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Project Administration Memorandum Project Administration Memorandum Loan No. 2588/2589/2590: Civil Aviation Development Investment Program (CADIP) Project Administration Memorandum CADIP Batch 1 Projects April 2010 i Project Administration Memorandum Forward The Project Administration Memorandum (PAM) is a living document that is progressively updated and revised as necessary, particularly following any changes in project or program costs, scope, or implementation arrangements. It is a guide to the management, implementation, and monitoring of the Civil Aviation Development Investment Program (CADIP). The PAM contains project data and information that allows the Government, the National Airports Corporation (NAC) as the executing agency and the Asian Development Bank (ADB) to monitor project implementation and evaluate project impact. In particular, the PAM outlines the implementation arrangements for the Program and contains the basic requirements and procedures on recruitment of consultants, procurement of goods, contracting of civil works, draw down of loan funds, disbursements, progress reporting, performance monitoring and auditing requirements under the Program. The contents and interpretation of the PAM will be discussed and updated regularly by the NAC and the CADIP Project Implementation Unit (PIU). In case of conflict among the documents in meaning or intent, the specific provisions of the Loan Agreement shall prevail. Prepared by: CADIP PROJECT IMPLEMENTATION UNIT (PIU) ii Project Administration Memorandum TABLE OF CONTENTS S. No Page Map of PNG showing the respective CADIP Projects iii 1. Executive Summary 4 2. Program Summary 4 3. Total Program Cost & Financing Plan 5 4 Loan Amount and Terms of the Loan 5 5 Program Descriptions 6 6 Project Monitoring Development Effectiveness Framework 7 7 Special Features 7 8 Implementation Arrangements 8 9 Implementation Timetable 9 10 Procurement 9 11 Disbursement 10 12 Program Monitoring & Evaluation 10 13 Reporting Requirements 10 14 Auditing Requirements 10 15 Anti-Corruption 11 16 Major Loan Covenants 11 17 Summary of Appendices 12 iii Project Administration Memorandum CADIP Figure 1. Map of Papua New Guinea showing the respective CADIP projects. iv Project Administration Memorandum 1. EXECUTIVE SUMMARY 1. The National Airports Corporation (NAC) has started implementing the Civil Aviation Development Investment Program (CADIP). This Program is aimed at revitalising and redeveloping the nations 21 national airports over a nine year period at a total cost of US$640 million. The Program is divided into four Batches of projects. Batch 1 Projects of the Program is within budget, scope and schedule. 2. A number of milestones have been achieved during the reporting period. These among others include the successful conclusion of loan negotiations cumulating in the signing of the CADIP Project and Loan Agreements between Government and the ADB, Loan Effectiveness, the establishment and staffing of the CADIP Project implementation Unit (PIU), the Changing of the Executing Agency (EA) name from the former Civil Aviation Authority (CAA) of PNG to the NAC, the commencement of bidding for procurement contract packages (POM Apron extension, POM ILS and Kavieng fencing), the establishment of a CADIP Project Trust Account and the securing of government counterpart funding for the first quarter of 2010. Ongoing internal and external project issues are continually being managed and monitored respectively by the PIU. 3. The Multi-tranche Financing Facility (MFF) is an ADB funding modality that is used to fund large scale investment projects. It was determined that the MFF is the most appropriate financing mechanism for CADIP. This financing model will be used to finance all CADIP projects in the four tranches including the Batch 1 Projects. The ADB’s MFF will finance 85% of the program whilst the Government finances the remaining 15%. Refer to sections 3 and 4 for the financing plans and loan components respectively. 4. In this PAM document, the terms Batch 1 and Project 1 will be used interchangeably to describe the first tranche of the MFF for CADIP. 2. PROGRAM SUMMARY 2.1Loan Processing History Activity Date 1 Fact-Finding Mission 18-29 May 2009 2 Fact Finding Wrap-Up Meeting 03 June 2009 3 Management Review Meeting (ADB) 15 July 2009 4 Investment Program Appraisal 27 July-7 August 2009 5 Staff Review Committee Meeting (ADB) 07 September 2009 6 Loan Negotiations 21-23 September 2009 7 ADB Board Consideration and Approval 24 November 2009 8 Loan Agreement Signing 28 January 2010 9 Loan Effectiveness 22 March 2010 5 Project Administration Memorandum 2.2 Pre-Inception Activity Date 1 ADB Project Implementation Seminar 2009 2 Development Effectiveness Monitoring Framework workshop 2009 3 PNG country portfolio review mission 2009 1 Change in EA name from CAA to NAC 15 February 2010 2 GoPNG and ADB Sign CADIP Loan and Project Agreements 24 February 2010 3 Environmental Permits secured February 2010 4 Procurement dates (Bid Start/Close) Start Close - POM ILS/Navigational Aids 13 Jan 2010 10 March 2010 - Kavieng Fencing 8 March 2010 19 April 2010 - POM Domestic Apron 21 April 2010 4 June 2010 5 Opening of CADIP Trust Account March 2010 6 1st Quarter GoPNG funding of K1.28 million secured March 2010 7 EOI for PIU Individual Consultants 22 March 2010 8 EOI for DSC 22 March 2010 2.3 Project Administration Activity Date 1 Project Inception Mission 26 – 30th April 2010 2 3 4 5 6 3 TOTAL PROGRAM COST AND FINANCING PLAN CADIP Funding Source USD Million PGK Million ADB 480.0 1,250.0 PPP 75.0 197.0 GoPNG 85.0 221.0 Total 640.0 1,670.0 CADIP Batch 1 Funding ADB 95.0 247.0 GoPNG 17.0 44.4 Total 112.0 291.2 CADIP Batch 1 Financing Plan Airport Improvement 81.0 210.6 Project Support & Capacity Development 9.0 23.4 Program Management 6.0 15.6 Contingencies 12.0 31.2 Financing Charges during Implementation 4.0 10.4 Total 112.0 291.2 A fixed exchange rate of 2.6% applies for all conversions. Appendix 05 contains a detailed financing plan for CADIP Batch 1 Projects. Appendix 06 contains the CADIP 2010 Cash Flow 6 Project Administration Memorandum 4. LOAN AMOUNTS AND TERMS OF THE LOAN The terms and conditions of the ADB Project1 loans are as follows; 4.1 Ordinary Capital Resources (OCR) Loan Amount US$25.0 million Repayment Period 25 years Grace Period 5 years Interest Charge To be determined in accordance with ADB’s LIBOR- based lending facility Interest Rate Movements 1 July 2009 1 January 2010 1 July 2010 Exchange Rate: 1 July 2009 1 January 2010 1 July 2010 0.3735 0.3580 Commitment Charge 0.15% per annum 4.2 Asian Development Fund (ADF) (‘’Hard Term’’) Loan Amount US$20.0 million equivalent in Special Drawing Rights (SDR) Repayment Period 32 years Grace Period 8 years Interest Charge 3.5% per annum Interest Rate Movements 1 July 2009 1 January 2010 1 July 2010 4.3 Asian Development Fund (ADF) (‘’Soft loan’’) Loan Amount US$50.0 million equivalent in Special Drawing Rights (SDR) Repayment Period 32 years Grace Period 8 years Interest Charge 1.0% per annum during grace period and 1.5% per annum Interest Rates Movements 1 July 2009 1 January 2010 1 July 2010 A description of the Loan Amounts and Terms is contained in Appendix 07. 5. PROGRAM DESCRIPTION 5. The objective of CADIP is to establish a sustainable civil aviation network that supports the growth and development of the nation. It has been developed and adopted to redevelop and revitalise the 21 national airports to meet minimum safety and security standards as well as the operational requirements of the newly introduced F100 aircraft. Batch 1 Projects will comprise an extension to the Jacksons Domestic Parking Apron and the replacement of old fire trucks and supply and installation of Instrument landing and Navigational Systems at that airport. This phase will also include an upgrading of the Mt. Hagen, Wewak, Hoskins and Gurney airports as well as the installation of new security fences at the Goroka, Gurney, Hoskins, Kavieng and Wewak airports. The Project components include; 7 Project Administration Memorandum 6. Airport Improvement: Airport improvements include the rehabilitation and upgrading of aerodrome infrastructure. The Aerodrome infrastructure consists of air side facilities including runways, taxiways, parking aprons, fire-tenders, and land side facilities such as passenger terminals, car parking and associated infrastructure facilities. 7. CNS/ATM Enhancement Upgrading of communication, navigation and surveillance equipment for reroute, landing, take off operations within the PNG Flight Information Region (FIR). 8 Program Support & Capacity Development: Capacity development would include institutional strengthening and capacity building of National Airports Corporation, PNG Air Services Limited and PNG Civil Aviation Safety Authority. 9 Program Management: Program management includes consulting services for the design and supervision of contracts as well as the implementation of the program through the PIU. 6. PROJECT DEVELOPMENT EFFECTIVENESS MONITORING FRAMEWORK 10. The Paris Declaration on Aid Effectiveness calls for effective monitoring of development assistance programs to developing countries by the donor countries and multilateral partners. The CADIP program adopts that strategy into its implementation and monitoring framework. CADIP PIU will update this section on a six (6) monthly basis starting in July 2010 to measure the progress of project activities against the expected project outputs and outcomes. Appendix 13 contains the detailed monitoring framework for CADIP and Batch 1 Projects. 7. SPECIAL FEATURES 7.1 Environmental Implications 11. Consistent with the Environmental Act of 2000 (the Act) an Initial Environmental Examination (IEE) Report was compiled for all the Batch 1 Projects. All contractors engaged under the Program will be monitored to ensure compliance with the Act as well as other relevant environmental legislation, policies and strategies of Government including the requirements of the Department of Environment and Conservation. Appendix 16 contains details of the IEE.
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