SR9 VOL. 2

Co AN,0 'P Public Disclosure Authorized

ERRA

SOCIAL IMPACT ASSESSMENT

Public Disclosure Authorized 8 October 2005 Pakistan Earthquake Volume-lI

ANNEXES Public Disclosure Authorized

May 2007 Public Disclosure Authorized Table of Contents

A. TORs for SIA ...... 1 B. TORs of the Continuous Social Impact Assessment ...... 6 C. ERRA Ordinance ...... 10 D. ERRA Operational Manual ...... 18 E. District Profiles ...... 89 F. Sectoral Key Performance Indicators ...... 97 G. Housing Form ...... 108 H. Livelihood Cash Grant Form ...... 110 ANNEX-A

TERMS OF REFERENCE

SOCIAL ASSESSMENT OF THE IMPACT OF THE EARTHQUAKE ON THE AFFECTED POPULATION

1. Background The population and social structures of the earthquake-hit areas were seriously affected by the scale of human death, injuries and material destruction affecting the eight districts of NWFP and AJK, leaving thousands orphaned and maimed and millions homeless. Considerable data have been compiled and are available at NADRA, the Army Inspection Teams and other agencies, covering socioeconomic aspects, eligibility criteria and beneficiaries of aid and so forth, but comprehensive analysis of the overall social impact of the earthquake disaster has not yet been undertaken.

The Social Assessment will primarily rely upon existing data, but in areas where these may be lacking, additional field research may be undertaken.

2. Objective The objective of the study is to assess the impact of the earthquake on the affected population in terms of human and material losses and displacement, and identification of factors influencing the rehabilitation of the affected persons' housing, livelihood, and future quality of life.

3. Scope The Social Assessment will address the impact of the earthquake on vulnerable groups, such as: - Children left unattended/orphaned by the earthquake, with focus on the protection they received immediately after the earthquake as well as the long-term protection measures in place. - Single-headed households. Widows and single-headed households present a particular vulnerability as they had to deal with their psycho-social distress as well as caring for children on their own. The loss of a mother has particularly negative physical and psychological impact on small children and infants, while the loss of the male head of family constitutes a serious blow to the economic livelihood of the household, significantly reducing its coping ability since the percentage of women economically active outside the household is below 2%. Single women, widows and women-headed households (i.e. without a male guardian) were reportedly reluctant to go to the tent camps for affected people, if these were outside their local area, since they will be among unrelated men, who may belong to another ethnic group and speak a different language. Furthermore, intemational experience shows that protection of women and children is frequently violated under disaster and conflict conditions. - Disabled. Before the earthquake around 10% of the population was disabled and in the affected areas they may be severely disadvantaged in accessing relief. A high proportion of the injured people may have become permanently disabled as a consequence of the severe injuries sustained to spinal cord, head and limbs and late treatment of injuries due to difficulties in access.

1 The Social Assessment will also focus on other issues related to particular vulnerabilities caused or affected by the earthquake:

Legal Rights. Assessment of the scale of loss of records of property rights to housing, commercial property, and land, with special focus on the impact on and needs of vulnerable groups, widows, and orphans in demonstrating legitimate property rights. In many rural communities, women customarily relinquish their claims to the joint family property, and in the present situation, where traditional mechanisms of social support may be destroyed, the risk of widows and female orphans losing their rightful inheritance is considerable, especially since they may be unaware of the procedures to be followed to ensure legal possession of the land they are entitled to inherit.

Shock and Trauma. The very high death toll and number of severe injuries in addition to the widespread material damage will have long-term consequences on the well-being of surviving family members, particularly widows, single-parent children, orphans, and the elderly. Assessment of the scale of the problem and of measures undertaken to address the issue.

The compilation and analysis of data will aim at coverage according to:

Affected people * Tribal/ethnic breakup of affected communities - by locality * Total number of households per village/town by tribal/ethnic group - number of household members - by gender and adult/child * Number of affected people - dead, injured, missing and displaced according to tribal/ethnic group, gender & divided into adult-child for each village/town * Number of school children ( boys/girls) dead as a result of the earthquake * Any previous record of vulnerable group: Number of orphans, widows, single-parent households - by tribal/ethnic group & locality. * Number of orphans, widows, single-parent households after earthquake - by tribal/ethnic group & locality * Number of permanently disabled men/women/children before and after the earthquake (specifying types of disability) in different localities

Dislocation * Number of communities and persons displaced from affected areas - by locality - number of people remaining in original location * Situation of remaining people in area - shelter, injuries - ability to remain * Present location and type of shelter of displaced communities - specific details about vulnerable groups: orphans, single women, female-headed households, disabled and old

Relocation from Hazardous sites * Number of people to be permanently relocated * Review measures put in place for relocation * Screen relocation sites for potential social safeguards issues (displacement of informal sellers, cultural property) * Assess affected people's awareness of reasons for and process of relocation

2 Livelihood and Material damage * Main source of livelihood of household - per locality * Material damage - houses destroyed - partially damaged - own house/rented house/squatter * Land ownership for house reconstruction and cultivation * Availability of local informal support networks and voluntary associations/CBOs/NGOs - their role in the immediate and longer term shelter and relief effort * Number of male/female councilors elected in the area, with roles in the relief. * Any info on previous support mechanism (extended family system, remittances from family members working /living abroad)

Grievance Redressal Mechanism * Review Grievance Redressal System in terms of documentation, categorization of grievances, appeal system and resolutions.

Land Task Force * Review TOR for Land Task Force and its compatibility with existing law and procedures * Review system for documentation and follow-up on land cases.

Social Indicators * Identify a coherent set of social indicators to be monitored across the various program components

Recommendations On the basis of the overall findings and assessment, recommendations regarding: - the beneficiary communication and information strategy of ERC - functioning of the grievance redressal mechanism - increasing transparency of the operations

4. Output The Social Assessment will serve as a baseline of the situation of the affected population before the start of the rehabilitation program for the Continuous Social Assessment (CSIA) and other impact assessments. The Social Assessment shall cover all the affected villages/communities of the eight districts in NWFP and AJK. It is envisaged that the majority of consultancy time will be spent in compiling and analyzing existing data with only minor supplementary field research in areas, where existing data bases are lacking.

Inception report: A report at the outset of the consultancy that details final methodology derived from review of available databases, discussions with beneficiaries, implementers and donors and identification of areas where additional data need to be compiled. Outline of overall strategy, incl assessment of data quality/validity. Identification and planning of additional field research if required.

Draft report: The consultants will produce a draft report covering the issues listed above and any other issue which has emerged from the data analysis.

Final report: A final report will be submitted after incorporating the feedback from ERRA and World Bank on the draft report.

3 5. Schedule for completion of tasks The consultancy is expected to commence on 01 October 2006 and be completed by 07 March 2007. However the draft final report would be submitted to ERRA by 07 January 2007.

Inception report: Within 1 month of the commencement of the consultancy contract.

Draft report: After any additional field studies are completed and within 3 months of the commencement of consultancy contract.

Final report: Within 2 months of completion of study i.e. submission of Draft Final Report.

6. Data, Services and Facilities to be provided by the client The consultants will be responsible for all costs and expenses incurred in carrying out the SA. The consultants will be provided at the outset of the work with the following documentation: - Project Appraisal Document - Housing damage assessment and social verification survey - Village Social Profile - Social Safeguards Framework - NADRA and Army Inspection databases - Any other relevant information available with the implementing agencies/ERRA etc.

7. Reporting requirements The Consultant will submit the draft Social Assessment report to ERRA within 3 months after initiating the work

8. Monitoring of consultants work The consultants will be monitored by the focal points at ERRA

9. Personnel requirements The consultancy team will require skills in social assessments and of associated participatory methodology. The consultancy team will need to show experience of livelihood analysis and social surveys, of gender sensitivity, and of the socio-economic and cultural of the program.

Position Minimum Experience Oualification

4 Team Leader Doctorate in Sociology 10 Years relevant experience Coordinator - 1 Post Graduate in Sociology/anthropology 10 years relevant

5 ANNEX-B

TERMS OF REFERENCE FOR A CONTINUOUS SOCIAL IMPACT

ASSESSMENT OF THE EARTHQUAKE EMERGENCY RECOVERY PROGRAM

1. Background

The proposed Earthquake Emergency Recovery Program aims to mitigate the negative impact of the earthquake on poverty levels and economic growth in the affected regions by supporting the GOP's efforts to restore livelihoods, rebuild houses and infrastructure, and prioritize the needs of the most vulnerable groups. The Program will be guided by an effort to revitalize the local economy and rapidly rebuild people's livelihoods, and to re-establish and secure previous development gains and progress in poverty reduction. To ensure community participation, self-sufficiency and empowerment, the program will seek to maximize the use of local initiative, resources and capacities and to take decisions at the lowest level possible. Specific efforts will be made to encourage the engagement of the private sector and civil society and to achieve accountability and transparency.

The Earthquake Emergency Recovery Operation is designed to support the restoration of livelihoods through income transfer to the most affected households, either in the form of cash transfer, a "cash-for- works" program, support for micro-enterprises, or housing support cash grants. Proposed assistance to the road and water sectors would complement this and support the resumption of livelihoods in the most remote and poorest earthquake -affected districts. Furthermore, the revival of the public health and education systems would complement the main project objectives of improved livelihoods and poverty alleviation in earthquake-affected areas.

The Housing Component has the following sub-components: (i) cash grants for housing reconstruction; (ii) capacity building that will include training of construction workers, the design and implementation of an information dissemination initiative, establishment of a grievance redressal mechanism at the local, divisional ( for AJK) and district levels, land-related management, and social and environmental monitoring; and (iii) technical assistance.

The Livelihood Support Component will provide cash grants to affected families for monthly income support. These grants should commence soon after the relief operations have stabilized, and take the fonn of a monthly livelihood/income support of a fixed amount targeted to affected and vulnerable households, recurring over a clearly defined time period.

The Social Protection Component will provide support to vulnerable groups, including the disabled, single-parent families, and vulnerable children. This would include rehabilitation for the disabled, psychological assistance for post trauma stress disorders, and legal protection of land, property and family rights for women and children whose male family members have died. Workfare programs focused on rubble removal repair and reconstruction will provide immediate temporary work opportunities and cash infusion into villages.

A Continuous Social Impact Assessment (CSIA) will facilitate the articulation of community perceptions, grievances and feed-back vis-a-vis identification of beneficiaries for the housing and livelihood components and the mobilization of resources. The CSIA will help monitor the social dimensions of the

6 program and flag potential risks. Through direct interaction with beneficiary communities it will carry out an independent evaluation of program implementation and distribution of program benefits. The CSIA will monitor the impact of the program and help to initiate necessary mitigation measures 2. Objectives Through direct interaction with the beneficiary communities, the CSIA will provide an independent assessment of the social safeguards framework and of the equitable distribution the program benefits, with particular focus on issues of social exclusion based on gender, vulnerability and local ethnic/religious minority status . It will help monitor the social dimensions of Earthquake Reconstruction Program and in doing so highlight the risks, challenges, opportunities and problems within the housing, livelihood and social protection component of the program.

3. Tasks to be carried out The CSIA will be implemented at the start of the program, and repeated on a semi-annual basis. In undertaking these tasks, the consultants are expected to include all villages under the program. It is envisaged that the majority of consultancy time will be spent interacting with beneficiaries at the village level. * Preparatory. Development of detailed methodology (combination of sampling, interviews, PRA, community focus group discussions and other research tools). * Initial A review of beneficiary selection procedures, the strengths and weakness of the identification of beneficiaries, grievance redressal mechanisms and of the social safeguard issues. * Semi-annually for each component: An semi-annual social audit and impact assessment aimed at highlighting implementation weaknesses, social issues such as gender and ethnic equity, vulnerability and social exclusion, grievances and provide feedback with specific recommendations for actions to district and provincial level authorities. The assessment should include an analysis of the role of the Patwari and community based organizations in the damage assessment, beneficiary selection, resolution of land related issues and establishment of grievance redress mechanism. The assessment shall also include a review of social safeguard issues, and a checklist to ensure social soundness to minimize social exclusion effects.

4. Outputs Inception report : A report at the outset of the consultancy that details final methodology derived from field visits and discussions with beneficiaries, implementers and donors. Semi-annual Reports: The consultants will produce reports covering the issues listed above. The timing of these will depend on the schedule of implementation set by the implementing agencies and beneficiaries. Presentation to implementing partners: The consultants will need to present findings in formal decision making forums such as the AJKRA/NWFPRA and ERRA and the national steering committee

5. Methodology The CSIA shall be conducted over all villages within the program and will ensure a comprehensive analysis of the equity of program implementation as well as comprehensive analysis of the Grievance Redressal Mechanism.

7 In facilitating a community audit on Earthquake Reconstruction Program, the consultants will need to combine community facilitation skills with those of independent analysis. The methods employed may include, * Individual interviews and community discussion forums (with separate session with women to ensure due representation of their views) * Participatory rural analysis * Periodic surveys

6. Schedule for completion of tasks The consultancy is expected to commence on February 2006 and be completed by . Inception report: Within 1 month of the commencement of the consultancy contract. Semi-annual reports on Housing Component Semi-annual report on Livelihood Component. Semi-annual report on Social Protection Component Final reports: Within 2 months of completion of each component Presentation to implementing partners: As required by...... Presentation to beneficiaries: In accordance with the needs of beneficiaries and of ..... and envisaged to be 6 monthly to be negotiated.

7. Data, Services and Facilities to be provided by the client The consultants will be responsible for all costs and expenses incurred in carrying out the CSIA. The consultants will be provided at the outset of the work with the following documentation. - Project Appraisal Document - Housing damage assessment and social verification survey - Social Assessment report - Village Social Profile - Social Safeguards Framework

8. Reporting requirements The CSIA will by pass the parallel union and and district level monitoring mechanisms and report directly to the AJKRA/NWFPRA, which in turn will table its report to ERRA and the national steering committee.

9. Personnel requirements

8 The consultancy team will require skills in social impact assessments and of associated participatory methodology. The consultancy team will need to show experience of livelihood analysis and social surveys, of gender sensitivity, and of the socio-economic and cultural of the program. S. No Position Minimum Experience Qualification 01 Team Leader Doctorate in Sociology/Anthropology 10 Years relevant Experience 02 Coordinator - 1 Post Graduate in Sociology /Anthropology 10 years relevant Experience 03 Coordinator - 2 Post Graduate in Sociology/Anthropology 10 years relevant Experience 04 Asst. Coordinator 1 Post Graduate in Sociology/Anthropology 5 Years relevant Experience 05 Asst. Coordinator 2 Post Graduate in Sociology/Anthropology 5 Years relevant Experience

Initial A review of beneficiary selection procedures, the strengths and weakness of the identification of beneficiaries, grievance redressal mechanisms and of the social safeguard issues. Annually for each component: An annual social audit and impact assessment aimed at highlighting implementation weaknesses, social issues such as gender and ethnic equity, grievances and provide feedback with specific recommendations for actions to district and provincial level authorities. The assessment should include an analysis of the role of the Patwari and community based organizations in the damage assessment, beneficiary selection, resolution of land related issues and establishment of grievance redress mechanism. The assessment shall also include a review of social safeguard issues, and a checklist to ensure social soundness to minimize social exclusion effects.

9 ANNEX- C

AN ORDINANCE

to provide for the establishment of the Earthquake Reconstruction and RehabilitationAuthority (ERRA)

WHEREAS it is expedient to constitute an autonomous organization for post disaster damage assessment, recovery, reconstruction and rehabilitation of the areas affected by the earthquake, and to provide for matters connected therewith or incidental thereto;

AND WHEREAS the National Assembly is not in session and the President is satisfied that circumstances exist which render it necessary to take immediate action;

NOW, THEREFORE, in exercise of the powers conferred by clause (1) of Article 89 of the Constitution of the Islamic Republic of Pakistan, the President is pleased to make and promulgate the following Ordinance:-

l.Short title, extent and commencement. (1) This Ordinance may be called the Earthquake Reconstruction and Rehabilitation Authority Ordinance, 2007.

(2) It extends to the whole of Pakistan. (3) It shall come into force at once and shall be deemed to have taken effect on the 1st day of March, 2007.

2.Definitions.- In this Ordinance, unless there is anything repugnant in the subject or context,-

(a) "affected areas" means areas affected by the earthquake and its aftershocks and notified as such by the Federal Government;

(b) "Authority" means the Earthquake Reconstruction and Rehabilitation Authority (ERRA);

(c) "Board" means the Board of the Authority established under section 12;

(d) "Chairman" means Chairman of the Authority;

(e) "Council" means the Earthquake Reconstruction and Rehabilitation Council constituted under section 8;

(f) "Deputy Chairman" means Deputy Chairman of the Authority;

(g) "ECNEC" means Executive Committee of the National Economic Council;

(h) "fund" means the fund established under section 15;

(i) "regulations" means regulations made under this Ordinance; and

(j) "rules" means rules made under this Ordinance.

10 3.Establishment of the Earthquake Reconstruction and Rehabilitation Authority.- (1) Immediately after commencement of this Ordinance, the Federal Government shall, by notification in the official Gazette, establish the Earthquake Reconstruction and Rehabilitation Authority (ERRA) for carrying out the purposes of this Ordinance.

(2) Subject to the provisions of this Ordinance, the Authority shall be autonomous in its functions and operations and shall be a body corporate having perpetual succession and a common seal, with power to acquire, hold and dispose of property, both moveable and immoveable, and enter into contracts and shall by its name sue and be sued.

(3) For the purpose of coordination, the Authority will be administratively attached with the Prime Minister's Secretariat.

4. Principal office.- The principal office of the Authority shall be in Islamabad and it may establish regional offices at such other place or places as it considers necessary.

5. Functions of Authority.- Subject to the provisions of this Ordinance, the Authority shall be responsible for all reconstruction, rehabilitation and early recovery programs and projects in the affected areas and, towards this end, may perform the following functions, namely:-

(a) to conduct surveys to assess damage and carry out future planning in the affected areas;

(b) to formulate a comprehensive umbrella development program to provide for-

(i) reconstruction of the government buildings and offices, utilities and services, infrastructure, roads, subways and bridges, potable water, drainage systems, health and education facilities, tourism, irrigation and agriculture facilities in the affected areas;

(ii) environmental protection and rehabilitation; and

(iii) restoration of economic activities and livelihoods;

(c) to prepare resettlement and rehabilitation plan for the affected population in consultation with the respective Governments of the affected areas;

(d) to approve projects, programs and schemes identified, prepared and submitted by the respective Governments of the affected areas;

(e) to take steps for monitoring and evaluation of the approved projects, programs and schemes;

(f) to prescribe cost-effective technology, building codes or construction guidelines, architectural designs, specifications, and construction materials for housing and other buildings in the affected areas to safeguard against future seismic threats;

(g) to facilitate the establishment of the reconstruction-related industry and businesses in the affected areas in consultation with the respective Governments; and

11 (h) to perform such other functions supplemental, incidental or consequential to the purposes and functions aforesaid and any other function assigned to it by the Federal Government in accordance with the purposes of this Ordinance.

6. Powers of the Authority.- To perform its functions the Authority may-

(a) undertake any work, incur any expenditure, procure plant, machinery, services, equipment, vehicles and any other moveable and immoveable property, and procure stores required for the implementation of approved development projects, programs and schemes;

(b) dispose of such plant, machinery, equipment, vehicles, property and stores as are no longer required in the manner as prescribed by rules;

(c) seek or call for any information from any person or any institution, department or agency, as may be required for carrying out its purposes; (d) seek and obtain from any department or agency (including the armed forces) advice and assistance to discharge its functions and for execution of its approved projects, programs and schemes;

(e) approve individual projects, programs and schemes, within the scope of the approved umbrella program;

(f) transfer any project on its completion to any department or agency of the Federal Govemment or respective Governments of the affected areas; and

(g) re-appropriate funds from one project, program, scheme etc. to another project, program or scheme.

7.Management and administration.- (1) The general direction in all matters of policy and administration of the Authority and its affairs shall vest in the Council.

(2) The Council may, by general or special order, delegate to any body or an officer of the Authority to exercise any of its powers, duties or functions under this Ordinance, subject to such conditions as it may deem fit.

8.The Council.- (1) There shall be established the Earthquake Reconstruction and Rehabilitation Council which shall consist of the following members, namely: -

(a) Prime Minister of Pakistan ------Chairperson

(b) Prime Minister of Azad Jammu and Kashmir ----- Member

(c) Chief Minister of NWFP ------Member

(d) Minister of Kashmir Affairs and Northern Areas, in the Federal Government of Pakistan ------Member

(e) Advisor to the Prime Minister on Finance ------Member

(f) Deputy Chairman, Planning Commission ------Member

12 (g) Chairman of the Authority ------Member

(h) Deputy Chairman of the Authority ------Member

(2) The Deputy Chairman of the Authority shall also act as Secretary of the Council. (3) The Council may co-opt such other members as it deems necessary for the conduct of its business.

(4) The Federal Government may, by notification in the official Gazette increase or decrease the membership of the Council and for that matter amend sub-section (1) so as to add any entry thereto or modify or omit any entry therein.

9. Functions of the Council.- The Council shall provide policy guidelines and approve the policies, plans, programs, projects and schemes, submitted by the Chairman or the Board.

10. Chairman of the Authority.- (1) The Federal Government shall appoint a Chairman of the Authority who shall be responsible for the policy matters for such period and on such terms and conditions as it may determnine.

(2) The Chairman shall perform such functions and carry out such responsibilities as may be delegated to him by the Council or the Board.

11. Deputy Chairman of the Authority.- (1) The Federal Government shall appoint a Deputy Chairman for such period and on such terms and conditions as the Federal Government may prescribe.

(2) The Deputy Chairman shall be responsible for the day to day administration of the Authority and may exercise such administrative and financial powers as are delegated to him by the Council or the Board.

12. The Board.- (1) There shall be a Board which shall be responsible for the implementation of the approved policy decisions, plans, programs, projects and schemes and shall have such administrative and financial powers as may be delegated to it by the Council.

(2) The Board shall consist of the following members, namely:-

(a) Chairman of the Authority ------Chairman (b) Deputy Chairman of the Authority ------Member (c) Additional Finance Secretary ------Member (d) Additional Secretary Defence ------Member (e) Additional Secretary, Planning Division - - Member (f) Additional Secretary, EAD ------Member (g) Chief Secretary, NWFP ------Member (h) Chief Secretary, AJ&K ------Member (i) four representatives of civil society to be nominated by the Federal Government - Members

d) a representative of civil society to be nominated by the Government of NWFP --- Member

13 (k) a representative of civil society to be nominated by the Government of an affected area ------Member

(3) The Deputy Chairman of the Authority shall also act as Secretary of the Board.

(4) The Board may co-opt such other members as are deemed necessary for the conduct of its business.

(5) The terms and conditions of the non-official members and their privileges will be such as may be determined by the Council.

(6) The Federal Government may, by notification in the official Gazette, increase or decrease the membership of the Board and for that matter amend sub-section (2) so as to add any entry thereto or modify or omit any entry therein.

13. Powers and functions of the Board.- (1) The Board shall exercise such powers and perform such functions as the Council may assign to it.

(2) Subject to the provisions of sub-section (1) and subject to the overall supervision and control of the Council, the Board shall perform the following functions, namely:-

(a) approve projects upto five hundred million rupees and any project beyond that limit shall be submitted to ECNEC for approval;

(b) approve the budget and accounts;

(c) consider the quarterly and annual reports of the Authority for making recommendations to the Council;

(d) appoint advisors and consultants and determine their conditions of appointment; and

(e) constitute such committees as it may consider appropriate.

14. Meetings.- (1) Meetings of the Council and of the Board shall be held at such time, place and in such manner as may be specified.

(2) The Council may meet as often as the Chairperson of the Council may direct.

(3) The Board shall meet as often as is expedient to discharge its responsibilities and shall prescribe procedure for regulating its proceedings.

(4) The decisions of the Council and of the Board shall be taken by the majority of members present and, in the event of a tie, the Chairperson or, as the case may be, the Chairman shall have a casting vote.

15. ERRA Fund.- (1) There shall be established a Fund for reconstruction and rehabilitation to be known as the ERRA Fund which shall vest in and be utilized by the Authority to meet the expenses and carry out the objectives of this Ordinance.

14 (2) The Fund shall consist of-

(a) such sums as the Federal Government may, from time to time, allocate to it; and

(b) all other sums or properties which may in any manner become payable to, or vest in, Authority.

16. Annual budget.- The Authority shall prepare the annual budget for each financial year and after its approval by the Board submit the same to the Council.

17. Accounts.- The Authority shall maintain complete and accurate books of accounts and shall, after the end of each financial year, prepare for the financial year a statement of accounts of the Authority in such form as may be prescribed by the Controller General of Accounts for submission to the Federal Govemment.

18. Audit.- (1) The accounts of the Authority shall be audited annually by the Auditor- General of Pakistan.

(2) The Authority, in addition to the audit by the Auditor General, may cause its accounts to be audited by intemal auditors and arrange for third party validation of the projects on need basis.

19. Exemption from taxes.- Notwithstanding anything contained in the Income Tax Ordinance, 2001 (XLIX of 2001), or in other law for the time being in force relating to income-tax, capital gains-tax, the Authority shall not be liable to pay and shall be exempt from paying any such taxes as aforesaid on its incomes, profits or gains.

20. Appointment of officers, etc.- (1) The Board may, from time to time, appoint such officers, employees, experts and consultants as it may consider necessary for the performance of its functions.

(2) The Board shall, prescribe by regulations the procedure for appointment of its officers, employees, experts and consultants and the terms and conditions of their service.

21. Recovery of dues.- Any sum due to the Authority shall be recoverable as arrears of land revenue.

22. Validity of proceedings.- No act, decision or proceeding of the Authority or its Council or Board shall be invalid by reason only of the existence of a vacancy in, or defect in the constitution of, the Authority or its Council or Board.

23. Indemnity.- No suit, prosecution, or other legal proceedings shall lie against the Authority, the Council, the Board, the Chairperson, the Chairman, or any member, officer, servant, advisor, consultant or expert of the Authority, for anything done in good faith under this Ordinance.

24. Officers etc., to be public servant.- Every officer, employee, expert, and consultant of the authority shall be deemed to be a public servant within the meaning of section 21 of the Pakistan Penal Code (Act XLV of 1860).

15 25. Ordinance XCI of 2002 not to apply to the Authority.- Nothing contained in the Industrial Relations Ordinance, 2002 (XCI of 2002), shall apply to, or in relation to, the Authority or its establishments or in its officers or employees.

26. Winding up of the Authority.- No provision of any law relating to winding up of bodies corporate shall apply to the Authority and the Authority shall not be wound up except by order of the Federal Government and in such manner as the Federal Government may direct.

27. Powers to make rules.-The Council may, by notification in the official Gazette, make rules for carrying out the purposes of this Ordinance.

28. Powers to make regulations.- The Board may make regulations not inconsistent with this Ordinance and the rules made thereunder, to provide for all matters for which provision is necessary or expedient for carrying out the purposes of this Ordinance.

29. Removal of difficulties.- If any difficulty arises in giving effect to any of the provisions of this Ordinance, the Federal Government may make such order, not inconsistent with the provisions of this Ordinance, as may appear to be necessary, for the purpose of removing the difficulty.

16 30. Power of the Federal Government to issue directives.- The Federal Government may, as and when it considers necessary, issue directives to the Authority on matters of policy, and such directives shall be binding on the Authority, and if a question arises whether any matter is a matter of policy or not, the decision of the Federal Government shall be final.

31. Ordinance to override other laws.- The provisions of this Ordinance shall have effect notwithstanding anything inconsistent contained in any other law for the time being in force and any such law, rule or regulation shall, to the extent of any inconsistency, cease to have effect from the date this Ordinance comes into force.

32. Repeal and savings.- Upon the commencement of this Ordinance-

(a) the Prime Minister's Secretariat's Notification No.F.1(4)/2005-Admn., dated the 24th October, 2005, shall stand rescinded;

(b) all funds, properties, rights and interests of whatsoever kind issued, used, enjoyed, possessed or owned, vested in the Earthquake Reconstruction and Rehabilitation Authority (ERRA) in existence before such commencement and of liabilities legally subsisting against the said Authority shall pass to the Authority established under this Ordinance; and

(c) all employees, advisors, consultants and experts appointed by the Authority in existence before the commencement of this ordinance shall become employees, advisors, consultants and experts of the Authority established under this Ordinance.

General PERVEZ MUSHARRAF, President.

17 ANNEX-D

OPERATIONAL MANUAL

18 t.w.#H Ana~

'~ k I

ERRA

Government of Pakistan

Earthquake Reconstruction and Rehabilitation Authority

OPERATIONAL MANUAL

September 2006

19 List of Abbreviations and Acronyms

AJ&K Azad Jammu and Kashmir AGP Auditor-General of Pakistan CGA Controller General of Accounts EAD Economic Affairs Division ERRA Earthquake Reconstruction and Rehabilitation Authority FHA Frontier Highway Authority IESCO Islamabad Electric Supply Company LOI Letter of Intent MoF Ministry of Finance NBP National Bank of Pakistan NHA National Highway Authority NWFP North West Frontier Province PESCO Peshawar Electric Supply Company PTCL Pakistan Telecommunication Company Limited RFP Request for Proposal SBP State Bank of Pakistan SCO Special Communication Organization WAPDA Water and Power Development Authority

20 Foreword

The Operational Manual is an effort to compile & consolidate different rules to be followed in the planning, designing and implementation of reconstruction and rehabilitation projects. The processes in these rules have basically been borrowed from the prevalent government instructions, so that these are easily understood by the various government tiers and officers striving for reconstruction and rehabilitation. A few variations from government procedures have been made for enhancing the pace of reconstruction activity. However, at the same time, effort has been made that transparency and efficiency are not compromised in implementing ERRA projects.

ERRA has been burdened with the responsibilities never before handled by an organisation in this country. While treading this unknown path ERRA will be facing new challenges each day. The operational manual, therefore, has to be a dynamic document. We are willing to learn, and make any mid-course corrections.

21 PART-I CHAPTER -1

FUNCTIONS AND MANA GEMENT OF THE

EAR THQ UAKE RECONSTR UCTION AND REHABILITA TION A UTHORITY

Background 1.1 Government of Pakistan has established Earthquake Reconstruction and Rehabilitation Authority (ERRA), as an autonomous organization, for post-disaster damage assessment, reconstruction and rehabilitation of the areas affected by the earthquake of 8 October 2005. The Authority shall be part of the Prime Minister's Secretariat with its headquarters at Islamabad. The Authority may establish its temporary sub-offices at such other places in the earthquake affected areas as it may consider appropriate to expedite the recovery, reconstruction, rehabilitation and development work. Area of Operation 1.2 The Authority shall undertake its operations in the affected areas of: (a) Pakistan; (b) the Azad Jammu and Kashmir in consultation with its government. Functions of the Authority 1.3 The Authority is responsible for reconstruction and re-development of earthquake affected areas and rehabilitation of affected population and towards this end, its functions and duties are as follows:- a) Surveys to assess damage and needs in the Affected Areas. b) Formulation of a comprehensive umbrella development programme to provide for (i) planned settlements, housing, government buildings and offices, utilities and services, infrastructure, health and education facilities, irrigation and agriculture facilities; (ii) environmental rebuilding, including cleaning of watersheds, reforestation programmes and other environmental interventions to restore the ecosystems. c) Preparation of resettlement plan for the affected population in consultation with local communities, ensuring an appropriate mechanism for the resolution of land titles and land tenure issues.

22 d) Getting general approval of its comprehensive development programme from the Council of ERRA. e) Identification, preparation, approval and execution of projects. f)Steps and measures to ensure execution of the approved projects and development programmes in accordance with the time schedule approved by the Council. g) Prescribing cost-effective technology, building codes, architectural designs, specifications, and construction materials for housing and other buildings in earthquake prone areas to safeguard against future seismic activity. h) Review the building codes of the various urban development authorities and recommending for appropriate changes to ensure quality construction and to maintain building standards in the country. i) Facilitating the setting of reconstruction related industry in the affected zones. j) Performing any other function assigned to it by the federal govenunent that is incidental to any of the aforesaid functions. Powers of the Authority

1.4 The Authority may: - (a) undertake any work, incur any expenditure, procure plants, machinery, equipments, vehicles for field duties and stores as needed for the implementation of approved development programmes and projects; (b) dispose of such plants, machinery, equipments, vehicles and stores as are no longer required; (c) employee such staff and officers as may be required for the functioning of the Authority; (d) engage such experts, consultants, advisors, contractors and suppliers as may be considered necessary for preparing and executing the development programmes; (e) seek or call for any information required by it for carrying out its purposes from any person, or any institution or any agency; (f) seek and obtain from any agency of the federal government, provincial governments, and Government of Azad Jammu and Kashmir or any local authority, advice and assistance to discharge its functions and execute its programmes and projects;

23 (g) approve individual projects, within the scope of the approved umbrella programmes, upto a cost determined by the Federal Government; (h) transfer any project on completion to any agency of the federal government, the provincial governments, and the Government of Azad Jammu and Kashmir with the approval of the Council; (i) approve the budget of the Authority; and (j) reappropriate funds from one head of account to another account within the approved budget. Council of the Earthquake Reconstruction and Rehabilitation Authority 1.5 The general direction, all matters of policy and administration of the Authority and its affairs shall vest in a Council which may exercise all powers, perform all functions and do all acts and things which may be exercised, performed or done by the Authority. The Council shall be apex body and shall consist of the following members: (i) Prime Minister of Pakistan Chairman (ii) Prime Minister of Azad Jammu and Kashmir Member (iii) Chief Minister of NWFP Member (iv) Minister for Kashmir Affairs and Northern Areas Member (v) Advisor to the Prime Minister on Finance Member (vi) Deputy Chairman, Planning Commission Member (vii) Chairman, ERRA Member (viii) Deputy Chairman, ERRA Member/Secretary 1.6 The Council may co-opt such members as may be deemed necessary by it for the conduct of its business. The Government may, by notification in the official gazette, increase or decrease the number of members of the Council from time to time or substitute any member as and when required. The ERRA Board 1.7 There shall also be a Board which shall be responsible for the implementation of the approved programmes, projects and policy decisions of the Council as well as for the day to day operational matters and shall have such administrative and financial powers as may be delegated to it by the Council. The Board shall comprise the following: (i) Chairman ERRA Chairman (ii) Deputy Chairman, ERRA Member/Secretary (iii) Additional Finance Secretary (Expenditure) Member (iv) Additional Secretary, Defence Member (v) Additional Secretary, Planning Division Member

24 (vi) Additional Secretary, EAD Member (vii) Chief Secretary, NWFP Member (viii) Chief Secretary, AJ&K Member (ix) Four representative of civil society to Member be nominated by the Federal Government (x) A representative of civil society to be Member nominated by Government of NWFP (xi) A representative of civil society to be Member Nominated by the Government of an affected area 1.8 The Board may co-opt such other members as deemed necessary by it for the conduct of its business. The Government may, by notification in the official gazette, increase or decrease the number of members of the Board from time to time. The Board shall submit reports to the Council in respect of all its activities on quarterly basis. Meetings of the ERRA Council and Board 1.9 The meetings of the Council and the Board shall be held at such times, places and in such manner as may be specified. The Council shall meet at least once in three months or as often as the Chairman desires. The Board shall meet as often as is expedient to discharge its responsibilities and shall prescribe procedures for regulating its proceedings. The decisions of the Council and the Board shall be taken by the majority of its members present and, in case of a tie, the Chairman shall have a casting vote. Chairman, ERRA 1.10 The Federal Government shall appoint a Chairman of the Authority who shall be responsible for the policy matters for such period and on such terms and conditions as it may determine. 1.11 The Chairman shall perform such functions and carry out such responsibilities as may be delegated to him by the Council or the Board. Deputy Chairman, ERRA 1.12 The Federal Government shall appoint a Deputy Chairman for such period and on such terms and conditions as the Federal Government may prescribe. 1.13 The Deputy Chairman shall be responsible for the day to day administration of the Authority and may exercise such administrative and financial powers as are delegated to him by the Council or the Board. Implementation Arrangements 1.14 The Council shall provide policy guidelines and approve the policies, plans, programs, projects and schemes, submitted by the Chairman or the Board. 1.15 The Board shall exercise such powers and perform such functions as the Council may

25 assign to it. 1.16 Subject to the provisions of para 1.15 and subject to the overall supervision and control of the Council, the Board shall perform the following functions, namely: * Approve projects up to sanctioning limits of CDWP. Any project beyond that limit would be submitted to ECNEC for approval; * Approve the budget and accounts; * Consider the quarterly and annual reports of the Authority for making recommendations to the Council; * Appoint advisors and consultants and determine their conditions of appointment; * Constitute such committees as it may consider appropriate. 1.17 The Governments of NWFP and AJ&K shall establish Steering Committees and one Reconstruction Agency (RA) each for the reconstruction and rehabilitation work. The steering committees shall be headed by the Chief Secretaries / Additional Chief Secretaries and shall include the representatives of respective departments and ERRA. The Steering Committees shall be responsible for: * Approval of annual reconstruction plans; * Over-viewing the Reconstruction Agencies; and * Reporting to ERRA. 1.18 The Reconstruction Agencies of NWFP and AJ&K shall be autonomous in status and shall be responsible for: * Preparing annual work programmes; * Implementation of contracts in coordination with line agencies; * Monitoring of regional and district programmes and projects; and * Reporting to the Steering Committees and the ERRA. 1.19 The District Reconstruction Units shall be responsible for: * Preparing district reconstruction plans; * Implementation of small contracts in coordination with District Governments / District level line agencies; * Reporting to their respective Governments; and * Coordinating / partnering with partner organizations.

26 1.20 Some of the reconstruction and rehabilitation work shall be undertaken by the national and provincial Government organizations like National Highway Authority, Water and Power Development Authority, Pakistan Telecommunication Company Ltd; Frontier Highway Authority and Sarhad Hydel Development Organization. The implementation arrangements and reporting mechanism is shown in Figure- 1.

27 Fig 1 PROPOSED FUNDS FLOW AND PROJECT IMPLEMENTATION ARRANGEMENT

MOF / SBP World Bank ADB 1 V__ Consolidated Fund _____ Other Donors ADBr Budget Counterpart Fund

ERRA /NBP

Account

Peshawar Islamabad SERRA, AJK PERRA, Electric Supply Electric Supply Muzaffarabad NWFP

Il1 s ssII1 r4r Health Public Works Electricity Education Local Govt.& Provmcial Dcpartment Department Department Department Rural Dev. Linc Department Departments SHYDOFH District Reconsstruction District RecnitsmRctstuono UnitsU

ADB = Asian Development Bank, ERRA = Earthquake Reconstruction and Rehabilitation Authority, FHA = Frontier Highway Authority, MOF = Ministry of Finance, NBP = National Bank of Pakistan, NWFP = North-West Frontier Province,

28 CHAPTER -2

APPRO VAL OF PROJECTSAND PROGRAMMES

Umbrella Development Programme 2.1 ERRA shall formulate a comprehensive umbrella development programme to provide for (i) planned settlements, housing, government buildings and offices, utilities and services, infrastructure, health and education facilities, irrigation and agriculture activities; (ii) environmental rebuilding including cleaning of watersheds, reforestation programmes and other environmental interventions to restore the ecosystems which shall be approved by the Council of Earthquake Reconstruction and Rehabilitation Authority. Development of Programmes / Projects 2.2 Individual programmes, projects, schemes etc., within the umbrella development programme, shall be identified by the ERRA, Reconstruction Agencies and District Reconstruction Units of NWFP and AJ&K and all other executing agencies in consultation with local communities. The programmes, projects, schemes etc., shall be formulated by the concerned agencies in accordance with the guidelines issued by the ERRA and shall be got approved by them from the appropriate forum after due project appraisal. Programmes, projects, schemes etc., falling outside the purview of any approving authority e.g. DDWP, PDWP shall be approved by the Council of the ERRA. The approved programmes, projects, schemes etc., shall be submitted to the ERRA for review and funding. ERRA shall be responsible for overall co- ordination with the Governments and Reconstruction Agencies of NWFP and AJ&K and other executing and implementing agencies with respect to various programmes, projects, schemes etc. to be undertaken in the earthquake affected areas. ERRA shall also be responsible for monitoring and evaluation of all activities undertaken by the reconstruction agencies and all other executing and implementing agencies financed through ERRA funds. Project Appraisal 2.3 While undertaking appraisal of various programmes, projects, schemes etc., the relevant appraisal agencies / authorities shall take into account the following factors:

29 * Desirability of the programme, project, scheme etc., in terms of location, number and type of beneficiaries and impact on the economy and environment. * Capacity of the executing / implementing agency or NGO / PO to undertake the programme, project, scheme etc. within the stipulated time and cost. * Arrangements for the running and maintenance of the programme, project, scheme etc. after completion including staffing arrangements, where required e.g. health and education establishments, and payment of user charges, if any. * Economic and / or social benefits to the community in quantifiable terms. * Participation of the community in the programme, project, scheme etc. * Financial Management arrangements for the programme, project, scheme etc. Provision of Funds 2.4 Before any programme, project, scheme etc., proposed by the Reconstruction Agencies of NWFP and AJ&K or by any other executing and implementing agency is prioritized and finally cleared by the ERRA, the Authority shall ensure the availability of funds for its implementation. The programmes, projects, schemes etc. finally cleared by the ERRA shall only be undertaken after funds have been released by the ERRA. The funds shall be released according to financial phasing and / or the provisions of the contracts and release of further funds shall be subject to rendition of monthly expenditure statements and financial and physical progress reports or any other information as may be required by the ERRA. Funds allocated / released for a particular programme, project, scheme etc., shall not be used for another programme, project or scheme without the prior approval of ERRA. Technical Approval 2.5 The respective agencies shall prepare detailed technical proposals and shall be competent to accord technical sanctions to such programmes, projects, schemes etc. which conform to the guidelines provided by the ERRA provided that according of technical approval falls within their competence. Notice of Approval 2.6 The ERRA shall notify in writing about the approval or rejection of the programme, project, scheme etc. to the concerned Government / Reconstruction Agency or executing and implementing agencies. In case of non-approval, the reasons shall be communicated. Procurement of Materials

30 2.7 ERRA shall facilitate adequate availability of different construction materials in the affected areas and for this purpose approach concerned government agencies / organizations and various trade bodies for taking necessary steps. However, procurement of materials for various progranmmes, projects, schemes etc. from various sources shall be the responsibility of the concerned executing and implementing agencies. The owners of private houses shall procure the required construction materials themselves. Right of Information 2.8 The ERRA can require the Governments of NWFP and AJ&K, the concerned Reconstruction Agencies and District Reconstruction Units of NWFP and AJ&K and all other executing and implementing agencies dealing with ERRA funds to submit specific information or any other supplementary information or clarification at any time and set a deadline for such information to be supplied. Failure on the part of any Reconstruction Agency or any other executing or implementing agency to provide any information or clarification by the fixed deadline may result in stoppage of funding by the ERRA for any or all programmes, projects, schemes etc. being implemented by the concerned agency.

31 CHAPTER -3

MANA GEMENT OF FUNDS Introductory 3.1 There shall be a fund to be known as the Earthquake Reconstruction and Rehabilitation Authority Fund which shall vest in the Authority and shall be utilized by the Authority to meet the charges in connection with its functions. The Fund shall consist of (a) such sums as the Federal Government may, from time to time, allocate to it in the annual budget; (b) grants; (c) all other sums or properties which may in any manner become payable to, or vest in, the Authority. Inflow and Outflow of Funds 3.2 All moneys consisting of loans, credits, grants and donations received by the Government and contributions of the Government meant for reconstruction and rehabilitation activity in the earthquake affected areas shall be deposited in the Federal Consolidated Fund with the State Bank of Pakistan (SBP). The Ministry of Finance shall allocate funds to the Authority out of the above said resources. The Government shall release these funds to the assignment account of ERRA which shall be maintained with National Bank of Pakistan. The Reconstruction Agencies and District Reconstruction Units of NWFP and AJ&K and other executing and implementing agencies shall open dedicated bank accounts to be maintained with National Bank of Pakistan to receive funding for the programmes, projects, schemes etc. to be implemented by them. The ERRA funds shall remain federal funds at all levels and shall be kept separately in the dedicated bank accounts to avoid mixing of these funds with other funds.

Disbursements from the Fund 3.3 Funds for different programmes, projects, schemes etc., approved by various authorities including the ERRA Council shall remain federal funds at all levels and shall be utilized in the following manner: a. For programmes, projects, schemes etc., which may be executed / implemented by Government organizations like National Highway Authority (NHA), Frontier Works Organization (FWO), Water and Power Development Authority (WAPDA) - Islamabad Electricity Supply Company (IESCO), Peshawar Electric Supply Company (PESCO),

32 Pakistan Telecommunication Company Ltd; (PTCL), Special Communication Organization (SCO), Frontier Highway Authority (FHA), Sarhad Hydel Development Organization (SHYDO) etc., the funds shall be transferred by the ERRA directly to the dedicated bank accounts of the respective organizations to be opened with National Bank of Pakistan. The disbursements shall be made as per the financial phasing of various programmes, projects, schemes etc., and the stipulations of the agreements entered into with such organizations, if any. The ERRA funds shall only be utilized by these organizations for the eligible expenditures pertaining to the projects entrusted to them by the ERRA. The moneys shall be disbursed from the dedicated bank account(s) in accordance with the provisions of General Financial Rules (GFR) and Federal Treasury Rules (FTR) or the relevant financial rules of the concerned autonomous bodies duly approved by the competent forum as per their governing statutes. The respective organizations shall be responsible for the preparation of the accounts, on monthly basis, in respect of the projects entrusted to them, in such form / format as may be required by the ERRA. The accounts shall be submitted to ERRA on such dates as may be fixed by the ERRA. In cases where the funds are released to the national and provincial organizations directly by the Government of Pakistan / donors, they shall be required to follow the guidelines issued by the Government / donors. In such cases, ERRA shall not be responsible for the maintenance of the accounts and monitoring, evaluation and internal audit of the funds so released by the donors / Government of Pakistan. b. For the programmes, projects, schemes etc., that shall be implemented through the Reconstruction Agencies of the Governments of NWFP and AJ&K or through the line departments of the two Governments or by the District authorities viz. District Coordination Officers (DCO) / Deputy Commissioners (DC), District Reconstruction Units (DRU) etc., the funds shall be released to the dedicated bank accounts of the respective reconstruction agencies to be opened with National Bank of Pakistan. The Reconstruction Agencies may make further disbursements to the District Reconstruction Units through a dedicated imprest account which shall be maintained with National Bank of Pakistan. The disbursements shall be made as per the financial phasing of various programmes, projects, schemes etc., and the stipulations of the agreements, if any, entered into by ERRA with such organizations. The ERRA funds shall only be utilized by

33 these organizations for the eligible expenditures pertaining to the projects entrusted to them by the ERRA. The moneys shall be disbursed from the dedicated bank account(s) in accordance with the provisions of GFR and FTR. The respective organizations shall be responsible for the preparation of accounts in respect of the programmes, projects, schemes etc., entrusted to them, on a monthly basis, in such form / format as may be required by ERRA. The Reconstruction Agencies shall obtain the accounts from all the Implementing Agencies / District Reconstruction Units to whom the funds are released by them, verify the correctness of those accounts and submit the same along with their own accounts to ERRA on such dates as may be fixed by the ERRA. For the purpose of making the payments: (i) The respective executing agencies shall prepare the bill in the prescribed format and as per rules and regulations on the subject; (ii) The bill so prepared shall be duly supported by the relevant documents and should tally with the subsidiary record; (iii) The bill shall be pre-audited and passed for payment by an Accounts Officer posted in the Reconstruction Agencies or the District Reconstruction Unit, as the case may be, by the respective Governments and authorized to pre-audit and pass the bills; (iv) The Accounts Officer shall make sure that the claim has been submitted by the authorized officer / Drawing and Disbursing Officer and has been properly classified as per Chart of Accounts; scrutinize the claim for availability of budget and funds for the programme, project, scheme etc., against which the bill has been preferred; eligibility of expenditure; correctness of the calculations and completeness of the claim; genuineness of the claim; affixation of a certificate on the claim regarding receipt of goods / materials or utilization of services; compliance with rules and regulations; recoveries and deductions at source etc., (v) In case of correctness of the claim in all respects the "pay order" shall be recorded on the face of the bill under the signature and stamp of the Accounts Officer authorized for the purpose; (vi) After the bill has been passed, a cheque shall be prepared for the amount for which the "pay order" has been recorded on the bill; the cheque so prepared shall

34 be marked as "Payee's A/c Only" and shall be signed by two officers authorized by the respective government in this behalf; (vii) In case the bill submitted by an executing agency is in excess of the amount of Rs. 1.0 million or in case of any doubt about the genuineness of the claim, the Accounts Officer shall recheck with the respective authorized officer / Drawing and Disbursing Officer of the concerned implementing agency that the bill has been duly submitted by him for that specific amount; (viii) All cheques shall be collected by the authorized representatives of the concerned implementing agencies or shall be dispatched by registered post / courier service; (ix) The implementing agencies shall reconcile their monthly expenditure with the

respective Accounts Officer by 5 th of the following month; (x) The Accounts Officers posted in the District Reconstruction Units or in the Reconstruction Agencies shall prepare the monthly accounts, in such form /

format as may be required by ERRA by 7 th of the following month and submit the same to ERRA through Reconstruction Agencies; (xi) The Accounts Officers shall be responsible for the safe custody of all accounts record; (xii) The Accounts Officers shall also reconcile the expenditure / total number of cheques issued during the month with the respective banks on a monthly basis. (xiii) The Governments of NWFP and AJ&K may post more than one Accounts Officer in the Reconstruction Agencies or District Reconstruction Units depending upon the load of work; (xiv) ERRA may, subject to availability, also provide the services of professional financial management staff to the Reconstruction Agencies and District Reconstruction Units of the Governments of NWFP and AJ&K who will be borne on the strength of Reconstruction Agencies or District Reconstruction Units and shall be paid their remuneration, as fixed by ERRA, from the capacity building funds available with the RAs and DRUs. (xv) The professional financial management staff will help the managements of RAs and DRUs and the Accounts Officers posted in the RAs and DRUs in tracking the

35 sources and uses of funds from various funding agencies and preparation of various accounts reports as required by the respective managements and ERRA. c. For the programmes, projects, schemes etc., that shall be directly undertaken by ERRA, and for all other payments relating to the development budget, ERRA shall make the payments from the account(s) maintained for the purpose and prepare detailed accounts by the dates and in the form / format as prescribed.

3.4 A flowchart showing the sources and outflow of funds has been shown as Figure-2. A flowchart showing the flow of accounting data and physical progress reports is at Figure-3. Ulization of the resources allocated to ERRA shall be for the performance of functions and achieving the objectives of ERRA.

36 ORGANIZATION Professional Staffing TOR Fig 2

Major Policy Decision Council / Board >Approval of Overall Plan and Annual Work Plan /Ti1idqnre tn FRR A

Policy Formulation & Overall Coordination Overall Planning & Approval of Major Project 25 Approval of Annual Work Plan >25 Implementation of Selective Projects ERRA /Program Monitoring and Setting Standards and Indicators Financial Management of ERRA Funding Thncnr rnnrrlirntirinfnrA C!nrncrvbin Pr~anrama

r Approve Annual Reconstruction Plans CS/ACS Chairs >Reporting to ERRA Department & / fvei-r-viewinu RpRannctnirtinn A renrv

Autonomous Body NWFP / AJK 40 Reporting to Steering Committee and ERRA Preparing Annual Work Program Reconstruction Agency Each Implementation of Contracts in coordination with Line A (Pn-'sv

Masters Planning of Muzaffarabad and Balakot & 15 Implementation of Infrastructure Service JEach Implementation of Provincial / District Hospitals, Reconstrulction Qfe

10 Preparing District Reconstruction Plans District \Implementing Small Contracts in Coordination with Reconstruction Each Districts Governments/District Level Line Agencies Units /Reporting to Province / State Total: 215

37 Observance of Rules and Regulations 3.5 In so far as spending from the ERRA funds, the ERRA, all concerned Executing Agencies (EA) and all concerned Implementing Agencies (IA) shall observe the provisions of GFR and FTR of the Government of Pakistan and the Public Procurement Rules, 2004. Various autonomous bodies dealing with ERRA funds shall have the option to follow their own procurement and financial rules in place of GFR and FTR if the same have been approved by the competent forum specified in their governing statutes. In each case, where a specific rule is to be relaxed for whatever reason and in whatever manner, the relaxation shall be obtained from the concerned authorities. In the case of donor funds (both grants and loans) donor guidelines for procurement of goods, works, consultant services, individual consultants, incremental staff etc., shall be followed. These guidelines shall take precedence over the rules of Government of Pakistan and procurement rules of the respective autonomous bodies.

38 CHAPTER- 4 ACCOUNTING General 4.1 The present day requirements obviously necessitate a comprehensive system of accounts, which apart from meeting the basic requirements of book keeping and accounting, takes into consideration the requirements of controls and procedures. 4.2 The policies, procedures and methods for discharging the accounting functions have been described in this chapter so as to ensure that the: * Accounting functions are performed correctly and efficiently; * Systems are effective and procedures are uniform; * Forms and Records are standardized; * Responsibilities of Accounts Personnel are specific; * Transactions are recorded and accounts are finalized in a timely manner; * Statutory and other requirements are complied with; and * New recruits are assisted in familiarizing themselves with the established systems and procedures. 4.3 It is envisaged that all accounting personnel will be conversant with the provisions of this Operations Manual. Considerations involved in selection of accounting policies 4.4 The primary consideration in the selection of accounting policies by an entity is that the financial statements prepared and presented on the basis of such accounting policies should represent a true and fair view of the state of affairs of the entity at the end of accounting period. For this purpose, the major considerations governing the selection and application of accounting policies are:

i) PRUDENCE: In view of the uncertainty attached to future events, inflow is not anticipated but recognized only when realized. Provision is made for all known liabilities and losses even though the amount cannot be determined with certainty and represents only a best estimate in the light of available information.

39 ii) SUBSTANCE OVER FORM: The accounting treatment and presentation in financial statements of transactions and events should be governed by their substance and not merely by their legal form. iii) MATERIALITY: Financial statements should disclose all "material" items, i.e. items the knowledge of which might influence the decision of the user of the financial statements. 4.5 In addition to above, the accounts shall be prepared on the following basis: i) A going concern concept. ii) Cash basis of accounts iii) Consistency Concept iv) True & Fair Presentation v) Historical Cost Conventions

Accounting Policies 4.6 The accounts of ERRA both for its Development (Reconstruction and Rehabilitation) and Non-Development Budget shall be maintained on cash basis of accounts. Books of Accounts 4.7 For proper account keeping, ERRA shall maintain the following books of accounts. The Reconstruction Agencies and District Reconstruction Units of the Governments of NWFP and AJ&K and all other executing agencies shall also maintain these books of accounts. i) Cash Book ii) Cheque Book Register iii) Cheque Register iv) Stock Register, Dead Stock Register and Register of Contracts v) Register of Assets (separate for development/non-development budget) vi) Budget Control Register / Statement of Releases vii) Disbursement Register viii) Project-wise Statements of Expenditure ix) Register of Advances (Advance Payments) x) Record of reconciliation with the bank and treasury xi) Transfer Entry Order Register Preparation of Financial Statements

40 4.8 On the basis of expenditure and financial data provided by the Reconstruction Agencies of the Governments of NWFP and AJ&K and various autonomous bodies involved in the reconstruction and rehabilitation work and on the basis of data generated by ERRA itself, the ERRA shall prepare the monthly accounts as well as the following financial statements on annual basis. i) Appropriation Accounts ii) Statement of Assets and Liabilities iii) Statement of Sources and Uses of Funds Maintenance of Accounts by Executing Agencies / Implementing Agencies 4.9 The accounts relating to the projects, programmes, schemes etc. financed through ERRA funds shall be maintained by the Reconstruction Agencies, District Reconstruction Units and all other Executing and Implementing Agencies separately and shall be preserved for audit. On completion of the reconstruction and rehabilitation activity and winding up of ERRA all record including the accounting record relating to the ERRA funds shall be handed over by the reconstruction agencies and the implementing and executing agencies to the respective governments. 4.10 Each executing agency / implementing agency shall maintain records in accordance with the form required by ERRA. The ERRA while releasing the funds shall elaborate clearly the conditions for utilization of funds. Neither the accounts nor the expenditure made out of ERRA Fund shall be mixed-up with funds received under the normal budget or funds received from other sources. 4.11 Any request for payment including advances to be paid to contractors for any work shall be accompanied by the relevant documents required in support of the payment. All accounts, vouchers and documents relating to tenders and quotations shall also be preserved by the concerned executing / implementing agency. Structure of Accounts 4.12 ERRA and all other Executing Agencies (EAs) dealing with ERRA funds shall follow the accounting policies and the Chart of Accounts prescribed by the Federal Government in so far as the use of ERRA funds is concerned. Expenditure of ERRA out of the non-development budget shall be booked under the Expenditure sub-element of Object Element of the Chart of Accounts prescribed by the Government. In so far as the expenditure out of development (reconstruction

41 and rehabilitation) budget is concerned, the ERRA, the Reconstruction Agencies and all executing and implementing agencies shall book the expenditure under the following heads: Housing Education Buildings including furniture and equipment Health Buildings including furniture and equipment Roads, Highways and Bridges (Transport Sector) Telecommunication Buildings including furniture and equipment Energy, Fuel and Electricity (Power) Works including Buildings Water Supply, Sanitation and Drainage Works Irrigation Works Governance and Other Government Buildings and Structures Agriculture and Livestock Tourism and Industry Other Expenditure Capacity Building Consultant Services (institutional) Imports / Quick Disbursements Livelihood (Cash Grants) / Social Protection Environment Payments and Accounting Records 4.13 Before a cheque is prepared for making the payment, a payment voucher shall be prepared by the concerned staff for submission to the officer authorized to approve the payment. Care shall be taken to adjust the required advances while preparing the payment voucher. The concerned Accounts Officer shall be responsible to check the payment voucher for: * Submission of the claim by the authorized officer / Drawing and Disbursing Officer * Availability of funds against the relevant project * Annotation of the relevant classification codes on the claim * Arithmetical calculations * Certificate of accountal of goods and materials and / or utilization of services . Completeness of the claim • Supporting documentary evidence

42 * All deductions required to be made at source

4.14 After the payment has been authorized under the signature of the authorized officer, particulars of the payment shall be recorded in the appropriate register/s. Thereafter, the cheque shall be prepared. While preparing the cheques, it shall be ensured that: * The cheque is stamped as "Payee's A/c Only" * Cheque Number is marked on the payment voucher, and * Complete particulars of the cheque are recorded in the Cheque Register * Appropriate record of delivery of cheque is maintained. 4.15 The payment vouchers complete in all respects shall be presented to the authorized cheque signatories in the cheque book. Before signing the cheque and affixing their signatures on the payment voucher, the authorized signatories shall ensure that: * Bill has been passed for payment by the authorized officer and is duly pre-audited. * Particulars of the cheque have been marked on the paid voucher. * The voucher and all the supporting documents have been marked as "Paid". 4.16 In respect of every payment made out of ERRA funds, proper receipt shall be obtained from the person to whom the payment is made. Reconciliation 4.17 All those who are responsible for payments out of ERRA funds shall be required to obtain the bank statements from the respective banks on a daily basis and reconcile the issued / paid cheques with the banks at frequent intervals. They shall also be responsible for carrying out reconciliation with the respective treasuries on a monthly basis or earlier, if so required. Necessary adjustments / entries pursuant to reconciliation shall be made immediately under the authority of accounts officer so deputed.

4.18 It shall be the responsibility of the concerned management dealing with ERRA funds to obtain confirmation of year-end balances from the bankers for all accounts and intimate those to the ERRA headquarters immediately.

Compilation ofAccounts 4.19 The ERRA, the Reconstruction Agencies, District Reconstruction Units and all the executing and implementing agencies shall prepare monthly accounts for all the transactions

43 pertaining to ERRA funds. The accounts shall be prepared in the form / format required by ERRA and shall be submitted by such dates as may be prescribed by ERRA. Failure to submit the accounts in the prescribed format and by the due dates may result in stoppage of funds. The accounts shall give a true and fair view of each project, programme, scheme etc. and shall include such information as approved cost, funds released, expenditure during the month, cumulative expenditure, balance at the close of month etc. Responsibilities 4.21 All executing agencies and implementing agencies shall be responsible for preparation of the accounts for the projects, programmes, schemes etc. being implemented by them. The line departments and / or the district authorities of the Governments of NWFP and AJ&K responsible for executing and implementing various projects, programmes, schemes etc., shall prepare the accounts and submit to the Reconstruction Agency of their Government. The Reconstruction Agencies shall scrutinize / review the accounts so received and submit the same to ERRA along with their own accounts. All other executing and implementing agencies shall submit their accounts to the ERRA directly. The ERRA will consolidate the accounts for submission to various donors by the agreed dates.

44 Disclosure 4.22 The accounts shall be prepared under different heads prescribed for various activities. The expenditure shall also be reported according to various formats as are required by the ERRA to meet the reporting requirements of donors.

45 CHAPTER -5

A UDIT Objectives of Audit 5.1 The objective of financial audit of the Earthquake Reconstruction and Rehabilitation Authority, the Reconstruction Agencies and District Reconstruction Units of NWFP and AJ&K, and all other executing and implementing agencies, in so far as they relate to the ERRA funds, is to provide an opinion: a) with regard to true and fair picture of the financial position of audited entities; b) about preparation of the financial statements in accordance with the relevant accounting standards; and c) on the eligibility of the expenditure incurred by the audited entities. Scope of Audit 5.2 The financial audit of the ERRA funds shall be undertaken to cover all areas of activity to ensure that: (a) transactions are properly authorized. (b) expenditure has been incurred according to the canons of financial propriety. (c) transactions have been recorded under proper heads of accounts. (d) funds have been utilized for the purposes for which they were made available. (e) counterpart funds have been utilized for the purposes for which they were provided. (f) goods and services have been procured in accordance with the Public Procurement Rules, 2004 or the procurement guidelines of donors or their own procurement rules duly approved by the competent forum as per their governing statutes. (g) transactions are duly supported by relevant documents. (h) there is a linkage between the books of accounts and the reports presented to stakeholders. (i) donor guidelines, where applicable, and financial procedures agreed with the donors have been followed.

46 Internal Audit 5.3 An internal audit unit shall be set up within the ERRA for audit of all ERRA funds dished out to the Reconstruction Agencies and District Reconstruction Units of NWFP and AJ&K and all other executing and implementing agencies including NGOs and POs. The accounts of ERRA shall also be subjected to internal audit. The internal audit unit will be headed by a Director who shall directly report to the Deputy Chairman, ERRA. The internal audit teams will operate in the earthquake affected areas of NWFP and AJ&K and shall carry out audit of all projects, programmes, schemes etc. implemented by various executing / implementing agencies through ERRA funds. Internal audit reports shall be issued within 15 days of the completion of the audit of an entity. External Audit 5.4 External audit of all ERRA funds shall be conducted by the Auditor-General of Pakistan on an annual basis. For this purpose audit teams of the Department of the Auditor-General of Pakistan shall conduct audit of all projects, programmes, schemes etc. financed from ERRA funds and executed by ERRA, the Reconstruction Agencies, District Reconstruction Units and all other executing and implementing agencies. Third Party Validation 5.5 Third party validation of various projects and programmes undertaken by ERRA, the Reconstruction Agencies and District Reconstruction Units of NWFP and AJ&K and all other executing and implementing agencies shall also be arranged as per the specified Terms of Reference. Compliance 5.6 Finance Wing of the Earthquake Reconstruction and Rehabilitation Authority shall coordinate with the respective reconstruction agencies and all other executing and implementing agencies with regard to the issues raised by the auditors for compliance within a reasonable time frame. All those issues on which the compliance is reported shall be dropped from the audit report. The outstanding issues of the internal and external audit reports shall be placed before the Board and Council of the ERRA. 5.7 The unresolved issues of external audit shall be reported in the Audit Report of the Auditor-General of Pakistan. However, these issues shall be reported separately for the ERRA and all other executing and implementing agencies in different chapters within the audit report

47 on the accounts of ERRA. The respective Principal Accounting Officers shall explain their position with respect to these issues before the Public Accounts Committee of the National Assembly. 5.8 Certification Audit Reports of the Auditor-General and third party validation reports shall be submitted to the donors within the timeframe agreed with them.

48 CHAPTER -6

ADHERENCE TO CERTAIN PRINCIPLES

Staff members of the ERRA and those of Reconstruction Agencies and District Reconstruction Units of NWFP and AJ&K and all other executing and implementing agencies including Non- governmental Organizations (NGOs) and Partner Organizations (POs) are jointly and severally required to exercise their discretion with reference to the following principles. IMPARTIALITY: They may not practice any form of discrimination or preferential treatment in their relations with third parties, be they employees of ERRA or persons or institutions involved in any way in the activities financed by ERRA or the results of those activities. The ERRA shall exclusively apply the procedures described in this manual. COST-EFFECTIVENESS: Maximum cost-effectiveness, in relation to the activities financed by ERRA, should always be ensured in decision making at all levels within the ERRA, by Reconstruction Agencies and District Reconstruction Units of NWFP and AJ&K and by all other executing and implementing agencies including NGOs and POs, and in the practical application of its procedures. CODE OF PUBLIC BEHAVIOR TO BE OBSERVED BY STAFF: The staffs of ERRA, the Reconstruction Agencies of NWFP and AJ&K, and all executing and implementing agencies including NGOs and POs, are required to perform a public service. They are, accordingly, under an obligation to observe confidentiality, impartiality and discipline similar to that required of Government employees. They may not, in the performance of their functions, engage in political or religious propaganda. They are expected to accord equal treatment to the beneficiaries of ERRA funds.

49 Administrative and Financial Powers Delegated to ERRA Board, as approved in the 2ndmeeting of the ERRA council

Sr. No. Description Powers delegated to ERRA Board 1 Framing of Rules and Regulations, not-inconsistent with Full Powers the government statutes of the Authority 2 Creation of Temporary posts. Up to BPS-19 3 Write off of irrecoverable value of stores or public Full Powers. money due to losses on account of deficiencies on account of breakage, shortage in transit, wastage, spoilage, dryness in storage, depreciation on account of wear and tear, fluctuation in market prices and obsolescence. 4 Award of contracts on cost plus basis as per prescribed Full Powers. Subject to procedure. transparent procedure. 5 Powers to approve development schemes, projects, The Board will approve all programs etc. projects that fall within the powers of CDWP but which are beyond the sanctioning power of the Chairman, ERRA. 6 Rent of Non-Residential Buildings up to Rs.80 per SFT, Full Powers. covered area. 7 Fixing of scales and ceiling for entertainment. Full Powers. 8 Honorarium / Efficiency Honorarium up to 6 months Full Powers. once in a financial year. Re-appropriation of funds from one project to another Full Powers. subject to prescribed conditions. 10 Appointing of firms of chartered accountants for third Full Powers. party validation and impact assessment with the approval Auditor-General of Pakistan. 11 Approval of contracts with respect to the projects which Full Powers. p ed by the Board for implementation by ERRA. 12 Determination of the strength of vehicles for the Full Powers. Authority. 13 Purchase of Vehicles and fixing of POL limits for Full Powers. various officers 14 Fixing of amount of monthly mobile phone subsidy for Full Powers various officers/officials. 15 Fees to Law Officers. Full Powers.

50 Administrative and Financial Powers Delegated to the Deputy Chairman ERRA as

approved in the 5 th meeting of the ERRA council

Sr. No. Description Powers delegated to the Deputy l _ Chairman 1 Powers to sell surplus or unserviceable stores Full Powers. and stock at a reserve price to another Government Department/Agency. 2 Extend mobile phone facility any Full Powers officer/official of ERRA. 3 Award consultancies for preparation of PC-I, Full Powers designing of buildings and structures, supervision of projects or any other work deemed necessary in the interest of the Authority. 4 Powers to approve development projects, Full Powers. programs, schemes etc. costing up to Rs.100 million. 5 Repair and maintenance of transport. Full Powers 6 Repair to hired and requisitioned non- Full Powers. residential buildings. Note:- The powers shall be restricted to the extent covered by landlord's liability. 7 Grant of the facility of residential telephone to Full Powers officers in BPS-17 and above. 8 Rent of Non-residential Buildings up to Rs.35 Full Powers. per SFT of covered area. 9 Rent of Residential Buildings. Chairman may hire a house for officers up to rental ceiling of Rs.30,000/- per month 10 Expenditure on account of Entertainment Chairman shall continue to exercise the powers of Principle accounting officer on account o entertainment expenditure. Members shall have the power to incur expenditure up to Rs.25 per head on light refreshments during official meetings. 11 Law charges Full Powers subject to the policies and guidelines issued by the Law Division on the subject. 12 Other expenditure on Commodities and Full Powers Services. 13 Authorization of final payment of the fund dues Up to Rs.50,000/- of a deceased Government servant to the

51 members of his family dispensing with production of succession certificate and guardianship certificate in the case of minor heirs. 14 Appointment of Consultants / Advisors at a Full powers subject to consolidated pay less than the initial observance of a transparent consolidated pay of MP-II Scale. procedure. 15 Compensation for acquisition of Land. Full powers, subject to acquisition of land through Land Acquisition Collector of the respective District. 16 Technical sanction of works, projects, Full Powers programs, schemes etc. 17 Approval of contracts with respect to the Full Powers. projects which are approved by the Chairman for implementation by ERRA itself.

52 PART-II

PROJECT PLANNING AND IMPLEMENTATION RULES INSTITUTIONS AND ORGANISATION

1. District Reconstruction Unit (DRU): A District Reconstruction Unit shall be established in each district affected by the earthquake. 2. The DRU shall comprise of such members as may be notified by the Government of the NWFP and the Government of Azad Jammu and Kashmir. 3. The DRU shall have the following duties and responsibilities: a) Consolidate Annual Work Plans for reconstruction and rehabilitation activities in the district and submit them for approval; b) Act as the secretariat for the District Reconstruction Advisory Committee (DRAC); c) Coordinate and facilitate planning and execution of all reconstruction and rehabilitation projects in the district; d) Monitor execution of each project in the district; e) Submit monthly and quarterly reports to PERRA/SERRA; f) Disburse funds against the work done under a project; and g) Any other function assigned to it by ERRA. 4. District Reconstruction Advisory Committee (DRAC): A District Reconstruction Advisory Committee shall have the following members: (2) In case of North West Frontier Province: a) District Nazim Chairman b) District Coordination Officer c) Program Manager DRU Secretary d) Tehsil Nazims concerned e) A representative of Planning Wing of ERRA Member f) EDO Finance and Planning Member g) EDO Works Member h) EDO of the line department proposing to Member

53 undertake the project. i) The District Reconstruction Advisory Committee may co-opt any additional members depending upon need and relevance. (3) In case of State of Azad Jammu and Kashmir: a) Deputy Commissioner Chairman b) Program Manager DRU Secretary c) A representative of Planning Wing of ERRA. Member d) A representative of the State Finance Department Member e) A representative of the State Planning Department Member f) District Officer of the line department proposing Member to under take the project g) Executive Engineer of the concerned Member engineering department h) The District Reconstruction Advisory Committee may co-opt any additional members depending upon need and relevance. (5) The Governments of Azad Jammu and Kashmir and the NWFP may include any other members in the District Reconstruction Advisory committee in consultation with ERRA. (4) Powers and functions of DRAC: The District Reconstruction Advisory Committee shall: a) Approve the Annual Work Plans prepared by the DRU and forward the same to PERRA/SERRA; b) Approve reconstruction and rehabilitation projects costing below Rs. 100 million; c) Scrutinize and clear all projects costing more than Rs.100 million before their submission to PERRA/SERRA; d) Hold quarterly meetings to review on going projects; e) Ensure full cooperation and support from all concerned departments in the planning and implementation of projects; and f) Perform any other duties assigned to it by ERRA. 3. Composition of Provincial/State Steering Committee: A Provincial/State Steering Committee shall have the following members: a) Chief Secretary or Additional Chief Chairman

54 Secretary Development b) Director General PERRA/SERRA Secretary c) A representative of Planning Wing of ERRA Member d) Secretary Finance Department Member e) Secretary of the Line Department executing Member the project f) Chief Engineer of the concerned Member Engineering Department g) Deputy Commissioner/DCO of the concerned district Member h) Program Manager of the respective DRU Member i) The Steering Committee may co-opt any additional members depending upon need and relevance.

4. Powers and functions of the State/Provincial Steering Committee: The State/Provincial Steering Committee shall: a) Approve the Annual Work Plans forwarded by the District Reconstruction Advisory Committee and forward the same to ERRA; b) Approve reconstruction and rehabilitation projects costing up to Rs.250 million; c) Scrutinize and clear all projects costing more than Rs.250 million before their submission to ERRA; d) Hold quarterly meetings to review on going projects; e) Ensure full cooperation and support from all concerned departments in the planning and implementation of projects; f) Assign projects to various implementing agencies and districts after careful assessment of capacity, and where such capacities are not available, decide on alternative means of implementation; g) Ensure implementation of all reconstruction and rehabilitation projects in accordance with the standards set by ERRA; and h) Perform any other duty assigned to it by ERRA.

55 5. State Earthquake Reconstruction and Rehabilitation Agency (SERRA): In the State of Azad Jammu and Kashmir, a State Earthquake Reconstruction and Rehabilitation Agency (SERRA) shall be established by the Government of Azad Jammu and Kashmir. (2) It shall act as Secretariat for the State Steering Committee. (3) It shall have such duties and powers as may be determined. 6. Provincial Earthquake Reconstruction and Rehabilitation Agency (PERRA): In the NWFP, a Provincial Earthquake Reconstruction and Rehabilitation Agency (PERRA) shall be established by the Government of NWFP. (2) It shall act as Secretariat for the Provincial Steering Committee. (3) It shall have such duties and powers as may be determined. STRATEGY PAPER 7. ERRA headquarters shall prepare, in consultation with the NWFP Provincial Government and the Government of Azad Jammu and Kashmir, a strategy paper for each sector for which reconstruction and rehabilitation it proposes to undertake. (2) The strategy paper shall include the following: a) Assessment of the damage due to earthquake. b) Targets to be achieved by way of reconstruction and rehabilitation. c) Broad outline of the strategy for reconstruction and rehabilitation. d) Minimum standards for the facilities/buildings to be created/constructed. (3) The Strategy Paper for each sector shall be approved by ERRA council and shall be notified. ANNUAL WORK PLAN 8. Preparation of Annual Work Plan: In line with the Strategy Paper, each District Reconstruction Unit, in consultation with the respective line departments, shall prepare an Annual Work Plan for each sector to be known as the District Work Plan for the respective sector. (2) The District Annual Work Plan for a sector shall be prepared on the format provided at Appendix A and shall include name, scope, estimated cost, funding source and gestation period of each project that the District Reconstruction Unit plans to undertake in the respective sector during a year.

56 (3) A project spread over more than one year shall also be mentioned in the Annual Work Plan along with annual phasing. 9. Approval of the Annual Work Plan: The DRU shall submit the District Annual Work Plan for each sector to the DRAC for approval along with suggestions/comments, if any. (1) The District Annual Work Plans approved by the DRAC shall be submitted by the DRAC to PERRA/SERRA. (2) PERRA/SERRA shall compile all District Annual Work Plans in a single document to be known as Provincial/State Annual Work Plan for the respective sector and shall lay it before the Provincial/State Steering Committee, along with any suggestions/comments. (3) Provincial/State Annual Work Plan approved by the Provincial/State Steering Committee shall be submitted by PERRA/SERRA to ERRA which shall compile the Annual Work Plans of the NWFP and AJK into a single document to be known as Annual Work Plan for the respective Sector, and lay it before ERRA Board for approval, along with any comments suggestions. (4) While approving the Annual Work Plan, ERRA Board shall also indicate the total amounts required for funding the execution of the plan. (5) Once approved by ERRA Board the Annual Work Plan for a sector shall be notified.

PROJECT PREPARATION 10. Project PC-I: For each project included in the Annual Work Plan, the line department or the agency planning to execute the project, shall, in consultation with the concerned engineering department and DRU, prepare a Project on ERRA PC-I according to Appendix B. (1) The Project shall include the following: a) The Project PC-I as at appendix B. b) Schedule of Running Expenditure, i.e., the details of manpower, equipment, and other requirements along with costs of running the facility proposed to be created through the project.

57 (2) ERRA may specify a separate format for the Schedule of Running Expenditure for each sector. (3) A DRU or the engineering department with prior permission of ERRA, may hire or arrange a consultant to facilitate the preparation of a project.

PROJECT APPRAISAL 11. While undertaking appraisal of a project, the relevant agencies shall take into account the following factors: i) Capacity of the implementing/executing agency. ii) Arrangements and costs for running and maintenance of the project or a facility created there under. iii) Participation of the community in the project iv) Financial management arrangements of a project. v) Any concerns of the foreign/international/national donors.

PROJECT APPROVAL 12. Submission of PC-I to the District Reconstruction Advisory Committee: Each Project shall be submitted to the District Reconstruction Advisory Committee for approval. (1) The District Reconstruction Advisory Committee may approve a project with such amendments/modifications as it may deem proper. (3) A Project costing up to Rs.100 million, if approved by the District Reconstruction Advisory Committee shall require no further approval. 13. Submission of PC-I to State/Provincial Steering Committee: A Project costing more than Rs.100 million, after its clearance by the District Advisory Committee, shall be sent to PERRA/SERRA, who shall lay it before the Provincial/State Steering Committee for approval, along with any observations, comments and suggestions. (1) The Provincial/State Steering Committee may approve a project with such amendments/modifications as it may deem proper. (2) A Project costing up to Rs.250 million if approved by the Provincial/State Steering Committee shall require no further approval. 14. Submission of Projects to ERRA Board and ERRA Council:

58 (1) A project costing more than Rs.250 million, after its clearance by the Provincial/State Steering Committee, shall be sent to ERRA, who shall lay it before the ERRA Board. (2) The Board may approve a project costing up to Rs.500 million. If the cost of the project is more than Rs. 500 million, the Board may recommend it to ECNEC for approval. (3) A Project costing up to Rs.500 million, approved by ERRA Board, shall require no further approval. (4) A project costing more than Rs.500 million will require approval of the ECNEC 15. Administrative Approval: Administrative approval of a project will be issued by DG PERRA/SERRA after approval of the PC-I by relevant fora.

16. Technical Sanction: The approval or clearance of a project by the District Reconstruction Advisory Committee, State/Provincial Steering Committee shall not automatically mean the technical sanction of the project. (2) The technical sanction of a project shall be issued by the concerned Engineering Department of the State/Provincial Government in consultation with the concerned line department and the District Reconstruction Unit, in accordance with the design and construction standards approved by ERRA.

RELEASE AND DISBURSEMENTS OF FUNDS 17. Release of Funds for Annual Work Plan: Upon approval of the Annual Work/Cash Plan by ERRA Board, ERRA shall release and transfer the amounts required for execution of the plan to PERRA/SERRA in such installments as deemed appropriate. 18. Release of Supplementary Grants: The Deputy Chairman shall have the power to allocate any additional funds as supplementary to the Annual Work Plan during the course of a year.

19. Release of Funds for projects: Each DRU shall formally request PERRA/SERRA for release of funds after the issuance of the Administrative Approval of a Project.

59 (1) PERRA/SERRA shall release the funds required for the project to the concerned DRU and send a copy of the release advice to the line department implementing the project. (2) Upon release of funds, the DRU shall request the concerned engineering department to start execution of the project.

20. Power to Re-appropriate funds: a) The Deputy Chairman, ERRA shall have the power to re-appropriate funds from a sector to another or from one project to another. a) Any re-appropriation of funds within a project up to Rs.1.000 million may be allowed by the respective DRU. b) Any re-appropriation of funds within a project up to Rs.5.000 million may be allowed by PERRA/SERRA. c) Any re appropriation of funds within a project beyond Rs.5.000 million may be allowed by Deputy Chairman. 21. Funds to remain with the DRUs: The funds required for execution of a project shall remain with the District Reconstruction Unit and shall in no case be transferred to any other account except in a manner hereinafter provided. 22. Disbursal of Project Funds: The District Reconstruction Unit shall disburse funds to the contractors, vendors, consultants or employees engaged for a project directly according to the schedule provided in the bidding document, purchase order or agreement made for execution of a project. (1) Funds for a construction contract shall only be disbursed after the line department and the concerned Engineering Department communicate in writing that the funds required to be disbursed are in line with the contract and that the contractor has done all that was required of him under the contract for the work. (2) No funds shall be disbursed to a vendor without a certificate in writing from the line department that the goods purchased are according to the technical specifications required under the purchase order/agreement. (3) No funds shall be disbursed to any consultants or employees employed under the project without a certificate in writing by the concerned line department indicating satisfactory performance of the consultant/employee.

60 23. Cost overruns: Any cost overrun beyond 15 per cent of the total cost of a project shall require approval of the forum by which the project was initially approved, provided that the revised total cost of the project still falls within the sanctioning power of that forum. (2) This allowance of 15% is not available for a revised project. 24. Books of Accounts: Each DRU shall separately maintain accounts for each project on a formnat notified by ERRA and shall render all accounts for inspection/audit as and when so required either by ERRA or PERRA/SERRA. (2) While making any payments or disbursing any amounts the DRU shall also send a copy of the release order as well as of the receipt to the concerned line department and the concerned engineering department. 25. Audit: All projects shall be subject to such internal and external audit as may be specified by ERRA.

BIDDING DOCUMENTS 26. Preparation of bidding documents: All bidding and contract documents related shall be prepared by the respective Engineering Department or consultants, if appointed for the purpose. 27. Approval of bidding documents: All bidding documents shall follow the standards, as closely as possible, of the Pakistan Engineering Council. (2) All biding documents shall be approved by the Tender Evaluation Committee to be chaired by the concerned Chief Engineer and comprising representatives of PERRA/SERRA and the line department at the Provincial/State level. (3) At the district level, it will be chaired by the EDO Works and Services department (in NWFP) or Executive Engineer, PWD (in AJK), with representatives from DRU and line departments. (4) A representative of consultants appointed by ERRA for this purpose shall also be included in the committee. 28. Advertisement, tender evaluation and work orders: (1) All tenders will be floated by the Tender Evaluation Committee. (2) All bids shall be evaluated by the Tender Evaluation Committee. (3) All work orders shall be prepared and issued by the concerned engineering department in accordance with the decision of the Tender evaluation Committee.

61 (4) If there is an ambiguity in a tender document or any difference of opinion as to any provision, the decision from ERRA will be the final word.

PROCUREMENTS 29. All procurements to be made under rules notified by ERRA: All procurements to be made for the projects related to reconstruction and rehabilitation shall be made in accordance with rules notified by ERRA.

MISCELLANEOUS 30. Reference to the Planning Commission Procedures: For things not provided for in these Rules, the planning procedures laid down by the Planning Commission shall be followed.

62 APPENDIX A ANNUAL WORK PLAN Sector District Reconstruction Unit: Reconstruction: Ser i. Name of the Project Approved by Estimated Cost Actual Allocation for 2006-07 DRAC/PSC/SSC ERRA Total Foreign Expenditure Rupee Foreign Total ii. Location Board ERRA Council Aid upto June, 2006 Exchange (Dates of Approval & (FEC) Total(F.Aid) Completion 1 2 3 4 5 6 7 8 9

A. ON-GOING PROJECTS Sub-total (On-going)

B. NEW APPROVED PROJECTS Sub-total (Approved)

C. UN-APPROVED PROJECTS Sub-total: (Un-approved) Total: (A+B+C) Appendix-B Sector: ......

ERRA PC-I FORM

DISTRICT/TEHSIL:

NAME OF SCHEME/PROJECT

......

Date ofppreparation......

DOCUMENT CONTROL Document I D No. 63 Project digest

1. Name of scheme/project:

2. Location of scheme/project:

3. Authorities responsiblefor:

i. Sponsoring:

ii. Execution:

iii. Post-completion Operation and Maintenance:

4. Facilities which existed prior to earthquake: This is just to get an idea of how much "better" is being reconstructed:

5. Relation of the project with the umbrella project/program:

6. If the project is a part of a group of projects, indicate the larger program or project.

7. Period of implementation: 8. SUMMARYAND SCOPE OF THE PROJECT

9. Funding Plan & Mode Of Financing Funding source Counterpartfunds if any (mention the source, amount andpercentage of the total cost to be financed through the counterpartfunds. Cost of the project (Rs. In million) i. Local:

ii. Foreign Exchange component: iii, Total

10. PROJECTDESCRIPTION. 10.1 Project Objectives: 10.2 Indicate the quantified contribution (financial, economic & social with indicators) of the project, if possible, to the target area & population.

64 10.3 Environmental Considerations and Inclusions: (This should include any environmental hazard feared and any steps taken to avoid such hazards mitigate the damage or replenish the environment) 11. MANPOWER REQUIREMENTS: 12. PROJECT COST BREAKUP

ITEM QUANTITY UNIT COST TOTAL COST COMMODITIES & SER VICES Civil works: Plant, equipment etc: Furniture & Fixture: Office Stationery: Design cost: Advertisement (if separate): Staff Training: Technical Assistance, Consulting services: Capacity Building: Vehicles/transport Human Resource requirements (salaries etc.) Contingencies: Other charges: Total 13. FINANCIAL PHASING: Item Year 1 Year 2 Year 3 Total

65 14. PROPOSED ACTIVITIES WITH TIMELINES

Sr. No Activity Timeline (dates) starting ending 1. 2. 3.

15. PERFORMANCE INDICATORS (Verifiable indicators for monitoring and evaluation during implementation and post completion). CERTIFICATE Certified that the project has been prepared keeping in view the instructions issued by ERRA on preparation of PC-I for infrastructure sector projects. PREPARED BY: (Name, designation & phone #) CHECKED BY: (Name, designation & phone #) APPROVED BY: (Name, designation & phone #)

66 Annex-i

Cost of Establishment (Million Rs.) No. of 1st 2nd | 3rd Name of Post BS Posts Year Year Year Total

Annex-II

Cost of Civil Works (Million Rs.) i) Give detailed cost estimates prepared by a cosulting firm/Engineering Department. ii) Line plan iii) Unit cost

Annex-III

67 Equipment (Million Rs.) Name of 1st 2nd 3rd | Equipment Quantity | Unit Cost | Year | Year | Year Total

Annex-IV

Vehicles (Million Rs.) 1st 2nd 3rd Make & Model Quantity | Unit Cost | Year Year | Year Total

68 Annex-V

Training (Million Rs.) No. of Unit 1st 2nd 3rd | Persons | Duration | Cost Year | Year Year Total Local Training

Foreign Training

69 Annexure to PC-I. (This part should be filled up only for revised scheme)

1. Comparative cost estimate of last sanctioned and Revised Schemes:

Item Last sanctioned Project Revised Local Foreign Total Local Foreign Total

(Rupees) (Rupees) (Rupees) (Rupees) (Rupees) (Rupees)

a) b) c) d) e) f) 2. Give reasons for the revision in cost estimate.

Item Reasons for the Revision