Papua New Guinea: Lae Port Development Project (Additional ...€¦ · PPCL = PNG Ports Corporation...
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Project Number: 40037 October 2011 Papua New Guinea: Lae Port Development Project (Additional Financing) Project Administration Manual
Transcript of Papua New Guinea: Lae Port Development Project (Additional ...€¦ · PPCL = PNG Ports Corporation...
Project Number: 40037 October 2011
Papua New Guinea: Lae Port Development Project (Additional Financing)
Project Administration Manual
Contents
ABBREVIATIONS I. PROJECT DESCRIPTION 1 II. IMPLEMENTATION PLANS 2 A. Project Readiness Activities 2 B. Overall Project Implementation Plan 3 III. PROJECT MANAGEMENT ARRANGEMENTS 4 A. Project Implementation Organizations – Roles and Responsibilities 4 B. Key Persons Involved in Implementation 4 C. Project Organization Structure 5 IV. ESTIMATED COSTS AND FINANCING 6 A. Detailed Cost Estimates by Expenditure Category 6 B. Allocation and Withdrawal of Loan Proceeds 8 C. Detailed Cost Estimates by Financing Agency 9 V. FINANCIAL MANAGEMENT 11 A. Financial Management Assessment 11 B. Disbursement 12 C. Accounting 13 D. Auditing 13 VI. PROCUREMENT AND CONSULTING SERVICES 15 A. Advance Contracting and Retroactive Financing 15 B. Procurement of Goods and Works 15 C. Consulting Services 16 D. Procurement Plan 17 E. Consultant’s Terms of Reference 18 VII. SAFEGUARDS 19 VIII. GENDER AND SOCIAL DIMENSIONS 20 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND
COMMUNICATION 21
A. Updated Project Design and Monitoring Framework 21 B. Monitoring 22 C. Evaluation 23 D. Reporting 23 E. Stakeholder Communication Strategy 23 X. ANTICORRUPTION POLICY 24 XI. ACCOUNTABILITY MECHANISM 25 XII. RECORD OF PAM CHANGES 26
Project Administration Manual Purpose and Process
1. The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.
2. The executing agency (EA), the Independent Public Business Corporation (IPBC) is wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by IPBC of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures.
3. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan Agreements. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreements, the provisions of the Loan Agreements shall prevail.
4. After ADB Board approval of the project's report and recommendations of the President (RRP) changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.
Abbreviations
ADB = Asian Development Bank ADF = Asian Development Fund AFS = audited financial statements AIDS = Acquired Immunodeficiency Syndrome EA = executing agency EIA = environmental impact assessment EMP = environmental management plan HIV = Human Immunodeficiency Virus IPBC = Independent Public Business Corporation JFPR = Japan Fund for Poverty Reduction LIBOR = London interbank offered rate MPA = Morobe Provincial Administration NGO = nongovernment organization OCR = ordinary capital resources OFID = OPEC Fund for International Development PAM = project administration manual PIU = project implementation unit PMU = project management unit PPCL = PNG Ports Corporation Limited QBS = quality-based selection QCBS = quality- and cost-based selection RRP = report and recommendation of the President to the Board SBD = standard bidding documents SGIA = second generation imprest accounts SOE = statement of expenditure SPRSS = summary poverty reduction and social strategy SPS = Safeguard Policy Statement TOR = terms of reference
I. PROJECT DESCRIPTION
1. Description. The original project was to expand the cargo handling capacity of Lae port, improve the livelihood of those directly or indirectly affected, and reduce the incidence of human immunodeficiency virus (HIV) and acquired immune deficiency syndrome (AIDS) in Lae. This involved financing the: (i) construction of a tidal basin on existing swamp land, a multipurpose berth, and terminal works; (ii) resettlement and livelihood improvement; (iii) consulting services in project management, construction supervision, financial management, resettlement, and socioeconomic monitoring; and (iv) gender-responsive programs for HIV and AIDS awareness and prevention. There has been no change to the original project scope and the original project rational is valid and remains applicable. 2. The Impact and Outcome. The impact and outcome of the project remains unchanged. The project will catalyze industrial and commercial development and promote trade for Papua New Guinea (PNG) by relieving a binding constraint on key port infrastructure in Lae. 3. Outputs. The outputs of the project remain unchanged, with output results already achieved in respect of some project activities. The project will have three outputs: (i) operational new port facilities; (ii) improved livelihood for those affected; and (iii) reduced incidence of HIV and AIDS in Lae. The project activities will consist of: (i) the construction of port facilities including a tidal basin, a berth, and terminal works; (ii) resettlement and livelihood and social improvement for the people affected by the project; (iii) project implementation support; and (iv) gender-responsive HIV and AIDS awareness and prevention. 4. Project Update (2007-2011). The project was approved for Asian Development Bank (ADB) financing in 2007. The Project was initially prepared using preliminary engineering designs and survey data. Subsequent to the ADB Board approval, the Independent Public Business Corporation (IPBC) undertook additional geotechnical survey to prepare detailed engineering designs. In addition, the Resettlement Program was to commence in 2008. However, the resettlement program was delayed by two years because of the land issues experienced at the proposed Malahang site and the requirement to undertake further consultations with the settlers at the project site. A Supplementary Resettlement Program was agreed and the settlers resettled outside the project site by the end of March 2010. The detailed engineering design work and depreciation of the US$ during the period resulted in project cost increases. See Section IV for details. As a result of the project cost increases, the Government requested additional financing from ADB in January 2011.
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II. IMPLEMENTATION PLANS A. Project Readiness Activities
A.1: Original Project Activities Dates
Fact-finding mission 12 March–3 April 2007
Management Review Meeting 17 August 2007
SEIA Board Circulation
Pre-appraisal Mission*
Staff Review Committee Meeting
Loan Negotiation
20 August 2007
18 August–14 September 2007
8 October 2007
22–23 November 2007
ADB Board consideration and approval 18 December 2007
Loan signing 12 June 2008
Loan effectiveness 30 October 2008
Inception mission 8–18 September 2008
Original Loan Closing Date 30 June 2012
Revised Loan Closing Date 30 June 2014
ADB = Asian Development Bank, SEIA = summary environmental impact assessment. * Upgraded to appraisal mission.
A.2: Additional Finance Project Activities Dates
Fact-finding mission 18 July–12 August 2011
Staff review committee meeting 12 September 2011
Loan Negotiations 6–7 October 2011
Circulation of RRP for Board Consideration 20 October 2011
ADB Board consideration and approval 10 November 2011
Loan signing TBD
Loan effectiveness TBD
Loan Closing Date 30 June 2014
ADB = Asian Development Bank, RRP = report and recommendation to the President, TBD = to be determined.
B. Overall Project Implementation Plan
IMPLEMENTATION SCHEDULE
2007 2008 2009 2010 2011 2012 2013 2014
Item
A. Resettlement - Planned
B. Civil Works - Actual
(1) Bidding
Prep & Submit Documents
Bidding & Contract Award
(2) Construction
C. JFPR
D. HIV & AIDS Prevention
E. Consulting Services
Detailed Engineering Design
PMU Support
Const. Supervision
Socioeconomic Monitoring
AIDS = Acquired Immunodeficiency Syndrome, HIV = Human Immunodeficiency Virus, JFPR = Japan Fund for Poverty Reduction, PMU = project management unit.
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III. PROJECT MANAGEMENT ARRANGEMENTS
A. Project Implementation Organizations – Roles and Responsibilities
Project implementation organizations
Management Roles and Responsibilities
Independent Public Business Corporation
Will set up and maintain, in a phased manner, a fully staffed and adequately funded Project Management Unit (PMU) comprising engineering and contract management division, a resettlement and environment division, and a finance and administration division, under the leadership of a project director with integrity, managerial skills, and familiarity with the government systems and local culture.
Project
Management Unit
(i) Implement the resettlement plan in association with the Morobe Provincial Administration (MPA), (ii) prepare bidding documents and handle the bidding process, (iii) manage the contracts, (iv) monitor the progress of the project, (v) prepare applications for fund withdrawals, (vi) prepare the project progress reports and project completion report, (vii) maintain project accounts and financial records for auditing, and (viii) monitor the socioeconomic impact of the project.
Project
Steering Committee
oversee the project implementation and provide policy guidance
ADB To provide project implementation supervision and guidance
B. Key Persons Involved in Implementation
Executing Agency Independent Public Business Corporation
Officer's Name Position Telephone Email address
Moses Koiri Chief Operating Officer +675 3212977 [email protected]
ADB
Officer's Name Position Telephone Email address
Ila Mari Project Director +675 4728966 [email protected],
PNG Resident Mission Staff Name Position Telephone No. Email address
Charles T. Andrews Country Director +675 3210400 [email protected]
Project Manager
Staff Name Position Telephone No. Email address
Allan Lee Head-PAU, PNRM +675 3210400 [email protected]
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C. Project Organization Structure
IPBC = Independent Public Business Corporation, PMU = project management unit. Sources: Asian Development Bank and IPBC.
Managing Director, IPBC
PMU
Project Director (National)
Resettlement and Environment
Deputy Project Director (International, Engineering, and Contract Management)
Finance
Administration
Resettlement Committee Project Steering Committee
Legal
Deputy Project Director (International, Finance, and
Administration)
Resettlement
Plan
Environment Management
Plan
Engineer (Terminal)
Engineer (Dredging and Bank
Protection)
Civil Works
Contract
Construction Supervision
Contract
Technician
Draftsman
Surveyor
Project Accounts
Imprest
Accounts
IPBC
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IV. ESTIMATED COSTS AND FINANCING
A. Detailed Cost Estimates by Expenditure Category
Table 1: Detailed Cost Estimates by Expenditure
($ million)
2007 2010 Increase
Item Total Total Total
A. Civil Works 1. Port Facilities 106.93 231.37 124.44 2. Resettlement Housing Construction 1.53 1.53 0.00 3. Canoe Landing Site Development 0.96 0.96 0.00 Sub Total (A) 109.42 233.86 124.44
B. Land Acquisition 1.49 1.49 0.00 C. Compensation and Relocation 0.31 0.31 0.00 D. Livelihood and Social Protection 1.50 1.50 0.00 E. HIV/Aids Prevention 0.75 0.75 0.00 F. Consulting
1. Support to PMU 2.94 2.94 0.00 2. Construction Supervision 6.00 6.00 0.00 3. Housing Construction Supervision 0.50 0.50 0.00 4. Audit Fees 0.13 0.13 0.00 Sub Total (F) 9.57 9.57 0.00
G. Training 0.03 0.03 0.00 H. Contingencies
1. Physical for Port Facilities (a) 16.47 24.29 7.82 2. Contingencies (A2, C and F3) 0.38 0.38 0.00 3. Price Contingencies for Port Facilities (b) 8.90 10.41 1.51 Sub Total (H) 25.75 35.08 9.33
Total Project Cost BEFORE Financial Charges 148.82 282.59
I. Financial Charges
1. Commitment Charge 0.56 0.42 (0.14) 2. Interest during construction (IDC) 4.62 8.40 3.78 Sub Total (I) 5.18 8.81 3.63
Total 154.00 291.40 137.40
PMU = project management unit. (a) Physical contingencies estimated at around 15%. (b) Price contingencies computed at 1.2% of foreign exchange and 3.2% on local costs. Note: Numbers may not seem precise because of rounding. Source: Government and Asian Development Bank estimates.
5. Total Project Cost: The project investment cost was estimated in 2007 at $154 million, including taxes and duties of $4.44 million. The revised total cost of the project is estimated to be $291.40 million in 2011, including taxes and duties of $9.49 million.
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6. Project Investment Plan: A summary of the project investment plan is shown in Table 2.
Table 2: Project Investment Plan ($ million)
Item 2007
Amounta
2011 Additional Financing
2011 Revised Amount
a
Civil Worksb 109.42 124.44 233.86
Land Acquisition 1.49 - 1.49 Compensation and Relocation 0.31 - 0.31 Livelihood and Social Support 1.50 - 1.50 HIV and AIDS Prevention 0.75 - 0.75 Consulting Services 9.57 - 9.57 Training 0.03 - 0.03 Contingencies
c 25.75 9.33 35.08
Financing Charges during Implementationd 5.18 3.63 8.81
Total 154.00 137.40 291.40
HIV and AIDS = human immunodeficiency virus and acquired immune deficiency syndrome. a Includes taxes and duties of $4.44 million (2007) increased to $9.49 million (2011), financed by Government.
b In 2007 prices in 2007 and 2010 prices in 2010.
c Physical contingencies computed at about 15% for civil works. Price contingencies computed at 1.2% for foreign exchange costs
and 3.2% for local currency costs; include provision for exchange rate fluctuation on the assumption of a purchasing power parity exchange rate. d Include interest and commitment charges. Interest during construction is computed at the 5-year forward London interbank
offered rate. Source: Government and Asian Development Bank estimates.
7. Financing Plan: ADB’s total financial assistance for the project will amount to $189.12 million equivalent. ADB will continue to finance 64.9% of the project investment plan. The cost estimates, by financing agency for 2007 project and revised financing plan are summarized in Table 3 below.
Table 3: Financing Plan
($ million)
2007 Additional Financing 2011
Source Total % Amount Total %
Asian Development Bank 100.00 64.9 89.12 189.12 64.9
OCR 60.00 38.9 85.00 145.00 49.8
ADF 40.00 26.0 4.12 44.12 15.1
JFPR 1.50 1.0 1.50 0.5
HIV/AIDS Cooperation Funda 0.75 0.5 0.75 0.3
OFID 6.00 3.9 6.00 2.1
Government 45.75 29.7 48.28 94.03 32.3
Total 154.00 100.0 137.40 291.40 100.0
ADF = Asian Development Fund, HIV/AIDS Cooperation Fund = Cooperation Fund for Fighting HIV/AIDS in Asia and the Pacific, JFPR = Japan Fund for Poverty Reduction, OCR = ordinary capital resources, OFID = OPEC Fund for International Development. a Contributor: Government of Sweden.
Source: Asian Development Bank estimates.
8. Original OCR Loan: The original (2007) ordinary capital resources (OCR) loan carries a term of 24 years with a grace period of 4 years, an interest rate determined in accordance with ADB’s London interbank offered rate (LIBOR) - based lending facility, a commitment charge of 0.15% per annum, and such other terms and conditions set forth in the OCR loan agreement dated 12 June 2008.The Government provided ADB with: (i) the reasons for its decision to borrow under ADB’s LIBOR-based lending facility on the basis of these terms and conditions; and (ii) an undertaking that these choices were independently made, without relying on any communication or advice from ADB.
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9. Additional Financing-OCR Loan: The proposed additional OCR loan will carry a term of 24 years with a grace period of 4 years, an interest rate determined in accordance with ADB’s LIBOR-based lending facility, a commitment charge of 0.15% per annum, and such other terms and conditions set forth in the draft OCR loan agreement for the additional financing. The Government has provided ADB with: (i) the reasons for its decision to borrow under ADB’s LIBOR-based lending facility on the basis of these terms and conditions; and (ii) an undertaking that these choices were independently made, without relying on any communication or advice from ADB. 10. Original ADF Loan: The original (2007) Asian Development Fund (ADF) loan (on soft terms) has a maturity of 32 years including a grace period of 8 years, an interest charge of 1% per annum during the grace period and 1.5% per annum thereafter, equal amortization, and such other terms and conditions set forth in the ADF loan agreement dated 12 June 2008. 11. Additional Financing- ADF Loan: The additional ADF loan (on hard terms) will have a maturity of 32 years including a grace period of 8 years, an interest charge of 2.02% per annum during the grace period and thereafter, equal amortization, and such other terms and conditions set forth in the draft ADF loan agreement for the additional financing. 12. Relending: The Government will onlend the proceeds of the additional financing loans to IPBC through a subsidiary loan agreement on terms and conditions acceptable to ADB. The subsidiary loan agreement will be executed on the same financial and other terms and conditions as specified in the additional finance loan agreements. The Government will bear the foreign exchange and interest rate variation risk of the additional finance loans. 13. Government Request for ADB Financial Assistance for Additional Financing: The Government is requesting ADB to finance the increased project costs for the following reasons: (i) the resettlement program has been successfully completed and the project site is available for civil works to commence immediately; (ii) switching funding sources of the project would disrupt the awarding of the port facilities civil works contract package and may result in significant delay in completion of the project; (iii) due to the ongoing congestion problems at the port and the impending commencement of the Liquefied Natural Gas (LNG) production facility and other mining projects, the project is now becoming urgent and critical for the economic development of the country; (iv) the Government does not have readily available funding that can accommodate the identified cost increase, and (v) financing under a public-private-partnership (PPP) arrangement would not be attractive to private investors at this early development stage of the tidal basin port facilities. B. Allocation and Withdrawal of Loan Proceeds
14. The loan allocation from the additional financing will only be used for financing project civil works.
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Table 4: Allocation and Withdrawal of Loan Proceeds (OCR) – Additional Financing
CATEGORY ADB FINANCING
Number
Item
Total Amount Allocated for ADB Financing
Percentage and Basis for Withdrawal from the Loan
Account ($)
Category Subcategory
1 Works 75,670,000 61% of total expenditure claimed
2 Unallocated 9,330,000
Total 85,000,000
Table 5: Allocation and Withdrawal of Loan Proceeds (ADF) – Additional Financing
CATEGORY ADB FINANCING
Number
Item
Total Amount Allocated for ADB Financing
Percentage and Basis for Withdrawal from the Loan
Account (SDR)
Category Subcategory
1 Works 2,650,000 3% of total expenditure claimed
Total 2,650,000
C. Detailed Cost Estimates By Financing Agency
15. The detailed cost estimates by financing agency is shown in Table 6.
Table 6: Detailed Cost Estimates by Financing Agency
ADB Government
OCR
OCR -AF
ADF
ADF - AF
OFID
JFPR
HIV & AIDS Corp Fund
Gov’t-Original Loan
Gov’t -AF Loan
Description Cost
AF Cost
% of cost
% of cost
% of cost
% of cost
% of cost
% of cost
% of cost
% of cost
% of cost
$ Cate-gory
$ Cate-gory
$ Cate-gory
$ Cate-gory
$ Cate-gory
$ Cate-gory
$ Cate-gory
$ Cate-gory
$ Cate-gory
A. Civil Worksa
1. Port facilitiesb 106.93 33.30 31.0 37.39 35.00 6.0 6.0 0.0 0.0 0.00 0.0 30.24 28.0
Additional Financing Loan 0.00 124.44 0.00 0.0 75.67 60.81 0.00 0.00 4.12 3.31 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0 44.65 35.88 2. Resettlement Housing Construction 1.53 0.00 0.0 1.53 100.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0 3. Canoe Landing Site Development 0.96 0.00 0.0 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 0.96 100.0
Subtotal (A) 109.42 33.30 30.0 38.92 36.00 6.0 5.0 0.0 0.0 0.00 0.0 31.20 29.0
B. Land acquisition 1.49 0.00 0.0 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 1.49 100.0 C. Compensation and Relocation 0.31 0.00 0.0 0.31 100.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0 D. Livelihood and Social Support 1.50 0.00 0.0 0.00 0.00 0.0 0.0 1.5 100.0 0.00 0.0 0.00 0.0 E. HIV & AIDS Prevention 0.75 0.00 0.0 0.00 0.00 0.0 0.0 0.0 0.0 0.75 100.0 0.00 0.0 F. Consulting
1. PMU 2.94 2.94 100.0 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0 2. Construction Supervision 6.00 6.00 100.0 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0 3. Housing Construction Supervision 0.50 0.00 0.0 0.50 100.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0 4. Audit Fees 0.13 0.00 0.0 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 0.13 100.0 Subtotal (F) 9.57 8.94 93.4 0.50 5.20 0.0 0.0 0.0 0.0 0.00 0.0 0.13 1.4
G. Training 1. Training for Resettlement Comm 0.03 0.00 0.0 0.03 100.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0
H. Contigencies 1. Physical Contingencies for Port
Facilitiesc
16.47 8.86 53.8 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 7.61 46.2
Additional Financing Loan 0.00 7.82 0.00 0.0 7.82 100.00 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0 0.00 0.00 2. Contigencies for A2, C, and F3 0.38 0.00 0.0 0.24 63.00 0.0 0.0 0.0 0.0 0.00 0.0 0.14 37.0 3. Price Contigencies for Port
Facilitiesd
8.90 8.90 100.0 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0
Additional Financing Loan 0.00 1.51 1.51 100.00 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0 0.00 0.00 Subtotal (H) 25.75 17.76 69.0 0.24 1.00 0.0 0.0 0.0 0.0 0.00 0.0 7.75 22.0
I. Financial Charges 1. Commitment Charge 0.56 0.00 0.0 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 0.56 100.0 2. Interest during construction 4.62 0.00 0.0 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 4.62 100.0 Additional Financing Loan 0.00 3.63 0.00 0.0 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0 3.63 100.00 Subtotal (I) 5.18 0.00 0.0 0.00 0.00 0.0 0.0 0.0 0.0 0.00 0.0 5.18 100.0
Total - Original Loan 154.00 60.00 38.9 40.00 26.00 6.0 3.9 1.5 1.0 0.75 0.5 45.75 29.7 Total - Additional Financing Loan 0.00 137.40 0.00 0.0 85.00 61.86 0.00 0.00 4.12 3.00 0.0 0.0 0.0 0.0 0.00 0.0 0.00 0.0 48.28 35.14
ADB = Asian Development Bank, ADF = Asian Development Fund, Gov’t = Government, HIV & AIDS Corporation Fund Cooperation = Fund for Fighting HIV&AIDS in Asia and the Pacific, IDC = interest during construction, JFPR = Japan Fund for Poverty Reduction. a
In 2007, prices in 2007 and 2010 prices in 2010. b Including $4.44 million in 2007 and increased to $9.49 million in 2011 for taxes and duties calculated at 10% of the value of the imported equipment. Taxes and
duties will be paid by the Government. c Physical contigencies estimated at around 15%.
d Price contigencies computed at 1.2% on foreign exchange costs and 3.2% on local currency costs; includes provision for potential exchange rate fluctuation
under the assumption of the purchasing power parity exchange rate.
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V. FINANCIAL MANAGEMENT
A. Financial Management Assessment
1. Financial Assessment 16. Financial management arrangements for the project are being administered by the project management unit (PMU) in the IPBC, overseen by the project steering committee (PSC). 17. At the time of the original loans, in-depth assessments of both IPBC and PNG Ports Corporation Limited’s (PPCL) accounting functions were undertaken to evaluate their financial management effectiveness and capacity. The assessments focused on major accounting policies and procedures; financial reporting, management reporting and budgeting; financial and management information systems; finance department structure and staffing; internal audit department structure and staffing; external audit relationship and results; corporate governance structure, and regulatory environment. 18. In relation to IPBC, the assessment concluded that IPBC has appropriate finance staff, procedures and systems to support its primary business of trust management. The assessment noted that as the project will require specialized accounting and reporting procedures, IPBC will require staff and systems support to appropriately manage and account for the project, which would be addressed through financial management consulting support to the PMU. 19. In relation to PPCL, the assessment noted that while there had been some improvements in internal controls and reporting at PPCL since corporatization, the overall environment was still not conducive to sound financial management. The assessment noted there were a number of areas for improvement which required attention including (i) obtaining a clean audit opinion, (ii) improving the capacity of accounting and information technology staff through training and recruitment, (iii) full implementation of financial and management information systems, (iv) re-evaluation of current accounting policies and procedures with the objective of decentralizing more to each port, and (v) improving the capacity of internal audit staff through training and recruitment. 20. Since that assessment, PPCL has been working to improve its corporate governance and financial management, particularly in budgeting and financial reporting. 21. Given the findings of the financial management assessment, a PMU was established and staffed with adequate finance expertise to ensure compliance with ADB policies and procedures, and help strengthen the financial management capacity of IPBC. The project management arrangements established by IPBC, including the PMU and the PSC, are considered to be operating effectively and no change to those arrangements is needed as a result of the additional finance. 22. Major risks and mitigating measures were identified and described in detail in the risk assessment and risk management plan. Financial management risks should be considered and updated throughout the life of the project. Risk mitigation measures should also be updated accordingly.
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2. Risks Associated with Corruption 23. An identified major risk is corruption. Recruitment of consultants and contractors closely follow ADB recruitment and procurement procedures. To mitigate the risk of corruption: (i) all PMU management and staff have been trained in ADB’s and the Government’s anticorruption policies, the concept of whistle-blowing, and methods of reducing vulnerability to corruption; (ii) IPBC will develop and maintain a project website to disclose the audited project financial accounts, project progress, and procurement activities; (iii) imprest accounts will be prudently used and closely monitored; (iv) ADB has participated in the selection of key consultants in consultation with IPBC, and reviewed beforehand the bidding documents and contract awards for all international and national competitive bidding contracts; and (v) financial management is centralized in the PMU for internal control. Having IPBC as the executing agency (EA) further mitigates the risk of corruption, as Transparency International is represented on IPBC’s board of directors, and IPBC is among the organizations that are Papua New Guinea’s most closely watched. These risks will continue to be managed through mechanisms already established within the EA to ensure ADB recruitment and procurement procedures are closely followed, particularly in relation to disbursement and audited project financial accounts. B. Disbursement
24. The ADB Loans, OPEC Fund International Development (OFID), HIV & AIDS Cooperation Fund and JFPR proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time),1 and detailed arrangements agreed upon between the Government and ADB.
25. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),2 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB.
26. No withdrawals from the loan account will be paid in respect to payment of taxes.
27. Before the submission of the first withdrawal application, IPBC should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. IPBC is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things, that the goods and services were produced in or from ADB members, and are eligible for ADB financing. 28. The proceeds of the loans from ADB and OFID and the grants from JFPR and the HIV/AIDS Cooperation Fund will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time), through direct payment, payment via imprest account, and reimbursement. To facilitate project implementation and funds flow, IPBC will establish separate imprest accounts for the loans from ADB and the grants from JFPR and the HIV/AIDS Cooperation Fund at a commercial bank acceptable to ADB after the loans and grants
1 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf
2 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf
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take effect. IPBC will use the imprest accounts exclusively to finance eligible expenditures as specified in the loan and grant agreements. The initial amount to be deposited into each imprest account will not exceed either 6 months of estimated expenditures to be financed from the imprest account or 10% of the loan or grant amount, whichever is less.3 For the contract for the dredging and wharfing civil works and international consulting services, direct payment or reimbursement will be used. The OFID loan for the joint cofinancing of port facilities under the project will be administered by ADB, and disbursed by OFID through direct payment. 29. Under the Additional Financing loans, there will be no imprest account.
30. Condition for Withdrawals from Loan Accounts (OCR): No withdrawals shall be
made from the loan accounts for the OCR loans until:
(a) The Subsidiary Loan Agreement, in form and substance satisfactory to ADB, shall have been duly executed and delivered on behalf of the Borrower and IPBC and shall have become legally binding upon the Borrower and IPBC in accordance with its terms; and
(b) the Borrower shall have furnished, or caused to have been furnished, to ADB an
opinion satisfactory to ADB of counsel acceptable to ADB showing that the Subsidiary Loan Agreement has been duly executed and delivered on behalf of the Borrower and IPBC and is legally binding upon the Borrower and IPBC in accordance with its terms.
31. Condition for Withdrawals from Loan Accounts (ADF): No withdrawals shall be
made from the loan account for the ADF loans until:
(a) The Subsidiary Loan Agreement, in form and substance satisfactory to ADB, shall have been duly executed and delivered on behalf of the Borrower and IPBC and shall have become legally binding upon the Borrower and IPBC in accordance with its terms; and
(b) the Borrower shall have furnished, or caused to have been furnished, to ADB an opinion satisfactory to ADB of counsel acceptable to ADB showing that the Subsidiary Loan Agreement has been duly executed and delivered on behalf of the Borrower and IPBC and is legally binding upon the Borrower and IPBC in accordance with its terms.
C. Accounting
32. The IPBC through its PMU will maintain separate project accounts and records by funding source for all expenditures incurred on the project. Project accounts will follow international accounting principles and practices and PNG’s Public Financial Management Act.
D. Auditing
33. The IPBC will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing and in accordance with the Government's
3 The imprest accounts will be used prudently according to the actual needs of the project and the capacity of the
Executing Agency to liquidate advances.
14
audit regulations by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 6 months of the end of the fiscal year by the executing agency. The annual audit report will include a separate audit opinion on the use of the imprest accounts. The Government and IPBC have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. For revenue generating projects only, ADB requires audited financial statements (AFS) for each executing and/or implementation agency associated with the project.
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VI. PROCUREMENT AND CONSULTING SERVICES
A. Advance Contracting and Retroactive Financing
34. ADB Policies and Procedures. All advance contracting and retroactive financing will be undertaken in conformity with ADB’s Procurement Guidelines4 (April 2010, as amended from time to time) and ADB’s Guidelines on the Use of Consultants5 (2010, as amended from time to time). The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. The borrower, IPBC, and the MPA have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the project. 35. Advance contracting. The civil works contract package is procured under the original project and the cost increase will be funded from the additional financing. ADB approval of advance contracting does not commit ADB to finance the Project. 36. Retroactive financing. Under the original Project Loan, retroactive financing is considered for contracts approved as part of the original project. No retroactive financing is to be proposed for Additional Financing loans. B. Procurement of Goods and Works
37. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines (April 2010, as amended from time to time) and in accordance with the Papua New Guinea - Public Finance Management Act (PFMA-1995). 38. International competitive bidding procedures will be used for civil works contracts estimated to cost $3 million or more, and supply contracts valued at $500,000 or higher. Shopping will be used for contracts for procurement of works and equipment worth less than or equal to $100,000.
39. The procurement will mainly consist of civil works for increasing the Lae port capacity and the works and goods necessary to improve livelihood of the 3,200 affected persons. The major civil works involving dredging, wharf, and terminal construction is packaged into one contract to attract international bidders because of lack of local capacity, reduce administrative pressure for the EA, and avoid interfacing problems. The procurement process initially followed the one stage one envelope bidding procedure with prequalification but was later changed to post-qualification international competitive bidding (ICB) procurement method. 40. The original project cost estimate was based on preliminary engineering designs and limited survey data. Subsequent to loan effectiveness, the project preparatory consultants were appointed to undertake detailed engineering designs using the latest geotechnical survey data. The surveys were undertaken during the period when the resettlement program was under implementation. By undertaking detailed engineering design prior to issuing bids for the port facilities civil works, IPBC has mitigated the risk of large cost variation claims. The major civil works involving dredging and the construction of the wharf and the terminal was grouped into one contract package to attract international bidders. Bids were issued on 19 January 2011 and
4 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf
5 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf
16
closed on 21 April 2011. Evaluation of bids is currently in progress and the EA is targeting to award the contract by 31 December 2011. 41. ADB and the Government will review the public procurement laws of the central and state governments to ensure consistency with ADB’s Procurement Guidelines before the start of any national competitive bidding (NCB) procurement. 42. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in subsection D below. C. Consulting Services
43. All consultants and nongovernment organizations (NGOs), if appropriate, will be
recruited according to ADB’s Guidelines on the Use of Consultants6 (April 2010, as amended from time to time).The terms of reference for all consulting services are covered in Section E.
44. International and national consulting services are required to support the PMU in port engineering and contract management, financial management, resettlement, and socioeconomic monitoring. An estimated 162 person-months (90 international, 72 national) of consulting services are required to (i) facilitate project management and implementation, and (ii) strengthen the institutional and operational capacity of the executing agency. An international consulting firm will be selected to provide a total of 567 person-months of consulting services for construction supervision and environment monitoring. There will be 201 person-months of international and 366 person-months of national consulting services. Consulting firms are engaged using the quality- and cost-based selection (QCBS) method with a standard quality: cost ratio of 80:20. 45. The request for proposal (RFP) for the construction supervision consultant for the main civil works (Port facilities - Dredging, land reclamation, and wharf and terminal construction) was issued in May 2010 and No Objection from ADB to award the contract in November 2010. The Award of Contract to the first ranked consultant has been approved by NEC in July 2011 and awaiting approval for Execution of Contract by the Head of State. The Consultancy Contract will be signed by end of November 2011.
6 Checklists for actions required to contract consultants by method available in e-Handbook on Project
Implementation at: http://www.adb.org/documents/handbooks/project-implementation/
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D. Procurement Plan
Project Information on Procurement
Country Papua New Guinea Name of Borrower The Independent State of Papua New Guinea Project Name Lae Port Development Project Original Loan Reference Date of Effectiveness Amount US$ (total from all financiers): Of which Committed, US$
L2398 and L2399 30 October 2008 $154,000,000 TBD
Additional Finance Loan Reference Date of Effectiveness
TBD TBD
Amount US$ (total from all financiers): $291,400,000 Of which Committed, US$ TBD Executing Agency The Independent Public Business Corporation Approval Date of Original Procurement Plan 23 November 2007 Approval of Most Recent Procurement Plan Not applicable
TBD = to be determined.
Procurement Thresholds, Goods and Related Services, Works, and Supply and Installation Procurement Method To Be Used Above
ICB Works > $3 million
ICB Goods > $500,000
NCB Works > $100,000, ≤ $3,000,000
NCB Goods > $100,000, ≤ $500,000 ICB = international competitive bidding, NCB = national competitive bidding.
Procurement Thresholds, Consultants’ Services
Procurement Method To Be Used Above (Value $)
Quality- and Cost-Based Selection (QCBS) $600,000
Consultants’ Qualifications Selection (CQS) Less than $200,000
Least-Cost Selection (LCS) Not applicable
Exceptional Methods
Single-source selection, selection of individual consultants.
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List of Contract Packages and Consulting Services
Contract Description
Estimated Cost
($ million) Procurement
Methoda
Expected/Actual Date of
Advertisement
Prior Review (Y/N)
Status as at September 2011
A. Civil Works
1. Civil Works Financed with ADB Loans
a. Dredging, land reclamation, and wharf and terminal construction
231.370
ICB with post-qualification
Advertised 19 Jan 2011 and closed 21 April
2011
Yes
Evaluation in progress
b. Construction of 482 houses 1.530 NCB n.a. n.a. Removed due to change in Resettlement Plan
2. Civil Works Financed by JFPR
a. School expansion 0.382 NCB July 2011 Yes Evaluation in progress
b. Expansion of Malahang Clinic 0.034 Shopping n.a. No Removed due to change in Resettlement Plan
c. Sport area 0.031 Shopping n.a. No As above
d. Market roofing 0.062 Shopping n.a. No As above
e. Community center 0.093 Shopping n.a. No As above
B. Consulting Services
1. Consulting Services Financed with ADB Loans
a. Construction supervision and environmental monitoring
5.500
QCBS
January 2010
Yes
Contract award approved by NEC and awaiting contract signing by end of 31 Oct 2011
b. Construction supervision for housing construction
0.500 QCBS n.a. n.a. Removed due to change in Resettlement Plan
2. Consulting Services Financed by JFPR
a. Micro-credit finance program 0.052 SSS Qtr 1, 2012 No Wau Microbank Limited is the only such bank in Lae
b. Skills training for women 0.056 SSS Various No Small value contract
c. Vocational training for men 0.031 SSS Various No Small value contract
d. Monitoring 0.150 CQS Qtr 4, 2011 No Small value contract
ADB = Asian Development Bank, CQS = consultants’ qualifications selection, ICB = international competitive bidding, ICS = individual consultant selection, JFPR = Japan Fund for Poverty Reduction, n.a. = not applicable, NCB = national competitive bidding, QCBS = quality- and cost-based selection, SSS = single source selection. a For ICB contracts, three copies of the invitation to bid and the prequalification and bidding documents should be
submitted to the Asian Development Bank (ADB) for approval 21 days before the proposed date for the issuing of the bidding documents. The bid evaluation report and the proposal for contract award should be submitted to ADB for review and approval 30 days before the expiration of the bid validity. Domestic preference will apply to ICB contracts only.
Source: Asian Development Bank estimates.
E. Consultant's Terms of Reference
46. The PMU was established by IPBC. The Project will strengthen the PMU with individual consultants to assist in awarding and managing contracts, safeguarding financial integrity, and implementing the resettlement plan, the JFPR program, and the HIV and AIDS Cooperation Fund Program. It is anticipated that a total of 162 person-months of international and national consulting services (90 person-months international and 72 person-months national) will be required to strengthen the PMU. An international consulting firm will be selected to provide a total of 567 person-months of consulting services for construction supervision and environment monitoring. There will be 201 person-months of international and 366 person-months of national consulting services. The terms of reference for all consulting services for the project are outlined in Appendix 1.
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VII. SAFEGUARDS
47. Poverty and Social Safeguards: The additional financing does not include additional works involving issues of involuntary resettlement and indigenous peoples and gender and it has been classified as Category C for involuntary resettlement and indigenous peoples. All civil works will be undertaken in existing locations identified or acquired under the original project. Additional safeguard documentation on involuntary resettlement and indigenous peoples is not required. The resettlement implementation, monitoring, grievance redress and livelihood support programs will be continued during project implementation according to the resettlement plan prepared under the original project. 48. Livelihood and Social Improvement: The JPFR funded “Livelihood and Social Improvement Program” was targeted to benefit the affected persons (AP) at the proposed “Malahang” resettlement site. The original plan of settling at Malahang was changed to a Supplementary Resettlement where cash was given to the AP who went and settled in places of their choice. The Project Resettlement Monitoring Team tracked each AP household to their final place of repatriation (which included Lae, regions in the Highlands, Sepik and the New Guinea Islands). Progress achieved to date, include: (i) a program of civil works for improving social infrastructure and services for the poor communities and refurbishment of three schools for the project affected children; and (ii) Bris Kanda (a local NGO) has been recruited to undertake the Income Improvement Program for APs by providing expert advice and guidance in agriculture, community based float fish cage, micro-credit and vocational training for both men and women. The process for identification of the Labu (traditional landowners of the Project site) community landing site is currently under progress and a solution comprising the provision of a dedicated ferry service to transport their “cash” produce from their villages to the landing site is being considered. Subsequent to the resettlement of the APs and the identification of the final relocation places, the implementation of the JFPR program is now being “fast-tracked.” 49. Environmental Safeguards: The proposed additional finance loan is classified as Category B. The additional financing will include provision of additional quarry materials to build wharf structures, slope protection, a small creek diversion. Environmental impacts caused by the additional financing would be short term, localized and can be mitigated. The updated draft IEE and Environmental Management Plan (EMP) has been prepared and posted on the ADB website in compliance with disclosure requirements of ADB’s Safeguards Policy Statement (2009).
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VIII. GENDER AND SOCIAL DIMENSIONS
50. To minimize the potential risk of new HIV and AIDS infections, the original project has a component for effective and sustainable response to the HIV and AIDS Epidemic and Gender. The following are five subcomponents; Business Response to AIDS Epidemic, Increasing Access to HIV and AIDS Information and Services, Promoting HIV and AIDS Awareness and Education in High-risk Settings, Support for People Living with HIV & AIDS, Establishing an HIV & AIDS Integrated Response Center. This component is funded through the Corporation Fund for Fighting HIV and AIDS in Asia and the Pacific. The consultant implementing this program is Lae Chamber of Commerce Incorporated (LCCI). LCCI has a consulting team who has been engaged to provide a total of 64 person-month services within a 36-month period to carry out activities in the Cooperation Fund for Fighting HIV/AIDS in Asia and the Pacific. The team has collaborated with the MPA, Provincial Health Division, Provincial AIDS Committee Secretariat (MPACS), health facilities/operators, faith-based organizations (FBOs), and community-based organizations (CBOs) operational in Lae/Huon districts in the implementation of the project. 51. The component under the original project has made good progress and is approximately 70% completed. The guidelines on workplace code of conduct were prepared by the project and have been enthusiastically and widely taken up by businesses in Lae and beyond. Capacity building of community support organizations and peer educators' training are well advanced. Participants are reporting back that their training is having a real impact on gender issues and HIV awareness within their organizations, communities and workplaces. People living with HIV are being taught skills to help restore and generate incomes. Construction is about to start on the Lae Port Seafarers Support Center and five urban health clinics will soon be renovated and extended to accommodate HIV and other health services.
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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND
COMMUNICATION
A. Updated Project Design and Monitoring Framework
52. The original Project Design and Monitoring Framework was updated as part of the Additional Financing.
Design Summary (Current Project)
Design Summary (Overall Project)
Performance Targets and
Indicators with Baselines
(Current Project)
Performance Targets and Indicators with
Baselines (Overall Project)
Data Sources and Reporting
Mechanisms (Overall Project)
Assumptions and Risks
(Overall Project)
Impact Enabling environment for industrial and commercial development is created
Enabling environment for industrial and commercial development is created
15–20 new industrial and commercial enterprises established by 2020
15–20 new industrial and commercial enterprises established by 2020
Post–project completion survey Registrar of Companies
Assumptions Policy environment and incentives for investment improve.
500–1,000 jobs generated by 2020
500–1,000 jobs generated by 2020.
Law-and-order problems are addressed
Outcome Port bottleneck constraining trade is relieved.
Port bottleneck constraining trade is relieved.
Lae port cargo handling capacity increased by about 1.4 million revenue tons per year after completion
Lae port cargo handling capacity increased by about 1.4 million revenue tons per year after completion
Stevedoring and cargo handling reports
Assumptions Highlands Highway is rehabilitated
Lae port cargo handling rate increased from 140 tons per hour to 210 tons per hour by 2015
Lae port cargo handling rate increased from 140 tons per hour to 300 tons per hour by 2015
Port statistics Macroeconomic and political stability continues.
Ship calls increased from 600 to 900 by 2017
Ship calls increased from 600 to 900 by 2017
Global economy remains buoyant and sustains high commodity prices.
Lae Port management is improved by AusAID.
Outputs Assumptions 1. New port facilities are operational.
New port facilities are operational.
Basin, multipurpose berth, and terminal constructed by 2011
Basin, multipurpose berth, and terminal constructed by 2014
There is no sudden change in Government’s strategic focus and priorities.
2. Livelihood of directly and indirectly affected people is improved.
Livelihood of directly and indirectly affected people is improved.
482 new houses for 2,912 people built by 2008
(a)
a Independent monitoring reports by the NGO
Government provides counterpart funds on time.
3 schools in Malahang expanded by 2008 and 473 children enrolled in schools in Malahang by 2008
(a)
a Provincial
administration’s health and education reports
Governance issues will not impede the implementation program.
22
Design Summary (Current Project)
Design Summary (Overall Project)
Performance Targets and
Indicators with Baselines
(Current Project)
Performance Targets and Indicators with
Baselines (Overall Project)
Data Sources and Reporting
Mechanisms (Overall Project)
Assumptions and Risks
(Overall Project)
1 health clinic improved by 2008
10 expanded community centers, including health clinic improvements by 2013
$40,000 micro-credit provided to 200 households by 2011
$40,000 micro-credit provided to 200 households by 2014
Reports of Wau Microbank Limited
Income levels for re-settlers and Labu people increased by 3–5% by 2011
Income levels for re-settlers and Labu people increased by 3–5% by 2014
3. HIV/AIDS incidence in Lae is reduced.
HIV/AIDS incidence in Lae is reduced
HIV/AIDS prevalence in Lae and Huon district decreased by 20%
HIV/AIDS prevalence in Lae and Huon district decreased by 20%
Activities with Milestones (Overall Project) Inputs (Additional Financing) 1. Construct a tidal basin (700 x 400 meters), a multipurpose berth of 240
meters, and terminal works by 2014. 2. Resettle 482 households by 2010. 3. Rehabilitate and enhance the livelihood of the affected people by 2012. 4. Mobilize the response of the private sector and NGOs to HIV/AIDS. 5. Mitigate environmental risks through engineering design, the construction
contract, and environmental monitoring.
ADB: $89.12 million
Item OCR ADF
Amount $85.00 million $4.12 million
Government: $48.28 million ADF = Asian Development Fund, AusAID = Australian Agency for International Development, HIV/AIDS = human immunodeficiency virus/acquired immune deficiency syndrome, NGO = nongovernment organization, OCR = ordinary capital resource. a Deleted due to Supplementary Resettlement Plan.
B. Monitoring
53. Project performance monitoring: It was agreed that within 12 months of loan effectiveness for the original loans, ADB and the Government will agree on a system for monitoring and evaluating the performance of the project in relation to its goals and purposes, with emphasis on trade, economic activities, job creation, and livelihood improvement. Six person-months of international consulting services are provided under the original project for setting up the system with baseline data and assessing the socio-economic impact of the project. The international financial specialist was to collect and enter data into the system. The international consultant was intended to commence services prior to project start. 54. Project Performance Report (PPR): The PPR has been established based on the Project Framework. The PPR seeks progressive information on both implementation and development objectives to assist in improving project management. PPRs highlight performance assessments for project supervision, key assumptions and risks, major problems encountered, actual or proposed remedial action, the project rating for implementation progress, and the likelihood of achieving development objectives. ADB continues to maintain quarterly implementation updates based on project progress reports received from the EA. 55. Project Review: ADB and the Government jointly undertake semi-annual reviews of the project to identify any difficulties or constraints being encountered in implementing the project. Each review covers all relevant aspects that may have an impact on the project’s performance and continuing viability, be it institutional, administrative, organizational, technical,
23
environmental, social or economic; the status of compliance with covenants in each loan, financial; and other aspects. 56. Compliance monitoring: Six months prior to the operation of the port facilities, the Borrower, through IPBC, shall undertake the requisite actions to achieve tariff levels that shall allow for full cost recovery of the facilities. IPBC will submit to ADB the annual performance monitoring reports within three months after end of each calendar year, and the final report within three months after project completion. The indicators may include (i) industrial and commercial activities, (ii) job creation, (iii) exports and imports, (iii) traffic volume, (v) port charges, (vi) income generation, (vii) social services. The employment impact indicators will include information about unskilled laborers, poor laborers, and women laborers. The Borrower and IPBC shall implement and comply with the EMP. The Borrower and IPBC shall submit semi-annual reports to ADB on the implementation of and compliance with EMP. 57. Safeguards monitoring: An external consultant will be recruited to monitor the resettled people and their activities under the resettlement plan under the JFPR Grant. The consultant will submit monthly and quarterly reports to ADB. The safeguard activities in the main civil works contract are covered in the main contract where the contractor will submit their EMP to the EA and ADB before construction, and these will be monitored, with quarterly reports submitted during construction.
58. Gender and social dimensions monitoring: LCCI, the consultant implementing this project component is monitoring the activities and submits monthly and quarterly reports to ADB (PNRM). PNRM also has carried out review missions to review progress. C. Evaluation
59. The ADB, the Borrower and IPBC will conduct semi-annual project reviews, and a mid-term review for the project, any mid-course changes to the project design or implementation arrangement will be considered during the mid-term review. Within 6 months of physical completion of the project, IPBC will submit a project completion report to ADB.7
D. Reporting
60. IPBC will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency AFSs, together with the associated auditor's report, should be adequately reviewed.
E. Stakeholder Communication Strategy
61. IPBC will communicate project activities and achievement of major milestones through its website. IPBC website has been developed to cater for reporting requirements under the project. Details and progress of project implementation are to be incorporated in the website.
7 Project completion report format is available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-
Sector-Landscape.rar
24
X. ANTICORRUPTION POLICY
62. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the project.8 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the project.9
63. To support these efforts, relevant provisions are included in the loan agreements and the bidding documents for the project. Recruitment of consultants and contractors has closely followed ADB recruitment and procurement procedures. To mitigate the risk of corruption: (i) all PMU management and staff have been trained in ADB’s and the Government’s anticorruption policies, the concept of whistle-blowing, and methods of reducing vulnerability to corruption; (ii) IPBC has developed and maintained a project website to disclose the audited project financial accounts, project progress, and procurement activities; (iii) imprest accounts will be prudently used and closely monitored; (iv) ADB have participated in the selection of key consultants in consultation with IPBC, and reviewed beforehand the bidding documents and contract awards for all international and national competitive bidding contracts; and (v) financial management is centralized in the PMU for internal control. Having IPBC as the EA further mitigates the risk of corruption, as Transparency International is represented on the IPBC board of directors, and IPBC is among the organizations that are PNG’s most closely watched. These risks will continue to be managed through mechanisms already established within the EA to ensure ADB recruitment and procurement procedures are closely followed, particularly in relation to disbursement and audited project financial accounts.
8 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 9 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp
25
XI. ACCOUNTABILITY MECHANISM
64. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.
26
XII. RECORD OF PAM CHANGES
65. All revisions/updates during course of implementation should be retained in this Section to provide a chronological history of changes to implemented arrangements recorded in the PAM.
66. Revisions Made:
Date Name Purpose of Change
1 05 Sept 2011 Detailed Cost Estimate by Financing Agency (Original Loan)
Updated for additional loan
2 05 Sept 2011 Design & Monitoring Framework Updated for additional loan
Appendix 1 27
Outline Terms of References for Consulting Services
A. Project Implementation Specialist/Port Engineer (international, 42 person-months) 1. The scope of work includes but is not limited to the following:
(i) Acting as the deputy project director of the project management unit (PMU). (ii) Establishing a clear line of commend within the PMU and procedures, and
cultivating a disciplined workforce. (iii) Assisting the project director in motivating, managing, and maintaining a team of
competent and stable staff within the PMU. (iv) Establishing a bid evaluation committee consisting of relevant and capable
members in consultation with IPBC and the project director of the PMU. (v) Organizing the bidding and bid evaluation for civil works in line with the
Procurement Guidelines (2007, as amended from time to time) of the Asian Development Bank (ADB), and preparing bid evaluation reports.
(vi) Working closely with the construction supervision consulting firm that will act as the engineer, as defined in the terms and conditions of Federation International des Ingenieurs-Conseils (FIDIC), to achieve as far as possible a smooth running contract where potential problems are identified as soon as possible and dealt with in an efficient and effective way.
(vii) Managing the contract with the engineer, and certifying financial claims before the contract is signed by the project director.
(viii) Reviewing and certifying variations in the construction contract (s) and submitting these to the project director for approval. Contract variations should be dealt with in a timely fashion to avoid delays and consequent costs to the contract.
(ix) Assisting the project director and PMU in its role as the employer, as defined in FIDIC terms and conditions, and overseeing the performance of the engineer and, through the engineer, the performance of the civil works contractor(s).
(x) Reviewing the engineer’s payment certificates and ensuring, as far as possible, that these are processed such that the employer meets its obligations with regard to payments under the contract.
(xi) Reviewing submissions from the engineer relating to claims, requests for additional payment, and requests for extensions of time submitted by the contractor, and working with the contractor and the engineer to achieve a reasonable outcome.
(xii) Preparing monthly and quarterly progress reports in line with ADB’s project administration memorandum.
(xiii) Preparing a project completion report in line with ADB’s project administration memorandum.
(xiv) Training the PMU staff to manage and supervise contracts. B. Financial Management Specialist (international, 42 person-months) 2. The scope of service includes, but is not limited to, the following:
(i) Establishing financial rules and procedures, and developing an accounting system to maintain the project accounts and financial management system within the PMU.
(ii) Developing disbursement/cash management processes and procedures with appropriate internal controls and reporting for the various sources of funding.
28 Appendix 1
(iii) Maintaining separate project accounts and financial statements to identify goods and services financed from different sources.
(iv) Safeguarding financial integrity in the PMU. (v) Arranging annual auditing and ensuring that the audited project accounts and
financial statements, and the auditor’s reports in English, are submitted to ADB within 6 months after the end of each financial year.
(vi) Preparing monthly, quarterly, and annual financial reports and submitting them to the PMU, IPBC, and ADB within 2 weeks after the end of each period.
(vii) Training the local staff in financial management. Cultivating a financially disciplined workforce.
(viii) Collecting data for the project performance and socioeconomic monitoring system designed by the socioeconomic specialist, and transmitting the data to the specialist.
C. Project Performance and Socioeconomic Monitoring Specialist (international, 6
person-months) 3. The scope of services includes, but is not limited to, the following:
(i) Reviewing the project documents, including the report and recommendation of the President, loan documents, the resettlement plan, and project progress reports.
(ii) Establishing a project performance and socioeconomic monitoring system adequate for assessing project performance and impact in relation to the project goal, outcome, and outputs, including gender-disaggregated baseline data, monitoring methodology, frequency of data collection, and record keeping. Indicators may include (a) industrial and commercial activities, (b) job creation, (c) exports and imports, (d) traffic volume, (e) port charges, (f) income generation, and (g) social services.
(iii) Communicating with the international financial specialist and obtaining data. (iv) Analyzing the data collected and assessing the performance and socioeconomic
impact of the project against the baseline data. (v) Preparing the final report to be incorporated in the project completion report, and
submitting it to the PMU, IPBC, and ADB within 3 months after the end of each year.
D. Resettlement Specialist (national, 72 person-months) 4. The scope of work includes, but is not limited to, the following:
(i) Working under the leadership of the PMU. (ii) Reviewing and gaining familiarity with the resettlement plan, and the JFPR and
HIV and AIDS Cooperation Fund programs. (iii) Preparing specifications and procuring the housing and construction contracts in
accordance with ADB’s Procurement Guidelines (2007, as amended from time to time).
(iv) Arranging transport and relocating people in the project area in an orderly manner.
(v) Contracting appropriate agencies to implement the JFPR and HIV and AIDS. Cooperation Fund activities according to the approved JFPR and HIV and AIDS Cooperation Fund documents.
Appendix 1 29
(vi) Monitoring and resettlement, and the JFPR and HIV and AIDS Cooperation Fund activities and the performance of the implementing agencies.
(vii) Ensuring that funds are spent on the purposes for which they were intended. (viii) Preparing monthly, quarterly, and annual progress reports summarizing the
progress of activities funded from different sources, problems encountered, proposed solutions, and gender-disaggregated employment, and submitting the reports to the PMU, IPBC, and ADB within 1 week after the end of each period.
(ix) Being participatory, consultative, and innovative in carrying out responsibilities. (x) Achieving successful results.
30 Appendix 1
Outline Terms of Reference for Consulting Services in Construction Supervision and
Environmental Monitoring 1. An international consulting firm will be selected to provide a total of 567 person-months of consulting services in construction supervision (201 person-months international and 366 person-months national). The international consulting firm will appoint a project manager to undertake the duties and responsibilities of the engineer as defined in the construction contract. The engineer will appoint and provide with appropriate delegated authority a suitably qualified chief resident engineer and other suitably qualified site staff comprising engineers, inspectors, surveyors, draftsmen, and a materials technician. The engineer will also appoint a design team based at the home office whose function will be to check and, when satisfied, approve the contractor’s design for those works for which the employer’s requirements have been specified. A. Scope of Work 2. The scope of the services includes but is not limited to the following:
(i) Representing the interest of the employer as defined in the construction contract in any matter related to the construction contract and to its proper execution.
(ii) Working closely with the project management unit (PMU), the employer’s representative, to achieve a clear understanding of its objectives, and providing advice to it relating to the execution of the works, so as to achieve a harmonious working relationship.
(iii) Undertaking the duties and responsibilities of the engineer as defined in the contract.
(iv) Reviewing the contractor’s work programs and, after consulting with the PMU and when satisfied, giving approval to those work programs.
(v) Assessing the adequacy of resources employed by the contractor and its methods of work in relation to the required rate of progress, and, when required, taking appropriate action.
(vi) Verifying and, when satisfied, approving the contractor’s design for those works for which the employer’s requirements have been specified. Ensuring that the contractor obtains the necessary building permits.
(vii) Reviewing the contractor’s temporary works proposals, adequacy of resources, method, and risk assessments to assess their suitability (including safety) for the tasks to be undertaken, and taking appropriate action.
(viii) Preparing and issuing to the contractor any additional drawings and specifications required for the execution of the contract.
(ix) Ascertaining the suitability of manufacturers, sources of machinery and equipment, and materials that contractors propose to sue to construct the works, either for temporary works or for incorporation in the permanent works.
(x) Providing necessary and sufficient site inspection of the works and ensuring the satisfactory performance of the contractor(s) and execution of the project in accordance with the contract documents and sound engineering practices; and ensuring the works’ quality and conformity with the drawings and specifications prescribed in the contract.
(xi) Certifying the quality and quantity of completed works. (xii) Examining and making prompt recommendations to the PMU relating to all
claims and requests for additional payment and extensions of time submitted by the contractor.
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(xiii) Reviewing and checking the contractors’ applications for payment and ensuring that, subject to any necessary amendment, these are passed promptly to the PMU to enable the employer to meet its obligations with regard to payments under the contact.
(xiv) Preparing monthly reports showing the progress of the works, the contractor’s performance, quality of the works, and the project’s financial status including projections and highlighting potential problems and ongoing contractual difficulties.
(xv) Maintaining a representative at the site at all times when the contractor is working.
(xvi) Proposing to the PMU for its approval, any variations in the drawings or specifications that may be considered necessary for the completion of the works, indicating any effect that the changes may have on the contract amount and any additional time required to complete the Project; and, where the variation exceeds the engineer’s power to approve under the contract, submitting the variation order for approval by the PMU.
(xvii) Informing the PMU of problems, actual or potential, that may arise in connection with the execution of the contract, and recommending suitable solutions.
(xviii) Extending timely assistance and directions to the contractor in all matters relating to the interpretation of the contract documents and other matters relating to contract compliance and progress.
(xix) Preparing and maintaining inspection and engineering reports and records to adequately document the progress of the works and the performance of the contractor.
(xx) Receiving and maintaining as permanent records all warranties required under the terms of the contract for materials and equipment accepted and incorporated in the works. Recording details of all materials and their source, incorporated in the works, and as-built drawings provided by the contractor. All records are to be handed over to the PMU on completion of the works.
(xxi) Supervising all soils and materials testing and all verification surveys including hydrographic surveys, and maintaining permanent records of these.
(xxii) Carrying out, if necessary, the inspection or testing of any materials, manufactured products, electrical and communication equipment plant and machinery for incorporation in the project in compliance with accepted international standards and practices either in or outside Papua New Guinea (PNG).
(xxiii) Regularly inspecting the contractor’s operations with regard to the safety of methods employed, and drawing the contractor’s attention to areas where improvement are necessary.
(xxiv) Designing a system for setting up and maintaining all records, and submitting this to the PMU for comments.
(xxv) Assisting the PMU in developing procedures for taking over the works on their completion.
(xxvi) Finalizing the value of the works and providing recommendations on any outstanding contactors’ claims. Reporting to the PMU on the financial outcome of the contract.
(xxvii) Submitting, within 1 month from the completion of the contract, a final report summarizing the construction activities and including all factors having an effect on the amount, costs, and progress of the works.
(xxviii) Assisting the PMU in preparing monthly and quarterly progress reports and the project completion report.
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(xxix) Issuing the completion certificate or handover certificate. (xxx) Preparing a list of defects and instructing remedial works. (xxxi) Performing any and all other items of work that are not specifically mentioned
above but are necessary and essential to the successful supervision and control of the construction activities in accordance with the plans, specifications, and terms of contract.
(xxxii) Ensuring that project implementation complies with the Government’s environmental policy and procedures, the Asian Development Bank’s (ADB) Environment Policy (2002) and requirements, the project’s environmental impact assessment and environmental management plan (EMP), the World Bank Group’s Environment and Health and Safety Guidelines, and the Loan Agreement.
(xxxiii) Providing technical support to the PMU and timely assistance to the contractor including orientation on environmental aspects of the project before the start of the work, and during implementation in the interpretation of the contract documents related to EMP and the monitoring plan.
(xxxiv) Assisting, advising on, and providing supervision for effective EMP implementation to ensure that the works are executed in accordance with established standards, criteria, and procedures; ensuring the implementation of the civil works in compliance with the EMP; and making recommendations for certification of payment to be made to the contractor for the engineer’s consideration.
(xxxv) Reviewing the present status of environmental management in Lae Port and identifying issues and problems. Preparing a detailed environmental management plan for the port during the operational phase, considering the International Convention for the Prevention of Pollution from Ships (MARPOL 73/78 Convention) and the associated annexes ratified by PNG, and the Convention on the Prevention of Marine Pollution by the Dumping of Wastes and Other Matter (London Dumping Convention).
(xxxvi) In coordination with PNG Ports Corporation Limited (PPCL), preparing and implementing environmentally responsible port management guidelines aimed at environmentally sound port operation. The guidelines that incorporate environmental principles in port operation will include sanctions and fines for infringement of the guidelines. The environmentally responsible port management guidelines must be approved by the board of PPCL.
(xxxvii) Assessing environmental and social impact and formulating mitigation measures for the development of the Labu canoe landing site, particularly the construction of the breakwater, retaining seawall, and jetty, and related land reclamation. Ensuring that environmental and social impact is mitigated to insignificant levels.
(xxxviii)Assisting PPCL in establishing an institutional arrangement for the environmental management of Lae Port in the form of an environment health, and safety division or unit staffed with an adequate number of personnel. Undertaking the necessary on-the-job training for the appointed staff, and involving them in environmental management and monitoring of port operations.
(xxxix) Identifying environmental management components/activities that can be contracted out to private operators, and preparing the necessary arrangements.
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(xl) Assisting PMU in preparing manuals/booklets, brochures, and pamphlets related to the environmental management of the port.
(xli) Preparing monitoring and evaluation reports. Submitting the reports to the engineer for incorporation in a semiannual report to be submitted to the Government and ADB.
3. Independent Public Business Corporation (IPBC) will provide, through the construction contract, offices and all furniture, computer and communications equipment, and office supplies including stationery required to undertake the services, as well as soils and materials testing facilities, service vehicles with drivers, and maintenance and operational items including fuel and other materials required to carry out the services. It will also provide liaison with government agencies, provide the consultants with access to all information as may be allowed by law, and assist in obtaining the necessary work permits, visas, and other documents necessary to enable the international consultant to carry out the services under the contract. B. Reporting Requirements 4. The required reports are as follows:
(i) Monthly progress reports with a maximum of five pages (in eight copies), to be submitted within the first week of the following month, summarizing the progress made against the planned schedule, problems encountered, and proposed solutions.
(ii) Quarterly progress reports with a maximum 30 pages (in eight copies), to be submitted within the first week of the following quarter, summarizing progress made during the quarter against the planned schedule, expenditure, contract variations, problem resolution, and projected cash flow.
(iii) Final report (in eight copies), to be submitted 1 month from the completion of the contract, summarizing the construction activities and including all factors having an effect on the amount, cost, and progress of the works.
(iv) Quarterly environmental monitoring reports (in eight copies), to be submitted 1 week after each quarter.
(v) An environmentally responsible port management policy. (vi) Other reports as required during construction.
