Greater Mekong Subregion Kunming-Hai Phong Transport

Project Administration Memorandum

Project Number: 39175 Loan Number: L2302 August 2007

VIE: Greater Mekong Subregion Kunming−Hai Phong Transport Corridor: Yen Vien−Lao Cai Railway Upgrading 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 18 October 2006)

Currency Unit – dong (D)

D1.00 = $0.0000622 $1.00 = D16,055.00 $1.00 = €0.799169

ABBREVIATIONS

ADB – Asian Development Bank ADF – Asian Development Fund AFD – Agence Française de Développement AP – affected person DGTPE – Treasury and Economic Policy General Directorate of the French Ministry of Finance EA – executing agency ECF – Emerging Countries Facility EMP – environmental management plan GMS – Greater Mekong Subregion GTZ – Deutsche Gesellschaft für Technische Zusammenarbeit HCMC – Ho Chi Minh City ICB – international competitive bidding JBIC – Japan Bank for International Cooperation KfW – Kreditanstalt für Wiederaufbau km – kilometer MG meter gauge m – meter PPTA – project preparatory technical assistance PRC – People’s Republic of China RCI – regional economic cooperation and integration RPMU – Railway Project Management Unit SDR – special drawing rights SEDP – Socio-Economic Development Plan, 2006-2010 SEIA – summary environmental impact assessment SG standard gauge TA – technical assistance TEU – twenty-foot equivalent unit VNR – Vietnam Railways WB – World Bank

NOTE

(i) The fiscal year of the Government ends on 31 December. (ii) In this report, "$" refers to US dollars.

CONTENTS

Page MAPS I. LOAN PROCESSING HISTORY 1 II. PROJECT DESCRIPTION 2 A. Project Area and Location 2 B. Impact and Outcome 2 C. Project Outputs 2 D. Special Features 3 III. COST ESTIMATES AND FINANCING PLAN 5 A. Cost Estimates 5 B. Financing Plan 6 C. Allocation of Loan Proceeds 7 IV. IMPLEMENTATION ARRANGEMENTS 7 A. Project Management 7 B. Implementation Schedule 7 V. PROCUREMENT 7 VI. CONSULTING SERVICES 8 VII. DISBURSEMENT PROCEDURES 8 A. Imprest Fund Procedure 9 B. Direct Payment Procedure 9 C. Commitment Procedure 10 D. Reimbursement Procedure 10 VIII. PROJECT MONITORING AND EVALUATION 10 A. Project Performance and Monitoring System 10 B. Project Review 11 IX. REPORTING REQUIREMENTS 11 A. Progress Reports 11 B. Annual Contract Awards and Disbursement Plans 11 C. Project Completion Report 11 X. ACCOUNTING AND AUDITING REQUIREMENTS 12 XI. LOAN COVENANTS 12 XII. KEY PERSONS INVOLVED IN THE PROJECT 12 A. Executing Agency 12 B. Asian Development Bank 12 C. Agence Française de Développement 13 D. Treasury and Economic Policy General Directorate of the French Ministry of Finance 13 XIII. ANTICORRUPTION 13

APPENDIXES Appendix 1: Design and Monitoring Framework 15 Appendix 2: Proposed Agence Française de Développement Grant Financing for Improved Facilitation of Transit Traffic at the Lao Cai Border Crossing 17 Appendix 3: Terms of Reference for Enhanced Financial Management Governance Reform Program for Vietnam Railways 20 Appendix 4: Detailed Cost Estimates and Financing Plan 25 Appendix 5: RPMU Staffing and Management Chart 27 Appendix 6: Updated Project Implementation Schedule 28 Appendix 7: Procurement Plan 29 Appendix 8: Outline Terms of Reference for Design and Supervision Consultant 32 Appendix 9: Disbursement Procedures 36 Appendix 10: Format for Quarterly Progress Report 41 Appendix 11: Worksheet for Quarterly and Yearly Contract Awards/Commitments and Disbursement Projections 44 Appendix 12: Outline of Project Completion Report 47 Appendix 13: Financial Reporting and Auditing Requirements 49 Appendix 14: Loan Covenants 52 Appendix 15: Relevant Documents 59

I. LOAN PROCESSING HISTORY

Processing Milestones:

Approval of PPTA/Major Change in Scope (TA4050-REG/Supplementary) : 14 June 2005 PPTA Implementation : 28 November 2005 – 30 September 2006 Loan Fact-finding : 15 – 26 May 2006 Management Review Meeting : 10 August 2006 Appraisal : 14 – 25 August 2006 Staff Review Committee Meeting : 15 September 2006 Loan Negotiations : 13 – 14 November 2006 Board Circulation : 23 November 2006 Board Consideration / Approval : 19 December 2006 Signing of ADB Loan Agreement : 16 January 2007 Signing of AFD Loan Agreement : 8 February 2007 Signing of DGTPE Loan Agreement : 25 April 2007 Signing of ADB and AFD Cofinancing Agreement : 25 May 2007 ADB Loan Effectiveness : 25 September 2007

Conditions for Loan Effectiveness:

1. The Borrower shall have approved the feasibility study for the Project;

2. The AFD Loan Agreement, for an amount of thirty-two million Euros (€32,000,000 [approximately $40,000,000]), shall have been duly executed and delivered, and all conditions precedent to its effectiveness (other than a condition requiring effectiveness of this Loan Agreement) shall have been fulfilled or arrangements satisfactory to ADB shall have been made for the fulfillment thereof within a period of time satisfactory to ADB; and

3. The DGTPE Loan Agreement, for an amount of approximately thirty-one million Euros (€31,000,000 [approximately $38,750,000]), shall have been duly executed and delivered, and all conditions precedent to its effectiveness (other than a condition requiring effectiveness of this Loan Agreement) shall have been fulfilled or arrangements satisfactory to ADB shall have been made for the fulfillment thereof within a period of time satisfactory to ADB.

Conditions for Commencement of Civil Works

4. The Works contractors shall not be issued a notice to commence Works for a particular section of alignment until (a) compensation payment and relocation to new sites has been satisfactorily completed for that particular section of alignment, and (b) agreed rehabilitation assistance is in place, and (c) the particular section of alignment is free of all encumbrances.

II. PROJECT DESCRIPTION

A. Project Area and Location

5. The project railway line, a non-electrified single-track MG line, which opened between 1903 and 1910, traverses about 285 km in a generally northwesterly direction from Yen Vien station, along the northern bank of the Red River to Lao Cai. The line crosses a varied terrain, including mountainous areas; connects a number of cities, towns, and industrial and residential areas; and carries substantial traffic (transit traffic between Hai Phong port and the PRC’s Yunnan province, bilateral trade between Viet Nam and the PRC, and domestic traffic, including from the apatite mine at Xuan Giao to the phosphate and chemical company near Tien Kien). The railway line also provides reliable and cheap passenger transport to the poor northern provinces. Rail services are popular, especially for tourists and locals visiting the mountainous region around Sa Pa, which is about 35 km from Lao Cai.

B. Impact and Outcome

6. By removing capacity constraints, the project will: (i) facilitate trade and enable economic growth within an between northwestern Viet Nam and Yunnan province; (ii) facilitate access to and from Hai Phong port to Yunnan Province, especially for container traffic; (iii) reduce transport costs; (iv) improve traffic safety; and (v) secure sufficient railway capacity to handle future traffic demand to 2020. The design and monitoring framework is in Appendix 1.

C. Project Outputs

7. The project comprises the following components:

(i) Track component. (a) Improving the alignment of the existing track, especially at sharp curves and in the vicinity of the Red River (to address problems associated with flooding, subsidence of embankment, and slope stability); (b) replacing worn-out rails with heavier hardened-steel rails, particularly on sections of track having sharp curves where rail wear is most severe; (c) replacing old sleepers and fastenings to prevent gauge expansion; (d) replacing worn out turnouts on the main line, and (e) ballasting of track. A total of about 240 km will be replaced with new rails, sleepers, and fastenings.

(ii) Bridge component. (a) Construction of six new bridges; (b) rehabilitation of 13 war-damaged and corroded bridges, which currently have speed restrictions; and (c) strengthening of up to 60 substandard bridges to enable use of heavier and more powerful locomotives.

(iii) Terminals component. (a) Constructing a new intermediate station at Mai Tung at km 124+200 including passing loops; (b) constructing additional passing loops (each with length of 480 m) at nine stations; (c) extending existing passing loops (minimum length of 450 m) at a further eight stations; (d) upgrading station facilities at North Yen Vien, Van Phu, Yuan Giao ‘A’, and Lao Cai; and (e) providing operational facilities at selected stations.

(iv) Safety component. Improving rail–road traffic safety through a package of measures, including (a) building one road over rail intersection at an existing railroad at-grade crossing at Dong Anh (km 20+700); (b) upgrading 44 existing at-

grade crossings by providing improved track crossing structure for both motorized and pedestrian road traffic; and (c) at selected unauthorized at-grade rail crossing points, provide about 5.5 km of fencing and permanent rights-of-way to channel traffic towards official crossing points. The rail safety works would be supported by a public awareness campaign.

(v) Reform component. (i) Institutional reforms related to the improvement of financial governance, and (ii) cross-border procedures at Lao Cai.1

D. Special Features

8. Subregional Context. The railway from Yen Vien, near Hanoi, to Lao Cai on the border with the PRC is part of the Kunming–Hai Phong transport corridor, which is a strategic link in the GMS north–south corridor. Developing the transport corridor is a high-priority subregional transport project under the GMS Economic Cooperation Program, which aims to develop efficient multimodal infrastructure links between the GMS countries.2 The proposed Project will restore and expand the capacity of a long-established link between Yunnan province in the southwest of the PRC and the strategic port of Hai Phong in Viet Nam on the Gulf of Tonkin. Landlocked Yunnan province has a growing need for efficient transport routes to sea ports for the export of its goods.

9. The project railway line serves three primary purposes: (i) it will facilitate bilateral trade between Viet Nam and the PRC, which currently accounts for about 650,000 tons per annum (about 30% of current traffic on the line) and is expected to more than triple when the adjoining railway in the PRC is upgraded (possibly by 2011); (ii) it will increase international trade from the PRC via the container port in Hai Phong, which could realize traffic growth of 12-15% per annum when the GMS cross-border agreement comes into force at the Lao Cai/Hekou border crossing; and (iii) it will be an integral part of the Singapore–Kunming railway link, which may be completed by about 2015 with the construction of the final link between Phnom Penh and Ho Chi Minh City.

10. The Governments of Viet Nam and the PRC are keenly aware of the benefits of increased trade, and both are planning to upgrade their infrastructure and to promote cross- border and transit trade. The PRC is upgrading the railway line between Kunming and Hekou by constructing a new railway to replace the line that was built in the early 20th century. About 300 km are under construction and a decision on starting construction of the remaining 160 km to Hekou is expected in 2008 (subject to the findings of a feasibility study currently being carried out). A new expressway, which will end at the border, is under construction. In addition to upgrading the railway in Viet Nam, the Government is planning to build a new toll highway to connect with the expressway in the PRC at Lao Cai. Border crossing procedures have been eased in recent years by allowing trucks to cross into the border provinces on both sides of the border and by enabling new banking and insurance services to facilitate trade. The GMS Cross- Border Transport Agreement, which will streamline border crossing procedures, will be piloted at the Lao Cai/Hekou border crossing by mid-2007. Reforms to the provisions for rail traffic are required to ensure the smooth passage of freight between the two border stations. The Project will provide grant financing to address this issue.

1 These components will be financed by proposed grant TA projects described in paras. 16 and 20. 2 The fourth meeting of the Subregional Transport Forum in Vientiane agreed to develop the corridor by improving roads, railways, and inland waterways. This project has been specifically developed to support this strategy.

11. Safety Component. In recent years, urban populations along the railway have increased considerably, leading to a large number of vehicles at railroad crossings. Under the safety component of the Project, a package of measures will improve the safety of rail and road users and the public living near the railway line. These include improvements to level crossings, construction of a flyover, and measures to check unauthorized track crossings by public vehicles. These measures will reduce the number of incidents at crossings.

12. Operational Improvements. Increasing the loads of trains by using more powerful locomotives will help to reduce the number of freight trains. This will conserve line capacity and defer costly infrastructure improvements. At present, such locomotives are not allowed on the Yen Bai–Lao Cai section because of the sharp curves, weak bridges, and worn and distressed track. Under the Project these constraints will be removed to enable heavier trains to be used.

13. A new signaling system will be installed with assistance from the PRC government. However, the current condition of the track means that, without the additional and extended passing loops, and the urgently needed track upgrading, the new system will have limited effect.

14. The Government and VNR have given assurances that the signaling and telecommunications works under the Project will be coordinated with those of the PRC signaling and telecommunications project in order to avoid duplication of work and to ensure efficient and economic implementation of both projects. ADB advised VNR that for compatibility of signaling on the route, the signaling component of the works at various stations under the Project should be implemented under the PRC signaling project. However, if the PRC signaling and telecommunications project cannot meet project requirements, the work will be incorporated into the design and scope of the Project.

15. AFD proposes to fund a TA to review railway cross-border traffic at Lao Cai/Hekou, identify bottlenecks, and recommend improvements (Appendix 2). The scope encompasses (i) a review of cross-border procedures for rail traffic and identification of the potential for streamlining, and (ii) a review of the handling of freight at the border, focusing on the handling of containers and other break bulk commodities. Container and break bulk commodities are currently transshipped at the border from road in the PRC to rail in Viet Nam (and vice versa) and will continue to require transshipment or reaxling at Lao Cai when the railway line in the PRC is upgraded to standard gauge. The focus of the review of freight handling will be on identifying possibilities for private sector involvement in container handling and container stuffing at Lao Cai.

16. Tourism. Hai Phong and Sa Pa in the project area are important tourist destinations in Viet Nam. Hai Phong is near to the World Heritage Site at Halong Bay, and Sa Pa mountain resort is accessed from the railway station at Lao Cai. The many tourists visiting both resorts provide much needed revenue to the local communities. In the case of Sa Pa (about 340 km from Hanoi), private tour operators have leased railway carriages from VNR and had them outfitted for luxury travel.

17. Associated Reform Program. The Government is reforming the railway subsector, with assistance from the Government of Germany through Gesellschaft für Technische Zusammenarbeit (GTZ). A new Railway Law3 has been drafted and has been in effect since 1 January 2006. The basic thrust of this reform is to allow private sector entities to take part in operations and some operational activities, such as onboard train services, will be outsourced.

3 Law No.: 35/2005/QH11.

The reforms also aim to inject a commercial orientation into the administration of VNR. The German Government has decided to extend its support to the reform process to the end of 2008, and is in the process of developing an assistance program to (i) implement the new Railway Law by supporting the drafting of implementing guidelines and draft amendments to other related laws, and (ii) provide technical assistance to restructure VNR. However, before the new law and the restructuring can become operational, a number of existing laws have to be revised and new implementing rules worked out.

18. Many of these implementing guidelines can be prepared by VNR without outside assistance, but for several, including sequencing the reform steps, external expertise will be required. In addition to extending its support for the reform process, the German Government, through GTZ, will coordinate the reform process with the new donors in the railway subsector, including ADB and AFD. GTZ will help VNR to sequence the reform steps and is already assisting Saigon Passenger Company to set up a traffic costing system.

19. However, one major concern is the lack of an accounting and audit system that satisfies generally accepted accounting principles. Without a system that provides effective management information and enables efficient pricing and supply of railway services, private sector involvement and railway modernization in general will not be successful. ADB has engaged VNR in a dialogue aimed at enhancing financial management services through a two-stage approach. First, an 18-month design phase starting in 2007 will assess VNR’s accounting and management information system, make proposals for internal audit and controller functions, prepare a plan for implementation (including training and detailed arrangements for a phased transition to the new system), and pilot test of a limited, semi-automated version within VNR’s freight operations. Second, a 3-year implementation phase will support a staged rollout of the new systems throughout VNR. AFD proposes to provide grant TA for the first phase of the reform program and ADB plans to provide advisory TA for the second phase in 2009–2011. The terms of reference for the Enhanced Financial Management Governance Reform Program are in Appendix 3.

20. Based on the sequencing of reform steps being developed by GTZ, ADB and GTZ have agreed to work closely together. Both parties, together with other interested donors, will meet with VNR twice a year as part of a railway reform consultation group, to take stock of the reform progress, recommend adjustments, and identify areas that need further attention and assistance.

III. COST ESTIMATES AND FINANCING PLAN

A. Cost Estimates

21. The project investment cost is estimated at $160.0 million, including taxes and duties estimated at $12.17 million equivalent (Table 1). The cost estimates are based on quantities derived from preliminary engineering designs and market prices for goods and materials, and include the costs of land acquisition and resettlement, and environmental mitigation and monitoring. Detailed cost estimates are in Appendix 4, including detailed cost estimates by financier.

Table 1: Project Investment Plan ($ million) Item Amount A. Base Cost a 1. Civil Works 39.13 2. Equipment and Track Renewal 85.39 3. Land Acquisition, Resettlement, and Social Mitigation 6.14 4. Environmental Mitigation and Monitoring 1.57 5. Consulting Services for Design, Supervision, and Administration 8.78

Subtotal (A)b 141.01 B. Contingencies c 17.33 C. Financing Charges During Implementation d 1.66

Total (A + B + C) 160.00 a In mid-2006 prices, excluding the TA projects referred to in paras. 31 and 35. b Includes taxes of $12.17 million comprising VAT (10%) and other taxes (2%). c The physical contingencies are computed at 12% for civil works and track implementation, and 2% for track materials (because the quantities have been estimated based on track standards and are firm). Price contingencies are computed at international cost escalation of 2% per year for foreign costs and 5% per year for local costs. d Only includes ADB’s capitalized interest. Source: Staff estimates based on Feasibility Study by PPTA consultant.

B. Financing Plan

22. The Government has requested a loan of $60.0 million from ADB’s Special Funds resources with an interest charge at the rate of 1.0% per annum during the grace period and 1.5% per annum thereafter; a term of 32 years, including a grace period of 8 years to help finance a portion of the Project costs. The Government has also sought a loan from AFD of €32.0 million (approximately $40.0 million equivalent), and a loan from DGTPE of €31.0 million (approximately $38.8 million equivalent) in the form of a tied overseas development assistance (ODA) credit (Table 2). Conditions and arrangements for AFD cofinancing will be through a bilateral financing agreement to be negotiated between the Government and AFD after approval of the loan in December 2006. A cofinancing agreement will be entered into by ADB and AFD under which the parties will jointly finance the civil works and consulting services. The remaining costs, estimated at $22.5 million equivalent, will be met by the Government from its own resources. DGTPE financing will be through parallel cofinancing using a loan from the Emerging Countries Facility (ECF).

Table 2: Financing Plan ($ million) Source Total % ADB 60.0 37.2 AFD 40.0 24.8 DGTPE 38.8 24.0 Government 22.5 14.0 ADB = Asian Development Bank, AFD = Agence Française de Développement, DGTPE = Treasury and Economic Policy General Directorate of the French Ministry of Finance. Source: ADB estimates.

C. Allocation of Loan Proceeds

23. The allocation of loan proceeds on the basis of categories of expenses has been established in the project loan agreement in SDRs and is shown in Table 3 below.

Table 3: Allocation of Loan Proceeds Amount ADB Financing Allocated Category Item Percentage and SDR Basis for Withdrawal 1 Works 14,441,000 60 percent of total expenditure 2 Equipment – Track Renewal * 16,394,000 60 percent of total expenditure 3 Environmental Protection 579,000 60 percent of total expenditure 4 Consulting Services 3,242,000 60 percent of total expenditure 3 Interest Charges 1,118,000 100 percent of amount due 4 Unallocated 4,621,000 TOTAL 40,395,000 * This line item refers to (i) installation of ballast, sleepers, rails, switches and associated works; (ii) procurement of P43 switches for passing loops and corresponds to item “A.2.b Track Renewal” of “Table A6.2: Detailed Cost Estimates by Financier”, Appendix 6 to the Report and Recommendation of the President.

IV. IMPLEMENTATION ARRANGEMENTS

A. Project Management

24. VNR will be the Executing Agency (EA) for the Project. The Railway Project Management Unit (RPMU), a unit within VNR, will be responsible for day-to-day project implementation. RPMU has been involved in project preparation and PPTA implementation. It will be expanded and qualified technical, financial, and support staff will be recruited for project management and implementation. ADB will be advised of the composition of RPMU and the competencies of the individual members as soon as its expansion is complete. ADB will provide training in procurement and project management to technical staff of VNR and RPMU. RPMU, acting on behalf of and under the authority of VNR, will be responsible for overall implementation of the Project, including procurement, withdrawal of loan proceeds, and reporting to ADB and the cofinanciers. The proposed staffing, management and organizational chart of the RPMU is in Appendix 5.

B. Implementation Schedule

25. The Project will be implemented over a period of about 5 years for completion in June 2012. The Government has been granted advance procurement, allowing recruitment of consultants to begin during the third quarter of 2007 for appointment when the ADB loan is declared effective. A period of about 18 months is envisaged for detailed engineering design, prequalification, preparation of bid documents, and tendering of the works up to the stage of contract award. The updated implementation schedule is in Appendix 6.

V. PROCUREMENT

26. The procurement, financed from the ADB and AFD loans, will be done in accordance with ADB’s Procurement Guidelines. Appropriate references to both ADB and AFD will have to be made in Procurement Notices and documentation relating to the ADB-AFD cofinanced

8 contracts. ADB will review and approve the procurement of goods and services, and selection, engagement and services of the consultants under the ADB-AFD cofinanced contracts. The final decision at each step of the procurement procedure will be communicated to the RPMU of Viet Nam Railways by ADB, on behalf of the two cofinanciers.

27. Civil works contracts have been packaged according to three subsections of the project route. Each package will include all works on the subsection, including track, bridges, realignment, embankment stabilization, station upgrading, and safety works. The civil works contracts will be procured by international competitive bidding (ICB) among prequalified bidders. The procurement of the DGTPE-financed package of rails, track switches, and fittings will be undertaken in accordance with the Government of France’s procurement rules.4 Other supply contracts that are not expected to exceed $100,000 in value will be procured through shopping. The procurement plan including a list of proposed contract packages is given in Appendix 7. Relevant sections of ADB’s anticorruption policy5 will be included in all bidding documents and contracts.

28. ADB has approved the Government’s request for advance action for procurement of civil works to enable the EA to make preparations for construction of civil works according to the implementation schedule. The Government was advised that, as per ADB’s procedures, advance action includes all procurement activities up to the stage of contract award. The Government was also advised that approval of advance action does not commit ADB to finance the Project.

VI. CONSULTING SERVICES

29. The Government will engage an international consulting firm in association with national consultants for detailed project design, preparation of technical specifications and bid documents, construction supervision, and quality assurance. Additional responsibilities include environmental supervision and management, updating, implementation and monitoring of the resettlement plan, socioeconomic impact assessment, and project performance monitoring. It is envisaged that 200 person-months of international consultants and 524 person-months of national consultants will be required. The terms of reference for the international consultants for design and supervision are in Appendix 8. International consultants for the Project will be recruited using the quality- and cost-based method and a full technical proposal in accordance with ADB’s Guidelines on the Use of Consultants. The Government was advised that, for the recruitment of consultants, advance contracting is the normal procedure and that ADB’s support of advance contracting does not commit ADB to approve the loan project or to finance the recruitment costs.

VII. DISBURSEMENT PROCEDURES

30. All disbursements under the ADB and AFD loans will be carried out in accordance with the ADB Loan Disbursement Handbook6 (January 2007, as amended from time to time). Unless AFD and ADB agree otherwise, withdrawals from the AFD’s and ADB’s loans will be made on a pro-rata basis (as shown in Appendix 4 Table A4.2) for each cofinanced contract. The RPMU of Viet Nam Railway Corporation (VNR) will be requested to submit the original Withdrawal Application (WA) and copies of supporting documents to AFD, and copies of the WA and supporting documents to ADB. Each WA will have to clearly distinguish the amount to be paid

4 The French intergovernmental loan facility called ECF (Emerging Countries Facility) is managed by DGTPE. 5 ADB. 1998. Anticorruption Policy. Manila. 6 ADB. 2001. Loan Disbursement Handbook. Manila.

9 by ADB (60% of the total cost) and the amount to be paid by AFD (the remaining 40%). The final decision relating to each payment will be communicated to the RPMU of Viet Nam Railways by ADB, on behalf of the two cofinanciers.

31. Since most of the payments will be made for contracts well above $200,000, direct payment procedures will be used to withdraw the loan funds. The statement of expenditure (SOE) procedure will be used to reimburse eligible expenditures for any individual payment not exceeding $100,000 per contract. Disbursements under the DGTPE loan will be carried out in accordance with the financing guidelines for loans under the ECF of the French Ministry of Finance. A copy of the Disbursement Handbook can be downloaded from ADB’s website at http://www.adb.org/Documents/Handbooks/Loan_Disbursement/default.asp. Disbursement of loan proceeds shall be subject to the provisions of Schedule 3 of the Loan Agreement. Appendix 9 provides a summary of disbursement procedures.

32. Before disbursement can start, the Borrower will have to nominate person(s) to sign the withdrawal applications. A withdrawal authorization letter, together with the original specimen signature(s) of the authorized signatories shall be submitted to ADB before submission of the first withdrawal application. In the event there is a change in the authorized person(s) in the future, the Borrower shall furnish the ADB with a new authorization letter, accompanied by the specimen signature(s) to ensure uninterrupted processing of loan disbursements.

33. RPMU will establish an imprest account at a commercial bank acceptable to ADB. The initial deposit to the imprest account shall be based on 6 months’ estimated expenditures, or $2.0 million, whichever is lower. The imprest account will be established, managed, replenished, and liquidated in accordance with ADB’s Loan Disbursement Handbook. The currency of the imprest account shall be in US Dollars. The statement of expenditure (SOE) procedures may be used for liquidating or replenishing the imprest account. Such procedures shall apply to contracts not exceeding $100,000.

34. The system for withdrawal of ADB loan proceeds consists of four major types briefly described below.

A. Imprest Fund Procedure

35. The procedures for setting up an Imprest Account are presented in detail in the Handbook. There are two ways to liquidate the imprest fund.

(i) Full documentation: For any individual payment exceeding the equivalent of $100,000 the application for replenishment of imprest fund account should be accompanied by supporting documents such as receipts, invoices, or other forms of evidence of payments.

(ii) Statement of Expenditures (SOE): Pursuant to paragraph 6(b), Schedule 3 of the Loan Agreement, the SOE procedure may be used for payment of eligible expenditures. Any individual payment to be reimbursed or liquidated under SOE procedure shall not exceed the equivalent of $100,000.

An application for replenishment will be supported by SOE in lieu of the normal full documentation. Under this procedure, the RPMU is required to submit to ADB together with a Withdrawal Application, an SOE duly certified by persons authorized to sign Withdrawal Applications. All relevant documents (invoices,

receipts, etc.) must be retained and must be made available for auditing and examination by ADB’s representative.

B. Direct Payment Procedure

36. The ADB, at the request of the Borrower, pays a designated beneficiary directly. A separate Withdrawal Application is required for each different currency. The following supporting documents must be submitted to ADB together with the Withdrawal Application:

(i) One of the following:

(a) For payment of goods: supplier’s invoice or bill of lading; (b) For payment of services: consultant’s claim or invoice; (c) For payment of civil works: claim or invoice from the contractor and work progress certificate signed by the authorized representative of the Borrower.

C. Commitment Procedure

37. The ADB, at the Borrower’s request, irrevocably agrees to reimburse a commercial bank for payments made or to be made to a supplier against a Letter of Credit (LC). Under this procedure, the LC issued by the Borrower’s bank (LC issuing bank) becomes operative only if and when ADB issues its commitment letter to the commercial bank in the supplier’s country. The Bank’s payment assurance under this procedure is limited to the amount available in the loan account. A commitment letter issued by ADB under this procedure is irrevocable in the sense that ADB’s obligation is not affected by the suspension or cancellation of the loan.

D. Reimbursement Procedure

38. The ADB pays from the loan account to the Borrower’s account or, in some cases, to the project account for eligible expenditures which have been incurred and paid for by RPMU and VNR out of its budget allocation or its own resources. This procedure normally requires submission of full supporting documentation.

(i) Contract or confirmed Purchase Order

(ii) In addition to the above requirement: a. For payment of goods (equipment/materials): supplier’s invoice or bill of lading. b. For payment of consulting services: consultant’s claim or invoice.

VIII. PROJECT MONITORING AND EVALUATION

A. Project Performance and Monitoring System

39. A set of indicators for evaluating project performance in relation to its impacts, outcomes, outputs, and conditions has been agreed to by VNR, ADB, and AFD. The data will be collected within 6 months of the date of loan effectiveness, including among others (i) economic development and socioeconomic indicators, (ii) transport costs and times for passenger and freight services, (iii) transport services and transport charges, (iv) accident rates, (v) financial sustainability of the rail sector, (vi) affected persons’ incomes, (vii) access to social services,

11 and (viii) jobs created in construction and maintenance. 7 At the beginning of project implementation, RPMU and the VNR will establish baseline and target values for the indicators. The indicators will be measured and compared with the baseline at project inception, completion, and after 3 years. Where relevant, indicators will be disaggregated by gender. The project supervision consultant services will include qualified consultants to help establish the monitoring and evaluation system, and train VNR staff in its use. The main sources of data will include (i) secondary data from government sources, (ii) a household socioeconomic sample survey, and (iii) participatory rapid appraisal. VNR will submit a report summarizing the key findings of monitoring at inception, completion, and 3 years after physical completion of the Project to ADB and AFD.

B. Project Review

40. The Government, ADB and AFD will review the Project’s progress jointly at least twice a year. In addition to semi-annual regular reviews by ADB and AFD, the Government, ADB, and AFD will jointly undertake a midterm review of the Project in mid-2010 to assess (i) implementation status, (ii) design and construction standards, (iii) performance of consultants and contractors, (iv) project impacts, (v) progress of sector reform, (vi) status of compliance with the covenants stipulated in the loan agreements, and (vii) the need for any changes in the project scope or schedule to achieve the Project impact.

IX. REPORTING REQUIREMENTS

A. Progress Reports

41. The RPMU, on behalf of VNR, will make satisfactory arrangements for reporting the progress of project implementation by submitting quarterly progress reports through VNR. The suggested format and content of the EA progress reports (in English) is in Appendix 10. RPMU will monitor project implementation in accordance with the implementation schedule, and will keep ADB informed of any significant deviations from the schedule. The quarterly report will summarize the information in the detailed reports, including basic data, utilization of funds, achievement of immediate development objectives, compliance with covenants, implementation progress, land acquisition, resettlement progress, and major issues and problems. RPMU will submit copies of the quarterly reports to ADB and AFD.

B. Annual Contract Awards and Disbursement Plans

42. The EA will submit to ADB an annual contract awards and disbursement projections. This requirement is effective in monitoring project implementation and will help identify impediments to implementation progress. The projection is submitted to ADB on 15 December of each year. The form is in Appendix 11.

C. Project Completion Report

43. Within 3 months of physical completion, RPMU will submit through VNR a project completion report to the cofinanciers, which will provide a detailed evaluation of the project design, costs, contractors’ and consultants’ performance, social and economic impact, economic rate of return and such other details as may be requested by ADB and AFD. In

7 The PPTA consultants have defined baseline indicators for performance of the railways, as well as the targets to be achieved after Project completion.

12 addition, within 3 months of each loan closing date, a loan completion report will be provided. The outline of the report is in Appendix 12.

X. ACCOUNTING AND AUDITING REQUIREMENTS

44. The RPMU will maintain separate accounts for the Project and have such accounts and related financial statements audited annually by an external auditor in accordance with auditing standards acceptable to ADB and AFD. Expenditures funded by AFD will be included in the annual project financial audit together with funds of other financiers and an opinion on the usage of each source of funds will be presented in the audit report. RPMU will submit to ADB and AFD, within 6 months of the end of each fiscal year, certified copies of such audited project accounts and financial statements and auditor's reports, all in English. The audit of such financial statements will include (i) an assessment of the adequacy of accounting and internal control systems with respect to project expenditures and other financial transactions; (ii) an assessment of compliance with financial loan covenants and ADB and AFD requirements for project management; (iii) an opinion on the use of the statement of expenditure procedure (if applicable); and (iv) an opinion on the use of the imprest account. The VNR will also submit its audited financial statements covering income statements and balance sheets during construction and in the first 3 years of commercial operations of the project railway within 6 months of the end of each fiscal year. A sample audit letter is in Appendix 13.

XI. LOAN COVENANTS

45. In addition to the standard conditions, some project-specific covenants are included in the Loan Agreement. These covenants are considered essential to ensure its successful implementation. The list of loan covenants is in Appendix 14.

XII. KEY PERSONS INVOLVED IN THE PROJECT

A. Executing Agency

Viet Nam Railways Contact Person: Nguyen Huu Bang, General Director, VNR Dang Duc Thinh, Deputy General Director, VNR Address: 118 Le Duan Street, Hanoi, Viet Nam Telephone: +844 8221891 Facsimile: +844 5113789

Railway Projects Management Unit Contact Persons: Tran Van Luc, Director, RPMU Tran Van Tuy, Deputy Director, RPMU Address: 95-97 Le Duan Street, Hanoi, Viet Nam Telephone: +844 9426703 Facsimile: +844 9420144 E-mail: [email protected]

B. Asian Development Bank Contact Person: John Cooney, Director, SEID Facsimile: +632 636 2336 Telephone: +632 632 6433 E-mail: [email protected]

Project Officer: Robert Valkovic, Senior Transport Specialist, SEID Telephone: +632 632 5436 E-mail: [email protected] Project Analyst: Aloha Samoza, Associate Project Analyst, SEID Telephone: +632 632 6898 E-mail: [email protected] Contact Persons: ADB Viet Nam Resident Mission Paul Vallely, Senior Transport Specialist Le Dinh Thang, Project Implementation Officer Facsimile: +844 9331373 Telephone: +844 E-mail: [email protected] [email protected] Financial Control Specialist: Francis Emmanuel, OIC, CTLA-4 Facsimile: +632 636 2596 Telephone: +632 632 4603 E-mail: [email protected] Counsel: Roberta Thami, OGC Facsimile: +632 636 2501 Telephone: +632 632 4895 E-mail: [email protected]

C. Agence Française de Développement Contact Person: Paris Headquarters Stéphane Carcas, Task Manager Telephone: +33 1 53 44 39 27 Facsimile: +33 1 53 44 38 65 E-mail: [email protected]

Contact Persons: Hanoi Office Sophie Salomon, Senior Programme Officer Carine Megueulle, Programme Officer Telephone: +844 823 6764/65 Facsimile: +844 823 6396 E-mail: [email protected] [email protected] D. Treasury and Economic Policy General Directorate of the French Ministry of Finance Contact Person: Sylvain Biard Chef de Secteur, Mission Economique à Hanoi Ambassade De France Au Vietnam Telephone: +844 944 5844 Facsimile: +844 944 5847 E-mail: [email protected]

XIII. ANTICORRUPTION

46. ADB’s anticorruption policy was explained to and discussed with the Government and the EA. Consistent with its commitment to good governance, accountability and transparency,

ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB’s anticorruption policy are included in the loan regulations and the bidding documents for the Project. In particular, all contracts financed by ADB and AFD in connection with the Project will include provisions specifying the right of ADB and AFD 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. In addition and to ensure transparency and good governance, VNR will publicly disclose on its website information on how the loan proceeds are being used, presenting procurement contract awards, including for each such contract the (i) list of participating bidders, (ii) name of the winning bidder, (iii) basic details on bidding procedures adopted, (iv) amount of the contract awarded, (v) list of goods and/or services purchased, and (vi) intended and actual utilization of loan proceeds under each contract. The website will be updated within 2 weeks of each award of contract.

47. The ADB Office of the General Auditor is the point of contact to report allegations of fraud and corruption among ADB-financed projects or its staff. Within that office, the Anticorruption Unit is responsible for dealing with all matters related to allegations of fraud and corruption. Please refer to the ADB’s Anticorruption Policy available at http://www.adb.org/Documents/Policies/Anticorruption/default.asp?p=antipubs. Anyone coming across evidence of corruption associated with the Project may contact the Anticorruption Unit by telephone, facsimile, by mail, or by email as follows:

Integrity Division (OAGI) Office of the Auditor General Asian Development Bank 6 ADB Avenue, Mandaluyong City 0401 Metro Manila, Philippines

Postal Address: P. O. Box 789 0980 Manila, Philippines Telephone No.: (63-2) 632 5004 Facsimile No. : (63-2) 636 2152 E-mail : [email protected] or [email protected]

48. The PAM shall be read in conjunction with the RRP, Loan Agreement, Project Agreement and relevant documents listed in Appendix 15.

Appendix 1 15

DESIGN AND MONITORING FRAMEWORK Design Performance Data Sources/Reporting Assumptions Summary Targets/Indicators Mechanisms and Risks Impacts Assumptions Increased cross-border Viet Nam–Yunnan Project completion reports Rehabilitation and trade with Yunnan province trade institutional reforms are province in the PRC increases by 15% p.a. Railway physical and completed as planned between 2011 and financial performance 2020 reports Continued commitment by the governments to regional Accelerated economic GDP per capita in the Government statistics and cooperation growth in northern project area outside accounts Vietnam. Hanoi increases to 70% Streamlined and efficient of the national average cross-border operation and by 2020 no barriers to trading and travel by people

Risk Downturn in economic growth Outcome Assumptions More efficient rail The railway Progress reports made by The PRC-assisted signaling transportation system rehabilitation and construction supervision project is completed on that will meet transport upgrading works will be consultants schedule. demand to 2020 completed by 2011. Reports of the review Government’s commitment The railway fully meets missions to railway reform railway freight transport demand till 2020. Post evaluation surveys Donor agencies agreeing to provide technical assistance Financially sustainable Railway operation is Annual results of the for reforms railway operation commercially viable by railway’s physical and 2015 and incremental financial performance Railway tariff will be set at revenues continue to full cost recovery level be sufficient to meet Rail and road accident debt service statistics Risks requirements of the Cross-border traffic may rehabilitation loan Government accounts suffer if the existing meter gauge on the PRC side is Improved traffic safety Reduction in the replaced by a standard number of accidents on gauge railway the railway by 25% and on the adjacent roads Rail traffic does not by 10% by 2015 materialize as per forecast

Improved governance All implementing of Vietnam Railways decrees for the Railway (VNR) Law in force by mid- 2007. Modern accounting and management reporting systems deployed throughout VNR implemented in 2010. 16 Appendix 1

Design Performance Data Sources/Reporting Assumptions Summary Targets/Indicators Mechanisms and Risks Outputs Assumptions 1. Railway Realignment, Reports of the review Government implements the infrastructure embankment missions recommendations made by rehabilitation and stabilization, track consultants for strengthening upgrading, along renewal, bridge building Progress reports made by financial management and with all associated and repairs, building construction supervision improving VNR’s financial resettlement and station facilities for consultants performance social mitigation upgrading line capacity, activities on Yen and safety works at Mid-term review and Continued support of the Vien–Lao Cai level crossings are project completion report German Government to help railway line completed VNR with reforms and preparation of implementing 2. Agreed agenda for All affected people are Railway accounts, and regulations institutional compensated in full user surveys strengthening for and on schedule Government’s approval of ensuring financial Reports of consultants for implementing regulations for sustainability of Institutional institutional strengthening the Railway Law in a timely railway operations strengthening for financial sustainability manner. consultants submit final of railway operations 3. Agreed agenda for report in June 2007 Government’s approval of railway reform for with recommendations Reports of consultants for the reform agenda for facilitating the on financial preparing implementing strengthening of financial implementation of management and regulations for the Railway institutions for ensuring the Railway Law that financial sustainability Law. sustainability, and VNR’s seeks to provide of VNR, and railway implementation of the reform opportunities for reform to enable agenda in a timely manner. private sector implementation of the participation in the Railway Law. Risk development of Wavering of political support railway infrastructure for reforms and operations Activities with Milestones Inputs 1. Preliminary design of the project components: completed by July 2006. ADB–$60 million 2. Recruitment of consultant services for project design and supervision: ADB AFD–$40 million (equivalent) approval of advance action by August 2006; consultants recruited by June DGTPE–$37.5 million 2007; consultants fielded by July 2007; consultants’ work completed by (equivalent) December 2011. Government–$22.5 million 3. Recruitment of consultants for institutional strengthening: services to be started in April 2008 and completed by February 2010. German Government – 4. Detailed design and drawings of the project components, prequalification continued funding of ongoing and bidding documents, civil works contracts awarded in October 2008. program for railway reform 5. Land acquisition and resettlement: started by January 2008 and completed through GTZ. by December 2009. 6. Civil works and track works, including realignment, stabilization of embankments, bridge rehabilitation, upgrading station facilities, and safety works: started in October 2008 and completed by June 2012. ADB = Asian Development Bank, AFD = Agence Française de Développement, DGTPE = Treasury and Economic Policy General Directorate of the French Ministry of Finance, GDP = gross domestic product, GTZ = Deutsche Gesellschaft für Technische Zusammenarbeit, PRC = People’s Republic of China, VIE = Viet Nam, VNR = Vietnam Railways.

Appendix 2 17

PROPOSED AGENCE FRANÇAISE DE DÉVELOPPEMENT GRANT FINANCING FOR IMPROVED FACILITATION OF TRANSIT TRAFFIC AT THE LAO CAI BORDER CROSSING TERMS OF REFERENCE

A. Introduction 1. The Yen Vien–Lao Cai Railway Upgrading Project in Viet Nam consists of increasing the capacity of the 285-km line by rehabilitating and upgrading tracks and bridges as well as by constructing and extending passing-loops at selected stations, based on traffic forecasts to 2020. A package of measures will be implemented to improve the safety of rail and road users and the public living near the railway line. 2. It is proposed that the Project be financed through an Asian Development Bank (ADB) loan from its Asian Development Fund resources in the amount of $60 million, with cofinancing in the amount of $40 million to be provided by Agence Française de Développement (AFD), and a tied overseas development assistance (ODA) credit in the amount of €30 million to be provided by Treasury and Economic Policy General Directorate of the French Ministry of Finance (DGTPE), another French bilateral source. An amount of approximately $22.5 million equivalent will be provided from the Government’s own resources. 3. The objectives of the stakeholders are to (i) assure the long-term viability of the national railway sector, and (ii) strengthen subregional integration in the Greater Mekong Subregion as a whole and more specifically within the integrated Kunming–Hai Phong transport corridor linking Yunnan province in the People’s Republic of China (PRC) with Viet Nam and onward to the Gulf of Tonkin. 4. With regard to the long-term viability of the railway sector, the Vietnamese authorities and several donors are researching funding sources. The Project includes phased assistance for the establishment and implementation of a computerized management accounting system. The Project also contributes to subregional integration. In addition, however, it is proposed that the question of railway traffic passing through the Lao Cai/Hekou border stations be further studied, specifically in the context of forecasts of growing traffic between the two countries, current traffic disruptions (which result in long waiting times and therefore higher costs), and existing processes and customs agreements at the border. A conference in July 2006 in Hanoi attended by PRC and Vietnamese authorities and operators confirmed the importance of streamlining traffic and facilitating exchanges between Viet Nam and the PRC to increase trade and economic growth. 5. AFD proposes to finance this study on a grant basis. It is both a part of the railway line upgrading as a whole, and complementary to the upgrading works at Lao Cai station. This study is consistent with the Programme de Renforcement des Capacités Commerciales financed by the French Ministry of Economy and Finance and co-managed by the latter and AFD. B. Scope and Objective 6. The proposed study is aimed at providing Vietnamese authorities, as well as their PRC counterparts, with the means and information necessary to make rational decisions on how to optimize the transport of goods by rail between the two countries. The study will address the situation at Lao Cai/Hekou border crossing, but the lessons may be adapted for use on the other Viet Nam–PRC rail border at Huu Nghi. The findings of the study will also contribute to future bilateral exchanges between the PRC and Viet Nam on rail policies. 7. The study aims to identify bottlenecks and recommend mitigation measures. It will have two phases. In phase 1, the existing situation at Lao Cai/Hekou border crossing will be reviewed 18 Appendix 2 and the causes of delays exposed, including the main disruptions to unloading, physical, administrative and institutional processes, and constraints. In phase 2, proposals will be made. C. Tasks 1. Phase 1: Review 8. The review will take place on both sides of the border. It will: (i) describe the traffic conditions and disruptions currently experienced at the border crossing, especially for railway traffic but for road traffic as well, by reviewing passenger traffic and handling of freight with particular focus on container traffic and break-bulk commodities; (ii) quantify the consequences of these constraints, in terms of time losses and related costs; (iii) review and analyse the existing agreements, regulations, documents necessary for exchanges at the border, including the 1992 Agreement and further protocols, laws or rules relating to working-rights in both countries, with a view to identifying their (a) status, (b) level (national, local), (c) dates of enforcement and expiration (d) subject matter (e.g., trade, transport, and working rights for drivers), and (e) in relation to transport regulations, describe document requirements and current controls on import and export of goods; (iv) identify the main causes of traffic disruption for major transported items, including: (a) physical causes, such as the existence of several points for customs and unloading of freight (consideration will be given to the construction of a container yard 1 km south of the current Lao Cai station) and (b) institutional and administrative causes, such as border crossing formalities and inspections for freight and passengers, restrictions on entry of transport units, technical standards for vehicles; (v) identify ongoing processes to facilitate transit at the border, including the GMS Cross-Border Transport Agreement dealing with road traffic; and (vi) identify any other contributing problems. 2. Phase 2: Recommendations and Proposals 9. Phase 2 will: (i) propose appropriate measures to facilitate trade, including (a) institutional and administrative measures, (b) physical measures, including communications systems (the consultant will work on a preliminary design basis, which will be expanded by consultants recruited for detailed engineering design and supervision of the implementation of the loan project); and (c) improving transhipment from road to rail at the border, identifying issues related to the upgrading to standard gauge in the PRC, and investigating the focus of freight handling, including the possibility of private sector involvement in container handling and container stuffing at Lao Cai; (ii) for each of the above items, describe: (a) how it will be implemented; (b) specific actions required and milestones; and (c) the consequences for each country, and the combined effect; (iii) propose several scenarios, each combining one or more of the measures in (i); and (iv) for the approved scenario (the approval process is still to be determined), propose ways and schedules for implementation.

Appendix 2 19

D. Personnel Requirements 10. A consultant, preferably with experience in transport, trade facilitation, international customs, and cross-border agreements, will be recruited. The candidate will carry out desk research and fieldwork and will meet with national authorities. VNR will help the consultant to collect data; arrange interviews with railway, customs and local government personnel in Lao Cai; and assist in internal travel.

E. Deliverables 11. A report will be prepared after phase 1 and submitted to VNR and AFD. This report will provide initial findings and contain recommendations on moving to phase 2. In phase 2, a more in-depth evaluation of the findings will be made and agreement reached on the implementation of appropriate measures. These will be described in detail in a final report submitted after phase 2. 12. Depending on the reviews in phase 1, deliverables could be: (i) draft amendments to existing legislation and agreements to enhance private sector involvement in train operations; and (ii) a preliminary design for possible physical improvements (which will be an input for detailed design and implementation under the main investment works). F. Estimated Time Frame and Assignments 13. The first phase of the study is expected to take 3 months. G. Estimated Cost 14. Consultants’ services are estimated at €100,000.

20 Appendix 3

TERMS OF REFERENCE FOR ENHANCED FINANCIAL MANAGEMENT GOVERNANCE REFORM PROGRAM FOR VIETNAM RAILWAYS A. Introduction 1. The Upgrade of the Railway Line between Yen Vien and Lao Cai Project will provide the physical framework required to meet rapidly growing demand for railway transport in north western Viet Nam and between Kunming in PRC and Hanoi and Haiphong in Vietnam. During project preparation, the Government requested and ADB and AFD have agreed to provide associated advisory technical assistance to optimize the economic benefits and the financial returns from the Project. Two technical assistance projects were identified during the course of project preparation: (i) the Financial Management Governance Reform Program for Vietnam Railways, which will modernize and transform the financial management system in Viet Nam Railways into a system that is suitable for commercial, market based railway operation as envisaged under the new Railway Law; and (ii) Improved Facilitation of Transit Traffic at the Lao Cai Border Crossing which will recommend on improvements in cross border traffic arrangements that would help to maximize the benefits enjoyed by Viet Nam and PRC from cross border railway transport. 2. Following the passing of the Railway Law and the reorganization of Vietnam Railways (VNR) into an infrastructure company and various operating companies, there is a need for stronger financial management accounting policies, procedures and internal controls, in an automated/computerized environment. The enhanced system should provide reliable cost and revenue management information for timely decision making and to safeguard the assets of the holding company and its operating companies. The availability of information on the financial position and operating profitability of VNR and its companies will enable VNR to compete more effectively in a market-oriented transport environment. The goal of the reforms is the establishment of a reliable automated financial management system. The Financial Governance Reform Program for the Viet Nam Railway Sector will take 5 years. Phase 1, implementing a system of accounts in accordance with generally accepted accounting principles and in a semi-automated finance and managerial accounting system, may be achievable within the first 2 years. Phase 2, full implementation of the enhanced system, including seamless automation of financial management databases with real-time data links between all organizational units of the VNR, will be a medium- to long-term goal. B. Reforms – Phase 1 1. Scope and Outcomes 4. Phase 1 will focus on the first 2 years of the Program. The components will include (i) an analysis of the present financial management and control organization and its system of accounts; (ii) design of an enhanced financial management system in a semi-automated environment congruent to the organizational structure of the VNR; (iii) implementation on a pilot basis of the proposed system; and (iv) training. The outputs of component (i) will include a road map for the Program, including recommendations on (i) organizational structure (including internal audit), and (ii) human resource competencies and skills required within the financial accounting and internal audit and control units of the VNR. Components (ii) and (iii) will support VNR staff through the pilot implementation of the enhanced financial and managerial accounting system. They will include a re- evaluation of the assets and liabilities of the companies, including a revaluation of fixed assets and inventories, and a review of the contingent accounts, if any. Component (iv) training will be an underlying capacity building program of the TA. 5. The TA outcome will be an improved system of financial management accounts and internal control designed in accordance with international good practice standards of financial reporting and control as appropriate for a railway operating in a market-oriented economy, implemented on a pilot basis. It is expected that Phase 1 will cost an estimated $600,000 and will be implemented over a period of 18 months. Consultancy services will be provided by a firm (preferably an association between an international accounting and auditing firm and a Vietnamese accounting and auditing

Appendix 3 21

firm). It will require 15 person-months of international consultants and 36 person-months of national specialists. 2. Terms of Reference of the Consulting Firm 7. The consulting firm will: (i) review the organization of VNR with regard to its relationships with its subsidiaries and the separation of infrastructure from operations from a financial management perspective and within the context of the new Railway Law and its implementing decrees; (ii) conduct a management audit of VNR, including a review of the effectiveness of its financial organization with regard to business units, profit centres and cost centres; (iii) review the system of control over cash receipts and disbursements, accounts receivables and payables, fixed assets and inventories, including the existence of registers, supporting documentation and control accounts, and reconcile the book values with the control accounts in the general ledger; (iv) evaluate assets and obligations, such as fixed assets, inventories, liabilities (including contingent liabilities) to ascertain whether the book values are realistic; (v) review the system of financial planning, budget preparation, control, and budget execution; (vi) review internal audit activities if any, and make recommendations for the establishment of regular internal audits and controls; (vii) review the system of independent external monitoring controls, such as activities of the external auditors and state auditors, audits of financial statements and audit reports for public disclosure; (viii) prepare recommendations for the introduction of appropriate good-practice systems in the abovementioned areas, items (i) to (vii); (ix) develop a semi-automated management accounting system appropriate to the needs of VNR in a market economy, establish local and wide area network connections enabling frequent (say hourly but not necessarily real-time) replication between a centralized accounts database at VNR and decentralized accounts databases at VNR subsidiaries using inexpensive off-the-shelf components and software, and design and implement training programs for staff. The system shall reflect the structure of the VNR; and (x) in the pilot implementation phase, assist VNR staff to set up the approved financial and management accounting system, establish revenue and cost center reporting systems, and engage in extensive consultation with the VNR, the Ministry of Transport and other government agencies before finalizing the financial management system. 3. Consultant Competencies a. International Accounting Specialist and Team Leader (12 person-months, intermittent) 8. This senior financial management specialist must have experience in carrying out management and financial audits. He or she must have a professional designation as a chartered accountant or its equivalent and must have a demonstrated successful track record of designing and developing financial management systems in an automated environment in the railway sector. The specialist should have at least 15 years’ experience (at least 10 years of which should be appropriate international experience, preferably in a developing economy). He or she will be the team leader for the TA project and will provide not only the technical expertise, but also the project management and supervisory skills required to move a team of international and national experts. He should be proficient in database software systems. b. International Automation Specialist (3 person-months, intermittent) 9. This senior automation specialist must have proven experience in designing and implementing financial management and database systems, preferably for the railway sector. He or she should be knowledgeable of the available cost-effective tools which can be used to further the automation efforts in the VNR. He or she will provide direct technical support to the Team Leader in as far as automation aspects of the project. Once the system is put in place, he will provide training to VNR staff on its use.

22 Appendix 3

c. National Accounting and Auditing Specialists (24 person-months, intermittent) 10. These two national accounting and auditing specialists should be graduates in accounting and/or auditing, with at least 5 years’ experience. They should be proficient in English and preferably have work experience in international organizations. They should be proficient in software systems. d. National Automation Specialist (12 person-months, intermittent) 11. The national automation specialist must possess the ability to customize and implement off- the-shelf software(s) to meet the specific management information system needs of the VNR. He or she should have a proven record of producing quality programs/systems for service companies (preferably in the transport sector). He or she will support the work of the International Automation Specialist. He or she should be proficient in English and preferably have worked in an international organization. 4. Deliverables 12. The deliverables are as follows: (i) An assessment of the existing management accounting system, financial accounts, and organization of VNR, and a road map for financial governance reform, which should be a time-bound action plan, sequencing the activities and interdependencies, and the estimated cost of carrying out the proposals contained in the road map; (ii) An organizational plan appropriate to an effective management information system, including draft terms of reference and job descriptions for the financial accounting, internal audit and control departments and their staff. If required, advisory assistance will be provided to VNR in the realignment of certain departments within the VNR in order to implement the system; (iii) Development and implementation (on a pilot basis) of an enhanced semi-automated financial control and management system. A training program, including workshops to create awareness of the new financial management system, in the operational and support units in VNR. A diagnosis of the accounting and finance skills of VNR staff will be carried out and will form the baseline indicators by which the effectiveness of the training program will be assessed by the end of the TA; and (iv) An inception report within 1 month from fielding of the consultant team, outlining its initial diagnosis, its proposed approach to the project and a time-bound schedule of activity for the TA project. Semi-annual progress reports during the duration of the project; a draft final completion report circulated 1.5 months prior to end of the project; and a final completion report issued at end of the project. All reports should be discussed in consultation with VNR and ADB. 5. Estimated Cost Table A3.1: Costs ($’000) Foreign Local Total Cost Cost Component Cost Cost 1. Consultants a. Remuneration International (15 person-months, intermittent) 270.00 270.00 National (36 person-months) 72.00 72.00 b. Per Diem International Consultants in Viet Nam 54.00 54.00 National Consultant travelling out of Hanoi 12.00 12.00 c. Travel International Travel (5 round trips) 20.00 20.00 Domestic Travel (3 round trips per consultant) 7.50 7.50 2. Workshops, Conferences , and Seminars 5.00 15.00 20.00 3. Communication and Reproduction/Translation 5.00 5.00 10.00 4. Software and Equipment (computers, servers, and printers) 65.00 65.00 5. Contract Negotiation 3.00 3.00 6. Contingencies 60.00 6.50 66.50 Total 482.00 118.00 600.00 Source: ADB estimates.

Appendix 3 23

C. Reforms – Phase 2 1. Scope, Activities and Outcomes 13. To extend the pilot implementation during phase 1, phase 2 will roll-out the Financial Management Governance Reform Program to the entire VNR organization. Lessons learned in phase 1 will be applied and the system improved and modified, taking into account the impact of changes in the Vietnam railways regulatory environment over the initial 18 months phase 1 period. Significant investments will be needed in computer infrastructure, the continuing evolution of business processes, and in human resource capacity development. 14. Activities will include a reassessment and stocktaking of the achievements of phase 1, and of implementation difficulties and gaps which will need to be addressed in phase 2. The post-evaluation of phase I will assist in refining a time-bound detailed action plan for phase 2. The extensive nature of phase 2 will require a minimum 3-year implementation period. Given the comprehensive scope of phase 2, intensive donor coordination will continue to ensure that the phase 2 program remains valid vis-à-vis each donor’s area of support within the overall framework and context of VNR institutional reforms and railway sector private sector reforms. It is expected that the long-term goal of the Program of providing a reliable, transparent, and succinct financial management system for timely and informed decision making by VNR and the Ministry of Transport will be achieved after implementation of phase 2. D. VNR Commitments 15. VNR will establish a finance working group of about 10 full-time VNR employees who will participate fully and actively in the process of developing and implementing Phase 1. The members of the finance working group will be representatives of the departments involved in the financial management system. After having been involved in the planning and conceptual process, these staff will be in a position to implement the new system. The finance working group will be headed by a senior member of staff from VNR who will be able to provide information and discuss problems directly with the management of VNR. This group should also be able to carry out detailed assignments, such as listing fixed assets, taking inventory, and similar tasks and be able to answer specific questions relating to railway matters. The cost of the finance working group (such as remuneration of its members) will be borne by VNR. The consultants will be given full and prompt access to accounting and organizational information. VNR will make available to the consultants clean air-conditioned and furnished office accommodation (with internet and communication facilities), printing, and photocopying facilities for the duration of the Program.

24 Appendix 3

Tentative Implementation Schedule – Phase 1 and 2

Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11

Phase 1 Recruitment of consultant Inception and diagnostics Development of pilot system Procurement Roll-out of pilot system Training (intermittent) Pilot operation of system Monitoring (intermittent) Phase 2 Recruitment of consultant Procurement Roll-out of core system to al VNR units Development of auxiliary components (point of sales etc.) Roll-out of associate systems Training (intermittent) Systems support Monitoring (intermittent) Operation of system (VNR)

Appendix 4 25

DETAILED COST ESTIMATES

Table A4.1: Detailed Cost Estimates by Expenditure Category

Foreign Local Total % of Total Item Cost Cost Cost Cost A Investment Costsa 1. Civil Works, of which 15.34 20.41 35.75 22.3 a. Realignment and Embankment 1.81 5.52 7.33 Stabilization b. Bridges 5.95 5.49 11.44 c. Stations 4.97 4.97 9.94 d. Safety 2.11 4.93 7.04 2. Equipment-Track Renewal 63.22 14.80 78.02 48.8 3. Land Acquisition, Resettlement 0.28 5.33 5.61 3.5 and Social Mitigation 4. Environmental Protection 0.28 1.15 1.43 0.9 5. Consultants for Design, 5.62 2.41 8.03 5.0 Supervision, and Administration 6. Taxes 0.00 12.17 12.17 7.6 Total Base Cost (A) 84.24 56.77 141.01 88.1 B. Contingenciesb 1. Physical 5.82 4.13 9.95 6.2 2. Price 4.49 2.89 7.38 4.6 Subtotal (B) 10.32 7.01 17.33 10.8 C. Financing Charges During Implementation c Interest During Implementation 1.66 0.00 1.66 1.0 Subtotal (C) 1.66 0.00 1.66 1.0 Total Project Cost (A+B+C) 96.21 63.79 160.00 100 a In mid-2006 prices excluding the TA projects referred to in paras. 31 and 35. b The physical contingencies are computed at 12% for civil works and track implementation, and 2% for track materials (because the quantities have been estimated based on track standards and are firm). Price contingencies are computed at international cost escalation of 2% per year for foreign costs and 5% per year for local costs. c Only includes ADB’s capitalized interest. Source: Staff estimates based on feasibility study by PPTA consultant.

Table A4.2: Detailed Cost Estimates by Financier 26 ($ million)

Total 4 Appendix Item Cost ADB AFD DGTPE Government % of % of % of % of $ $a Cost b $ Cost $ Cost $ Cost

A. Investment Costs 1. Civil Works, of which 35.75 21.45 60 14.30 40 0.00 0 0.00 0 a. Realignment and Embankment 7.33 4.40 60 2.93 40 0.00 0 0.00 0 Stabilization b. Bridges 11.44 6.86 60 4.58 40 0.00 0 0.00 0 c. Stations 9.94 5.96 60 3.98 40 0.00 0 0.00 0 d. Safety 7.04 4.22 60 2.82 40 0.00 0 0.00 0 2. Equipment-Track Renewal 78.02 24.35 31 16.24 21 37.43 48 0.00 0 a. Equipment-rails and switches 37.43 0.00 0 0.00 0 37.43 100 0.00 0 b. Track Renewal 40.59 24.35 60 16.24 40 0.00 0 0.00 0 3. Land Acquisition, Resettlement, and 5.61 0.00 0 0.00 0 0.00 0 5.61 100 Social Mitigation 4. Environmental Protection 1.43 0.86 60 0.57 40 0.00 0 0.00 0 5. Consultants for Design and 8.03 4.82 60 3.21 40 0.00 0 0.00 0 Supervision, and Institutional Strengthening and Administration 6. Taxes 12.17 0.00 0 0.00 0 0.00 0 12.17 100 Total Base Cost (A) 141.01 51.48 37 34.32 24 37.43 27 17.78 13 B. Contingencies (B) 17.33 6.86 40 5.68 33 0.07 0 4.72 27 C. Financing Charges During 1.66 1.66 100 0.00 0 0.00 0 0.00 0 Implementation (C) Total Project Costs (A+B+C) 160.00 60.00 40.00 37.50 22.50 % Total Project Costs 100 37.50 25 23.40 14.10 ADB = Asian Development Bank, AFD = Agence Française de Développement, DGTPE = Treasury and Economic Policy General Directorate of the French Ministry of Finance. a Amount of ADB loan proceeds allocated to the cost category. b The amounts disbursed by ADB for eligible expenditures under a cost category will be subject to the ceiling set by the allocation of loan proceeds for such a cost category. Source: Staff Bank estimates.

RPMU STAFFING AND MANAGEMENT CHART

Appendix 5 5 Appendix 27

Source: RPMU/VNR.

UPDATED IMPLEMENTATION SCHEDULE Appendix 6 Appendix

Km= kilometer. Source: RPMU/VNR.

Appendix 7 29

PROCUREMENT PLAN

Project Information Country Socialist Republic of Viet Nam Name of Borrower Socialist Republic of Viet Nam Project Name Greater Mekong Subregion Kunming-Hai Phong Transport Corridor: Yen Vien–Lao Cai Railway Upgrading Project Loan Reference L2302-VIE Date of Effectiveness Amount $ $60 million Of which Committed, $ Executing Agency Vietnam Railways Approval Date of Original Procurement Plan 14 November 2006 Approval of Most Recent Procurement Plan 14 November 2006

Publication for Local Advertisements1 2nd Quarter 2007 Period covered by this Plan December 2006–May 2008

Procurement Thresholds, Goods and Related Services, Works, and Supply and Install

Procurement Method2 To be used ($) International Competitive Bidding (ICB) above $1,000,000 Works ICB Goods above $500,000 National Competitive Bidding (NCB) Works above $100,000, below $1,000,000 NCB Goods above $100,000, below $500,000 Shopping Works less than $100,000 Shopping Goods less than $100,000

Procurement Thresholds, Consultants Services

Procurement Method To be used ($) Quality- and Cost-Based Selection (QCBS) $200,000 Consultants’ Qualifications Selection (CQS) $100,000–$200,000 Least-Cost Selection (LCS) Below $100,000

1 General procurement notice, invitations to prequalify and to bid, calls for expressions of interest. 2 For international competitive bidding (ICB), the Asian Development Bank (ADB) will conduct prior review of all procurement documents, the bid evaluation report (BER), and award of contract. For national competitive bidding (NCB), the first draft English language version of the procurement documents should be submitted for ADB review and approval regardless of the estimated contract amount. ADB-approved NCB procurement documents should be used as a model for all NCB procurement financed by ADB, and will not be subjected to further review unless required under special arrangements. For NCB, ADB will review the BER and award of contract on post-facto basis.

30 Appendix 7

List of Contract Packages, Goods, Works, and Consulting Services Estimated Expected Date Prior Ref Contract Cost Procurement of Review Comments Description ($ million) Method Advertisements Y/N Lot Civil works and 29.0 ICB 2nd Quarter 2008 Y Jointly 1 track works Financed by between Yen Vien ADB and and Doan Thuong AFD (Km 10.90–Km 144.75 [133.85 km]) Lot Civil and Track 36.0 ICB 2nd Quarter 2008 Y Jointly 2 works between Financed by Doan Thuong and ADB and Lam Giang (Km AFD 144.75–Km 225 [80.25 km]) Lot Civil works and 35.0 ICB 2nd Quarter 2008 Y Jointly 3 track works Financed by between Lao Cai ADB and and Lam Giang AFD (Km 225.0–Km 296.05 [71.05 km]) Lot Supply of rails, 37.5 DGTPE 2nd Quarter 2008 Y Financed by 4 track switches, Guidelines10 DGTPE and fittings Lot Various packages 0.1 Shopping 2nd Quarter 2008 Y Jointly 5 of goods each of Financed by value less than ADB and $0.1 million AFD CS International 8.5 QCBS 2nd Quarter 2007 Y Jointly 1 Consultant for Financed by Design and ADB and Supervision AFD ADB = Asian Development Bank, AFD = Agence Française de Développement, CS = consulting services, DGTPE = Treasury and Economic Policy General Directorate (DGTPE) of France’s Ministry of Finance, km = kilometer, Ref = reference, Tbd = to be discussed, Y/N = yes/no. Source: ADB estimates.

10 Procurement to be guided by DGTPE guidelines limited to French contractors. Appendix 7 31

Procurement under International Competitive Bidding (with prequalification) Suppliers/ Executing Agency ADB Contractors

Review list of goods or Loan or advance contracting works to bid (from procurement plan) approved

ADB review and approval a Prepare draft PQ documents and draft bidding documents b ADB review and approval a Advertise the invitation for PQ in www.adb Advertise in locally in English and issue the PQ documents; submit to ADB a report on advertising (minimum 6 week period given for Purchase PQ documents from EA submission of PQ applications) and submit PQ application

PQ applications received

Evaluate PQ applications ADB review and approval a Recommend prequalified firms

EA Notifies prequalified and ADB approval received disqualified firms

Issue bidding documents to Purchase bidding documents prequalified firms from EA and submit bid (minimum bidding period 6 weeks)

Public bid opening Prepare record of public bid Opening

Evaluate bids and recommend ADB review and approval a contract award Sign contract agreement and Prepare contract agreement return to EA, and send to supplier Provide performance security

Send 3 copies of signed contract to ADB Review signed contract; Contract implementation Prepare PCSS for payment purposes a Approval not required under post review b The draft bidding documents can be prepared at a later stage provided that ADB approval is obtained before issuance o bi dding documents to prequalified firms.

32 Appendix 8

OUTLINE TERMS OF REFERENCE FOR DESIGN AND SUPERVISION CONSULTING SERVICES11

A. Background and Objective 1. The Viet Nam Railway Corporation (VNR), the Executing Agency (EA), has the responsibility to implement the proposed Asian Development Bank (ADB)-financed Yen Vien– Lao Cai Railway Upgrading Project (the Project), which is a part of the Greater Mekong Subregion (GMS) Kunming–Hai Phong Transport Corridor.12 Within VNR, the Railway Project Management Unit (RPMU) will be the implementing agency responsible for project preparation, procurement, implementation, liaison with ADB, and related activities. A firm of international consultants in association with national consultants will be recruited under the Project to assist with detailed design, procurement activities, and construction supervision and to monitor various other loan and Project-related activities. The recruitment of consulting services will be done in accordance with ADB’s Guidelines on the Use of Consultants and on the basis of the detailed terms of reference (TOR). 2. The main objectives of the consulting services are to ensure that the procurement of civil works and materials under the proposed Project are undertaken in an economical and efficient manner, consistent with widely accepted engineering standards and practices for such works, and to the satisfaction of the Government, VNR, ADB, and cofinanciers. The international consultants should ensure that on-the-job training is provided and transfer of engineering and project management experience is transferred to associated VNR and RPMU staff. 3. The project preparatory technical assistance (PPTA) consultant prepared the Project Feasibility Study including preliminary designs. The PPTA consultant has identified four major contract packages for procurement. Three contract packages for civil works (including track renewal), financed by ADB and AFD, will be procured using international competitive bidding (ICB) procedures as per ADB’s Procurement Guidelines. The fourth contract package for rails, track switches and fittings that will be financed by DGTPE tied-assistance will be procured only from French contractors, in accordance with the French Ministry of Finance’s guidelines for procurement under the Emerging Countries Facility (ECF) loans. 4. In general the works to be carried out under each civil works contract will comprise:

(i) Realignment of railway tracks in some section, including rebuilding of new bridges; (ii) Rehabilitation of selected existing bridges; (iii) Replacement of steel girders in selected bridges; (iv) Repairs to bridge substructures; (v) Building new station complete with tracks and station facilities; (vi) Constructing new passing loop tracks and extension of existing passing loops at selected stations; (vii) Renewal of track complete with new rails and switches/turnouts (supplied under a separate contract), concrete sleepers, elastic fastenings; and ballasting; (viii) Civil works related to stabilization of embankment/side slope, protection of embankment slopes, and drainage; (ix) Safety works including road over bridges (over passes) and improvements to level crossings; and

11 This outline terms of reference is based on the detailed terms of reference for consulting services for detailed design, construction supervision, and monitoring under the Project. 12 The Project is cofinanced with Agence Française de Développement (AFD) and the Treasury and Economic Policy General Directorate (DGTPE) of the French Ministry of Finance. Appendix 8 33 (x) All building works at stations, including access road to stations, platform, upgrading/extension, and stores and freight facilities (where applicable).

B. Scope of the Services 5. The services to be provided by the consulting services will be described in detail in the Terms of Reference in the Request for Proposals and will include, but will not be limited to the following: a. Detailed Design

(i) review of preliminary design done by the PPTA consultants; (ii) conduct environmental, socioeconomic, geographic, and geodetic surveys at sites; (iii) provide the technical specifications for the procurement and construction contracts, including procurement of rails, switches, fastenings, and related materials; (iv) prepare detailed designs of all civil works and track works, including getting approval of the relevant designs by VNR; (v) prepare the detailed and general cost estimates based on the detailed design; and (vi) it is expected that at the stage of detailed design the consultant will review the requirements and the preliminary design proposals and come forward with innovative solutions that will facilitate efficient and economic project implementation. As for example while considering the replacement of girders it should be investigated if replacing some steel members and/or strengthening of others, replacement expenditure on the whole girder can be avoided. It may be possible to economize in other areas. b. Procurement and Contract Supervision 6. The consultant is responsible for preparation of the prequalification documents, bid documents, criteria for assessment of prequalification submissions, and tender documents for all bidding packages of the Project in compliance with relevant regulations of the Government, ADB, and other cofinanciers. The contract packages that are jointly financed by ADB and AFD will be procured in accordance with ADB’s Procurement Guidelines. The contract package of rail and switch procurement financed by DGTPE will be in accordance with DGTPE guidelines. The consulting services will provide assistance for evaluation of bids up to the stage of contract award. 7. In all stages, the consultant will ensure compliance with the Government and VNR requirements and standards and relevant international engineering standards wherever practicable. The consultant will assist RPMU including, but not limited to the following: (i) compile prequalification and bid documents for international procurement as per ADB’s Procurement Guidelines; (ii) submission of prequalification and bid documents and criteria of assessment to the Government, ADB, and the cofinanciers (if needed) for approval; (iii) draft the invitation to bid and specific procurement notices for inclusion in the Asian Development Bank Business Opportunities and UNDP; (iv) revise prequalification and bid documents based on the comments of the Government, ADB, and other cofinanciers; (v) convene the prebid meeting and field trip; (vi) respond to bidders’ queries; (vii) check conformity of the prequalification and bid s to eligibility criteria in the bidding documents,

34 Appendix 8 (viii) bid evaluation in accordance with ADB’s and Government’s requirements, (ix) clarify of any issues with bidders, (x) prepare a bid evaluation report to ADB and Government for approval, and (xi) assist in contract award procedures and submission of contract documents to ADB and Government.

8. The consultants will assist RPMU in the procurement of technical support equipment following the ADB’s international shopping procedures.

c. Supervision of Procurement, Construction Supervision, Monitoring of Project Progress and Budget Control 9. The consultant will assist the RPMU in the day to day supervision of international procurement activities that will include, but limited to, the following: (i) prepare documents to finalize the contracts with the successful bidders, (ii) provide advisory assistance to VNR in completing the signing of contracts, (iii) issue orders for supplying and commissioning the equipment, (iv) administer contracts (including management of performance securities, return of bid bonds, advance payments etc.), (v) manage contractual queries, (vi) check and monitor supplier’s delivery program, staff training, spare parts, and commissioning proposals and warranties, (vii) review supplier’s quality control program, (viii) assist the RPMU in inspecting materials, equipment, and machinery to ensure they comply with the specifications, and give immediate notice to suppliers in the event of noncompliance, (ix) advise of any needed changes to plans or specifications, (x) assist RPMU in reviewing and examining claims arising from suppliers in relation to time extensions for delivery, additional payments, and other matters that may arise from time to time during contract implementation, (xi) upon completion of procurement, inspect the goods and certify completeness or otherwise, (xii) review suppliers’ ongoing commitment to training of VNR staff, commissioning of equipment, supply of spare parts, equipment warranties, and supply of end user manuals, and (xiii) assist RPMU in the release of payments and performance bonds under the contracts. (xiv) The contracts will be administered under the FIDIC Conditions of Contract and in compliance with Vietnamese regulations, working drawings and variation in quantity must be approved by VNR. (xv) preparation and monitoring of a project implementation program and reporting procedures, (xvi) liaison with ADB and other relevant bodies, (xvii) preparing withdrawal applications under ADB loan and other required documentation, (xviii) preparing Project accounts and financial statement in accordance with the Loan and Project agreements, and (xix) preparing quarterly and annual progress reports as required under the Loan and Project agreements. d. On-the-Job Training Assistance 10. The consultant will provide associated VNR and RPMU staff with on-the job training in:

Appendix 8 35 (i) procedures for the engagement of consultants, (ii) international procurement, (iii) project management (iv) preparation and submission to ADB a Project Completion Report in accordance with the requirements set forth in the Loan and Project Agreements.

11. The consultants will provide any additional services related to the Project upon request and approval of the Government on the basis of justifiable and mutually acceptable billing rates/costs. Such additional services will also be subject to prior approval by ADB. C. Required Expertise 12. Approximately 200 person-months of international consultants and 524 person-months of national consultants will be needed. The consultants will have expertise in: detailed design of project components, international procurement under ADB’s Procurement Guidelines, management and contract administration, construction supervision, and monitoring of implementation of environmental, updating, implementation and monitoring of resettlement plan, socioeconomic impact assessment and project performance monitoring of the Project. The following expertise will be required: (i) procurement and project supervision specialist for review and preparation of documentation and assisting in bidding, award, and contractual issues associated with the procurement process under the Project; (ii) engineering expertise (in various disciplines) for preparation of detailed designs; and (iii) resettlement, social, and environmental experts. The consultants will be required to make their own arrangements under the Consultant’s Contract for appropriate English/Vietnamese translation and interpretation service that may be required. D. Submission of Reports 13. The consultant will submit two copies each of the following reports to ADB, AFD, and DGTPE and RPMU/VNR: (i) a brief monthly report highlighting the progress made and main developments during the month reported, and any problems that need to be brought to the attention of ADB, should be faxed to ADB by the third week of every month.

(ii) A detailed quarterly progress report should cover all aspects of the services and the Project covering the progress made during the quarter and on a cumulative basis, program of work for the next quarter, difficulties encountered and assistance needed, if any.

(iii) A final report to be submitted on completion of services that will summarize all consulting activities and their results. E. Facilities 14. Offices, laboratories, transportation, and accommodation for the consultant’s fulltime and short time international and national staff, and RPMU counterparts (all furnished and equipped, together with appropriate services, maintenance, and consumable stores) for the project will be provided through the civil works contracts.

36 Appendix 9 DISBURSEMENT PROCEDURES

Reference: ADB’s Loan Disbursement Handbook dated January 2007

1. Procedures for withdrawal of loan proceeds are standardized to facilitate disbursements under most loans. Disbursement procedures consist of four major types, described briefly below:

A. DIRECT PAYMENT PROCEDURE (page 24 of the Handbook)

2. This procedure is where ADB, at the borrower’s request, pays a designated beneficiary directly.

1. Requirements

(i) A signed withdrawal application (form ADB-DRP/RMP in Appendix 5) must be submitted to ADB together with a summary sheet (form DRPSS in Appendix 8) and the required supporting documents. (ii) A separate withdrawal application is required for each different currency.

2. Supporting Documents

3. The following supporting documents must be submitted to ADB with the withdrawal application: (i) All cases require a contract or confirmed purchase order (PO), if not submitted earlier to ADB, indicating the amount and date due; (ii) payment of goods requires the supplier’s invoice, bill of lading, other similar documents; (iii) payment of services requires the consultant’s claim or invoice; (iv) payment of civil works requires the claim or invoice and a summary of work progress certified by the project engineer approved by the borrower’s authorized representative.

B. COMMITMENT PROCEDURE (page 26 of the Handbook)

4. This procedure is where ADB, at the borrower’s request, provides an irrevocable undertaking to reimburse a commercial bank for payments made or to be made to a supplier against a letter of credit (LC) financed from the loan account.

1. Requirements

(i) A signed application for issuance of commitment letter in the form ADBCL (see Appendix 6) is submitted to ADB together with a summary sheet for the commitment letter (see Appendix 9) and the required supporting documents. A separate application is required for each currency in which a commitment letter is requested.

2. Supporting Documents

5. Supporting documents to be submitted to ADB with the application for commitment letter include: (i) a contract or confirmed PO, if not yet submitted earlier to ADB; and (ii) two signed copies of the LC against which ADB’s commitment letter is requested.

Appendix 9 37 a. Amendments to the LC

6. The borrower requests ADB’s approval of amendments to the LC as soon as the LC amendment is obtained from the LC issuing bank (see Appendix 17). Copy of the signed amendment must be attached to the request.

7. ADB communicates its approval to the nominated commercial bank and the borrower by the form shown in Appendix 18 or by authenticated SWIFT, tested telex, or a formal letter of approval.

8. ADB can allow the borrower, in urgent cases, to send its application for approval to amend the LC by fax. The message is to include loan number, commitment letter number, LC number, and nature and reason for the amendment. Copy of the LC amendment should be attached to the application.

9. The message must state that the amendment has been made by the LC issuing bank and that the application for approval of amendment of LC and a copy of the LC amendment are being airmailed to ADB.

10. 1. Amendments to the LC for: (i) extending the expiry date and shipping dates up to the loan closing date; and (ii) other amendments except those mentioned in para. 8.18 need not be submitted to ADB for approval. The borrower merely informs ADB using the standard form (see Appendix 19) and submits a signed copy of the amendment. This will ensure ADB’s prompt payment of claims received from the nominated commercial bank.

b. Amendments requiring ADB’s prior approval

11. ADB’s prior approval is required for amendments to the LC involving changes such as:

(i) extension of the LC expiry date beyond the loan closing date of the loan account, as specified in the loan agreement, or otherwise extended by ADB; (ii) change in the LC’s value or currency; (iii) description or quantity of goods; (iv) country of origin; (v) beneficiary; and (vi) terms of payment.

12. The nominated commercial bank(s) are to copy all proposed amendments to ADB for its information or approval.

C. REIMBURSEMENT PROCEDURE (page 30 of the Handbook)

13. This procedure is one where ADB pays from the loan account to the borrower’s account or, in some cases, to the project account for eligible expenditures, which have been incurred and paid for by the project out of its budget allocation or its own resources.

14. Under this procedure, ADB’s payments are made only to the borrower or EA and not to a third party, and this procedure normally requires submission of full supporting documentation.

1. Requirements

(i) A signed withdrawal application (see form ADB-DRP/RMP in Appendix 5) must be submitted to ADB together with a summary sheet (see form ADB-RMP-SSin Appendix 8) and the required supporting documents. (ii) A separate withdrawal application must be submitted for each currency.

38 Appendix 9 (iii) A separate summary sheet must also be submitted for each loan category or subcategory grouping items claimed by contract number. (iv) The expenditures should have been incurred and paid for by the borrower out of its own fund sources.

2. Supporting Documents

(i) ADB is to receive the withdrawal application with the contract or confirmed PO, if not yet submitted to ADB; (ii) a copy of the invoice/bill/claim and delivery receipt; and (iii) the evidence or receipt of payment showing the amount paid, the date of receipt, and the payee.

a. Statement of Expenditure (SOE) Procedure

15. Statement of Expenditures procedure is a simplified procedure requiring no submission of supporting documentation. The procedure derives its name from the SOE form, which is submitted with the withdrawal application. The SOE replaces the usual supporting documents and the summary sheet. The SOE form provides data on contracts and disbursements up to the authorized ceiling amount. In the SOE, the borrower certifies that

(i) expenditures have been incurred and paid for under the terms and conditions of the loan agreement; (ii) records are maintained and are available for examination by ADB disbursement/review missions and independent auditors; and (iii) payments have not been split just to enable it to pass through the threshold prescribed under the SOE.

16. The SOE forms available are:

(i) SOE form for contracts of US$100,000 and below (see Appendix 22); (ii) SOE form for contracts over US$100,000 (see Appendix 23); (iii) SOE form for noncontract items, mostly related to operating and overhead expenses (see Appendix 24); and (iv) SOE form (free format) for items not provided in the other SOE forms (see Appendix 25).

17. The statement of expenditure procedures may be used for liquidating or replenishing the imprest account. Such procedures shall apply to contracts not exceeding $100,000.

18. Where ADB subsequently finds any payment made under SOE procedure to be insufficiently supported or ineligible for ADB financing, ADB may offset the amount of the unjustified or ineligible payment against subsequent withdrawals for reimbursement or request the borrower or EA to refund the same amount to the loan account.

D. IMPREST FUND PROCEDURE (page 37 of the Handbook)

19. This is a procedure where ADB makes an advance disbursement from the loan account for deposit to an imprest account to be used exclusively for ADB’s share of eligible expenditures. The following conditions must exist before the borrower is allowed to use the procedure: (i) need for the procedure, (ii) borrower’s capability, and (iii) audit arrangements.

Appendix 9 39 1. Requirements

(i) A signed withdrawal application for imprest account (see Appendix 7) must be submitted to ADB together with a statement of the estimated ADB share of project expenditures on form ADB-IFP-EES (see Appendix 29).

20. The borrower is required to open, for the exclusive use of the project, a separate bank account for depositing advances. The imprest account shall be maintained in current account only and opened in the borrower’s name. The Account may be opened at the Central Bank of the borrower’s country or in a commercial bank the borrower designates, provided that the institution chosen is capable of executing foreign exchange and local currency transactions, opening letters of credit and handling a large volume of transactions, and issuing detailed monthly bank statements promptly.

21. The initial deposit to the imprest account will be $2 million or 6 months’ estimated expenditures, whichever is lower. The ceiling for the imprest account shall not exceed 10% of the loan amount,

2. Liquidation/Replenishment

22. As eligible expenditures are incurred and paid from the Account, the borrower requests liquidation/replenishment of the Account by submitting a withdrawal application and the applicable summary sheet using the form in Appendix 8 if full documentation is required or Appendix 22 to 25 if SOE procedure is approved. The corresponding bank statement and reconciliation statement (see Appendix 30) should also be submitted with the application. Withdrawal application must be prepared in the currency of the Account.

E. INSTRUCTIONS FOR WITHDRAWALS

23. Before the first withdrawal application (W/A) is submitted to ADB, the name of the authorized representative(s) must be provided to ADB, including the authenticated specimen signatures of the representative(s).

24. The W/A should be signed by the authorized representative(s), sequentially numbered and should not exceed five digits (00001, 00002, etc). The cover letter of the W/A should include a sentence reconfirming that the contracts were awarded on the basis of tax exemption to ensure expeditious loan disbursement by ADB.

25. For all withdrawals, ADB must receive a withdrawal application in the prescribed form. A withdrawal application is a written request from the borrower to ADB to pay funds against the borrower’s loan account. The application must reach ADB before the loan closing date. The W/A forms and summary sheets to be used vary for the different procedures. A separate W/A for each currency requested should be submitted. A withdrawal application consists of:

(i) the application itself in letter form (see Appendixes 5, 6, and 7 for sample formats); (ii) summary sheet(s) for each category claimed (see Appendixes 8 and 9 for sample formats); and (iii) supporting documents, if required (see Appendix 10).

40 Appendix 9 26. Before a disbursement is made for any contract issued by the Borrower, ADB has to prepare a Procurement Contract Summary Sheet (PCSS). Copies of all signed contracts and supporting documents should be sent to ADB as soon as they are available. This is a basis for ADB to monitor performance against the projected annual activities made at the start of the year. A PCSS number will be assigned by ADB for each contract received and these data will be relayed to the EA. The PCSS serves as an acknowledgement by ADB that the award of a contract has been checked and has been found to comply with ADB’s procurement guidelines. It also serves as a basis for disbursement. The PCSS is also numbered sequentially, not exceeding four digits, i.e. 0001, 0002, etc. The PCSS consists of the following basic information:

(i) ADB Contract No. or the PCSS No. (ii) Date of ADB approval of the Award of Contract (iii) Date of Contract Approval by the EA (iv) Mode of Procurement (v) Name of contractor or supplier (vi) Terms of payment and currency of contract (vii) Component to which the expenditures will be charged

27. Without the PCSS, ADB’s Controller’s Department could not proceed with the processing of payment for the W/A. When an amendment or a variation of a contract is made, a copy of the variation order should also be sent to ADB, for updating of the PCSS.

28. To avoid delay in the processing of payment, the PCSS No. should be indicated in the W/A to be submitted by the EA. The PCSS No. should be shown in the summary sheet.

29. The W/A to be submitted to ADB must be the signed original copy to the attention of Mr. Francis Emmanuel, CTLA-4 and copied to Director, SEID.

Appendix 10 41 FORMAT FOR QUARTERLY PROGRESS REPORTS

A. Quarterly Progress Report 1. A quarterly progress report will comprise the following sections: An executive summary, project status, financial status, and a detailed report on the Project’s compliance with the loan covenants. An outline Table of Contents for the report is given in Table 1 below. The report will contain all information required to update the ADB’s Project Performance Report

Table 1: Quarterly Progress Report for Projects (To be prepared by the Project Supervision Consultant)

OUTLINE TABLE OF CONTENTS Maps showing project area and project components 1. Introduction • Brief description of the Project Briefly describe the components of the project

• Contracts by Project List contracts, values and nature of work 2. Executive Summary • Status Provide status as of reporting date of each contract, including that of the consultants in 1 or 2 brief paragraphs

• Progress Summary Sheet Provide one sheet to summarize the status of the whole project and one sheet for each contract. 3. Contracts For each contract in turn provide information for all subsections as the case may be. Details for each contract should be presented as one unit.

• Progress status Provide details as set out in paragraph 3 of main text. Include details of contractors’ resources (plant, equipment and manpower) and comment on inadequacies.

• Financial Status Provide details as set out in paragraph 4 of the main text. Include details of variation orders issued and projections under process. Projections should be based on independent analysis of claims.

• Quality Control Provide statement of quality control activities during the reporting period.

• Safeguards Compliance Provide status of (i) resettlement and social safeguards activities; (ii) compliance with environmental mitigation measures; and (iii) safety issues, including accidents. 4. Loan Covenants Provide details/status of compliance. 5. Others Provide details of any Benefit Monitoring activities. Provide details of weather during reporting period, as relevant. Provide list of movements of consultant’s staff during reporting period. 42 Appendix 10

2. An Executive Summary will summarize, in not more than one page, the major and critical events only for the reporting period. Attached to this section is a Progress Summary Sheet, which illustrates project status and major implementation issues.

3. Project Status will discuss the status of critical project implementation activities against that assumed in the original implementation schedule and will discuss actions required in the next reporting period to address any project status issue. Progress will be presented graphically based on a critical path analysis and will include projections to project completion based on the status at the end of each reporting period. When delays have occurred, the report will include reasons for any delay and will quantify the effect of the delay in terms of overall project completion. When specific actions have been identified, the report will identify the person/entity to lead the action and the timetable of delivery. Where necessary the report will discuss the following:

(i) Implementation progress achieved and problems encountered and reasons for deviations from assumed progress;

(ii) Proposed actions our countermeasures to resolve any implementation problem or to mitigate the impact of and issue to project progress;

(iii) Major actions and critical activities relating to subproject preparation;

(iv) Status of bidding and award of civil works, equipment supply, and service contracts;

(v) Status of major procurement and disbursement actions; and

(vi) Measures proposed during the next reporting period. The report will also include a summary of activities planned for the next reporting period to implement these measures.

4. Financial Status and utilization of loan funds, counterpart funds for the reporting period and future requirements. This section will also include projections for contract awards and disbursements over the next four quarters for both civil works and consulting services contracts.

5. Compliance with Loan Covenants, particularly those relating to environmental, social, resettlement, and sector and institutional development and reforms itemized in Schedule 5 in the Loan Agreement.

B. Monthly Progress Report

6. This report should be a brief, comprehensive report summarizing the above (all items in Part A, Quarterly Report) in not more than four pages. The monthly report should focus on progress of major implementation activities and/or problems. A Progress Summary Sheet for the reporting months must be included.

Appendix 10 43 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.

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, 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.

1. Compilation of Activity List

5. 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 progres

44 Appendix 11

WORKSHEET FOR QUARTERLY AND YEARLY CONTRACT AWARDS/ COMMITMENTS AND DISBURSEMENT PROJECTIONS (QP-01/20__)

A. Introduction 1. This worksheet was developed as a result of the Bank's efforts to make more accurate the assessment of the liquid funds required to be held by the Bank during each year for making disbursements against ADB-financed Loans. This worksheet is provided to enable the EA, and the Project Division to develop realistic quarterly projections of their contract awards/commitments and disbursements.

B. Completing the Worksheet

2. The EA is requested to observe the following instructions in completing the worksheet:

(i) PROJECT: Official name of the project. (ii) LOAN/LOAN NO.: ADB assigned Loan Number; SEGMENT NO.: ADB assigned Loan Segment Number, if any; FUNDS: OCR, SF, etc.; COUNTRY: Abbreviated ADB acronym of the Borrowing Country. (iii) PROJECTION MADE IN: Month and Year in which projections are prepared. (iv) "LINE" COLUMN: To be numbered in sequence for easy identification purposes. (v) "CATEGORY" COLUMN: Indicate the Category of Expenditure in accordance with the Allocation of Loan Proceeds as defined in the Loan Documents. (vi) "CONTRACT/COMMITMENT ITEM" COLUMN: Indicate the Contract/Commitment Item that corresponds to each Category. Indicate in detail each contract or bid package (or more detailed breakdowns if found useful) awarded prior to the preparation of this worksheet, or which will be awarded/committed during the projection year, under each Category of Allocation of Loan Proceeds. (vii) "MONTH CONTRACT AWARDEDICOMMITTED OR TO BE AWARDEDICOMMITTED - CONTRACT VALUEICOMMITMENT" COLUMN: Indicate either the actual (QA) or projected (QP) month of award of contract/commitment and the actual/ estimated value of each contract/commitment eligible for Bank financing listed in the "Contract/Commitment Item" Column. In the upper portion of the blank space write (QA) and the date on which the contract/commitment was awarded/committed. When the Project Division anticipates that a contract/commitment will be awarded/committed in future quarters of the projection year; indicate (QP) and the month in the blank space under the quarter in which the contract/commitment is scheduled to be awarded/ committed. In the lower portion (double box), indicate the value of contract/commitment already awarded/committed (QA) or to be awarded/committed (QP) for each contract/commitment listed. Where the exact contract value/commitment is an estimate, you may supply (as an attachment) a list of the particular items included in the contract/commitment with cost estimate for each item., In the case where a contract/commitment has been awarded/ committed in previous years, but full or partial delivery is expected during the projection year, list Executing Agency's and/or ADB assigned Contract Number/Commitment and title in the "Contract/ Commitment Item" Column, as well as the contract award/ commitment date, the contract/commitment value in the "Contracts Awarded on Previous Year(s)" Column and the contract/commitment value (QP) available for Appendix 11 45

Disbursement. Where the Executing Agency anticipates procurement through International Shopping (IS) procedure, list the procurement in the appropriate "Category" and "Contract/Commitment Items Columns as IS. In such a case, the Executing Agency should furnish a list of all items to be procured through IS with the estimated cost of each item as an attachment. While it may be difficult to determine or project an accurate date of award of contracts/commitments for IS items, it is essential to work out a realistic time schedule for the award of such contracts (BASED ON CONTRACT SIGNING DATE)l commitment as well as the estimated schedule and amounts of disbursements relevant to such contracts/commitments. (viii) "DISBURSEMENT AMOUNT RELATED TO THE CONTRACT/ COMMITMENT" COLUMN: Indicate the disbursement amount projected (OP) to take place for each contract/commitment listed in the "Contract/Commitment Item" Column during the applicable quarters of the projection year. The commercial portion of existing contracts/commitments should be referred to define the commercial payment terms of each contract. Where the Executing Agency is projecting to award contracts or to approve commitments during the projection year, for which payment terms or delivery time are unknown, make assumptions in the projections (OP) of disbursements in each quarter of the projection year. Interest During Construction (IDC), if any, should also be included in the Disbursement Projections. (ix) "TOTAL” COLUMNS: Summarize the entire yearly projected contract awards value/commitments and disbursement amount under each Contract/Commitment Item. Total all the projections of contract awards/commitments and disbursements for each Contract/Commitment Item for the four quarters of the projection year. Total for the projection year is the summation of Quarterly Actuals (QA) plus Quarterly Projected (QP). Yearly: (YP) = (QA) + (QP). (x) "TOTAL OF THIS PAGE_OF_PAGES" LINE: It is devised to help in carrying on the totals horizontally and vertically computed from one page to the following page; the totals will be reported in the "Total from Previous Page ___ of ______Pages" line of the subsequent page.

C. Notes

3. The EA is requested to provide the information in yearly and quarterly breakdowns of projections IN TIME TO MAKE IT POSSIBLE TO REACH SERD/SESS AT THE ADB HEADQUARTERS NOT LATER THAN THE 15TH OF DECEMBER OF EACH YEAR.

46 Appendix 11 Appendix Worksheet for Quarterly & Yearly Contract Awards/Commitments & Disbursement Projections ($ Million) ( Important: Before completing this form, please read carefully the instructions printed at the back of this form. Refer to PAI Nos. 5.02. Issued in December 2001.)

PROJECT: PROJECTIONS MADE IN: LOAN/GRANT NO. SEGMENT NO. FUNDS (OCR, SF, ADF-IX, ATF2/) COUNTRY (Acronym) (Month, Year)

Contracts QUARTER 1 QUARTER 2 QUARTER 3 QUARTER 4 TOTAL PROJECTED Awarded on FOR THE YEAR 20___ Previous Jan, Feb, Mar 20_____ Apr, May, Jun 20_____ Jul, Aug, Sep 20_____ Oct, Nov, Dec 20_____ (YP)=(QA) + (QP) Year(s)

Ref. Month Awarded/ Month Awarded/ Month Awarded/ Month Awarded/ Cate- Month, Year QP QP QP QP Line CONTRACT/COMMITMENT ITEM /1 Committed or To be Committed or To be Committed or To be Committed or To be Disbursement gory 1/ Contract QP Disbursement QP Disbursement QP Disbursement QP Disbursement No. Awarded/ Awarded/ Awarded/ Awarded/ Contract Value/ Amount Related to Awarded Committed Amount Related Committed Amount Related Committed Amount Related Committed Amount Related Commitment the Contract/ QA to the Contract/ QA to the Contract/ QA to the Contract/ QA to the Contract/ (9)=(1+3+5+7) Commitment QP Commitment (2) QP Commitment (4) QP Commitment (6) QP Commitment (8) Contract Value Contract Value/ Contract Value/ Contract Value/ Contract Value/ (10)=(2+4+6+8) QA QA QA QA (Bank Financed) Commitment (1) Commitment (3) Commitment (5) Commitment (7) QA QA QA QA TOTAL (Carried Forward) FROM PREVIOUS PAGE ___ OF ___ PAGES

TOTAL OF THIS PAGE___ OF___PAGES (To be carried on next page) GRAND TOTAL (LAST PAGE)

1/ In accordance with the allocation of loan proceeds as defined in the loan documents, or any other detailed breakdown if found useful. NOTES AND REMARKS: Page ___ of ___ pages 2/ ATF = Asian Tsunami Fund; Projections should be for the ADB-ATF financed component only. QP-01-20______QA = Quarterly Actual (already awarded/committed/disbursed, when projections are prepared). QP = Quarterly Projected (to be awarded/committed/disbursed), when projections are prepared). ADB Form No. 16/06 Revised September 2005 Appendix 12 47

PROJECT COMPLETION REPORT

Suggested Topics for Project Completion Reports to be Prepared by Borrowers

I. PROJECT DESCRIPTION

A. Objectives B. Components C. Implementation methods D. Description and justification of changes in components (or subproject appraisal criteria) or implementation methods

II. PROJECT IMPLEMENTATION

A. Compare original and actual implementation schedules. Indicate delays, length and causes of delays, and remedial action taken.

B. Compare cost estimates made during appraisal and actual costs (foreign and local). Local currency costs incurred, appropriate exchange rates for their conversion into US dollars, and the foreign exchange costs financed by cofinanciers must be compiled correctly with reference to audited project accounts. Indicate factors that contributed to any significant overruns or underruns.

C. State problems or difficulties in recruiting consultants, with reference to ADB procedures. Assess the consultant's work and the working relationship between the executing agency (EA) and the consultant. Use of a design and monitoring framework is strongly recommended.

D. State problems or difficulties encountered in procuring goods and services (including civil works) with reference to ADB procedures. Assess the supplier's or contractor's performance under the contract.

E. Give the extent of compliance of the borrower and EA with loan covenants, with reasons for noncompliance or delays in compliance and the remedial actions taken.

F. State reasons for any delays in loan utilization. Evaluate the appropriateness of the disbursement methods used. Justify the reallocation of loan proceeds.

G. State problems or difficulties with subproject appraisal. Evaluate the EA’s performance and capacity to appraise subprojects.

III. INITIAL OPERATIONS

A. Describe initial operations of the project and transitional problems encountered from project completion to initial operations.

B. Describe measures taken to ensure continued smooth operation of the project relative to management, staffing, funding, and maintenance of project facilities.

C. Analyze the prospects of the project benefits being realized.

48 Appendix 12

IV. EVALUATION OF THE ASIAN DEVELOPMENT BANK’S PERFORMANCE

A. Assess ADB's performance in supervising project implementation. Include comments on the adequacy of the consultants’ terms of reference and appropriateness of specifications in tender documents. Evaluate the effectiveness and timeliness of assistance extended by ADB to solve implementation problems.

B. Comment on problems encountered with ADB's procedures. Note the measures taken to resolve these problems and suggest changes in procedures and requirements.

Appendix 13 49

FINANCIAL REPORTING AND AUDITING REQUIREMENTS

1. ADB's Handbook for Borrowers on the Financial Governance and Management of Investment Projects Financed by the ADB (the Booklet) provides guidelines to ensure timely compliance with the Loan covenants and the quality of financial information as required by ADB.

2. ADB, by its Charter, is required to ensure that the proceeds of any loan made, guaranteed, or participated in by ADB are used for the purposes for which the loan was approved. ADB requires accurate and timely financial information from its borrowers/recipients to be assured that expenditure was for the purposes stated in the loan agreement.

3. The following are the main requirements:

(i) ADB requires the EA to maintain separate project accounts and records exclusively for the Project to ensure that the Loan funds were used only for the objectives set out in the Loan Agreements.

The first set of project accounts to be submitted to ADB covers the fiscal year ending 31 December 2008. As stipulated in the Loan or Project Agreements, they are to be submitted up to six months after the end of the fiscal year. For this Loan, the deadline is by 30 June 2009. A sample report format with explanatory notes is attached as Annex A.

(ii) The accounts and records for the project are to be consistently maintained by using sound accounting principles. The external auditor is to express an opinion on whether the financial report has been prepared using international or local generally accepted accounting standards and whether they have been applied consistently.

ADB prefers project accounts to use international accounting standards prescribed by the International Accounting Standards Committee. The name of external auditor is to comment on the impact of any deviations, by the Executing Agency from international accounting standards.

(iii) The external auditor specifies in the Auditor's Report the appropriate auditing standards they used, and direct them to expand the scope of the paragraph in the Auditor's Report by disclosing the key audit procedures followed. The external auditor is also to state whether the same audit procedures were followed for all supplementary financial statements submitted.

ADB wishes that auditors conform to the international auditing standards issued by the International Federation of Accountants. In cases where other auditing standards are used, the external auditor is requested to indicate in the Auditor's Report the extent of any differences and their impact on the audit.

(iv) The external auditor's opinion is also required on whether

• the proceeds of the ADB's Loan have been utilized only for the project as stated in the Loan Agreement; • the financial information contains data specifically agreed upon between the Recipient or EA and ADB to be included in the financial statements;

50 Appendix 13

• the financial information complies with relevant regulations and statutory requirements; and • compliance has been met with all the financial covenants contained in the Loan or Project Agreements.

(v) The Auditor's Report is to clearly state the reasons for any opinions that are qualified, adverse, or disclaimers.

(vi) Actions on deficiencies disclosed by the external auditor in its report are to be resolved by the Recipient or Executing Agency within a reasonable time. The external auditor is to comment in the subsequent Auditor’s Report on the adequacy of the corrective measures taken by the Recipient or EA.

4. Compliance with these ADB requirements will be monitored by review missions and during normal project supervision, and followed up regularly with all concerned, including the external auditor.

Appendix 13 51

ANNEX A: SAMPLE FORM OF AUDITOR’S OPINION

Imprest Account

We have examined the Statement of Imprest Account of Loan No ___-INO for the period 1 January to 31 December 2008, pursuant to the Agreement signed between the Government and the Asian Development Bank on ______2007.

Our examination was made in accordance with generally accepted auditing standards emphasizing on the adequacy and completeness of the supporting documents of the Imprest Account and other auditing procedures as we considered necessary in the circumstances;

In our opinion, the Statement of Imprest Account and supporting documents and information submitted with them (can/ cannot) be fairly relied on to support the applications for reimbursement/payment in accordance with ADB’s requirements as set out in the Loan Agreement.

STATEMENT OF EXPENDITURE

We have also examined the Statements of Expenditure submitted to ADB during the period in support of applications for liquidation of the Imprest, pursuant to the above-mentioned Loan Agreement. Our examination was made in accordance with generally accepted auditing standards, and, accordingly included such tests of the accounting records, verification of assets and other such auditing procedures as we considered necessary in the circumstances.

In our opinion, the Statement of Expenditures submitted, together with the internal control and procedures involved in their preparation, (can/cannot) be relied on to support the applications for liquidations in accordance with the requirements of the above mentioned Loan Agreement. 52 Appendix 14

LIST OF LOAN COVENANTS

A. Sector Covenants

1. The Borrower and VNR shall enable ADB's representatives to inspect the Project, the Goods and Works financed out of the proceeds of the Loan, and any relevant records and documents. [LA, Section 4.02 and PA, Section 2.10]

2. The Borrower shall take all action which shall be necessary on its part to enable VNR to perform its obligations under the Project Agreement, and shall not take or permit any action which would interfere with the performance of such obligations. [LA, Section 4.03]

3. The Borrower shall exercise its rights under the Loan Agreement in such a manner as to protect the interests of the Borrower and ADB and to accomplish the purposes of the Loan. [LA, Section 4.04 (a)]

4. No rights or obligations under the Loan Agreement shall be assigned, amended, or waived without the prior concurrence of ADB. [LA, Section 4.04 (b)]

5. VNR shall carry out the Project with due diligence and efficiency, and in conformity with sound administrative, financial, engineering, environmental, railway and public utility practices. [PA, Section 2.01 (a)]

6. In carrying out of the Project and operation of the Project facilities, VNR shall perform all obligations set forth in the Loan Agreement to the extent that they are applicable to VNR. [PA, Section 2.01 (b)]

7. VNR shall make available promptly as needed, the facilities, services, equipment, land and other resources which are required, in addition to the proceeds of the Loan, for carrying out of the Project. [PA, Section 2.03]

8. VNR shall carry out the Project in accordance with plans, design standards, specifications work schedules and construction methods acceptable to ADB. VNR shall furnish, or cause to be furnished, to ADB, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such details as ADB shall reasonably request. [PA, Section 2.04]

9. ADB and VNR shall cooperate fully to ensure that the purposes of the Loan will be accomplished. [PA, Section 2.07 (a)]

10. VNR shall promptly inform ADB of any condition which interferes with, or threatens to interfere with, the progress of the Project, the performance obligations under this Project Agreement or the Subsidiary Loan Agreement, or the accomplishment of the purposes of the Loan. [PA, Section 2.07 (b)]

11. ADB and VNR shall from time to time, at the request of either party, exchange views through their representatives with regard to any matters relating to the Project, VNR and the Loan. [PA, Section 2.07 (c)]

12. VNR shall furnish to ADB all such reports and information as ADB shall reasonably request concerning (i) the Loan and the expenditure of the proceeds thereof; (ii) the Goods, Appendix 14 53

Works and consulting services and other items of expenditure financed out of such proceeds; (iii) the Project; (iv) the administration, operations and financial conditions of VNR relevant to the Project; and (v) any other matters relating to the purposes of the Loan. [PA, Section 2.08 (a)]

13. Without limiting the generality of the foregoing, VNR shall furnish to ADB quarterly reports on the execution of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as ADB shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the quarter under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following quarter. [PA, Section 2.08 (b)]

14. Promptly after physical completion of the Project, but in any event not later than three (3) months thereafter or such later date as ADB may agree for this purpose, VNR shall prepare and furnish to ADB a report, in such form and in such detail as ADB shall reasonably request, on the execution and initial operation of the Project, including its cost, the performance of VNR of its obligations under this Project Agreement and the accomplishment of the purposes of this Loan. [PA, Section 2.08 (c)]

15. VNR shall, promptly as required, take all action within its powers to maintain its corporate existence, to carry on its operations, and to acquire, maintain and renew all rights, properties, powers, privileges and franchises which are necessary in carrying out of the Project or in the conduct of its business. [PA, Section 2.11 (a)]

16. VNR shall at all times conduct its business in accordance with sound administrative, financial, environmental, railway and public utility practices, and under the supervision of competent and experienced management and personnel. [PA, Section 2.11 (b)]

17. VNR shall at all times operate and maintain its plants, equipment and other property, and from time to time, promptly as needed, make all necessary repairs and renewals thereof, all in accordance with sound administrative, financial, engineering, environmental, railway, public utility, and maintenance and operational practices. [PA, Section 2.11 (c)]

18. VNR shall promptly notify ADB of any proposal to amend, suspend or repeal any provision of the Governing Laws and shall afford ADB an adequate opportunity to comment on such proposal prior to taking any action thereon. [PA, Section 2.14]

A. Financial Covenants

19. The Borrower shall ensure that VNR utilizes technical assistance to be made available under the Project to optimize the Project's economic benefits and financial returns, including modernizing VNR's financial management system into a structure suitable for a modern commercial market-based railway operations as envisaged under the Borrower's Railway Law No. 35/2005/QH11, effective 1 January 2006. [LA, Schedule 5, Para. 2]

20. The Borrower shall ensure that VNR prepares its financial statements of operations showing VNR's actual position. The financial statements shall comprise an income and expenditure statement, and balance sheet. [LA, Schedule 5, Para. 3]

21. Without prejudice to the generality of Section 2.09 of the Project Agreement, the Borrower shall ensure that a separate accounting system for Project expenditures is maintained

54 Appendix 14 in accordance with sound accounting principles. All Project accounts, including financial statements, statements of expenditures and account records, shall be audited annually as part of the regular audit of accounts and financial statements by an independent auditing firm. The consolidated audit reports (in English) shall be submitted to ADB in accordance with the requirements and within the deadlines stated in Section 2.09 (a) of the Project Agreement. The audit opinion shall include (i0 a detailed description of the source of funds and expenditures made; (ii) an assessment of the adequacy of accounting and internal controls systems with respect to Project expenditures and other financial transactions, and to ensure safe custody of Project-financed assets; (iii) a determination as to whether the Borrower and VNR have maintained adequate documentation for all financial transactions, specifically including the statement of expenditures and imprest account procedures; and (iv) confirmation of compliance with this Loan Agreement's financial covenants. [LA, Schedule 5, Para. 21]

22. VNR shall take out and maintain with responsible insurers, or make other arrangements satisfactory to ADB for, insurance of Project facilities to such extent and against such risks and in such amounts as shall be consistent with sound practices. [PA, Section 2.05 (a)]

23. Without limiting the generality of the foregoing, VNR undertakes to insure, or cause to be insured, the Goods to be imported for the Project and to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such Goods. [PA, Section 2.05 (b)]

24. VNR shall maintain, or cause to be maintained, records and accounts adequate to identify the Goods, Works and consulting services and other items of expenditure financed our of the proceeds of the Loan, to disclose the use thereof in the Project, to record the progress of the Project (including the cost thereof) and to reflect, in accordance with consistently maintained sound accounting principles, its operations and financial condition. [PA, Section 2.06]

25. VNR shall (i) maintain separate accounts for the Project; (ii) have such accounts and related financial statements (balance sheet, statement of income and expenses, and related statements) audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to ADB; and (iii) furnish to ADB, promptly after their preparation but in any event not later than 6 months after the close of the fiscal year to which they relate, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditor's opinion on the use of the Loan proceeds and compliance with the financial covenants of the Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language. VNR shall furnish to ADB such further information concerning such accounts and financial statements and the audit thereof as ADB shall from time to time reasonably request. [PA, Section 2.09 (a)]

26. VNR shall enable ADB, upon ADB's request, to discuss VNR's financial statements and its financial affairs, relevant to the Project, from time to time with the auditors, appointed by VNR pursuant to Section 2.09 (a) hereabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of VNR unless VNR shall otherwise agree. [PA, Section 2.09 (b)]

Appendix 14 55

27. Except as ADB may otherwise agree, VNR shall not sell, lease or otherwise dispose of any of its assets which shall be required for the efficient carrying on of its operations or the disposal of which may prejudice its ability to perform satisfactorily any of its obligations under this Project Agreement. [PA, Section 2.12]

28. Except as ADB may otherwise agree, VNR shall apply the proceeds of the Loan to the financing of expenditures on the Project in accordance with the provisions of the Loan Agreement and this Project Agreement, and shall ensure that all Goods, Works and consulting services financed out of such proceeds are used exclusively in the carrying out of the Project. [PA, Section 2.13]

C. Environmental Covenants

29. The Borrower shall ensure that its laws and regulations governing environmental impact assessments, as well as ADB's Environment Policy (2002), are followed. If there is any discrepancy between the Borrower's laws and regulations, and ADB's Environment Policy, then the ADB Policy requirements shall apply. [LA, Schedule 5, Para. 16]

30. The Borrower shall ensure that the contract documents for Works under the Project include specific measures in accordance with ADB's Environment Policy to mitigate negative environmental impacts caused by the construction and to give due consideration to prevention of damage to the natural environment in the design, construction, operation and maintenance of the Project. [LA, Schedule 5, Para. 17]

31. The Borrower shall ensure that VNR implements the Environmental Management Plan (EMP) for the Project, based on the IEE, ensuring that there are adequate budget and staff resources. The Borrower shall ensure that the Project shall complies with best environmental practices and meets the mitigation and monitoring requirements in a timely manner as described in the IEE and prevents damage to the natural environment as a result of the design, construction, operation and maintenance of Project facilities. The Borrower and VNR shall cause (i) the contractors engaged under the Works contracts to comply strictly with all environmental mitigation and monitoring requirements set out in the contract doucments, and (ii) the consultants engaged for construction supervision to monitor closely the compliance by contractors with the environmental impact mitigation and monitoring requirements. [LA, Schedule 5, Para. 18]

32. The Borrower shall ensure that VNR submits a semi-annual monitoring report on the conduct of the IEE and EMP to ADB for review, and which report shall include updates on the development and implementation of mitigation measures. [LA, Schedule 5, Para. 19]

D. Social Covenants

33. The Borrower shall ensure that VNR: (i) engages resettlement and fender specialist consultants to assist in updating, implementing and monitoring the Resettlement Plan (RP) and an independent monitor before commencement of any land acquisition activities; (ii) does not commence any land acquisition and relocation activities nor commence any Works under the updated RP has been approved by ADB; and (iii) carries out all resettlement activities in accordance with theupdated RP agreed upon between the Borrower and ADB. The RP shall be prepared in compliance with ADB's Policy on Involuntary Resettlement and the Borrower's laws, regulations, and procedures. In case of discrepancies between the Borrower's laws,

56 Appendix 14 regulations, and procedures and ADB's Policy requirements, ADB's Policy requirements shall prevail. [LA, Schedule 5, Para. 7]

34. The Borrower shall ensure that the Project-affected persons (APs), including those from the host community, are compensated at replacement cost and assisted prior to displacementfrom their houses, land, and assets, such as they will be at least as well off as they would have been in the absence of the Project, and the poorest APs and vulnerable groups, including ethnic minority APs,are assisted to help improve their socioeconomic status. No APs will be displaced from affected land until the applicable province allocates suitable alternative land for such APs within the same or a neighboring commune or pays compensation at replacement cost sufficient to purchase suitable alternative land within the same or neighboring commune. [LA, Schedule 5, Para. 8]

35. The Borrower shall ensure timely provision of counterpart funds for resettlement to meet any unforseen obligations in excess of the resettlement budget estimates in order to satisfy resettlement requirements and objectives. [LA, Schedule 5, Para. 9] 36. VNR shall ensure that Works contractors are not issued a notice to commence Works for a particular section of alignment until (a) compensation payment and relocation to new sites has been satisfactorily completed for that section of alignment, (b) agreed rehabilitation assistance is in place, and (c) the particular section of alignment is free of all encumbrances. [LA, Schedule 5, Para. 10]

37. The Borrower shall ensure that, to the extent any ithnic minorities are likely to be significantly affected by the Project, the measures set forth in the Ethnic Minorities Specific Actions, as agreed between the Borrower and ADB as as specified in the approved RP, are carried out in accordance with such Actions, applicable laws and regulations of the Borrower and ABD's Policy on Indigenous Peoples. [LA, Schedule 5, Para. 11]

38. VNR shall ensure that all Works contracts under the Project incorporate provisions and budget to the effect that contractors: (i) comply with all applicable labor laws and related international treaty obligations, and do not employ chiled labor; (ii) provide safe working conditions for male and female workers; (iii) implement the provisions set forth in the Project- specific Gender Strategy as summarized in para. 13 below; and (iv) carry out HIV/AIDS and Human Trafficking education and awareness campaigns in the campsites and corridors of influence and which campaigns: (A) will include women leaders and youth from Project affected households, the Women's Union, and (B) are held in coordination with the Borrower's programs and other existing initiatives. [LA, Schedule 5, Para. 12]

39. District-level resettlement committees established pursuant to the RP shall include representatives fromthe district-level Women's Union. Commune-level resettlement committtees established pursuant to the RP shall include representatives from the commune- level Women's Union as well as female representatives from affected households, including women-headed households and women from ethnic minority households. VNR shall ensure there are capacity building training programs to provide training to district-level and commune- level resettlement committee members, as well as female representatives from affected households, including women-headed households and women from ethnic minority households, in order to provide, among other things, entitlements, compensation and livelihood strategies for income improvement for affected persons, and grievance procedures. [LA, Schedule 5, Para. 13]

Appendix 14 57

40. The Borrower shall ensure that VNR (i) prepares a format for monitoring reports with monitoring indicators broken down by gender and ethnic group for purposed of monitoring and reports, and (ii) conducts gender sensitization training on gender and resettlement for its relevant staff, the district-level and commune-level resettlement committees, and the Women's Union. [LA, Schedule 5, Para. 14]

41. In any instance where land is acquired for affected persons, the Borrower and VNR shall ensure joint registration of land or land use rights in the names of both the husband and wife. [LA, Schedule 5, Para. 15]

E. Other Covenants

42. VNR shall be the Executing Agency for the Project and its responsibilities shall include procurement, withdrawal of Loan proceeds and reporting to ADB and co-financiers. The RPMU, a unit within VNR, shall be responsible for day to day Project implementation and its staff shall include sufficient qualified technical, financial and support personnel. [LA, Schedule 5, Para. 1]

43. In carrying out of the Project, VNR shall employ competent and qualified consultants and contractors, acceptable to ADB, to an extent and upon terms and conditions satisfactory to ADB. [PA, Section 2.03 (a)]

44. The Borrower shall ensure that VNR deploys sufficient rolling stock and sufficient numbers of high horsepower locomotives, at all times, for effective operation of the Project railway line. [LA, Schedule 5, Para. 4]

45. The Borrower shall ensure that the extensions to existing passing loops and new passing loops at stations included in the Project are implemented in coordination with ongoing signaling works in order to ensure efficient and economic implementation of the Project. [LA, Schedule 5, Para. 5]

46. The Borrower shall ensure that VNR takes all necessary measures, including adjustment of train composition, schedules, and operational speeds, when necessary, to allow both operations and period possession of the line to facilitate implementation of Works on and adjacent to the track in accordance with an agreed implementation schedule. [LA, Schedule 5, Para. 6]

47. To ensure transparency and good governance, VNR shall publicly disclose on its website information on how Loan proceeds are being used, presenting procurement contract awards, including for each contract (a) the list of participating bidders, (b) name of the winning bidder, (c) basic details on bidding procedures adopted, (d) amount of the contract awarded, (d) list of goods and/or services purchased, and (e) intended and actual utilization of Loan proceeds under each contract. The website shall be updated within two (2) weeks after each award of contract. [LA, Schedule 5, Para. 20]

48. VNR shall implement a systematic Project performance monitoring and analysis system for use throughout the Project period. VNR shall establish Project indicators (baseline data) including, among others: (i) economic development and socioeconomic indicators; (ii) transport costs and time for passenger and freight services; (iii) transport services and transport charges; (iv) accident rates; (v) financial sustainability of the railway sector; (vi) affected persons income; (vii) access to social services, and (viii) jobs created in construction and maintenance. The

58 Appendix 14 baseline data shall be collected within (6) months of the Effective Date; a second survey shall be conducted upon Project completion, and a third survey three years after Project completion to establish Project impact. The design of the baseline and impact surveys shall include data collected from (i) secondary data from government sources, (ii) household socioeconomic sample surveys, and (iii) participatory rapid appraisals. Where relevant, indicators will be disaggregated by gender. [LA, Schedule 5, Para. 22]

49. The RPMU shall: (i) collect and consolidate all Project progress reports, site reports, technical and financial reports and submit them to ADB; (ii) prepare quarterly progress reports, midterm Project evaluation report and an overall Project completion report; and (iii) other reports as may be reasonably requested by ADB. Quarterly reports shall include updated implementation, financial and government-related information, as well as reports submitted by the independent monitor for resettlement activities. Quarterly reports shall be submitted to ADB within 30 days of the end of each quarter. [LA, Schedule 5, Para. 23]

50. Except as ADB may otherwise agree, all Goods, Works and consulting services to be financed out of the proceeds of the Loan shall be procured in accordance with the provisions of Schedule 4 to the Loan Agreement. ADB may refuse to finance a contract where Goods, Works or consulting services have not yet been procured under procedures substantially in accordance with those agreed between the Borrower and ADB or where the terms and conditions of the contract are not satisfactory to ADB. [PA, Section 2.03 (b)]

59 Appendix 15 LIST OF ADB REFERENCE MATERIALS

A. Project Related 1. Report and Recommendation of the President to the Board of Directors 2. Loan Agreement 3. Project Agreement 4. Cofinancing agreement between ADB and AFD 5. AFD Loan Financing Agreement

B. Consultants. May be downloaded from the following website: http://www.adb.org/Consulting/documents.asp

4. Guidelines on the Use of Consultants by ADB and Its Borrowers

C. Procurement. May be downloaded from the following website: http://www.adb.org/Procurement/prequalification-bid-documents.asp

5. Guidelines on Procurement under ADB Loans

D. Disbursement 6. Disbursement Letter issued by Controller’s Department 7. Loan Disbursement Handbook

E. General – may be downloaded from the following website: http://www.adb.org/Integrity/ http://www.adb.org/Documents/Policies/Environment/default.asp http://www.adb.org/Documents/Policies/Involuntary_Resettlement/default.asp http://www.adb.org/Documents/Policies/Indigenous_Peoples/default.asp