Greater Mekong Subregion Kunming-Hai Phong Transport
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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. 2 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 rail- road at-grade crossing at Dong Anh (km 20+700); (b) upgrading 44 existing at- 3 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