Report and Recommendation of the Presidentto the Board of Directors

Sri Lanka Project Number: 39631 December 2005

Proposed Loan, Pakistan Earthquake Fund Grant, and Technical Assistance Grant Islamic Republic of Pakistan: Earthquake Emergency Assistance Project

CURRENCY EQUIVALENTS(as of 30 November 2005)

Currency Unit – Pakistan rupee/s (PRe/PRs) PRe1.00 = $0.0167

$1.00 = PRs59.72

ABBREVIATIONS

ADB – Asian Development Bank ADF – Asian Development Fund AGP – Auditor General of Pakistan AJK – Azad Jammu and Kashmir AJKED – Azad Jammu and Kashmir Electricity Department CGA – Controller General of Accounts CSO – civil society organization DCC – district coordination committee DOH – Department of Health DSC – design and supervision consultant EARF – environmental assessment and review framework EMP – environmental management plan EPA – Environmental Protection Agency ERRA – Earthquake Reconstruction and Rehabilitation Authority FCU – Federal Coordination Unit FHA – Frontier Highway Authority GAP – gender action plan GDP – gross domestic product ICB – international competitive bidding IEE – initial environmental examination IESCO – Islamabad Electricity Supply Company IRP – involuntary resettlement policy IS – international shopping kV – kilovolt LAA – Land Acquisition Act of 1894 LCB – local competitive bidding LGRDD – Local Government and Rural Development Department MOF – Ministry of Finance NADRA – National Database and Registration Authority NIC – national identity card NGO – nongovernment organization NWFP – North-West Frontier Province P&DD – Planning and Development Department PDNA – preliminary damage and needs assessment PDWP – Provincial Departmental Working Party PEPA – Pakistan Environmental Protection Agency PESCO – Peshawar Electricity Supply Company PIFRA – Protect to Improve Financial Reporting and Accounting PIU – project implementation unit PMU – project management unit PPMS – project performance monitoring system

PWD – Public Works Department RA – reconstruction agency SBP – State Bank of Pakistan SC – steering committee SDR – special drawing rights SHYDO – Sarhad Hydro Development Organization TA – technical assistance UNDP – United Nations Development Programme UNESCO – United Nations Educational, Scientific, and Cultural

Organization UNICEF – United Nations Children’s Fund WAPDA – Water and Power Development Authority

NOTES

(i) The fiscal year (FY) of the Government ends on 30 June. FY before a calendar year denotes the year in which the fiscal year ends, e.g., FY2005 ends on 30 June 2006.

(ii) In this report, "$" refers to US dollars.

(iii) The proposed Project will be partially carried out in Azad Jammu and Kashmir, an area over which Pakistan and India have been in dispute since 1947. By financing the proposed Project, the Asian Development Bank does not intend to make any judgment as to the legal or other status of any disputed territories or to prejudice the final determination of the parties’ claims.

Vice President L. Jin, Operations Group 1 Director General K. Senga, South Asia Department (SARD) Director N. Patel, Officer-In-Charge, Transport and Communications Division, SARD

Team leader F. Garcia, Senior Transport Specialist, SARD Team members I. Caetani, Social Development Specialist, SARD

A. Djusupbekova, Counsel, Office of the General Counsel (OGC) E. Haugh, Senior Advisor, SARD A. Ignacio, Operations Officer, SARD A. Jorgensen, Principal Urban Specialist, SARD A. Mohammed, Counsel, OGC K. Niaz, Project Implementation Officer, SARD J. Perera, Senior Compliance Specialist, SARD M. Shafi, Project Implementation Officer, SARD R. Stroem, Principal Energy Specialist, SARD D. Utami, Senior Environment Specialist, SARD H. Yamaguchi, Transport Specialist, SARD

CONTENTS Page

LOAN AND PROJECT SUMMARY i

I. THE PROPOSAL 1

II. RATIONALE: ANALYSIS, PROBLEMS, AND OPPORTUNITIES 1 A. Natural Disasters in Pakistan and the Region 1 B. Impact of the Earthquake on Northern Pakistan and Azad

Jammu and Kashmir 1 C. The Government’s Response 2 D. Needs Assessment 2 E. Impact of the Earthquake 3 F. Earthquake Reconstruction and Rehabilitation Authority 7 G. Response of Development Partners 8 H. ADB’s Response and Strategy 8 I. Hazard Risk Management 9 J. Lessons Learned 9

III. THE PROPOSED PROJECT 10 A. Impact and Outcome 10 B. Outputs 11 C Special Features 12 D. Sector Components 13 E. Legal Assistance, Governance, and Institutional Building 14 F. Cost Estimates 15 G. Financing Plan 15 H. Cofinancing 16 I. Implementation Arrangements 17

IV. TECHNICAL ASSISTANCE 26

V. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS 27 A. Economic and Poverty Impacts 27 B. Social Impacts 27 C. Resettlement Issues 28 D. Indigenous People Issues 28 E. Environmental Impacts 29 F. Sustainability 29 G. Risks, Mitigation Measures and Assumptions 29

VI. ASSURANCES 31 A. Specific Assurances 31 B. Condition for Grant and Loan Effectiveness 34 C. Conditions for Disbursement 34

VII. RECOMMENDATION S 34

APPENDIXES 1. Design and Monitoring Framework 36 2. Summary of Damage and Needs Assessment 39 3. List of Permissible Imports 42 4. Transport Sector Assessment and Proposed Assistance 47 5. Power Sector Assessment and Proposed Assistance 51 6. Social Sectors Assessment and Proposed Assistance 55 7. Legal Assistance, Governance, and Institutional Building 60 8. Cost Estimates 66 9. Funds Flow and Project Implementation Arrangement 67 10. Procedures for Selection, Approval, and Implementation of Subprojects 6911. Project Implementation Schedule 72 12. Outline Terms of Reference for Steering Committees,

Reconstruction Agencies and other Implementation Agencies 73 13. Summary Poverty Reduction and Social Strategy 79 14. Initial Environmental Examination 81 15. Resettlement Framework 89 16. Gender Action Plan 97 17. Vulnerable People Action Plan 101 18. Outline Terms of Reference for Consulting Services for Providing Capacity Building for the Office of the Auditor General of Pakistan 104

SUPPLEMENTARY APPENDIXES (available on request) A. 2005 Pakistan Earthquake Preliminary Damage and Needs Assessment B. Economic Impact of the Earthquake C. Financial Management and Disbursement D. Terms of Reference for Consulting Services

LOAN AND PROJECT SUMMARY

Borrower Islamic Republic of Pakistan

Classification Targeting Classification: Targeted intervention Sector: Multisector Subsectors: Education sector development, energy sector development,

health systems, law and judiciary, roads, subnational government administration

Themes: Sustainable economic growth, inclusive social development, governance

Subthemes: Fostering physical infrastructure development, gender equity in opportunities

EnvironmentAssessment

Category B. An initial environmental examination was undertaken (Appendix 14).

ProjectDescription

The Earthquake Emergency Assistance Project (the Project) will rehabilitate and restore infrastructure damaged and destroyed by the earthquake of 8 October 2005 in affected areas of Azad Jammu and Kashmir (AJK) and North-West Frontier Province (NWFP), thereby restoring the livelihoods of affected people. The Project’s design is based on the findings of the preliminary damage and needs assessment (PDNA), prepared for the Government by a multidonor mission led by the Asian Development Bank (ADB) and World Bank from 24 October to 12 November 2005.

The investment component of the Project is designed as a sector project and will address urgently required rehabilitation and reconstruction in the transport, power, and health and education sectors. The Project’s quick-disbursing component will finance urgently needed imports. Local communities and beneficiaries will actively participate in the selection, design, implementation, and operation and maintenance of all works carried out under the Project. The Project additionally addresses the needs of vulnerable groups, including women and children, and assists affected people by supporting the reissue of lost identification cards and other documentation, as well as protecting their legal rights.

Rationale The 8 October 2005 earthquake was the most debilitating natural disaster in Pakistan’s history. According to figures provided by the Government of Pakistan, as of 3 November 2005, approximately 73,000 people had died and more than 70,000 were severely injured or disabled. Over 2.8 million people have been left without shelter, and 2.3 million persons are without adequate food. The overall cost associated with the earthquake is estimated at $5.2 billion, which includes the costs of relief, livelihood support for victims, and reconstruction. The cost of reconstructing of lost assets and restoring services is estimated to be $3.5 billion. Estimates show the total loss in employment to be around 324,000 jobs, equal to about 29% of the previously employed population in the affected districts

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and affecting nearly 1.6 million people. Vulnerable groups are at risk of becoming poorer. In particular, female-headed households, widows, and orphaned children are at a risk of having little or no access to supplies and services and of losing property claims, often because they lack proper identity papers. By providing financing for the most urgently needed components and works, the loan and grant will enable the Government to finance a portion of the overall reconstruction and rehabilitation program, provide assistance to vulnerable groups, and help to restore the economic activity essential to the survival of residents in the heavily affected areas.

Impact and Outcome

The expected impact of the Project is to contribute to reversing the devastating impact of the earthquake and so revive economic activity and enable people to resume their livelihoods and return to normal life. This will be achieved primarily through rehabilitating and reconstructing damaged and destroyed infrastructure as quickly as possible, which will particularly assist the poor and other vulnerable people.

The Project will have the following components:

(i) Quick-disbursing component. In accordance with ADB’s Disasterand Emergency Assistance Policy, a portion of the proposed Project will be used for quick-disbursing assistance to partly finance the unusually high and unexpected expenditures required for rehabilitation and reconstruction. The quick-disbursing component will be used to finance only those imports identified as necessary for an effective recovery program. The Government and ADB have agreed on a list of permissible imports for financing under the quick-disbursing facility.

(ii) Project's sector components. In consultation with the Government, and taking into account the assistance being proposed by other development partners, project components will finance rehabilitation and reconstruction in the following sectors: (a) transport; (b) power; and (c) health and education. The Project will rehabilitate and reconstruct high-priority earthquake-damaged educational, health and road infrastructure facilities by providing civil works, equipment and materials. These activities will be undertaken with the adoption of appropriate and cost-effective earthquake-resistant design and construction standards. Civil works designs will follow a sector approach in selecting the highest-priority subprojects. This will allow a quick response and maximum flexibility regarding both geographic coverage and the selection of subprojects, within an agreed framework and criteria.

(iii) Implementation assistance. Consulting services will include services for project design, implementation, monitoring, and evaluation. Legal assistance, governance, and institutional building subcomponents will be used to address governance, legal, and documentary issues arising from the earthquake’s impact.

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Cost Estimates The estimated cost of the Project is $374.2 million equivalent. For the Project’s sector components, the Government will contribute 24% of the estimated cost of reconstruction and rehabilitation, mainly in the form of taxes and duties, land acquisition, rehabilitation, resettlement, and administrative support. As a sector approach is being followed, the cost estimates are broken down by sectors.

Financing Plan ADB will provide a grant of $80 million from the Pakistan Earthquake Fund, and a loan of $220 million from ADB’s Special Funds resources—as Asian Development Fund (ADF) loan—to finance the Project.

This covers the entire foreign exchange cost (except interest during implementation) of $236.3 million, as well as $63.7 million equivalent of local currency cost.

($ million)

Source Foreign Exchange

Local Currency

Total Cost Percent

A. Quick-Disbursing Component 100.0 8.0 108.0 100 1. Asian Development Bank Grant 65.0 0.0 65.0 60 2. Asian Development Bank ADF Loan 35.0 0.0 35.0 32 3. Government 0.0 8.0 8.0 8 B. Project Componentsa 136.3 125.5 261.8 100 1. Asian Development Bank Grant 5.0 10.0 15.0 6 2. Asian Development Bank ADF Loan 131.3 53.7 185.0 70 3. Government 0.0 61.8 61.8 24 C. Interest during Implementation 4.4 0.0 4.4 100 Total 240.7 133.5 374.2 100 Asian Development Bank 236.3 63.7 300.0 80

ADF= Asian Development Funda Includes cost of consulting services. Source: Asian Development Bank estimates.

Grant and Loan Amount and Terms

The proposed Project will be (i) a grant of $80 million from the Pakistan Earthquake Fund and (ii) a Special Drawing Rights loan of SDR 154,227,000 ($220 million equivalent) from Special Funds resources. In accordance with ADB’s Disaster and Emergency Assistance Policy, the loan will have a 40-year term, including a grace period of 10 years, an interest rate of 1% per annum, and repayment of principal at 2% per annum for the first 10 years after the grace period and 4% per annum thereafter.

Allocation and RelendingTerms

The Government will make the loan and the grant proceeds of the Project available to the governments of AJK and NWFP in accordance with the existing policies and practices of the Government or any changes approved by the Government’s Economic Coordination Committee (ECC). Likewise, a portion of the loan and grant proceeds will be made available to Peshawar Electricity Supply Company (PESCO) and Islamabad Electricity Supply Company (IESCO) in accordance with the existing policies of the Government or any changes approved by the Government’s ECC. The Government will bear all foreign exchange risk. In addition, the Government will provide required counterpart funds for implementing the

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Project to the governments of AJK and NWFP, IESCO, and PESCO in a timely manner and on a grant basis.

Period of Utilization

30 June 2009

EstimatedProjectCompletionDate

31 December 2008

ImplementationArrangements

The Earthquake Rehabilitation and Reconstruction Authority (ERRA) established by presidential decree, in response to the 8 October 2005 massive earthquake, will be the executing agency for the Project. The mechanisms and implementation strategies, institutional framework and related terms of reference for the recovery efforts under the umbrella of ERRA are still being developed. Based on current understanding of ERRA functions, the authority is expected to facilitate, guide, coordinate, approve and monitor the reconstruction effort, develop the overall policy and planning framework for the reconstruction effort, standard setting and quality control and manage the operation and accounting of rehabilitation and reconstruction funds. ERRA is also expected to lead revision of the current arrangements for subproject approval, implementation and fund flow to simplify procedures and so ensure quick implementation and full transparency. ERRA’s Governing Council, chaired by the Prime Minister, will approve overall programs and large work packages, basically fulfilling the role of the Central Departmental Working Party in normal development projects, but with a much shorter timeframe. ERRA’s Board will oversee the implementation of the Project through provincial and district line agencies following current/revised procedures but on a fact-track basis. ERRA will also approve major changes in the scope and cost of the subprojects, annual plans and budgets, and support the Project’s implementing agencies with financial and technical management.

ERRA will be staffed by various specialist professionals deputed from relevant government departments (including those of the federal Government and other provinces) and hired from the private sector as necessary for ERRA to carry out its functions. Periodic social and technical monitoring, regular review, and overall fund flow and internal audits of the Project will be carried out by ERRA. The Controller General of Accounts (CGA) will prescribe the related procedures and requirements for fiduciary monitoring. The AJK and NWFP implementing agencies will develop the subprojects following the selection criteria and social compliance, through public consultation as outlined in Appendix 10, which will be formalized in an operational manual to be prepared by ERRA.

The Governments of AJK and NWFP, through their steering committees (SCs) specially constituted for the purpose of reconstruction in the quake affected areas, chaired by the Additional Chief Secretaries of AJK and NWFP and having representation of ERRA, provincial line departments and the district governments (in case of NWFP), will be responsible for over

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seeing the provincial planning and implementation of subcomponents. These committees will be supported by professionally staffed reconstruction agencies (RA)—the NWFP Reconstruction Agency and the AJK Reconstruction Agency, containing various specialist staff, will be for implementation of subprojects for which capacity does not exist at with provincial and district line departments contracted as decided by the respective steering committees of NWFP and AJK. RAs will design and approve subprojects falling within the powers delegated to the RA by the provincial Government and within the overall annual budget and work plan approved by ERRA. The steering committees and ERRA will approve sub projects, work plans, budgets and provide overall guidance, in line with emergency procedures to be put in place by the ERRA Council and/or Board. For the subprojects implemented through the provincial line departments/implementing agencies, and the district governments, where technical capacity exists as decided by the respective SCs, additional support will be provided by deputing staff and by appointment of additional expertise as required to meet the additional work load and fast track requirements, due diligence and reporting. The ERRA, RAs, and line departments staff requirements, and related operating costs, will be funded through incremental administration support, supported in part by ADB grant.

The district advisory committees (DACs)/district development committees (DDCs) headed by district coordination officer (DCO) or Nazims in NWFP and deputy commissioners in AJK, will be responsible for the identification of subprojects and needs, and recommend plans for approval of the steering committees. These plans will be approved annually by the steering committees or ERRA and implemented through RA (through their district reconstruction units), line departments and district governments, as recommended bv SCs. Implementing agencies additional incremental staff and overhead cost for subproject implementation, and technical backstopping and technical assistance support for implementing agencies to plan, design, supervise and implement the subprojects, will be financed by the Project.

FinancialManagement

The Ministry of Finance will manage the multidonor Consolidated Fund for the Emergency Earthquake Assistance established in the State Bank of Pakistan (SBP) through which the project funds will flow. ERRA is putting in place the related fiduciary arrangements to ensure transparency in funds flow, financial management, accounting, internal control processes, procurement, periodic financial reporting, monitoring and internal and external audits. The CGA will provide the related guidelines, and ensure that all relevant Government statutory provisions and prudent regulations are followed. Disbursement of project funds will generally follow existing accounting procedures. The Auditor General of Pakistan (AGP) will be responsible for determining the appropriate auditing arrangements and ensuring the timely completion of audits conducted in accordance with internationally accepted auditing practices.

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The Project funds will be disbursed through the Consolidated Fund in SBP, to the imprest account operated by the fund manager—the Ministry of Finance (MOF) for the quick-disbursing components and ERRA for the other components—to finance components of the Project. MOF will make budget allocations for counterpart funds in the budget, and release the Government’s counterpart share as a grant in a separate account operated by the fund manager in the form of budget allocation, as a grant, released from the MOF to the ERRA Fund (a special deposit fund in public account—assignment account). The ADB funds for the Project, and Government’s counterpart funds will be released to ERRA as executing agency (excluding quick-disbursing component, for which MOF will be the executing agency). ERRA will maintain separate accounts for ADB loan and grant (imprested accounts), the Government counterpart funds and will release funds to the respective implementing agencies (second generation imprest accounts) as advances against approved budget/work plan at the federal, provincial and district levels. All funds will be utilized for their intended purposes as per the financing plan, in accordance with the procedures set down by CGA and ERRA. ADB funds will be issued with specified codes for the rehabilitation and reconstruction program, and all payments and disbursements will be made based on those codes. A fund flow arrangement is in Appendix 9.

ERRA will provide ADB with quarterly financial and physical progress reports, as well as annually audited financial statements, of the use of donor and ADB funds. Given the magnitude of funds, which will be passing through ERRA, the MOF has already proposed that ERRA should establish periodic internal audits and reviews mechanisms, in consultation with other donors and ADB. These will provide systemic feedback to improve financial management, fund flow timeliness, accountability and transparency. Project imprest accounts will be operated in accordance with the ADB’s Loan Disbursement Handbook (January 2001). AGP will nominate private chartered accountants, if required, to meet the increased burden on CGA and to demonstrate transparency.

All donor funds channeled through ERRA will be subject to the same operating procedures and processes, provided as Supplementary Appendix C. Based on the preliminary assessment and subject to finalization of implementation and financial management arrangements satisfactory to ADB, the financial management arrangements for the Project are found to be satisfactory.

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Executing and ImplementingAgencies

ERRA will be the executing agency for the Project. MOF will be the executing agency for the quick-disbursing component. In order to fast-track the Project, ERRA is located within the Prime Minister’s Secretariat and has been mandated with extraordinary authority to expedite the recovery, reconstruction, and rehabilitation in the earthquake-affected areas. ERRA’s Governing Council consists of the Prime Minister of Pakistan (Chair), the prime minister for AJK, the chief minister of NWFP, minister for Kashmir Affairs and Northern Areas, advisor to the Prime Minister of Pakistan, deputy chairman of the Planning Commission, and the chairman of ERRA.

Under ERRA, the implementing agencies for the Project will be (i) NWFP Reconstruction Authority, (ii) AJK Reconstruction Authority, (iii) PESCO, and (iv) IESCO. In NWFP and AJK, the various line departments will also be the implementing agencies as well as Sarhad Hydro Development Organization (SHYDO), which come under NWFP Irrigation and Power Department and the Frontier Highways Authority (FHA) which comes under the NWFP Works and Services. The steering committees established for the purpose, chaired by the respective Additional Chief Secretary and having representation from ERRA, provincial line departments and districts will decide about the existence or otherwise of sufficient capacity for the purpose of implementation of the subprojects. The implementation of the Project will generally follow procedures already in place for ADB-financed projects, but will be supported by additional fast-track mechanisms and fund flow due diligence provided by ERRA.

Procurement Given the urgent Project needs, procurement of goods, works, and services will be carried out in a manner consistent with the simplified and expedient procedures under the ADB Disaster and Emergency Assistance Policy and ADB Guidelines for Procurement and the contemplated implementation schedule. Local competitive bidding procedures will be the preferred mode of procurement. Basically, the procurement procedures as that already in place with the various line agencies for ongoing ADB loans are simplified as allowed under the special procedures for emergency lending. The procurement of goods and related services estimated to cost more than $1 million will be procured following international competitive bidding procedures. International shopping procedures will be followed for procurement of goods and related services estimated at between $100,000 and $1 million. For small, specialized equipment and materials contracts valued at less than $100,000, direct procurement procedures acceptable to ADB will be followed. Due to the urgent nature of this Project, the bidding period for international competitive bidding will be shortened to 30 days and, for local competitive bidding, to 14 days. Civil works contracts worth over $5 million will be procured through international competitive bidding, and those estimated to cost $5 million or less will be procured through local competitive bidding procedures acceptable to ADB. Community participation in the procurement of small works of a simple nature is encouraged.

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For the quick-disbursing component, all items on the positive list imported by the Government, including packages procured by private entities on behalf of the Government, following normal local commercial procedures for the private sector and standard Government procurement procedures for the public sector procurement, where such procedures are functioning and appropriate and acceptable to ADB, are eligible.

ConsultingServices

The implementation of the earthquake reconstruction program will more than double the normal level of development activities in NWFP and AJK, putting unprecedented stress on the responsible agencies. The most efficient way to boost their human and skills capacity is to recruit experienced consultants. This implementation support, will take three forms: (i) legal assistance, governance, and institutional building ($2.5 million); (ii) incremental administrative support ($5 million); and (iii) consulting services ($7.5 million). All the implementation support will be funded from the ADB grant proceeds. All consulting firms and individual international consultants will be engaged in accordance with ADB‘s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB. As the rehabilitation and reconstruction work to be financed under the Project must be completed within 36 months due to its urgent nature, expeditious selection and fielding of consultants is necessary. Accordingly, ERRA and the executing and implementing agencies may recruit directly from consultants already engaged on ADB-financed projects in Pakistan and now providing services similar to those required for the Project. This arrangement will provide an efficient way to recruit consultants under the circumstances. In any other cases, the consulting services from firms will be provided through quality- and cost-based selection using simplified technical proposals. Individual consultants will be procured through ADB’s procedures for the recruitment of individual consultants.

Project Benefits andBeneficiaries

The Project will contribute to the Government’s efforts to regenerate the economy, rehabilitate public infrastructure and utilities, and generate employment. Priority will be given to providing work for earthquake-affected people, including women, to help reestablish their livelihoods. The rehabilitation of damaged and lost infrastructure, particularly road and power infrastructure will improve the quality of life and revive economic activities. Reconstruction of education and healthcare facilities will offer long-term benefits for affected people.

The legal assistance, governance, and institutional building subcomponent, which is an important part of reconstruction, will also support improvements in gender mainstreaming and the elimination of legal discrimination and cultural marginalization. Orphans, female heads of households, and widowers will be trained in new social and income-earning roles to improve the well-being of their families. No major resettlement impacts are envisaged under the Project. Restoration of the means of livelihood of poor people who were farmers and shepherds, on government land or other land not privately held will be addressed. Any land acquisition and resettlement will be done in accordance with Government’s laws and regulations and ADB’s Involuntary Resettlement Policy.

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The Project’s initial environmental examination (IEE) determined that it is a category B project. The environmental assessment and review framework provides the procedures to be followed for a sector loan modality. Based on the Project’s initial environmental examination, the environmental impacts will be mostly limited to construction related aspects, of which the disposal of millions of tons of rubble is the major issue. These impacts will be mitigated through careful construction procedures.

Risks and Assumptions

The four major overarching risks for the Project include the physical risks associated with unstable mountain slopes, problems of access and logistics, the Government’s capacity to implement such a massive reconstruction effort in a reasonable timeframe, and the local government’s capacity to properly operate and maintain the new facilities. The physical and logistical risks include (i) aftershocks causing further damage to already weakened structures and infrastructure; (ii) landslides that could cause delays in restoration of services and reconstruction; (iii) remote locations and difficult topography that make any reconstruction logistically difficult; (iv) high elevations in some areas that will limit reconstruction to a few months in the summer season, (iv) massive relief operations and temporary housing camps that could hinder or delay reconstruction, especially in the vicinity of the larger towns; and (v) lack of available land for infrastructure.

The government’s capacity in NWFP, and especially in AJK are severely weakened by the loss of many of their own buildings, facilities, and staff members. Compounding the difficulties is their relative lack of experience with externally funded projects, which constitutes another risk. Substantial strengthening will need to be done to enable them to fast-track the emergency reconstruction works. The Government has established ERRA and has mandated it with extraordinary authority to open bottlenecks in current procedures and so fast-track implementation.

Physical risks will be mitigated by relocating roads, bridges, electrical lines, human habitations and other infrastructure away from the existing and potentially unstable slopes and/or new slide areas. All new facilities will incorporate earthquake strengthening and other damage-mitigation measures. Logistics of access and climate will be addressed through prioritization of reconstruction requirements so that for this Project only works that can realistically be completed in the 3-year timeframe are included. ERRA, the executing and implementing agencies, in addition to the normal project consultants, will be supported by specialists recruited, from the private sector to strengthen the government’s own staff, and to ensure that they can attract quality personnel. The implementation assistance component will finance this specialized help, estimated to include more than 700 person-months.

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The Government has indicated that the usual counterpart funding requirement from the local governments will be waived for this emergency project, as counterpart funding will be paid by the central government. Similarly, the Government is aware of the need to provide operating support to some local utilities, education and health facilities, and electricity distribution companies until their normal revenue sources can be restored.

Implementation risks related to capacity for timely delivery of quality subprojects in the various project sectors will be mitigated in several ways. First, detailed subproject criteria will be developed, in addition to general subproject selection criteria already agreed to. Second, in terms of implementation, specific monitoring mechanisms will include regular financial audits as well as regular design and construction supervision and performance audits through random audits and special post-completion audits.

TechnicalAssistance

Given the relatively high degree of fiduciary risk associated with this Project, and the extraordinary challenges over the Office of the AGP and the office of the CGA, which are created by this Project as well as by other donor Projects, ADB will ensure that these agencies will be provided with adequate resources to meet their fiduciary responsibilities. In conjunction with the Project, a technical assistance (TA) is proposed for building the capacity of the office of the Auditor General of Pakistan (AGP) and the office of the CGA. The TA is estimated to cost $2.5 million, of which ADB will finance $2.0 million on a grant basis from ADB’s TA funding program. The TA includes provision of 192 person-months domestic and 9 person-months international consultant. Consultants will provide training and technical advice in various aspects of audit, accounts and performance monitoring and evaluation. The AGP and CGA will be the executing agencies for the TA. The proposed TA is scheduled to be implemented for 36 months from January 2006 to January 2009. Administration of the proposed TA will be delegated to ADB’s Pakistan Resident Mission.

I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on (i) a proposed grant and loan to the Islamic Republic of Pakistan for the Earthquake Emergency Assistance Project (the Project), and (ii) a proposed technical assistance (TA) for Capacity Building for the Office of the Auditor General of Pakistan (AGP). The Project will assist the early reconstruction of damaged infrastructure and restore livelihoods that were severely affected by the earthquake of 8 October 2005. The design and monitoring framework is in Appendix 1.

II. RATIONALE: ANALYSIS, PROBLEMS, AND OPPORTUNITIES

A. Natural Disasters in Pakistan and the Region

2. The northern parts of South Asia have a history of earthquakes arising from its geological and tectonic history. The basic geological fact is that the Euro-Asian Plate is colliding with the Indian Plate along an alignment that more or less coincides with the Himalayan Mountains. Earthquakes of low magnitudes occur from time to time in this area as the subduction of the Indian Plate continues. An occasional high-magnitude earthquake occurs when there is a sudden release of energy in this process. Accurate forecasting of earthquakes is very difficult, if not impossible, with current technologies. In the province of Balochistan, the earthquake of 1935 is well documented and it killed some 26,000 people. Taking into account all natural disasters that the country has experienced, the earthquake of 8 October 2005 is clearly the worst in terms of deaths, injuries, property loss, and damage to infrastructure.

B. Impact of the Earthquake on Northern Pakistan and Azad Jammu and Kashmir

3. On 8 October 2005, at 8:50 a.m. Pakistan Standard Time, an earthquake measuring 7.6 on the Richter scale was recorded in Pakistan, Afghanistan, and India. The earthquake’s epicenter was 100 kilometers north-northeast of Islamabad, along the fault line where the Indian Plate meets the Eurasian Plate. Tremors were felt across a wide swath of South Asia, from central Afghanistan to western Bangladesh. As of 27 October 2005, the Geological Survey of Pakistan registered more than 1,000 aftershocks, many of which ranged from 5.0 to 6.0 on the Richter scale.

4. Lasting for about 2 minutes, the 8 October 2005 earthquake is arguably the most debilitating natural disaster in Pakistan’s history. Pakistan-administered Azad Jammu and Kashmir (AJK)1 and the eastern districts of the North-West Frontier Province (NWFP) bore the full force of the earthquake in terms of number of lives lost, injuries sustained, and destruction of infrastructure and economic assets. Substantial public and private assets in social services delivery, governance, commerce, communications, and shelter were either badly damaged or destroyed in at least three districts of AJK and five districts of NWFP.

5. According to the figures provided by the Government, as of 3 November 2005, approximately 73,000 people had died and more than 70,000 were severely injured or disabled. Over 2.8 million people have been left without shelter, and it is estimated that about 2.3 million persons are without adequate food primarily due to the disruption of the transport system and loss of stored food. The terrain in affected areas of both NWFP and AJK is highly diversified and 1 Azad Jammu and Kashmir (AJK) is an area over which India and Pakistan have been in dispute since 1947. ADB

does not intend to make any judgment as to the legal or other status of any disputed territories or to prejudice the final determination of the parties’ claims.

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includes densely populated areas as well as rugged, mountainous areas with small, dispersed rural settlements. Official estimates of the damage remain conservative as many isolated communities in the earthquake-affected region remain inaccessible, which foreshadows an increase in official figures as these areas are eventually reached. Furthermore, the United Nations has issued a warning indicating that more lives will be lost if additional relief does not materialize before the imminent onset of the Himalayan winter.

6. Many government buildings—including hospitals; health clinics; provincial and local government administration offices; police, judiciary and penal facilities; and schools and colleges—were destroyed or severely damaged. The earthquake has had a devastating impact on the delivery of all social services in the affected areas. The most seriously affected sectors are transport, health and education, power, and water supply and sanitation. They have suffered not only destruction or serious damage to physical facilities, but also through the death or serious injury of care providers including nurses, doctors, health workers, teachers, and schools staff.

C. The Government’s Response

7. The Government responded quickly to the earthquake emergency. Although communications with the most severely affected areas and populations were severed, the President and Prime Minister visited affected sites the first day after the disaster. Two army divisions moved into NWFP and AJK and set up five advanced staging posts to facilitate the distribution of relief goods. The geography of some affected areas has led the Government to call for an unprecedented number of helicopters to assist with the distribution of relief goods. As of 2 November 2005, a fleet of more than 125 helicopters and fixed wing aircraft, both foreign and domestic, have made over 5,000 sorties to affected areas.

8. The Prime Minister has outlined a 12-point national strategy for reconstruction and rehabilitation. The Prime Minister’s office has appointed a Federal Relief Commission and corresponding relief coordinator, with the overall responsibility for overseeing relief efforts targeting shelter, food, clean water, and immediate medical care. At the district and grassroots levels, military relief personnel have been stationed to facilitate the distribution of relief goods. Furthermore, the President has established an Earthquake Reconstruction and Rehabilitation Authority (ERRA) to facilitate the rebuilding and repair of damaged infrastructure, including housing, roads, bridges, government buildings, schools, and hospitals.

9. As of 11 November 2005, the Government had distributed 350,000 tents, 3.2 million blankets, and 3,000 tons of medicine, and had established tent villages for earthquake-affected persons. The Government has made available army medical teams comprised of medical officers and paramedics in at least 13 stations in and around the affected districts of AJK and NWFP. The Government has also announced a program that includes compensation of PRs100,000 for each family that has lost members, PRs50,000 for each individual who sustained serious injury, and PRs25,000 for each individual with minor injuries. The maximum amount of assistance given to each family under this program is PRs500,000, and disbursements have already begun.

D. Needs Assessment

10. At the request of the Government, a mission led by the Asian Development Bank (ADB) and the World Bank conducted a preliminary damage and needs assessment (PDNA) to estimate the scale of damage caused by the 8 October 2005 earthquake. Experts from other

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international organizations, including the European Union, Department for International Development, United Kingdom, Japan Bank for International Cooperation, Japan International Cooperation Agency, United States Agency for International Development, Food and Agricultural Organization (FAO) of the United Nations, United Nations Children’s Fund (UNICEF), United Nations Development Programme (UNDP) and other United Nations (UN) agencies also participated in this assessment. Team members visited the nine most heavily affected districts of Abbottabad, Battagram, Kohistan, Mansehra, and Shangla in NWFP and Bagh, Neelum, Muzaffarabad, and Poonch in AJK to verify and evaluate the intensity of disaster damage and to meet with both civil administration authorities and people from affected communities. The assessment team also met with a range of civil society, international, governmental and development partner organizations to gain an understanding of the full spectrum of issues that are likely to influence the recovery strategy. The major donors’ conference in Islamabad on 19 November 2005 further defined the final breakdown of donors’ sectoral responsibilities.

11. The PDNA began on 24 October 2005 and concluded on 12 November 2005. It has been revised based on comments received from the Government and other stakeholders. The Government endorsed the findings of the report on 11 November 2005. Appendix 2 is a summary of the PDNA, which is available in full as Supplementary Appendix A. The ADB website (www.adb.org) offers relevant publications.

E. Impact of the Earthquake

12. The overall cost associated with the earthquake is estimated at approximately $5.2 billion, which includes estimated costs for relief, livelihood support for victims, and reconstruction. The cost of reconstructing lost assets and restoring services is estimated to be PRs208.1 billion ($3.5 billion).

1. Estimated Damages and Reconstruction Costs

13. Direct Damage. Preliminary estimates of direct damage sustained due to the earthquake total to PRs135.1 billion ($2.3 billion), as presented in Table 1. These estimates are based on the book value of the assets. The largest component is private housing, which amounts to PRs61.2 billion ($1.03 billion), followed by transport sector totaling PRs20.2 billion ($340 million), and to the education sector equaling PRs19.9 billion ($335 million). Direct damage to agriculture and livestock is also sizeable, totaling PRs12.9 billion ($218 million). The losses to industry and services amount to PRs8.6 billion ($144 million).

14. The level of direct damage is worse in AJK than in NWFP. For AJK, it amounts to PRs76.4 billion ($1.3 billion) and for NWFP, PRs56.4 billion ($950 million). In most sectors, the destruction of physical assets in AJK is greater than that in NWFP.

15. Indirect Losses. The indirect losses resulting from the direct damage are PRs34.2 billion ($576 million). The indirect losses are comparable in absolute values between NWFP and AJK. The estimated indirect losses do not take into account the beneficial effect of rehabilitation and reconstruction activities on future output. Reconstruction will not only restore physical assets but also permit improved production of goods and services. Hence, the estimates of indirect losses presented above are likely to be on the higher side in the case of output losses.

16. Reconstruction Costs. The cost of reconstruction of lost assets and restoration of public services is estimated at PRs208 billion ($3.5 billion). Reconstruction costs are valued at

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improved standard replacement rate, including the cost of rebuilding to earthquake-resistant standards in a manner suitable to local conditions. This is necessary given the high degree of exposure to future natural disasters in the affected areas.

Table 1: Preliminary Estimate of Total Losses and Reconstruction Costs

SectorDirect

Damage (PRs million)

Indirect Losses

(PRs million)

Reconstruction Costsa

(PRs million)

Reconstruction Costsa

($ million)

Share of Total

Reconst. Costs (%)

A. Social Infrastructure 1. Private Housingb 61,220 7,218 92,160 1552 442. Health 7,114 1,378 18,012 303 93. Education 19,920 4,133 28,057 472 134. Environment 12 8,985 151 45. Public Administration 2,971 687 4,254 72 2

B. Physical Infrastructure 1. Transportc 20,165 4,061 24,699 416 122. Water Supply and Sanitation 1,165 1,900 32 13. Irrigation 324 623 10 04. Energy, Power and Fuel 744 1,561 2,377 40 1

C. Economic Sectorsd 1. Agriculture and Livestock 12,933 6,770 17,846 300 92. Industry and Services 8,578 8,379 9,178 155 4

Total 135,146 34,187 208,091 3,503 100o/w : Azad Jammu and Kashmir 76,375 17,671 116,625 1,963 56 : North-West Frontier Province 56,436 16,516 91,467 1,540 44o/w : Public Assets 45,795 12,175 82,187 1,384 39 : Private Assets 87,015 22,012 125,904 2,120 61o/w : Urban Areas 25,789 13,675 46,163 777 22 : Rural Areas 107,021 20,512 161,928 2,726 78

o/w = of which. a Includes cost of reconstruction of both immovable and movable assets and restoration of public services. b Includes the value of household contents such as consumer durables. Reconstruction costs exclude replacement of these assets.c Includes roads and bridges.d Total losses and reconstruction costs in agriculture, industry and services are over and above what is accounted for by the sectors

listed above. Source: Asian Development Bank and World Bank-led Preliminary Damage and Needs Assessment, 12 November 2005.

2. Macroeconomic Impact

17. The impact of the earthquake on Pakistan’s official gross domestic product (GDP), which excludes GDP from AJK, is expected to be limited to about 0.4%. In fiscal year (FY) 2006, GDP growth was projected in June at 7%, with recent data suggesting the growth will be around 6.5%. The additional impact of the earthquake is likely to bring output growth further down, to around 6.1%.2 This loss is due to a projected reduction in NWFP output in FY2006. In addition, the output loss in AJK could amount to PRs76.4 billion ($297 million), or 27% of AJK’s 2004–05 output. As reconstruction activity starts, the impact on GDP growth could actually be positive, felt mostly in FY2007 and FY2008.

18. At the macroeconomic level, the most significant impact of the earthquake is expected to be on the fiscal deficit of the Government. In the absence of any offsetting revenue increases

2 This assumes that all of the income loss will fall in fiscal year 2006, an assumption that may overstate the impact of

the earthquake on growth.

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and expenditure reductions, the earthquake is projected to increase the FY2006 deficit of the Government between 0.6% and 1.0% of GDP. The budgets of NWFP and AJK will be unable to accommodate a significant share of the relief and reconstruction expenditures, although it is to be expected (and desirable) that they would have significant role in the reconstruction process.

19. The earthquake has now created additional expenditure needs to cover for relief, reconstruction, and rehabilitation costs. These pressures could pose difficulties for Pakistan’s macroeconomic balances and may undermine the achievement of its long-term development goals, unless additional concessional financing is made available by the international community. A key element of the Pakistan’s Poverty Reduction Strategy Paper is the utilization of the additional fiscal space created by prudent fiscal policy and aid to meet development and poverty-reduction objectives. It is, therefore, important that priority public expenditures be protected, so that Pakistan can continue to improve service delivery of health, education, and public infrastructure. The Government has indicated that it would be prepared to absorb a part of the budgetary impact of the earthquake by making cuts in low-priority expenditures and raising additional domestic revenue. These adjustments would be needed irrespective of the amount and type of financing that the donor community would provide. However, given the limited magnitude of resources for rehabilitation of the affected areas, it is unlikely that the Government will be able to fully absorb the fiscal impact of the earthquake without significantly affecting public sector development activities.

20. Pressure on the external trade balance has arisen from strong aggregate demand and factors not directly related to the earthquake. The earthquake may cause an increase (albeit limited) in imports of fuel, food, and construction materials. A delay in aid inflows to finance the Government’s earthquake expenditures would aggravate pressure on balance of payments.

3. Social, Poverty, Environment, and Livelihood Impact

21. Social Impact. The earthquake has so far claimed more than 73,000 lives, while 70,000 are injured and 2.8 million left homeless. In addition to the immense damage and loss of life, the earthquake increased vulnerabilities among the surviving population. In particular, the factors creating new vulnerabilities or contributing to existing ones include internal displacement and marginalization based on gender, age, and disabilities.

22. Marginalized and vulnerable groups may not be able to access emergency assistance on an equal basis with others. In particular, female-headed households, widows, and orphaned children are at risk of (i) having little or no access to supplies and services and (ii) losing property claims owing to their lack of proper identity papers. Many elderly and disabled are likely to have lost their support network. Physical and psychological disabilities suffered as a consequence of the earthquake need to be taken into account, as they incur lasting liabilities in terms of economic costs and social exclusion. Long-term health expenses and rehabilitation will be important burdens on families and the Government alike.

23. The new poor, created by the disaster, may also face financial problems and social pressure if they are unable to repay formal or informal loans obtained before the earthquake.

24. The health and nutrition of the vulnerable people are threatened by a diminished and unbalanced diet.

25. Poverty. The earthquake-affected areas were not the poorest in Pakistan, but they were,

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even before the earthquake, among the most vulnerable. Geographical remoteness and a harsh climate have made these areas particularly vulnerable to sudden disasters.

26. Of the total of 2.4 million people employed at the time of the earthquake, almost 84% were living below the poverty line of $2 per day. In addition, women and youths in the affected provinces had difficulty finding employment.

27. The depletion and degradation of natural resources have been particularly severe in the earthquake-affected areas. The reduction in average land availability per household due to land fragmentation, erosion, and landslides has resulted in households becoming increasingly poorer. Demographic pressure and price increases have also worsened vulnerable groups’ exposure to poverty.

28. Most of the jobs in the affected provinces are in relatively less productive sectors, particularly agriculture, livestock, and informal services. These sectors are without social safety nets and supplemented by secondary income sources (such as off-farm jobs) and remittances. Thus, the loss of employment, even for a short time, is likely to precipitate a decline into conditions of extreme poverty for many families.

29. The vulnerable groups described in the previous section are at risk of becoming poorer. The situation is particularly critical for children, many of whom may be orphaned, homeless, and out of school, which may force them to seek alternative forms of support. Without help, poverty among these groups will constantly grow, with little hope for the future. A social security mechanism should be put place for the survival of people who are not able to provide for themselves.

30. Environment. The earthquake has damaged the environment. Impacts on ecosystems are often less dramatic than structural damage due to their slower manifestation. Considering that the environment of the affected area was vulnerable even before the earthquake, comprising fragile mountain ecosystems, significant long-term adverse impacts are likely. A detailed environmental assessment of the impacts of the earthquake is urgently needed to quantify losses to forest, aquatic, and terrestrial ecosystems, including biodiversity, and to restore damaged ecosystems.

31. The most visible consequence of the earthquake is the enormous quantity of debris and rubble from damaged and destroyed structures. Preliminary estimates indicate that up to 200 million tons of rubble may need disposal.

32. The main environmental impacts from the earthquake resulted from landslides. While the exposed soil surfaces now appear to be in a state of equilibrium, a second phase of landslides is likely, and largely unpreventable, with the onset of seasonal rains and the melting of snow in the spring. The loss of forest cover over the last decade due to encroachment, illegal timber felling, and agriculture will likely exacerbate the adverse impacts of the landslides. This risk continues today as demand for lumber for reconstruction could further denude slopes of forests.

33. Social Network, Employment, and Livelihoods. Community cohesion is threatened by forced migration. However, the interdependence of surviving members on each other and on comparatively resource-rich households may restore some measure of social cohesion.

34. Community-based organizations and civil society networks administering to vulnerable groups before the quake are not functioning as they did. The quake’s impact on government

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infrastructure and services has crippled the ability of individuals to exercise their rights and to seek legal redress and protection. One of the major challenges will be to reduce the procedural burden and legal requirements for obtaining compensation.

35. The livelihood assets of affected people have been substantially reduced. Human resources and capacities are weakened; traditional and skilled labor in the informal sector does not provide any form of job security.

36. Estimates show the total loss in employment to be around 324,000 jobs, equal to about 29% of the employed population above the age of 10 in the affected districts. About 38% and 25% of total employment in the affected districts of AJK and NWFP, respectively, are estimated to be lost. The largest job losses are in agriculture, small businesses and shops, and construction, while no employment loss is assumed for migrant workers and public sector employees. Employment losses will likely have impact on nearly 1.6 million people.

F. Earthquake Reconstruction and Rehabilitation Authority

37. The ERRA was established by the Government on 24 October 2005 to guide reconstruction work, undertake strategic planning in the affected districts, and coordinate the implementation of works in the two affected provinces. It is located within the Prime Minister’s Secretariat with a mission to expedite the reconstruction, rehabilitation, and final recovery of the earthquake-affected areas. ERRA has the following functions:

(i) assess damage and needs in the quake-affected areas; (ii) formulate a comprehensive program to provide for planned settlements, housing,

government buildings and offices, utilities and services, infrastructure, health and education facilities, and irrigation and agriculture facilities including watershed protection and environmental programs;

(iii) ensure that resettlement plans are formulated for subprojects with resettlement impacts prior to the award of contracts;

(iv) oversee the identification of projects; (v) prescribe cost-effective technology; (vi) review and revise building codes to incorporate earthquake-resistant design in all

repairs and new construction; (vii) promote the development of reconstruction-related industry in the affected area; (viii) facilitate and organize direct contributions by the private sector and bilateral

donors for reconstructing housing, hospitals, schools, and other facilities; (ix) provide oversight and overall monitoring; and (x) facilitate disbursement of funds to the provincial agencies responsible for the

day-to-day implementation of reconstruction.

38. ERRA’s Governing Council consists of the key senior-most Government officials responsible for reconstruction including the Prime Minister of Pakistan (chair), the prime minister for AJK, the chief minister of NWFP, minister for Kashmir Affairs and Northern Areas, advisor to the Prime Minister of Pakistan, deputy chairman of the Planning Commission and the chairman of ERRA. ERRA will prepare an annual budget and maintain proper accounts, which will be audited by the Auditor General of Pakistan (AGP).

39. ERRA is responsible for the timely implementation of reconstruction and has been given authority to expedite various central and provincial government processes, such as land acquisition and the rapid transfer of disbursement funds, and to support provincial and district level line agencies’ planning and implementation of works. ERRA is charged with ensuring that

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the usual slow pace of implementation by the provincial agencies is stepped up to meet the 3-year timeframe for restoring services and facilities.

G. Response of Development Partners

40. The Government requested international assistance, which started arriving within days of the earthquake. As of 11 November 2005, according to Government reports, assistance totaling nearly $2.5 billion had been pledged by a total of 83 bilateral and multilateral donors, with many also providing to the relief effort significant in-kind support, including logistical and manpower assistance. Major contributions have been pledged by Australia, Canada, People’s Republic of China, Denmark, Germany, India, Iran, Japan, Kuwait, Netherlands, Norway, Saudi Arabia, Sweden, Switzerland, Turkey, United Arab Emirates, United Kingdom, and United States. Other donors include Algeria, Austria, Belgium, Finland, France, Greece, Ireland, Italy, Republic of Korea, Luxembourg, Malaysia, Oman, and Ukraine, among others. The World Bank approved supplemental financing of $200 million within weeks of the earthquake to help the Government meet emergency expenditure requirements. The United Nations immediately deployed its Disaster Assessment and Coordination team to provide technical assistance for assessing the scale of the disaster and to help manage the international response. UNDP is helping to coordinate relief efforts both nationally and locally. Other UN specialized agencies such as UNICEF, World Food Programme, and United Nations Population Fund have also provided emergency relief assistance.

41. On 26 October 2005, the secretary-general of the UN hosted a ministerial-level international donors’ conference in Geneva to discuss Pakistan’s short-term requirements for relief assistance. The UN launched a flash appeal for $550 million in immediate relief assistance to Pakistan. About $140 million has been earmarked for an emergency push to feed and provide shelter to those affected. The Geneva conference was followed by another multidonor event in Islamabad on 19 November 2005 aimed at boosting resources for the medium- to longer-term reconstruction and rehabilitation programs. The total pledged from all international donors is estimated at about $6.1 billion.

H. ADB’s Response and Strategy

42. At the international donor’s conference on earthquake reconstruction and rehabilitation held on 19 November 2005 in Islamabad, ADB President Haruhiko Kuroda announced that ADB would provide up to $1 billion in reconstruction and recovery assistance to Pakistan during 2005–2006.

43. On 14 November 2005, ADB’s Board approved $105 million from loan savings to the Decentralization Support Program (DSP). DSP is an existing program loan with an implementation mechanism in place, including accounting, disbursement, and fiduciary risk-management measures. On the same day, the Board approved the establishment of Pakistan Earthquake Fund, including an initial contribution from ADB of $80 million in grant financing.

44. The first phase of ADB’s assistance to earthquake reconstruction and rehabilitation, comprising the $105 million for the DSP and $300 million for the proposed Project, brings total proposed assistance to $405 million. The second phase of the proposed assistance, targeted for approval in 2006, is estimated at about $595 million. ADB also actively seeks support from bilateral donors as well as the private sector to use the fund as a mechanism to deliver prompt and effective assistance.

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45. ADB’s Pakistan Resident Mission is reviewing a number of ongoing loans in the earthquake-affected areas that can be redesigned to more effectively address earthquake damage. In some cases, savings within these loans will be reallocated to address earthquake rehabilitation.

I. Hazard Risk Management

46. It is important to take into account some of the factors that may have exacerbated the damage in affected areas. These critical factors should be reflected in the design and implementation of the recovery strategy, as existing vulnerabilities should be mitigated as much as possible rather than repeated.

47. Seismotectonic considerations indicate that similar or larger events in the same or neighboring regions may be possible. A seismological observation network exists but needs modernization. Efforts to undertake a new seismic risk analysis of Pakistan should also be intensified. Similarly, assessments of risks in the affected areas should guide reconstruction decisions. Further multi-hazard risk mapping for the country, including the affected areas, should guide future development plans.

48. A national disaster management strategy that enhances existing entities and mechanisms should be devised and implemented. Communities, local authorities, and nongovernment organizations (NGOs) should be encouraged to cooperate and be better prepared.

J. Lessons Learned

49. A review of ADB-wide experience with rehabilitation assistance indicates the following essential factors: (i) projects must be prepared as quickly as possible; (ii) projects should focus on restoring facilities; (iii) to the extent possible, rehabilitation works should be completed within 2–3 years; (iv) as implementation places a heavy burden on executing agency staff, and therefore, strong consulting support and ADB supervision is needed during implementation; and (v) efforts should be made to ensure that ADB’s rapid response to disasters is matched by equally quick action by the government. Lessons learned from ADB’s earlier emergency projects include the following: (i) beneficiary participation must be ensured and increased in project preparation and implementation, especially in the maintenance of facilities; (ii) environmental and social aspects should be considered during project implementation, even though the need for a rapid response may not permit a detailed treatment of these issues prior to the approval of the assistance; (iii) arrangements for disbursement, including retroactive financing and the use of imprest accounts, should give the executing agencies quick and simple access to funds; (iv) project objectives and scope need to be carefully defined; and (v) criteria for subproject selection should permit simple prioritization of subprojects and demand short implementation periods.

50. Post-earthquake reconstruction is a major investment. The Government should take this opportunity to protect the reconstruction of public and private buildings and infrastructure from various types of hazards. Lessons learned from the damage should be fed into reconstruction planning, and future risks reduced, through improved building standards and design. The safety of public buildings such as schools and hospitals is particularly important and should incorporate appropriately improved building standards to reduce their risks. Both in the reconstruction phase and in urban development plans, land-use plans need to integrate the identification of risk areas. Buildings collapsed in northern Pakistan because of very poor construction quality and the

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absence of any seismic consideration in their design. The primary lesson learned is that new buildings need to be seismically designed and built to a higher quality. Compliance with present regulations and more stringent codes in the future needs stronger enforcement. During the reconstruction phase, the repair of damaged buildings needs to include seismic strengthening. Additionally, the feasibility of a national seismic retrofitting program for buildings should be examined, with schools and hospitals as priorities.

51. The lessons and experiences of current relief and recovery coordination should be used to develop an appropriate disaster-management mechanism and authority, as well as a national plan that clarifies the roles and responsibilities of different government agencies and strengthens coordination among them. Risk management education and training the staff of appropriate agencies would greatly improve risk management in the country. Primary and secondary schools should also raise awareness of risks as part of the curriculum. Incorporating risk-mitigation safety measures into the basic training of engineers, contractors, and builders should also be considered as part of the reconstruction process. A major public awareness campaign on risks, preparedness, and vulnerability reduction should be implemented as soon as possible. The feasibility of tailoring an insurance package to the poor that addresses their main post-disaster risks should be investigated, as should investing in ex ante risk-reduction measures.

52. These lessons have been considered and incorporated in the design of the proposed Project. Indeed, ADB’s response has been very rapid. Within a few days of the calamity, a team of ADB-funded disaster management experts started to provide assistance to the Government; within 2 weeks, a multidonor Damage and Needs Assessment Mission led by ADB and the World Bank was fielded to help the Government assess the damage and evolve a short- and medium-term recovery and rehabilitation strategy. With an implementation period of 36 months, the Project focuses on the immediate rehabilitation of physical and social infrastructure in the affected areas and the restoration of livelihoods for those affected. The proposed Project has been prepared to complement assistance from other multilateral and bilateral agencies and donors.

53. To ensure timely implementation, the responsibility for project administration will be delegated to the Pakistan Resident Mission in Islamabad, immediately upon loan effectiveness. If appropriate, ADB will also consider establishing an extended mission in Muzzafarabad for the duration of project implementation to provide day-to-day support and guidance to the AJK line agencies provide on the spot review of various documents and closely monitor compliance with ADB requirements. Pakistan Resident Mission or the possible extended mission will assist with quality control, speedy implementation of subprojects, and rapid assistance to ERRA, AJK, NWFP, the line agencies and districts on any project implementation matters. It will carry out random spot checks on procurement and project accounts of subprojects, and inspect project facilities for quality control and proper financial management.

III. THE PROPOSED PROJECT

A. Impact and Outcome

54. The expected impact of the Project is to contribute to reversing the devastating impact of the earthquake and so revive economic activity and enable people to resume their livelihoods and return to normal life. This will be achieved by rehabilitating and reconstructing damaged and destroyed infrastructure as quickly as possible, which will particularly assist the poor and other vulnerable people.

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55. The Project will focus on the selected sectors identified through consultation with the Government, the private sector, civil society, and other donors. The Project will rehabilitate public infrastructure and adopt appropriately revised earthquake-resistant design and construction standards in all construction undertaken. In addition, the Project will provide capacity building to enhance rehabilitation capacity and institution building for sustainable development.

56. The Project has been developed in close cooperation with other donors, all of which are intimately involved in post-earthquake rehabilitation and reconstruction in the affected areas of Pakistan. The choice of sectors and the project design is based on the findings of the ADB and World Bank-led PDNA. Specifically, the World Bank is likely to concentrate on housing, national highways, and social sectors. Close coordination among the donors and Government has been maintained throughout the processing of the Project.

57. Members of the project team visited affected districts and held discussions with relevant Government and relief agencies on the ground, as well as with affected people. Subsequent discussions with development partners and the Government helped project formulation to evolve based partly on comparative advantage and sectoral presence in the affected region, and also in regard to project scope. The project design also draws on ADB’s considerable experience in delivering emergency assistance in developing member countries over the past 2 decades. The Project is linked with and complements relief and assistance provided by the Government, NGOs, UN, and other donors, and it takes the necessary next steps to ensure that assistance will be sustainable.

58. In terms of its broad overall scope and objectives to support poverty reduction and protect and promote livelihoods, the Project is consistent with the goals of Pakistan's Medium-Term Development Framework 2005–2010. It is also in line with ADB’s Country Strategy and Program for Pakistan, which prioritizes improving physical and social infrastructure to support pro-poor growth and poverty reduction throughout the country. The Project is consistent with ADB’s Disaster and Emergency Assistance Policy.3

B. Outputs

59. The Project comprises three components: (i) quick-disbursement, (ii) project sector components, and (iii) implementation assistance. These components are designed to operate in a mutually supportive fashion to achieve the overall objective of mitigating earthquake losses to the affected communities and providing urgent rehabilitation and reconstruction of priority infrastructure assets.

60. Quick-Disbursing Component. In accordance with ADB’s Disaster and Emergency Assistance Policy, a portion of the proposed Project will be used for quick-disbursing assistance to partly finance the unusually high and unexpected expenditures required for rehabilitation and reconstruction. The Project will extend a quick-disbursing component of $108 million (a $65 million grant from the Pakistan Earthquake Fund and a $35 million loan from ADB’s Special Funds resources, and about $8 million in Government counterpart funding from taxes and duties). As per ADB’s Disaster and Emergency Assistance Policy, the quick-disbursing component will be used to finance only those imports identified as necessary for an effective

3 ADB. 2004. Disaster and Emergency Assistance. Operations Manual. Sections D7/BP and D7/OP. Manila.

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recovery program. The Government and ADB have agreed on a list of permissible imports for financing under the quick-disbursing project facility (Appendix 3).

61. Project Sector Components. Project sector components will be $246.8 million, including $185 million from ADB’s Special Funds resources and $61.8 million from the Government’s counterpart funding. It will be used to rehabilitate earthquake-damaged education and health facilities and other high-priority infrastructure by providing civil works, equipment and materials, working capital, and consulting services for project design, implementation, monitoring, and evaluation. During the rehabilitation phase, appropriate and cost-effective design and construction standards will be adopted. Civil works designs will follow a sector approach and select the highest-priority subprojects during implementation. This will allow a quick response and maximum flexibility in both geographic coverage and selection of components within the agreed framework and criteria. In consultation with the Government, and taking into account the assistance being proposed by other development partners, the project sector components will finance rehabilitation and reconstruction in the following sectors: (i) transport with $140.0 million; (ii) power with $53.5 million; and (iii) social sectors, including health and education, with $53.3 million.

62. Implementation Assistance. Consulting services for Project implementation will be financed by $15.0 million in grants from the Pakistan Earthquake Fund.

63. The legal assistance, governance, and institutional building subcomponent will be $2.5 million and is included in the $15 million for implementation assistance.

C. Special Features

64. The Project will address urgent basic needs and restore social services lost as a result of the earthquake. If life in the affected and neighboring areas is to return to normal, transport, power and social services must be restored, destroyed infrastructure must be rebuilt, and access to employment opportunities must be made available. The Project has, therefore, been processed under ADB’s Disaster and Emergency Assistance Policy. Since interventions will typically replace preexisting assets, reconstructed to appropriate technical and earthquake-resistant standards, an economic analysis is not required. Investments will be made on the basis of least-cost restoration of preexisting facilities. The procedures for project loan and grant processing, procurement, consultant engagement, subproject selection, and the type of works to be done reflect this flexibility, without sacrificing quality, transparency, and safeguards. However, the Project is designed to ensure proper targeting, subproject control and monitoring, and community participation while addressing area resource and capacity constraints.

65. ADB will focus on ensuring that the Project implementation is efficient, effective, and expedient. Following the Disaster and Emergency Assistance Policy, additional resources have been dedicated to implementation, supervision and monitoring, including (i) support for ERRA, (ii) provision of resettlement specialists, and (iii) environment specialists to assist environmental assessment of earthquake-related projects by the provincial environmental protection agencies.

66. The Project has been prepared through a high consultative, multidonor exercise led by ADB and the World Bank. 4 Needs assessment, Project design and implementation arrangements have been harmonized among donors, and aligned, to the greatest extent

4 The World Bank is funding reconstruction of the National Highways through additional financing to its ongoing

Highway Rehabilitation Project.

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possible, with the prevailing system in Pakistan in an attempt to minimize the administrative burden on the Government.

D. Sector Components

1. Transport

67. The transport sector component of the Project will rehabilitate earthquake-damaged major roads and bridges, except national highways, within the four affected districts in AJK (Bagh, Muzaffarabad, Neelum, and Poonch) and the five affected districts in NWFP (Abbottabad, Battagram, Kohistan, Mansehra, and Shangla). The component will cover repairing and rehabilitating the damaged major roads and bridges under the Public Works Department and Local Government and Rural Development Department in AJK and the Frontier Highway Authority (FHA) and district governments in NWFP. Road clearance now in place is not anticipated to last beyond the coming snow season. More thorough and permanent road rebuilding measures are required, particularly protection works to minimize landslides and river erosion and improved drainage for slope stabilization. Rehabilitation works will restore roads and bridges to the pre-quake or higher standard, as this is considered cost-effective in the long run. Where technically feasible and justified, rehabilitation will include protection measures to mitigate damage from future landslides. Land acquisition and relocation may be required where the original road cannot be reconstructed and requires partial realignment. The transport sector assessment is in Appendix 4.

2. Power

68. The power sector faired better overall than expected immediately after the earthquake. The power companies responded quickly and restored the power supply within days of the quake. It should be noted that nearly all repairs were of a temporary nature and need to be replaced by permanent solutions. There are still areas that have not yet been inspected because damaged roads make access to them not yet possible. In the aftermath of the earthquake, it was necessary to establish tent villages and relief camps for the dislocated population. These camps need to be electrified to ensure lighting and security at night, power for pumping water, and the efficient operation of schools and other common facilities. Temporary electrification of tent villages and relief camps needs to be funded, and the recurring costs of electricity consumption in tent villages and camps should be paid to the supplying electricity distribution companies to ensure their financial sustainability.

69. The power sector component comprises rehabilitation of the power generation and supply system that were damaged by the earthquake. In detail, the Project will cover (i) repairing the nine hydropower generation stations, including access roads, buildings, equipment and ancillary facilities; (ii) supplying and installing equipment and lines related to the 132 kV, 33 kV, and 11 kV substations; (iii) constructing of operational substations buildings and staff quarters; (iv) supplying and installing 0.4 kV and 0.22 kV low-voltage lines; (v) installing service connections to consumers; (vi) providing spare parts, operational vehicles, and tools (vii) installing transformers, meters, and service connections to the tent villages and relief camps established after 8 October 2005; (viii) paying electricity supply for up to two years to the tent villages and relief camps; and (ix) installing transformers, meters, and service connections to the anticipated new model villages to be established for the victims of the earthquake. Reconstruction and rehabilitation works will be carried out to restore the facilities to pre-earthquake levels or to a higher standard as this is considered cost-effective in the medium to long term. Details of the component are in Appendix 5.

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3. Social Sectors

70. The social sector component will focus on reconstruction and rehabilitation of selected health and education facilities geographically located in the affected districts of AJK and benefiting other areas where affected people are currently concentrated. The health subcomponent to be implemented by the AJK Reconstruction Agency and AJK Department of Health, will include: (i) reconstructing one district hospital and three Tehsil headquarter hospitals, including wards, operating theatres, outpatient departments, staff quarters and other necessary services; (ii) providing all the essential medical equipment to the hospitals including ambulances and supplies; and (iii) constructing proper waiting areas with public toilets and clean drinking water for visitors. The education subcomponent to be implemented by the Reconstruction Agency and AJK Department of Education will include: (i) repairing and reconstructing about 550 partly and completely destroyed government middle schools buildings with improved seismic designs, latrines and office accommodation; (ii) providing all essential furniture and equipment for all the middle schools reconstructed and repaired; (iii) training trainers for teachers training; and (iv) assessing and advising on school health services for physical and physiological health. The social sectors assessment is in Appendix 6. The AJK Steering Committee will decide whether there is sufficient capacity within the line department to undertake a particular subproject or the implementation is to be undertaken through the specially constituted Reconstruction Agency.

E. Legal Assistance, Governance, and Institutional Building

71. Destruction arising from the earthquake has generated legal and documentary issues for earthquake affected people, and enormously strained governmental administration and resources, at the national, provincial, and local levels. The legal assistance, governance, and institutional building subcomponent seeks to address these issues. The replacement of birth, death, marriage and disability certificates, property titles, and national identification cards will be supported. Methods used for replacing documents will include supporting the collection and coordination of data by the relevant departments and offices and facilitating the connectivity, coordination and networking of such information; it will provide legal assistance to earthquake affected victims to help them address legal and documentary issues arising from the earthquake. This will include the earthquake legislative framework that is currently under consideration for making special provision for persons and property affected by the earthquake. It will also establish (if necessary) a decentralized mechanism for earthquake victims for private dispute resolution and grievance review against public officials. In addition, training and awareness workshops will be conducted for judges, district officials, and the public on the potential earthquake or disaster emergency related legal issues, disputes or cases that are likely to arise. There will also be provision to strengthen the capacity of local government to provide for vocational training for women and disabled people who may need to enter the labor market for the first time together with a designed program for post training assistance for finding jobs.

72. The legal assistance, governance, and institutional building subcomponent will support transparency of earthquake and emergency assistance, through ERRA by supporting the publication in English, Pushtoo and Urdu, on the internet and in local newspapers, as well as broadcast on national and provincial television and radio, of (i) modes of earthquake assistance from the Government, development partners and NGOs; (ii) contract and procurement details in relation to earthquake assistance; and (iii) any proposed laws or policy relating to earthquake assistance. To keep the public notified, these broadcasts and publications will be regularly updated at least every quarter. Assistance will also be provided to the Government to centralize the collection of data on earthquake affected people and earthquake-affected property in order

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to maximize rehabilitation efforts and minimize duplication of efforts. Details of the component can be found in Appendix 7.

F. Cost Estimates

73. The total cost of the Project is estimated at $374.2 million equivalent, including the quick-disbursing component, taxes and duties (of approximately $18.3 million) and interest during implementation. The Government will contribute 24% of the estimated cost of reconstruction and rehabilitation, mainly in the form of taxes and duties, land acquisition, rehabilitation, resettlement, and administrative support. As a sector approach is being followed, the cost estimates are broken down by sectors (Table 2 and Appendixes 4–6). Detailed cost estimates are provided in Appendix 8.

Table 2: Cost Estimates ($ million)

Item Foreign Exchange

Local Currency

Total Cost

A. Quick-Disbursing Component 100.0 8.0 108.0 B. Project Sector Components a 131.3 115.5 246.8 1. Transport 84.6 55.4 140.0 2. Power 24.0 29.5 53.5 3. Social Sectors (Health and Education) 22.7 30.6 53.3

C. Implementation Assistance 5.0 10.0 15.0 D. Interest during Implementation 4.4 0.0 4.4 Total 240.7 133.5 374.2 a Including taxes and duties of $18.3 million. Source: Asian Development Bank estimates.

G. Financing Plan

74. The Government has asked for a grant of $80 million from the Pakistan Earthquake Fund and an additional $220 million from ADB’s Special Funds resources (Asian Development Fund [ADF] loan) to help finance the Project.

75. The ADF loan will have a 40-year term, including a grace period of 10 years, an interest rate of 1% per annum, and repayment of principal at 2% per annum for the first 10 years after the grace period and 4% per annum thereafter. The Government advised that it will make the loan and the grant proceeds of the Project available to the governments of AJK and NWFP on terms and conditions in accordance with the existing policies and practices of the Government or any changes approved by the Government‘s Economic Coordination Committee (ECC). Likewise, a portion of the loan and grant proceeds will be made available to Peshawar Electricity Supply Company (PESCO) and Islamabad Electric Supply Company (IESCO) NWFP on terms and conditions in accordance with the existing policies and practices of the Government or any changes approved by the Government’s ECC. The Government will bear all foreign exchange risk. In addition, the Government will provide required counterpart funds for implementing the Project in a timely manner to the governments of AJK and NWFP, IESCO, and PESCO on a grant basis.

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Table 3: Financing Plan ($ million)

Source Foreign Exchange

Local Currency Total Cost Percent

A. Quick-Disbursing Component 100.0 8.0 108.0 100 1. Asian Development Bank Grant 65.0 0.0 65.0 60 2. Asian Development Bank ADF Loan 35.0 0.0 35.0 32 3. Government 0.0 8.0 8.0 8 B. Project Componentsa 136.3 125.5 261.8 100 1. Asian Development Bank Grant 5.0 10.0 15.0 6 2. Asian Development Bank ADF Loan 131.3 53.7 185.0 70 3. Government 0.0 61.8 61.8 24 C. Interest during Implementation 4.4 0.0 4.4 100 Total 240.7 133.5 374.2 100 Asian Development Bank 236.3 63.7 300.0 805

ADF = Asian Development fund a Includes cost of consulting services.Source: Asian Development Bank estimates.

H. Cofinancing

76. An underlying objective of ADB's Disaster and Emergency Assistance Policy is to coordinate with development partners, minimize duplication, encourage cofinancing and have catalytic effect on the provision of additional resources. It is likely that a number of these partners may be willing to complement ADB's funds for this Project through cofinancing. ADB has typically sought Board approval for the administration of loan or grant funds from cofinanciers only when cofinancing commitments are in place. In light of the need for expediency and efficiency in ADB's response to the earthquake disaster and emergency, Management requests Board approval of the administration of any cofinanced funds obtained from development partners subsequent to the date of Board approval. Approval of such cofinanced funds will be confirmed and approved by Management, and reported to the Board in accordance with the standard reporting procedures. This procedure will be adopted only to the extent that the additional funds provided by cofinanciers will not materially alter or fundamentally affect the objectives, purposes and scope of the existing Project. Any proposed cofinancing that will materially affect the objectives, purpose, or scope of the Project would be processed as a major change of scope and circulated to the Board in accordance with ADB's Project Administration Instructions 5.04 and the usual practice.

77. Simultaneously with loan and grant negotiation, ADB received indications from the European Commission (EC) of its interest in providing €30 million to finance a part of the Social Sectors Component. The EC has indicated that its formal commitment to provide such financing may be expected by the end of 2005. To avoid any Project delay, Board approval for the administration of the EC grant is sought. An information paper will be provided to the Board to describe the impact of EC grant on the financing of the Project when the arrangements with the EC are finalized.

78. As described above, EC is prepared to commit to provide cofinancing with ADB, allowing ADB to catalyze additional resources for the Project. For the EC to participate, it requires

5 Given the exceptional circumstances of the emergency, it is proposed that ADB fund 80% of the Project costs.

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nondiscrimination against all its members in procurement processes. Thus, while most of the investments to be supported by the Project are expected to come from within Pakistan or to involve some procurement from ADB member countries, to facilitate the EC’s commitment to cofinance €30 million for Social Sectors Component, Board approval is sought to allow procurement in, and procurement of eligible goods and services from, member countries of the European Union, including ADB nonmember countries. This would facilitate maximum and expeditious development and catalyze additional resources from development partners in the current emergency circumstances.

79. The request for Board approval is being made pursuant to Article 14(ix) of the ADB Charter, which states that the Board may, by a vote of the Directors representing not less than two thirds of the total voting power of the members, approve procurement from ADB nonmember countries in appropriate circumstances. The Charter provides one, non-exclusive, example of what may constitute “appropriate circumstances” for allowing procurement in non-ADB member countries or procurement of goods and services produced in ADB nonmember countries. It states that the Charter’s requirement that procurement occur only in member countries may be lifted “in the case of a nonmember country in which a significant amount of financing has been provided to the Bank.” This example is similar to the current proposal. The EC is expected to provide a grant of €30 million, which is a significant contribution to the Social Sectors Component. The European Union, which is supporting the EC’s provision of such financing includes ADB members and nonmembers that are together providing this contribution by way of joint cofinancing for the Project. The Board’s approval for lifting the procurement restriction is being requested only in support of Social Sectors Component of the Project.

I. Implementation Arrangements

1. Project Management and Coordination

80. ERRA, established through presidential decree in response to the 8 October 2005 massive earthquake, will be the executing agency for the Project, and MOF will be the executing agency for quick-disbursing component. The mechanisms and implementation strategies, institutional framework and related terms of reference for the recovery efforts under the umbrella of ERRA are still being developed. Based on the current understanding of ERRA functions, the authority is expected to facilitate, guide, coordinate, approve, and monitor the reconstruction effort, develop the overall policy and planning framework for the reconstruction effort, standard setting and quality control and manage the operation and accounting of the rehabilitation and reconstruction funds. ERRA is also expected to lead revisions of the current arrangements for subproject approval implementation and fund flow to simplify procedures and so ensure quick implementation and full transparency. As a priority, ERRA will develop and adapt appropriate earthquake resistant designs and construction codes for immediate adoption by civil construction industry. ERRA’s Governing Council, chaired by the Prime Minister, will approve overall programs and large work packages, basically fulfilling the role of the Central Departmental Working Party in normal development projects, but with a much shorter timeframe. ERRA’s Board, chaired by ERRA’s Chairman, will oversee the implementation of the project through provincial and district line agencies following current/revised procedures, on fact track basis. ERRA will also approve major changes in scope and cost of the subprojects, annual plans, and budgets. It will support Project implementing agencies with financial and technical management. The implementing agencies include Reconstruction Agencies in NWFP and AJK, IESCO, and PESCO. In addition, the implementing agencies in AJK include the Departments of Local Government and Rural Development, Electricity, Health, Education, and Public Works.

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The implementing agencies in NWFP include the line department, five district governments, FHA, and Sarhad Hydro Development Organization (SHYDO).

81. ERRA will be staffed by various specialist professionals deputed from relevant government departments (including those of the federal Government and other provinces), and hired from the private sector as necessary for ERRA to carry out its functions. Periodic social and technical monitoring, regular review and overall fund flow and internal audits of the Project will be carried out by ERRA. The Controller General of Accounts (CGA), AGP and MOF will prescribe the related procedures and requirements for fiduciary monitoring. The AJK and NWFP implementing agencies will develop the subprojects following the selection criteria and social compliance, through public consultation, based on procedures outlined in Appendix 10 and to be formalized in an operational manual to be prepared by ERRA.

82. The governments of AJK and NWFP, through their steering committees specially constituted for the purpose of reconstruction in the quake affected areas, chaired by the Additional Chief Secretaries of AJK and NWFP and having representation of ERRA, provincial line departments and the district governments (in case of NWFP), will be responsible for overseeing the provincial planning and implementation of subcomponents. These committees will be supported by professionally staffed Reconstruction Agencies (RA)—the NWFP Reconstruction Agency and the AJK Reconstruction Agency, containing various specialist staff, will be responsible for implementation of subprojects for which capacity does not exist at with provincial and district line departments contracted as decided by the respective steering committees of NWFP and AJK. RAs will design and approve subprojects falling within the powers delegated to the RA by the provincial Government and within the overall annual budget and work plan approved by ERRA. The steering committees and ERRA will approve work plans, budgets and provide overall guidance, in line with emergency procedures to be put in-place by ERRA Council and/or Board. For the subprojects implemented through the provincial line departments/implementing agencies, and the district governments, where technical capacity exists as decided by the respective SCs, additional support will be provided by deputing staff and by appointment of additional expertise as required to meet the additional work load and fast track requirements, due diligence and reporting. ERRA, RAs and line departments staff requirements, and related operating costs, will be funded through incremental administration support, supported in part by ADB grant funds.

83. The district advisory committees (DACs)/district development committees (DDCs) headed by district coordination officer (DCO) or Nazims in NWFP and deputy commissioners in AJK, will be responsible for identification of subprojects and needs, and recommend plans for approval of the steering committees. These plans will be approved annually by the steering committees or ERRA and implemented through RA (through their district reconstruction units), line departments and district governments, as recommended by steering committees. Implementing agencies’ additional incremental staff and overhead cost for subproject implementation, and technical backstopping and technical assistance support for implementing agencies to plan, design, supervise and implement the subprojects, will be financed by the projects.

84. Identification of subprojects will be done by respective implementing agencies in consultation with the local stakeholder, using official records and applications received from communities, NGOs and elected representatives, to identify schemes and the sites. Selection of sites and subprojects will be made from the identified list using a pre-determined selection criteria. The selected list will be verified and appraised for social compliance (through public consultation) by NGOs/specialized agency directly hired by ERRA for the 8 affected districts in

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AJK and NWFP. The RAs of NWFP and AJK, with the assistance of hired consultant teams, will undertake the technical and safeguard appraisal, before the list is submitted DAC recommendation/advice and approval of the SCs and ERRA. ERRA Council, SCs and implementing agencies will approve the subprojects to be executed by district/provincial agencies, within their approval limits and after screening send the list of subprojects to be implemented by federal line agency for their approval.

85. In addition to the incremental staff support and/or consultants hired by the RAs and line departments of AJK and NWFP, to implement the project components, ERRA will use their own staff and/or hire short term consultants to assist them with due diligence and monitoring and to guide implementing agencies in project appraisal, coordination and incorporation of social and environmental safeguards. Consulting firms recruited directly by RA and line departments will assist the RA, provincial line agencies and district government (depending on the agency implementing the subprojects) with design, processing approvals, and internal monitoring, procurement, and construction supervision.

86. Financial Management. Ministry of Finance (MOF) will manage the multidonor Consolidated Fund for Emergency Earthquake Assistance established in the State Bank of Pakistan (SBP) through which the project funds will flow. ERRA is putting in place the related fiduciary arrangements to ensure transparency in the flow of funds, financial management, accounting, internal control processes, procurement, periodic financial reporting, monitoring and internal and external audits. The CGA will be responsible for establishing accounting and reporting practices and requirements. The CGA, MOF and AGP will provide the related guidelines, and ensure that all relevant government statutory provisions and prudential regulations are followed. Disbursement of project funds will generally follow existing accounting procedures. The AGP will have the overall responsibility for the audit of earthquake assistance, and as such will be responsible for determining the appropriate auditing arrangements and for ensuring the timely completion of audits and that audits will be conducted in accordance with internationally accepted auditing practices.

87. The Project funds will be disbursed through the Consolidated Fund in SBP to the imprest account operated by the fund manager—the MOF for the quick-disbursing components and ERRA for the other components—to finance loan and grant components of the Project. MOF will make budget allocation for counterpart funds in the Budget, and release the Government’s counterpart share as a grant in a separate account operated by the fund manager in the form of budget allocation, as a grant, released from the MOF to ERRA Fund (a special deposit fund in Public Account—assignment account). The ADB funds for the Project, and Government’s counterpart funds will be released to ERRA as executing agency (excluding quick-disbursing component, for which MOF will be the EA). ERRA will maintain separate accounts for ADB loan and grants (imprested accounts), Government’s counterpart funds and will release funds to the respective implementing agencies (second generation imprest accounts) as advances against approved budget/work plan at the federal, provincial and district levels,. All funds will be utilized for their intended purposes as per the financing plan, in accordance with the procedures set down by CGA and ERRA. ADB funds will be issued with specified codes for the rehabilitation and reconstruction program, and all payments and disbursements will be made based on these codes. The fund flow arrangement is in Appendix 9.

88. ERRA will provide ADB with quarterly financial and physical progress reports on the use of ADB and other donor funds, as well as annually audited financial statements. Given the magnitude of funds that will pass through ERRA for implementation, MOF had proposed that ERRA should establish periodic internal audits and reviews mechanisms, in consultation with

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other donors and ADB. These will provide systemic feedback to improve financial management, fund-flow timeliness, accountability and transparency. Project imprest accounts will be operated in accordance with the ADB’s Loan Disbursement Handbook (January 2001). The AGP may nominate private chartered accountants, if required, to meet the increased burden on and to demonstrate transparency.

89. All donor funds channeled through ERRA will be subject to the same operating procedures and processes. The World Bank has completed a preliminary financial management assessment, which is available as Supplementary Appendix C. Based on the preliminary assessment, and subject to finalization of implementation and financial management arrangements satisfactory to ADB, financial management arrangements for the Project are found to be satisfactory.

90. Monitoring and Anticorruption Measures. ADB and other donors will rely on the agreed funds-flow mechanism, as well as the periodic disbursement, procurement, and output monitoring reports generated by ERRA, to fulfill their assurance requirements. A generic performance monitoring system will be established by ERRA in consultation with donor agencies, including ADB. This system will take into account the key indicators and targets outlined in the project framework. With the assistance of project-financed consultants, ERRA will facilitate the development of this framework and its implementation plan within 3 months of loan effectiveness. Basic damage assessment has already been conducted and information provided in this assessment will be updated within 3 months of loan effectiveness to validate the damage baseline. ERRA and provincial RAs and line departments will use this baseline to undertake regular reviews and provide routine monitoring reports, for which the requirements and structures will be agreed with al the donors by ERRA and provided in the operations manual. Monitoring bodies are envisaged at both the provincial level (including the AJK) and the district level. These will consist of technical, environmental and social safeguard specialist; elected representatives and NGOs, who will produce regular monitoring reports and undertake periodic reviews of project implementation.

91. Apart from the regular monitoring framework and reporting requirement established under ERRA operations, the Project will be reviewed jointly by ERRA and ADB, with frequencies and timeframes agreed by ADB and ERRA. The terms of reference of external donor review will also be negotiated and agreed between donors, including ADB, and ERRA for the purpose of consistency, effectiveness, and efficiency, and also to avoid overloading the agencies involved in the reconstruction activity. A comprehensive midterm review planned after the first year of the Project will: (i) evaluate the project’s scope, design, and implementation arrangements; (ii) assess the effectiveness of implementing agencies, and structure in terms of achieving project objectives and targets; (iii) evaluate the progress on contract awards disbursement and procurement, and appropriateness of the related procedures for these aspects to achieve project targets; (iv) evaluate the efficiency and effectiveness of the monitoring, safeguard and fund flow arrangement; (v) evaluate the performance of the consultants and consultancy arrangement in delivering project outputs and technical assistance terms of reference; (vi) identify changes needed in any or all of the arrangement and components; (vii) identify critical issues and constraints, if any; and (viii) recommend adjustments to the project design and/or implementation arrangements, if necessary. The midterm review will identify any slow-moving component and make recommendations for remedial measures. Reallocation of funds from poorly performing components to better performing components may be recommended by the Midterm Review Mission.

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92. ADB’s Anticorruption Policy (1998) was explained to and discussed with the Government and executing agencies. Consistent with its commitment to good governance, accountability, and transparency, ADB reserves the right to investigate, directly or through its agents, any alleged corrupt, fraudulent, collusive, or coercive practices relating to the Project. To support these efforts, relevant provisions of ADB’s Anticorruption Policy are included in the Loan and Grant Regulations and the bidding documents for the Project. In particular, all contracts financed by ADB in connection with the Project shall include provisions specifying the right of ADB to audit and examine the records and accounts of the Executing Agencies and all contractors, suppliers, consultants and other service providers as they relate to the Project.

93. In addition, ERRA will publicly disclose on the website for the Project information on how the funds are being used for the intended beneficiaries following applicable procedures. The website will present financial statements and track procurement contract awards, as well as include information on, among other things, the list of participating bidders, name of the winning bidder, basic details on bidding procedures adopted, amount of the contract awarded, the list of goods and/or services purchased, and their intended and actual utilization.

2. Subproject Selection Criteria and Approval

94. The implementing agencies will formulate and propose a list of subprojects through the SC and line departments. The implementing agencies will conduct initial screening of the proposals and submit these to the provincial steering body for final selection and approval in accordance with general selection criteria for purposes of eligibility criteria for each project component. The general eligibility criteria are listed in Appendix 10.

95. The first two subprojects to be carried out by each implementing agency will be subject to prior review and approval by ADB before commencement. Any subsequent subproject exceeding $500,000 equivalent but less than $3 million equivalent will be sent to the relevant steering committee for approval and ADB for information, while subprojects exceeding $3 million equivalent will require prior review and approval by ADB. Subprojects estimated to cost $500,000 equivalent or less will be subject to approval by the respective PDWP and random audit and checks by ADB to ensure compliance with requirements of subproject selection criteria and the implementation arrangement.

3. Implementation Schedule

96. As the Project is for emergency assistance, implementation will start immediately after approval and be completed within 36 months. 6 A detailed implementation schedule is in Appendix 11.

4. Procurement

97. Given the urgent Project needs, procurement of goods, works, and services will be carried out in a manner consistent with the simplified and expedient procedures permitted under the ADB’s Disaster and Emergency Assistance Policy and ADB’s Guidelines for Procurement and the contemplated implementation schedule. ADB procedures for providing reconstruction 6 The period of 36 months for project implementation was requested by the Government, and is considered justified

based on the extreme destruction and dislocation caused by the earthquake of 8 October 2005, and the weakened absorptive capacity of the country, particularly the provincial and district administrations of the affected areas, following the disaster. The 36-month implementation schedule under the ADB’s Disaster and Emergency Assistance Policy is considered appropriate.

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assistance after disasters allow maximum flexibility so that project activities can start promptly. Local competitive bidding procedures will be the preferred mode of procurement.

98. Goods and related services estimated at more than $1 million will be procured following international competitive bidding procedures. International shopping procedures will be followed for procurement of goods and related services estimated at between $100,000 and $1 million. For small, specialized equipment and materials contracts valued less than $100,000, direct procurement procedures acceptable to ADB will be followed. Due to the urgent nature of this Project, the bidding period for international competitive bidding will be shortened to 30 days and for local competitive bidding, to 14 days.

99. Civil works contracts over $5 million will be procured through international competitive bidding and those estimated to cost $5 million or less will be procured through local competitive bidding procedures acceptable to ADB. Post-qualification with single stage: two-envelope procedures, and usage of the existing contractor registration system or contractors previously prequalified for works of similar size and nature is acceptable. Further, in order to effectively respond to the urgent Project needs, contracts estimated at less than $100,000 may be awarded to local contractors or those contractors who are working in the affected region on direct contracting basis at negotiated rates or at rates of ongoing contracts. Civil works estimated between $100,000 to $500,000 may be awarded following limited local competitive bidding procedures by inviting a limited number of registered or qualified contractors to participate in the bidding, including where practicable, the invitation for bids will be advertised in a national newspaper. ADB will conduct prior review of bidding documents, technical and price evaluation reports and award recommendations for all packages estimated to cost $1,000,000 and above. For contracts estimated to cost less than $1,000,000, ADB will review and approve the first contracts for each implementing agency/PIU; post-facto approval procedures will follow if procurement procedures are satisfactory. However, if ADB determines at a later stage that its guidelines were not followed, ADB may not accept the award, or terms, of the contract in which case the Government cannot use loan or grant proceeds to finance the contract. If the loan or grant proceeds have already been used to finance such contracts at the time of such determination, the Government will refund to ADB any such expenditure incurred. Rebidding and extending bid validity will be subject to ADB prior approval. Community participation in the procurement of small works of a simple nature is encouraged.7

100. For the quick-disbursing component, all items on the positive list imported by the Government, including packages procured by private entities on behalf of the Government following normal local commercial procedures for the private sector and standard Government procurement procedures for the public sector procurement, where such procedures are functioning and appropriate and acceptable to ADB, are eligible.

5. Consulting Services

101. The implementation of the earthquake reconstruction program will more than double the normal level of development activities in NWFP and AJK, putting unprecedented stress on the responsible agencies. The most efficient way to boost their human and skills capacity is to recruit experienced consultants. Implementation support will take three forms: (i) legal advisory, governance, and institutional building ($2.5 million); (ii) incremental administrative support ($5 7 To encourage community participation and use of indigenous materials, methods to incorporate community

participation in procurement may be used for rural and municipal infrastructure. Small works contract with an estimated cost of $20,000 or less in each case may be awarded to community organizations in accordance with practices and procedures acceptable to ADB.

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million); and (iii) consulting services ($7.5 million). All implementation support will be funded from ADB grant proceeds.

102. The decision on consultancy packaging and whether to recruit the specialist consultants individually or through a firm will be determined during the inception phase. The incremental administrative support will include the cost of staff to strengthen the capacity of ERRA and the implementing agencies and the PIUs. These staff would be a mixture of deputed government personnel and individual specialist from institutes, private sector or consulting firms. It is estimated that ERRA would require about 30 such new staff, including three international advisors (earthquake seismic/structural, construction manager/planner and safeguard specialist) in the first year. The estimated budget is $2.5 million for first year, but decreasing as the initial capacity building is attained. Since ERRA is responsible for overseeing implementation by all agencies, not just ADB, it is proposed that ADB will finance about a third of the total cost or $1.7 million, over the 3-year period.

103. Similarly, the implementing agencies will need an estimated five specialists, including one international construction/procurement specialist, for the first 12 months. As with ERRA, the implementing agencies will support implementation of all externally financed projects. The estimated cost is $0.4 million per year for 3 years or $1.2 million total, for each province. Provincial and district line and implementing agencies will also need capacity building in construction and safeguard aspects and support for implementation. It estimated that each implementing agency will require at least four domestic specialists in project planning and design, procurement, construction management and quality control and safeguards. The estimated cost of the incremental administration for these implementing agencies is $150,000 per year per implementing agency, or $2.1 million in each of NWFP and AJK over the 3 years.

104. In addition, to the incremental administrative support for the Reconstruction Agencies in AJK and NWFP, design and construction supervision consultants are required. The consulting services will consist of about 1,500 person-months.

105. All consulting firms, and individual international consultants, will be engaged in accordance with ADB‘s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB. Since the rehabilitation and reconstruction work to be financed under the Project must be completed within 36 months due to the nature of the Project, expeditious selection and fielding of consultants is necessary. Accordingly, qualified and existing consulting services on the ground should be extended and retrofitted to address emergency needs, provided that these consultants meet the following conditions: (i) appropriate expertise for the proposed assignment, (ii) capacity for immediate mobilization, and (iii) satisfactory performance in previous projects.8 This arrangement will provide an efficient way to recruit consultants under the circumstances. Consulting services from firms will also be provided through quality- and cost-based selection using simplified technical proposals. Individual consultants will be procured through ADB’s procedures for recruitment of in individual consultants. Since the Project is to be completed in only 36 months, selection and fielding of consultants must be expeditious. Outline terms of reference for consulting services are in Supplementary Appendix D.

8 This is in conformity with para. 114 of ADB’s Disaster and Emergency Policy, which states: “Direct selection,

negotiation, and hiring are desirable when justified to expedite technical services required in emergency situations. Time-consuming competitive bidding processes should be avoided wherever possible. Qualified and existing consulting services on the ground should be extended and retrofitted to address emergency needs, as in the recent Gujarat earthquake project”.

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6. Advance Action

106. Given the urgency of the Project, advance action before the date of loan and grant effectiveness was endorsed including ADB’s approval of the recommendations for awarding contracts for procuring goods, services, and civil works and the recruitment of consultants. The Government has been advised that ADB’s approval of such advance action does not commit ADB to finance the Project.

7. Disbursement Arrangements

107. Implementation and Project Sector Components. Disbursements will be made in accordance with ADB’s Loan Disbursement Handbook (January 2001) as amended from time to time and detailed arrangements agreed between ADB and the Government. Each executing agency and implementing agency, through qualified accounting staff, will prepare disbursement projections, request budgetary allocations for counterpart funds, maintain books of accounts and supporting documents and prepare withdrawal applications. On loan and grant effectiveness, imprest accounts will be established as necessary at the National Bank of Pakistan for ERRA and the MOF for the loan and the grant to cover eligible expenditures under the Project. Existing government fund flow arrangements will be used to disburse funds from the executing agencies’ imprest account down to the district levels.

108. The advance to each imprest account will not exceed the lesser of 3 months’ estimated project expenditures or 10% of the loan and grant amount. ADB’s statement of expenditure procedures will be followed to liquidate the imprest accounts and to reimburse individual payments of up to $100,000. The imprest accounts will be established, managed, replenished and liquidated in accordance with ADB’s Loan Disbursement Handbook (January 2001) as amended from time to time, and with detailed arrangements between the Government and ADB.

109. ERRA will disburse funds directly for the activities including (i) capital and operating costs of the ERRA; (ii) consultants, technical support team offices, capacity building and training activities; and (iii) related expenditures for monitoring, review, and evaluations.

110. Quick-Disbursing Component. The quick-disbursing component will be disbursed based on a list of imports identified as necessary for an effective recovery program. The proceeds will be disbursed based on certification by the Government that, with regard to imports not earlier than 8 October 2005, the value of the total imports, less imports from ADB nonmember countries, ineligible imports, and disbursements made by other donors, is greater than the amounts claimed for disbursements.

111. The Government will be required to submit with each withdrawal request certification confirming compliance with the above formula in respect of the period covered by the withdrawal request. Disbursements will be in the form of reimbursement to the Government. Supporting documentation for this component will be limited to customs clearance documents and records of the Department of Customs. For purposes of disbursement, submission of these documents will not be required. However, these documents will be audited during the annual audit and a separate audit opinion shall be provided on the use of loan and grant proceeds under the quick-disbursing component.

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8. Retroactive Financing

112. The Project provides for retroactive financing of eligible expenditures. ADB has agreed to provide retroactive financing of up to 30% of Project for eligible expenditures incurred not earlier than 8 October 2005, provided that the expenditures are procured in accordance with agreed procedures. The Government has been advised that provision of retroactive financing does not commit ADB to finance any part of the Project.

113. The Government has requested, and ADB has agreed, subject to Board approval, to finance on a retroactive basis, the (i) cost of consulting services related to surveys with respect to damage and needs assessment provided that the consultants have been engaged in accordance with procedures acceptable to ADB; and (ii) cost of procurement activities related to the Power Sector Component provided that such activities have been carried out in accordance with procedures acceptable to ADB. ADB shall have the right to refuse to finance any contract that has been entered into and does not meet ADB’s requirements.

9. Accounting, Auditing, and Reporting

114. Each executing and implementing agency will maintain records and accounts adequate to identify works, goods, and services financed by the loan and grant proceeds. Specifically, each executing agency and implementing agency will (i) maintain separate accounts for the Project; (ii) ensure that project accounts and financial statements are audited annually in accordance with sound accounting principles by independent auditors acceptable to ADB; and (iii) provide to ERRA for consolidation and delivery to ADB, not later than 4 months after the close of each fiscal year with certified copies of audited accounts and financial statements and the report of the auditor on these, including the auditors’ opinion on the use of the imprest accounts, statement of expenditure procedures and certification of imports (for the quick-disbursing component). Given the relatively high degree of fiduciary risk associated with this Project, the audited accounts and financial statements will be provided to ADB within 4 months of the end of the fiscal year.9

115. Consistent with the harmonization and alignment agenda, ADB, the World Bank and other major donors are attempting to harmonize their requirements and alight to the greatest extent possible, align them with Pakistan's own systems and procedures to reduce the administrative burden on the Government. Harmonized accounting and reporting requirements should improve both the accuracy and timeliness of financial reporting. ADB will hold the Government of Pakistan accountable that funds will be used in an efficient and effective manner and for their intended purpose. ADB will rely on CGA to ensure that adequate accounting procedures and practices (including internal controls) satisfactory to ADB are developed and implemented, and on AGP to ensure that audits are conducted in line with internationally acceptable auditing practices. ADB will reserve the right to substitute auditors and/or to conduct its own audit should irregularities comes to light.10

9 The auditing requirement has been harmonized with that of the World Bank. Although both institutions typically

require submission of audited financial statements within 6 months, it was felt that the risks associated with this transaction, together with a 36-month implementation period warranted a slightly tighter deadline for submission.

10 The World Bank has supported the Project to Improve Financial Reporting and Accounting (PIFRA) in Pakistan. Under this project, the audit component has succeeded in upgrading the audit methodology, depth of compliance testing, regularity of audit practices, performance audit, audit reporting and audit report follow-up. A significant number of auditors has been trained in the use of modern auditing techniques. While audit quality has improved markedly with the increased professionalism of auditors, the timeliness of completion of the audit has not improved significantly. This has been due primarily to devolution and the need to provide separate audit services

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116. Each executing agency/implementing agency will prepare quarterly progress reports in a format acceptable to ADB, which will provide information on (i) progress made against established targets, including pre-identified monitoring indicators; (ii) delays and problems encountered, and actions taken to resolve them; (iii) compliance with loan covenants; and (iv) a proposed program of activities for the next quarter. ERRA will consolidate the reports of all implementing agencies and deliver them to ADB. Within 3 months of physical completion of the Project, each implementing agency will prepare a project completion report and submit it to ERRA for delivery to ADB.

10. Environmental Assessments and Monitoring

117. The Project is classified as environmental category B in accordance with ADB’s Environment Policy (2002), as the primary focus is on rehabilitation of existing social infrastructure. The Project has been designed and will be flexibly implemented following a sector loan modality. Unlike a sector project, the proposed Project has no sample subproject selected at present, due to its emergency nature, and, therefore, no sample subproject initial environmental examination (IEE). The Project’s IEE provides overall preliminary scoping and highlights potential environmental impacts and mitigation measures to be further explored during subproject formulation. The Project’s IEE includes also the environmental assessment and review framework (EARF), which provides a set of guidelines on how the environmental assessment for subprojects will be prepared and reviewed. The summary of project IEE including the EARF is attached in Appendix 14.

11. Project Performance Monitoring and Evaluation

118. A performance monitoring system, satisfactory to ADB will be established, based on the key indicators and targets outlined in the project framework. With the assistance of project financed consultants, ERRA will develop comprehensive project performance monitoring system (PPMS) procedures and plans in accordance with ADB's Project Performance Monitoring System Handbook within 9 months of loan effectiveness. The PPMS procedures, performance indicators, and their targets will be reviewed and approved by ADB. Benchmark surveys will be conducted before project implementation. With the help of its consultant, ERRA will then undertake every 6 months quantitative and qualitative project-performance monitoring for each project component to evaluate the delivery of planned facilities and the project benefits that accrued. The RAs and other implementing agencies will assist ERRA in collecting baseline data and carrying out PPMS activities.

IV. TECHNICAL ASSISTANCE

119. Given the relatively high degree of fiduciary risk associated with this Project, and the extraordinary challenges over the Office of the Auditor General of Pakistan (AGP) and the office of the Controller General of Accounts (CGA), which are created by this Project as well as by other donor Projects, ADB will ensure that these agencies will be provided with adequate resources to meet their fiduciary responsibilities. A TA for $2 million to be financed on a grant basis by ADB’s TA funding program, titled Capacity Building for the Office of the Auditor General of Pakistan, will assist AGP and CGA to support ERRA to ensure that (i) all executing

to the district governments. Now that the district audit infrastructure is in place, AGP is better placed to complete audits in a timely fashion. Through PIFRA, the Government is adopting international best practice in auditing, and AGP is moving further into areas such as performance and risk-based auditing.

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and implementing agencies receiving earthquake funds maintain auditable accounts; (ii) financial, compliance and performance audits are conducted by the newly established Director General Audit ERRA wing of the AGP in accordance with International Organization of Supreme Audit Institutions standards; and (iii) ERRA performance monitoring and evaluation systems are coherent and provide information to enable timely preparation of reports for management and donors and ensure that implementation lessons inform policy makers.

120. The TA includes provision of 192 person-months domestic and 9 person-months international consultants. Consultants will provide training and technical advice in various aspects of audit, accounts and performance monitoring and evaluation. The terms of reference for consultants are in Appendix 18. The AGP and CGA will be the executing agencies for the TA. The proposed TA is scheduled to be implemented for 36 months from January 2006 to January 2009. Administration of the proposed TA will be delegated to ADB’s Pakistan Resident Mission.

V. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS

A. Economic and Poverty Impacts

121. The Project will contribute to the Government’s efforts to regenerate the economy, rehabilitate public infrastructure and utilities, and generate employment. It will help restore access to public infrastructure and services. The priority given to providing unskilled work to affected people, including women, will be an important intervention for people who cannot reestablish their livelihoods and are living in temporary shelters.

122. The rehabilitation of damaged and lost infrastructure, particularly roads and power systems, will improve the quality of life, revive industry and agriculture, and facilitate affected households’ reconnection to the rest of the country. Support for physical reconstruction in key sectors like education and healthcare will have positive effects on enhancing human capital and protecting the vulnerable.

123. In addition, rehabilitation works that entail clearing debris with labor on a cash-for-work basis, and rebuilding basic infrastructure using appropriate labor-intensive methods, can create both temporary and permanent jobs for the poor. The benefits of the Project will be evident through economic rehabilitation arising from the speedy reconstruction of infrastructure and facilities and livelihood restoration in the earthquake-affected areas.

124. A summary poverty reduction and social strategy is in Appendix 13.

B. Social Impacts

125. The earthquake has been as much a socioeconomic disaster for individual households as a disaster affecting physical infrastructure. About 2.8 million people, out of the total population of 5 million in the affected areas, were left homeless. Many have lost all their basic necessities for survival, including clothing and household essentials. Since damage is unusually bad in certain villages and towns, the percentage of households affected locally will be markedly higher, implying that a higher percentage of people have entered the ranks of the poor. The “new poor” will also come from the most vulnerable and marginalized groups, both socially and economically. Considering the extent of the damage, the cost of rebuilding houses and infrastructure is exorbitant both for affected households and for the state. Support in terms of financial assistance and the introduction of improved earthquake-resistant technology will be of considerable benefit in protecting both the old poor and the new from sinking further into poverty.

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126. The legal assistance, governance, and instititutional building subcomponent will also offer a great opportunity to tackle some major social issues, such as gender and other vulnerabilities, legal discrimination and cultural marginalization. Legal constraints may be lifted to face the emergency and set ground for further changes. Creating an environment that is conducivefor vulnerable and marginalized groups in the earthquake-affected areas to participate fully in reconstruction activities is an urgent need. Orphans, wives of the missing, single heads of households, and widowers have to deal with transformations in their social roles that place new burdens on them. Helping them to become economically independent and to improve the well-being of their families involves reducing existing inequalities and discrimination. To this end, a gender action plan is presented in Appendix 16.

C. Resettlement Issues

127. As reconstruction and rehabilitation of roads, power, health, and education infrastructure will be done mostly at their original locations, no major resettlement impacts11 are envisaged under the Project. The need for involuntary resettlement or land acquisition in a specific subproject area will be known only during project implementation, when site-specific plans are available for subprojects. However, improvement of existing facilities or new construction could require land acquisition and relocation. Moreover, relocation of households and communities may take place where severely affected locations are specifically declared by authorities as too high-risk to allow rehabilitation. A measure of voluntary resettlement may also be expected in places affected by major landslides, or where affected people have been either squatters or renters. In some affected districts of NWFP, a few big landlords employ large numbers of tenants to cultivate their land on long-term leases. Such land tenure arrangements will need careful examination to develop fair compensation and relocation entitlements. In addition, the permanent or temporary removal of squatters from road rights-of-way could generate resettlement impacts on them. Another issue is how to re-establish the property rights of those who were temporarily displaced by the earthquake, as most of them enjoyed only user rights over the land on which they earned their living as cultivators and shepherds. The death of household heads could similarly generate difficulties for their surviving household members in re-establishing ownership over destroyed or damaged household property. The principal entitlements of those who will be affected by subprojects are listed in the entitlement matrix of the resettlement framework (Appendix 15). A subproject involving resettlement impacts will be approved by ADB only after the executing and/or implementing agency submits a satisfactory resettlement plan for the subproject, prepared in accordance with the agreed resettlement framework.

D. Indigenous Peoples Issues

128. In NWFP, some of the earthquake-affected communities are tribal. Tribes typically dominate the areas they occupy and participate in the mainstream economic and political activities. Tribal people are well represented in mainstream public institutions, the civil service, and educational institutions. The social inequality and vulnerability of most such people thus arise from economic differentiation rather than from social exclusion or cultural differences. In the earthquake-affected areas, for example, land is owned by a few large, powerful tribal families. They rent out their land to members of the same tribe or sub-tribe to cultivate crops

11 Resettlement impacts are “social and economic impacts that are permanent or temporary and are (i) caused by

acquisition of land and other fixed assets, (ii) by change in the use of land, or (iii) restrictions imposed on land as a result of an ADB operation” (F2 OM/BP).

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and to raise livestock. All of them will certainly benefit from the rehabilitation of roads, power systems, and social services such as education and health facilities that were destroyed or damaged by the earthquake.

129. A social assessment12 will be conducted focusing on the potential vulnerability of all affected groups, including tribal people, to ensure effective consultations and that culturally appropriate benefits reach each such affected group, instead of focusing only on groups defined as indigenous peoples. As part of this assessment, the executing and implementing agencies of each subproject will examine the vulnerabilities of all groups in terms of potential exclusion from project benefits, negative project impacts, if any, and the need for specific culturally compatible mechanisms for participation (e.g., for women and the permanently disabled). If such exclusions are found in the subproject area, the executing and implementing agencies will incorporate adequate measures in subproject design to address such vulnerabilities. If land acquisition or relocation becomes necessary, people’s entitlements will be ensured by the subproject through its resettlement plan, which will be prepared in accordance with the approved resettlement framework. This is the most appropriate and efficient approach to rebuild and reconstruct

E. Environmental Impacts

130. The Project’s IEE indicates that the Project is not expected to have significant adverse environmental impacts. What adverse environmental impacts the Project will likely have will be limited mostly to the construction stage. These impacts will be reversible, short term, affecting only a limited area, and therefore manageable. However, it is necessary to ensure that subprojects subject to the Government’s and ADB’s environmental assessment requirements will carry them out prior to their approval. It is also necessary that the environmental management plan for each subproject be strictly implemented.

F. Sustainability

131. A key selection criteria for subprojects to be financed through the Project will be an assessment of financial sustainability. This will include an assessment of availability of counterpart financing for implementation purposes as well as for future incremental recurrent costs. Based on these arrangements and given the current macroeconomic environment, the Project is felt to be financially sustainable.

G. Risks, Mitigation Measures, and Assumptions

132. Major risks associated with this emergency project include

(i) physical risks due to aftershocks causing further damage to already weakened structures and infrastructure and land slides could cause delays in restoration of services and reconstruction. The upcoming snow fall will lead to snow melt and runoff in spring and summer seasons which could trigger further land slides and erosion, potentially damaging reconstructed infrastructure;

(ii) the remote locations and difficult topography makes any reconstruction logistically difficult and will lead to longer time frames;

12 The World Bank has planned to conduct a similar social assessment in the affected areas prior to formulating

plans for subprojects. During implementation, however, attention will be given to bakarwals, or nomadic tribes that periodically migrate into the affected areas.

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(iii) the high elevations in some of the areas means that there is heavy snow cover and low temperatures during winter months, which means that reconstruction must take place mostly during summer months, leading to longer than normal elapsed time to complete works;

(iv) massive relief operations and temporary housing camps could hinder/delay reconstruction, especially in the vicinity of the larger towns, in order to relocate people to make room for reconstruction work;

(v) lack of available land for new rights of way, could delay access by contractors to work sites;

(vi) lack of human capacity of NWFP and especially AJK local governments due to loss of much of their own buildings and facilities, and many staff, and lack of experience with externally funded projects, especially the due diligence requirements;

(vii) weakened capacity of local consultants and contractors and more specifically the overstretching of these capacities in the short term could undermine implementation;

(viii) the World Bank fiduciary assessment has concluded that the fiduciary risk high, given the complexity of funds flow arrangements, the multi-sector, multi-government nature of the Project, nascent stage of ERRA (including lack of financial management capacity), and weak auditing capacity and potential for mismanagement of funds and corruption;

(ix) lack of financial capacity of NWFP and AJK and the electrical companies to meet the 25% counterpart funding requirement, and need to budget for sufficient funds to properly operate and maintain the new facilities; and

(x) ERRA is a new agency and while it has extraordinary authority to implement reconstruction quickly it has no experience.

133. Physical risks will be mitigated by relocating roads, bridges, electrical lines, human habitations, and other infrastructure away from the existing and potentially unstable slopes and new slide areas. ERRA will conduct detailed seismic evaluations to determine alternate routes and locations. All new facilities will incorporate earthquake strengthening and other damage- mitigation measures. The logistics of access and climate will be addressed through prioritization of reconstruction requirements so that for this emergency loan, only those works that can realistically be completed in the 3 years timeframe are included. Works with longer timeframes will be scheduled under the longer term reconstruction programs that the Government is also preparing, which could be financed in part by future ADB loans.

134. Many of the existing relief camps will be dismantled by next summer as the Government’s housing program progresses and people go back to their villages to rebuild their homes. But many will need to remain for at least 18–24 months, while new urban areas are planned and developed and basic infrastructure installed. These camps will be consolidated and located in areas of available government land. ERRA is already locating government lands for development as new town sites within a reasonable distance of existing urban development, to enable lower population densities in the larger towns. Land acquisition will be from existing government land as much as possible. ERRA has been vested with adequate authority to follow emergency land acquisition procedures, which will only take a couple of months. The Government has agreed to conform to ADB’s frameworks for resettlement and environmental impact.

135. ERRA has been provided with extraordinary authority, through the very high level Council, chaired by the Prime Minister of Pakistan. The capacity of ERRA, the P&D and the line

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agencies of the provinces and the two electrical companies will be strengthened through provision of in house specialists that will be deputed or hired from other government agencies, institutes and the private sector, including some foreign experts to assist in the first year of the project. In addition adequate consulting services, through private consulting firms, will be recruited by the implementing agencies to support the various provincial and district line agencies with all aspects of implementation.

136. Implementation and fiduciary risks related to capacity for timely delivery of quality subprojects in the various project sectors will be mitigated in several ways. First, detailed subproject criteria will be developed, in addition to general subproject selection criteria already agreed to. Second, in terms of implementation, specific monitoring mechanisms will include regular financial audits as well as regular design and construction supervision and performance audits through random audits and special post-completion audits. To undertake such supervision and performance auditing, ERRA will be supported by the dedicated provincial units of ERRA and specialized consulting inputs. ERRA will have a strong governance framework that will combat corruption risks and to ensure that the assistance reaches the intended victims of the earthquake. These include (i) ERRA/provinces to ensure equitable and transparent distribution of rehabilitation, including beneficiary identification and publishing a computerized list of affected people; (ii) transparency in procurement (iii) field monitoring through the line agencies and their consultants/NGOs; and (iv) financial control mechanisms by ERRA and the provinces.

137. As the nature of this Project demands that the response be rapid, the flow of funds will also need to be rapid. However, ERRA is a newly created organization, with no experience, which is nevertheless expected to follow existing procedures and fast-track them. To ensure mitigation of the risk of corruption and mismanagement of funds, extensive and comprehensive fiduciary arrangements will need to be put in place. Fiduciary risks will be further mitigated by (i) strengthening the financial management capacity of ERRA and the implementing agencies, (ii) developing financial management procedures as part of the operations manual to be prepared in advance of disbursement against sector components; and (iii) a shortened auditing deadline.

138. The weakened capacity of local consultants and contractors will be addressed through ERRA by associating them with international consultants and contractors where possible for on-the-job training and capacity building.

139. The provinces and the electrical distribution companies will need budgetary support from the central Government to meet their 25% counterpart funds. Because of the massive damage many revenue sources for the provinces have been reduced and they have extensive additional expenditures due to the damaged infrastructure. Similarly, the central Government will have to support the provinces with funds for operation and maintenance of the reconstructed facilities, power systems, schools and hospitals and other basic services, at least in the short term until provincial and electric company revenues can be restored to sustainable levels.

VI. ASSURANCES

A. Specific Assurances

140. In addition to the standard assurances, the Government has given the following assurances, which are incorporated in the legal documents:

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(i) The Government will ensure that all subprojects meet, to the satisfaction of ADB, the agreed selection criteria and implementation arrangements, and that all subprojects are properly monitored to the satisfaction of ADB.

(ii) The Government will ensure that adequate budgetary allocations of required counterpart funds are made and released in a timely manner to governments of AJK and NWFP, and that these counterpart funds are in addition to the ongoing development program of each of governments of AJK and NWFP. Governments of AJK and NWFP will provide such counterpart funds to respective implementing agencies in a timely manner.

(iii) The Government will ensure that within one month of the loan and grant effectiveness, the project implementation agreement in the format acceptable to ADB is signed between (a) NWFP and SHYDO; (b) NWFP and FHA; and (c) NWFP and each of the district governments; (d) NWFP and NWFP RA; and (e) AJK and AJK RA.

(iv) The Government will ensure that the executing agencies and implementing agencies actively seek community participation in the selection, design, and implementation of all works carried out under the Project. To that extent, a provision will be included in all tender documents that contractors will give preference to local labor, where applicable. For works that can be done by both male and female workers, female workers will be given equal opportunities to employment. The Government will ensure that for all activities carried out under the Project, the principle of equal pay for work of equal value will be applied.

(v) Governments of AJK and NWFP will ensure that the facilities provided under the Project are operated and maintained appropriately, and that adequate budgetary and other resources are provided for operation and maintenance.

(vi) Government of AJK will ensure that all the equipment can be operated soon after procurement and training, all vacant posts in the tehsil and district hospitals under health sector subcomponent are filled immediately after the Project activities start in those hospitals, and paramedical staff is provided opportunities to work in the remote areas.

(vii) Government of AJK will ensure that for the equipment to be procured under health sector subcomponent, operators and technicians are assigned, or post created and filled at the time of placing the order for that equipment.

(viii) Government of AJK will ensure that positions required to meet the staffing requirement are in place before the start of any subproject in accordance with the Government of AJK’s existing rules on teacher-student ratio.

(ix) Government of AJK will ensure that the recurring and operational budget for all schools to be reconstructed under the Project will be provided by the government of AJK from its annual recurring budget.

(x) The Government agrees to provide legal facilitation and assistance to earthquake victims for accessing legal entitlements and to help them to address issues of legal entitlement arising from the earthquake, including an earthquake legal

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framework that will be adopted for making special provision for persons and property affected by the earthquake and vulnerable people.

(xi) The Government will ensure that adequate environmental mitigation measures in accordance with (a) the Government’s environmental regulations and (b) ADB’s Environment Policy (2002) are incorporated into all subproject designs and implementation. The Government will ensure that the environmental management plan (EMP) to mitigate any adverse environmental impacts of any subproject is implemented, and in the event that unexpected impacts occur, remedial measures are prepared in consultation with ADB. The Government will ensure that the agreed environmental assessment review framework is applied in selecting subprojects; that a subproject for which an environmental assessment study is required has such required study completed and a subproject for which Government environmental clearance is required obtains such clearance prior to the award of any contracts for that subproject.

(xii) The Government will ensure that, to the extent possible, subprojects will avoid land acquisition and involuntary relocation. In the event land acquisition or involuntary relocation is required for any subproject, the Government will prepare a resettlement plan (RP) in accordance with the Government’s applicable laws and regulations, ADB’s Policy on Involuntary Resettlement (1995) and the agreed Resettlement Framework; and submit it to ADB for review and approval before land acquisition is initiated. The RPs will be disclosed to all affected persons in their own languages and the Project reporting will provide information on land acquisition and resettlement.

(xiii) The Government will ensure that each of the agreed Gender Action Plan and Vulnerable People Action Plan is implemented and that adequate resources are allocated for this purpose in a timely manner.

(xiv) The Government through ERRA will publicly disclose on the website for the Project information on how the funds are being used for the intended beneficiaries following applicable procedures. The website will present financial statements and track procurement contract awards, and include information on, among others, status of earthquake damages and casualties, subproject selection criteria, information on funding commitment by donors, the list of participating bidders, name of the winning bidder, basic details on bidding procedures adopted, amount of the contract awarded, the list of goods and/or services purchased, and their intended and actual utilization. Likewise, national and provincial/AJK news papers in English, Pushtoo, and Urdu will carry such details on a regular basis, at least once a month. Similarly, television and radio broadcasts will be made in these language broadcasts at national and provincial/AJK levels giving these same details.

(xv) The Government will ensure that proper accounting and audit procedures are in place to ensure efficient and economic use of the ADB financing proceeds. Accounts and financial statements in relation to the Project and the subprojects will be maintained and certified by independent auditors acceptable to ADB. The Government, executing agencies and implementing agencies will allow ADB representatives to carry out spot or random checks on the flow of funds through the imprest accounts. The Government, executing agencies and implementing

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agencies will allow independent auditors, acceptable to ADB, to undertake performance audits on a random basis to review, among others, implementation of (a) the Gender Action Plan; (b) the Vulnerable People Action Plan; and (c) compliance with ADB’s safeguard policies. The Government will also ensure that post completion audit is conducted by the independent auditors, acceptable to ADB soon after the completion of the Project.

B. Condition for Grant and Loan Effectiveness

141. The following is the condition for grant and loan effectiveness: Appropriate approval of the competent authority of the Government will have been granted for the Project.

C. Conditions for Disbursement

142. The following are conditions for disbursement:

(i) Detailed implementation, financial management and auditing arrangements will have been developed and documented in an operational manual in substance and form satisfactory to ADB prior to disbursement against Project Sector Components.

(ii) Financial terms and conditions for the Project will have been approved by the ECC and found satisfactory by ADB prior to disbursement for the Project Sector Components and the Implementation Assistance Component.

VII. RECOMMENDATIONS

143. I am satisfied that the proposed grant and loan would comply with the Articles of Agreement of ADB and recommend that the Board approve the following:

(i) the grant not exceeding the equivalent of $80,000,000 to the Islamic Republic of Pakistan for the Earthquake Emergency Assistance Project from ADB’s Pakistan Earthquake Fund on the terms and conditions as are substantially in accordance with those set forth in the draft Financing and Project Agreements presented to the Board;

(ii) the provision of technical assistance not exceeding the equivalent of $2,000,000 on a grant basis to the Government of Pakistan for Capacity Building of the Office of the Auditor General of Pakistan;

(iii) the loan in various currencies equivalent to Special Drawing Rights 154,227,000 to the Islamic Republic of Pakistan for the Earthquake Emergency Assistance Project, from ADB’s Special Funds resources, with an interest charge at the rate of 1% per annum, and repayment of principal at 2% per annum for the first 10 years after the grace period and 4% per annum thereafter; a term of 40 years, including a grace period of 10 years; and such other terms and conditions as are substantially in accordance with those set forth in the draft Financing and Project Agreements presented to the Board;

(iv) the administration by ADB of loans or grants in accordance with the proposal set out in paragraph 76 of this Report to the Islamic Republic of Pakistan for the

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Earthquake Emergency Assistance Project, to be provided by any development partner or cofinancier on a loan or a grant basis, after the date of the Project's Board approval; and

(v) the administration by ADB of a grant not exceeding the equivalent of €30 million to the Islamic Republic of Pakistan for the Earthquake Emergency Assistance Project, to be provided by the European Commission on a grant basis subject to the condition that the Board approve by a vote of the Directors representing not less than two thirds of the total voting power of the members, that goods and services for the Social Sectors Component may be procured from member countries of the European Union, which are not ADB member countries. If the required affirmative vote of Directors is not obtained, ADB will not administer such grant, and goods and services will only be procured from ADB member countries.

Haruhiko Kuroda President

6 December 2005

Appendix 1 36

DESIGN AND MONITORING FRAMEWORK

Design Summary

Performance Targets/Indicatorsa

Data Sources/Reporting Mechanisms

Assumptions and Risks

Impact The expected impact of the Project is to contribute to the revival of economic activity and to enable people to resume their means of livelihood and return to normalcy, by minimizing the devastating impact of the earthquake.

Economic recovery and increase in economic activity in affected areas.

Affected areas economic data and indicators

Affected areas statistics and data; surveys, including poverty reduction, vulnerable people and gender

Surveys

Assumptions The Project will be implemented as designed to ensure that the target beneficiaries who are the affected people will receive the intended benefits.

Risks Mismanagement of funds and slower than anticipated implementation.

OutcomeRestore economic activities and livelihood in earthquake-affected areas

Rehabilitated public infrastructure, with revised and appropriate earthquake resistant design and construction standards in all construction undertaken in the chosen sectors: transport, power, health and education.

Improved incomes and self-reliance

Government’s progress reports

Audit reports

Project progress reports

Project review missions

Surveys

Assumptions Adequate Government provision of funds

Strengthened capacity of ERRA, and the provincial and line agencies of the provinces/districts, and the two electrical companies through incremental administration support and adequate consulting services.

Risks Weakened human capacity of NWFP/AJK and local governments

Newly established ERRA with no experience

Poor governance including corruption

Output 1. Quick-Disbursing Component

Partially finance the unusually high and unexpected expenditures that are being undertaken by the Government on account of earthquake related rehabilitation and reconstruction efforts

Imports of high priority items as listed in a 'positive' list of goods and services undertaken by December 2006

Customs data

Government's progress reports

Assumptions Timely import of essential goods and services.

2. Project Sector Components AssumptionsTransportRehabilitate earthquake-damaged major roads and bridges, except National Highways, within the four affected districts in AJK (Bagh, Muzaffarabad, Neelum, and Poonch, about 1,000 km) and the five affected districts in NWFP (Abbottabad, Battagram, Kohistan,

500km major/high roads in AJK rehabilitated. By December 2007.

500km LGRD link roads in AJK rehabilitated by December 2007.

1,000km provincial highways/rural access roads in NWFP by December 2007.

Government’s progress reports

Audit reports

Project progress reports

Project review missions

Surveys

Timely award of civil works contracts

Adequate performance by contractors

Communities’ acceptance and full involvement in project implementation

Appendix 1 37

Design Summary

Performance Targets/Indicatorsa

Data Sources/Reporting Mechanisms

Assumptions and Risks

Mansehra, and Shangla, about 1,000 km)

Risks Weakened human capacity of NWFP/AJK and district Governments

Remote locations and difficult topography

Physical risks and additional delays due to aftershocks causing further damage to already weakened structures

Power Sector (i) Repair 9 damaged hydropower generation stations inclusive of access roads, buildings, and ancillary facilities; (ii) supply and install equipment and lines related to the 132kV, 33kV, and 11kV substations; (iii) construct operational buildings of substations and staff quarters; (iv) re-establishment of 0.4kV and 0.22kV low voltage lines and service connections to consumers; (v) and install transformers, meters, and service connections to the tent villages and relief camps established after 8 October 2005

5 fully rehabilitated hydro power stations by 31 December 2006.

4 fully rehabilitated hydro power stations by 31 December 2007.

10 132/33kv grid-stations to be fully rehabilitated by 31 December 2007.

Service connections to be installed less than one month after receipt of application.

Electrification of all tent villages scheduled for electrification by 1 May 2006.

Government’s progress reports

Audit reports

Project progress reports

Project review missions

Surveys

Assumptions Timely award of civil works, supply and installation contracts

Adequate performance by contractors

Communities acceptance and full involvement in project implementation

Risks Weakened human capacity of NWFP/AJK and district Governments

Remote locations and difficult topography

Physical risks and additional delays due to aftershocks causing further damage to already weakened structures

Social Sectors

Health (i) reconstruction of one district hospital and three Tehsil headquarter hospitals, including wards, operation theatres, outpatient departments, staff quarters and other necessary services; (ii) provision of all the essential medical equipment to the hospitals including ambulances and supplies; and (iii) construction of proper waiting areas and provision of public toilets and clean drinking water for visitors

Survey and design, bidding for 4 Hospital civil work’s contracts in Health by December 2006.

Bidding and award for 90% supply contracts completed by December 2007

Two hospitals are fully operational before June 2007.

Reconstruction completed, equipment supplied, and hospitals operational by June 2008.

Government’s progress reports

Audit reports

Project progress reports

Project review missions

Surveys

Assumptions Timely hiring of consultants

Availability of and capacity of the consultants and contractors

Timely award of civil works, supply and installation contracts

Adequate performance by contractors and timely delivery of equipment suppliers

Communities acceptance and full involvement in project implementation

Risks Weakened human capacity of NWFP/AJK and district Governments

Remote locations and difficult

Appendix 1 38

Design Summary

Performance Targets/Indicatorsa

Data Sources/Reporting Mechanisms

Assumptions and Risks

Education (i) repair and reconstruction of about 550 partly and completely damaged Government middle schools buildings, according to improved seismic designs, latrines, office accommodation; (ii) provision of all essential furniture and equipment for all the middle schools reconstructed and repaired; (iii) training of master trainers for teachers training; and (iv) school health services for physical and physiological health assessment and advice.

Award of contract for 150 schools (cumulative) by December 2006.

Award of contract for 400 schools (cumulative) by December 2007.

Award of contract for all 500 schools (cumulative) by March 2008.

Award of supply contract for schools (cumulative) by July 2006.

First Training of master trainers completed by September 2006. Teacher training completed by December 2007. School health services provided to 150 schools by March 2007.

topography

Physical risks and additional delays due to aftershocks causing further damage to already weakened structures

Activities with Milestones General Milestones1.1 Establishment of RAs and DRUs by February 2006 1.2 Selection and recruitment of consultants by February 2005 for existing firms

with variation contracts. For new firms, minimum additional 3 months. 1.3 Selection of four projects in each sector by March 2006 1.4 Survey and design, preparation of costs estimates and preparation of bidding

documents—3-12 months depending on the projects. Transport 2.1. Bidding and contract awards by end 2006 2.2. Reinstatement/rehabilitation of all destroyed/damaged roads and bridges

under the project by December 2008 Power 3.1 Survey and detailed designs by March 2006 3.2. Bidding and contract awards completed by end 2006 3.3. Construction, equipment delivery, and installation: April 2006–December 2008 Social Sectors 4.1. Hire implementing agencies incremental staff and establish RAs by February

2006 4.2. Selection and recruitment of consultants by February 2006, variation in

contracts of existing firms by Feb 2006. 4.3. Selection of 100 projects in Education by March 2006 4.4. Survey and design, preparation of costs estimates and preparation of

bidding documents for 4 supply or work’s contracts in Health by 30 April 2006 4.5. Inviting bid for three supply contract in Educations by 31 March 2006. Award of contract for at least 20 schools (education sector) by April 2006

InputsGrant of $80 million from the Pakistan Earthquake Fund and $220 million from ADB’s Special Funds resources (ADF loan)

Government counterpart funding about $74.2 million, mainly in the form of taxes and duties, land acquisition, rehabilitation, resettlement and administrative support

ADB = Asian Development Bank, ADF = Asian Development Fund, AJK = Azad Jammu and Kashmir, DRU = district reconstruction unit, ERRA = Earthquake Reconstruction and Rehabilitation Authority, kV = kilovolt, NWFP = North-West Frontier Province. a Performance indicators and targets for individual subprojects will be developed as part of the Project’s monitoring and

evaluation system during the Project’s inception and implementation period. Information available during processing was not adequate to enable numeric indicators for all sectors to be defined.

Appendix 2 39

SUMMARY OF DAMAGE AND NEEDS ASSESSMENT

1. The earthquake that struck northern Pakistan on the morning of 8 October 2005 left widespread destruction in its wake, killing at least 73,000 people, severely injuring another 70,000, and leaving 2.8 million people without shelter. The state of Azad Jammu and Kashmir (AJK) and the eastern part of the North-West Frontier Province (NWFP) were dealt the most serious blow and have suffered extensive damage to economic assets and infrastructure, with social service delivery, commerce, and communications either debilitated or destroyed. Vulnerable groups, mainly women and children living in inaccessible mountain areas with low income and little service provision, have borne the brunt of the earthquake’s impact.

2. In addition to the enormous human toll, the earthquake and its aftermath will pose a large cost to Pakistan. The overall cost associated with the earthquake is estimated at approximately $5.2 billion, which includes the estimated costs of relief, livelihood support for victims, and reconstruction (Table A2.1).

Table A2.1: Overall Costs of the Earthquake

Category $ MillionRelief 1,092 Death and Injury Compensation 205 Early Recovery 301 Restoration of Livelihoods 97 Reconstruction 3,503

Of Which Short-Term Reconstruction 450 Of Which Medium/Long-Term Reconstruction 3,053

Total 5,198Note: Excludes indirect losses (income) of $576 million (see Table A2.2) Sources: Relief, Death and Injury Compensation and Early Recovery (UN Agencies), Reconstruction and Restoration of Livelihoods (Asian Development Bank/World Bank Assessment Team).

3. Preliminary estimates of the direct damage sustained from the earthquake total PRs135.1 billion ($2.3 billion), as presented in Table A2.2. These estimates are based on the book value of the assets. The largest component of this damage is to private housing, which amounts to PRs61.2 billion ($1.03 billion), followed by damage to the transport sector totaling PRs20.2 billion ($340 million) and to the education sector equaling PRs19.9 billion ($335 million). Direct damage to agriculture and livestock is also sizeable, totaling PRs12.9 billion ($218 million). Losses to industry and services amount to PRs8.6 billion ($144 million).

4. Direct damage is higher in AJK than in NWFP. For AJK, it amounts to PRs76.4 billion ($1.3 billion) and for NWFP, PRs56.4 billion ($950 million). In most sectors, the destruction of physical assets in AJK is higher than in NWFP, as is its monetary value.

5. The indirect losses are PRs34.2 billion ($576 million) and comparable in absolute values between NWFP and AJK. The estimated indirect losses do not take into account the effect of rehabilitation and reconstruction activities on future output. Reconstruction will not only restore physical assets, but also lead to renewed production of goods and services. Hence, the estimates of indirect losses presented above are likely to be on the high side for output losses.

Appendix 2 40

Table A2.2: Preliminary Estimate of Total Losses and Reconstruction Costs as of 10 November 2005

Sector

DirectDamage

(PRs million)

Indirect Losses

(PRs million)

Reconstruction Costsa

(PRs million)

Reconstruction Costs a

($ million)

Share of Total

Reconst.Costs

(%) A. Social Infrastructure

1. Private Housing b 61,220 7,218 92,160 1552 442. Health 7,114 1,378 18,012 303 93. Education 19,920 4,133 28,057 472 134. Environment 12 8,985 151 45. Public Administration 2,971 687 4,254 72 2

B. Physical Infrastructure 1. Transport c 20,165 4,061 24,699 416 122. Water Supply and Sanitation 1,165 1,900 32 13. Irrigation 324 623 10 04. Energy, Power and Fuel 744 1,561 2,377 40 1

C. Economic Sectors d 1. Agriculture and Livestock 12,933 6,770 17,846 300 92. Industry and Services 8,578 8,379 9,178 155 4

Total 135,146 34,187 208,091 3,503 100o/w : Azad Jammu and Kashmir 76,375 17,671 116,625 1,963 56 : North-West Frontier Province 56,436 16,516 91,467 1,540 44o/w : Public Assets 45,795 12,175 82,187 1,384 39 : Private Assets 87,015 22,012 125,904 2,120 61o/w : Urban Areas 25,789 13,675 46,163 777 22 : Rural Areas 107,021 20,512 161,928 2,726 78

o/w = of which. a Includes cost of reconstruction of both immovable and movable assets and restoration of public services. b Includes value of household contents such as consumer durables; reconstruction costs exclude replacement of these assets.c Includes roads and bridges.d Total losses and reconstruction costs in agriculture, industry and services are over and above what is accounted for by the

sectors listed above. Source: Asian Development Bank and World Bank-led Preliminary Damage and Needs Assessment, 12 November 2005.

6. The cost of reconstructing lost assets and restoring public services is estimated to be PRs208 billion ($3.5 billion). A substantial portion of these costs is for housing reconstruction, which will cost an estimated PRs92 billion ($1.6 billion). A breakdown of reconstruction costs by sector is presented in Figure A1. Reconstruction costs are valued at improved standard replacement rate that includes the cost of rebuilding to earthquake-resistant standards suitable to local conditions. This is necessary given the high degree of exposure to future natural disasters in the affected areas.

Appendix 2 41

Figure A2: Reconstruction Cost by Sector (Total: PRs208 billion; $3.5 billion)

Private Housing ($1,552 million)

Industry and Services ($155 million)

Agriculture and Livestock ($300

million)

Energy, Power and Fuel ($40 million)

Irrigation ($10 million)

Environment($151 million)

Public administration ($72 million)

Transport ($416 million)

Health ($303 million)

Education ($472 million)

Water Supply and Sanitation ($32 million)

Appendix 3 42

LIST OF PERMISSIBLE IMPORTS

No. Description

I. List of General Imports for Rehabilitation and Reconstruction

1. Natural rubber latex, natural rubber and similar natural gums 2. Synthetic rubber latex, synthetic rubber and reclaimed rubber; waste and scrap of

unhardened rubber 3. Cork (natural, raw, and waste, including natural cork in blocks or sheets) 4. Fuel wood (excluding wood waste) and wood charcoal 5. Pulpwood (including chips and wood waste) 6. Other wood in the rough or roughly squared 7. Pulp and waste paper (except: 251.1, waste paper and paperboard; scrap articles of paper or of paperboard fit only for use in papermaking) 8. Cotton 9. Jute and other textile bast fibers, raw or processed but not spun; tow and waste thereof

(including pulled or garneted rags or ropes) 10. Vegetable textile fibers (other than cotton and jute) and waste of such fibers 11. Synthetic fibers suitable for spinning 12. Other manmade fibers suitable for spinning and waste of manmade fibers 13. Wool and other animal hair (excluding wool tops) 14. Fertilizers, crude 15. Stone, sand and gravel 16. Iron ore and concentrates 17. Ores and concentrates of base metals, n.e.s. 18. Non-ferrous base metal waste and scrap, n.e.s. 19. Crude vegetable materials. n.e.s. 20. Coal, Iignite and peat 21. Briquettes; coke and semi-coke of coal, lignite or peat; retort carbon 22. Petroleum oils, crude, and crude oils obtained from bituminous minerals 23. Petroleum products, refined 24. Residual petroleum products, n.e.s. and related materials 25. Hydrocarbons 26. Nitrogen-function compounds 27. Organo-inorganic and heterocyclic compounds 28. Other organic chemicals 29. Inorganic chemical elements, oxides and halogen salts 30. Other inorganic chemicals; organic and inorganic compounds of precious metals 31. Synthetic organic dyestuffs, natural indigo and color lakes 32. Dyeing and tanning extracts, and synthetic tanning materials, excluding cadmium-

containing compounds 33. Pigments, paints, varnishes and related materials, excluding cadmium-containing

compounds34. Fertilizers, manufactured 35. Condensation, polycondensation and polyaddition products, whether or not modified or

polymerized, and whether or not linear (e.g., phenoplasts, aminoplasts, alkyds, polyallyl esters and other unsaturated polyesters, silicones)

Appendix 3 43

No. Description

36. Polymerization and copolymerization products (e.g., polyethylene, polytetrahaloethylenes, polyisobutylene, polystyrene, polyvinyl chloride, polyvinyl acetate, polyvinyl chloroacetate and other polyvinyl derivatives, polyacrylic and polymethacrylic derivatives, coumarone-indene resins)

37. Regenerated cellulose; cellulose nitrate, cellulose acetate and other cellulose esters, and chemical derivates of cellulose, plasticized or not (e.g., collodions, celluloid); vulcanized fiber

38. Other artificial resins and plastic materials 39. Miscellaneous chemical products, n.e.s. 40. Manufactures of leather or of composition leather, n.e.s.; saddlery and harness; parts of

footwear, n.e.s. 41. Material of rubber (e.g., pastes, plates, sheets, rods, thread, tubes, of rubber) 42. Rubber tires, tire cases, interchangeable tire treads, inner tubes and tire flaps, for

wheels of all kinds (except: 625.12 tires, pneumatic, new, or rubber, for racing cars) 43. Articles of rubber, n.e.s. 44. Cork manufactures 45. Veneers, plywood, 'improved' or reconstituted wood, and other wood, worked, n.e.s. 46. Wood manufactures, n.e.s. 47. Paper and paperboard 48. Paper and paperboard, cut to size or shape, and articles of paper or paperboard 49. Textile yarn 50. Fabrics, woven, of manmade fibers (not including narrow or special fabrics) 51. Sacks and bags, of textile materials, of a kind used for the packing of goods 52. Lime, cement, and fabricated construction materials (except glass and clay materials 53. Clay construction, materials and refractory construction materials 54. Glass 55. Pig iron, spiegeleisen, sponge iron, iron or steel powders and shot, and ferroalloys 56. Ingots and other primary forms, of iron or steel 57. Iron and steel bars, rods, angles, shapes and sections (including sheet piling) 58. Universals, plates and sheets, of iron or steel 59. Hoop and strip, or iron or steel, hot-rolled or cold rolled 60. Iron or steel wire (excluding wire rod), whether or not coated, but not insulated 61. Tubes, pipes and fittings, of iron or steel 62. Iron and steel castings, forgings, and stampings in the rough state 63. Copper 64. Nickel 65. Aluminum 66. Lead for construction purposes 67. Zinc 68. Tin 69. Miscellaneous nonferrous base metals employed in metallurgy, and cermets 70. Structures and parts of structures, n.e.s., of iron, steel or aluminum 71. Containers for storage and transport 72. Wire products (excluding insulated electrical wiring) and fencing grills 73. Nails, screws, nuts, bolts, rivets and the like, of iron, steel or copper

Appendix 3 44

No. Description

74. Tools for use in the hand or in machines 75. Household equipment of base metal, n.e.s. 76. Manufactures of base metal, n.e.s. 77. Steam and other vapour generating boilers, superheated water boilers, and auxiliary

plant for use therewith; and parts thereof, n.e.s. 78. Steam or other vapour power units, whether or not incorporating boilers (including

mobile engines but not steam tractors, steam road rollers, or steam rail locomotives); and parts thereof, n.e.s.

79. Internal combustion piston engines and parts thereof, n.e.s. (except: 713.2.5 engines, piston, internal combustion, for armored fighting vehicles)

80. Rotating electric plant and parts thereof, n.e.s. 81. Other power generating machinery and parts thereof, n.e.s. (except: 718.7 nuclear

reactors, and parts thereof, n.e.s.) 82. Agricultural machinery (excluding tractors) and parts thereof, n.e.s. 83. Tractors (other than those falling within headings 744.11 and 783.2), whether or not

fitted with power take-offs, winches or pulleys 84. Civil engineering and contractors' plant and equipment and parts thereof, n.e.s. 85. Printing and bookbinding machinery, and parts thereof, n.e.s. 86. Other machinery and equipment specialized for particular industries, and parts thereof,

n.e.s; other machinery and equipment specialized for particular industries, and parts thereof, n.e.s.

87. Machine-tools for working metal or metal carbides, and parts and accessories thereof, n.e.s.

88. Metalworking machinery (other than machine-tools), and parts thereof, n.e.s. Metalworking machinery (other than machine-tools), and parts thereof, n.e.s.

89. Heating and cooling equipment and parts thereof, n.e.s. (except: (i) 741.31.10 Furnaces, electric, for separation or recycling of irradiated nuclear fuels or for treatment of radioactive waste; (ii) 741.31.38 Ovens, non-electric, for separation or recycling of irradiated nuclear fuels or for treatment of radioactive waste; (iii) 741.32.14 Furnaces, non-electric, for separation or recycling of irradiated nuclear fuels or for treatment of radioactive waste; (iv) 741.32.34 Ovens, nonelectric, for separation or recycling of irradiated nuclear fuels or for treatment of radioactive waste; (v) 741.5 Air conditioning machines, self-contained, comprising a motor-driven fan and elements for changing the temperature and humidity of air, and parts thereof, n.e.s.

90. Pumps (including motor and turbo pumps) for liquids, whether or not fitted with measuring devices; liquid elevators of bucket, chain, screw, band and similar kinds; parts, n.e.s. of such pumps and liquid elevators Pumps (including motor and turbo pumps) for liquids, whether or not fitted with measuring devices; liquid elevators of bucket, chain, screw, band and similar kinds; parts, n.e.s. of such pumps and liquid elevators blowers; centrifuges; filtering and purifying apparatus; and parts thereof, n.e.s. (except: (i) 743.5.1 Centrifuges for separating uranium isotopes, (ii) 743.5.2 Centrifuges for separation or recycling of irradiated nuclear fuels or for treatment of radioactive waste)

91. Pumps (other than pumps for liquids) and compressors; fans and 92. Mechanical handling equipment, and parts thereof, n.e.s. 93. Other non-electrical machinery, tools and mechanical apparatus, and parts thereof, n.e.s.

(except: 745.24 Automatic vending machines (e.g. stamp, cigarette, chocolate and food machines), not being games of skill or chance; and parts thereof, n.e.s.)

Appendix 3 45

No. Description

94. Taps, cocks, valves and similar appliances for pipes, boiler shells, tanks, etc. (including pressure and temperature controlled valves)

95. Non-electric parts and accessories of machinery, n.e.s. 96. Office machines 97. Telecommunications equipment, n.e.s.; and parts, n.e.s., and accessories of apparatus

falling within telecommunications, etc. 98. Electric power machinery (other than rotating electric plant of heading 716), and parts

thereof, n.e.s. 99. Electrical apparatus for making and breaking electrical circuits, for protecting of electrical

circuits, for making connections to or in electrical circuits (e.g., switches, relays, fuses, lightning arresters, surge suppressors, plugs, lamp holders and junction boxes); resistors, fixed or variable (including potentiometers), other than heating resistors; printed circuits; switchboards (other than telephone switchboards), and control panels, n.e.s.; parts, n.e.s. of the foregoing apparatus (except: 772.3.3 dimmers, light, theatre)

100. Equipment for distributing electricity 101. Electrical machinery and apparatus, n.e.s. (except: 772.85 particle accelerators, and

parts thereof, n.e.s) 102. Motor vehicles for the transport of goods or materials for Earthquake rehabilitation and

reconstruction103. Parts and accessories, n.e.s. of the motor vehicles falling within heading 722 and 782 104. Trailers and other vehicles, not motorized, n.e.s. and specially designed and equipped

transport containers (except: (i) 786.12.2 library-trailers (ii) 786.12.3 limbers, ammunition, armoured or not (iii) 786.12.9 trailers, exhibition (iv) 786.12.13 trailers, furniture-removal and (v) 786.81 other vehicles, not mechanically propelled)

105. Sanitary, plumbing and heating fixtures and fittings, n.e.s. 106. Furniture and parts thereof; bedding, mattresses, mattress supports, cushions and

similar stuffed furnishings 107. Instruments and appliances, n.e.s., for medical, surgical, dental or veterinary purposes 108. Meters and counters, n.e.s. 109. Measuring, checking, analyzing and controlling instruments and apparatus, n.e.s.; parts

and accessories n.e.s. of the instruments and apparatus of groups of 873 and 874 (except: 874.52 instruments, apparatus or models, designed solely for demonstrational purposes (e.g., in education or exhibition), unsuitable for other uses)

110. Printed matter 111. Articles, n.e.s. of plastics 112. Office and stationery supplies, n.e.s.

II. Sector Related Imports for the Project

1. Community and household rainwater tanks, fittings, fixtures, and rainwater harvesting piping and harvesting equipment

2. Desludging equipment, pumps, trailers and associated fixtures 3. Materials for the construction of sludge drying beds 4. Community and household septic tanks 5. Sanitary and plumbing fixtures and fittings 6. Solid waste management equipment for coping with debris, including glass and wood

cutters, composters and compactors. Solid waste management equipment for coping with debris, including glass and wood cutters, composters and compactors.

Appendix 3 46

No. Description

7. Communal solid waste bins 8. Plumbing and rainwater harvesting tools and installation of solid waste management

equipment.9. Seed 10. Farming tools 11. Fish processing equipment 12. Urgent purchase and import of helicopter fuel for use by the helicopters involved in the

relief and rehabilitation operations

Source: ADB Fact-Finding Mission.

Appendix 4 47

TRANSPORT SECTOR ASSESSMENT AND PROPOSED ASSISTANCE

A. Introduction

1. The road network in the Azad Jammu and Kashmir (AJK) includes about 9,430 kilometer (km) of primary, secondary, and local roads of which 4,020 km are paved, 420 km are fair-weather and 4,990 km are local or unpaved. The Public Works Department (PWD) is responsible for the 4,440 km paved and fair-weather roads and the Local Government and Rural Development Department (LGRDD) manages the local roads that are the tertiary links connecting villages to the existing road network. The road network in the three earthquake-affected districts is 5,305 km of which 2,545 km are managed by PWD and 2,760 km is the responsibility of LGRDD.

2. In North-West Frontier Province (NWFP), the road network consists of about 9,100 km of provincial highways, secondary roads and rural roads. About 5,000 km of these roads are paved. The Frontier Highway Authority (FHA) is responsible for the 2,100 km of provincial highways that connects all districts and provide links to the neighboring provinces. The remaining 7,000 km of roads are managed by the 24 district governments. In the five affected districts, the road network is 6,034 km of which 549 km of provincial highways are under FHA and the rest are with the districts. Three national highways serve as the primary corridor to the affected districts in NWFP. Managed by the NHA, these highways have a total length of about 270 km.

B. Damage and Impact of the Earthquake

3. Due to the mountainous terrain in AJK and northern areas of NWFP, access to population centers is by roads carved along mountainsides. The earthquake damage to these roads was primarily caused by landslides. Five types of damages were observed: (i) major landslides causing the loss of an entire section of the mountain slope and the road traversing it; (ii) minor landslides depositing a large amount of debris on the road where the mountainside is unstable; (iii) flow of debris including large boulders on the road; (iv) severe cracking in the road due to embankment failure and the upheaval of earth; and (v) unstable mountainside slopes that may potentially become landslides. Lack of maintenance and extreme weather conditions will accelerate the deterioration of the damaged roads. Overall damage is estimated at PRs20.165 billion ($339.5 million).

4. Bridges were also affected by the earthquake, but the damage to them was not extensive. Of particular mention is Balakot bridge, on which severe damage was observed in the reinforced concrete superstructure and the abutments. Some other, smaller concrete bridges, culverts, and suspension bridges on rural roads were also damaged.

5. In the four affected districts of AJK (Bagh, Muzaffarabad, Neelum, and Poonch), it is estimated that about 2,366 km roads were damaged. Of these, 203 km are major roads, 761 km are other paved roads, and 182 km are unpaved roads, for a total of 1,146 km, representing 45% of the total PWD-managed roads. The Neelam Valley road and, to a lesser extent, the Jehlum Valley road were severely damaged. Both roads are the primary transport arteries in AJK. Another 1,220 km of local unpaved roads developed with community participation and managed by LGRD are damaged. This represents 44% of the total LGRDD roads in the affected districts. The assessed damage in AJK is estimated at PRs9,190 million.

6. In NWFP, about 2,063 km of roads were damaged representing 31% of the total road network in the five affected districts (Abbottabad, Battagram, Kohistan, Mansehra, and Shangla).

Appendix 4 48

Of these, 652 km are provincial highways managed by FHA, 1,016 km are other paved provincial roads managed by the districts, 367 km are unpaved districts roads, and 27 km are urban roads that are managed by municipal agencies. Estimate assessed damage in NWFP are PRs7,363 million ($124 million).

7. The three national highways damaged by the earthquake include Mansehra-Pattan (N35), Mansehra-Naran (N15), and Kohala-Muzaffarabad (N75). The damaged length is about 194 km representing 72% of the total length. Estimated assessed damage to the national highways1 is PRs3,481 million.

C. Government Response to the Earthquake

8. As soon as initial information on the extent and scale of damages to the main national highways was received, the Government mobilized all available resources at its disposal to clear the transport corridors to the affected areas. This effort was led by the Army Corps of Engineers and by the army-owned Frontier Works Organization. The latter is one of the major construction firms in the road sector and possesses a large equipment fleet and skilled human resources which are needed for massive emergency works. At present, the Frontier Works Organization is continuing with the work of clearing the national highways. The army’s engineering units are also involved in clearing the other provincial roads.

9. FHA, NWFP’s Works and Services Department and AJK’s PWD have mobilized all available resources, including contractors and consultants already assigned to different works, to quickly clear and rehabilitate major roads. The variation orders to contractors and consultants for immediate rehabilitation in the affected areas are eligible for retroactive financing under the Project.

D. Scope

10. This component will rehabilitate earthquake-damaged major roads and bridges, except national highways (footnote 1), within the four affected districts in AJK (Bagh, Muzaffarabad, Neelum, and Poonch) and the five affected districts in NWFP (Abbottabad, Battagram, Kohistan, Mansehra, and Shangla). The component will cover the repair and rehabilitation of the damaged major roads and bridges under PWD and LGRDD in AJK and under FHA and district governments in NWFP. Road clearance now in place is not anticipated to last permanently, especially beyond the coming snow season. More thorough and permanent road rebuilding is required, particularly including protection works to minimize landslides and river erosion and improved drainage for slope stabilization. Rehabilitation works will restore roads and bridges to the prequake level or higher standard, as this is considered cost-effective in the long run. Where technically feasible and justified, works will include protection measures to mitigate damage from future landslides. Resettlement will be minimal and will be confined to areas where the original road cannot be reconstructed and requires partial realignment.

11. To enhance the government’s quick response to future disasters including aftershocks of this earthquake, road sector agencies will need to be equipped with appropriate equipment and machinery to deploy in landslide-prone areas (through the quick-disbursing component).

1 The World Bank is financing reconstruction of the national highways through additional financing to its ongoing

Highway Rehabilitation Project.

Appendix 4 49

E. Cost Estimates and Financing Plan

12. The cost of the component is estimated at $140.0 million equivalent including a foreign exchange cost of $84.6 million. The local currency cost is $55.4 million equivalent and includes local taxes and duties of approximately $5.2 million. The summary cost estimate is in Table A4.1. The interest during construction is estimated at $1.4 million, which will be paid by the Government.

Table A4.1: Cost Estimate ($ million equivalent)

ItemForeign

Exchange Local

Currency Total Civil Works 83.1 55.4 138.5 Equipment 1.5 0.0 1.5 Total 84.6 55.4 140.0

Source: Asian Development Bank estimates.

13. The allocation of the civil works among types of roads or implementing agencies is based on the recovery needs identified by the Asian Development Bank (ADB)/World Bank joint needs assessment as summarized in Table A4.2. The indicative allocation is 61% for AJK and 39% for NWFP. The allocation will be modified on the bases of updated surveys.

Table A4.2: Indicative Allocation by Type of Road or Implementing Agency Cost Sharing

Type of Road ImplementingAgency

Allocationa

(% of the total)Costb

($ million)ADB

($ million)Governmentc

($ million)AJK Major Roads PWD 48 65.9 49.2 16.7 Link Roads LGRDD 13 18.6 13.9 4.7 AJK Total 61 84.5 63.1 21.4 NWFP Provincial Highway FHA 6 8.1 6.1 2.0 Rural Access Roads Abottabad 4 4.9 3.6 1.2

(district governments) Battagram 5 7.0 5.2 1.8 Kohistan 5 7.0 5.2 1.8 Mansehra 14 18.9 14.1 4.8 Shangla 6 8.1 6.1 2.0 NWFP Total 39 54.0 40.4 13.7

Total (Civil Works) 100 138.5 103.5 35.0 Equipment 1.5 1.5

Total 140 105.0 35.0 AJK = Azad Jammu and Kashmir, FHA = Frontier Highway Authority, LGRDD = Local Government and Rural Development Department, NWFP = North-West Frontier Province, PWD = Public Works Department. a Based on the joint ADB/WB damage assessment. b Including physical and price contingencies. c Including tax and duties of approximately $5.2 million. Source: Asian Development Bank estimates.

Appendix 4 50

14. ADB will finance the foreign exchange cost of $84.6 million, as well as $20.4 million equivalent of the local currency cost, for a total of $105.0 million, or about 75% of the total cost of the component. The Government will finance the remaining local currency cost of $35.0 million equivalent, which includes taxes and duties. The financing plan is given in Table A4.3.

Table A4.3: Financing Plan ($ million)

Item ForeignExchange

LocalCurrency Total %

Asian Development Bank 84.6 20.4 105.0 75 Government 0.0 35.0 35.0 25 Total 84.6 55.4 140.0 100

Source: Asian Development Bank estimates.

F. Implementation Arrangements

1. Project Management

15. The project management follows the overall framework set out in the main text. In AJK, the Reconstruction Agency and PWD will be the implementing agencies for major roads, and Reconstruction Agency and LGRDD will be the implementing agencies for link roads. In NWFP, Reconstruction Agency and FHA will be the implementing agencies for provincial highways and RA though the district reconstruction units (DRUs) and district governments will be the implementing agencies for rural access roads under each district. The steering committee in NWFP and AJK will decide where there is sufficient capacity to implement the subprojects. To address the issues of capacity the incremental staff and consulting services assistance will be distributed among the various implementing agencies depending on the work load assigned to them by the steering committees.

2. Implementation Schedule

16. The Project will be implemented over a period of 3 years including preconstruction activities and is scheduled for completion by the end of 2008.

3. Procurement

17. Civil works contracts and procurement of goods and services will follow the procedures set out in the main text.

4. Consulting Services

18. Consulting services will be provided for each implementing agency to: (i) carry out all field investigations and surveys; (ii) assess the damage and reconstruction and rehabilitation requirements; (iii) carry out design and project preparation; (iv) prepare cost estimates and provide procurement support, including preparation of tender documents, calling for bids, bid evaluation, and award of contracts; (v) undertake and prepare required environment and social assessment studies including resettlement plan to ensure compliance with the Government and ADB’s environmental and social safeguard policies; (vi) assist implementing agencies in obtaining necessary clearances from ADB and the Government; (vii) supervise construction and ensure quality control; and (viii) report progress on a regular basis. Consulting services will be engaged by the concerned implementing agency as approved by steering committee.

Appendix 5 51

POWER SECTOR ASSESSMENT AND PROPOSED ASSISTANCE

A. Damages and Impact of the Earthquake

1. The 8 October 2005 earthquake in northern Pakistan damaged and disrupted power generation and supply systems in Azad Jammu and Kashmir (AJK) and the eastern part of North-West Frontier Province (NWFP). Five companies are involved in generating power and supplying it to and within the earthquake-affected areas of AJK and NWFP. In terms of power generation AJK Electricity Department (AJKED), Sarhad Hydro Development Organization (SHYDO), and the Water and Power Development Authority (WAPDA) Hydel have a total of 10 hydro generation stations within the affected areas. In terms of power distribution, AJKED, Islamabad Electric Supply Company (IESCO), and Peshawar Electric Supply Company (PESCO) supply electricity to the affected areas.

2. The power supply system was restored within days of the earthquake, but nearly all repairs were temporary and need to be replaced by permanent solutions. Some areas still have not yet been fully inspected because access to them is not yet possible due to the collapse of roads and continuing landslides. In the aftermath of the earthquake, it was necessary to establish tent villages and relief camps for dislocated people. These tent villages and relief camps need to be electrified to ensure security and lighting at night, power to pump water, and the efficient operation of schools and other facilities. The installation of temporary electrification in tent villages and relief camps needs to be funded, and the recurring costs of their electricity consumption should be paid to the supplying distribution companies.

3. The preliminary damage and needs assessment (PDNA) prepared for the Government by a joint Asian Development Bank (ADB) and World Bank team estimated power sector reconstruction costs to be PRs1.9 billion ($31.7 million). Further detailed reconstruction estimates indicate that this amount will be higher when the costs of electrification and electricity consumption in the growing number of tent villages and relief camps are included. In addition, about 30% of electricity distribution networks in AJK and 20% in NWFP have yet to be surveyed for damage and taken into consideration in the PDNA report. The contingency allocated to the power sector component is earmarked to address the eventual damage assessment in the areas not yet inspected.

B. Project Scope

4. The Project component comprises rehabilitation of the power generation and supply system infrastructure that was damaged during the earthquake, and the electrification of tent and relief camps as well as related electricity supply to these camps for up to 2 years. In detail, the Project will cover (i) repair of nine hydropower generation stations inclusive of access roads, buildings, and ancillary facilities; (ii) supply and installation of equipment and lines related to the 132kV, 33kV, and 11kV substations; (iii) construction of operational buildings of substations and related staff quarters; (iv) 0.4kV and 0.22kV low voltage lines (v) service connections to consumers; vi) spare parts, operational vehicles, and tools (vii) installation of transformers, meters, and service connections to the tent villages and relief camps established after 8 October 2005; (viii) payment for electricity supply for up to two years to the tent villages and relief camps, and (ix) installation of transformers, meters, and service connections to the anticipated new model villages to be established for the victims of the earthquake. Reconstruction and rehabilitation works will be carried out to restore the facilities to pre-earthquake levels or to a higher standard as considered cost-effective in the medium to long -

Appendix 5 52

term. The installation of electricity to the tent villages and relief camps will be done with safety of the occupants and the network as a high priority.

C. Cost Estimates and Financing Plan

5. The cost of the power sector component is estimated at $53.5 million equivalent, including a foreign exchange cost of $24.0 million. The local currency cost is $29.5 million equivalent and includes local taxes and duties of approximately $2.5 million. Interest during construction will be paid by the Government and amounts to $0.4 million for the power sector component. The summary cost estimate is in Table A5.1.

Table A5.1: Cost Estimate ($ million)

Item ForeignExchange

LocalCurrency Total

Civil Works 3.5 2.3 5.8 Equipment 20.5 27.2 47.7 Total 24.0 29.5 53.5 Source: Asian Development Bank estimates

6. The detailed cost estimate per executing agency is shown in Table A5.2, which also identifies the individual items for financing. The items are based on the needs of reconstruction identified during the development of the PDNA report, which was done by a joint team from ADB, the United Kingdom’s Department for International Development, and the World Bank. The total cost of PRs3.21 billion is equivalent to $53.5 million. The allocations will be modified based on the updated survey and investigation.

Table A5.2: Total Reconstruction Costs for the Power Sector (PRs million)

Estimated cost to reconstruct damaged infrastructureReconstruction Costs AJKED IESCO PESCO SHYDO Total

Hydro Power Plant 99.80 11.00 110.80

132kV Line 17.87 17.87

132/33kV Substation 123.13 123.13

33kV Line 4.00 4.00

33/11kV Substation 4.00 3.00 7.00

11kV lines 93.30 20.80 114.10

11/0.4kV substation 0

LT lines 31.30 23.10 54.40

Service connection 183.00 61.00 244.00

Transformers 83.20 20.00 103.20

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Estimated cost to reconstruct damaged infrastructureReconstruction Costs AJKED IESCO PESCO SHYDO Total

Buildings 90.00 46.00 149.70 285.70

Spares and Generators 19.80 29.70 4.40 53.90

Tools & Vehicles 12.00 8.90 20.90

Subtotal Reconstruction Costs 580.60 69.80 464.30 24.30 1,139.00

Shelter Installation Costs

Tent Camps - Installation of Electricity 50.00 30.00 350.00 430.00

Subtotal Fixed Assets Costs 630.60 99.80 814.30 24.30 1,569.00 Recurring Shelter Consumption Costs Tent Camps - Electricity supply (1 year) 120.00 60.00 390.00 570.00

Total Costs (Allocation) per

Executing Agency 813.66 169.78 1,285.73 26.73 2,295.90

Contingency (unallocated) 914.10

Total Reconstruction Costs 3,210.00AJKED = Azad Jammu and Kashmir Electricity Department, IESCO = Islamabad Electricity Supply Company, kV = kilovolt, PESCO = Peshawar Electricity Supply Company, SHYDO = Sarhad Hydro Development Organization. Source: Asian Development Bank estimates.

7. ADB will finance the foreign exchange cost of $24.0 million and $16.0 million equivalent of the local currency cost for a total of $40.0 million or about 75% of the total cost of the component. The Government will finance the remaining local currency cost of $13.5 million equivalent, which includes taxes and duties. The financing plan is given in Table A5.3.

Table A5.3: Financing Plan ($ million)

Item ForeignExchange

LocalCurrency Total %

ADB 24.0 16.0 40.0 75 Government 0.0 13.5 13.5 25 Total 24.0 29.5 53.5 100

Source: Asian Development Bank estimates

8. Although no cofinancing is presently envisioned in conjunction with the power sector component of the earthquake related emergency assistance loan, cofinancing from both official (loan and grant) and commercial sources may be mobilized for the follow-on power sector expansion projects, which will most likely be developed in the affected areas during the medium term horizon (2–5 years).

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D. Implementation Arrangements

1. Project Management

9. There are four implementing agencies within the power sector component, namely AJKED, IESCO, PESCO, and SHYDO. Each implementing agency has been provided an allocated directly related to the damages and reconstruction needs within their respective areas, and accordingly each implementing agency will be responsible for development of respective subprojects. The implementing agencies will be responsible for the implementation of their respective subprojects.

2. Implementation Schedule

10. All reconstruction works are scheduled to be completed within 3 years. The detailed implementation schedule is in Appendix 11.

3. Procurement

11. The procurement procedures for the power sector component are identical to those of the overall Project.

4. Consulting Services

12. The implementing agencies in the power sector have, for the most part, the capabilities and technical expertise to implement the power sector component of the Project. However, to assist with development of procurement packages inclusive of establishment of specifications, to ensure transparency, and independent monitoring, consulting services will be required to assist the implementing agencies with (i) preparation of the subproject proposals to ensure compliance with subproject criteria, (ii) preparation of detail design, cost estimates, and bidding documents, (iii) conduct general construction and installation supervision, (iv) random checking for quality assurance purposes, (v) undertake and prepare required environment and social assessment studies including resettlement plan to ensure compliance with the Government and ADB’s environmental and social safeguard policies. The consultants will have expertise in (i) electrical engineering specifically in power supply systems, and (ii) structural engineering for buildings.

13. The consultants will be hired by the concerned implementing agency with the approval of ERRA or SC as the case may be. The outline terms of reference of the consultants are in Supplementary Appendix D.

Appendix 6 55

SOCIAL SECTOR ASSESSMENT AND PROPOSED ASSISTANCE

A. Background

1. Before the earthquake, Azad Jammu and Kashmir (AJK) had adequate primary and secondary healthcare facilities as well as referral hospitals for its population of 3.4 million. There were seven district hospitals, six subdistrict hospitals, 31 rural health centers, 184 basic health units, and 105 dispensaries. The district hospitals provided coverage to both the urban and rural populations of the districts.

2. The damage assessment survey jointly undertaken by the Asian Development Bank (ADB) and World Bank found that the extent of damage to the health sector in AJK far exceeds initial expectations. The assessment reported that health facilities were completely destroyed or made irreparable in Bagh and Poonch districts. The damage in Muzaffarabad is reported at 70–80% of the entire health infrastructure of the district. Besides the infrastructure, most of the medical and office equipment, furniture, drugs, and laboratories were destroyed. Information on ambulances and supervisory vehicles is not available but 21 four-wheel vehicles and six motorcycles have been reported destroyed. These losses have resulted in a complete breakdown of the health system, severely disrupting the provision of both secondary and primary healthcare services. In addition, health management at the central, district, and facility level was paralyzed, and most official and health management information records and systems were lost.

Table A6.1: Summary of Damage to the Healthcare System in Affected Areas

Type of Health Institution/Offices

NumberFully

Damaged

NumberPartly

Damaged

EstimatedReplacement Cost in

PRs (millions) Tertiary care hospital 0 1 500 Secondary care (district, subdistrict, and civil hospitals)

16 13 6,798

First-level healthcare facilities (RHCs, BHUs and MCH centers)

203 68 8,091

Other health facilities (dispensaries, first-aid posts, etc)

218 32 159

Health management offices 17 3 318 Total health facilities 454 117 15,866 Lost vehicles/motorcycles 21/6 0 22

Total 15,888

3. Prior to the earthquake, the literacy rate in AJK was estimated to be 64% of the total population, or about 56% among females and 80% among males. Education has remained a priority with the AJK government, as about 27% of its total recurring budget is allocated to education. The damage assessment survey has identified Bagh, Muzaffarabad, Neelum, and Poonch (Rawlakot) as the worst affected districts in AJK with regards to education. The total number of government schools and colleges in AJK prior to the earthquake was 7,258. Of these, 3,879, or 53%, were in the three worst affected districts. There were 290,000 students (44% girls) and 12,971 teachers in these three districts.

4. Educational institutions of all levels, from primary schools to degree colleges and the university, have suffered substantial damage. Apart from damage to the institutions and buildings, the sector has lost people. According to a United Nations Children’s Fund (UNICEF)

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report, almost half of the casualties of the earthquake were children of school age. The number of lost school staff and teachers is 853 for both AJK and NWFP.

Table A6.2: Summary of Damage to Educational Institutions

AJK

Institutions Number of Damaged

Institutions

EstimatedCost

(PRs million)

% of Total Cost

Government primary 2,153 3,064 22

Government middle 565 1,341 10

Government high 312 1,473 11

Government higher second 27 188 1

Government intercollege 25 78 1

Government colleges and postgraduate

28 1,260 9

Technical/vocational

Private 574 2,620 19

AJK University 1 3,463 12

Materials and furniture 0 2,036a 15

Administration buildings 0 0

Total 3,685 13,660 100 AJK = Azad Jammu and Kashmir. a Cost of materials, equipment, and furniture includes PRs540 million for AJK University.

5. ADB is processing an emergency assistance package for the earthquake-affected areas. Apart from other sectors, the government of AJK has shown interest in securing funds to support the rehabilitation and reconstruction of the essential social sector infrastructure. The social sector component will focus on reconstructing and rehabilitating selected health and education facilities located within the affected districts.

B. Objective

6. The objective of this component is to address the greatest social-sector needs of earthquake-affected people. District and subdistrict headquarters being the major urban centers of AJK, people from remote areas use the health and educational facilities in these places. The task of reconstructing and rehabilitating social-sector facilities is gigantic and will take place over a period of time. Most of the locations where primary health and education services are damaged are remote and difficult to get to because of damaged roads. The capacity and outreach required to build these services both in the public and private sector has to be put in place before work can begin on rebuilding these facilities. However, work can begin immediately in such urban areas as district and subdistrict headquarters and in accessible rural areas, and where capacities are currently concentrated. The urban centers and larger rural settlements are the worst affected, as these were densely populated. Immediate restoration of heath facilities and education in these centers will benefit the most people, apart from accommodating people from surrounding areas in the short term. This approach is advocated in the short-term recovery strategy recommended in the damage and need assessment and agreed with the Government.

Appendix 6 57

7. In the health sector, the present arrangement in the emergency relief phase is that various field hospitals provide emergency healthcare assistance to people in Bagh, Muzaffarabad, and Rawlakot. The seriously injured are being referred to Rawalpindi and Abbotabad for treatment. Prior to the earthquake, there was one referral health facility at each district headquarters. In addition, there was a hospital in each subdistrict headquarters. In Muzaffarabad, the capital of AJK, the 400-bed Combined Military Hospital was administratively under the armed forces but with the government of AJK providing 80% of its administrative costs. The other hospital in Muzaffarabad was the 300-bed Abbas Institute of Medical Sciences, which provided referral services to the civilian population of AJK. As these facilities have suffered irreparable damage for the most part, practically no referral facilities exist today. In the short term, many relief agencies are providing these services through makeshift hospitals that have concentrated the population seeking medical aid in Muzaffarabad and other major urban centers in AJK. This temporary relief infrastructure is expected to start thinning out very soon, and there will be immense pressure to provide referral services in districts and subdistricts. The health component will focus on reconstructing one hospital in district headquarters with 150–250 beds each and three hospitals in subdistrict headquarters with 60–80 beds each. All of these hospitals will be equipped with diagnostic and treatment facilities to provide referral facilities for people from all parts of AJK, but particularly from earthquake-affected districts. Health administration buildings have also been seriously damaged, which seriously hampers the ability of the Health Department to respond to the emergency. The component will also provide for the reconstruction and rehabilitation of health management buildings.

8. In ongoing relief and rescue operations, many agencies focus on providing temporary structures for primary education institutions, but middle and high schools are too big for these agencies to handle. In addition, as in the health sector, primary education facilities are scattered, situated at remote locations and currently difficult to reach. As the immediate need identified in the reconstruction strategy for education is to restart classes, the reconstructed and rehabilitated middle and high schools can also be used to accommodate students of the nearby primary schools over the short term. The resumption of routine school activities would help establish some kind of normalcy in the lives of the school children, teachers, and staff. The component will focus on reconstructing and rehabilitating 550 government middle schools and 300 high schools, including the provision of all essential furniture and equipment. The component will also assess, and advise on, the physical and psychological health of students, as well as train trainers for teacher training.

C. Scope

9. The health subcomponent will include (i) construction of one (150 to 250 bedded) district hospital and three (40–80 bedded) Tehsil headquarter hospitals, including wards, operation theatres, outpatient departments and other necessary services; (ii) provision of all the essential medical equipment to the hospitals including ambulances and supplies; (iii) construction of proper waiting areas and provision of public toilets and clean drinking water for visitors; and iv) consultancy and administrative assistance including health management planning. German Agency for Technical Cooperation is actively negotiating a soft component for the health sector, which will include training management support and systems, and planning to be operationalized in parallel with the ADB emergency assistance loan.

10. The education subcomponent would include: (i) repair and reconstruction, according to improved seismic designs of about 550 partly and completely damaged government middle schools building, latrines, office accommodation (ii) provision of all essential furniture and equipment for all the middle schools reconstructed and repaired; (iii) training of master trainers

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for teachers training; (iv) school health services for physical and physiological health assessment and advise; and (v) consultancy and administrative assistance.

D. Cost Estimates

11. The cost of the health subcomponent is estimated at $29.7 million including taxes and duties of approximately $1.6 million. The cost of the education subcomponent is estimated at $23.6 million including taxes and duties of approximately $1.0 million. The summary cost estimates are provided in Tables A6.3 and A6.4.

Table A6.3: Reconstruction and Repair Cost for the Health Sector($ million)

Item Foreign Exchange Cost

Local Currency Cost Total Cost

Civil Works 7.0 10.3 17.3 Equipment 7.4 5.0 12.4 Base Cost 14.4 15.3 29.7

Source: Asian Development Bank estimates.

Table A6.4: Reconstruction and Repair Cost for the Education Sector ($ million)

Item Foreign Exchange Cost

Local Currency Cost Total Cost

Civil Works 7.8 10.6 18.4 Equipment 0.5 4.7 5.2 Base Cost 8.3 15.3 23.6

Sources: Asian Development Bank estimates.

12. ADB will finance the foreign exchange cost of $22.7 million as well as $17.3 million equivalent of the local currency cost, for a total of $40.0 million, or about 75% of the total cost of the component. The Government will finance the remaining local currency cost of $13.3 million, which includes taxes and duties. The financing plan is provided as Table A6.5.

Table A6.5: Financing Plan ($ million)

Source ForeignExchange Cost

LocalCurrency Cost Total Cost Percent

Financing (%)ADB 22.7 17.3 40.0 75 Government 0.0 13.3 13.3 25 Total 22.7 30.6 53.3 100

Source: Asian Development Bank estimates.

E. Selection Criteria

13. The selection of the various facilities under the Project will be based on the needs assessment exercise jointly undertaken by the World Bank and ADB. It also takes into consideration the priorities determined by the government of AJK for additional activities to be undertaken as part of the Multisector Rehabilitation and Improvement Project in AJK. The selection is based on the following criteria:

(i) Social sector facilities located in the earthquake affected zone in AJK; (ii) Addressing the basic emergency needs in the affected areas; (iii) No overlap of assistance from other donors for the assistance;

Appendix 6 59

(iv) Determined as priority for ADB assistance by Government of AJK; and (v) Subprojects are technical feasible, cost efficient and financially sustainable.

F. Implementation Arrangements

14. The social component of the emergency assistance will be implemented through the implementation arrangement established under the ongoing Loan 2153 PAK (SF) Multisector Rehabilitation and Improvement Project for AJK, by further strengthening the existing project management units and project implement units (PIUs) with staff and technical assistance consultants, if the SC decides to use this existing mechanism as implementing agency for subprojects. The Multisector Rehabilitation and Improvement Project for AJK is at the take-off phase with implementation arrangements in place and activities in the various sectors about to be initiated. Department of Health (DOH) will undertake civil works through the Works Department or RA. Consulting services will be required to assist the DOH or RA as the case may be: (i) in the preparation of the layout for the hospitals including detailed engineering with seismic provisions, bid preparation, assistance in procurement and construction, supervision/contract administration of civil works, and procurement of equipment; (ii) determine the needs of the equipments in consultation with the administration of the hospital and specialist consultants; (iii) project management and reporting; and (iv) assess and undertake any necessary study to ensure compliance with ADB and the Government’s environmental and social safeguards policies. The health subcomponent will require 20 person-months of international consultancy services, mainly providing health management specialist services and technical advice, and 200 person-months of domestic consulting services for surveys, design, supervision, and project management. In addition, the implementing agency (which can be RA or DOH) of health will require strengthening in terms of both human resources and capacity, for which administrative support will be provided.

15. For education, the AJK Department of Education (DOE) will be the implementing agency. A previously existing headed by a project implementation officer with essential staff has been established within the DOE to oversee implementation. The PIU will be responsible for overall management of the education component, including (i) procurement of civil works and equipments, (ii) coordination with other departments and line agencies, (iii) progress monitoring, and (iv) audit of accounts and preparation of progress reports. The PIU will undertake procurement through an interdepartmental purchase committee established within the DOE but having representation of the Finance Department and P&D Department. DOE will undertake civil works through their own Public Works Department. Consulting services will be required to assist the DOE with (i) the preparation of the layout for high and middle schools including detailed engineering with seismic provisions, bid preparation, assistance in procurement and construction, supervision/contract administration of civil works, and procurement of equipment; and (ii) project management and reporting. The education subcomponent will require 20 person-months of international consultancy services, mainly providing education management specialist services and technical advice, and 200 person-months of domestic consulting services for surveys, design, supervision, and project management. In addition, the PIU will require strengthening in terms of both human resources and capacity, for which administrative support will be provided.

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LEGAL ASSISTANCE, GOVERNANCE, AND INSTITUTIONAL BUILDING

1. The destruction caused by the earthquake has created legal and documentary issues for earthquake affected people and generated a tremendous strain on government administration and resources, at national, provincial and local levels. This subcomponent seeks to assist the federal, North-West Frontier Province (NWFP) and Azad Jammu and Kashmir (AJK) governments to build institutional strength and capacity to effectively deal with issues and risks associated with restoring lost documents and helping earthquake victims retain their legal rights and entitlements in a timely and effective manner. This subcomponent also seeks to build local government capacity to provide special services to earthquake-affected people, especially those who are more vulnerable. The subcomponent aims to compliment and support existing administration structures, wherever possible. This subcomponent will be implemented in accordance with the following principles: (i) affected people are offered people-centered solutions and recognition is given, at an early stage that vulnerable groups require special and urgent arrangements; (ii) rehabilitation activity is designed for, and implemented by, the lowest level of mandated and competent agency; (iii) durable arrangements are made, which assign clear responsibilities for central and localized strategic coordination; (iv) needs and sectoral technical responses are assessed and defined in ways that avoid unmanageable demands; (v) innovative institutional arrangements are created (even if only temporary) through which specialized expertise can be quickly mobilized and held accountable; and (vi) validation, audit, accountability, judicial and quasi-judicial arrangements are stipulated with a clearer view of enhancing the predictability of outcomes for disaster-affected people. Details of implementation arrangements under this subcomponent, including the appointment of the implementing agencies, will be developed, taking into consideration changing circumstances. The implementing agencies with assistance from ADB resource person will be responsible for the implementation of this subcomponent. Details on each activity under this subcomponent are described below.

2. The constituent parts of the legal assistance, governance, and institutional building, which may be streamlined or augmented following discussions with the Government and other development partners, are described below:

A. Provision of National Identity Cards

3. The National Database and Registration Authority (NADRA) is the agency that issues national identity cards (NICs). Following the earthquake, thousands of NICs will need to be replaced, and those people previously without NICs will need to be issued NICs in order to secure compensation entitlement and other rights. NICs are also used in legal proceedings and establishing property and inheritance rights. Issuing of new or replacement NICs will significantly reduce the incidence of fraud. Consideration also needs to be given to providing NICs to children in order to facilitate the identification and repatriation of abandoned or displaced children with their families or relatives, requiring a review of the legal framework to make provision for children’s NIC.

4. Currently, NADRA is attempting to issue NICs under its existing modalities, however this will not be sufficient to meet the urgent needs of the earthquake-affected people. Issuing NICs to earthquake-affected people cannot be delayed. It will be necessary to develop new modalities in order to meet the demand arising from the earthquake. This may include relaxation of certain procedures used to verify identity, (e.g. Union Council members or other appropriate local leaders will be involved in attesting the accuracy of information provided by villagers, so that an alternative form of attestation will be developed), the requirement for the payment of fees and

Appendix 7 61

the establishment of localized offices and additional mobile units with the necessary equipment. Other Government departments such as the Central Board of Revenue and local revenue departments could be used to assist in the identification process in order to speed up the process.

5. This subproject will support NADRA in its efforts to improve its capacity to issue NICs to earthquake affected people as expeditiously as possible and to develop its outreach to vulnerable people such as women and children. Support may also be considered for additional staff, necessary additional computer equipment, networking and connectivity components, photographic equipment, as well as the purchase of mobile units and office items. The staff of the mobile units will include at least one woman to ensure that female villagers have opportunities to obtain NICs.

B. Provision of Documents

6. The Local Government, Elections, and Rural Development Department of NWFP and the Local Government and Rural Development Department of the AJK would normally oversee the registration of births, deaths, and marriages. With respect to title or ownership documents for land, these would be issued by revenue officers, variously known as district officer (revenue) and deputy district officer (revenue) in NWFP and collector or assistant collector in AJK. These departments would be responsible for providing duplicates of documents destroyed in the earthquake.

7. The Project will provide support to these departments by assisting them in developing new modalities in order to expedite the process of providing duplicates of documents. Computerization will be considered where feasible as well as provision of mobile units. Special procedures will be required to be provided for quake affected areas with regard to death certification. Provision will be required to be made for acceptance of this certification by courts of law for grant of succession certificates, declaratory suits, and revenue officers for mutation of rights in the name of legal heirs. There will also be the need to consider alternative processes for the presumption of death. Currently, the presumption of death in relation to a missing person is seven years. Support will be provided to allow local government officers/revenue officers to visit areas affected by the earthquake in order to issue duplicates of birth and marriage certificates and issue death certificates and outreach to the most seriously affected and vulnerable people. In addition to these efforts, there will also be a need to launch an effective public awareness campaign so that earthquake affected people are made aware of their rights to be issued with duplicates of documents and the new modalities regarding their issue.

8. Disability certificates need to be issued by the Medical Superintendent, District Headquarters Hospital, to ensure that disabled persons have access to disability entitlements. Co-ordination needs to be strengthened between the executive district officer (health) in NWFP and the district health officers in AJK, who are responsible for local basic health units and regional health units, and the medical superintendent to reach out to local communities. Capacity-building may be necessary to deal with disability, health and entitlement issues.

9. The Auditor General of Pakistan (AGP) needs to ensure that pensioners, including widows, are facilitated to obtain their pension entitlements. Where public servants have been disabled, the AGP may consider pensioning the disabled on the basis of early retirement. Coordination is necessary between AGP and medical superintendent and local government official to facilitate affected people to obtain pension entitlements.

Appendix 7 62

C. Legal Facilitation and Assistance

10. The destruction brought about by the earthquake has, as discussed above, generated legal and documentary issues for earthquake-affected people and the Government. Such legal issues arise from the loss of documents, such as property titles; birth, death, marriage, and disability certificates; court records; and bank account and pension documents. They also arise from the devastating loss of life caused by the earthquake, as following these mass deaths, proof of death, disability, custody, fostering, and adoption of children, and the inheritance of real and personal property have all arisen as problems. Issues such as insurance coverage, enhancing the limitation period for claiming compensation, property disputes, and other entitlement issues are follow-on concerns.

11. This activity will support the Government in developing a legislative framework for the post earthquake reconstruction period to enable special legal provisions for people and property affected by the earthquake, and related purposes. Legislation under the framework will include (i) shortening the period for the presumption of death, (ii) providing for the custody, fostering, and adoption of children, (iii) establishing special institutional and legal arrangements for the protection of orphaned or displaced children, women and the disabled persons, and their property, and (iv) increasing the vigilance against abduction and human trafficking. Provisions relating to the protection of property rights through inheritance would also need to be introduced. Consideration should also be given to enhance the penalty for any crime, if it is committed in relation to property or money intended for earthquake affectees or relief.

12. To translate formal legal solutions into solutions for earthquake-affected people will require them, and divisional and district level government officials and affected citizens, to understand the new legal requirements, and be able to proceed along appropriate channels. They will also need to have assistance to resolve any legal questions that may arise. Members of the law and administration of justice system in earthquake-affected areas will similarly need to be made aware of the mechanisms for resolving earthquake related legal and administrative problems. In the earthquake affected areas already poor and vulnerable people will have difficulty negotiating formal avenues, and will clearly need assistance to avail themselves of any new laws and procedures.

13. As an activity of this subcomponent, legal facilitation and assistance for earthquake- related legal and documentary issues would be provided to earthquake affected people. The provision of assistance would be functionally decentralized in the affected areas of NWFP and AJK. Staff would have access to transportation in order to conduct outreach, by visiting affected communities, and to service all relevant areas. ADB will coordinate with the Government and officials of the earthquake affected districts to determine the number of legal facilitators required for a particular area. However, certain districts may need more assistance than others.

14. A subcomponent coordinator or director, with assistance from at least one staff member, will coordinate this activity, facilitate cross learning amongst the decentralized offices and monitor the conduct of legal services. This activity will be closely coordinated with the civil society organizations (CSOs), and nongovernment organizations (NGOs), and other relevant development partners.

Appendix 7 63

D. Judicial, Police and Public Officials Training Workshops and Legal Awareness

15. Judges, court officials, police and revenue officers in the earthquake-affected areas need to be familiarized with the property and custody legal issues likely to arise post-earthquake, and the special post earthquake legislative framework when enacted. The types of legal issues that are likely to arise can be anticipated, including, for example, property, inheritance, compensation, rights of orphans, disabled and widows, however the details of the sorts of disputes have not yet been identified. Based on more detailed data identifying the nature of earthquake-related legal disputes likely to come before the courts, ADB in conjunction with the Government would coordinate training of judicial revenue officials and police, and public legal awareness workshops in or for the earthquake-affected areas.

16. The earthquake legislative framework referred to in paragraph 10 above, will presume knowledge of the law and imposes harsh jail penalties for violations. Legal awareness workshops will be coordinated for district officials, local law enforcers, and the public, in conjunction with, or independently from the judicial workshops for earthquake related issues.

E. Public Grievance Review Mechanism

17. The legal and factual issues generated by the earthquake, are likely to lead to increased disputes and grievances both among earthquake affected people, and possibly against government officers and departments. The Government will need to ensure that all earthquake relief and reconstruction efforts promote transparency, participation, accountability, and a zero-tolerance for any corruption associated with earthquake assistance. Similarly the proposed earthquake legislative framework would increase penalties for earthquake related crimes and improprieties.

18. The pre-earthquake public redress procedures were a patchwork of federal and provincial systems with mixed resources and mixed results. Those systems that can operate effectively following the earthquake will be supported. Consideration will be given as to whether the regulatory framework, capacity, accessibility and reach of the existing institutions are adequate.

19. In furtherance of the Government’s objectives, and to assist earthquake affected people with disputes and grievances, it may be necessary to create a decentralized provincial system of public grievance review and alternative dispute resolution will be established or supported in the earthquake affected areas and staffed by independent persons. The mechanisms would seek to resolve private disputes, and investigate claims of impropriety against public officials relating to earthquake assistance. Proposals for achieving this end are currently being considered. In consultation with the Government, NWFP, AJK and NGOs, a number of tried and tested mechanisms will be reviewed, in order to determine the most appropriate way to provide forms of dispute resolution, public grievance review, and anti-corruption forum, in the context of conditions on the ground in earthquake affected areas.

F. Transparency and Earthquake Data Collection

20. The Office of the President, through the Earthquake Reconstruction and Rehabilitation Authority (ERRA), will begin to coordinate the many separate efforts to collect data in relation to earthquake affected infrastructure and earthquake affected people. This coordination will include NADRA, the Central Board of Revenue, relevant local government departments, CSOs and NGOs. Centralization of data collection will minimize duplications of efforts, focus relief

Appendix 7 64

efforts to those earthquake affected people who need it the most and limit the extent to which earthquake affected people are approached by multiple government agencies and NGOs for similar data collection questions. In the longer term, such data collection will be invaluable to the governmental and other relief agencies for future planning and understanding lessons learned.

21. This activity will support ERRA in coordinating this activity by providing data collection managers who can train staff and advice on connectivity of data and networking issues. Subject to an initial technical and needs assessment, consideration may also be given for the provision of computer equipment, software licenses and the recruitment of new staff.

22. Transparency and access to information standards need to be agreed so that stakeholders are aware of transparency and access to information obligations. Local institutions such LGO monitoring committees and NGOs, CSOs and local media may be engaged to enhance transparency and the flow of information. Provision of information management systems, computerization and networking will need to be supported.

23. In addition, ERRA will facilitate the coordination required to ensure that information on earthquake assistance, post earthquake rehabilitation and reconstruction, names of affectees and extent of damage suffered by them, and related laws and policies, will be placed on an earthquake website, and published in English, Pushtoo, and Urdu in local newspapers as well as on national and provincial television and radio. To keep the public notified, these publications and broadcasts will be regularly updated at least every quarter. This would require some coordination amongst departments, donors, and NGOs to obtain the appropriate information. The information to be included should present financial statements, track procurement contract awards, including its amount, and basic information on the processes adopted, list of goods or services purchased and their utilization.

G. Vocational Training

24. The earthquake left many households without any income-generating capacity. Many of these household have lost their breadwinner. Single women and widows now face the need to provide for their families. Many of them will have to enter the job market, often for the first time. The need arises to provide them with free vocational training, designed to give them the possibility to approach the market as semi-skilled labor for positions which are socially acceptable. Another group of vulnerable people, who may need to enter the job market and need special training, are the disabled. In fact, disabled are equally capable to produce income and can be a valuable source of income for their families. For this reason they need to be given equal opportunity of access to the labor market and accordingly, they will also need special assistance. In both cases, there is also the need to assist the trainees in finding a job, once the training has been completed. This activity aims at building and strengthening the capacity of local governments in delivering and managing training programs designed to reach vulnerable people who have been particularly affected by the earthquake and need targeted assistance and complements the vulnerable people action plan in Appendix 17 and the gender action Plan in Appendix 16.

25. The special training needs to be designed by specialized consultants. These consultants will work with the relevant departments of NWPF and AJK to strengthen their capacity to deliver such trainings and to facilitate the participation of the target groups to the courses. The consultants will also design and implement a program of post-training assistance to find jobs.

Appendix 7 65

H. ADB’s Approach to Implementation

26. From its involvement in other natural disasters, ADB has learned that post disaster rehabilitation and recovery is most effective when (i) affected people are offered people- centered solutions and recognition is given, at an early stage, that vulnerable groups require special and urgent arrangements; (ii) rehabilitation activity is designed for, and implemented by, the lowest level of mandated and competent agency; (iii) durable arrangements are made, which assign clear responsibilities for central and localized strategic coordination; (iv) needs and sectoral technical responses are assessed and defined in ways that avoid unmanageable demands; (v) innovative institutional arrangements are created (even if only temporary) through which specialized expertise can be quickly mobilized and held accountable; and (vi) validation, audit, accountability, judicial and quasi-judicial arrangements are stipulated with a clear view of enhancing the predictability of outcomes for disaster affected people.

27. ADB will work with the federal Government and with NWFP province and AJK state Governments to ensure that this subcomponent is implemented in a manner which incorporates the principles set out in paragraph 21 above. As the Government and other development partners are working in related areas, there will be a need to continue coordination to ensure that Government and development partner activities, as well as those of the ADB, complement each others activities.

28. Consistent with the sector approach adopted for the entire Project, ADB’s assistance will seek to support good governance, anti-corruption, and the legal and public administrative infrastructure through cofinance, and gap-filling in areas not yet covered, and in areas where ADB has a comparative advantage. ADB will actively coordinate with development partners and the Government to minimize duplication, encourage cofinancing and have a catalytic effect on the provision of additional resources. To provide against the duplication of efforts, the allocation of ADB funds for this activity may be adjusted to ensure delivery of balanced and demand responsive institutional assistance.

29. This subcomponent will be coordinated through ERRA. Advisory technical assistance engaged by ADB and associated contracts to implement activities in an agreed annual work plan will be administered by ADB under ADB’s Guidelines on the Use of Consultants and other arrangements satisfactory to ADB.

Appendix 8 66

Table A8: Cost Estimates ($ million)

Category Foreign

ExchangeLocal

Currency TotalCost

A. Asian Development Bank Financing 1. Quick-Disbursing 100.0 0.0 100.0 a. Grant Financing 65.0 0.0 65.0 b. Loan Financing 35.0 0.0 35.0 2. Project Components a. Equipment and Materials 29.9 19.1 49.0 i. Education 0.5 2.0 2.5 ii. Health 7.4 3.1 10.5 iii. Transport 1.5 0.0 1.5 iv. Power 20.5 14.0 34.5 b. Civil Works 101.4 34.6 136.0 i. Education 7.8 7.2 15.0 ii. Health 7.0 5.0 12.0 iii. Transport 83.1 20.4 103.5 iv. Power 3.5 2.0 5.5 c. Implementation Assistance 5.0 10.0 15.0

i. Legal Assistance, Governance, and Institutional Building 1.0 1.5 2.5

ii. Incremental Administrative Support 1.5 3.5 5.0 iii. Consulting Services 2.5 5.0 7.5 Subtotal (A) 236.3 63.7 300.0B. Government Financing (Counterpart) 1. Physical Works 0.0 51.5 51.5 i. Education 0.0 5.1 5.1 ii. Health 0.0 5.6 5.6 iii. Transport 0.0 29.8 29.8 iv. Power 0.0 11.0 11.0 2. Taxes and Duties a 0.0 18.3 18.3 i. Education 0.0 1.0 1.0 ii. Health 0.0 1.6 1.6 iii. Transport 0.0 5.2 5.2 iv. Power 0.0 2.5 2.5 v. Quick-Disbursing 0.0 8.0 8.0 3. Interest During Implementation 4.4 0.0 4.4

Subtotal (B) 4.4 69.8 74.2Total 240.7 133.5 374.2

WSS = water supply and sanitation. a Equipment and materials (10%), civil works (5%), quick-disbursing (8%). Source: Asian Development Bank estimates.

Appendix 9 67

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68 Appendix 9

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Appendix 10 69

PROCEDURES FOR SELECTION, APPROVAL, AND IMPLEMENTATION OF SUBPROJECTS

A. Eligibility Criteria for Subprojects

1. The subprojects will be for rehabilitation of earthquake-damaged infrastructure in the transport, power, and health and education sectors. The eligibility criteria listed represent threshold general selection criteria for a subproject to be satisfied prior to application of sector-specific criteria.

(i) The subproject will rehabilitate or restore damaged infrastructure and facilities caused by the earthquake, based on the preliminary damage and needs assessment, and assessments carried out by the project consultants.

(ii) The subproject is technically feasible, cost-effective and financially sustainable, incorporates multi-hazard-resistant design standards of the Government of Pakistan or equivalent authorities; and represents a least-cost alternative.

(iii) The subproject will incorporate beneficiary consultation and input in the selection process where applicable.

(iv) The subproject will be completed within the project implementation period. (v) The funding of the subproject will not overlap with funding from other agencies,

though such agencies may cofinance specified support, including monitoring, capacity building, and identified poverty reduction.

(vi) All necessary approvals of the national and respective state/provincial governments will be obtained for the subprojects before submission by the implementing agencies to the Asian Development Bank (ADB) for approval.

(vii) Subprojects will be prioritized on the basis of their social and economic impacts. (viii) The subproject is: (a) in compliance with applicable national and state laws and

ADB Environment Policy (2002); and (b) prepared in accordance with the requirements of an agreed environmental assessment and review framework. Subprojects that do not satisfy the framework will not be included under the Project. For subprojects that require an initial environmental examination (IEE): (a) the IEE is included in the subproject proposal; (b) the related environment management and monitoring plan is prepared for design and implementation; and (c) Government environment clearance including all necessary clearances as applicable for respective states is obtained prior to award of the subproject contract. In the exceptional cases of subprojects that require an environmental impact assessment (EIA), the EIA will be prepared according to the procedures specified in the environmental assessment review framework (EARF) and approved by the State Governments and ADB prior to approval of the subproject.1

(ix) The subproject is (a) in compliance with applicable national and state laws and ADB Policy on Involuntary Resettlement (1995); (b) minimizes land acquisition and resettlement, and limits resettlement to unencumbered public lands to the extent possible and that has not been squatted upon; and (c) is prepared in accordance with an agreed resettlement framework. For subprojects involving land acquisition and resettlement of affected persons, a resettlement plan in accordance with the agreed resettlement framework will be formulated and

1 The summary EIA of this particular subproject will be disclosed through ADB website 120 days prior to approval of

it.

70 Appendix 10

forwarded to ADB for review and approval prior to acquisition of any land or the award of subproject contracts.

B. Procedures

4. All subprojects will be prepared and processed in accordance with the following procedures (Table A10):

(i) The implementing agencies will select a subproject from the list agreed with ADB during the loan inception mission for the Project, or propose other subprojects that qualify given the eligibility criteria and prepare a project concept paper, which describes the main elements of the proposed subprojects and main justification, and (a) categorize resettlement significance using resettlement categorization checklist and (b) environmental screening checklist. As this Project is in environment category B, the relevant procedures apply.

(ii) The above checklists will be submitted to the implementing agencies in the respective states for review. If the implementing agencies find that the proposed subproject is eligible in light of the eligibility criteria and the reports are in order, implementing agencies will send the reports to ADB for further review, to obtain necessary guidance with regard to the extent of relevant analysis, assessment, plan, etc.

(iii) ADB will review the subproject concept reports submitted by the implementing agencies/SCs. If ADB finds that a proposed subproject is not likely to satisfy the eligibility criteria and/or the agreed procedures, ADB will advise the implementing agency either (a) to modify the subproject proposal in a manner that will make it eligible for approval or (b) that the subproject must be rejected. If a subproject is rejected, the IA may propose a replacement subproject. If the proposed subproject satisfies the eligibility criteria and procedures, based on the resettlement checklist, ADB will advise on the requirements of preparation and application of the resettlement plan.

(iv) Following approval of a subproject concept by implementing agencies, SCs and ADB, the relevant implementing agency will conduct a feasibility study and preliminary design or other similar design works, and based on those works, develop a resettlement plan (if required) and undertake an IEE including an environmental management plan.

(v) The implementing agency will disclose the resettlement plan and IEE to the affected persons and incorporate the results of the consultation.

(vi) The report of the feasibility study and preliminary design/other design work, including the resettlement plan and IEE, will be submitted by the implementing agency to the SC for its appraisal. The implementing agencies and SCs will appraise the reports in light of the relevant frameworks. Based on the review, the implementing agencies/SCs will prepare a summary appraisal report for each of the subprojects as the case may be. If the implementing agency finds that one or more proposed subprojects are technically, environmentally, and socially viable, and all reports are in order, the implementing agency will send those reports, with attachments including the resettlement plan (if required) and IEE, to ADB for further review and approval.

(vii) ADB will review the summary appraisal reports, together with required attachments. If ADB finds that the proposed subproject satisfies the eligibility criteria and procedures, ADB will approve the subproject. If ADB finds that the proposed subproject does not satisfy the eligibility criteria and procedures, or does not

Appendix 10 71

comply with sector-specific criteria, and ADB safeguard policies, ADB may advise the implementing agency on remedial actions to be taken for the proposed subproject for it to comply or reject the subproject.

Table A10: Summary Procedures for Selection and Approval of Subprojects

Activities Required Action Responsibility 1. Initial list of subprojects Prepare an initial list of subprojects

with a brief description of activities to be implemented in each subproject, and, along with rough cost estimates, submit the proposal to the steering committees through the technical section.

Implementing agencies with assistance from consultants as required

2. Compilation and initial review of subprojects

Compile and review, as appropriate based on the selection criteria, the subproject proposals submitted by the implementing agencies.

Earthquake Reconstruction and Rehabilitation Authority (ERRA) or steering committee with assistance from consultants

3. Selection and approval of subprojects

Based on agreed selection criteria and the priorities of the state governments, select and approve subproject proposals.

Empowered Committee for the respective state

4. Survey and detailed design Conduct a survey and prepare detailed design; hold consultations with different beneficiary groups and civil societies to determine local needs and priorities; consider social impacts of the subprojects, including the environment and resettlement effects; and apply the requirements set forth in the initial environmental examination and the resettlement framework.

Implementing agency with assistance from consultant, with inputs from communities and civil societies

5. Detailed cost estimates and bidding documents

Based on the detailed design, prepare detailed cost estimates, bidding documents, and technical specification.

Implementing agencies and reconstruction agencies(RAs) with assistance of consultant

6. Prepare detailed subproject proposal and submit to ADB

Submit the approved subproject proposal to the Asian Development Bank (ADB), with relevant environmental and social safeguard compliances, for review and approval.

Implementing agency

7. Final subproject approval Review and approval of the subproject proposals.

Respective implementing agencies and steering committees of the state/ADB as applicable

72 Appendix 11

PR

OJE

CT

IMP

LE

ME

NT

AT

ION

SC

HE

DU

LE

A

cti

vit

ies

1.

Recru

itm

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on

su

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f C

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Se

lect

ion a

nd C

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ct S

ignin

gF

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f co

nsu

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2. P

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stab

lishin

g f

und f

low

and m

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stem

Incr

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enta

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Sta

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ina

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verific

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entif

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f su

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ue

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a

3.

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Co

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5.

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supply

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act

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for

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ronm

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l, re

settle

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t, a

nd

so

cial a

ppra

isa

l of

sub

pro

ject

s. In

itially

, only

those

subp

roje

cts

will

be c

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act

ed w

hic

h

do n

ot re

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ese

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ment, e

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oci

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ana

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ent pla

ns.

All

com

pensa

tions

must

be p

aid

be

fore

const

ruct

ion b

egin

s.

43

12

2008

4Q

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Pro

ject

Imp

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on

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12006

200

72

32

34

1

Appendix 12 73

OUTLINE TERMS OF REFERENCE FOR STEERING COMMITTEES, RECONSTRUCTION AGENCIES AND OTHER IMPLEMENTATION AGENCIES

A. Steering Committees

1. Objectives of the Steering Committees

1. The provincial level steering committees are responsible for planning, approval of work plans and budgets and coordination of the proposed infrastructure development through the specially constituted Reconstruction Agencies and the provincial and district level agencies.

2. Duties and Responsibilities of the Steering Committees

a. General Management Tasks

2. The general management tasks of the steering committees are as follows:

(i) Decide whether sufficient capacity exists in a particular IA for undertaking the subprojects and assign subprojects to RA or the line departments/district governments accordingly.

(ii) Approve procedures and guidelines for evaluation of design and supervision consultants (DSC), and approve the recruitment the DSCs and other consulting packages for the respective implementing agencies.

(iii) Confirm procedures and guidelines for pre-qualification of contractors and their selection for bidding by the implementing agencies under advance procurement actions.

(iv) Review and approve standard bid documents and standard technical specifications of works prepared by implementing agencies/DSC;

(v) Approve procedures and issue guidelines for evaluation of bids of contractors/ suppliers including their post-qualification wherever necessary.

(vi) Provide monthly progress reports to ERRA on progress of reconstruction activity by the respective implementing agencies.

(vii) Coordinate and oversee the work of the implementing agencies and DSCs, including review and approval of annual work plans, consultancy and contract packages, master plans, and large subprojects.

B. Reconstruction Agencies

1. Objectives of the Reconstruction Agencies

3. The Government of NWFP and the Government of AJK will establish specialized Reconstruction Agencies to support the implementation. The Reconstruction Agencies are responsible for: (i) providing managerial and institutional capabilities for implementation where the provincial line departments and district agencies don’t have capacities to implement the subprojects, and (ii) to support the steering committees in the performance of their functions.

74 Appendix 12

2. Role of Reconstruction Agencies as Implementation Agencies

4. The role of reconstruction agencies as implementing agencies are as follows:

(i) Undertake all the works assigned to it by the steering committees where the existing implementation arrangements lack the requisite capacity to undertake subprojects;

(ii) Reconfirm all project components and identify, specify and check required additional surveys and investigations as necessary and prepare the appraisal reports for each subprojects;

(iii) Confirm land acquisition requirements and assess each site’s environmental aspects for detailed design of the project component;

(iv) Prepare a detailed implementation schedule covering all stages of the implementation process for each subproject from field survey and investigations to acceptance of finished work;

(v) Identify the possibility of private participation in subprojects, prepare community development and public awareness programs, and identify training requirements;

(vi) Confirm project component packages and contract documents, check, verify and update designs, engineering estimates and contract documents. Amend as necessary to comply with ADB procedures;

(vii) Confirm procurement methods (ICB, IS or LCB) for each project component; (viii) Collect available data from different sources and conduct detail physical surveys,

investigations and studies as necessary to generate data for design of the project subcomponents;

(ix) Prepare detailed designs, construction drawings, cost estimates, tender documents, and associated contract documentation to include LoI, conditions of contract, specifications, drawings, design reports, bills of quantities, etc. for all subproject subcomponents;

(x) Prepare required environmental and social studies to comply with the Government and ADB’s safeguard requirement;

(xi) Confirm procedures and guidelines for pre-qualification of contractors and their selection for bidding under advance procurement actions;

(xii) Review and confirm standard bidding documents and standard technical specifications of works under advance procurement actions prior to appointment of PMC/DSC;

(xiii) Invite tenders for civil works (ICB/LCB), evaluate as per set procedure and recommend awards;

(xiv) Procurement of equipment, materials and services procured under ICB, IS or LCB, procedures, including preparation of tender documents, tendering, tender evaluation and contract award;

(xv) Evaluation of bids, and preparation of abstract of bids and recommendation for award;

(xvi) Supervise, coordinate and monitor the civil works and supply of equipment and materials ensuring sound supervision and quality control and any other technical matters and issue certificates for acceptance;

(xvii) Record measurement of acceptable works, check contractors/suppliers invoices and recommend payment;

(xviii) Undertake overall contract management and preparation of variation orders;

Appendix 12 75

(xix) Preparation of subproject appraisal reports and obtaining approvals of ADB; (xx) Formulating satisfactory resettlement plans, where necessary for subprojects; (xxi) Ensure compliance of loan covenants; Conduct Benefit Monitoring and

Evaluation study; (xxii) Prepare monthly, quarterly mid term and final progress reports; and (xxiii) Prepare final measurement and ‘as built’ drawings

3. Institutional Strengthening

5. The institutional strengthening tasks of the reconstruction agencies are as follows:

(i) Assist the steering committees in the performance of their functioning; (ii) Guide the existing implementing agencies in the implementation of subproject

assigned to them; (iii) Assist the steering committee in appraising the annual work plans submitted to it

by the implementing agencies; (iv) Ensure that training services contracted to outside organizations are effective

and fit within the Project's plans for strengthening the capacity of the implementing agencies;

(v) Create awareness in the implementing agencies as to the importance of maintaining an up-to-date management information system and assist in its operation;

(vi) Identify opportunities within the Project for Private Sector Participation (PSP) and Public Private Partnership (PPP);

(vii) Coordinate and guide financial management reforms management in the implementing agencies;

(viii) Coordinate improvement in Management Information Systems (MIS) in the project districts and Geographical Information System (GIS) conducted by other agencies;

(ix) Assist the line departments in establishing, testing and reviewing financial accounting and control systems and ensuring accurate and timely report submissions and funds flow from the ADB and onwards to the implementing agencies;

(x) Assist the line departments in developing annual Project work plans, job descriptions, staffing schedules and equipment budgets;

(xi) Assist Steering Committees in reviewing Project progress; (xii) Assist the implementing agencies in monitoring and advising the steering

committees on financial, staffing, and administrative improvements; (xiii) Prepare an overall Project Performance Management System (PPMS) for the

Project and ensure that the necessary independent inputs are in place when and where required;

(xiv) Assist implementing agencies in the preparation of subproject appraisal reports and obtaining approvals of ADB;

(xv) Assist and guide implementing agencies in compliance of loan covenants; (xvi) Conduct Benefit Monitoring and Evaluation study; (xvii) Prepare Project accounts and submit timely statements to steering committee

and ERRA; (xviii) Prepare monthly, quarterly mid term and final progress reports; and

76 Appendix 12

(xix) Monitor compliance with ADB’s involuntary resettlement safeguard requirements in subproject design and develop a tracking system to ensure that necessary resettlement plans are prepared, and submitted to ADB for review and approval, and that all requisite resettlement monitoring reports are prepared and submitted to ADB in a timely fashion.

4. Community Awareness and Participation

6. The community awareness and participation tasks of the reconstruction agencies are as follows:

(i) Confirm procedures and guidelines for incorporation of affected persons inputs; (ii) Inventory and review recent and current community-based development

initiatives in the provinces, the organizations involved, mechanisms used, successes achieved;

(iii) Assist in identification and hiring of NGOs by implementing agencies; (iv) Assist implementing agencies in the design, preparation, planning and

management of the community participation components; (v) Plan and deliver initial briefing, training and orientation of DSCs and

implementing agencies in community awareness and participation programs; (vi) Assist and advise the implementing agencies to manage and coordinate the

implementation of the environmental and social due diligence; (vii) Provide continuous guidance on suitable mechanisms for participatory

interaction with and training of local government and affected communities; (viii) Monitor performance of community participation in the field, where necessary

make adjustments in the program set-up and mechanisms employed, review field reports and advise implementing agencies on actions required;

(ix) Plan and organize regular training events, including workshops and seminars for the duration of the Project;

(x) Monitor impact of community participation in the project districts; and (xi) Prepare annual reports on performance and impact of community participation

and development activities.

C. Other Implementation Agencies

1. Provincial and District Implementation Agencies

7. The steering committee will decide if sufficient capacity exists within an existing provincial line department and/or district agency for undertaking the implementation of sub projects.

2. Duties and Responsibilities of Provincial and District Implementation Agencies

a. General Management Tasks

8. The general management tasks of the provincial and district implementation agencies are as follows:

Appendix 12 77

(i) Undertake all the works assigned to it by the steering committee where the existing implementation arrangements lack the requisite capacity to undertake subprojects;

(ii) Confirm land acquisition requirements and assess each site’s environmental aspects for detailed design of the project component;

(iii) Prepare a detailed implementation schedule covering all stages of the implementation process for each subproject from field survey and investigations to acceptance of finished work;

(iv) Identify the possibility of private participation in subprojects, prepare community development and public awareness programs, and identify training requirements;

(v) Confirm project component packages and contract documents, check, verify and update designs, engineering estimates and contract documents. Amend as necessary to comply with ADB procedures;

(vi) Confirm procurement methods (ICB, IS or LCB) for each project component; (vii) Collect available data from different sources and conduct detail physical surveys,

investigations and studies as necessary to generate data for design of the project subcomponents;

(viii) Prepare detailed designs, construction drawings, cost estimates, tender documents, and associated contract documentation to include LoI, conditions of contract, specifications, drawings, design reports, bills of quantities, etc. for all subproject subcomponents;

(ix) Prepare required environmental and social studies to comply with the Government and ADB’s safeguard requirement;

(x) Confirm procedures and guidelines for pre-qualification of contractors and their selection for bidding under advance procurement actions;

(xi) Review and confirm standard bid documents and standard technical specifications of works under advance procurement actions prior to appointment of PMC/DSC;

(xii) Invite tenders for civil works (ICB/LCB), evaluate as per set procedure and recommend awards;

(xiii) Procurement of equipment, materials and services procured under ICB, IS or LCB, procedures, including preparation of tender documents, tendering, tender evaluation and contract award;

(xiv) Evaluation of bids, and preparation of abstract of bids and recommendation for award;

(xv) Supervise, coordinate and monitor the civil works and supply of equipment and materials ensuring sound supervision and quality control and any other technical matters and issue certificates for acceptance;

(xvi) Record measurement of acceptable works, check contractors/suppliers invoices and recommend payment;

(xvii) Undertake overall contract management and preparation of variation orders; (xviii) Preparation of subproject appraisal reports and obtaining approvals of ADB; (xix) Formulating satisfactory resettlement plans, where necessary for subprojects; (xx) Ensure compliance of loan covenants, and conduct Benefit Monitoring and

Evaluation study; (xxi) Prepare monthly, quarterly midterm and final progress reports; and (xxii) Prepare final measurement and ‘as built’ drawings.

78 Appendix 12

b. Community Awareness and Participation

9. The community awareness and participation tasks of the provincial and district implementation agencies are as follows:

(i) Design, prepare, plan and manage the community participation components; (ii) Invite and select of NGOs to be involved in the community participation

programs;(iii) Manage and coordinate the implementation of the environmental mitigation and

due diligence; (iv) Monitor performance of community participation in the field, where necessary

make adjustments in the program set-up and mechanisms employed. Prepare field reports for submission to the steering committee;

(v) Monitor impact of community participation in the project cities; and (vi) Prepare annual reports on performance and impact of community participation

and development activities.

Appendix 13 79

SUMMARY POVERTY REDUCTION AND SOCIAL STRATEGY

A. Linkages to the Country Poverty Analysis Sector identified as a national priority in country poverty analysis? Yes

Sector identified as a national priority in country poverty partnership agreement? Yes

Contribution of the sector/subsector to reduce poverty in Pakistan:

The rehabilitation components for the transport, power, and social sectors will reestablish services and infrastructure that are crucial for the social and economic life of the affected areas. In particular, transport and power infrastructure rehabilitation and reconstruction will revive economic activity, resulting in income generation, employment, and rehabilitation of affected people. Health and educational facilities will provide fundamental social services that are needed to rebuild the human capital that was lost.

The legal assistance, governance, and institutional building component will provide relief to the legal and documentary problems that earthquake-affected people will encounter. Major targets will be the issue or replacement of identity cards and birth, death, and marriage certificates. The component will also provide a legal framework with special provisions for people and property affected by the earthquake, especially vulnerable people.

Finally, the use of labor-intensive techniques in the civil works will provide job opportunities in all affected areas.

B. Poverty Analysis Proposed Classification: Poverty intervention

What type of poverty analysis is needed?

Prior to the earthquake, North-West Frontier Province (NWFP) and Azad Jammu and Kashmir (AJK) were not the poorest regions in the country. They were nevertheless among the most vulnerable to external shocks. Geographical isolation, the harshness and fragmentation of the land, the lack of security as a consequence of conflicts, and adverse climatic conditions put the population at risk of being thrown into poverty.

The earthquake claimed some 80,000 lives, almost half of whom are thought to be children, and some 70,000 were injured, and 2.8 million were left without shelter. Of the 70,000 who were injured, many will be permanently disabled. Many of the affected people will also need counseling. Crops and other livelihood assets were destroyed, and savings were lost. Many communities are completely isolated, and they are particularly threatened by epidemic diseases, famine, and cold. Productive human capital was deeply compromised, as was the productive capacity of the affected region as a whole. Risks of abuse, discrimination, and militia recruitment are very high.

The earthquake had impacts in the short and the long term. In the short term, the lack of food and shelter threatens the survival of affected people. In the long term, productive capacity is threatened in that many men died, leaving women who will have to enter the labor market, many for the first time. Disabilities will constitute a great burden on affected families and the Government.

A mass of new poor will have to first go through the harshness of winter and then find their way out of poverty.

Before the earthquake, both NWFP and AJK had relatively few people living on less than $1 per day—9.9% in NWFP and 2.5% in AJK, against a national average of 13.9%. Yet poverty was substantial when including those living on $2 per day—76.2% in NWFP and 51.0% in AJK, against a national average of 69.7%. Hence the extreme vulnerability.

C. Participation ProcessStakeholder Analysis: No

Participation Strategy: Yes

All stakeholders will be actively involved in order to reduce the risk of grievance and ensure that benefits are fairly distributed. High rates of participation are also proven to increase ownership. In addition, contractors will discuss the selection of unskilled labor in the project area with township labor officials and village leaders to ensure that labor will behired on a nondiscriminatory basis.

80 Appendix 13

D. Gender and Development

Strategy to maximize impacts on women

Women traditionally suffer discriminated in Pakistan and, in the aftermath of the earthquake, face the burden of providing for their families. Disabilities place additional burdens on women and other family members. Family and household structures may need to be recast, with many families forming one household, other households headed by one person (female or male), and other families composed of grandparents and grandchildren. Widows will embrace the role of head of household, combining the traditional roles of breadwinner and caregiver. Vocational training will be essential, as will special rehabilitation and training for disabled women. Equal opportunities and access to jobs will be crucial. Equal property rights and proper identification are also very important. Targeted provisions are present in the gender action plan for the Project.

Gender plan prepared? Yes

E. Potential Issues

Issues Significant/

Not-significant/ None

Strategy to Address Issues Output prepared

Resettlement Not significant All proposed infrastructure development, rehabilitation, and reconstruction will be at existing sites and on original routings and alignments. Buffer zones may require some temporary land acquisition. Particular attention will be paid to non-titled land users (squatters and unregistered tenants) and women. Special mechanisms will be arranged to overcome problems arising from the absence of title deeds to land where affected people had user rights.

A resettlement framework was prepared and will guide the preparation of appropriate resettlement plans for all subprojects with resettlement impact.

Gender Significant In Pakistan, women have always been one of the most vulnerable groups. The earthquake has exacerbated their already precarious position. Particular attention will be devoted to gender issues in implementing all of the Project’s components. The institutional building component in particular will constitute a great opportunity to address gender issues nationally.

A gender action plan was prepared.

Affordability Not significant People will have equal access to public services. The affordability of other services will be monitored.

None

Labor Significant The Project will provide short- and long-term employment opportunities. Contractors will be asked to use labor-intensive techniques. Equal opportunities and wages will be afforded to men and women, regardless of ethnicity, religion, or other factors that have been grounds for discrimination.

None

Indigenous People

Not significant Indigenous peoples are fully mainstreamed, and their vulnerability arises mainly from economic differentiation within tribal communities. Project impacts on them will arise mainly from land acquisition and disturbances to livelihood. These will be adequately addressed through resettlement planning.

None

Other Risks/ Vulnerabilities

Significant The elderly and disabled are notably at risk of marginalization, discrimination, and abuse. The earthquake increased the number of physically and psychologically disabled and, in many cases, also deprived them of support.

A vulnerable groups action plan was prepared.

Appendix 14 81

INITIAL ENVIRONMENTAL EXAMINATION

A. Introduction

1. The objective of the proposed Project is to support the efforts of the Government of Pakistan (the Government) to rehabilitate areas affected by the recent earthquake in northern Pakistan, especially in Azad Jammu and Kashmir (AJK) and North-West Frontier Province (NWFP). The Project will employ a sector loan modality to allow the selection of the highest priority subprojects during implementation. Based on the preliminary damage and needs assessment, the Project will cover the following sectors: transport, energy, and the social sector areas of health and education. Due to the emergency nature of the Project, no sample subproject has been selected, so no sample subproject initial environmental examination (IEE) is available.

2. The Project’s IEE provides overall preliminary scoping and highlights potential environmental impacts and mitigation measures to be further explored during subproject formulation. The Project’s IEE includes an environmental assessment and review framework that provides a set of guidelines on how the environmental assessment for the subprojects will be prepared and reviewed. This IEE was based on the preliminary damage and needs assessment and the environmental and social screening framework prepared by the World Bank.

B. Overview of the Project

3. The Project aims to support reconstruction and recovery from the affects of the earthquake with particular focus on (i) reconstructing basic infrastructure and services and (ii) reviving economic activity in the affected areas. The Project has three sector components. The scope of the proposed project components is summarized in Table A14.1.

Table A14.1: The Summary of the Scope of Project Components

Project Component Scope of Works Transport Sector Remove landslide debris and open roads to traffic

Restore roads and bridges Stabilize road embankments to withstand snow Comprehensively survey to guide planning and prioritization of the

reconstruction and recovery works Reconstruct unpaved local roads Reconstruct the main provincial access roads

Energy Sector Procure on an emergency basis high- and low-voltage lines, transformers, grid station equipment, and materials for power station operational buildings and staff quarters

Electrify the 10 tent villages and supply power Repair and reconstruct on an emergency basis damaged electricity

networks and related buildings Upgrade and expand power systems to improve access for the poor

and provide electricity to promote economic development in the earthquake-affected area

Social Sector: Health Reestablish public health centers Provide services to people living in relief camps and disabled people Reconstruct, repair, and provide equipment for health management

offices and health facilities

Appendix 14 82

Project Component Scope of Works Social Sector: Education

Reconstruct and consolidate schools and resume classes immediately in semi-permanent structures

Survey and map where schools are needed and teachers are available

Reconstruct and repair schools

C. Description of the Environment

4. The project components will be located in earthquake-affected areas of AJK and NWFP. The general environmental conditions are as follows:

5. Physical Environment. The Project area is part of the mountainous region in the north, in which summers are temperate and winters intensely cold. Rainfall generally occurs in two distinct crop-growing seasons, from December to March and from June to September, with the onset of the summer monsoon in the first or second week of June. In the intervening periods of April-May and October-November, almost no rain falls. The three main rivers in the project area are the Jhelum, Kunhar, and Neelum.

6. Ecological Environment. The Project area is located in the Himalayan Mountains and is famous for its high-altitude coniferous and broad-leaved forests and great biodiversity. Forests, game reserves, and cold rivers, lakes, and wetlands characterize the landscape. Around 4% of the land in AJK has been declared protected forest. The Machiara National Park is located in the heart of the earthquake-affected area. In NWFP, about 6% of the land is designated as protected, with Ayubia National Park located at the periphery of the earthquake-affected zone.

7. Social, Cultural, and Economic Development. The area most heavily damaged by earthquake is home to a scattered population of some 5.7 million people. The social structure in this region is closely knit, with an average of 7 family members per household. About 88% of the people live in the mountains in rural settlements ranging from two households to more than 300. The region’s population is relatively young, with 42% below the age of 15 years and only 6.7% above the age of 60. A high portion of the population lacks basic services, clean drinking water, and safe waste disposal. Agriculture and livestock rearing are the primary sources of employment in the rural areas, with most rural residents engaged in subsistence agriculture. Public administration accounts for a significant proportion of employment in the affected urban areas, followed by small trading, business, construction, and transport.

D. Anticipated Environmental Impacts

8. The Project’s main objective is to reconstruct and restore infrastructure damaged or destroyed by the earthquake and is therefore not expected to have a significant adverse environmental impacts. What adverse environmental impacts there may be will mostly be limited to the construction stage. They will affect a limited area only over the short term and be reversible, so the mitigation measures indicated in the attached matrix should be manageable.

9. To address any potential impacts, subprojects will be screened and classified at an early stage, and an environmental assessment will be carried out. The environmental assessment and review framework will guide the preparation of the environmental assessments of subprojects. The scoping of the potential environmental impacts and proposed mitigation measures are presented in Table A14.2.

Appendix 14 83

10. The preliminary damage and needs assessment indicates that the following post-earthquake environmental conditions require consideration:

(i) Debris and rubble need to be removed before reconstruction can start. There was evidence of debris and rubble being dumped in rivers adjacent to the cities and along the road, as well as in open fields, drainage ditches, and forested areas. These practices should be stopped, and the areas restored. Dumping in rivers affects the water quality and causes clogging and flooding, and dumping in the forest destroys new vegetation. It is necessary to identify safe locations for disposing of debris and rubble.

(ii) Petroleum leakage has been a serious environmental problem since the earthquake. It is estimated that around 10,000 liters of petroleum fuel in underground storage have leaked due to earthquake damage. As water for drinking and irrigation come mainly from surface sources, it is therefore necessary to undertake monitoring of surface water contamination.

(iii) Landslides are the main environmental impact of this natural disaster. Landslides affect not only slope drainage, but also the habitats of fauna and flora. All project components with significant physical intervention in landslide areas need to be properly prepared by taking this into account.

E. Institutional Arrangement and Monitoring Plan (Environmental Assessment and Review Framework)

11. The Project will be executed by using sector modality and the environmental assessment framework, which covers environmental criteria for project selection and responsibilities of the parties involve are summarized as follows:

1. Environmental Criteria for Selection of Subprojects

12. As much as possible, not to include a category A project in accordance to the Asian Development Bank’s (ADB’s) Environmental Assessment Requirements (2003) for the first batch of the Project. If an environmental category A subproject needs to be included, the summary environmental impact assessment (EIA) of this particular subproject will need to be prepared and be disclosed to the public 120 days prior the approval of the subproject. The EIA should be carried out in accordance with ADB and Government of Pakistan requirements. In addition, a two-step staff consultations with affected people needs to be carried out.

2. Environmental Assessment Requirement

13. Taking into account the potential impacts related with the follow up subprojects, the Government of Pakistan notification on Environmental Impact Assessment Requirement, and the ADB environmental assessment guidelines, the environmental classification of the subprojects will be as follows:

(i) Subprojects will be categorized A if the subproject generates significant adverse environmental impacts that requires a complex management plan, or if the subproject located within or pass through: (a) wildlife sanctuaries, (b) national parks, (c) other sanctuaries, (d) areas declared by the Government of Pakistan as environmentally sensitive, (e) areas of international significance (e.g., protected wetland as designated by the Ramsar Convention), or (f) areas designated by the United Nations Educational, Scientific, and Cultural Organization (UNESCO) as cultural heritage sites. This type of project requires EIA report including an environmental management plan (EMP).

Appendix 14 84

(ii) A subproject will be categorized as B if the project is likely to have an adverse environmental impact, but of lesser degree or significance than those for category A subprojects and all the mitigation measures to handle the impact are manageable. This type of project will need IEE report including EMP.

3. Review Procedure for Environmental Assessment of Subprojects and Responsibilities and Authorities

14. The environmental assessment study for the follow up subprojects and the review procedure for the follow up subproject will be carried out to comply with the Government’s and ADB’s environmental safeguard policies. The study will also identify mitigation measures.

15. Each implementing agency will assume the following responsibilities: (i) Hiring the qualified environmental consultant to prepare the environmental

screening to classify the subprojects in consultation with respective Provincial Environmental Protection Agency (EPA) either AJK EPA or NWFP EPA.

(ii) Conducting environmental assessment study based on the classification of the sub project with adequate consultation with affected people. For category A subproject two step consultation with affected people needs to be carried out.

(iii) For category B project, each implementing agency responsible for submitting the environmental screening and environmental assessment report and its summary to the AJK EPA or NWFP EPA for review in order to obtain an environmental clearance for execution of the subprojects. However, if the EPA AJK is not available, the environmental clearance from PEPA should be obtained.

(iv) For category A project, aside following the procedure as stated in (ii),implementing agency needs to submit also the EIA report and its summary to ADB as soon as possible to meet the 120 days public disclosure prior to obtaining an ADB’s approval for this subproject.

(v) Forwarding the environmental clearance and its conditions to ADB. (vi) Ensuring that the contract document for implementing each subproject includes:

(a) environmental monitoring and management plan taken from the environmental assessment report, and (b) the environmental clearance certificate and its conditions.

(vii) Ensuring that environmental clearance certificate from NWFP EPA or AJK EPA should be obtained prior to granting contract award.

(viii) Monitoring the implementation of environmental management plan throughout the whole project implementation stage particularly during preparation of detail engineering design and construction stage and preparing the report in monitoring the implementation of environmental management plan.

(ix) Undertaking remedial action in close consultation with respective EPA and ADB to handle unexpected environmental impacts.

(x) Submitting the monitoring report on EMP to the relevant agencies and ADB.

16. ADB will assume the following responsibility: (i) Providing comments for the preparation of the EIA and its summary of any

subproject that categorized as A project. (ii) Disclosing the SEIA report for category A subproject through ADB’s website 120

days prior to approving subproject. (iii) Approving subproject by taking into account the environmental assessment

report and conditions of environmental clearance certificates. (iv) Undertaking random monitoring in the implementation the environmental

safeguard policy at any time within the implementation period of the Project.

Appendix 14 85

(v) Providing suggestion and recommendations on remedial actions to handle unexpected environmental impacts.

4. Environmental Due Diligence to Ensure Compliance with the ADB’s Environmental Policy

17. The Government should ensure that ADB is given access to undertake environmental monitoring for all subprojects, if needed. However, the line department where the subprojects is implemented has the responsibility for monitoring of the implementation of environmental management plan for its respective subprojects. The report on monitoring the implementation of EMP needs to be systematically documented.

5. Public Disclosure

18. Each implementing agency is responsible for ensuring that all environmental assessment documentation, including the monitoring reports, is properly and systematically kept as part of the subproject-specific records.

19. All environmental assessment documents are subject to public disclosure and documents must be made available to public, if requested.

6. Staff Requirement and Budget

20. Each implementing agency at present has no environmental officer, therefore, it has been included in the project implementation arrangement that each implementing agency (where required) and both reconstruction agencies will be supported with a qualified environmental consultant.

F. Public Consultation and Disclosure

21. Consultation with affected people was not specifically done during the preparation of this summary IEE due to the emergency nature of the Project. However, the Government and other donors were closely involved in the preliminary damage and need assessment, which is the basis for preparing this summary. In addition, during the preliminary damage and needs assessment and the Fact-Finding Mission, the proposed environmental assessment and review framework was discussed, and agreement was reached that it will be implemented for the subprojects. Therefore, during subproject preparation, especially when the environmental assessment is being prepared, consultation with concerned parties will be conducted to comply with the Government’s and ADB’s requirements.

G. Findings and Recommendation

22. The Project and its subprojects will focus on reconstructing and rehabilitating infrastructure. Therefore, it is expected that an adverse environmental impact will mostly occur during the construction phase. These impacts are insignificant, short term, and reversible. Mitigation measures should be integrated into the engineering and construction works as part of subproject design. However, it is necessary to ensure that subprojects meet the Government’s and ADB’s environmental assessment requirements prior to their approval and that the environmental management plan for each subproject is strictly implemented.

86 Appendix 14T

able

A14

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Appendix 14 87 S

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una

void

able

, pro

vide

co

mpe

nsat

ory

plan

ting

S

uita

ble

labo

r ca

mp

wat

er,

sani

tatio

n an

d w

aste

dis

posa

l ar

rang

emen

ts

R

apid

ass

essm

ent o

f al

tern

ativ

es fr

om

envi

ronm

enta

l/soc

ial

pers

pect

ive

R

eset

tlem

ent a

ctio

n pl

an

B

orro

w a

rea

reha

bilit

atio

n

Mai

nten

ance

res

pons

ibili

ty

assi

gned

Tra

inin

g

88 Appendix 14S

ub

pro

ject

Ch

arac

teri

stic

s

Sec

tor

Su

bp

roje

ct

Typ

e an

d

Th

resh

old

s

Typ

ical

Act

ivit

ies

En

visa

ged

in

Em

erg

ency

A

ssis

tan

ce P

has

e

Typ

ical

En

viro

nm

enta

l an

d

So

cial

Co

nce

rns

Typ

ical

En

viro

nm

enta

l an

d

So

cial

Op

po

rtu

nit

ies

Typ

ical

Mit

igat

ion

/En

han

cem

ent

Mea

sure

s to

be

incl

ud

ed in

P

roje

ct

New

roa

ds fo

r m

issi

ngco

nnec

tions

Det

erm

ine

loca

tion

Det

erm

ine

Alig

nmen

t C

ondu

ct s

urve

ys

Det

aile

d de

sign

s

Sig

nific

ant r

eset

tlem

ent

expe

cted

R

estr

ictio

ns o

n cr

oss-

drai

nage

and

sta

gnat

ion

of d

rain

age

Inc

reas

ed s

edim

enta

tion

of w

ater

bod

ies

due

to

eros

ion

Inc

reas

ed r

un-o

ff an

d flo

odin

g L

oss

of tr

ees

and

othe

r ve

geta

tion

Cul

tura

l pro

pert

y-re

late

d to

cha

nce

finds

I

nade

quat

ely

reha

bilit

ated

bor

row

pits

Ero

sion

pro

tect

ion

Roa

dsid

e pl

anta

tion

Dur

able

con

stru

ctio

n L

abor

cam

p ar

rang

emen

ts

(wat

er, f

uel,

sani

tatio

n, w

aste

m

anag

emen

t)

Con

stru

ctio

n pe

riod

wor

ker

heal

th a

nd s

afet

y C

ompe

nsat

ory

tree

pla

ntat

ion

and

reve

geta

tion

Exp

lore

ben

efic

ial u

se o

f bo

rrow

-pits

(e.

g. fo

r fis

hing

) L

ocal

con

flict

-res

olut

ion

mec

hani

sm s

tren

gthe

ning

(e

.g.,

for

man

agin

g m

igra

tion)

Env

ironm

enta

l and

soc

ial

asse

ssm

ent f

or s

chem

es

Reh

abili

tatio

n of

pow

er

tran

smis

sion

/di

strib

utio

n sy

stem

s

Deb

ris d

ispo

sal

Reh

abili

tatio

n of

sy

stem

s

Im

prop

er d

ebris

dis

posa

l P

CB

dis

posa

l R

educ

e sy

stem

loss

es

C

onsu

ltatio

n

Cle

aran

ce o

f site

s an

d de

bris

di

spos

al

W

aste

tran

sfor

mer

coo

lant

oil

shou

ld b

e st

ored

in s

eale

d co

ntai

ners

and

dis

pose

d of

sa

fely

Tra

inin

g

Res

ettle

men

t Pla

n

Energy

R

ehab

ilita

tion

of p

ower

ge

nera

tion

syst

ems

D

ebris

dis

posa

l

Reh

abili

tatio

n of

sy

stem

s

Im

prop

er d

ebris

dis

posa

l

Fue

l sou

rcin

g

PC

B d

ispo

sal

N

o re

settl

emen

t exp

ecte

d

U

se c

lean

er te

chno

logy

w

here

pos

sibl

e an

d im

prov

e en

ergy

effi

cien

cy

C

onsu

ltatio

n

Cle

aran

ce o

f site

s/ d

ebris

di

spos

al

E

nsur

e fu

el s

ourc

ing

is

sust

aina

ble

M

eet e

mis

sion

sta

ndar

ds

W

aste

tran

sfor

mer

coo

lant

oil

shou

ld b

e st

ored

in s

eale

d co

ntai

ners

and

dis

pose

d of

sa

fely

Tra

inin

g S

ourc

e: M

odifi

ed fr

om T

he W

orld

Ban

k, E

nviro

nmen

tal a

nd S

ocia

l Scr

eeni

ng a

nd A

sses

smen

t Fra

mew

ork,

Nov

embe

r 20

05.

Appendix 15 89

RESETTLEMENT FRAMEWORK

A. Introduction

1. The proposed project will support the efforts of the Government of Pakistan (the Government) in the recovery, reconstruction, and rehabilitation of the earthquake-affected areas of Azad Jammu and Kashmir (AJK) and North-West Frontier Province (NWFP).

2. The Asian Development Bank (ADB) will assist the rehabilitation of damaged or destroyed infrastructure of the transport, power, and health and education sectors, and will provide legal assistance and support for institutional building. Reconstruction and rehabilitation of damaged or destroyed facilities will be done at their original sites. The Government will try to use its own land if additional land is required for physical infrastructure. The Government will acquire private land only if vacant government-owned land is not available

3. Resettlement impacts 1 of a specific subproject will be known only during project implementation. As a result, the preparation of resettlement plans for such subprojects cannot be done before Board consideration of the loan and grant. Therefore the resettlement framework will be part of the report and recommendation of the President and the legal agreements considered by the Board at project approval. This resettlement framework, agreed between the Government and ADB, sets out compensation and other entitlements of all project-affected people as well as how to prepare satisfactory resettlement plans for subprojects with resettlement impacts.

4. Among the earthquake-affected communities are several dominant tribes and subtribes that participate in mainstream economic and political activities and are represented in public institutions, civil services, and educational institutions. Social inequalities and vulnerabilities in these communities usually arise from economic differentiation, as land is owned by a few large, powerful families who rent it out to others who cultivate crops and raise livestock. The project is unlikely to change this dominant mode of economic system. A social assessment2 will be conducted focusing on the vulnerabilities of all affected groups including tribal groups and cultural minorities in the earthquake-affected areas. This is to ensure effective consultations and that culturally appropriate benefits will reach each affected group. As part of this assessment, the executing agency of each subproject will examine the vulnerability of different groups in terms of potential exclusion from subproject benefits, negative subproject impacts, and the need for specific culturally compatible mechanisms for participation by women, the permanently disabled, and other vulnerable groups. If any of the above are found in a subproject area, the executing agency will incorporate adequate measures to address such vulnerabilities in project design. If land acquisition or relocation becomes necessary, people’s entitlements will be ensured through the resettlement plan that will be prepared in accordance with the approved resettlement framework.

B. Policy and Legal Framework

5. The resettlement framework has been prepared in accordance with ADB’s Involuntary Resettlement Policy (IRP), its disaster and emergency assistance policy, and the Land 1 Resettlement impacts are social and economic impacts that are permanent or temporary, and are caused by (i)

acquisition of land and other fixed assets, (ii) change in the use of land, or (iii) restrictions imposed on land as a result of an ADB operation.

2 The World Bank has planned to conduct a similar social assessment in the affected areas. ADB and World Bank could jointly conduct this assessment.

Appendix 15 90

Acquisition Act (LAA) of 1894 (with amendments).3 Whereas the LAA considers those eligible for compensation to be legal owners and tenants who are registered with the Land Revenue Department or possess formal lease agreements, the IRP emphasizes that the absence of formal legal title to land is not a bar to entitlements and assistance. The second important policy issue is that, while the LAA assesses compensation based on the market value of acquired property, the IRP emphasizes the payment of replacement value of all affected assets. The third policy issue is the participatory approach to grievance resolution provided by the IRP through information disclosure and discussions with affected communities, and the appointment of special committees such as grievance redress committees. In contrast, under the LAA, the sole authority to resolve disputes lies with the Land Acquisition Collector. Thus the IRP provides for consultation and disclosure of resettlement information much more than does the LAA. The IRP emphasizes of rehabilitation of all affected people so that they will not be worse off because of land acquisition and resettlement. The LAA does not provide such assistance but does declare a land owner eligible for a 15% acquisition surcharge and 8% compounded interest per year if compensation payment is delayed.

6. Having taken into consideration the above differences between the LAA and IRP, the following resettlement policy principles were adopted for the purpose of the Project. If a subproject requires land acquisition or resettlement or both, the executing agency will prepare a satisfactory resettlement plan based on the following core principles and will obtain ADB’s approval prior to awarding contracts.

7. The main involuntary resettlement principles and procedures that are applicable to the Project are the following:

(i) Involuntary resettlement will be avoided; if it cannot be avoided, it will be minimized.

(ii) Where involuntary resettlement is unavoidable, affected persons will be assisted in reestablishing themselves and improving their quality of life.

(iii) Lack of formal legal land title is not a bar to compensation or rehabilitation assistance under the Project.

(iv) Land-for-land is an option for compensation in the case of loss of land; however, in the absence of replacement land, cash compensation for the property acquired will be paid at its replacement value4 in addition to any transaction costs.

(v) Each affected person is entitled to receive assistance to restore income and livelihood to a pre-project standard, and all vulnerable affected people are entitled to assistance to improve their income and livelihood.

(vi) All affected people will be fully informed and consulted on compensation and other entitlements, relocation programs, and rehabilitation assistance. The resettlement plan will be posted on the ADB website.

(vii) Affected people will be fully involved in the selection of relocation sites, if any, and livelihood compensation and development options at the earliest opportunity.

3 The draft resettlement policy and associate ordinance was prepared with ADB’s assistance in 2002. These

instruments have still not been approved by the Government. 4 Replacement cost means the cost of replacing lost assets and income. In the case of land, it means the cost of

buying replacement land near the lost land with equal productive potential plus the cost of preparing the land to levels similar to those of the affected land and the cost of any registration and transfer taxes. If alternative land is not available in the vicinity of the lost land, it means the cost of buying land with similar attributes and productive and/or residential potential plus the cost of preparing the land to levels similar to those of the affected land and cost of any registration and transfer taxes. In selecting alternative lands, affected people will be informed and consulted.

Appendix 15 91

(viii) All affected people will be integrated economically and socially into their host communities, if relocated. For this, participatory measures will be designed and implemented by the executing agency.

(ix) Affected people’s social and cultural institutions will be protected and supported. (x) Common property resources and community and public services will be provided

to relocated communities. (xi) Compensation and rehabilitation programs will be carried out with equal

consideration for women and men; in the case of these subprojects, particular attention will be paid to the rights of women, widows, orphans, the elderly, and other vulnerable people and groups such as indigenous peoples and religious and cultural minorities. Appropriate and sufficient assistance will be provided to help them improve their socioeconomic status.

(xii) Compensation and resettlement assistance will be fully provided before the approval of any subproject if it involves resettlement.

(xiii) Full compensation and resettlement costs are included in subproject costs.

C. Entitlements

8. The application of policies, laws and regulations pertaining to displacement, dispossession and resettlement is outlined below. The entitlement matrix is not exhaustive: more entitlements may be added if any resettlement impact not listed in the matrix is identified during project implementation. However, the entitlements may not be reduced or lowered.

92 Appendix 15

Tab

le A

15:

En

titl

emen

t M

atri

x

Typ

e o

f L

oss

es

En

titl

ed P

erso

n

En

titl

emen

t Im

ple

men

tati

on

Issu

es

Per

man

ent l

oss

of

land

La

nd o

wne

r

Land

-for

-land

or

cash

-for

-land

at

repl

acem

ent v

alue

of l

ost l

and.

Shi

fting

or

mov

ing

allo

wan

ce, i

f dis

plac

ed.

Li

velih

ood

and

inco

me

rest

orat

ion

gran

t an

d sk

ill a

nd v

ocat

iona

l tra

inin

g.

Li

ving

allo

wan

ce u

ntil

livel

ihoo

d re

stor

ed.

La

nd r

egis

trat

ion

expe

nses

and

taxe

s, if

an

y.

P

riorit

y in

sel

ectin

g re

plac

emen

t lan

d w

ill b

e gi

ven

to

thos

e w

ho a

re id

entif

ied

as v

ulne

rabl

e, b

ased

on

need

s an

d re

leva

nce.

Spe

cial

atte

ntio

n w

ill b

e pa

id to

vul

nera

ble

peop

le to

en

sure

thei

r in

herit

ance

rig

hts.

Rel

evan

t dep

artm

ents

of N

WF

P a

nd A

JK w

ill is

sue

or

repl

ace

prop

erty

title

s an

d na

tiona

l ide

ntity

car

ds a

s ea

rly a

s po

ssib

le to

faci

litat

e th

e pr

oces

s.

Loss

of a

gric

ultu

ral

land

and

loss

of

inco

me

or li

velih

ood

Ten

ant o

r sh

arec

ropp

er

C

ash

paym

ent f

or lo

ss o

f sta

ndin

g cr

ops

at m

arke

t val

ue

C

ash

paym

ent f

or th

e re

mai

ning

por

tion

in

agre

emen

t with

the

land

ow

ner

Ass

ista

nce

in n

egot

iatin

g a

new

sh

arec

ropp

er a

gree

men

t on

anot

her

plot

of

land

S

ubsi

sten

ce a

llow

ance

of u

p to

6 m

onth

s un

til a

ltern

ativ

e em

ploy

men

t is

foun

d

E

ntitl

emen

ts a

pply

equ

ally

to b

oth

regi

ster

ed a

nd

unre

gist

ered

tena

nts

and

shar

ecro

pper

s.

A

t lea

st 3

0-da

y no

tice

of la

nd c

lear

ance

The

Dep

artm

ent o

f Agr

icul

ture

will

det

erm

ine

mar

ket

valu

e.

Sub

sist

ence

and

ass

ista

nce

in f

indi

ng n

ew

empl

oym

ent

T

enan

ts a

nd s

hare

crop

pers

dis

plac

ed b

y th

e ea

rthq

uake

will

get

the

entit

lem

ents

.

Loss

of l

ivel

ihoo

d or

in

com

e D

aily

wag

e w

orke

r in

ag

ricul

ture

or

in n

on-

agric

ultu

ral e

nter

pris

es

incl

udin

g bu

sine

ss

S

ubsi

sten

ce a

ssis

tanc

e un

til a

ltern

ate

empl

oym

ent i

s fo

und

Ass

ista

nce

in o

btai

ning

ski

ll tr

aini

ng a

nd

seed

mon

ey to

res

tore

inco

me

and

livel

ihoo

d

Iden

tific

atio

n of

dai

ly w

age

wor

kers

is to

don

e in

co

nsul

tatio

n w

ith lo

cal a

utho

ritie

s an

d vi

llage

lead

ers

Tem

pora

rily

affe

cted

la

nd (

durin

g co

nstr

uctio

n)

Land

ow

ner

La

nd r

ent d

urin

g th

e te

mpo

rary

use

of

land

If di

spla

ced,

shi

fting

or

mov

ing

assi

stan

ce

(as

abov

e)

The

land

will

be

rest

ored

to it

s pr

evio

us s

tatu

s or

will

be

impr

oved

. Ren

t will

be

deci

ded

by th

e ex

ecut

ing

or

impl

emen

ting

agen

cies

in c

onsu

ltatio

n w

ith a

ffect

ed

peop

le.

Bus

ines

ses

tabl

ishm

ent

Land

ow

ner

R

epla

cem

ent v

alue

of l

and

and

com

mer

cial

est

ablis

hmen

t with

out

dedu

ctio

n fo

r de

prec

iatio

n or

sal

vage

able

m

ater

ials

.

Shi

fting

or

mov

ing

cost

s as

abo

ve.

T

he e

stim

ated

val

ue o

f the

bus

ines

s w

ill b

e in

clud

ed

in r

epla

cem

ent v

alue

.

The

rel

evan

t dep

artm

ents

of N

WF

P a

nd A

JK w

ill

issu

e or

rep

lace

pro

pert

y tit

les

and

natio

nal i

dent

ity

card

s as

ear

ly a

s po

ssib

le to

faci

litat

e th

e pr

oces

s.

Bus

ines

ses

tabl

ishm

ent

Non

-titl

ed (

squa

tter)

Rep

lace

men

t val

ue fo

r st

ruct

ures

they

co

nstr

ucte

d w

ithou

t ded

uctio

n fo

r de

prec

iatio

n

S

alva

geab

le m

ater

ials

bel

ong

to th

e es

tabl

ishm

ent o

wne

r

M

ovin

g or

shi

fting

allo

wan

ce, i

f dis

plac

ed

S

uppo

rt to

find

alte

rnat

e la

nd fo

r bu

sine

ss a

nd

settl

emen

t by

exec

utin

g or

impl

emen

ting

agen

cies

.

The

est

imat

ed v

alue

of t

he b

usin

ess

affe

cted

will

be

incl

uded

in r

epla

cem

ent v

alue

.

Appendix 15 93

Typ

e o

f L

oss

es

En

titl

ed P

erso

n

En

titl

emen

t Im

ple

men

tati

on

Issu

es

Loss

of c

rops

and

tr

ees

(bot

h te

mpo

rary

an

d pe

rman

ent)

Titl

e ow

ner

and

non-

title

d ow

ner

If

sow

n or

sta

ndin

g cr

ops

are

dam

aged

or

upr

oote

d, th

e cu

ltiva

tor

of th

e af

fect

ed

crop

s w

ill b

e co

mpe

nsat

ed in

cas

h at

the

mat

ure

crop

val

ue to

be

asse

ssed

on

the

basi

s of

cur

rent

mar

ket r

ates

.

Com

pens

atio

n fo

r lo

ss o

f fru

it tr

ees

at

mar

ket v

alue

, bas

ed o

n th

e pr

esen

t in

com

e an

d cr

op-b

earin

g ca

paci

ty.

T

he v

alue

of t

rees

or

crop

s th

at w

ill b

e af

fect

ed b

y a

subp

roje

ct w

ill b

e de

cide

d by

loca

l agr

icul

tura

l of

fices

in c

onsu

ltatio

n w

ith a

ffect

ed p

eopl

es.

O

wne

rs w

ill b

e gi

ven

at le

ast 3

0 da

ys’ n

otic

e be

fore

re

mov

al.

Loss

of s

truc

ture

s (c

ompl

ete

loss

or

deem

ed lo

ss if

cos

t of

repa

ir is

mor

e th

an

40%

of r

epla

cem

ent

valu

e) a

nd im

mov

able

as

sets

(in

clud

ing

resi

dent

ial h

ouse

s).

Ow

ner

Com

pens

atio

n fo

r st

ruct

ures

/ass

ets

at fu

ll re

plac

emen

t cos

ts w

ithou

t ded

uctio

n fo

r de

prec

iatio

n or

sal

vage

able

mat

eria

ls.

T

rans

port

atio

n co

sts.

R

elev

ant d

epar

tmen

ts o

f NW

FP

and

AJK

will

issu

e or

rep

lace

pro

pert

y tit

les

to fa

cilit

ate

the

proc

ess.

Loss

of s

truc

ture

s(c

ompl

ete

loss

or

deem

ed lo

ss if

cos

t of

repa

ir is

mor

e th

an

40%

of r

epla

cem

ent

valu

e) a

nd im

mov

able

as

sets

(in

clud

ing

resi

dent

ial h

ouse

s)

Non

-titl

ed (

squa

tters

)

Rep

lace

men

t val

ue fo

r st

ruct

ures

they

co

nstr

ucte

d, w

ithou

t ded

uctio

n fo

r de

prec

iatio

n. S

alva

geab

le m

ater

ials

be

long

to th

e es

tabl

ishm

ent o

wne

r.

M

ovin

g or

shi

fting

allo

wan

ce, i

f dis

plac

ed.

T

he e

xecu

ting

agen

cy w

ill a

ssis

t in

findi

ng a

ltern

ate

resi

dent

ial l

and.

Rel

evan

t dep

artm

ents

of N

WF

P a

nd A

JK w

ill is

sue

or r

epla

ce p

rope

rty

title

s to

faci

litat

e th

e pr

oces

s.

Cul

tura

l and

/or

com

mun

ity s

truc

ture

s C

omm

unity

T

he e

xecu

ting

or im

plem

entin

g ag

ency

will

re

build

com

mun

ity s

truc

ture

s at

rel

ocat

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Appendix 15 94

D. Procedure of Formulating a Resettlement Plan

9. Subprojects will be selected based on several selection criteria agreed upon by the Government and ADB. The executing agency of a subproject will do its best to avoid or at least to minimize land acquisition and resettlement as much as possible. If resettlement impacts are unavoidable in implementing a subproject, the executing or implementing agency will formulate a resettlement plan for the subproject by following the procedure given below:

(i) Initially categorize anticipated resettlement impacts in consultation with the ADB Pakistan Resident Mission and identify the financial and expert resources required to prepare a resettlement plan if resettlement impacts are identified.

(ii) Conduct stakeholder consultations to obtain their inputs regarding how to avoid or at least minimize involuntary resettlement, and to identify their needs and preferences; undertake a social assessment to identify different categories of affected people, including indigenous peoples, based on the degree and scale of subproject impacts on them.

(iii) Outline an applicable policy and legal framework (if the policy and legal framework discussed in the resettlement framework are adequate to address resettlement impacts, only a summary of the policy and legal framework is required, along with a reference to the resettlement framework).

(iv) Undertake a census and complete an asset inventory of all affected people and households, and provide resettlement information to all affected people in their own language.

(v) Develop an entitlements matrix to outline the entitlements of all affected people including non-titled people (e.g., squatters, encroachers, tenants, and wage workers) following the above entitlement matrix (if new categories of affected people and types of losses are identified during project implementation, appropriate entitlements will be added to the resettlement plan and forwarded to ADB for review and approval, and all affected people should be informed of such changes).

(vi) Explain relocation plans and the rehabilitation strategy, including income restoration and improvement, to affected people.

(vii) Describe the institutional framework of resettlement programs.(viii) Itemize a budget for all resettlement activities in the resettlement budget and

financial plan.(ix) Outline, if applicable, the environmental impacts of relocation.(x) Formulate a time-bound schedule for resettlement plan implementation. (xi) Outline procedures contained in the grievance redress mechanism. (xii) Describe both the internal and external monitoring program and the final

evaluation.(xiii) Disclose the draft resettlement plan to all affected people in their own language

and keep copies of the documents at public offices; the executing agency will endorse it before submitting it to ADB for review and approval.

(xiv) Disclose the resettlement plan to all affected people again after ADB’s approval, if it is revised according to ADB’s advice and comments (the plan will be posted on ADB’s involuntary resettlement website).

(xv) At a minimum, pay compensation and complete any required relocation before awarding subproject construction contracts.

Appendix 15 95

E. Implementation Arrangements

10. The resettlement specialists of the safeguard compliance group within the project coordination unit will ensure that the each project implementing agency formulates satisfactory resettlement plans for each subproject with any resettlement impacts. Each implementing agency will have resettlement specialists among its consultants who will assist each administrative department or implementing agency with initial screening of subprojects for resettlement impacts. If any are found, the resettlement specialists will assist in undertaking social assessments at subproject sites and in formulating resettlement plans, were necessary, in accordance with the approved resettlement framework. If significant resettlement impacts are identified, the line department or implementing agency is responsible for engaging resettlement specialists to ensure resettlement safeguard compliance and for submitting satisfactory resettlement plans to the implementing agency and ADB for review and approval prior to any acquisition or resettlement of affected persons and the award of civil works contracts.

F. Consultation and Participation

11. Executing agencies will invite vulnerable households and people for stakeholder consultations during the formulation of resettlement plans. The decisions of such meetings will be recorded, and these records will indicate the responsibility and timeline for implementing the decisions. Each resettlement plan will include a note on all public consultations held and the disclosure of resettlement information. During resettlement plan preparation, resettlement information will be disclosed to all affected people in their own language, and their views and opinions will be taken into consideration in finalizing the plans. Final resettlement plans will be translated into local languages and disclosed through public notices posted at implementing agency offices, published in newspapers, and posted on ADB’s website. Affected people will be closely consulted in resettlement site selection and livelihood restoration.

G. Eligibility Provisions

12. All affected people are entitled to compensation and rehabilitation. However, eligibility to receive compensation and other assistance will be limited by a cut-off date to be set for each subproject on the day corresponding to the beginning of its preliminary impacts assessment. The cut-off date defines “eligibility” and “affected person.” Given the destruction caused by the earthquake, some affected people may have difficulty proving their ownership of, or user rights to, any affected property. In such cases, affected people will be assisted and supported under the legal assistance, governance and institutional building activities of the Project. Such support will include reissuing and replacing national identity cards, property titles, birth certificates, disability certificates, and marriage certificates.

H. Grievance Redress Mechanism

13. The LAA provides for aggrieved persons at different stages of land acquisition to present their grievances to the Land Acquisition Collector or a court of law for redress. The executing agency of each subproject with resettlement impacts will establish a grievance redress committee headed by the district land acquisition collector and including among its members concerned union councils, local nongovernment and community-based organizations, and community leaders. The committees will be open forums for raising objections and holding discussions to resolve conflicts. Each committee will record its deliberations and inform the concerned parties within 4 weeks of its findings and recommendations.

Appendix 15 96

I. Monitoring and Evaluation

14. SCs, assisted by RAs will monitor compliance of resettlement plans with ADB’s involuntary resettlement safeguard requirements in subproject design. It will also develop a tracking system to ensure that necessary resettlement plans are formulated, and submitted to ADB for review and approval.

15. Each resettlement plan will include monitoring—internal and external—indicators. The EA will conduct its own internal monitoring of RP implementation and will submit quarterly reports to SC. A private firm, NGO, or university will be engaged by executing agency/implementing agency as an external monitor. External monitoring reports will be submitted quarterly during the first year of subproject implementation, and twice a year from the second year to SC. SC will submit these reports to ERRA and ADB for review. There will be a separate section in the project’s midterm review report on the progress in resettlement implementation in the entire project.

J. Resettlement Budget

16. The ERRA will be responsible for providing adequate funds for land acquisition and relocation arising from subprojects. Detailed estimates will be prepared by executing agency/implementing agency for each RP, which will be included in the overall subproject estimate. The budget will include (i) detailed costs of land acquisition, relocation, and livelihood and income restoration and improvement; (ii) sources and availability of adequate funding; (iii) arrangements for approval of RP cost estimates; and (iv) the flow of funds and contingency arrangements.

17. Land acquisition and resettlement are state government’s responsibility. However, under the Project, state governments might find difficult to pay for land acquisition and resettlement. Therefore, in each subproject, it is necessary to indicate who will fund land acquisition and resettlement costs. Costs of physical infrastructure at relocation sites and income and livelihood restoration and improvement programs could be financed from grant funds provided such financing has in-built check and balances to ensure ADB’s requirements are met. All land acquisition, compensation, relocation and rehabilitation of income and livelihood will be considered as an integral component of project costs.

Appendix 16 97

GENDER ACTION PLAN

A. Introduction

1. The earthquake in northern Pakistan has disrupted lives of 1.6 to 2.2 million women and children. Already considered particularly vulnerable, they have now lost homes, assets, and family members, becoming widows or orphans. Many of those who survived are injured, and some are permanently disabled physically and/or psychologically even as they are left without a support network. Many are at risk due to cold, malnutrition, disease, and a lack of access to resources and assets to address their situation. Most were never registered and lack the identification documents they need to reclaim their properties or inherit them from family members the have lost.

2. Women and children in these precarious conditions are also at risk of physical and/or psychological abuse and violence and progressive marginalization. In addition, children are at risk, especially in Azad Jammu and Kashmir (AJK), of being recruited by militias to escape extreme poverty and famine.

B. The Gender Action Plan

3. The objectives of the gender action plan (GAP) are to promote and enable the equal participation of men and women stakeholders as agents and beneficiaries of the Pakistan Earthquake Emergency Assistance Project (the Project). The GAP is based on analyses of gender disparity and the gender dimension of poverty in Pakistan. In Pakistan, women are particularly disadvantaged, suffering discrimination in the social, cultural, economic, and political spheres of life and denied equal access to resources, services, and opportunities that will enable them to participate in, contribute to, and benefit fully from development processes in the country. Women have different legal status from men. For these reasons women are particularly vulnerable, especially in the aftermath of a catastrophic event such as the earthquake. The Project will encourage and support women’s increased participation in the consultative processes of planning and implementing the various activities to be carried out within the different sectors through the loan project components of the Project. In addition, the GAP will develop measures to mitigate the risks deriving from the situation. The Project includes legal assistance, governance, and institutional building activities. This GAP will guide the development of provisions under this component with particular attention to women. The GAP will pay particular attention to the following:

(i) equal participation of women in reconstruction planning; (ii) recovery of livelihood and economic activity for women, especially those who

have become household heads; (iii) equal access for women and men to infrastructure activities in relation to

planning, construction, maintenance, and as users; (iv) equal compensation to women for land acquisition under the Project’s

components; and (v) equal wages for female workers in reconstruction and rehabilitation activities.

Appendix 16 98

Table A16. Gender Action Plan

Component Expected risks/issues Target actions 1. Transport Design

Equal participation of women in reconstruction planning

Resettlement Provision of identity cards to

women and minors free of charge

Equal compensation to women for land acquisition under the Project’s components.

Reconstruction and civil works implementation Recovery of livelihood and

economic activity for women, particularly those who have become household heads

Participation of women in reconstruction works

Equal wages for female workers in reconstruction and rehabilitation activities

Personal security

Ensure the participation of both men and women in local communities in the planning, construction, and maintenance of infrastructure.

Ensure that contractors employ female labor where socially and culturally acceptable.

Ensure wage parity. Encourage contractors to use labor-

intensive techniques. Encourage people from affected

communities to participate in land clearance and road construction through a cash-for-work scheme.

Ensure that women and female-headed households are awarded equal compensation for land acquisition.

Ensure the creation of a mechanism to ensure property rights to women, even without formal identification, and the issuing of new identification cards free of charge.

Where female labor is present on construction sites, provide secure and separate sanitary facilities and security for women.

2. Power Design Equal participation of women in

reconstruction planning Resettlement Provision of identity cards to

women and minors free of charge

Equal compensation to women for land acquisition under the Project’s components

Reconstruction and civil works implementation Recovery of livelihood and

economic activities for women, particularly those who have become household heads

Participation of women in reconstruction works

Equal wages for female workers in reconstruction and rehabilitation activities

Personal security

Ensure the participation of both men and women in local communities in the planning, construction, and maintenance of infrastructure.

Ensure that contractors employ female labor where socially and culturally acceptable.

Ensure wage parity. Encourage contractors to use labor-

intensive techniques. Encourage people from affected

communities to participate in land clearance and transmission line, sub-station, and other infrastructure construction through a cash-for-work scheme.

Ensure that women and female-headed households are awarded equal compensation for land acquisition.

Ensure the creation of a mechanism to ensure property rights to women, even without formal identification, and the issuing of new identification cards free of charge.

Where female labor is present on construction sites, provide secure and separate sanitary facilities and security for women.

3. Social sector Design Equal participation of women in

reconstruction planning

Ensure that health facilities cater to the special physical and psychological needs of conflict and earthquake

Appendix 16 99

Component Expected risks/issues Target actions Resettlement Provision of identity cards to

women and minors free of charge

Equal compensation to women for land acquisition under the Project’s components

Reconstruction and civil works implementation Recovery of livelihood and

economic activity for women, particularly those who have become household heads

Participation of women in reconstruction works

Equal wages for female workers in reconstruction and rehabilitation activities

Personal security

affected men, women, children, elderly, and disabled.

Ensure the participation of both men and women in local communities in the planning, construction, and maintenance of infrastructure.

Ensure that contractors employ female labor where socially and culturally acceptable.

Ensure wage parity. Encourage contractors to use labor-

intensive techniques. Ensure that women and female-headed

households are awarded equal compensation for land acquisition.

Ensure the creation of a mechanism to ensure property rights to women, even without a formal identification, and the issuing of new identity cards free of charge.

Where female labor is present on construction sites, provide secure and separate sanitary facilities and security for women.

Encourage people from affected communities to participate in land clearance and structure construction through a cash-for-work scheme.

Provide separate sanitary facilities in schools for female and male staff and students.

Provide suitable quarters for female teachers so that they will be encouraged to move to these areas.

Ensure all structures are assessable to the disabled.

Ensure all structures meet safety requirements.

4. Legal assistance, governance, and institutional building activities of implementation assistance

Provision of identity cards to women and minors free of charge

Recovery of livelihood and economic activity for women, particularly those who have become household heads

Access of women and minors to legal status, property rights, and inheritance rights

Inalienability of the land for minors, including girls

Access of women to vocational training

Access of disabled women to rehabilitation and special training to integrate or reintegrate them into the labor market

Equal compensation to women for land acquisition under the Project’s components

Support the development of an identification mechanism for issuing identification cards free of charge and defining property rights.

Promote livelihood restoration programs, with particular attention to the needs of single women and female-headed households.

Ensure that inheritance and property rights are suitable to meet the needs of earthquake-affected people, particularly women and children.

Promote the development of a guardianship legal framework with provisions to ensure the inalienability of land and other property of a minor, either female or male.

Promote the development of new vocational training programs specifically targeted to women as they enter or reenter the labor market.

Promote the development of

Appendix 16 100

Component Expected risks/issues Target actions Equal wages for female workers

in reconstruction and rehabilitation activities

rehabilitation and special training programs for disabled women to integrate or reintegrate them into the labor market.

Promote the development of special support units to help earthquake-affected people.

Ensure the development of a legal framework for an equitable, nondiscriminatory labor and wage system.

C. Implementation

4. The GAP will be implemented through existing and planned implementation mechanisms for the project components, comprising subprojects that are not yet identified. The capacity of implementing agencies and units will be strengthened under the implementation assistance component, and the support of consultants will be obtained, where necessary, to enable the effective implementation of the GAP.

D. Monitoring and Evaluation

5. Gender-disaggregated data will be collected during project monitoring and evaluation. Monitoring systems will incorporate such data, and processes of review and evaluation will cover both quantitative and qualitative gender-based information.

Appendix 17 101

VULNERABLE PEOPLE ACTION PLAN

A. Introduction

1. The earthquake-affected areas of Pakistan were not the poorest in the country, but they were among the most vulnerable. Years of conflict in Azad Jammu and Kashmir (AJK) and neighboring Afghanistan, geographical remoteness, and climatic harshness have made these areas particularly vulnerable.

2. The earthquake exacerbated the plight of the existing marginalized groups while creating new ones. Both existing and newly marginalized groups may not be able to access assistance on an equal basis. In particular, female-headed households, widows, and orphaned children are at risk of having little or no access to supplies and services and of losing property claims, often because they lack proper identification. The elderly and the disabled are likely to have lost their support network, notably family members. Physical and psychological disabilities caused by the earthquake need to be taken into account, as they carry long-term effects in terms of economic costs and social exclusion. Long-term health expenses and rehabilitation will be important burdens for families and the Government alike.

B. The Action Plan

3. The empowerment of those affected by the earthquake needs to be integrated into all project interventions. The need to (i) protect the vulnerable from exploitation, violence, and abuse; (ii) ensure their access to entitlements and assets; and (iii) ensure the inclusion of the disabled in education, vocational training, and employment schemes are guiding principles that need to be communicated to policymakers, public servants, camp managers, the media, nongovernment organizations, and affected and displaced people themselves. These actions need to be implemented using a rights-based approach, with institutional building activities legally supporting such changes.

4. The objectives of this action plan are to promote and enable the equal participation of vulnerable stakeholders as agents and beneficiaries of the Pakistan Earthquake Emergency Assistance Project (the Project). These groups are particularly disadvantaged and discriminated against in the social, cultural, economic, and political spheres of life, and are denied equal access to resources, services, social and official structures, and opportunities that will enable them to participate in, contribute to, and fully benefit from development processes in the country. The Project will encourage and support vulnerable people’s increased participation in the consultative processes of planning and implementing the various activities to be carried out in the loan components of the Project. In addition, the action plan will develop measures to mitigate the risks arising from the post-earthquake situation. This action plan will guide the development of provisions under the legal assistance, governance, and institutional building component with particular attention to all vulnerable groups. The action plan will focus particular attention on the following:

(i) equal participation of all vulnerable people in reconstruction planning; (ii) recovery of livelihood and economic activity for the vulnerable, particularly the

disabled and those who have lost their support networks; (iii) equal access for vulnerable groups to infrastructure activities in relation to

planning and, where possible, construction, use, and maintenance; (iv) equal compensation to vulnerable people for land acquired under the project

components; and

Appendix 17 102

(v) equal wages for workers from vulnerable groups in reconstruction and rehabilitation activities.

5. Vulnerable people include the following: (i) female-headed households (also covered by the GAP); (ii) widows (also covered by the GAP); (iii) orphaned children; (iv) the elderly, especially those who have lost their support network; (v) the physically and/or psychologically disabled, especially those who have lost

their support network; (vi) ethnic, linguistic, and religious minorities; (vii) nomadic tribes in the effected areas; (viii) people living in extreme poverty; and (ix) internally displaced people, particularly minors.

Table A17: Vulnerable People Action Plan

Component Target actions 1. Transport Ensure the participation of vulnerable people in local communities in the

planning, construction and maintenance of infrastructure. Provide that contractors employ disabled (when possible) and other vulnerable

labor. Ensure wage parity. Encourage contractors to use labor-intensive technologies. Encourage people from affected communities to participate in land clearance and

road construction through a cash-for-work scheme. Ensure that vulnerable groups are awarded equal compensation of land

acquisition. Ensure the creation of a mechanism to ensure property rights to vulnerable

people, even without a formal identification. New identification cards shall be issued free of charge.

Where disabled labor is present on construction sites, provide disabled-friendly facilities and security for them.

2. Power Ensure the participation of vulnerable people in local communities in the planning, construction and maintenance of infrastructure.

Provide that contractors employ disabled (when possible) and other vulnerable labor.

Ensure wage parity. Encourage contractors to use labor-intensive technologies. Encourage people from affected communities to participate in land clearance and

transmission line, sub-stations and other infrastructures construction through a cash-for-work scheme.

Ensure that vulnerable groups are awarded equal compensation of land acquisition.

Ensure the creation of a mechanism to ensure property rights to vulnerable people, even without a formal identification. New identification cards shall be issued free of charge.

Where disabled labor is present on construction sites, provide disabled-friendly facilities and security for them.

3. Social sector Ensure that health facilities cater to the special physical and psychological needs and earthquake-affected men, women, children, elderly, disabled and other vulnerable people.

Ensure the participation of vulnerable people in local communities in the planning, construction and maintenance of infrastructure.

Provide that contractors employ disabled (when possible) and other vulnerable labor.

Ensure wage parity.

Appendix 17 103

Component Target actions Encourage contractors to use labor-intensive technologies. Ensure that women and female-headed households are awarded equal

compensation of land acquisition. Ensure the creation of a mechanism to ensure property rights to vulnerable

people, even without a formal identification. New IDs shall be issued free of charge.

Where disabled labor is present on construction sites, provide disabled-friendly facilities and security for them.

Encourage people from affected communities to participate in land clearance and structures construction through a cash-for-work scheme.

Provide separate sanitary facilities for female and male staff and students and disabled.

Ensure all structures are disabled-friendly. Ensure all structures meet safety requirements.

4. Legal Assistance,Governance,and Institutional Building

Support the development of an identification mechanism for issuing of identification cards and definition of property rights. New IDs shall be issued free of charge.

Promote livelihood restoration programs, with particular attention to the needs of vulnerable people, particularly those who have lost their support network.

Ensure that inheritance and property rights are suitable to meet the need of earthquake affected people, particularly women and children and other vulnerable people.

Promote the development of rehabilitation and special training programs for disabled to (re-) integrate them in the labor market.

Promote the development of special support units to help earthquake affected people.

Ensure the development of a legal framework to ensure equal, nondiscriminatory, labor and wage system.

C. Implementation

6. This action plan will be implemented through existing and planned implementation mechanisms for project components, comprising subprojects that are not yet identified. The capacity of implementing agencies and units will be strengthened under the implementation assistance component, and support from consultants will be obtained, where necessary, to enable the effective implementation of this action plan.

D. Monitoring and Evaluation

7. Data disaggregated for vulnerability—particularly for people living under the poverty line and the elderly and disabled—will be collected during project monitoring and evaluation. Monitoring systems will incorporate such data, and processes of review and evaluation will cover information on vulnerable people both quantitatively and qualitatively.

Appendix 18 104

OUTLINE TERMS OF REFERENCE FOR CONSULTING SERVICES FOR PROVIDING CAPACITY BUILDING FOR THE OFFICE OF THE AUDITOR GENERAL OF PAKISTAN

A. Background

1. With reference to accounting and audit, each executing agency and implementing agency will maintain records and accounts adequate to identify works, goods, and services financed by the loan proceeds. Specifically, Earthquake Reconstruction and Rehabilitation Authority (ERRA) and each executing agency/implementing agency will maintain separate accounts for the Project and ensure project accounts are audited annually and submitted to ADB. Given the relatively high degree of fiduciary risk associated with this Project, the audited accounts and financial statements will be provided to ADB within 4 months of the end of the fiscal year. The auditing requirement has been harmonized with that of the World Bank. Although both institutions typically required submission of audited financial statements within 6 months, it was felt that the risks associated with this transaction together with a 36-month implementation period warranted a slightly tighter deadline for submission.

2. The Ministry of Finance, Auditor General of Pakistan (AGP) and Controller General of Accounts (CGA) are working with ERRA, as the client for services of the AGP and CGA, to develop and institutionalise financial management systems and procedures including accounting systems that will produce auditable accounts and financial and performance auditing arrangements governing all resources for post-quake rehabilitation and reconstruction. This involves revising existing government systems and procedures to address the specific scope, scale and timing requirements of the earthquake response. With regard to accounts, the CGA will approve the accounting system, including financial management. ERRA and implementing agencies will maintain accounts in accordance with the new accounting model (NAM). The accounts will be computerized providing auditable information to track expenditure by implementing agency, donor, district, province/state and activity. ERRA will follow this model for its own accounts, and to aggregate implementing agencies’ accounts.

3. The AGP audit jurisdiction will extend to all agencies involved in post-quake rehabilitation and reconstruction operations. The AGP will conduct an annual financial audit and periodic compliance with authority and performance audits. The AGP carries out audits in accordance with the International Organisation of Supreme Audit Institutions (INTOSAI) standards. In order to meet the increased workload demands of these responsibilities the AGP is establishing a team of auditors headed by a Director General ERRA Audit with three offices in Abbottabad, Islamabad, and Muzaffarabad. The AGP is empowered to hire incremental staff as required.

4 ERRA is developing an earthquake monitoring and evaluation framework based on five core principles: (i) joint and harmonized monitoring and evaluation; (ii) results focus; (iii) lesson learning; (iv) people focus; and (v) transparency and communication. ERRA will establish a performance monitoring and evaluation system for the Earthquake Emergency Assistance Project loan and grant funded activities and outcomes. ERRA will need to ensure that monitoring and evaluation systems for earthquake recovery activities are coherent, provide information to enable timely preparation of reports for management and donors and ensure that implementation lessons inform policy makers.

Appendix 18 105

B. Scope of Services

5. This TA has three components.

1. Auditable Accounts (Component 1)

6. This includes CGA support to ERRA to design and implement the financial management system consistent with the NAM through a packaged solution configured in software (SAP R3) consistent with the on-going World Bank funded project to improve financial reporting and auditing (PIFRA). This will include computerization of the financial accounting and budgeting system at the point of expenditure. ERRA will be required to aggregate of financial reports from three types of agencies receiving funds against approved schemes: (i) existing government implementing agencies e.g. Frontier Works Organisation, National Housing Authority, Water and Power Development Authority, etc.; (ii) NGOs and other civil society organisations; and (iii) proposed province/state and district level ‘reconstruction institutions’. The CGA, ERRA and implementing agencies will require targeted technical assistance in areas such as system design and computerization of accounts, and training of over 150 officers.

2. Financial, Compliance and Performance Audits (Component 2)

7. This includes capacity development of the newly established DG Audit ERRA office within the AGP to ensure that timely and accurate audit reports are prepared. Technical support and training of over 120 auditors is required by the AGP in three areas: (i) conducting information systems audit including updating manuals and working papers; (ii) instituting strategic audit planning, monitoring and quality assurance systems including developing an audit plan, establishing a quality assurance cell and reviewing the process life cycle of audit reports; and (iii) developing guidelines for procurement audit including conducting procurement audit of sample large schemes and developing case studies and training in donor (ADB, World Bank etc.) procurement procedures. A study tour for selected senior officials to visit a tsunami-affected country(s) to discuss audit and accounting responses is proposed.

3. Performance Monitoring and Evaluation (Component 3)

8. ERRA is developing an earthquake monitoring and evaluation framework. Technical assistance will be provided to ensure that the Earthquake Emergency Assistance Project loan and grant monitoring and evaluation system is integral to the broader ERRA framework and provides timely information for ADB and government.

C. Staffing

9. A total of 192 person-months of domestic and 9 person-months of international, long and short term, individual consultants are proposed. This includes 36 person-months for a domestic project coordinator. Consultants will provide training and technical advice in various aspects of audit, accounts and performance monitoring and evaluation. It is expected that domestic consultants providing technical advice in audit and accounts will be drawn from the pool of ex-AGP and CGA officers.

D. Implementation Arrangements

10. The AGP and CGA will be the executing agencies for the TA. The proposed TA is scheduled to be implemented for 36 months from January 2006 to January 2009.

Appendix 18 106

Administration of the proposed TA will be delegated to the ADB PRM. It is proposed to establish an advisory committee with representatives of AGP, CGA and ERRA chaired by ADB to (i) assist in short-listing, including provision of the Government’s concurrence of consultants; (ii) approve progress and annual reports; and (iii) provide guidance to the team of consultants recruited under the proposed TA. The Governance Unit, PRM will provide secretariat services to the advisory committee. All consultants will be engaged by ADB in accordance with its Guidelines on the Use of Consultants and other arrangements satisfactory to ADB for the engagement of consultants. Procurement of equipment will be conducted in accordance with ADB’s Guidelines for Procurement and other arrangements satisfactory to ADB for procurement.

E. Reporting and Documentation Requirements

11. Biannual reports prepared by the Governance Unit secretariat will be endorsed by the advisory committee prior to submission to the Government and ADB.

F. Government Inputs

12. The AGP, CGA and ERRA will provide consultants with suitable office space and counterpart staff, local communications, office support staff and necessary equipment to conduct their mandated responsibilities. As noted above a new DG Audit ERRA wing of AGP is being established and ERRA will be fully staffed to address its accounting, internal audit and performance monitoring and evaluation responsibilities. Government training venues will be availed as appropriate.

G. Cost Estimates

Table A18: Cost Estimates and Financing Plan ($'000)

Item ForeignExchange

LocalCurrency

TotalCost

A. Asian Development Bank Financinga

1. Consultants a. Remuneration, Per Diem and Travel i. Internationalb 225 0 225 ii Domesticc 0 1,080 1,080

2. Training, Study Tour 450 450 3. Workshops, Communications and Documentation 45 45 4. Contingencies 40 160 200 Subtotal (A) 265 1,735 2,000 B. Government Financing 1. Office Accommodation and Transportd 0 100 100

2. Remuneration and Per Diem of Counterpart Staffd 0 300 300 3. Otherse 0 100 100 Subtotal (B) 0 500 500 Total 265 2,235 2,500

a Financed by Asian Development Bank technical assistance funding program. b Short term international individual consultants (9 person-months) recruited by ADB c Long and short term domestic individual consultant firms (192 person-months) recruited by ADBd Includes staff from at least 10 implementing agencies and over 8 local governments e Includes training venues (federal, 2 province/states and 8 districts), government resource persons,

communications, office supplies, printing and publishing, etc.

Source: Asian Development Bank estimates.