Preparing the Small Cities and Towns Development Demonstration Sector Projects

Technical Assistance Report

Project Number: 40641 July 2007

People’s Republic of China: Preparing the Small Cities and Towns Development Demonstration Sector Projects

CURRENCY EQUIVALENTS (as of 11 July 2007)

Currency Unit – yuan (CNY) CNY1.00 = $0.1319 $1.00 = CNY7.5835

ABBREVIATIONS

ADB – Asian Development Bank DFR – draft final report DMF – design and monitoring framework EA – executing agency EIA – environmental impact assessment EMP – environmental management plan FSR – feasibility study report HPG – Hebei provincial government IA – implementing agency LPG – Liaoning provincial government PMO – project management office PPMS – project performance monitoring system PRC – People’s Republic of China RP – resettlement plan SEIA – summary environmental impact assessment SPG – Shanxi provincial government TA – technical assistance

TECHNICAL ASSISTANCE CLASSIFICATION

Targeting Classification – Targeted intervention (MDG) Sectors – Multisector (water supply, sanitation and waste management, transport and communication, energy, education) Subsectors – Water supply and sanitation, waste management, roads and highways, energy transmission and distribution, technical education, vocational training and skills development Themes – Inclusive social development, Sustainable economic growth, environmental sustainability Subthemes – Human development, fostering physical infrastructure development, urban environmental improvement

NOTE

In this report, "$" refers to US dollars.

Vice President C. Lawrence Greenwood, Jr., Operations Group 2 Director General H.S. Rao, East Asia Department (EARD) Director R. Wihtol, Social Sectors Division, EARD

Team leader A. Leung, Principal Urban Development Specialist, EARD Team members M. Gupta, Social Development Specialist (Safeguards), EARD S. Popov, Senior Environment Specialist, EARD T. Villareal, Urban Development Specialist, EARD W. Walker, Social Development Specialist, EARD J. Wang, Project Officer (Urban Development and Water Supply), People’s Republic of China Resident Mission, EARD L. Wu, Principal Social Sector Economist, EARD

o o 114 00'E 122 00'E

Siping SMALL CITIES AND TOWNS DEVELOPMENT HEILONGJIANG DEMONSTRATION SECTOR PROJECTS I N N E R M O N G O L I A IN THE PEOPLE'S REPUBLIC OF CHINA Tieling Fuxin Xinmin Fushun Weichang Nanzamu

Beizhen Shenyang Guyuan Liaozhong Chaoyang Heishan Donggang Longhua Liaoyang I N N E R M O N G O L I A Jinxian (Linghai) Benxi Pingguan Panshan Anshan Nanfen Zhangbei Chengde Jinzhou L I A O N I N G Kuandian o Jinxi Haicheng 41 00'N Zhangijakou Jianchang 41 o 00'N Yingkou Gushan Huian Liaodong Bay Gai Xian Huailai Suizhong Yanggao Dandong Datong Sanhe Shanhaiguan Yutian Qinhuangdao Qiaocun BEIJING Zhuanghe Baodi Tangshan Shuozhou Lingqiu Gaobeidian Xinjin Korea Bay Shenchi Laiyuan Fanshi Baxian Tianjin

) Baoding r T I A N J I N Dalian e Baode v i Yuanping Bohai Sea R Kelan Gaoyang w lo H E B E I el Jingle Xinzhou Hejian (Y Cangzhou S H A N X I Zhufutun Shijiazhuang Wuyi Shouyang Botou Jingxing Hengshui Taiyuan Yangquan Zhaozhou Bohai Bay Lishi Yuci e Jinzhou Dezhou H g Mucun Qingyuan n S H A N D O N G a u Yushe H Wutong Gutao Xingtai Weixian Zuoquan Linxi Xiangyuan Subproject City/Town Huozhou Licheng Wuan National Capital r Handan e

R n Provincial Capital e Lucheng

F City/Town o 36 o 00'N Linfen Changzhi Pingshun 36 00'N National Road

Jishan Other Road Yellow Sea Houma Jincheng Railway N River Provincial Boundary Yuncheng H E N A N 0 50 100 150 International Boundary 0

7 Boundaries are not necessarily authoritative. - Kilometers 1 8 6 6

H o 122 o 00'E R 114 00'E

I. INTRODUCTION

1. During the Country Program Midterm Review in April 2007, the People’s Republic of China (PRC) confirmed its request for assistance from the Asian Development Bank (ADB) to finance the proposed Small Cities and Towns Development Demonstration Sector Projects in Hebei, Liaoning, and Shanxi provinces. Financing will be under three sector loans, one for each province, but the impacts are the same: improving urban environmental conditions, supporting employment generation, and improving infrastructure facilities and municipal services in a range of small cities and towns. The resulting three projects are included in the 2009 lending program and a project preparatory technical assistance (TA) is scheduled for processing in 2007.1 ADB’s Fact-Finding Mission visited the three provinces in May–June 2007. This report is based on the understanding reached with the Government regarding the impact and outcome, methodology and key activities, cost estimates, financing plan, and implementation arrangements for the TA, as well as the Mission’s observations.

II. ISSUES

2. Urbanization continues to be a key thrust of the Government’s development objectives under the 11th Five-Year Program (2006–2010), with emphasis on balancing regional development between the coastal and inland provinces by coordinating the development of large, medium-sized, and small cities and statutory towns, and strengthening the development of urban settlements around metropolitan areas. This strategy of promoting growth with equity is in line with ADB’s strategic priorities in the PRC. Both the 11th Five-Year Program and ADB’s Town-Based Urbanization Strategy Study2 have stressed that the PRC should develop towns by facilitating the development of larger urban agglomerations. The national and provincial governments also need to focus their efforts on towns with high potential for employment generation and economic growth. The Government aims to increase economic productivity and narrow the urban-rural income gap through the development of cities and towns. Cities are the main engines of economic growth in the PRC today. In support of industrial production and administrative activity, the service sector in cities has expanded enormously in recent years, creating large numbers of jobs per unit of investment. At the same time, many towns located near metropolitan areas or along development corridors play important roles as manufacturing centers, tourist destinations, and agroprocessing sites. Investment is justified as most urban infrastructure projects are considered public goods and are expected to generate positive economic externalities. However, municipal and town governments often lack financing and institutional capacity to prepare and implement large projects.

3. The proposed projects aim to help promote balanced and environmentally sustainable urbanization; narrow the urban-rural gap; and improve production, employment, and living conditions in small cities and towns in each of three project provinces (Hebei, Liaoning, and Shanxi). The projects will support the development of selected small cities and towns in the three provinces that will have a demonstration effect for other small cities and towns in the three provinces and elsewhere in the PRC. The projects will assist the provincial and local governments in developing an approach and criteria for selecting and prioritizing small cities and towns with potential for employment generation and economic growth, and those suffering from environmental blight, and will specifically seek to improve technical and financial sustainability within selected sectors. Institutional strengthening and operational know-how, supported by strength in financial management with the introduction or strengthening of market-based mechanisms for public utilities and services, will form the cornerstone of the projects. Developing markets and creating jobs by

1 The TA first appeared in ADB Business Opportunities on 13 April 2007. 2 ADB. 2004. Technical Assistance to the People’s Republic of China for the Town-Based Urbanization Strategy Study. Manila. 2 supporting urbanization and protecting the environment in small cities and towns are in line with ADB's strategic objective of promoting growth with equity in the PRC.

4. The provinces of Hebei, Liaoning, and Shanxi are located in the north and northeast part of the PRC. Their combined total population is 103.25 million, comprising mainly Han Chinese. The population living in urban areas represent about 40% of this total.3 Income levels in the three provinces lag behind those of other areas of the PRC. In 2006 about 6%, 6.2%, and 8.8%, respectively, of the total populations in Hebei, Liaoning, and Shanxi lived on incomes below the official poverty line, compared with the 4.95% national average poverty incidence.4 Hebei is the center for the iron and steel industry which, together with the pharmaceutical industry, has produced heavy pollution in the province. Liaoning is the base for industrial materials and machinery, while Shanxi produces about one third of the PRC’s coal output and has significant coal processing industries; all these activities compound environmental pollution.

5. The race to industrialize has left much of the area with very significant pollution problems and correspondingly poor living conditions. Atmospheric, aquatic, and ground pollution blight the provinces, creating a poor living environment and a serious threat to human health and life expectancy. Living conditions for the populations of small cities and towns are made worse by congestion and conflict between heavy industrial traffic and other road users, inadequate potable water supplies, and lack of sewage collection and wastewater treatment. Centralized heating has limited coverage and, elsewhere, heat is provided by a multiplicity of coal-burning stoves. Solid waste management is often rudimentary with poor environmental protection. Increases in the urban population have outstripped the capacity to provide services, and poor asset maintenance has compounded the problem. Public service providers are unable to manage sustainable operations, and restructuring is of paramount importance to ensure future viability and independence. There is also a need to reduce unemployment by realigning skills to match the growing demand for workforce in secondary industries.

6. The proposed projects focus on supporting sustainable urban development and consist of a number of sector interventions primarily targeted to support industrial development, tourism, job creation, and environmental protection. The main sectors are roads and associated services, restoration of historical areas, water and wastewater, solid waste management, upgrading and greening of rivers, district heating, and education.5 The subsectors involve (i) construction of new roads, focusing on town bypasses, upgrading the existing inadequate (unsurfaced) roads, and improving traffic planning and management; (ii) repairs to and restoration of historic areas to promote tourism; (iii) increases in the capacity to supply potable water and coverage of distribution networks, and provision of sewerage systems with associated wastewater treatment facilities; (iv) river and lake improvement works to reduce the risk of seasonal flooding and increase the capacity to impound water for industrial, irrigation, and other uses; (v) provision of modern solid waste collection equipment, development of engineered waste disposal sites, and strengthening of operational management; (vi) provision of centralized heating plants and the associated heat distribution networks; and (vii) support to educational establishments. All targeted small cities and towns have approved development master plans and programs that the projects will directly support. A rapid environmental assessment has been carried out and a category A assessment is proposed to ensure that each project will minimize adverse environmental impacts on the affected people and maximize environmental benefits to the subproject cities and towns and their residents. Involuntary resettlement and indigenous peoples assessments have been undertaken for a

3 The urbanization rates in Hebei, Liaoning, and Shanxi were 38%, 58%, and 43% in 2006, respectively, and are expected to rise to 47%, 63%, and 45% by 2010. 4 The official low-income line in 2005 was CNY944 per capita per year, lower than the international standard of $1 per capita per day. The 4.95% national poverty incidence equates to 64.32 million people. 5 The sectors in which selected cities and towns have indicated a need for support are similar, and all TA reports will be shared by the three provinces. 3

selection of cities and towns across the three provinces and it is concluded that category A is applicable to resettlement and category C is applicable to indigenous peoples.

7. The proposed projects will be processed and implemented as three separate sector loans in support of the respective published and adopted provincial strategies for urban development. Detailed component proposals that fully support the planning strategy and sector goals are being developed for the first group of cities and towns in each province. The projects will seek to develop approaches and solutions to problems that can be replicated in urban centers throughout the three provinces and may be used to demonstrate to other provinces across the PRC how to formulate planning strategies and implement programs in support of structured development of small cities and towns. A participatory approach has been adapted under which the city and town stakeholders have identified and prioritized the major problems in their urban area and highlighted necessary actions to address those problems. The subproject components, financed by ADB, will directly support the actions. Numerous internationally supported environmental improvement and infrastructure projects are under construction or were completed recently across the three provinces, and the necessary implementation capacity exists at the provincial level through experienced project management offices (PMOs). 6 Experience under those projects will be reviewed to draw relevant lessons for the ensuing loans.

III. THE TECHNICAL ASSISTANCE

A. Impact and Outcome

8. The impact of the TA is improved infrastructure, environmental protection, and employment generation in small cities and towns in Hebei, Liaoning, and Shanxi provinces. The TA will assist the Government in preparing the Small Cities and Towns Development Demonstration Sector Projects, which will be processed as three sector loans for Hebei, Liaoning, and Shanxi, respectively; and in developing methodologies that are appropriate for replication across the provinces and elsewhere in the PRC.

9. The outcome of the TA is project design and feasibility studies that are agreed on by the three provincial governments and ADB. The TA will assist the respective provincial governments to (i) review and identify selection parameters for the priority listing of cities and towns to form the subprojects; (ii) review and assess the scope of the most appropriate components to fulfill sector strategy goals; (iii) prepare a feasibility study for the components of three core sample subproject cities/towns in each province; and (iv) prepare a sector-based small cities and towns development and environmental improvement project, including environmental impact assessment, environmental management plan, social analysis, and resettlement plan in line with ADB policies and guidelines. The design and monitoring framework (DMF) is in Appendix 1.

B. Methodology and Key Activities

10. The TA will be implemented in three phases. Phase 1, lasting 1 month, will comprise studies to (i) review and assess the current constraints to economic development and adverse environmental impacts due to lack of appropriate infrastructure in small cities and towns; (ii) review the economic and environmental development strategies, priorities, and investment plans of Hebei provincial government (HPG), Liaoning provincial government (LPG), and Shanxi provincial government (SPG), particularly with respect to development of small cities and towns; (iii) identify the problems and urgency of mitigating needs relating to urban infrastructure, services, and other issues in the subproject cities and towns; (iv) review the likely resettlement impact of the proposed

6 Over the period 1997–2006, Hebei had signed project loans with ADB (2), World Bank (3), and bilateral agencies (11); Liaoning had signed project loans with ADB (5) and World Bank (6); Shanxi had signed project loans with ADB (5) and World Bank (7). 4

projects; (v) develop a project DMF taking into consideration the economic, financial, social, environmental impacts of the project; and (vi) prepare an inception report. During phase 2, lasting for 2.5 months, the TA will (i) assess the potential impacts of the components based on technical, institutional, environmental, social and ethnic, economic, financial, and other relevant factors; (ii) formulate balanced urban infrastructure development and pollution control strategies comprising structural and nonstructural measures; (iii) update feasibility studies of components in three subproject cities/towns in each province; (iv) assist HPG, LPG, and SPG to prepare (and/or strengthen the existing) draft environmental impact assessments, resettlement and social development plans according to ADB’s guidelines and policies, and conduct public consultation meetings and disclosure of relevant information; (v) develop technical, thematic, and safeguards assessment guidelines for evaluating subprojects during project implementation; (vi) refine the DMF through a stakeholder workshop in each demonstration subproject city/town; and (vii) prepare an interim report. Phase 3, for 2.5 months, will assist HPG, LPG, and SPG to (i) formulate sector investment projects for each province for ADB funding; (ii) consolidate feasibility study reports prepared in phase 2; (iii) formulate procurement needs and corresponding procurement arrangements; (iv) justify their respective financial, economic, social, and environmental terms; and (v) prepare a draft final report. The initial poverty and social analysis for each province is in Appendix 2.

11. HPG, LPG, and SPG have extensive experience with internationally funded projects although the implementing agencies in the subproject cities have no experience with ADB procedures. Therefore, the consultant will provide appropriate training continuously during project preparation and, specifically, in three 1-day workshops in each province covering (i) DMF and a project performance monitoring system, (ii) environmental impact assessment and environmental management planning, and (iii) resettlement plans and social development. The workshops will be held after the inception reports have been finalized.

12. Major risks to the successful implementation of the TA include (i) inadequate counterpart support and performance, (ii) lack of adequate and timely provision of necessary data, (iii) delay in submitting required studies, (iv) delay in appointing and mobilizing consultants and design institutes, and (v) inadequate performance by the consultants and design institutes. To mitigate the risks, the recruitment and performance of the consultants and design institutes will be monitored closely. The Government has agreed to provide adequate counterpart support and all necessary data according to an agreed-upon timetable. Close coordination among the consultants, executing and implementing agencies, and ADB will further mitigate the risks.

C. Cost and Financing

13. The total cost of the TA is estimated to be $2,300,000 equivalent. It is proposed that $1,700,000 be financed on a grant basis by ADB’s TA funding program. HPG, LPG, and SPG will equally provide the balance of local costs, equivalent to $600,000, to cover in-kind counterpart costs and services including counterpart staff, office space, furniture, administrative support and interpretation services, logistics and local (city) transportation. The Government has been informed that approval of the TA does not commit ADB to finance any ensuing project or to extend any further TA with respect to the implementation of any recommendations of the TA. The detailed cost estimates are in Appendix 3.7

D. Implementation Arrangements

14. HPG, LPG, and SPG will be the executing agencies for the TA. Each has established a project leading group to provide overall guidance and support to the proposed project. A PMO

7 The budget for equipment, workshops, and survey will be equally shared by the three provinces and will be administered by the TA consultant in consultation with the three executing agencies. 5

comprising representatives from the Finance Bureau, Development and Reform Commission, and Construction Bureau, among others, has been established in each province and reports to its respective project leading group. The PMOs will maintain interdepartmental coordination, ensure the study team’s access to relevant information and data, liaise with ADB on matters relating to TA implementation, and facilitate socioeconomic, poverty, and other surveys required. Each PMO is led by a director and has a minimum of three experienced professional staff, including an interpreter/translator, who will work with the consultants on a full-time basis.

15. The TA will be implemented over a 6-month period and is expected to start in January 2008 and be completed by July 2008. The TA will be conducted by a separate team for each province, reporting to a coordinating team leader located centrally in Hebei. The national consultant teams will work discretely within the respective provinces. A total of 137 person-months of consulting services (52 international and 85 national) will be required. The international consultants will provide expertise in urban development, transport planning and management, water and wastewater engineering, solid waste management, district heating, river and lake hydrology and flood control, historic building works, financial and economic analyses, resettlement planning and social impact analysis (poverty and gender), institutional capacity development, and environmental impact assessment. The national consultants will have expertise in road and transport engineering, civil and geotechnical engineering, solid waste management, project economic and financial analyses, environmental protection, socioeconomic analysis and resettlement, technical education and vocational training, and institutional and legal aspects of urban development. The terms of reference for the consultants are in Appendix 4.

16. An international consulting firm in association with national consultants will be engaged in accordance with ADB’s Guidelines on the Use of Consultants (2007, as amended from time to time). ADB will select and engage consultants on the basis of the quality of the proposal (90%) and the cost (10%) of the services to be provided (the quality- and cost-based selection method) using the full technical proposal procedures. The 90/10 weighting is considered appropriate because the TA is a complex multidisciplinary assignment that requires innovation and creativity and the quality of the consulting services will have a high impact on the ensuing sector loans, which are expected to be demonstrable for replication. One set of inception, interim, draft final, and final reports will be produced for each of the three provinces. All reports by the consultants will be prepared in English and translated into Chinese. The consultants will maintain close working relations with ADB and with HPG, LPG, and SPG, and will regularly discuss progress and findings. Tripartite meetings involving ADB staff, the consultants, and HPG, LPG, SPG will be held in Shijiazhuang, Shenyang, and Taiyuan cities, respectively, to provide guidance to the consultants and to review their reports.

17. Each PMO will provide a suitably furnished office with utilities and telecommunication access, city-level transport (excluding transport between subproject locations) for consultants, materials, maps, data and documents required by the TA; and will cover the cost of utilities for the use of the consultants, counterpart professional staff, and support staff. The TA equipment will be procured by the consultants in accordance with ADB’s Procurement Guidelines (2007, as amended from time to time) and transferred to HPG, LPG, and SPG upon completion of the TA.

IV. THE PRESIDENT’S RECOMMENDATION

18. The President recommends that the Board approve the provision of technical assistance not exceeding the equivalent of $1,700,000 on a grant basis to the Government of the People’s Republic of China for Preparing the Small Cities and Towns Development Demonstration Sector Projects. 6 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Design Performance Data Sources/Reporting Assumptions Summary Targets/Indicators Mechanisms and Risks Impact Assumptions Improved infrastructure, Increased water supply Annual socioeconomic • Project design and environmental coverage and wastewater surveys undertaken as part construction are protection, and collection ratio a of the PPMS implemented employment generation effectively. in small cities and Increased urban roads Municipality and tourism towns in Hebei, per square kilometer of records/statistics • Project financing a Liaoning, and Shanxi urban area requirements, provinces Statistical records. Air and including those Increase in employment water quality data to be from ADB, are in secondary industries collected as part of PPMS provided on time. and in tourism a • The Government Improved air quality in and ADB sign loan project cities/towns a and project agreements. Improved quality of water in rivers and lakes a Risks • Costs are higher Increased average per than foreseen. capita income of urban population a • Urban development pressures outpace Poverty reduced by 50% planned over base year 2000 infrastructure complying with MDG development. (Target 1)

Outcome Assumptions Project design and Memorandum of Memorandum of • Government FSRs completed and understanding signed by understanding priorities do not agreed on by Government and ADB at change. government and ADB final tripartite meeting • Government does not seek other sources of funding.

Outputs Assumptions 1. Analysis of 11th 5- Analysis of current Inception report and first • Domestic FSRs are year development situation and future tripartite review meeting prepared in program, project policies and directions of (month 2) thorough and cities’ master sectoral development in timely fashion. plans, sector plans the three provinces to be and policies, their completed by the end of • Domestic EIAs are financing month 1 of the project comprehensive requirements, and preparatory TA and prepared in institutional timely fashion. capacities • Support comes 2. Technical, Consensus reached on Interim report and second from all levels of environmental, the midterm draft report tripartite review meeting government economic, by month 4 (month 4) agencies financial, and concerned. Appendix 1 7

Design Performance Data Sources/Reporting Assumptions Summary Targets/Indicators Mechanisms and Risks social appraisal of • Information is the sectors in each made available to of the three consultants in provinces timely fashion.

3. RPs, poverty and Household surveys Survey findings and • Land acquisition social assessment completed by month 3 of affordability analysis and and resettlement report TA draft resettlement plans issues are Socioeconomic addressed at an impact of the early stage. subproject components and Risks policy options on • Appointment of vulnerable groups domestic design and implications institutes by for resettlement government is delayed. 4. SEIA and EMP Draft SEIA and EMP EIAs of various project submitted for review by components and final • Performance of month 5 of the TA consultant report (month 5) domestic design institutes is inadequate, 5. Institutional Hebei, Liaoning, and Midterm review mission resulting in poorly capacity-building Shanxi governments prepared FSRs, plan and corporate agree, in principle, to EIAs, RPs, and development plan include the capacity- SAs. building component in the project design and to introduce good corporate governance in relevant agencies.

6. Participatory plan In each of the three Minutes of the tripartite assessments provinces: workshops Three tripartite workshops to be conducted at inception, midterm, and final tripartite meeting; and

A stakeholder workshop Material output from per subproject to be workshops conducted to develop problem and objectives tree and DMF

7. Training Three 1-day training Material and notes of workshops workshops between workshops (months 2 and 4) inception and interim reports, focused on (i) DMF and PPMS, (ii) EIA and EMP, and (iii) resettlement/social development

8 Appendix 1

Design Performance Data Sources/Reporting Assumptions Summary Targets/Indicators Mechanisms and Risks 8. Draft final Draft proposal prepared Draft final report of the assessments as part of the consultant consultants ADB project completed for final report and submitted team (month 6) preparing the to ADB by the end of investment project month 6

9. Final assessments Final report submitted 30 Comments from HPG, LPG, completed based days after comments on SPG, ADB, and tripartite on comments from draft final report review ADB and HPG, (month 7) LPG, and SPG

Activities with Milestones Inputs 1.1 Review current constraints to economic development in small cities and towns • ADB inputs in the three provinces and urgency of mitigating needs related to urban - Provide infrastructure and services in the subproject cities and towns (month 1). $1,700,000 grant 1.2 Review and analyze provincial sector plans and city/town 11th 5-year including development plans and programs and their financing requirements (month 1). consultancy inputs: 1.3 Review likely resettlement impact of the proposed subprojects (month 1). 52 person-months 1.4 Submit TA inception report and hold first tripartite meeting (month 2). international and 1.5 Hold minimum of three DMF workshops per province (months 2–3). 85 person-months national 2.1 Assess the technical, financial, economic, environmental, and social viability

of project components, including conducting household survey (months 1–3). • Government inputs 2.2 Analyze the project component and policy options for environment impact, - Provide $600,000 poverty reduction, social impact, and involuntary resettlement (months 2–4). equivalent 2.3 Estimate detailed costs and financing plan and institutional arrangements for counterpart different subproject components (months 3–5). facilities and 2.4 Establish monitoring and evaluation systems for subprojects including services to include technical, thematic, and safeguards assessment guidelines for evaluating a TA project office subprojects to be selected during project implementation (month 4). with 2 full-time 2.5 Develop capacity-building and finance resourcing (month 4). professionals and 2.6 Conduct second stakeholder workshop and tripartite meeting (month 4). 1 full-time 2.7 Conduct 1-day training workshops for EA, IAs, and design institutes on translator in each DMF/PPMS, RP, and EIA/EMP (months 2–4). of the three 2.8 Hold public consultation workshops on EIA and RP (month 4). provinces, and

preparation of 3.1 Fine-tune the technical, financial, economic, environmental, and social FSRs, RPs, SAs, assessments based on tripartite discussions (month 5). EIAs, and EMPs. 3.2 Formulate sector investment projects for each province for ADB funding and

confirm procurement needs and arrangements (month 5)

3.3 Hold final stakeholder workshop (month 6). 3.4 Submit final report and hold third tripartite meeting (month 6). ADB = Asian Development Bank, DMF = design and monitoring framework, EA = executing agency, EIA = environmental impact assessment, EMP = environmental management plan, FSR = feasibility study report, HPG = Hebei provincial government, IA = implementing agency, LPG = Liaoning provincial government, MDG = Millennium Development Goal, PPMS = project performance monitoring system, RP = resettlement plan, SA = social assessment report, SEIA = summary environmental impact assessment, SPG = Shanxi provincial government, TA = technical assistance. a Values to be determined during the project preparatory technical assistance.

Appendix 2 9

INITIAL POVERTY AND SOCIAL ANALYSIS – HEBEI PROVINCE

A. Linkages to the Country Poverty Analysis

Is the sector identified as a national Yes Is the sector identified as a Yes priority in country poverty analysis? national priority in country poverty No partnership agreement? No

Contribution of the sector or subsector to reduce poverty in the People’s Republic of China (PRC):

Hebei’s Small Cities and Towns Development Demonstration Sector Project is one of the development priorities of the Government to promote pro-poor economic growth by increasing employment and raise the living standard of the population in Hebei. The province is located in the PRC’s poorer north and northeastern region.

B. Poverty Analysis Targeting Classification: Targeted intervention - MDG

What type of poverty analysis is needed?

The poverty analysis will (i) identify how the project relates to national and provincial priorities in the country poverty analysis; (ii) assess the effects of the ensuing project on its beneficiaries including migrants, especially socioeconomic and health benefits and impacts on income levels; and (iii) identify poverty-related baselines for project monitoring and evaluation.

C. Participation Process

Is there a stakeholder analysis? Yes No

An initial stakeholder workshop has been held in two proposed subproject cities/towns in Hebei. Stakeholder analysis is required to identify the following: (i) stakeholders’ interest in, importance to, and influence over the project; (ii) local institutions and processes on which to build; and (iii) provide a basis and strategy for participation.

Is there a participation strategy? Yes No

A participatory process will be an integral part of implementation of the technical assistance (TA) to ensure a high level of congruence of goals between all major stakeholders. A series of participatory workshops will be held to ensure full participation of major stakeholders in the design process of the proposed projects. The workshops will be based both centrally in the provincial capital city and locally in the subproject small cities and towns.

D. Gender Development

Strategy to maximize impacts on women:

An analysis to assess gender-related issues in Hebei will be conducted during TA implementation as part of poverty and social assessment. The analyses will be based on the specific findings of the social survey to be conducted throughout each of the subproject cities/towns. Findings and recommendations will be incorporated into the design and monitoring framework and project design.

Has an output been prepared? Yes No

The output will be prepared in the process of TA implementation.

10 Appendix 2

E. Social Safeguards and Other Social Risks

Item Significant/ Plan Not Significant/ Strategy to Address Issues Required None

Significant Involuntary resettlement category A. Full Resettlement Not significant The project is likely to require significant Short permanent and temporary land acquisition to None improve infrastructure in the cities and towns. The None total number of affected persons is predicted to exceed 200 per city/town. The resettlement plans (RPs) will be prepared following the PRC Land Administration Law and Asian Development Bank’s (ADB) Involuntary Resettlement Policy. The RPs will be disclosed in accordance with ADB’s Public Communications Policy (2005).

Significant The development of road infrastructure, parks, Yes Affordability and riverscape in the province will be a Not significant government responsibility and is not directly No chargeable to the population. Utility services and None solid waste management attract user charges and affordability may be an issue. Affordability will be assessed further during TA implementation as part of economic and financial analyses.

Significant The project is specifically designed to generate Yes Labor employment, both during implementation and Not significant subsequently, by an expansion in economic No activity that the project supports. None

Significant Indigenous peoples category C. Yes Indigenous Peoples Not significant Hebei province comprises more than 99% Han No Chinese. The project is assigned category C, to None be confirmed during TA implementation.

Significant No other social risks are anticipated as a result of Yes Other Risks the proposed project. and/or Not significant No Vulnerabilities None

Appendix 2 11

INITIAL POVERTY AND SOCIAL ANALYSIS – LIAONING PROVINCE

A. Linkages to the Country Poverty Analysis

Is the sector identified as a national Yes Is the sector identified as a Yes priority in country poverty analysis? national priority in country poverty No partnership agreement? No

Contribution of the sector or subsector to reduce poverty in the People’s Republic of China (PRC):

Liaoning’s Small Cities and Towns Development Demonstration Sector Project is one of the development priorities of the Government to promote pro-poor economic growth by increasing employment and raise the living standard of the population in Liaoning. The province is located in the PRC’s poorer north and northeastern region.

B. Poverty Analysis Targeting Classification: Targeted intervention - MDG

What type of poverty analysis is needed?

C. Participation Process

Is there a stakeholder analysis? Yes No

An initial stakeholder workshop has been held in two proposed subproject cities/towns in Liaoning. Stakeholder analysis is required to identify the following: (i) stakeholders’ interest in, importance to, and influence over the project; (ii) local institutions and processes upon which to build; and (iii) provide a basis and strategy for participation.

Is there a participation strategy? Yes No

D. Gender Development

Strategy to maximize impacts on women:

An analysis to assess gender-related issues in Liaoning will be conducted during TA implementation as part of poverty and social assessment. The analysis will be based on the specific findings of the social survey to be conducted throughout each of the subproject cities/towns. Findings and recommendations will be incorporated into the design and monitoring framework and project design.

Has an output been prepared? Yes No

The output will be prepared in the process of TA implementation.

12 Appendix 2

E. Social Safeguards and Other Social Risks

Item Significant/ Plan Not Significant/ Strategy to Address Issues Required None

Significant Indigenous peoples category C. Yes Indigenous Peoples Not significant Liaoning province comprises more than 99% Han No Chinese. The project is assigned category C, to None be confirmed during TA implementation.

Significant No other social risks are anticipated as a result of Yes Other Risks the proposed project. and/or Not significant No Vulnerabilities None

Appendix 2 13

INITIAL POVERTY AND SOCIAL ANALYSIS – SHANXI PROVINCE

A. Linkages to the Country Poverty Analysis

Is the sector identified as a national Yes Is the sector identified as a national Yes priority in country poverty analysis? priority in country poverty partnership No agreement? No

Contribution of the sector or subsector to reduce poverty in the People’s Republic of China (PRC):

Shanxi’s Small Cities and Towns Development Demonstration Sector Project is one of the development priorities of the Government to promote pro-poor economic growth by increasing employment and raise the living standard of the population in Shanxi. The province is located in the PRC’s poorer north and northeastern region.

B. Poverty Analysis Targeting Classification: Targeted intervention - MDG

What type of poverty analysis is needed?

C. Participation Process

Is there a stakeholder analysis? Yes No

An initial stakeholder workshop has been held in two proposed subproject cities/towns in Shanxi province. Stakeholder analysis is required to identify the following: (i) stakeholders’ interest in, importance to, and influence over the project; (ii) local institutions and processes upon which to build; and (iii) provide a basis and strategy for participation.

Is there a participation strategy? Yes No

A participatory process will be an integral part of implementation of technical assistance (TA) to ensure a high level of congruence of goals between all major stakeholders. A series of participatory workshops will be held to ensure full participation of major stakeholders in the design process of the proposed projects. These workshops will be based both centrally in the provincial capital city and locally in the subproject small cities and towns.

D. Gender Development

Strategy to maximize impacts on women:

An analysis to assess gender-related issues in Shanxi province will be conducted during TA implementation as part of poverty and social assessment. The analysis will be based on the specific findings of the social survey to be conducted throughout each of the subproject cities/towns. Findings and recommendations will be incorporated into the design and monitoring framework and project design.

Has an output been prepared? Yes No

The output will be prepared in the process of TA implementation.

14 Appendix 2

E. Social Safeguards and Other Social Risks

Item Significant/ Plan Not Significant/ Strategy to Address Issues Required None

Significant Indigenous peoples category C. Yes Indigenous Peoples Not significant Shanxi province comprises more than 99% Han No Chinese. The project is assigned category C, to None be confirmed during TA implementation.

Significant No other social risks are anticipated as a result of Yes Other Risks the proposed project. and/or Not significant No Vulnerabilities None

Appendix 3 15

COST ESTIMATES AND FINANCING PLAN ($'000)

Item Total Cost A. Asian Development Bank Financing 1. Consultants a. Remuneration and Per Diem i. International Consultants (52 person-months) 910.0 ii. National Consultants (85 person-months) 365.0 b. International and Local Travel 83.0 c. Reports and Communicationsa 83.0 2. Equipmentb 51.0 3. Workshopsc 30.0 4. Surveys 50.0 5. Translationd 42.0 6. Representative for Contract Negotiationse 18.0 7. Contingencies 68.0 Subtotal (A) 1,700.0

B. Government Financing 1. Office Accommodation and Transportf 60.0 2. Local Support Staffg 5.0 a. Secretaryh 54.0 b. Interpreterh 60.0 3. Remuneration and Per Diem of Counterpart Staff 100.0 4. Surveys and Investigations a. Environmental Impact Assessments 60.0 b. Socioeconomic Surveys 90.0 c. Project Design 150.0 5. Contingencies 21.0 Subtotal (B) 600.0 Total 2,300.0 a Includes office communications, printing and binding of reports, and translation into Chinese. b Includes desktop computers, photocopier, facsimile machine, and software. c Includes training workshops. d Translation refers to miscellaneous documents in English. e Includes the cost of travel and per diem for Government observers invited for contract negotiations. f Includes telephone lines (1 international) and city/town-level transport. g Includes office supplies and secretarial/interpreting services. h Requires 3 persons. Note: Items A3, 4, 5, and 6, and all items under B are to be equally shared among the three provinces and to be administered by the technical assistance consultant in consultation with the three executing agencies. Source: Asian Development Bank estimates.

16 Appendix 4

OUTLINE TERMS OF REFERENCE FOR CONSULTANTS

A. Objectives

1. The objectives of the technical assistance (TA) are to (i) identify the most appropriate municipal infrastructure, public services, and urban upgrading programs to facilitate economic development, expand urban utility services, enhance environmental protection and management, support employment generation, and reduce the existing low income levels in the secondary small cities and towns of the provinces of Hebei, Liaoning, and Shanxi; (ii) prepare feasibility studies for a sector-based investment project in each province based on detailed assessment of three core subprojects for each province; (iii) establish criteria for selection and prioritization of subproject cities and towns; and (iv) formulate the project using as reference the demonstration subprojects in each province, for possible funding by the Asian Development Bank (ADB).

B. Policy Dialogue-Related Activities

2. Policy dialogue is ongoing between ADB and the People’s Republic of China (PRC) in connection with ADB’s urban lending program in the PRC. To strengthen the dialogue in relation to the projects, the consultants will prepare notes for policy dialogue―based on discussions with the three provincial governments―on (i) strategies and enabling legislation required to facilitate development of subregions, cities, and towns and including the sectors covered under the projects; (ii) activities and interventions needed to strengthen the ability of city and town local governments to guide their own development; (iii) targeting provincial resources for efficiency and equity; (iv) capacity building and the upgrading of necessary skills to ensure managerial, technical, and financial independence of utility/urban service operation; (v) cost recovery and tariff reform for revenue-generating sector operations; (vi) urban poverty reduction, social protection, and resettlement policies; (vii) participatory approach to project design; and (viii) regulatory enforcement and monitoring.

C. Design and Monitoring Framework

3. In consultation with government agencies, the public, and project stakeholders, the consultants will develop, through stakeholder workshops and meetings, a design and monitoring framework for each subproject that outlines the impact, outcomes, outputs, and inputs or activities. The consultants will develop baseline urban infrastructure and services provision, environmental and social indicators (including health and other relevant data) necessary to effectively monitor project performance, and will collect baseline indicators as appropriate. Each project framework will be developed using problem-tree analysis and will be based on a participatory approach1 involving beneficiaries and stakeholders in project development, which will form the basis for the project performance management systems (PPMS) and risk and sensitivity analysis.

D. Training

4. The executing agencies (EAs) have had good experience with internationally funded projects, but the implementing agencies (IAs) in the cities and towns have no such experience. The consultants will therefore provide appropriate training to both as a continuous exercise during project preparation for demonstration towns, specifically, in three workshops per province, which will cover the following subjects: (i) design and monitoring framework/PPMS; (ii) environmental impact assessment (EIA) and environmental management plan (EMP); and (iii) resettlement plans (RPs) and social development initiatives. The workshops will be held shortly after the issuance of inception reports.

1 Initiated by city and town workshops during the initial TA Fact-Finding Mission in May 2007. Appendix 4 17

E. Overall Scope of Work2

5. The TA will be implemented over a period of 6 months by three teams, one per province, reporting to a coordinating team leader.3 The national consultant teams will work discretely within the respective provinces. The consultants will work in close association with the EAs and will accomplish the following activities for three demonstration small cities or towns in each province: (i) review and assess the development master plan, sector plans, investment plans, and institutional capacity of the executing agencies to ensure the project will meet the criteria for sector lending; (ii) establish criteria for subproject selection in each province; (iii) prepare a feasibility study report for each core subproject, including an assessment of the technical, financial, economic, social, and environmental impacts of the subproject and its components in accordance with ADB’s policies and guidelines; (iv) formulate the subprojects to improve urban infrastructure, public services, and other interventions to facilitate the development of secondary industries, employment generation, and environmental protection in accordance with sector development strategies for cities and towns; and (v) provide training and capacity building in the IAs of demonstration subprojects. The scope of the consultants’ work is given in the following paras.

1. Technical Aspects (international consultants, total 25.5 person-months; and 11 national consultants, total 35.5 person-months)

6. The sectors to be covered in subprojects across the three provinces are (i) road construction; (ii) river training, flood protection, and greening; (iii) water supply, sewerage, and wastewater treatment; (iv) solid waste management; (v) district heating; (vi) restoration of historic areas; and (vii) education. The sector components will be applied variously in a range of small cities and towns within each province. For each of the three selected demonstration subprojects per province, the consultants will―for the components that apply―assess and prepare recommendations on (i) demand capacities and suitability of proposed carriageway standards and designs of the roads, road safety measures and design parameters to be applied to intersections and other vehicle maneuvering areas; (ii) dredging, cleanup, and flood protection measures along river corridors, design standards reflecting probability of peak flow events, water storage criteria for industrial supplies and greening of riparian areas; (iii) suitability of proposed water resources for potable water supplies with particular attention to quality and sustainability issues, leakage control, and supply zoning in distribution networks and demand management; (iv) coverage and design parameters of sewerage systems, suitability of wastewater treatment and criteria for performance, options for reuse of effluents and methods of sludge disposal; (v) appropriate collection methodology, separation and disposal of solid wastes, including domestic, commercial, industrial, and toxic and clinical materials, and landfill design and operation; (vi) district heat network coverage, demand predictions, controls and options for optimal heat generation with particular reference to fuel type and emissions; (vii) appropriateness and methodology of historic building repair and restoration with provision of utility services; and (viii) provision or upgrading of technical education and vocational training. In addition, the consultants will recommend, for all components, specific actions for future maintenance of assets and necessary institutional restructuring and strengthening to ensure future managerial, technical, and financial independence and sustainability of operations.

2. Environmental Impact Assessment (international consultant, 4.5 person-months; and 3 national consultants, 3.0 person-months each)

7. The consultants will review the EIAs of the subprojects, suggest improvements, and help each provincial government prepare a summary environmental impact assessment (SEIA) and an

2 Detailed terms of reference for individual team members will be provided. 3 The team leader will work for 6 person-months, 4 of which will be spent on institutional development (see para. 11). 18 Appendix 4

EMP for each subproject component, following ADB’s Operations Manual Section F1 on Environmental Considerations in ADB Operations (2006) and Public Communications Policy (2005). They should identify any gaps between the EIAs and the requirements of ADB’s environmental policy, and recommend additional studies to fill these gaps and improve the EIAs. Other specific duties will include the following: (i) identify risks and provide mitigating measures, where appropriate, and provide inputs in the write-ups for the EIAs and relevant sections of the feasibility studies; (ii) assist Hebei, Liaoning, and Shanxi provincial governments with stakeholder participation, consultation, and involvement during subproject EIA/SEIA preparation and document these consultations and results in the EIA and SEIA; (iii) evaluate the environmental appropriateness of the subprojects and the use of the proposed technology including, among others, the reduce, reuse, and recycle principle for waste management; (iv) provide the necessary environment analysis and justification inputs for the financial and economic analyses of each subproject; (v) establish environmental baseline indicators and performance targets for the design and monitoring framework; (vi) prepare policy notes for discussion of urban air quality improvement, and environmental and land use planning and management; (vii) prepare environmental assessment and review procedures as well as other environmental tools such as cumulative impact assessment or strategic environmental assessment to be agreed upon with the Government for assessing subsequent subprojects; (viii) prepare the terms of reference and budgetary requirements for independent environment monitoring and evaluation during project implementation; (ix) prepare environmental guidelines for evaluating subprojects to be selected during project implementation; (x) ensure that the SEIA and EMP are prepared in conformity with ADB’s guidelines; and (xi) prepare a Powerpoint presentation of SEIA for ADB peer review.

3. Financial Analysis and Management Assessment (international consultant, 6 person-months; and 3 national, 3 person-months each)

8. The consultants will make a financial analysis of each subproject and its components and an analysis of the financial performance of the relevant revenue-generating entities in accordance with ADB’s Guidelines for the Financial Governance and Management of Investment Projects Financed by the Asian Development Bank. In particular, they will (i) work with the economists to provide financial information and analysis relevant to a review of policy and practice relating to financing, operating, and maintaining urban infrastructure services; (ii) assess the financial sustainability of the sector components; (iii) document and present the historical financial statements of the relevant subproject entities; (iv) identify areas for improvement and training needed with respect to the quality of financial statements, disclosure, and notes to the financial statements; (v) review the financial performance of subproject entities in the past 5 years and evaluate their financial capacity regarding cost recovery, borrowing capacity, accounts receivable, and subsidies, as appropriate; (vi) prepare income statements, balance sheets, and cash flow statements for relevant subproject entities in nominal terms, forecast the results for 20 years after the beginning of full sector subproject operation, and calculate relevant financial ratios; (vii) review the detailed cost tables with unit costs, physical quantities, and phasing of the project cost; and review and identify contract packages and the financing plan; (viii) analyze and summarize subproject costs using COSTAB or a similar software; (ix) for each IA, assess financial management and review current accounting and administrative capacities, the internal control system employed, current internal audit, external or government audit; and recommend any changes as appropriate; and (x) recommend an appropriate fund flow mechanism and disbursement procedures for project implementation.

Appendix 4 19

4. Economic Analysis (international consultant, 6.0 person-months; and 3 national consultants, 4.0 person-months each)

9. The consultants will work with the appointed design institutes to design and appraise each subproject. The economic analysis will include, but will not be limited to the following: (i) review the economic analysis in the domestic feasibility studies and identify any divergence from ADB’s Guidelines for the Economic Analysis of Projects and other relevant publications; (ii) review the economic rationale for each subproject, and recommend changes to the proposed role of government in each subproject as needed; (iii) review the economic justification for each subproject, based on economic development and urban master plans, urban development plans, EMPs, or other relevant strategic plans and determine the extent of further benefit-cost analysis required to appraise the economic basis for each subproject, including estimating the economic internal rate of return; (iv) review the analysis of options for each subproject, and ensure that the least-cost option is identified; (v) assist with design questions for the household survey; (vi) apply the modern welfare theory to estimate the welfare impact of each subproject on the poorest households; (vii) undertake a willingness-to-pay study to facilitate the economic analysis, taking into consideration ADB Economic Research Department’s Technical Note 19; (viii) conduct a health impact analysis; (ix) develop economically sound indicators of health impacts of the project, and use the household survey and other relevant sources to develop baseline estimates of those indicators; and (x) evaluate economic risks to the project.

5. Social Dimensions and Resettlement (international consultant, 6 person-months; 3 national consultants, 3 person-months each; and 3 national consultants, 2.5 person-months each)

10. Using the initial poverty and social assessment, the consultants will (i) review the poverty situation in subproject cities and towns and assess the project’s potential impact on the poor; (ii) survey project beneficiaries by gender and income group, identify vulnerable groups including migrant workers, estimate beneficiaries falling below the official poverty line, conduct affordability analysis, assess project impacts, and recommend mitigating measures; (iii) conduct a review of ethnic minorities, if any, and the likely impact of the project on them; (iv) design the questionnaire for the household survey, use the survey results to assess the social and poverty reduction impact, and assist in conducting a distribution analysis; (v) collect and analyze health data, which will be used to develop a PPMS; (vi) orient Hebei, Liaoning, and Shanxi governments on ADB's Involuntary Resettlement Policy (1995) requirements and procedures, assess the policy and legal framework for resettlement in the PRC, and propose measures to bridge any gap between ADB and PRC policies; (vii) review the subproject draft RPs and modify as required in compliance with ADB’s Operations Manual Section F2 on Involuntary Resettlement (2006), and assist the IAs in finalizing the RPs; (viii) define categories for impact and compensation eligibility of affected people, and prepare an entitlements matrix (based on PRC laws and regulations and ADB’s resettlement policy); (ix) identify compensation and rehabilitation options, and develop livelihood rehabilitation and improvement programs in consultation with affected people; (x) assist the Hebei, Liaoning, and Shanxi governments in preparing a resettlement framework for the project as a whole and a summary RP and implementation schedule for each core subproject having significant resettlement impacts; (xi) assist the Hebei, Liaoning, and Shanxi governments in organizing a public consultation and disclosure plan and initiate a participatory process for RP preparation and implementation among affected people; (xii) assess the baseline socioeconomic condition, needs, and priorities of women affected by land acquisition and resettlement, and identify specific measures to assist them; (xiii) assess whether compensation standards and associated budgets and available lands are sufficient and that consultation on these issues has occurred; (xiv) review the organizational structure and capacity for resettlement implementation, and recommend improvements and actions required before the start of land acquisition; and (xv) help the Hebei, 20 Appendix 4

Liaoning, and Shanxi governments develop an internal and external monitoring and evaluation plan, specifying key indicators of progress, mechanisms for reporting, resource requirements, and database maintenance.

6. Institution Development, Capacity Development, and Training (international consultant,4 4.0 person-months; and national consultant,5 3 person-months)

11. The consultants will (i) assess the capacities of the Hebei, Liaoning, and Shanxi provincial governments and IAs to formulate sector-based infrastructure development projects and to implement, operate, maintain, and manage the facilities to be constructed under the project in terms of technical, managerial, and administrative expertise of staff; (ii) prepare institutional capacity development programs for relevant subproject components concerned with roads and traffic management in line with ADB’s Guidelines for Financial Governance and Management of Investment; (iii) propose a detailed, realistic, and operationally sound organization of the project management office to ensure efficient implementation of the project as well as an efficient structure for the IAs; (iv) design and conduct training workshops to cover ADB’s procedural requirements: e.g., procurement, PPMS, management information system, resettlement and indigenous peoples and social assessment; (v) propose a coordination mechanism for multiple stakeholders; and (vi) identify the consulting services required during project implementation for further training programs under the loan.

F. Reporting

12. The consultants will submit the following reports for each province: (i) an inception report within 4 weeks from the start of the TA, which will finalize the approach, present a detailed work plan and implementation schedule for the TA, and identify any need for improvements to the subprojects for which feasibility study reports (FSRs) have been prepared; (ii) an interim report that presents a preliminary description of the investment project as a whole, including costing, assessment findings and recommendations, and to be submitted 12 weeks after the TA starts, together with an interim EIA and draft summary RP; (iii) summary and full EIA reports within 20 weeks from the start of the TA; (iv) a social and poverty impact and indigenous people assessment report and a summary RP within 22 weeks from the start of the TA; (v) a draft final report (DFR) covering detailed design and cost estimates, economic analyses, etc., will be submitted 24 weeks after the TA starts, together with an FSR for the project as a whole, plus individual revised FSRs for each subproject; and (vi) a final report, 2 weeks after receiving comments on the DFR from the Hebei, Liaoning, and Shanxi governments and ADB, which comments will be issued no later than 6 weeks after issuance of the DFR. Two weeks input time is allowed for this activity.

13. All reports will be written in English and translated into Chinese. Three copies of each report (in English) will be submitted to ADB and 10 copies (in both Chinese and English) to the EAs. The reports should address all aspects of the terms of reference to the level of detail appropriate for the given stage of the TA and should include revised project logical frameworks. The consultants will present key findings in workshops. Members of the project leading groups in the three provinces, representatives of the Ministry of Finance, National Development and Reform Commission, local communities, and ADB staff will participate in the workshops and the tripartite meetings, which will be organized separately in the three provinces after the submission and review of the inception report, interim report, and the draft final report. The consultants will assist ADB with the preparation of three (one for each province) draft reports and recommendations of the President to the Board of Directors of ADB.

4 To be undertaken by the team leader. 5 To be undertaken by the national sector experts.