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ADB's Aide Memoire(12Th-19Th Nov 2013)

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ADB's Aide Memoire(12Th-19Th Nov 2013) Aide Memoire South Asia Department Urban Development and Water Division DRAFT AIDE MEMOÍRE L2528-IND AND L2834-IND: NORTH EASTERN REGION CAPITAL CITIES DEVELOPMENT INVESTMENT PROGRAM REVIEW MISSION (12 – 19 November 2013) I. INTRODUCTION 1. On 23 June 2009, ADB approved the Multitranche Financing Facility (MFF) for the North Eastern Region Capital Cities Development Investment Program (NERCCDIP) for an aggregate amount not exceeding $200 million. A framework financing agreement (FFA) for the MFF was signed by the Government of India and Asian Development Bank (ADB) on 14 May 2009. The first periodic financing request (PFR) for $30 million was approved on 1 July 2009 and the loan agreement was signed on 4 August 2009. The second PFR for $72 million was approved by ADB on 16 December 2011 and loan agreement was signed on 19 November 2012. 2. ADB fielded a review mission (the Mission) for the MFF and Loans 2834 and 2528 from 12 to 19 November 20131. The Mission met the Central Executing Agency, the Ministry of Urban Development (MOUD), State Investment Program Management and Implementation Units (SIPMIUs) of three2 states under NERCCDIP, consultants - Project Management and Monitoring Consultants (PMMC), Design and Supervision Management Consultants (DSMCs), Institutional Development Consultants (IDCs) - and key contractors working in these states. A wrap-up meeting was held on 19 November 2013 with the Joint Secretary (UD) of MOUD and Director (UD) of MOUD, and Director (ADB-I) of Department of Economic Affairs (DEA). A list of key persons met is included in Appendix 1. II. SUMMARY OF PROJECT PROGRESS A. Overall Physical Progress and Implementation Status 3. Procurement Status. All 12 contracts have been awarded under Project 1, and only 9 out of 32 contracts are left to be awarded under Project 2. Appendix 2 presents the current status of all contract packages in the updated the Procurement Plans, and Appendix 3 presents the action plan and timelines for completing the remaining procurement under Tranche 2, as agreed with the SIPMIUs, MOUD and the Mission. 4. Implementation Status and Output Summary. The overall physical progress and outputs achieved to date under Part A of Projects 1 and 2 is summarized in Appendix 4. For Part B, Project Management and Monitoring Consultants (PMMC) and 5 Design, Construction Supervision and Management Consultants (DSMCs) are engaged. Institutional development 1 The Mission comprised Ms. Neeta Pokhrel, Urban Development Specialist/Mission Leader, Mr. Edward Moises, Project Analyst, Ms. Ninette Ramirez, Safeguards Specialist (Staff Consultant), Mr. Azizur Rahman, Gender Specialist (Staff Consultant), Mr. Pritam Kapur, PMMC Team Leader (Consultant), Mr. Karni Singh Rathore, North East Project Support Unit Team Leader (Consultant). 2 Sikkim, Meghalaya and Mizoram 2 activities in all states are ongoing - supported under Project 1 in Shillong and Agartala, and supported under Project 2 in Aizawl, Gangtok and Kohima, through the Institutional Development Consultants. Appendix 5 outlines the implementation status of the agreed reforms. While accounting reforms are either completed or close to completion in all 5 states, others are progressing well. B. Use of Loan Funds 5. Cumulative Contract Awards and Disbursement. As reflected in ADB’s mainframe, as of 6 November 2013, under Project 1, all 12 contracts have been awarded. Cumulative disbursements stand at $13.38 million (52%). Under Project 2, 23 out of 32 total contracts or around 90% of the committed funds have been awarded. However, cumulative disbursements under Project 2 stand very low at $2.6 (around 5%). The SIPMIUs confirmed that the following additional statement of expenditure (SoEs) have been sent to MOUD as of 10 November 2013. In addition, Kohima and Gangtok SIPMIUs will send an additional claim of around Rs. 7 Crores, collectively, by 22 November 2013 to MOUD. Aizawl and other SIPMIUs may send further claims incurred until 26 November 2013 to MOUD. Table 1: Claims Submitted to MOUD until 10 November 2013 (Rs. Crores) SIPMIUs Claims in Rs. Claims in Rs. under L2528 under L2834 Kohima 84, 27,936.00 1,65, 87,036.00 Gangtok 1,5041130.00 2,61,45,810.00 Aizwal 65,00,000.00 10,15,00,000.00 Agartala 54, 50,136.00 7, 77,98,445.00 Shillong 22,07,444.00 5,41,455.00 C. Performance in 2013 6. Projects’ performance to date against the 2013 targets is summarized Table 1, which is quite encouraging. Performance of the states varies. While Aizawl has exceeded the targets for both loans, Agartala and Kohima still need to make a big push in achieving their committed project performance targets. Kohima and Gangtok need to make the pending contractor payment within the week of 18 November 2013 and submit the SoEs for them to MOUD. Project implementation may strengthen significantly in all 5 states provided the key impediment - the seriously constrained fund flow - is immediately removed and maintained as such by both MOUD and the states. Table 2: Performance against Committed Contract Awards and Disbursement Targets3 May 2013 – 10 November 2013 (Rs. Crores) Agartala Aizawl Gangtok Kohima Shillong Tranche 1 Disbursement Target 1.36 1.22 6.50 16.68 2.50 Achievement 1.70 1.29 5.34 5.77 1.04 Tranche 2 Contract Award Target 2.80 102.6 43.77 0.00 1.98 Achievement 0.00 109.02 46.20 0.00 0.00 Disbursement Target 22.00 12.76 6.4 4.32 2.07 Achievement 11.30 13.49 3.54 3.51 0.23 3 These targets were committed by the States in May 2013 for May-Nov. 2013. Figures as of 10 Nov. 2013. 3 III. KEY ISSUES 1. Contract Management and Contractor Concerns 7. Contract management, especially of works contracts, in all states needs to be immediately and significantly improved and made more effective. The Mission, as highlighted in earlier review missions, reiterated that SIPMIUs should not allow significant delays, such as 8-10 months as seen in the past, in contractor mobilization and overall project implementation delays by the contractor. All SIPMIUs, with the DSMC’s assistance, need to conduct thorough two weekly and monthly planning with each of their contractors scrutinizing their monthly work plan, critical path, manpower and equipment deployment schedule/plan, methodology and detailed work schedule. The Mission found that the pace of progress and level of planning still needs immediate strengthening in all states. Additionally, the Mission recommended that all SIPMIUs should continue the practice of inviting top-level representatives of their key contractors every three months to discuss issues and measures to expedite works faster. 8. The Mission also met with all key contractors currently working in these three states to follow up on the work progress commitments made by them, emphasize the need to expedite works speedily in order make up for lost time, hear their concerns and provided EMP implementation and safeguards compliance orientation workshop. The following key concerns/ issues were raised by the contractors: Delays in payment Delays in receiving designs/ drawings and site clearances Delays in approval of designs and drawings submitted Labour availability, restrictions Currency fluctuation4 2. Consultant Management 9. All 5 DSMCs need to immediately reassess and supplement their contract management and construction supervision personnel in the field in order to improve planning, construction supervision and contract management on-site, which was found inadequate in all states. SIPMIUs and their respective DSMCs should collectively assess their remaining input, since all remaining designs will now be completed by early next year, including that of Tranche 3, in order to focus the resources on effective contract management and construction supervision in the field. After the design period is over in early 2014, all DSMCs need to provide full-time on-site personnel on the key contracts and minimize the fly-in-fly-out consultants. The following specific and key recommendations were made: i. DSMC Gangtok: Team Leader acceptable to the SIPMIU to be fielded by 30 November 2013. Adequate full-time construction supervision engineers to be fielded for each of the major works contracts in order to conduct measurements and improve construction supervision and contract management. ii. DSMC Shillong: Full-time solid waste management (SWM) specialist to be fielded immediately for the design and tender documents completion of phase 2 of Marten landfill site, closure and optimization of existing site, composting plant operationalization 4 In Aizawl, the STP contract did not allow for currency fluctuation compensation/adjustment, even though significant equipment import was expected from the contractor. The Mission advised the SIPMIU to submit request on contract variation on this aspect. 4 and preparation of comprehensive SWM medium and long-term measures for Shillong. Senior design engineer for sewerage will also be fielded to complete the DPR in time. iii. DSMC Aizawl: The Mission raised serious concerns on the performance of and non- compliance by DSMC on safeguards documentation and actions required, which has resulted in all works in concerned packages being suspended by the Mission until preparatory actions and compliance check by ADB is completed. As most of the designs have been completed, and the remaining detailed design report for Tranche 3 will be completed by early 2014, the SIPMIU will pursue alternative ways to obtain construction supervision and contract management consulting support. iv. PMMC: Once all the design is completed and vetted by MOUD, PMMC’s role will need to be changed also to providing more in-state quality control and monitoring, which needs more frequent visits by the PMMC team and close hand-holding . 3. Human Resources in SIPMIUs 10. While some strengthening of the SIPMIUs has been carried out since May 2013, both Gangtok and Aizawl SIPMIUs lack adequate human resources to expedite the rather large tranche 2 components/packages currently underway in these two states.
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