.2 154,216.4 160,327.6 1,527.8 38,554.1 40,081.9 102.9 4WD = four-wheel drive, O&M = operation and maintenance. a The amount of duties and taxes is exclusive of contingencies. Source: Asian Development Bank estimates.

Appendix 3 Page 2

Table 3.2: Detailed Cost Estimates by Financier ($’000)

Government ADB Loan ADB Grant Cost % of Cost % of Cost % of Cost Item Amounta Amount Amount Category Category Category

A. Investment Costs 1. Materials 35,027.0 3,502.7 10.0 17,111.8 48.9 14,412.5 41.1 a. Food for Free Distribution 8,522.4 852.2 10.0 0.0 0.0 7,670.1 90.0 b. Food for Work 11,211.5 1,121.1 10.0 3,348.0 29.9 6,742.3 60.1 c. Rice Seed 8,887.8 888.8 10.0 7,999.0 90.0 0.0 0.0 d. Urea Fertilizer 6,405.4 640.5 10.0 5,764.8 90.0 0.0 0.0

2. Equipment and Vehicles 458.8 35.7 7.8 0.0 0.0 423.1 92.2 a. 4WD Vehicles 254.9 25.5 10.0 0.0 0.0 229.4 90.0 b. Motorbikes 102.0 10.2 10.0 0.0 0.0 91.8 90.0 c. Office Equipment 102.0 0.0 0.0 0.0 0.0 102.0 100.0

3. Consulting Services 2,278.8 0.0 0.0 0.0 0.0 2,278.8 100.0 a. Support to Establish Food Security System 933.0 0.0 0.0 0.0 0.0 933.0 100.0 b. Consulting Services for Capacity Development 1,345.8 0.0 0.0 0.0 0.0 1,345.8 100.0

Subtotal (A) 37,764.6 3,538.4 9.4 17,111.8 45.3 17,114.4 45.3

B. Recurrent Costs 1. Project Management Support Staff Remuneration 1,376.4 1,101.1 80.0 0.0 0.0 275.3 20.0 2. O&M of Equipment and Vehicles 552.6 442.1 80.0 0.0 0.0 110.5 20.0

Subtotal (B) 1,929.0 1,543.2 80.0 0.0 0.0 385.8 20.0

Total Base Costs 39,693.6 5,081.6 12.8 17,111.8 43.1 17,500.2 44.1

C. Interest During Implementation 388.5 0.0 0.0 388.5 100.0 0.0 0.0

Total Project Costs 40,082.0 5,081.6 17,500.0 17,500.0 % Total Project Costs 12.7% 43.7% 43.7% 4WD = four-wheel drive, O&M = operation and maintenance. a The Government financing total is $5,081,600 of which (i) $3,538,000 if for duties and taxes and (ii) $1,543,200 is for recurrent costs. Source: Asian Development Bank estimates.

Appendix 4 Page 1

Project Implementation and Fund Flow Diagram

Ministry of Economy and Finance (EA)

CPMU (FGIA)

NCDM (IA) MAFF (IA) MRD (IA) MOC (IA) MOWRAM MOWA (IA) MOEYS (IA) (IA)

PPMUs (7 SGIAs)

CC/CBO/NGO PCDM (IA) PDA (IA) PDRD (IA) PDWRAM (IA) PDWA (IA) POE (IA) (IA)

Implementation Link Fund Flow Link

CPMU = central project management unit; EA = executing agency; FGIA = first generation imprest account; MAFF = Ministry of Agriculture; Forestry and Fisheries; MOC = Ministry of Commerce; MOEYS = Ministry of Education, Youth and Sports; MOWA = Ministry of Women Affairs; MOWRAM = Ministry of Water Resources and Meteorology; MRD = Ministry of Rural Development; NCDM = National Committee for Disaster Management; PCDM = provincial committee for disaster management; PDA = provincial department of agriculture; PDRD = provincial department of rural development; PDWRD PPMU = provincial project management unit. Source: Asian Development Bank estimates

Appendix 5 Page 1

Strengthening Institutional Capacity For Emergency Response to Food Crisis and Improving Food Security

A. Impact, Outcome, and Outputs

1. The impact of the proposed technical assistance (TA) is reduced human suffering from food deprivation. The outcome is strengthened institutions dealing with food crisis. The TA will have four outputs: (i) establishment of an independent monitoring system to oversee target- group selection, distribution of food and inputs, organization and management of the food-for- work program, and compliance with fiduciary requirements; (ii) development of a system of emergency food reserve and rapid response; (iii) strengthening of financial management capacity of the executing agency (EA), implementing agency (IA), and provincial project management units (PPMUs), including longer-term capability to deal with food emergencies; and (iv) management and monitoring of Project implementation.

B. Methodology and Key Activities

2. The TA will involve oversight and capacity building. The oversight function will cover monitoring and auditing by independent agents. Capacity building will cover direct consultancy expert input for system development and human resource upgrading through on-the-job training. Key tasks include (i) assessing the overall state of food security in Cambodia; (ii) monitoring the state of poverty and hunger in project provinces; (iii) assessing the potential for agricultural productivity improvement in project area; (iv) assisting in identification of rural market link roads and irrigation channels which could be rehabilitated immediately through the food-for-work program; (v) assessing the existing food and input procurement and distribution system including logistics; (vi) assessing the capacity of nongovernment organizations and/or community-based organizations in the Project area to undertake beneficiary mobilization for participation in and implementation of project activities; (vii) examining the impact of free food distribution, the food-for-work program, and subsidized input distribution on prices, supply, and demand in the market; (viii) monitoring (a) target-group selection, (b) procurement and distribution of food and inputs, (c) organization and management of the food-for-work program, and (d) compliance with fiduciary requirements; (ix) establishing a food security database; (x) strengthening financial management capacity of EA, IA, and PPMUs, including longer-term capability to deal with food emergencies; and (xi) developing a system of emergency food reserve and rapid response, including size of reserve, strategic location, procurement, utilization and replenishment, organizational and institutional structure, legal and regulatory framework, operational modalities, physical infrastructure and equipment, early warning systems, identification and monitoring of indicators, crop assessment, and reporting and dissemination.

C. Costs and Financing 3. It is estimated that the consulting services for capacity development and project management will cost $4.72 million, of which the attached TA will finance $1.50 million, the fund allocated under component 3 will finance $3.12 million, and the Government will provide $100,000 as part of the TA to cover incremental administrative expenses, office space, local travel, and per diem for counterpart staff. Retroactive financing for a maximum of 30% of the total TA amounts will be considered for eligible expenditure incurred not earlier than 22 August 2008, provided that the expenditure is in compliance with the following conditions: (i) it is in accordance with acceptable procedures specified by ADB, (ii) it is verified by ADB, (iii) it is certified by MEF, and (iv) the certification is acceptable to ADB. Cost estimates and a financing plan is in Table A7.1.

Appendix 5 Page 2

Table 5.1: Cost Estimates and Financing Plan for Technical Assistance for Capacity Development and Project Management ($’000) Financed from Item ADF Grant Attached TA Total Comp. 3 A. ADB Financing 1. Consultants a. Remuneration and per diem (i) International consultants 756.0 378.0 1,134.0 (ii) National consultants 387.0 387.0 774.0 b. International and local travel 53.0 150.0 203.0 2. Office equipment 102.0 0.0 102.0 3. Training, seminars and workshops 0.0 30.0 30.0 4. Reports and communications 0.0 10.0 10.0 5. Vehicles 0.0 a. 4 WD Vehicles 255.0 0.0 255.0 b. Motorbikes 102.0 0.0 102.0 6. Support to Establish Food Security System 0.0 0.0 a. Baseline Surveys and monitoring and data collection 170.0 0.0 170.0 b. Analysis and recommendation of food procurement, storage, transportation, and distribution system 213.0 0.0 213.0 c. Essential hardware and logistics support 400.0 0.0 400.0 d. Monitoring and Auditing System 150.0 0.0 150.0 7. Project audit at completion 150.0 0.0 150.0 8. Miscellaneous administrative support costsa 0.0 450.0 450.0 9. Project management support staff remuneration 1,376.4 0.0 1,376.4 10. O&M of equipment and vehicles 552.6 0.0 552.6 11. Contingencies 0.0 95.0 95.0 Subtotal (A) 4,666.9 1,500.0 6,166.9

B. Government Financing Incremental administrative expenses, office space, local travel, and per diem for counterpart staff 0.0 100.0 100.0 Subtotal (B) 0.0 100.0 100.0 Total 4,666.9 1,600.0 6,266.9 4WD = four-wheel drive, ADB = Asian Development Bank, Comp. = component, O&M = operation and maintenance. a Independent monitor. Source: Asian Development Bank estimates.

D. Implementation Arrangements 4. MEF will be the EA of the TA. The proposed implementing agencies include MEF for capacity building, and MEF, the National Committee for Disaster Management, and provincial committee for disaster management for independent monitoring and emergency food reserve and rapid response system. The National Food Security Task Force will provide overall policy guidance for the TA implementation and monitor activities of the TA.

5. The TA will be implemented over a period of 24 months beginning in October 2008. To ensure harmonious inputs and outputs of consulting services and independent monitoring

Appendix 5 Page 3 services, the TA fund and the fund allocated under component 3 will be utilized as a merged source to achieve outputs stated in para 1.

6. Overall, a total of 312 person-months of consulting services, comprising 54 person- months of international and 258 person-months of national consultants, will be provided by the attached TA fund and the fund allocated under component 3. The attached TA will provide 119 person-months of consulting services, comprising 30 person-months of international and 89 person-months of national consultants. The work of the consultants will be coordinated and led by an international team leader and a national project manager. Other individual consultants will have core expertise in procurement and logistics, sociology and community facilitation, food security, and project facilitation at the provincial level. NGOs will be contracted as independent monitors of key project activities. A tentative schedule of consultant expertise (in person- months) is provided in Table A7.2. The international team leader, national project manager, procurement/logistics expert, sociologist/community facilitator, and provincial facilitators will be engaged directly by ADB in accordance with the Guidelines on the Use of Consultants (2007, as amended from time to time). For the remaining consulting services, a firm will be recruited following quality- and cost-based selection method using the 80:20 ratio for scores related to technical and financial proposals. The NGOs will be recruited following consultants' qualifications selection procedures.

Table 5.2: Tentative Schedule of Consultant Expertise (person-months) From ADF Grant Total Consulting Inputs From Attached TA (Component 3) Expertise Int'l National Int'l National Int'l National Consultants Consultants Consultants Consultants Consultants Consultants

1. Agro-economist and 18 0 6 0 12 0 international team leader 2. Agro-economist and national 0 24 0 12 0 12 project manager 3. Procurement/logistics expert 12 24 4 12 8 12 4. Sociologist/community 12 18 4 9 8 9 facilitator 5. Food security expert 12 12 4 6 8 6 6. Provincial facilitators 0 180 0 90 0 90 54 258 18 129 36 129 Total 312 147 165 6. Independent monitors Lump-sum contract Int’l = international, TA = technical assistance. Source: Asian Development Bank estimates.

Outline Terms of References for Consultants and Service Providers 7. General Requirements. The international consultants should have (i) at least a master’s degree or equivalent qualification, (ii) adequate relevant experience in implementing projects in Southeast Asia, (iii) sound knowledge and practical knowledge in relevant fields in Asia, and (iv) strong interpersonal and communication skills. The national consultants should have (i) a bachelor’s degree or equivalent qualification, (ii) extensive knowledge and experience in relevant fields in Cambodia, (iii) experience in working with government institutions, private

Appendix 5 Page 4 sector, NGOs and community based organizations and international consultants, and (iv) be fluent in written and spoken English.

8. All consultants will need to have good working knowledge of ADB’s safeguard policies, including: (i) Social Impact of Projects; (ii) Environmental Handbook; (iii) Disaster & Emergency Assistance Policy - DEAP (2004); (iv) Action Plan for Implementing ADB’s Disaster & Emergency Assistance Policy (2008) in particular with regard to Procurement and the Recruitment of Consulting Services under Emergency Projects; and (v) Second Governance and Anti-Corruption Action Plan (2006).

1. Agro-economist/ International Team Leader (18 person-months, international)

a. Scope of Work

9. The team will be lead by a Project Manager, who will report directly to the Task Force and the ADB. S/he will be responsible for the implementation of the project.

b. Detailed Tasks

10. The consultant will be tasked to undertake the following specific responsibilities; (i) Overall coordination with the ADB and the Task Force; (ii) Assessment of existing food and input procurement and distribution system including logistics; (iii) Project planning, budgeting, procurement, implementation supervision and monitoring; (iv) Periodic reporting and interagency coordination; (v) Supervision of the work of the Procurement and Logistics expert and Social Scientist and Community Facilitator, and Food Security Expert; (vi) Coordination with the World Food Program (WFP) on Food-for-Works and Food for School Children programs; (vii) Assess the potential for agricultural productivity improvement in project area; (viii) Coordination with Ministry of Agriculture, Forestry and Fisheries (MAFF) on fertilizer and rice seed procurement (for grain seed procurement, Ministry of Agriculture will procure directly from AQIP Seed Company); (ix) Ensuring that procurement is carried out through national shopping procedures acceptable to ADB; (x) Ensure that the retroactive financing provided for procurement by the EA on behalf of the Government during 2008 are in accordance with agreed procedures, and are certified by MEF; (xi) Coordination with ADB to ensure that the certification is acceptable to ADB; (xii) Coordination with other donors; (xiii) Development and updating a Project Management System; (xiv) Organization and conduct of workshops and tripartite meetings; (xv) Strengthening financial management capacity of EA, IA, and PPMUs, including longer term capability to deal with food emergencies; and (xvi) Assist EA and IAs in developing and implementing PPMS, including training of Project staff.

Appendix 5 Page 5

c. Selection Criteria

11. Incumbent should hold a Masters Degree in agricultural economics or related field and have a minimum of 15 years of relevant experience. The candidate should have extensive team leadership experience and should have worked for at least five years in the Greater Mekong region. Familiarity with the particular circumstances of the Tonle Sap basin in Cambodia will be viewed favorably. Familiarity with poverty reduction and sustainable development is a requirement. d. Output and Reporting Requirements

12. The consultant will produce the following outputs for the entire project: (i) detailed Implementation Plan by project activity, (ii) Inception Report, (ii) Interim Report, (iii) Final Report, and (iv) periodic reports for review by the Task Force and EA.

2. Procurement/Logistics Expert (12 person-months international, 24 person- months, national)

a. Scope of Work

13. The Procurement and Logistics Expert will focus primarily on rice, seed and fertilizer procurement and delivery. The expert will be assisted by a team of national provincial facilitators with extensive knowledge of procurement and distribution and logistics thereof. This team will review the procurement process at all stages, assist in planning and scheduling delivery requirements, oversee the receipt, testing, weighing, storage, recording of stock in warehouse and elsewhere as the case may be, the movement of commodities, and payments. This team will assist in ensuring that the rice, seed and fertilizer are delivered to the commune/village stores in a timely manner.

b. Detailed Tasks

14. The consultant would be part of team comprising international and domestic experts tasked to strengthen the fiduciary oversight and to enhance governance in the delivery of project assistance. As the team member, the consultant will contribute to the overall implementation of the procurement component including the following tasks:

(i) Working in coordination with Task Force, staff and other consultants; (ii) Providing overall procurement support for the Emergency Food Assistance Project for Cambodia; (iii) Supporting the development of procurement packages for different items by province, in line with emergency procurement policies and procedures of the Government and ADB; (iv) Assisting in the drafting and finalization of tender documents; (v) Designing a system of tracking execution of procurement contracts, ensuring that bids are awarded in a transparent and timely manner, recording transactions and reporting on all procurement activities; (vi) Undertaking spot and random checks and audits on procurement procedures and actual execution of procurement contracts; (vii) Preparing fuller Terms of Reference (TORs) for provincial team members their areas of expertise, defined in a flexible manner given the post-disaster needs and uncertainties;

Appendix 5 Page 6

(viii) Working closely with the Task Force, all concerned line ministries, and oversight agencies as needed; (ix) Working closely with local/ district and provincial governments in the 7 project provinces in determining and evaluating the local government’s priority needs including assisting in identification of rural market link roads and irrigation channels which could be rehabilitated immediately through food-for works program; (x) Coordinating closely with the Government and all principal donors operating in the concerned sectors to ensure that ADB’s support does not overlap with that of other agencies; (xi) Establishing close link with the work done by the independent monitor; (xii) Exploiting any beneficial linkages ADB support could have with other ADB or any other donor-financed activities in the project area to help the vulnerable segments of the affected population, including women and children; (xiii) Identifying safeguard requirements and undertake safeguard assessments (including Environmental Impact Assessments) where possible within the team and if not, preparing specific TORs and support ADB in Government in identifying and recruiting suitable experts; (xiv) Preparing an implementation framework and schedule, formulating bidding documents, providing support in coordinated procurement arrangements and supervising and monitoring the initial project implementation progress in the respective sectors; (xv) Participating and contributing to the proceedings of workshops and tripartite meetings; and (xvi) Assisting the Team in the execution of his/her responsibilities.

c. Selection Criteria

15. The incumbent should hold a Masters Degree in a relevant field such as engineering, economics, finance or related field and should have a minimum of 10 years of relevant experience. The candidate should have experience in working in the Greater Mekong region for at least three years. Familiarity with the particular circumstances of the Tonle Sap basin will be viewed favorably. Familiarity with poverty reduction and sustainable development is a requirement.

d. Output and Reporting Requirements

16. Within the scope of his/her terms of reference the consultant will produce the following outputs: (i) detailed Implementation Plan by project activity, (ii) Inception Report, (ii) Interim Report, (iii) Final Report, and (iv) periodic reports for review by the Task Force and EA.

3. Sociologist/Community Facilitator (12 person-months international, 18 person- months, national)

a. Scope of Work

17. The Sociologist/Community Facilitator experienced in community facilitation will maintain oversight of the identification of the target population which will be implemented following acceptable procedures and will involve the village councils, representatives of the villages and selected NGOs/ CBOs.

Appendix 5 Page 7

b. Detailed Tasks

18. The consultant would be part of team comprising international and domestic experts tasked to strengthen the fiduciary oversight and to enhance governance in the delivery of project assistance. As the team member, the consultant will contribute to the overall implementation of the procurement and distribution component including the following tasks:

(i) Monitor the state of poverty and hunger in project provinces; (ii) Review of target population (include the village councils, representatives of the villages and selected NGOs/ CBOs); (iii) Review of the selection process, assist in mobilizing the communities and self help groups; (iv) Assess capacity of NGO/CBO in project area to undertake beneficiary mobilization for participation in and implementation of project activities (v) Monitoring implementation of the program; (vi) Management of rice and input distribution, record keeping and ensuring a transparent and fair process; (vii) Engaging the local communities in all consultations to determine their needs and preferences; (viii) Assessing the status of women in project area and preparing a gender action plan; (ix) Preparing in collaboration with the Project Manager an environmental profile of project area and undertake initial environmental examination following ADB’s guidelines; (x) Designing a monitoring and evaluation (M&E) system disaggregated by gender; (xi) Coordinating with Ministry of Agriculture, Forestry and Fisheries for the programs assigned to them (fertilizer and grain seed); (xii) Coordinating with WFP for activities linked to their ongoing programs (Food-for- Works and Food-for-School Children); (xiii) Coordinating with other donors; (xiv) Participating and contributing to the proceedings of workshops and tripartite meetings; and (xv) Assisting the Team in the execution of his/her responsibilities.

c. Selection Criteria

19. The incumbent should hold a Masters Degree in a relevant field such as sociology, anthropology, economics or a related field and should have a minimum of 10 years of relevant experience as social impact specialist, and community facilitator. The incumbent should have experience in working in the greater Mekong region. Familiarity with the particular circumstances of the Tonle Sap basin will be viewed favorably. Familiarity with poverty reduction and sustainable development is a requirement.

d. Output and Reporting Requirements

20. Within the scope of his/her terms of reference the consultant will produce the following outputs: (i) detailed Implementation Plan by project activity, (ii) Inception Report, (ii) Interim Report, (iii) Final Report, and (iv) periodic reports for review by the Task Force and EA.

Appendix 5 Page 8

4. Food Security Expert (12 person-months international, 12 person- months, national)

a. Scope of Work

21. The Food Security Expert will assist the Government in the development of a system of emergency food reserve and rapid response.

b. Detailed Tasks

22. The consultant would be part of team comprising international and domestic experts tasked to strengthen the fiduciary oversight and to enhance governance in the delivery of project assistance. As the team member, the consultant will contribute to the overall implementation of the procurement and distribution component including the following tasks: (i) Assess the overall state of food security in Cambodia; (ii) Assess the state of government response system for food emergencies; (iii) Analyze systems of emergency food security reserve in comparable countries to identify best practices; (iv) Examine the impact of free food distribution, food-for-works program and subsidized input distribution on prices, supply and demand in the market; (v) On the basis of the above, develop a system of emergency food reserve and rapid response including size of reserve, strategic location, procurement, utilization and replenishment, organizational and institutional structure, legal and regulatory framework, operational modalities, physical infrastructure and equipment, early warning systems, identification and monitoring of indicators, crop assessment and reporting and dissemination; and (vi) Participating and contributing to the proceedings of workshops and tripartite meetings.

c. Selection Criteria

23. The incumbent should hold a Masters Degree in a relevant field such as sociology, anthropology, economics or a related field and should have a minimum of 10 years of relevant experience as food security expert. The incumbent should have experience in working in the greater Mekong region. Familiarity with the particular circumstances of the Tonle Sap basin will be viewed favorably. Familiarity with poverty reduction and sustainable development is a requirement.

d. Output and Reporting Requirements

24. Within the scope of his/her terms of reference the consultant will produce the following outputs: (i) detailed Implementation Plan by project activity, (ii) Inception Report, (ii) Interim Report, (iii) Final Report, and (iv) periodic reports for review by the Task Force and EA.

5. Agro-economist/National Project Manager (24 person-months, national)

a. Scope of Work

25. The National Project Manager will assist the International Project Manager with the implementation of the project.

Appendix 5 Page 9

b. Detailed Tasks

26. The consultant would be part of team comprising international and domestic experts tasked to strengthen the fiduciary oversight and to enhance governance in the delivery of project assistance. As the team member, the consultant will contribute to the overall implementation of the procurement and distribution component including assisting the Project Manager in the following tasks: (i) Overall coordination with the ADB and the Task Force; (ii) Assessment of existing food and input procurement and distribution system including logistics; (iii) Project planning, budgeting, procurement, implementation supervision and monitoring; (iv) Periodic reporting and interagency coordination; (v) Supervision of the work of the Procurement and Logistics expert and Social Scientist and Community Facilitator, Food Security Expert and the Independent Monitor; (vi) Coordination with the World Food Program (WFP) on Food-for-Works and Food for School Children programs; (vii) Assess the potential for agricultural productivity improvement in project area; (viii) Coordination with Ministry of Agriculture, Forestry and Fisheries (MAFF) on fertilizer and rice seed procurement (for grain seed procurement, Ministry of Agriculture will procure directly from AQIP Seed Company); (ix) Ensuring that procurement is carried out through national shopping procedures acceptable to ADB; (x) Ensure that the retroactive financing provided for procurement by the EA on behalf of the Government during 2008 are in accordance with agreed procedures, and are certified by MEF; (xi) Coordination with ADB to ensure that the certification is acceptable to ADB; (xii) Coordination with other donors; (xiii) Development and updating a Project Management System; and (xiv) Organization and conduct of workshops and tripartite meetings.

c. Selection Criteria

27. The incumbent should hold Bachelor’s degree or equivalent in agricultural economics or a relevant field and have a minimum of 5 years of relevant experience. The candidate should have extensive team work experience in leadership position and should have had worked for at least three years in the Tonle Sap basin in Cambodia. Familiarity with poverty reduction and sustainable development is a requirement.

d. Output and Reporting Requirements

28. Within the scope of his/her terms of reference the consultant together with the international Project Manager will produce the following outputs: (i) detailed Implementation Plan by project activity, (ii) Inception Report, (ii) Interim Report, (iii) Final Report, and (iv) periodic reports for review by the Task Force and EA.

Appendix 5 Page 10

6. Provincial Facilitators (180 person-months)

a. Scope of Work

29. National provincial facilitators will assist the TA team with the supervision of procurement and distribution and compliance with fiduciary requirements. They will be working closely with the Provincial Committee for Disaster Management (PCDM). Eight facilitators, one each for the seven provinces, and for slum communities in Phnom Penh will be hired.

b. Detailed Tasks

30. National provincial facilitators would be part of team comprising international and domestic experts tasked to strengthen the fiduciary oversight and to enhance governance in the delivery of project assistance. As the team member, the consultant will contribute to the overall implementation of the procurement and distribution component including assisting the Project Manager in the following tasks: (i) Review the procurement process at all stages, assist in planning and scheduling delivery requirements, oversee the receipt, testing, weighing, storage, recording of stock in warehouse and elsewhere as the case may be, the movement of commodities, and payments; (ii) Assist in ensuring that the rice, seed and fertilizer are delivered to the commune/village stores in a timely manner. (iii) Review of target population (include the village councils, representatives of the villages and selected NGOs/ CBOs); (iv) Review of the selection process, assist in mobilizing the communities and self help groups; (v) Monitoring implementation of the program; (vi) Management of rice and input distribution, record keeping and ensuring a transparent and fair process; (vii) Engaging the local communities in all consultations to determine their needs and preferences; (viii) Undertaking spot and random checks and audits on procurement procedures and actual execution of procurement contracts; and (ix) Working closely with local/ district and provincial governments in the 7 project provinces in determining and evaluating the local government’s priority needs including assisting in identification of rural market link roads and irrigation channels which could be rehabilitated immediately through food-for works program.

c. Selection Criteria

31. The incumbent should hold Bachelor’s degree or equivalent in a relevant field such as engineering, economics, finance or related field and have a minimum of 5 years of relevant experience. The candidate should have extensive team work experience in leadership position and should have had worked for at least three years in the Tonle Sap basin in Cambodia. Familiarity with poverty reduction and sustainable development is a requirement.

d. Output and Reporting Requirements

32. The team of provincial monitors will prepare periodic reports for review by all stakeholders.

Appendix 5 Page 11

7. Independent Monitor

a. Scope of Work

33. A number of national NGOs will be contracted to undertake independent monitoring of activities under the proposed project. The monitors will report to ADB and NFSTF.

b. Detailed Tasks

34. The selected national NGOs will undertake the following tasks: (i) Assess the overall state of poverty, hunger and food insecurity in project areas; (ii) Monitor (a) target group selection, (b) procurement and distribution of food and inputs, (c) organization and management of food-for-works program, and (d) compliance with fiduciary requirements; and (iii) Develop and implement objective quantitative and qualitative criteria to assess the impact of project activities on production, consumption, income, hunger, poverty, prices and market; and (iv) Provide a monthly monitoring reports to ADB and NFSTF.

c. Selection Criteria

35. The selected national NGOs should have extensive experience in food security areas in Cambodia. It should have necessary competence to undertake oversight and fiduciary checks.

d. Output and Reporting Requirements

36. The selected NGOs will produce the following outputs: (i) detailed Implementation Plan by project activity, (ii) Inception Report, (ii) Interim Report, (iii) Final Report, and (iv) periodic reports for review by the Task Force and EA.

8. Support for the Establishment of Food Security System

a. Scope of Work

37. Under the supervision of the international and national food security experts, and in close cooperation and guidance of the TA Team Leader a number of services contracts will be drawn with qualified firms to establish a system of emergency food reserve and rapid response. This will require: (i) surveys and diagnosis of the current nationwide food security situation; (ii) institutional analysis of food procurement, storage and distribution system; (iii) essential hardware and logistic support, and related facilities for NCDM and PCDMs; (v) building capacity of NCDM and PCDMs in the project provinces to respond to food crisis; and (vi) baseline surveys, and monitoring and data collections in the Project areas.

Appendix 6 Page 1

Procurement Plan

Project Name: CAM-Emergency Food Assistance Project Loan (Grant) Number: Loan and Grant Amount Project: $40.08; Attached TA: $1.6 million Executing Agency: Ministry of Economy and Finance Date of first Procurement Plan 31 July 2008 Date of this Procurement Plan 22 August 2008

A. Process Thresholds, Review, and 18-Month Procurement Plan

1. Project Procurement Thresholds

1. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works.

Procurement of Goods and Works Method Threshold

National Competitive Bidding for Fertilizer Not applicable National Competitive Bidding for Vehicles $500,000 Commodity Procurement for Rice Not applicable Direct Contracting for Rice seeds Shopping Below $100,000

2. ADB Prior or Post Review

2. Except as ADB may otherwise agree, the following prior- or post-review requirements apply to the various procurement and consultant recruitment methods used for the project

Procurement of Goods and Works Procurement Method Prior or Post Comments

NCB Goods Prior Fertilizer, four-wheel vehicles, motorcycles Commodity Procurement Prior/ Post Rice Direct Contracting Prior Rice seeds from AQIP Seed Company Shopping Prior Recruitment of Consulting Firms (including attached TA)

Quality and Cost Based Selection Not applicable Recruitment by ADB Quality Based Selection NGOs Not applicable Recruitment by ADB

Recruitment of Individual Consultants Individual Consultants Not applicable Recruitment by ADB ADB = Asian Development Bank; AQIP = Agriculture Quality Improvement Project; NCB =national competitive bidding; NGO = nongovernment organization; TA = technical assistance.

3. Goods and Works Contracts Estimated to Cost More Than $1 Million

3. The following table lists goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

Appendix 6 Page 2

Contract Prequalification Value Procurement of Bidders Advertisement Item ($ million) Method (y/n) Date Comments Rice 19.733 Others- n Q3 2008 Numerous Commodity contracts from approved rice millers Fertilizer 6.405 NCB n Q3 2008 Rice seeds 8.887 Direct n Q3 2008 From AQIP Contracting Seed Co.

AQIP = Agriculture Quality Improvement Project, NCB =national competitive bidding.

4. Consulting Services Contracts Estimated to Cost More Than $100,000

4. The following table lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

Contract Advertisement International General Value Recruitment Date or National Description ($ million) Method (quarter/year) Assignment Comments International 1.134 ICS International Consultants National 0.774 ICS National Consultants Independent 0.450 CQS National To be recruited Monitor by ADB (NGOs) ADB = Asian Development Bank, CQS = consultants’ qualification selection, ICS = individual consultant selection NGO = nongovernment organization.

5. Goods and Works Contracts Estimated to Cost Less than $1 Million

5. The following table groups smaller-value goods, works, and consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

Value of Number of Procurement / Comments General Contracts Contracts Recruitment Description ($, cumulative) Method 4WD Vehicles (8) 255,000 1 NCB Motorcycles (35) 102,000 1 NCB Office Equipment 102,000 Numerous Shopping 4WD = four-wheel drive, NCB = national competitive bidding.

6. Other Services Contracts

6. The following table lists other services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

Appendix 6 Page 3

Contract General Value Recruitment Advertisement Procurement Description ($ million) Method Date Method Comments Establishment of Emergency 0.933 QCBS Q3 2008 Others Food Reserve and Rapid Response System

QCBS = quality- and cost-based selection.

B. Project Procurement Plan

1. Indicative List of Packages Required Under the Project

7. The following table provides an indicative list of all procurement (goods, works, and consulting services) over the life of the project. Contracts financed by the Borrower and others should also be indicated, with an appropriate notation in the Comments section.

Estimated Value Estimated Domestic ($ million, Number of Procurement Preference General Description cumulative) Contracts Method Applicable Comments Goods Rice 19.733 Numerous Commodity N Procurement Fertilizer 6.405 1 NCB N Rice seeds 8.887 1 Direct N Contracting 4WD Vehicles 0.255 1 NCB N Motorcycles 0.102 1 NCB N Office Equipment 0.102 Numerous Shopping N

Consulting Services International and 1.908 Numerous ICS N National Consultants Independent Monitor 0.450 7 CQS N (NGOs) Other Services Establishment of 0.933 Numerous Others N Emergency Food Reserve and Rapid Response System 4WD = four-wheel drive, CQS = consultants’ qualification selection, NCB =national competitive bidding, ICS = individual consultant selection.

C. National Competitive Bidding Annex

1. Cambodia

8. General. The procedures to be followed for national competitive bidding shall be those set forth for the national competitive bidding method in the Government’s Procurement Manual of September 2005 issued under Decree Number 14 ANKR.BK dated 26 February 2007 with

Appendix 6 Page 4 the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the ADB’s Procurement Guidelines (2007, as amended from time to time).

9. Application. Contract packages subject to national competitive bidding procedures will be those identified as such in the project procurement plan. Any changes to the mode of procurement from those provided in the procurement plan shall be made through updating of the procurement plan, and only with prior approval of ADB.

10. Eligibility. Bidders shall not be declared ineligible or prohibited from bidding on the basis of barring procedures or sanction lists, except individuals and firms sanctioned by ADB, without prior approval of ADB.

11. Advertising. Bidding of national competitive bidding contracts estimated at $500,000 or more for goods and related services or $1,000,000 or more for civil works shall be advertised on ADB’s website via the posting of the procurement plan.

12. Anti-Corruption. Definitions of corrupt, fraudulent, collusive, and coercive practices shall reflect the latest ADB Board-approved Anticorruption Policy (1998, as amended to date) definitions of these terms and related additional provisions

13. Rejection of all Bids and Rebidding. Bids shall not be rejected and new bids solicited without ADB’s prior concurrence.

14. Bidding Documents. The bidding documents provided with the Government’s Procurement Manual shall be used to the extent possible. The first draft English language version of the procurement documents shall be submitted for ADB review and approval, regardless of the estimated contract amount, in accordance with agreed review procedures (post and prior review). The ADB-approved procurement documents will then be used as a model for all procurement financed by ADB for the project, and need not be subjected to further review unless specified in the procurement plan.

15. Member Country Restrictions. Bidders must be nationals of member countries of ADB, and offered goods, works and services must be produced in and supplied from member countries of ADB.

Appendix 7 Page 1

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; • 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;

Appendix 7 Page 2

- 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 shown in Appendix 2); 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).

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 precommencement 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.

Appendix 7 Page 3

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.

Page 3 of this Appendix provides an illustration of this calculation using a generic sample implementation schedule and this Appendix, page 4 a specific example in the education sector.

Appendix 7 Page 4

Implementation Schedule with Activities and Weights

Yr1 Yr2 Yr3 Yr4 Yr5

a B

b C d c D ef A C T I V T I E S A

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.

Sample Implementation Schedule

(a) (b) (a) x (b) Activities Year 1 Year 2 Year 3 Year 4 Assigned Actual W eighted 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 W eight 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

Appendix 8 Page 1

Governance Risk Mitigation Measures

Area Measures Regular access to the EA’s accounting and control systems to monitor Financial Management expenditures and other financial transactions and safe custody of Project- and Audit financed assets.

Capacity development of the EA, IAs, and PPMUs in accounting and internal control systems, financial management, and audit capabilities.

Financial statements to be audited by external auditors acceptable to ADB and regularly published and reported to the shareholders.

Introduction of an appropriate internal audit system and conduct of internal audit by engaging an external audit firm.

Preparation of an operational risk mitigation action plan under the TA and undertaking operational risk assessment with the Government.

Close coordination with the proposed Public Financial Management for Rural Development project.

Public disclosure of operational and financial performance of the sector Institutional entities to improve transparency. Mechanisms

Strong government monitoring, including spot checks of the safety-net programs.

Improvement of records keeping system, development of database.

NGO and independent expert oversight of food and input procurement and distribution.

Strong interagency coordination through NCDM at the center and PCDM in provinces.

Following up on the experience of WFP in Cambodia and adapting some of the oversight and monitoring arrangements instituted by WFP in its projects.

Encouragement of civil society monitoring, including establishment of telephone hotlines at CARM and CPMU office in Phnom Penh to report irregularities and misappropriation of Project resources.

CARM = Cambodia Resident Mission, CPMU = central project management unit, EA = executing agency, IA = implementing agency, NCDM = National Committee for Disaster Management, NGO = nongovernment organization, PCDM = provincial committee for disaster management, PPMU = provincial project management unit, TA = technical assistance, WFP = World Food Programme.

Appendix 9 Page 1

Major Loan Covenants

Covenant Due Date Remarks Particular Covenants Article IV, Section 4.01. In the carrying out of the Project During project and operation of the Project facilities, the Beneficiary shall implementation perform, or cause to be performed, all obligations set forth in Schedule 5 of the Financing Agreement.

Art. IV, Section 4.02. The Beneficiary shall (i) maintain, or cause to be maintained, separate accounts During project for the Project, including separate accounts for the Loan implementation and the Grant;

(ii) have such accounts and related financial statements During project audited annually, in accordance with appropriate auditing implementation standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB;

(iii) furnish to ADB, as soon as available, certified copies of Not later than 6 such audited accounts and financial statements and the months after the end report of the auditors relating thereto (including auditors' of each related fiscal opinion on the use of the Loan proceeds and the Grant year proceeds and compliance with the financial covenants of the Financing Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language; and

(iv) furnish to ADB such other information concerning such During project accounts and financial statements and the audit thereof as implementation ADB shall from time to time reasonably request

Project Executing and Implementing Agencies Schedule (Sched.) 5, paragraph (para.) 1. The Ministry of During project Economy of Finance (MEF), as the Project Executing implementation Agency, shall be responsible for overall implementation of the Project.

MEF and implementing agencies (IAs) shall be responsible for implementation of the following specific parts of the Project:

(a) MEF for: (i) procurement of rice, transportation and storage for the free distribution program and the food-for-works program; (ii) procurement, transportation and storage of seed and fertilizer; (iii) establishment and implementation of an independent monitoring system to oversee the Target Group selection, distribution of food and other inputs, organization and management of food-for-works programs, and support for compliance with fiduciary requirements; (iv) strengthening capacity of the Project EA and the

Appendix 9 Page 2

Covenant Due Date Remarks IAs in Project management and monitoring.

(b) Ministry of Rural Development for (rural roads): (i) organization of the Target Groups, provision of technical support and management for the food-for- works program (improvement or rehabilitation of rural roads and small water schemes).

(c) Ministry of Water Resources and Meteorology for (small water schemes): (i) organization of the Target Groups, provision of technical support and management for the food-for- works program (improvement or rehabilitation of rural roads and small water schemes).

(d) Ministry of Education, Youth and Sports for (school feeding program): (i) provision of food for the Beneficiary's school feeding and take home ration programs to benefit students in grades 1 to 4 and families of selected girl students in grades 4 to 6.

(e) Ministry of Women's Affairs for (ECLC feeding program): (i) provision of food to children in selected ECLCs.

(f) Ministry of Agriculture, Forestry and Fisheries (MAFF) for: (i) identification of the Target Groups (farmers) for subsidized seed and fertilizer distribution; (ii) sale of seed and fertilizer at subsidized prices to the Target Groups.

(g) National Committee for Disaster Management and Provincial Committee for Disaster Management for: (i) development of a system for emergency food reserve and rapid response.

(h) Commune Council and Village Development Committee for: (i) identification of the Target Groups for the free food distribution and the food-for-works program; (ii) free rice distribution to the Target Groups; (iii) free food distribution, on a cash transfer or voucher system basis to selected urban poor in Phnom Penh.

(i) Quality control of seeds and fertilizers shall be carried out by the designated department of MAFF and the quality control of rice shall be carried out by such a department of Ministry of Commerce.

Policy Guidance, Coordination and Consultations Sched. 5, para. 2. The Task Force, which has been set up by the Beneficiary, chaired by MEF and includes

Appendix 9 Page 3

Covenant Due Date Remarks representatives from MEF, MAFF, MOI, MRD, MOP, MOWRAM, NCDM, NIS, SNEC and members from key development partners, shall be responsible for providing overall policy guidance for Project implementation and Project coordination. The Beneficiary shall ensure that technical experts support the senior level officials of the member agencies who have been designated to the Task Force. The Task Force shall meet as often as necessary.

CPMU shall provide secretariat to the Task Force

Sched. 5, para. 3. Beneficiary shall ensure that a participatory and consultative process is in place throughout the implementation period of the Project to ensure direct involvement of stakeholders in all key decisions, especially in selection of the Target Groups, assistance packages, policy reform and institutional strengthening measures, and monitoring and evaluation. Beneficiary shall ensure that debate and conflict resolution shall be encouraged through informal local committees beyond formal consultation fora, such as the Task Force and PCDM meetings, and other community level discussions.

Sched. 5, para. 4. Beneficiary shall ensure that NCDM provide the day to day interdepartmental coordination at the central level and PCDM, chaired by the provincial governor, provide the same at the provincial level.

Sched. 5, para. 5. Beneficiary shall ensure that:

(i) CPMU which has been established in MEF and currently headed by a project director is responsible for overseeing daily implementation of the project; and

(ii) PPMUs are established in all Project Provinces to undertake project activities regarding procurement, storage and distribution of rice, seed and fertilizer in their respective provinces. PPMUs will report to the CPMU on all matters related to their specified activities.

Counterpart Funding Sched. 5, para. 6. Beneficiary shall ensure that adequate counterpart funds are made available to the project when required and in the amounts called for to enable the IAs and related project agencies to discharge their responsibilities under the Project and to cover any shortfall of funds to ensure completion of the Project in a timely manner.

Distribution Arrangements Sched. 5, para. 7. Beneficiary shall cause CCs, assisted by respective VDCs to be responsible for receiving, storing and distributing free rice, seed and fertilizer to the Target Groups.

Appendix 9 Page 4

Covenant Due Date Remarks

Sched. 5, para. 8. Beneficiary shall cause CCs and VDCs to identify Target Groups that shall be households and individuals from selected communes and villages in 7 project provinces (Banteay Meanchey, Battambang, Kampong Chhnang, Kampong Thom, Odor Meanchey, Pursat, and Siem Reap) and 3 slum areas (Steung Meanchey, Beungkok and riverside) in Phnom Penh.

Beneficiary shall ensure that Project beneficiaries are selected through a participatory process in accordance with the selection criteria agreed between the Beneficiary and ADB.

Screening and selection process shall be conducted by CCs and VDCs with support from the village chiefs, and agreed upon by the PCDM. Process shall be subject to the supervision and monitoring by an independent monitor acceptable to ADB. Screening and selection criteria, process and project area may be amended from time to time with agreement between the Beneficiary and ADB.

Conflicts arising from Target Group selection shall be referred to respective CCs for resolution in consultation with all parties concerned. If no resolution can be reached at the CC level, the conflict shall be referred to the focal point in the respective IA for final resolution, in accordance with paragraph 12 of Schedule 5 of the Financing Agreement.

Governance Measures Sched. 5, para. 9. Beneficiary shall: (i) undertake necessary measures to create and sustain a corruption-free environment for activities under the project;(ii) comply with ADB's Anticorruption Policy (1998, as amended to date); (iii) where appropriate, ensure that relevant provisions of ADB's Anticorruption Policy (1998, as amended to date) are included in all bidding documents for the project; (iv) ensure that a good governance framework shall be prepared as part of the Project to promote good governance and mitigate corruption risks; and (v) ensure that information about categories of the target groups, names of the beneficiary households or recipients under each category, and procurement activities shall be made publicly available for public scrutiny.

Beneficiary: (i) acknowledges ADB's right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive or coercive practices relating to the project; and (ii) agrees to cooperate fully with, and to cause the EA and IAs to cooperate fully with any such investigation and to

Appendix 9 Page 5

Covenant Due Date Remarks extend all necessary assistance, including providing access to all relevant books and records as may be necessary for the satisfactory completion of any such investigation.

All external costs related to such investigation shall be met by Project resources.

Sched. 5, para. 10. Beneficiary shall: (i) ensure that EA conducts periodic inspections on the contractors' activities related to loan and grant proceeds, fund withdrawals and settlements; and (ii) ensure and cause the EA to ensure that all contracts financed by ADB in connection with the project include provisions specifying the right of ADB to audit and examine the records and accounts of the EA and all contractors, suppliers, consultants and other service providers as they relate to the project.

Sched. 5, para. 11. Beneficiary shall cause the EA to: (i) maintain a specific web page on its website to disclose information about procurements related to the project; and (ii) provide stakeholders, including civil society and non- governmental organizations, with detailed information on procurement on public notice boards at the provincial town hall and market places in their respective provinces.

Beneficiary shall ensure that criteria and procedure for selection of the Target Groups under parts A and B of the project are similarly posted on the web page and on public notice boards in the respective provinces.

Focal Point to Handle Complaints Sched. 5, para. 12. Beneficiary shall ensure that: (i) focal point is appointed in each of the IAs to address any public complaints on financial irregularities in procurement and distribution of goods, construction of works and other services, including conflicts arising from target group selection that cannot be resolved by the respective CCs; (ii) specific phone lines are dedicated at the CPMU and ADB's Cambodia Resident Mission, to be used by the public for reporting of irregularities and misappropriation of the project resources, if any, and advertised to the public; (iii) appropriate grievance procedures are effectively implemented; and (iv) EA provides a bi-annual review and report to the Task Force and ADB on all relevant complaints received and resolutions undertaken.

Reporting and Auditing Sched. 5, para. 13. Beneficiary shall cause the EA to

Appendix 9 Page 6

Covenant Due Date Remarks submit:

(i) monthly progress statements; and no later than 10 days after the end of each month

(ii) quarterly progress reports to the Task Force and ADB no later than 3 weeks on the status and progress of the project. after the end of each quarter, throughout the project implementation period.

Sched. 5, para. 14. The Office of the Director of Accounts (or an officer with equivalent functions) I the EA shall be responsible for coordinating all project account activities and ensuring compliance with ADB's audit and accounting requirements.

Sched. 5, para. 15. Beneficiary shall ensure that (i) an independent financial audit(s) conducted during project implementation to determine the degree to which project funds were utilized observing standard financial propriety, practices and regularity; and (ii) other audits undertaken as required under ADB's Disaster and Emergency Assistance Policy including a special audit involving a performance evaluation of the project, focusing on governance, financial accountability, and transparency.

Environmental and Other Social Issues Sched. 5, para. 16 and 17. Beneficiary shall ensure that works will not have any adverse environmental impact and will be carried out on vacant land owned by the Beneficiary, free from encumbrances, habitation, dispute or controversy.

In the event of unforeseen land acquisition or involuntary settlement, the Beneficiary shall immediately inform ADB and prepare the necessary planning documents in compliance with ADB's Involuntary Resettlement Policy (1995).

Beneficiary shall ensure that women and men will be paid equal remuneration for work of equal value and that child labor shall not be allowed.

Project Performance Monitoring System Sched. 5, para. 18. Beneficiary shall ensure that progress monitoring, safeguard monitoring and benefit monitoring and evaluation shall be carried out during project implementation by EA and IAs.

Post-evaluation carried out 3 years after project completion.

Appendix 9 Page 7

Covenant Due Date Remarks Project performance management system (PPMS) developed on the basis of project design and monitoring framework to examine project's technical performance, evaluate delivery of project facilities, assess achievement of project objectives and measure project's social, economic, financial and institutional impacts.

Baseline and periodic surveys shall be carried out to collect data disaggregated by income group, gender, types of vulnerability and other characteristics as appropriate.

Sched. 5, para. 19. Beneficiary shall establish an independent monitoring system to conduct monitoring of beneficiary screening and selection, and project procedures including fiduciary compliance.

Independent monitors shall report to ADB and Task Force.

IAs shall provide CPMU monthly or quarterly progress reports, as appropriate, which shall be consolidated into a single progress report for the Project. The consolidated report shall be submitted to ADB.

CPMU together with IAs shall establish baseline at the commune level within 3 months of project inception from secondary sources, baseline survey and participatory observations.

Project midterm review undertaken 1 year after inception and findings presented to ADB in a timely manner. ADB shall in turn consult with the Beneficiary regarding implementation timeframe for corrective actions if warranted.

ADDENDUM

Addendum Page 1

I. Major Change in Project Scope, Financing Plan and Cost Allocation

1. A review mission was undertaken during 2-6 February 2009 to review implementation progress and reexamine various components under the Project for their effectiveness and relevance in the face of the second round economic shock8 due to the global financial crisis following the soaring food prices in 2008. The Government expressed its desire to expedite the implementation of the Project activities, and requested ADB to support the expansion of the social safety net and food for work activities under the Project.

2. In view of the current situation and government needs, the following change in project scope was agreed between the Government and the Mission: (i) increased allocation to school feeding; (ii) increased allocation to food-for-work/cash for work; and (iii) reduced scope of productivity enhancement support. Based on the following changes, a revised budget (Table 1) and revised procurement plan (Table 2) have been developed.

3. Free Rice Distribution under Component 1. Free rice distribution to 200 communes has been carried out while the remaining activities are under preparation. Government raised concerns on the distribution of free rice to slums in view of the fact that there were more than 300 of these slums in Phnom Penh. The Mission discussed with the Government the possibility of alternative arrangements (i.e., schools in slums, HIV and AIDS sufferers, etc.) and agreed that the remaining provision for free food distribution be instead allocated entirely to the school feeding program and the budget should be increased to $3.2 million by reallocating $2 million since (i) the Government can avail additional support to design a social safety net program under the $13 million budgetary support committed by the World Bank; and (ii) it is difficult to design alternative arrangements within the limited timeframe under this Project.

4. Food for Work under Component 1. To cope with the second round of shocks created by repercussions from the global financial crisis, both the Mission and the Government agreed that the budget allocated for this activity be increased from $11 million to $13 million to create more jobs. The agreements were also reached on the following provisions: (i) increase the limit for each subproject to $10,000 9 ; (ii) allow cash as a means of compensation; (iii) allow subprojects to be contracted with the proviso that the labor is sourced from the respective villages; and (iv) on a case-to-case basis, and subject to prior clearance by ADB, increase the limit of subproject costs, provided they meet the social and environmental safeguard requirements of ADB, and where the capacity of the implementing party to implement the subproject is proven.

5. Both the Mission and the Government agreed on the need to simplify the implementation process allowing the Provincial Project Monitoring Units (PPMUs) to avail of this provision in the most expeditious manner. The Government agreed to collaborate with World Food Programme (WFP) to complement the activities where the provincial government capacity is limited. The Mission requested the CPMU to discuss with the Ministry of Rural Development (MRD), Ministry of Water Resources And Meteorology (MOWRAM), and WFP respectively to (i) examine and assess their implementation process and procedures; (ii) assess the implementation capacity of the provincial departments of MRD and MOWRAM; and (iii) determine the realistic scope of

8 A new crisis has emerged and Cambodia is facing the serious challenge of coping with a second round of shocks created by repercussions from the global financial crisis. These shocks are expected to generate severe impacts on job opportunities, household income and food security. 9 Increasing the threshold is necessary to reduce the number of subprojects to a manageable and realistic level given that the budget for food/cash for work is now being increased to $13 million (22,000 subprojects with $5,000 limit and the original $11 million budget).

Addendum Page 2 work and budget allocation for each organization to implement the activities. To minimize fiduciary risks, cash-for-work will be implemented by MRD the MOWRAM on a pilot basis to test the effectiveness of the implementation procedures before expanding the geographic coverage10.

6. Scaled-down Scope under Component 2. During project preparation, AQIP Seed Company was identified as the main supplier of seed to be distributed under Component 2, and provision was made for the direct procurement of seed from AQIP. However, in November 2008, AQIP informed ADB of its inability to supply the required seeds for the immediate planting season. This hampered the implementation of the seed-fertilizer-extension package under this component. AQIP has recently informed the CPMU that it can supply 2,000 tons of good quality seeds for the next planting season which starts from May 2009. Due to declining inputs prices, the Government requested ADB to reduce the scope of Component 2 by cancelling about $5 million.

7. The Mission recognized that the obstacles that have developed over the course of the Project's implementation are significant and substantial. The Mission discussed this with the Government and agreed that (i) scaling down this component is necessary and integrating lessons learned into the proposed Tonle Sap Poverty Reduction and Smallholder Development Project (TSPRSDP) is feasible; and (ii) the geographical coverage needs to be strategically considered to maximize the benefits and outputs. The scaled-down component will require AQIP to supply 2,000 metric tons at $640 per ton ($1.28 million) with an additional delivery cost of $85 per ton ($0.17 million). It is expected to commence on 10 May 2009.

8. The total cost of the procurement, inclusive of delivery cost for 2,000 tons of IR66 seed, is approximately $1.45 million. The estimated cost of fertilizer to be distributed along with the rice seeds amounts to $2 million. The Government has made commitments to ensure that the implementation of the scaled down component is done with its full support. Both ADB and the Government agreed that the geographical coverage needs to be strategically considered to maximize the benefits and outputs.

9. The changes to the project are intended to ensure that the Project will reduce the poverty of low-income groups and contribute to the efforts of the Government to strengthen the safety-net programs for poor and vulnerable population in the face of two shocks—first, the spike in food prices and inflation, and second, the indirect impact of the unfolding global financial crisis.11 While it will not materially change the project purpose and target beneficiaries, it will affect the components and costs. The change requires reallocation of grant and loan proceeds. The estimated budget for productivity support will be substantially reduced from $15.3 million to $3.89 million, which will enable the project to carry out the productivity support on a

10 The draft implementation procedures were developed to clarify institutional responsibilities at the village, communes, province and the national levels and specify the procedures in identification of rehabilitation interventions and beneficiary labors, procurement porcess, pre and post work measurement, cash payment, and reporting. The CPMU willl recruit engineer(s) to counter-check the design and work measures certified by the communes and PPMUs. Villagers will receive training to be involved in monitoring during construction and completion of subprojects rehabilitation. 11 The financial crisis severely affected the Cambodian economy, particularly the garment industry, which accounts for about 70% of the total experts. Since the global financial crisis late last year, about 60,000 out of 340,000 workers have been laid off. The majority of the workers are from rural areas. Increasing laid off and reduction of the remittance is causing the loss of purchasing power of rural households. Job losses and lower remittances from the reduction in external demand for Cambodia-made garments and tourisms, and external and domestic demand for construction are likely to exert a significant impact on the poor households, particularly in terms of nutrition status and enrollment in education.

Addendum Page 3 smaller scale. About $5 million was cancelled, and the rest of the amount reallocated to Component 1. This resulted in a change in total project cost from $40.1 million to $34.1 million and a change in the ADB loan financing from $17.5 million to $12.2 million. The change, however, will not have implications on the project's implementation/administration arrangements on the part of EA and other implementation agencies.

10. The change may affect the nature of project benefits. However, its reduced support for productivity enhancement may not necessarily result in a major negative impact on the target rural beneficiaries under the Project. According to the recent study conducted by the Cambodia Institute of Development Study12 agricultural production may increase due to declining inputs prices. It also predicts, however, that it will reduce per capita income for households due to declining commodity prices, declining remittance, and more workers returning from the city, which may result in a deterioration of the living condition in the rural areas. The proposed increased allocation of budget in food and/or cash for work could partially off-set loss in income in rural areas in the project provinces. The proposed changes recognize the fact that the project will now need to primarily ameliorate adverse livelihood impact of the global financial crisis especially on those vulnerable groups in the Tonle Sap Basin, rather than the previous impact of the food price inflation shock of 2008, which could be addressed under the proposed TSPRSDP13 that aims for a medium-term productivity enhancement support

12 According to the Rapid Assessment on the Impact of the Financial Crisis in Cambodia, prepared by the Cambodia Institute of Development Study, January 2009, 13The loan fact-finding for this proposed project was conducted during 9-20 February 2009 and the MOU was signed on 20 February 2009.

Addendum Page 4

TABLE 1. EXPENDITURE ACCOUNTS BY FINANCIER

The Kingdom of Cambodia Emergency Food Assistance Project Expenditure Accounts by Financier (US$ '000)

The Government Loan 2455-CAM Grant 01116-CAM % of % of % of % of % of % of Original Revised Original Revised Original Revised Original Revised Item Cost Cost Cost Cost Cost Cost Cost Cost Cost Amount Cost Amount Cost Amount Category Category Category Category Category Category A. Investment Costs 1. Materials 35,027.0 29,070.8 3,502.7 10.0 2,810.4 9.7 17,111.8 48.9 11,848.0 40.8 14,412.5 41.1 14,412.5 49.6 a. Food for Free Distribution 8,522.4 10,637.1 852.2 10.0 967.0 10.0 0.0 0.0 0.0 0.0 7,670.1 90.0 9,670.1 90.0 b. Food for Work 11,211.5 14,544.8 1,121.1 10.0 1,454.5 10.0 3,348.0 29.9 8,348.0 57.4 6,742.3 60.1 4,742.3 32.6 c. Rice Seed 8,887.8 1,666.7 888.8 10.0 166.7 10.0 7,999.0 90.0 1,500.00 90.0 0.0 0.0 0.0 0.0 d. Urea Fertilizer 6,405.4 2,222.2 640.5 10.0 222.2 10.0 5,764.8 90.0 2,000.0 90.0 0.0 0.0 0.0 0.0

2. Equipment and Vehicles 458.8 458.6 35.7 7.8 35.7 7.8 0.0 0.0 0.0 0.0 423.1 92.2 422.9 92.2 a. 4WD Vehicles 254.9 268.9 25.5 10.0 25.5 9.5 0.0 0.0 0.0 0.0 229.4 90.0 243.4 90.5 b. Motorbikes 102.0 102.0 10.2 10.0 10.2 10.0 0.0 0.0 0.0 0.0 91.8 90.0 91.8 90.0 c. Office Equipment 102.0 87.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 102.0 100.0 87.8 100.0

3. Consulting Services 2,278.8 2,278.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2,278.8 100.0 2,278.8 100.0 a. Support to Establish Food Security System 933.0 933.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 933.0 100.0 933.0 100.0 b. Consulting Services for Capacity Development 1345.8 1,345.8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1,345.8 100.0 1,345.8 100.0

Subtotal (A) 37,746.6 31,808.2 3,538.4 9.4 2,846.1 8.9 17,111.8 45.3 11,848.0 37.2 17,114.4 45.3 17,114.2 53.8

B. Recurrent Costs 1. Project Management Support Staff Remuneration 1,376.4 1,376.4 1,101.1 80.0 1,101.1 80.0 0.0 0.0 0.0 0.0 275.3 20.0 275.3 20.0 2. O&M of Equipment and Vehicles 552.6 552.6 442.1 80.0 442.1 80.0 0.0 0.0 0.0 0.0 110.5 20.0 110.5 20.0

Subtotal (B) 1,929.0 1,929.0 1,543.2 80.0 1,543.2 80.0 0.0 0.0 0.0 0.0 385.8 20.0 385.8 20.0

Total Base Cost 39,693.6 33,737.2 5,081.6 12.8 4,389.2 13.0 17,111.8 43.1 11,848.0 35.1 17,500.2 44.1 17,500.0 51.9

C. Interest During Implementation 388.5 388.5 0.0 0.0 0.0 0.0 388.5 100.0 388.5 100.0 0.0 0.0 0.0 0.0

Total Project Costs 40,082.0 34,125.7 5,081.6 4,389.2 17,500.0 12,236.4 17,500.0 17,500.0 % of Total Project Costs 12.68% 12.86% 43.66% 35.86% 43.66% 51.28%

Cancelled Loan Proceeds 5,263.6 a/ The Government financing total is $5,081,600 is for duties and taxes and (ii) $1,543,200 is for recurrent costs. Notes/Assumptions: (i) Revised amount for seed and fertilizer procurement is under the assumption that only 2,000 tons of rice seeds are available. (ii) $5 million of loan proceeds are reallocated to Food-for-Work ($3 million) and School Feeding/Slum Alternative ($2 million).

Addendum Page 5

TABLE 2. REVISED PROCUREMENT PLAN

Table 2.1: Goods And Works Contracts Estimated To Cost More Than $1 Million

Item Original Revised Procurement Prequalification Advertisement/ Comments Contract Contract Method Of Bidders Procurement Value Value (y/n) Date ($ million) ($ million) Rice 19.733 25.182 Others- n Q4 2008/ Numerous Commodity Q3 2009 contracts Q4 2009 from approved rice millers

Fertilizer 6.405 2.222 NCB n Q2 2009 Q4 2009 Q1 2010 Rice 8.887 1.667 Direct n Q1 2009 From AQIP seeds Contracting Q2 2009 Seed Co. Q4 2009 AQIP = Agriculture Quality Improvement Project, NCB =national competitive bidding.

Table 2.2: Indicative List of Packages Required Under the Project (Goods)

General Original Revised Estimated Procurement Domestic Description Estimated Estimated Number Method Preference Value Value of Applicable ($ million, ($ million, Contracts cumulative) cumulative) Rice 19.733 25.182 Numerous Commodity N Procurement Fertilizer 6.405 2.222 Numerous NCB N Rice seeds 8.887 1.667 Numerous Direct N Contracting 4WD Vehicles 0.255 0.255 2 Shopping* N Motorcycles 0.102 0.102 Numerous Shopping* N Office Equipment 0.102 0.102 Numerous Shopping N 4WD = four-wheel drive, CQS = consultants’ qualification selection, NCB =national competitive bidding, ICS = individual consultant selection.

* Note: The motor vehicles and the motorcycles were required for the Project to move forward. The NCB will take a minimum o f 3 months before the orders can be placed. To expedite procurement of goods and services, The ADB approved on 10 December 2008, the request to change the procurement procedure from national competitive procedure to Shopping in view of the emergency nature of the project and the need to procure the vehicles expeditiously. This is consistent with the paragraph 53 of the RRP and the ADB's Policy on Disaster and Emergency Assistance.

Addendum Page 6

II. Amendments to the Financing Agreement

In order to formalize the consensus reached by the Beneficiary and ADB concerning various implementation issues concerning the Project, the following amendments to the Financing Agreement was made in October 2009.

1. Item (f) of Section 1.02 is hereby deleted in its entirety and replaced with the following:

"(f) Goods" means equipment and materials to be financed out of the proceeds of the Loan and/or the Grant; and including related services such as transportation, insurance, installation, commissioning, training, and initial maintenance, but excluding consulting services;"

2. Item (a) of Section 2.01 is hereby deleted in its entirety and replaced with the following:

"(a) a loan in various currencies equivalent to seven million six hundred five thousand five hundred fifty two Special Drawing Rights (SDR 7,605,552) (the "Loan"); and"

3. Section 2.02 is hereby deleted in its entirety and replaced with the following:

"Section 2.02 (a) The Loan proceeds shall be withdrawn from the Loan Account in accordance with the provisions of Schedule 3A to this Agreement for purposes of financing the Project expenditures under Parts A and B of the Project (each such Part as described in Schedule 1 to this Financing Agreement); and

(b) The Grant proceeds shall be withdrawn from the Grant Account in accordance with the provisions of Schedule 3B to this Agreement for purposes of financing the Project expenditures under Parts A and C of the Project."

4. Items (i), (v), (vi), and (vii) of Part A of the Project as described in Paragraph 2 of Schedule 1 to the Financing Agreement are hereby deleted in their entirety and replaced respectively with the following:

"(i) identification of the Target Groups for the free food distribution, the food-for- works program, and the cash-for-works program;"

"(v) Provision of food or cash, as appropriate, for the Beneficiary’s school feeding and take home ration programs to benefit selected students and their families;"

"(vi) provision of food to children and volunteer teachers in selected ECLCs; and"

"(vii) organization of the Target Groups, provision of technical support and management for the food-for-works and the cash-for-works programs (improvement or rehabilitation of rural roads and small water schemes)."

5. Schedule 2 to the Financing Agreement is hereby deleted in its entirety and replaced with Annex 1 attached hereto.

6. Paragraph 6 of Schedule 3A to the Financing Agreement is hereby deleted in its entirety and replaced with the following:

Addendum Page 7

"6 (a) Except as ADB may otherwise agree, the Beneficiary immediately after the Effective Date shall cause MEF to establish an imprest account and each PPMU to establish a second generation imprest account (SGIA) respectively at the National Bank of Cambodia or a commercial bank acceptable to ADB for the exclusive utilization of the Loan proceeds. All imprest accounts shall be established, managed, replenished and liquidated in accordance with ADB's Loan Disbursement Handbook dated January 2007 as amended from time to time and detailed arrangements agreed upon between the Beneficiary and ADB. The currency of the imprest accounts shall be Dollar. The initial amount to be deposited into the imprest account established by MEF shall not exceed the lower of (i) the estimated expenditure to be financed from the imprest account for the first six months of Project implementation, or (ii) the equivalent of ten (10) percent of the Loan amount. The initial amount to be deposited into each SGIA shall not exceed the lower of (i) the estimated expenditure to be financed from the relevant SGIA for the first six months of Project implementation, or (ii) $50,000 equivalent. (b) The statement of expenditures (SOE) procedure may be used for reimbursement of eligible expenditures for the Project and to liquidate advances provided into each imprest account, in accordance with ADB's Loan Disbursement Handbook and detailed arrangements agreed upon between the Beneficiary and ADB. Any individual payment to be reimbursed or liquidated under the SOE procedure shall not exceed the equivalent of $50,000."

7. Paragraph 5 of Schedule 3B to the Financing Agreement is hereby deleted in its entirety and replaced with the following:

"5 (a) Except as ADB may otherwise agree, the Beneficiary immediately after the Effective Date shall cause MEF to establish an imprest account and each PPMU to establish an SGIA respectively at the National Bank of Cambodia or a commercial bank acceptable to ADB for the exclusive utilization of the Grant proceeds. All imprest accounts shall be established, managed, replenished and liquidated in accordance with ADB's Loan Disbursement Handbook dated January 2007 as amended from time to time and detailed arrangements agreed upon between the Beneficiary and ADB. The currency of the imprest accounts shall be Dollar. The initial amount to be deposited into the imprest account established by MEF shall not exceed the lower of (i) the estimated expenditure to be financed from the imprest account for the first six months of Project implementation, or (ii) the equivalent of ten (10) percent of the Grant amount. The initial amount to be deposited into each SGIA shall not exceed the lower of (i) the estimated expenditure to be financed from the relevant SGIA for the first six months of Project implementation, or (ii) $50,000 equivalent. (b) The statement of expenditures (SOE) procedure may be used for reimbursement of eligible expenditures for the Project and to liquidate advances provided into each imprest account, in accordance with ADB's Loan Disbursement Handbook and detailed arrangements agreed upon between the Beneficiary and ADB. Any individual payment to be reimbursed or liquidated under the SOE procedure shall not exceed the equivalent of $50,000."

8. Attachment to Schedule 3A to the Financing Agreement is hereby deleted in its entirety and replaced with the Annex 2 attached hereto.

Addendum Page 8

9. Attachment to Schedule 3B to the Financing Agreement is hereby deleted in its entirety and replaced with the Annex 3 attached hereto.

10. Title of Section B in Schedule 4 to the Financing Agreement is hereby amended to read: "Procurement of Goods and Works".

11. Paragraph 3 of Schedule 4 to the Financing Agreement is hereby deleted in its entirety and replaced with the following:

"3. Except as ADB may otherwise agree, Goods and Works shall be procured only on the basis of the methods of procurement set forth below:

National Competitive Bidding Shopping Direct Contracting Community Participation

12. A new additional paragraph is inserted into Paragraph 7 of Schedule 4 to the Financing Agreement to provide for as follows:

"Community Participation in Procurement The Beneficiary, in accordance with the agreed procedures set forth in the Procurement Plan as updated, and any other Project document approved by ADB, may use the community participation method in procurement for Works contracts in relation to the implementation of the cash-for-works program."

13. Paragraph 7 of Schedule 5 to the Financing Agreement is hereby deleted in its entirety and replaced with the following:

"7 (a) The Beneficiary shall cause the CCs, assisted by their respective VDCs, to be responsible for receiving, storing and distributing free rice, seed and fertilizer to the Target Groups. (b) The Beneficiary shall cause the food-for-works and the cash- for-works programs to be implemented through relevant existing structures of MRD and MOWRAM, as appropriate, in the Project areas, including relevant CCs. However, in the areas where relevant capacities for implementing the food-for- works program are lacking, the Beneficiary may consider alternative arrangements by engaging other competent organizations, including agencies of the United Nations to implement the food-for-works program; provided, however that the details of such alternative arrangements shall be subject to ADB's prior approval.

Addendum Page 9

Annex 1

SCHEDULE 2

Amortization Schedule (Emergency Food Assistance Project)

Date Payment Due Payment of Principal (expressed in Special Drawing Rights)*

15 February 2019 76,100 15 August 2019 76,100 15 February 2020 76,100 15 August 2020 76,100 15 February 2021 76,100 15 August 2021 76,100 15 February 2022 76,100 15 August 2022 76,100 15 February 2023 76,100 15 August 2023 76,100 15 February 2024 76,100 15 August 2024 76,100 15 February 2025 76,100 15 August 2025 76,100 15 February 2026 76,100 15 August 2026 76,100 15 February 2027 76,100 15 August 2027 76,100 15 February 2028 76,100 15 August 2028 76,100 15 February 2029 152,100 15 August 2029 152,100 15 February 2030 152,100 15 August 2030 152,100 15 February 2031 152,100 15 August 2031 152,100 15 February 2032 152,100 15 August 2032 152,100 15 February 2033 152,100 15 August 2033 152,100 15 February 2034 152,100 15 August 2034 152,100 15 February 2035 152,100 15 August 2035 152,100 15 February 2036 152,100 15 August 2036 152,100 15 February 2037 152,100 15 August 2037 152,100 15 February 2038 152,100

Addendum Page 10

15 August 2038 152,100 15 February 2039 152,100 15 August 2039 152,100 15 February 2040 152,100 15 August 2040 152,100 15 February 2041 152,100 15 August 2041 152,100 15 February 2042 152,100 15 August 2042 152,100 15 February 2043 152,100 15 August 2043 152,100 15 February 2044 152,100 15 August 2044 152,100 15 February 2045 152,100 15 August 2045 152,100 15 February 2046 152,100 15 August 2046 152,100 15 February 2047 152,100 15 August 2047 152,100 15 February 2048 152,100 15 August 2048 151,652

Total 7,605,552

* The figures in this column represent SDR equivalents determined as of the respective dates of withdrawal. The arrangements for payment of each maturity are subject to the provisions of Sections 3.04 and 4.03 of the Loan Regulations.

Addendum Page 11

Annex 2

Attachment to Schedule 3A

TABLE

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (Emergency Food Assistance Project) CATEGORY ADB FINANCING Item Amount Allocated Percentage and Basis for SDR Withdrawal from the Loan Category Subcategory Account 1 Materials 7,358,522 Food-for-Works Program 57 percent of total 1A and Cash-for-Works 5,029,000 expenditure Program 90 percent of total 1B Seeds 985,000 expenditure 90 percent of total 1C Fertilizer 1,344,522 expenditure 2 Interest Charge 247,000 100 percent of amount due

Total 7,605,552

Addendum Page 12

Annex 3

Attachment to Schedule 3B

TABLE

ALLOCATION AND WITHDRAWAL OF GRANT PROCEEDS (Emergency Food Assistance Project) CATEGORY ADB FINANCING Item Amount Allocated Percentage and Basis for $ Withdrawal from the Grant Category Subcategory Account

1 Materials 14,412,300 1A Free Distribution of Food 9,670,000 90 percent of total Program expenditure 1B Food-for-Works Program 4,742,300 33 percent of total and Cash-for-Works expenditure Program 2 Vehicles 321,000

2A 4WD Vehicles 243,000 90 percent of total expenditure 2B Motorbikes 78,000 90 percent of total expenditure 3 Office Equipment 102,000 100 percent of total expenditure* 4 Consulting Services 2,278,700 100 percent of total expenditure* 5 Project Management 386,000

5A Recurrent Expenditures 275,000 20 percent of total expenditure 5B Operation and 111,000 20 percent of total Maintenance of expenditure Equipment and Vehicles

Total 17,500,000

* Exclusive of local taxes and duties

Addendum Page 13

KEY PERSONS INVOLVED IN THE PROJECT

I. Asian Development Bank (ADB) The ADB Cambodia Resident Mission (CARM) is responsible for the implementation of the Emergency Food Assistance Project. Country Director, CARM : Putu Kamayana

Project Officer : Nao Ikemoto Tel. No. Email: [email protected]

Financial Control Specialist : Yasumitsu Hirao Tel No. (632) 632-4915 Email: [email protected]

Assistant Project Analyst : Sophana San Tel. No. Email: [email protected]

Address : 29, Suramarit Street (268/19) Sangkat Chaktomuk, Khan Daun Penh Phnom Penh, Cambodia

Facsimile : +855 23 215807

Telephone : +855 23 215805, 215806, 216417

ADB’s website : http://www.adb.org

II. Executing Agency The Executing Agency of the Project is the Ministry of Economy and Finance (MEF).

Project Director : H.E. Vong Sandap Deputy Secretary General

Address : No. 59 St. 75 corner 90, Sangkat Wat Phnom, Kahn Daun Penh, Phnom Penh

Facsimile : +855 23 430719

Telephone : +855 23 430716

III. Exchange of Communication All official letters/correspondence/fax messages, etc. must be signed by the Project Director, MEF and addressed to Country Director, CARM.