Mongolia: Regional Logistics Development Project€¦ · The 1,810 km Mongolian railway system...

Regional Logistics Development Project (RRP MON 41192-01)

Project Administration Manual

Project Number: 41192-01 Proposed Loan: MON: Regional Logistics Development Project November 2010

Mongolia: Regional Logistics Development Project

Table of Contents

I. PROJECT DESCRIPTION ....................................................................................................... 1 II. IMPLEMENTATION PLANS ..................................................................................................... 2

A. Project Readiness Activities ................................................................................................ 2 B. Overall Project Implementation Plan ................................................................................... 3 C. Implementation Schedule .................................................................................................... 4

III. PROJECT MANAGEMENT ARRANGEMENTS ....................................................................... 5 A. Project Implementation Organizations – Roles and Responsibilities .................................. 5 B. Key Persons Involved in Implementation ............................................................................ 6 C. Project Organization Structure ............................................................................................ 7

IV. COSTS AND FINANCING ........................................................................................................ 8 A. Detailed Cost Estimates by Expenditure Category ............................................................. 8 B. Allocation and Withdrawal of Loan and Grant Proceeds ................................................... 10 C. Detailed Cost Estimates by Financiera .............................................................................. 11 D. Detailed Cost Estimates by Yeara ..................................................................................... 12 E. Contract Awards and Disbursement S-curves .................................................................. 13 F. Funds Flow Diagram ......................................................................................................... 13

V. FINANCIAL MANAGEMENT .................................................................................................. 14 A. Financial Management Assessment ................................................................................. 14 B. Disbursement .................................................................................................................... 16 C. Accounting and Auditing .................................................................................................... 17

VI. PROCUREMENT AND CONSULTING SERVICES ............................................................... 17 A. Advance Contracting and Retroactive Financing .............................................................. 17 B. Procurement of Civil Works, Goods and Consulting Services .......................................... 18 C. Procurement Plan .............................................................................................................. 19 D. Consultant’s Terms of Reference ...................................................................................... 22

VII. SAFEGUARDS ....................................................................................................................... 23 A. Environment ...................................................................................................................... 23 B. Land Acquisition and Resettlement ................................................................................... 24 C. Execution of Goods Contracts for Terminal Equipment and Systems .............................. 24

VIII. GENDER AND SOCIAL DIMENSIONS .................................................................................. 25 IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION ... 25

A. Project Design and Monitoring Framework ....................................................................... 25 B. Monitoring .......................................................................................................................... 27 C. Evaluation .......................................................................................................................... 30 D. Reporting ........................................................................................................................... 30 E. Disclosure of Documents .................................................................................................. 31

X. ANTICORRUPTION POLICY ................................................................................................. 33 XI. ACCOUNTABILITY MECHANISM .......................................................................................... 34 XII. RECORD OF PAM CHANGES ............................................................................................... 35

PROJECT ADMINISTRATION MANUAL (PURPOSE AND PROCESS)

The Project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The Ministry of Road, Transportation, Construction and Urban Development (MRTCUD) is wholly responsible for the implementation of ADB financed Regional Logistics Development Project, as agreed jointly between the Beneficiary and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by MRTCUD of its obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At Loan and Grant Negotiations, the Beneficiary and ADB agreed to the PAM and ensured consistency with the financing agreement. In the event of any discrepancy or contradiction between the PAM and the Financing Agreement, the provisions of the Financing Agreement shall prevail. After ADB Board approval of the project's report and recommendation of the President (RRP), changes in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

Abbreviations

ADB Asian Development Bank CAREC Central Asian Regional Economic Cooperation DFR draft final report EA executing agency EIA environmental impact assessment FS feasibility study GDP gross domestic product HA hectare IA implementing agency IEE initial environmental examination IFI international financing institution IRR internal rate of return KM kilometer Kph kilometers per hour M meter MM Millimeter MNET Ministry of Nature, Environment and Tourism MOF Ministry of Finance MRA Mongolian Railway Authority MRTCUD Ministry of Road, Transportation, Construction and Urban Development MT metric tons NGO non-government organization NPV net present value O/D origin-destination ODA official development assistance PIA project impact area PKM passenger-kilometer PRC People’s Republic of China RF Russian Federation RFP request for proposal RP resettlement plan Sq. Km square kilometer TA technical assistance TKM ton-kilometer TOR terms of reference UBTZ Ulaanbaatar Tumur Zam USD U.S. dollar ZULC Zamyn Uud Logistics Center

I. PROJECT DESCRIPTION

1. Mongolia is a historical land bridge between north and south (from the People’s Republic of China [PRC] to the Russian Federation (RF) on the way to Europe). The transport sector, which mainly consists of road transport and railways, is a key driver of economic development in Mongolia. The road network, including state and local roads, totals approximately 49,250 kilometers (km) connecting 21 major cities and towns and 160 smaller villages (soums and bags). The 1,810 km Mongolian railway system carries over 90% of freight. The main-line connecting the PRC rail system in the south with the Russian Trans-Siberian line in the north, was completed in 1955. It is the lifeline of the economy and most of the economic development in the country during the last 55 years has taken place along this corridor. The strategic location of Mongolia as a transit country between the PRC and the RF has contributed to the demand for transport. In recent years, high economic growth has led to increased transport demand. Although the volume of transportation has risen, the transport sector is unable to meet all of the increasing demand. This constrains Mongolia’s ability to achieve its full economic growth potential. 2. Mongolia is also a landlocked country and such countries face greater transportation challenges. Located between two large neighbors, Mongolia has no direct access to seaports and has to depend upon the RF and the PRC for access to seaports. In recent years, trade flows have been reoriented from the RF so that most of the imports (over 80%) are now coming from the PRC through th.e border point in Zamyn Uud in the southeast of the country. The bulk of Mongolia’s exports also transit through Zamyn Uud on their way to Tianjin port, the only PRC port available to Mongolia for purposes of international trade. As a consequence, the traffic handled at Zamyn Uud witnessed high growth rates in recent years. However, Zamyn Uud is now badly congested,1 and this is affecting imports, exports, and transit traffic. Though a number of reasons contribute to these delays (non availability of rolling stock, change of gauge, delays at customs), the main reason is the grossly inadequate logistics at Zamyn Uud in particular and in Mongolia in general. 3. Recognizing the need for development of intermodal transport and a strong logistics network in the country to enhance Mongolia’s global competitiveness, the Government has requested ADB financing for design and construction of a logistics center in Zamyn Uud with integrated Customs and Quarantine facilities to remove current congestion at the border. The Zamyn Uud Logistics Center (ZULC) will include a computerized terminal management system for efficient, safe, and secure intermodal container operations. 4. ADB strategy for Mongolia identifies the underdeveloped transport network and inefficient cross border transport as major transport sector issues. Its regional cooperation strategy and program update for CAREC identifies multimodal transport as a strategically important priority and developing multimodal facilities at Zamyn Uud as a key intervention for possible ADB assistance. The recent ADB sector assistance program evaluation (SAPE) also identifies logistics as a key area for future support. 2 5. Impact: International and regional trade is promoted in Mongolia. 6. Outcome: An efficient, competitive, and reliable multimodal transport system at Zamyn Uud.

1 Discussions with different stakeholders revealed that import cargoes could take anywhere between 10 to 60 days for

clearance at Zamyn Uud. 2 ADB. 2008. Sector Assistance Program Evaluation of the Asian Development Bank Assistance for Roads and

Railways in Mongolia. Manila.

2

7. Outputs:

1. A multimodal facility, complete with facilities for road to road, road to rail, and rail to rail transshipment is developed at Zamyn Uud.

2. Terminal equipment and management system are procured and installed to support efficient operations.

3. Institutional capacity of the Implementing Agency improved and project implementation management support provided.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

8. MRTCUD designated the Mongolian Railway Authority (MRA) as the Implementing Agency (IA). The IA will establish a Project Implementation Unit (PIU) on 10 November 2010, which will be supported by the staff of MRTCUD’s Roads and Transport Policy Department; Finance, Investment and International Cooperation Department; and Internal Auditing, Monitoring and Evaluation Department on as-needed basis. 9. Draft safeguards document (Initial Environment Examination) has been completed. Approval of the Ministry of Nature, Environment and Tourism (MNET) has been obtained to commence construction of ZULC based on the Initial Environment Examination (IEE). Assistance proposed for project implementation will include recruitment of a procurement consultant to assist the IA in the preparation of bidding documents for all contract packages for goods and civil works as well as the request for proposal (RFP) for implementation consultants. Bid invitations are expected by early January 2011. Similarly the consultant selection process for project management, construction supervision, and MRA’s institutional capacity improvement will commence from early January 2011 using advance contracting. Overall program readiness activities are shown in Table 1.

Table 1: Project Readiness Activities

Activities

Months

Who responsible Augor

Prior Sep Oct Nov

Dec ‘10

Feb. ‘11

May

Designation of Implementing Agency √ MRTCUD

Loan Fact Finding Mission and MOU Signing

√ ADB and Government

Completion of the bidding documents for all contracts

√ MRTCUD/MRA and TA Consultant

Advance contracting actions:

A. Project Management consultants Recruitment

Commencement

Completion

√

√

MRTCUD/MRA

3

B. Civil Works and Goods bidding

Invitation for bids for ICB

Contract Award

√

√

MRTCUD/MRA

ADB Board approval √ ADB

Loan signing √ ADB and Government

Issuance of legal opinion √ Government

Loan effectiveness √ Government

ADB = Asian Development Bank, ICB = International Competitive Bidding, MOF = Ministry of Finance, MRTCUD = Ministry of Road, Transportation, Construction and Urban Development, PPTA = Project preparatory technical assistance. Source: MRTCUD and Asian Development Bank estimates.

B. Overall Project Implementation Plan

10. Physical implementation will be completed by 31 December 2015 and loan account will close by 30 June 2016. Overall project implementation plan is shown in Figure 1. 11. The project duration is 5 years, and the overall implementation plan will be updated annually and submitted to ADB.

4

Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 Qtr 1 Qtr 2 Qtr 3 Qtr 4 1st H 2nd H 1st H 2nd H

1Procurement Schedule for Civil Works Packages

207

A.General Procurement Notice and Invitation for Bids

13

B. Receive and Evaluate Bids, ADB Approval 13

C. Award Bid, Sign Contract 5

D. Mobilization and Construction for Civil Works 176

2 Procurement Schedule for Goods Packages 233

A.General Procurement Notice and Invitation for Bids

13

B. Receive and Evaluate Bids, ADB Approval 13

C. Award Bid, Sign Contract 5

D. Mobilization, Delivery, Installation of Goods 202

3Recruitment Schedule for Design, Implementation Supervision, and Capacity Improvement Consultant

267

A.CSRN Announcement, Receipt of EOIs and Shorlisting

7

B.Receipt and Evaluation of Technical Proposals

13

C.Public Opening of Financial Proposals and Computation of Final Evaluated Scores

3

D. Contract Negotiation and Award 4

E.Mobilization of Consultant and Delivery of Services

240

5 Civil Works Defects Liability Period 52

6Goods Warranty Period and Trial Operations

26

Source: PPTA Consultant

Item

ADB - Asian Development Bank; CSRN - Consultant services recruitment notice; EOI - Expression of Interest; Qtr - Calendar quarter.

ProjectTime

(weeks)2010 2011 2012 2014 20152013

C. Implementation Schedule

Figure 1: Implementation Schedule

5

III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations – Roles and Responsibilities

Project Implementation Organizations Management Roles and Responsibilities

Ministry of Road, Transportation, Construction and Urban Development (MRTCUD) -the Executing Agency

timely provision of agreed counterpart funds for project activities;

monitoring and evaluation of project activities and outputs, including periodic review, preparation of review reports reflecting issues and time-bound actions taken (or to be taken);

involving beneficiaries and civil society representatives in all stages of project design and implementation;

public disclosure of project outputs; quality assurance of works, and services of

consultants and counterpart staff; establishing strong financial management system

and submitting timely withdrawal applications to ADB, conducting timely financial audits as per agreed timeframe and taking recommended actions;

complying with all loan covenants; preparing regular periodic progress reports, and

project completion reports and their timely submission to ADB; and

ensuring project’s sustainability during post implementation stage and reporting to ADB on the assessed development impacts.

Project Steering Committee

the existing PSC for PPTA implementation will continue under the Project. The PSC will meet quarterly and be responsible for (i) approving the annual Project budget and activity plan, and (ii) reviewing and advising on implementation progress

Ministry of Finance (MOF)

signing the Financing Agreement for the Project; monitoring of the project implementation and

providing respective coordination and facilitation; timely provision of agreed counterpart funds for

project activities; allocating and releasing counterpart funds;

endorsing to ADB the authorized staff with approved signatures for WAs processing; and

processing and submitting to ADB any request, when required, for reallocating the loan proceeds.

Mongolian Railway Authority – MRA (Implementing Agency and PIU)

recruiting project management consultants (PMC); finalizing surveys, design, bidding documents, and

contract awards; overall construction supervision with the Project

Management Consultants, quantity and quality validation of installation of civil works, equipment and procured machinery;

involving beneficiaries and civil society representatives in all stages of project design and implementation;

public disclosure of project outputs; quality assurance of works, and services of

consultants and counterpart staff; complying with all loan covenants; preparing regular periodic progress reports,

6

monitoring and evaluation reports, and project completion report and their timely submission to ADB; and

ensuring projects' sustainability during post implementation stage and reporting to ADB on the assessed development impacts.

MRTCUD’s Roads and Transport Policy Department; Finance, Investment and International Cooperation Department; and Internal Auditing, Monitoring and Evaluation Department (organization units supporting the Implementing Agency)

primarily responsible for supporting MRA, PIU in the implementation of the project;

practical (on-the-job) training of MRA PIU staff on ADB documentation requirements, as needed.

Asian Development Bank (ADB)

assist the MRTCUD and its project implementing agency in providing timely guidance at each stage of the project for smooth implementation in accordance with the agreed implementation arrangements;

review all the documents that require ADB approval; conduct regular loan review missions, a mid-term

review, and project completion mission ensure compliance with all loan covenants including

safeguards; timely process withdrawal applications and release

eligible funds; ensure the compliance with financial audit

recommendations; regularly update the project performance review

reports with the assistance of MRTCUD and MRA; regularly post on ADB web the updated project

information documents for public disclosure, and also the safeguards documents as per disclosure provisions of the ADB safeguards policy statement

B. Key Persons Involved in Implementation

Executing Agency Ministry of Road, Transportation, Construction and Urban Development (MRTCUD - the executing agency)

T. Purevdorj Vice Minister Telephone: +976-11-326369 Office Address: MRTCUD Building, Barilgachdiin Talbai 3 Chingeltei District 15170, Ulaanbaatar, Mongolia

Asian Development Bank Division Director Tyrrell Duncan

Director, Transport Division East Asia Department (EATC) Telephone No: +63-2-632-4110 Email address: [email protected] 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines

Mission Leader Manmohan Parkash Advisor, Knowledge Management and Capacity Development East Asia Department (EARD) Telephone: +63-2-632 5475 Email address: [email protected] 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines

7

C. Project Organization Structure

12. The Project Steering Committee for the PPTA 3 will be retained for Project implementation. It will be established based on the new Guidelines for the Implementation and Administration of Loans to be issued by the Ministry of Finance. The PSC will meet quarterly and be responsible for (i) approving the annual Project budget and activity plan, and (ii) reviewing and advising on implementation issues. 13. The MRTCUD will be the executing agency (EA) and its Mongolian Railway Authority (MRA), which has the mandate for all intermodal transport and logistics projects of MRTCUD, will be the implementing agency (IA). Day-to-day implementation of the Project will be performed by a Project Implementation Unit (PIU) to be established under MRA. An international firm will be engaged as project management consultants (PMC) with responsibility for detailed design and implementation supervision. Contract modalities will include civil works and procurement and installation of terminal equipment and systems, hence the PMC’s role will be to manage contracts with IA and PIU and give hands-on training in project management and oversight, financial management, ADB disbursement procedures including use of imprest accounts, operation and maintenance, asset management, and reporting. Since this will be MRA’s first IFI-funded project, the direct involvement of MRTCUD’s related departments in project execution will result in effective capacity improvement for implementing externally-funded projects.

Figure 2: Project Organization Chart

ADB - Asian Development Bank MOF - Ministry of Finance MRTCUD - Ministry of Road, Transportation, Construction and Urban Development

MRA - Mongolian Railway Authority PIU - Project Implementation Unit

3 ADB. 2008. Technical Assistance to Mongolia for Preparing the Regional Logistics Development Project. Manila.

MRA (IA)

PIU

Design and Implementation

Supervision Consultant

Contractor(s)

MOF

Steering Committee

ADB

MRTCUD (EA)

8

IV. COSTS AND FINANCING

A. Detailed Cost Estimates by Expenditure Category

14. The project is estimated to cost $71.6 million, including taxes and duties, contingencies, and interest and other charges during implementation. Table 2 summarizes the total investment plan. The cost estimates are based on quantities derived from preliminary engineering designs and unit rates reflecting market prices for goods and materials.

Table 2: Project Investment Plan ($ million)

Item Amounts A. Base Costa 1. Civil works, materials, and equipmentb 58.21 2. Project management, consulting services, and environmental mitigation 3.11 Subtotal (A) 61.32 B. Contingenciesc 8.95 C. Financing Charges During Implementationd 1.37 Total (A+B+C) 71.64 a In July 2010 prices. b Including taxes and duties of $1.95 million. c Physical contingencies are estimated at 6% and price contingencies computed at 10% for local

currency costs for 2011–2015 and 3% for foreign exchange components for 2011–2015. d Interest during implementation for the Asian Development Bank loan is based on Asian Development

Fund rate of 1% during the grace period. Source: Asian Development Bank estimates.

15. The Government has requested financing of up to an equivalent of $40 million from ADB’s Asian Development Fund (ADF) loan and $5 million from ADF grant for a total of $45 million from ADB’s Special Funds resources to help finance the Project.4 The ADF loan will have a term of 32 years, including a grace period of 8 years, with an interest charge of 1% per annum during the grace period and 1.5% per annum thereafter and such other terms and conditions set forth in the draft loan and grant agreements. The Beneficiary will be Mongolia. A summary of the financing plan is in Table 3.

Table 3: Financing Plan ($ million)

Source Total %

Asian Development Bank (Loan) 40.00 55.8

Asian Development Bank (Grant) 5.00 7.0 Government 26.64 37.2

Total 71.64 100.0 Source: Asian Development Bank estimates.

4 Including transportation and insurance cost.

9

Detailed Cost Estimates by Expenditure Categorya

Foreign Local Total Foreign Local TotalItem Exchange Currency Cost Exchange Currency CostA.

1. Track materials 5,544.8 616.1 6,160.9 8,217.4 913.0 9,130.5 11.32. Trackwork 1,356.0 904.0 2,260.0 2,009.6 1,339.7 3,349.3 4.1

3. Pavement 8,174.5 2,043.6 10,218.1 12,114.6 3,028.6 15,143.2 18.74. Lighting 446.9 111.7 558.6 662.3 165.6 827.8 1.05. Safety and security 2,913.0 323.7 3,236.7 4,317.1 479.7 4,796.8 5.96. Buildings 2,266.8 1,511.2 3,778.0 3,359.4 2,239.6 5,599.0 6.97. Facilities 210.8 134.8 345.6 312.4 199.7 512.2 0.68. Sitework, cleaning, and earthworks 465.54 1,862.2 2,327.7 689.9 2,759.7 3,449.7 4.39. Site utilities (electric, water, field office communication lines) 1,148.0 287.0 1,435.0 1,701.3 425.3 2,126.7 2.6

10. Access road and bridge 5,025.2 2,153.7 7,178.9 7,447.4 3,191.7 10,639.1 13.111. Terminal equipment 16,596.7 513.3 17,110.0 24,596.3 760.7 25,357.0 31.3

44,148.3 10,461.2 54,609.5 65,427.7 15,503.5 80,931.3 100.0

B.1,676.7 1,435.7 3,112.4 2,485.0 2,127.6 4,612.6 5.7

C. Licenses, Taxes, and Duties 0.0 3,595.3 3,595.3 0.0 5,328.2 5,328.2 6.6D. Contingencies

1. Physicalb 2,646.5 649.1 3,295.6 3,922.1 962.0 4,884.1 6.0

2. Pricec 3,113.9 2,546.0 5,659.9 4,614.8 3,773.2 8,388.0 10.3

Subtotal (D) 5,760.4 3,195.1 8,955.5 8,537.0 4,735.2 13,272.1 16.4

E.

1,366.4 0.0 1,366.4 2,025.1 0.0 2,025.1 2.5

Subtotal (E) 1,366.4 0.0 1,366.4 2,025.1 0.0 2,025.1 2.552,951.8 18,687.3 71,639.2 78,474.7 27,694.5 106,169.2 131.2

a

b

c

d

Total Project Cost (A+B+C+D+E)

Base costs are in July 2010 market prices and exclude taxes, duties, and license fees.

Source: Asian Development Bank estimates.

Physical contingency is estimated at 6% of subcomponents A.1–A.11.

Price contingency for local currency costs based on 10% for 2011–2015. For foreign exchange components based on 3% for 2011–2014.

Interest during implementation for the Asian Development Bank loan is based on Asian Development Fund rate of 1% during the grace period.

$'000 MNT Million

Project Management, Consulting Services, and Environmental Mitigation

Interest during implementation

Financing Charges during Implementationd

Base Costs

Subtotal (A)

% of Total Base Cost

10

B. Allocation and Withdrawal of Loan and Grant Proceeds

16. Table 4 shows allocation and withdrawal of funds under all the categories of Project scope. Project management and consulting services, environmental mitigation, and part of civil works will be financed out of the ADF Grant of $5.0 million.

Table 4: Allocation and Withdrawal of Loan and Grant Proceeds

ALLOCATION AND WITHDRAWAL OF LOAN PROCEEDS (Regional Logistics Development Project)

CATEGORY ADB FINANCING

Number Item Total Amount Allocatedfor ADB Financing

(SDR)

Percentage and Basis for Withdrawal

from the Loan Account Category

1 Works 33,544,700 100 percent of total expenditure claimeda

2 Equipment 6,110,000 100 percent of total expenditure claimeda

3 Unallocated 345,300

Total 40,000,000 a Excluding taxes and duties.

ALLOCATION AND WITHDRAWAL OF GRANT PROCEEDS (Regional Logistics Development Project)

CATEGORY ADB FINANCING

Number Item Total Amount Allocatedfor ADB Financing

Category

Percentage and Basisfor Withdrawal from the

Grant Account

1 Works 1,887,600 100 percent of total expenditure claimeda

2

Project management, consulting services, and environmental mitigation

3,112,400 100 percent of total expenditure claimeda

Total 5,000,000 a Excluding taxes and duties.

11

C. Detailed Cost Estimates by Financiera ($’000)

Item

$% of Cost

$% of Cost Category

$% of Cost Category

$% of Total

Project CostA.

1. Track materials 6,160.9 100.0 0.0 0.0 0.0 0.0 6,160.9 8.62. Trackwork 2,260.0 100.0 0.0 0.0 0.0 0.0 2,260.0 3.23. Pavement 8,666.4 84.8 0.0 0.0 1,551.7 15.2 10,218.1 14.34. Lighting 558.6 100.0 0.0 0.0 0.0 0.0 558.6 0.85. Safety and security 3,236.7 100.0 0.0 0.0 0.0 0.0 3,236.7 4.56. Buildings 3,778.0 100.0 0.0 0.0 0.0 0.0 3,778.0 5.37. Facilities 345.6 100.0 0.0 0.0 0.0 0.0 345.6 0.58. Sitework, cleaning, and earthworks 0.0 0.0 1812.3 77.9 515.4 22.1 2,327.7 3.29. Site utilities (electric, water, field office communication lines) 1,359.8 94.8 75.2 5.2 0.0 0.0 1,435.0 2.0

10. Access road and bridges 7,178.9 100.0 0.0 0.0 0.0 0.0 7,178.9 10.011. Terminal equipment 6,110.0 35.7 0.0 0.0 11,000.0 64.3 17,110.0 23.9

39,654.9 71.9 1,887.5 4.4 13,067.1 23.7 54,609.5 76.2B.

0.0 0.0 3,112.4 100.0 0.0 0.0 3,112.4 4.3

C. Licenses, Taxes, and Duties 0.0 0.0 0.0 0.0 3,595.3 100.0 3,595.3 5.0D. Contingencies

1. Physicalb 345.3 10.5 0.0 0.0 2,950.3 89.5 3,295.6 4.62. Pricec 0.0 0.0 0.0 0.0 5,659.9 100.0 5,659.9 7.9

345.3 3.9 0.0 0.0 8,610.2 96.1 8,955.5 12.5

E. 0.00.0 1,366.4 100.0 1,366.4 1.9

0.0 0.0 0.0 0.0 1,366.4 100.0 1,366.4 1.940,000.0 5,000.0 26,639.1 71,639.1

55.8 7.0 37.2 100.0a

b

c

d


Description

ADB Loan Government TotalADB Grant




% Total Project Costs

Interest during implementation for the ADB loan is based on Asian Development Fund rate of 1% during the grace period.


Base costs are in July 2010 market prices and exclude taxes, duties, license fees. All cost categories are financed 100% in parallel by Asian Development Bank (ADB) loan, grant

Total Project Cost (A+B+C+D+E)Subtotal (E)

and/or government.

Subtotal (A)Project Management, Consulting Services, and Environmental Mitigation

Base Costs

Subtotal (D)

12

D. Detailed Cost Estimates by Yeara ($’000)

TotalItem CostA. Base Costs

1. 6,160.9 0.0 3,080.5 2,464.4 616.1 0.02. Trackwork 2,260.0 226.0 1,130.0 904.0 0.0 0.03. Pavement 10,218.1 1,021.8 3,065.4 5,109.0 1,021.8 0.04. Lighting 558.6 111.7 167.6 167.6 111.7 0.05. Safety and security 3,236.7 647.3 971.0 971.0 647.3 0.06. Buildings 3,778.0 755.6 1,133.4 1,133.4 755.6 0.07. Facilities 345.6 69.1 103.7 103.7 69.1 0.08. Sitework, cleaning, and earthworks 2,327.7 698.3 1,163.9 465.5 0.0 0.09. Site utilities (electric, water, field office communication lines) 1,435.0 430.5 717.5 143.5 143.5 0.0

10. Access road and bridge 7,178.9 2,153.7 3,589.5 1,435.8 0.0 0.011. Terminal equipment 17,110.0 0.0 12,832.5 3,422.0 855.5 0.0

54,609.5 6,114.1 27,954.8 16,319.9 4,220.7 25.8

B. Project Management, Consulting Services, and Environmental Mitigation 3,112.4 622.5 648.2 648.2 648.2 545.2C. Licenses, Taxes, and Duties 3,595.3 405.5 1,831.6 1,072.8 283.7 1.7

D. Contingencies1. Physicalb 3,295.6 371.7 1,679.0 983.4 260.0 1.52. Pricec 5,659.9 272.2 2,459.5 2,160.8 761.8 5.6

Subtotal (D) 8,955.5 643.9 4,138.4 3,144.2 1,021.9 7.2

E.

1,366.4 23.6 145.4 419.4 378.0 400.0Subtotal (E) 1,366.4 23.6 145.4 419.4 378.0 400.0

71,639.2 7,809.5 34,718.6 21,604.5 6,552.5 954.0a

Bank (ADB) loan, grant and/or government. b

c

d



2011 2012


Base costs are in July 2010 market prices and exclude taxes, duties, license fees. All cost categories are financed 100% in parallel by Asian Development


20142013


Interest during implementation for the ADB loan is based on Asian Development Fund rate of 1% during the grace period.

2015

Track materials

Total Project Cost (A+B+C+D+E)

Subtotal (A)

13

Counterpart funds Direct Payment

Counterpart Funds

Flow of fundsLendingLoan repayment

Borrower (Ministry of Finance of Mongolia)

ADB

Executing Agency (Ministry of Roads, Transport, Construction,

and Urban Development)

- Contractors - Consultants

Payment to Imprest Account

E. Contract Awards and Disbursement S-curves

0.0

0.2 1.12.4

4.48.2

14.1

19.9

23.7

26.2 29.8

33.435.8

36.5 38.4 38.5 39.0 39.7 40.042.0

45.0

0.0

2.72.7 4.0

7.4

17.420.0 24.0

28.2

33.0

35.036.0

38.040.0

41.0 42.043.0 45.0 45.0

45.0

45.0

0.0

10.0

20.0

30.0

40.0

50.0

$ Million

Time Elapse

Figure 3: ZULC Contract Awards and Disbursement S-Curves

Project Cumulative Disbursements ADB Cumulative Contract Awards

F. Funds Flow Diagram

17. Figure 4 shows how the funds will flow from ADB and the Government to implement the Project. Funds coming from MOF to MRTCUD will relate to counterpart funds only. ADB will disburse to the imprest account or to the contractors directly. Imprest account will be set up at a commercial bank acceptable to ADB.

Figure 4: Funds Flow Diagram

Cumulative Disbursements Cumulative Contract Awards

Payment to Imprest Account

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V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

18. Key findings of the financial management assessment undertaken for the MRTCUD during project preparation are as follows:

Table 5: Summary of the Financial Management Assessment

Particulars Conclusions

A. Funds Flow Arrangements

To date, various international financing projects have been implemented by MRTCUD, with most projects financed by ADB, the World Bank, European Bank for Reconstruction and Development (EBRD), and bilateral assistance organizations from Germany, Japan, and United States. MRTCUD has enough capability to smoothly work under the proposed project with the training for MRA’s PIU staff designed through ADB TAs in procurement and preparation of terminal management contract bidding package and by the project implementation consultant during project implementation.

B. Staffing MRTCUD’s Finance, Investment and International Cooperation Department, which oversees funds flow, is staffed with experienced financial specialists who are experts in managing the internal finance. All employees are full time with formal job descriptions for each position. Experienced staff in this Department will provide the necessary support to the PIU.

C. Accounting Policies and Procedures

The chart of accounts based on the state standard format has been in use by the Financial Department for many years. Segregation of duties is specified in the comments on the questionnaire including budgeting system, payments, policies and procedures, cash and bank, safeguard over assets, other offices and implementing entities. A separate financial management manual is planned to be established for the Project to be used by the PIU in accordance with ADB requirements.

D. Internal and External Audits

An Internal Audit function is available through the Internal Auditing, Monitoring and Evaluation Department of MRTCUD. For the external Audit, the independent government auditor is the Mongolian National Audit Office. Annual audited report by this agency for 2008 has been received and reviewed by the PPTA consultant.

E. Reporting and Monitoring

Financial statements are currently prepared for MRTCUD on monthly, quarterly and annual basis. Existing reporting system can be linked with the financial information of physical project progress but with the help of financial management specialist of the consultants.

F. Information Systems

Financial management system is computerized and it produces the necessary financial reports of the ongoing development works. The staff is adequately trained to maintain the system and the management organization and processing system safeguard the confidentiality, integrity, and availability of data.

Source: PPTA consultants.

19. Actions required to be taken by the MRTCUD are as follows: (i) MRA, PIU’s financial staff must undergo training on ADB financial management procedures and ADB disbursement procedures to fully understand ADB’s reporting requirements and strengthen their internal audit capacity.

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(ii) A separate financial management manual for the Project should be established in accordance with the Government and ADB requirements before loan effectivity; and MRA should maintain separate accounts by funding source for the Project and have such accounts audited annually, in accordance with appropriate auditing standards consistently applied by independent auditors whose qualifications, experience, and terms of reference are acceptable to ADB. 20. Risk Analysis: During the implementation phase, the MRTCUD and MRA might face some risks that can generally be divided in two main categories: (i) country level; and (ii) organization/project level. Delay in the release of counterpart funds can be attributed as a country specific risk for the Project. Further, all the contracts with foreign suppliers/consultants financed out of loan and grant funds are subject to approval by the MRTCUD, MOF, and other cognizant agencies, which takes considerable time and eventually it could affect the project implementation. These, together with project-specific risks and the activities to mitigate them, are summarized as follows. Financial management risks shall need to be re-assessed and updated throughout the life of the investment program. Risk mitigation measures shall also be updated accordingly.

Table 6: Risk Assessment and Mitigation Measures

Risk Risk

Assessment*Risk-Mitigation Measures

Inherent Risk 1. Country-specific Risks M MOF and MRTCUD shall ensure the timely release of

counterpart funds, as per loan covenants 2. Entity-specific Risks M MRA is new to ADB procurement guidelines and

disbursement procedures. Involvement of MRTCUD staff and international procurement specialist at the initial stage of project implementation until all contract awards and consultant’s recruitment, and on-the-job training on ADB procedures shall be carried out. ADB has committed to provide necessary support and training to staff of MRA.

Overall Inherent Risk M Control Risk

1. Implementing Entity N The Steering Committee will provide overall guidance in project implementation. Organizational capacity of MRTCUD to oversee the implementation is satisfactory.

2. Funds Flow S Government has provided assurance on timely availability of counterpart funds starting 2012. For 2011 however, budgetary exercise has been completed and Government requested ADB assistance to finance start-up activities, and the PIU.

3. Staffing M Implementation consultant shall assist the MRTCUD to design and implement the training program for PIU staff of MRA especially for ADB financial reporting requirements including disbursement procedures and their integration into overall national financial reporting requirements.

4. Accounting Policies and Procedures

N Accounting Policy and Procedures Manual for PIU shall be drafted taking into account the national accounting standards and the requirements of ADB.

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Risk Risk

Assessment*Risk-Mitigation Measures

5. Internal Audit N MRTCUD’s Internal Auditing, Monitoring and Evaluation Department will provide internal control services. The implementation consultants will also review and assess the adequacy of this arrangement.

6. External Audit M Annual audit of the project accounts shall be done in accordance with the International Standards of Auditing by an external auditor acceptable to ADB. Audited project accounts are required to be submitted to ADB within 6 months after the end of calendar year.

7. Reporting and Monitoring M MRTCUD, MRA through the PIU and implementation consultants shall regularly report in accordance with ADB requirements on adequacy of control mechanisms.

8. Information Systems S Appropriate computerized information systems shall be installed at MRA, PIU to strengthen the efficiency of existing information system and reporting.

Overall Control Risk M * H – High, S – Substantial, M – Moderate, N – Negligible or Low. Source: PPTA consultants. B. Disbursement

21. The loan and grant proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time)5 and detailed arrangements agreed upon by the Government and ADB. 22. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),6 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list to subprojects financed by ADB. 23. Direct payment procedures will generally be used for all goods and civil works contracts, which are designed as large, and also for consulting services since there are very few expenditures envisaged other than civil works and goods contracts and consulting services, as shown in detailed cost estimates. MOF will establish two imprest accounts,7 one for the loan and one for the grant at a commercial bank acceptable to ADB. The maximum amount to be deposited in the imprest account will not exceed the estimated expenditures to be financed from the imprest account or 10% of the respective loan and grant amount, whichever is lower. The request for initial advance to the imprest account should be accompanied by an Estimate of Expenditure Sheet setting out the estimated expenditures for the first six (6) months of project implementation, and submission of evidence satisfactory to ADB that the imprest account has been duly opened. For every liquidation and replenishment request of the imprest account, the Government will furnish to the ADB (a) Statement of Account (Bank Statement) where the imprest account is maintained, and (b) the Imprest Account Reconciliation Statement (IARS) reconciling the above mentioned bank statement against the EA’s records. 24. ADB’s statement-of-expenditure (SOE) procedure will be used for liquidation and 5 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf 6 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf 7 Bank charges for imprest accounts will be financed from ADB loan and grant.

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replenishment of the imprest accounts, and for reimbursement of eligible expenditures not exceeding $100,000 per individual transaction. The payments in excess of the SOE ceiling will be reimbursed, liquidated, or replenished based on full supporting documentation. SOE records should be maintained and made readily available for review by ADB mission or upon ADB’s request. Before the submission of the first withdrawal application, the Government should submit to ADB sufficient evidence of the authority of the person (s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is $100,000, unless otherwise approved by ADB. The MRTCUD will consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. 25. MRTCUD will be responsible for (i) preparing disbursement projections, (ii) requesting budgetary allocations from MOF for counterpart funds (on behalf of MRA for the Project), (iii) collecting supporting documents, and (iv) preparing and sending withdrawal applications to ADB. 26. All disbursements under government financing will be carried out in accordance with regulations of Mongolia relevant to counterpart financing of the projects financed by the Multilateral Financing Organizations. The MRA shall open and maintain a separate account for government co-financing funds.

C. Accounting and Auditing

27. The MRTCUD and MRA will (i) maintain separate accounts and records by funding source (loan and grant) following accounting principles prescribed by the Government of Mongolia Accounting Law. The Law requires financial statements to be prepared following internationally recognized accounting standards; (ii) have such accounts audited annually, in accordance with appropriate auditing standards consistently applied by independent auditors whose qualifications, experience, and terms of reference are acceptable to ADB; (iii) furnish to ADB as soon as available but in any event not later than 6 months after the end of each related fiscal year, certified copies of such audited project accounts and the report of the auditors relating thereto (including the auditors’ separate opinions on the use of the imprest accounts and statement of expenditures which will be submitted together with a signed Management Letter), and (iv) furnish to ADB such other information concerning such accounts and the audit thereof as ADB shall from time to time reasonably request. The independent auditors will be engaged and financed under the Project. 28. The MOF will cause the detailed consolidated project accounts to be audited annually in accordance with International Standards on Auditing by an auditor acceptable to ADB. The Government and MRTCUD have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures.

VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting and Retroactive Financing

29. The Government of Mongolia requested for approval of advance procurement action. All

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advance contracting will be undertaken in conformity with ADB’s Procurement Guidelines (2010, as amended from time to time)8 and ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time)9. The issuance of invitations to bid under advance contracting will be subject to ADB approval. 30. Two contract packages are currently proposed under advance contracting – Package 1 for civil works; and Package 2 for design and implementation supervision consulting services. Advance contracting will include (i) preparation of tender documents; (ii) evaluation of bids; and (iii) recruitment of consultants. 31. The Government was informed that retroactive financing should (i) specifically be discussed and agreed between ADB and the Beneficiary, (ii) that the amount to be retroactively financed does not exceed 20% of the loan and grant amount, and (iii) the expenditures must have been incurred before effectiveness but no earlier than 12 months before signing of the Financing Agreement. The Government of Mongolia has been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the Project. B. Procurement of Civil Works, Goods and Consulting Services

32. All procurement of civil works and goods will be undertaken in accordance with ADB’s Procurement Guidelines (2010, as amended from time to time). International Competitive Bidding (ICB) will be used for civil works and goods contracts estimated to cost more than $1 million and $500,000, respectively. National Competitive Bidding (NCB) will be used for civil works and goods contracts estimated to cost below ICB thresholds but more than $100,000. All ICB contracts are subject to prior review. Prior review and approval of ADB of the procurement documents (bidding and contract) is required. For NCB, prior review for first English language version of bidding documents which will be used as a model for subsequent procurement.

33. All consulting services will be recruited according to ADB's Guidelines on the Use of Consultants (2010, as amended from time to time). A total of 172 person months of consulting services (60 international, 112 national) grouped into one package will be funded under the Project, to support the EA in (i) Preparation of detailed design and implementation supervision; (ii) training of PIU staff; (iii) terminal operations management; (iv) environmental monitoring; (v) procurement management; and (vi) project implementation and institutional capacity improvement. Consultants will be engaged using QCBS, with the standard ratio of 80:20.

34. An 18-month procurement plan indicating thresholds and review procedures, and civil works, goods and consulting service contract packages, is in Section C below.

8 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf 9 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf

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C. Procurement Plan

Table 7: Procurement Plan and Tentative Contract Packages Project Information Country Mongolia Name of Beneficiary Mongolia Project Name Regional Logistics Development Project Loan Reference TBD Date of Effectiveness TBD Project Cost Amount $71.6 million Of which ADB-Financed Amount $45 million Executing Agency Ministry of Road, Transportation, Construction

and Urban Development (MRTCUD) Approval Date of Original Procurement Plan October 2010 Approval of Most Recent Procurement Plan TBD Publication for Local Advertisement TBD Period Covered by this Plan 4 October 2010 – 31 March 2012

TBD = to be determined.

Procurement Thresholds for Civil Works, Goods and Related Services, Supply and Install Method ThresholdInternational Competitive Bidding (Civil Works) > $1,000,000 International Competitive Bidding (Goods) > $500,000 National Competitive Bidding (Civil Works) > $100,000 National Competitive Bidding (Goods) > $100,000 Shopping for Works and Goods $100,000 or less

List of Contract Packages in Excess of $100,000 Goods and Consulting Services

Ref Contract Description Estimated

Costs ($ million) a

Procurement Methods

Date of Advertisement

Prior Review

Y/N

1. Civil works and associated goods

35.4 (4 lots)

ICB Jan 2011 Y

2. Terminal Equipment and Systems

6.1 (2 lots)

ICB Jan 2013 Y

3. Services 3.1

(2 lots) QCBSb Jan 2011 Y

ADB = Asian Development Bank, ICB = international competitive bidding, N = no, NCB = national competitive bidding, QCBS = quality- and cost-based selection, Y = yes. a Cost estimates do not include taxes and duties, and physical contingencies. b A 80:20 weighting will be applied.

Sources: MRTCUD and ADB estimates.

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35. National Competitive Bidding. The procedures to be followed for national competitive bidding shall be those set forth in the Public Procurement Law of Mongolia of 1 December 2005, effective 1 February 2006, as amended on 6 February 2007 and 16 July 2009 (hereinafter referred to as PPLM), with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of ADB's Procurement Guidelines (April 2010, as amended from time to time).

(i) The Standard Bidding Documents of Mongolia for Goods and Works that have been approved by ADB as acceptable for ADB-financed projects, together with ADB's clarifications and modifications thereto, shall be used.

(ii) Government-owned enterprises in Mongolia shall be eligible for projects only if they can establish that they: (i) are legally and financially autonomous; (ii) operate under the principles of commercial law; and (iii) are not dependent agencies of the Executing Agency and/or the Implementing Agency.

(iii) If a bid security is required, the bid security shall be in any of the following forms at the bidder's option: (i) a bank guarantee; or (ii) a cashier's or certified check.

(iv) Bidders must be nationals of member countries of ADB, and offered Goods and Works must be produced in and supplied from member countries of ADB. Bidders or potential bidders shall not be required to register with the taxation and other registration authorities of the government as a condition or requirement of bidding or award, leaving these requirements for after award and before signing of contract.

(v) Foreign bidders from eligible countries of ADB shall be allowed to participate in bidding under the same conditions as local bidders and without any domestic preference.

(vi) Prequalification shall not be required, except in the case of large or complex works, and with prior written concurrence of ADB.

(vii) Qualification criteria shall be clearly specified in the bidding documents, and all criteria so specified shall be used to determine whether a bidder is qualified. The evaluation of a bidder's qualifications shall only take into account the bidder's capacity and resources to perform the contract, in particular its experience and past performance on similar contracts, capabilities with respect to personnel, equipment and construction or manufacturing facilities, and financial position. The evaluation of the bidder's qualifications shall be conducted separately from the technical and commercial evaluation of the bid.

(viii) Evaluation and qualification criteria, and submission requirements, to be used in each bidding activity shall be clearly specified in the bidding documents. The evaluation of bids shall be done in strict adherence to the criteria specified in the bidding documents.

(ix) The invitation to bid and the bidding documents shall be prepared in the Mongolian language. If another language will be used, then such other language shall be English.

(x) Bidders shall be requested to extend the validity of their bids only under exceptional circumstances and the Executing or Implementing Agency, as the case may be, shall communicate such request for extension to all bidders before the date of expiry of their bids. When the procurement is subject to ADB's prior review, the Executing or Implementing Agency, as the case may be, shall obtain in a timely manner the prior written concurrence of ADB for the extension of the bid validity period.

(xi) All bids shall not be rejected or new bids invited without ADB's prior written concurrence. No bid shall be rejected merely on the basis of a comparison with

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the estimated cost or budget ceiling without ADB's prior written concurrence (with specific reference to Article 30 of the PPLM).

(xii) Negotiations with bidders shall not be undertaken before award of contract, except as provided in Paragraph 2.63 of ADB's Procurement Guidelines (2007, as amended from time to time) (with specific reference to Article 30.2 of the PPLM). A bidder shall not be required, as a condition for award, to undertake obligations not specified in the bidding documents or otherwise to modify its bid as originally submitted.

(xiii) Bidding documents and contracts under national competitive bidding procedures financed by ADB shall include a provision requiring suppliers, contractors and consultants to permit ADB to inspect their accounts and records relating to the bid submission and the performance of the contract by the supplier, contractor and/or consultant, as the case may be, and to have them audited by auditors appointed by ADB, if so required by ADB.

(xiv) At the same time that notification on award of contract is given to the successful bidder, the results of the bid evaluation shall be posted on a well-known freely accessible website (namely Mongolia's Ministry of Finance e-procurement website: www.e-procurement.mn) identifying the bid and lot numbers and providing information on the: (i) name of each bidder that submitted a bid; (ii) bid prices as read out at bid opening; (iii) names of bidders whose bids were rejected and the reasons for their rejection; and (iv) name of the winning bidder, and the price it offered, as well as the duration and summary scope of the contract awarded. The Executing Agency or Implementing Agency, as the case may be, shall respond in writing to unsuccessful bidders who seek explanations on the grounds on which their bids were not selected.

(xv) Bidding documents and contracts under national competitive bidding procedures financed by ADB shall include a provision requiring compliance with core labor standards.

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D. Consultant’s Terms of Reference

36. The project comprises (i) construction of a multimodal facility, complete with facilities for road to road, road to rail, and rail to rail transshipment at Zamyn Uud; (ii) terminal equipment and management system to support efficient operations; and (iii) support for enhancing institutional capacity of the implementing agency (ia) and project implementation management support. The consulting services will assist in the implementation supervision of the project, management of contractors, and enhancing the institutional capacity of the IA.

1. Scope of Consultancy Services

37. Assist EA and IA in Project implementation including but not limited to: The consulting services consist of five components, detailed design, construction supervision, capacity improvement, assistance to the IA in procurement for terminal management services, and environmental management. The consultants will be recruited in accordance with ADB's Guidelines on the Use of Consultants (2010, as amended from time to time).

2. Tasks

38. The tasks of the detailed design, implementation supervision and capacity building services will include but not be limited to the following: The consultants will (i) undertake detailed design of the Project; (ii) assist in procurement of civil works, goods, materials, and equipment under the Project; (iii) supervise the implementation of the Project; (iv) monitor the environmental impact mitigation measures carried out; (v) organize human trafficking prevention

Table 8: List of ADB-financed Contract Packages Contract

No. Lot No.

Item Estimated Value

($ million) Procurement

Mode

A Civil Works and Associated Goods 35.43

A1 Access Road and Bridge 7.18 ICB A2 Buildings and Facilities 4.12 ICB

A3 Rail works, Site works and Utilities, and Pavement

20.33 ICB

A4 Lighting, Safety, and Security 3.80 ICB

B Terminal Equipment and Systems 6.11

B1 Logistics Center Management System

4.25 ICB

B2 Customs and Quarantine Equipment and Forklifts

1.86 ICB

C Services 3.11

C1 Environmental Mitigation and Monitoring

0.51 ICB

C2 Detailed design and construction supervision

2.60 ICB

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training program for the local police; (vi) assist the EA/IA in preparing reports required by ADB; and (vii) conduct periodic review of the implementation of the Project and ensure compliance of the ADB, procurement guidelines for procurement of civil works, goods, materials, and services by the Contractors and the applicable national regulations, specifications, relevant international engineering standards are complied with. The consultants will prepare the draft terminal management contract and assist the EA/IA in recruitment and negotiations with the selected contractor.

3. Staffing

39. About 172 person-months of consulting services (60 person-months of international experts and 112 person-months of national experts) will be engaged using full technical proposal procedures based on quality and cost-based selection following ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time). The provisions of ADB’s Anticorruption Policy (1998, as amended to date) will be included in all invitation documents and contracts for consultants. The consultants will have expertise in road engineering, railway engineering, terminal engineering and operation, procurement, project implementation, environment, and institutional capacity improvement and training. 4. Reports

40. The consultants will submit the following reports to the MOF, EA, the IA, and ADB: (i) an Inception Report, which covers at least initial findings and the work program for the balance of the assignment including staffing plan and schedule for approval by the EA and ADB, 3 weeks after commencement of services; (ii) monthly progress report (the contents include at least briefing details of the works carried out during the previous month, the problems encountered or anticipated, together with the steps taken or recommendations for their correction, and financial and physical progress to date) within 10 days after each month subsequently; (iii) quarterly report (at least including detailed description of the achieved progress of works, difficulties and delays encountered or anticipated, contract awards and disbursement status, payments to the consultants and contractors, and remedial actions taken or suggested, the overall progress if the Project as monitored against the PPMS indicators) within 14 days after each quarter subsequently, and (iv) a project completion report (covering at least detailed description of all the work by items of technical and non-technical matters, As-Built drawings, economic analysis, financial and disbursement data, analyses, difficulties and delays encountered and reasons, and remedial actions taken, the overall progress of the Project as monitored against the PPMS indicators, including recommendations to the EA and ADB) one month after the contract of consulting services completed but not more than 6 months after the physical completion of the project.

VII. SAFEGUARDS

41. The MRTCUD of Mongolia will ensure that all the requirements prescribed in Schedule 5 of the Financing Agreement and the Initial Environmental Examination (IEE) dated October 2010 are complied with during the implementation of the Project.

A. Environment

42. The Government will ensure that the design, construction, operation and maintenance of the components of the Project are carried out in accordance with ADB’s Safeguard Policy Statement (SPS, 2009), applicable laws and regulations of Mongolia, and the IEE. The

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MRTCUD will ensure that potential adverse environmental impacts arising from the Project are minimized by implementing all mitigation and monitoring measures as presented in the environment management plan (EMP) included in the IEE. The MRTCUD will ensure that:

(i) EMP is updated after the detailed design prior to implementation of civil works. (ii) Sufficient resources to implement and record the implementation of the EMP

prepared for the Project are available. (iii) Starting from project commencement, the MRTCUD will submit semi-annual

environmental monitoring reports prepared by the environment safeguard specialist to ADB, within 3 months of the end of the period during implementation of the Project. The report will include, among other things, environmental monitoring data (baseline and routine), a review of progress made on environmental measures detailed in the IEE and EMP; as well as problems encountered and remedial measures taken.

(iv) The quarterly progress report will have a short description of environmental situation.

(v) Detailed engineering designs, civil works and other contracts for the Project incorporate applicable environmental mitigation measures identified in the IEE and EMP.

(vi) The civil works contracts and the construction supervision contract will include the environmental protection and its monitoring provisions.

(vii) Civil works contractors are supervised to ensure compliance with the requirements of the EMP. In particular, the civil works contracts will include the construction workers’ health and safety provisions including HIV/AIDS prevention activities, and the construction supervision consultant contract will include the training program on human trafficking for the local police.

(viii) The construction supervision consultant will work as the focal point of the grievance redress mechanism as prescribed in the IEE.

B. Land Acquisition and Resettlement

43. To ensure compliance to ADB Safeguard Policy Statement (2009) the Government will ensure the implementation of the following requirements and procedures:

(i) No involuntary land acquisition (both temporary and permanent) on demolition of structures will be involved during the implementation of the Project.

(ii) Conduct consultations and information sharing to ensure community awareness during project construction activities.

C. Execution of Goods Contracts for Terminal Equipment and Systems

44. The MRTCUD will ensure that subsequent to award of goods contracts, no project facilities will be handed over to the contractor until the applicable provisions of the IEE and EMP have been complied with. Any changes to the project facilities arising from the detailed designs of the project will be subject to prior approval by ADB and the relevant government agency of Mongolia.

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VIII. GENDER AND SOCIAL DIMENSIONS

45. The Beneficiary shall cause MRTCUD and MRA to include a specific provision in the bidding documents to ensure that Works contractors: (i) comply with core labor standards, applicable laws and regulations of the Beneficiary and incorporate applicable workplace occupational safety norms; (ii) do not differentiate payment between men and women for work of equal value; (iii) do not employ child labor in the construction and maintenance activities; (iv) do not use forced or compulsory labor; (v) eliminate employment discrimination; (vi) to the extent possible, maximize employment of local people, including women, for project construction and operation purposes, provided that the requirements for job and efficiency are adequately met; and (vii) disseminate information on the risks of sexually transmitted infections (STI), including human immunodeficiency virus/acquired immunodeficiency syndrome, and other communicable diseases to the employees of the contractors under the Project and to members of the local communities surrounding the Project.

46. The Beneficiary shall cause MRTCUD and MRA to ensure that Works contractors: (i) provide equal job opportunities for men and women; (ii) provide for equal pay to men and women for work of equal type, and prompt payment of wages; and (iii) provide safe working conditions.

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION

A. Project Design and Monitoring Framework

47. Design and Monitoring Framework (DMF) for the project is in Table 9.

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Table 9: Design and Monitoring Framework

Design Summary Performance Targets

and Indicators

Data Sources and Reporting

Mechanisms Assumptions and

Risks

Impact International and regional trade promoted in Mongolia

Mongolia international trade increased by 100% in 2020 compared with 2009 PRC-Mongolia trade increased by 120% in 2020 compared with 2009

Government statistics

Assumptions Macroeconomic

targets achieved Associated facilities

and infrastructure developed

Outcome An efficient, competitive, and reliable multimodal transport system developed at Zamyn Uud

Freight traffic handled at Zamyn Uud increased by 80% by 2018 compared with 2009 Container traffic volume increased by 100% by 2018 compared with 2009 Waiting time at Zamyn Uud reduced by 50% in 2018 compared with 2009

MRTCUD statistics and post-evaluation surveys Post evaluation surveys and reports from MRTCUD

Assumptions Traffic forecast for

Zamyn Uud realized Shippers and freight

operators realize the benefits of using the facility

Outputs 1. A multimodal facility

complete with facilities for road to road, road to rail, and rail to rail transshipment developed at Zamyn Uud

2. Terminal equipment

and management systems procured and installed

3. Strengthened

institutional capacity

Multimodal facility starts operations by December 2015 Procurement and installation is completed by June 2015 Capacity development support for project implementation and management contract is completed by June 2015

Project administration missions and PCR Progress reports and PCR Consultants reports and progress reports

Assumption Government

provides funds in a timely manner

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Activities with Milestones

1. Civil works and buildings: completed by December 2014

2. Materials and equipment: procured by December 2014

3. Track laying: completed by December 2014

4. Equipment and communication facilities: completed by June 2015

5. Consulting services: completed by June 2015

6. Management contract: started by July 2015

Inputs

- ADB: $45 million, of which loan is $40 million, and grant is $5 million

- Government: $26.64 million

ADB = Asian Development Bank, MRTCUD = Ministry of Road, Transportation, Construction and Urban Development, PCR = project completion report, PRC = People’s Republic of China. Source: Asian Development Bank estimates.

B. Monitoring

B.1 Project Performance Monitoring

48. The MRTCUD will establish a PPMS within 6 months from loan effectiveness and collect and update baseline data for performance monitoring. The key indicators and targets, assumptions, and risks outlined at the impact, outcome, and output levels in the Project’s design and monitoring framework will be the primary data required for analysis. Indicators for the PPMS will be discussed and agreed to during the ADB inception mission. Baseline data will be established and MRTCUD's quarterly reports as well as each ADB review mission will report on implementation progress. B.2 Accelerating and Monitoring Contract Awards and Disbursement 49. MRTCUD will exercise rigorous monitoring for timely contract awards and disbursement. In this respect, actions will include: - To avoid the delays in bid evaluation as a result of contractors' submission of incomplete bids, a checklist of all the supporting documents, forms, and guarantees will be attached with the bids for future tendering (substantially in the format provided in Table 10). This will be further discussed during pre-bid meetings; - Monitoring of agreed time-bound activities from preparation of BER to the contract award will be carried out using a checklist in Table 11 for each action with the given timeframe; and - For ADB monitoring, consultants shall copy to ADB project officer the interim payment certificates (IPCs), which will help intensify ADB's monitoring, expedite withdrawal application (WA) processing and payments to contractors, and consequently improve the project implementation progress.

Table 10: Checklist of Documents for Bidders at Purchase of Tender Documents

ITB Sub-clause 11.1 Requirements Specific Instructions and Supporting Documents

(a) Letter of Bid Total bid price (excluding discount); Discount (if any); Bid validity of 150 days Signed by an authorized person (see. Item e, below)

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(b) Completed schedules as required, including priced Bill of Quantities, in accordance with ITB 12 and 14

Completed Schedule of Payment Currencies, if wished to be paid in foreign currency according to ITB sub-clause 15.2;

Completed Tables of Adjustment Data; Completed Bill of Quantities

(c) Bid Security, in accordance with ITB 19

Bidders may utilize their existing bid security, with no revision to the expiry date, provided it meets the following:

Format in accordance with the Form of Bid Security, or any format acceptable to the Employer; other forms like cashier's or manager's check is also acceptable;

Each lot (if in lots) is covered by a bid security (either one bid security per lot or one bid security covering multiple lots - EA should check if these are the same amounts indicated in the Bidding Documents);

Validity of bid security is 28 days beyond the validity of the bid;

For Joint Ventures (JV), the bid security is in the name of the JV or names of all future partners of the JV, if not yet constituted.

(d) Alternative bids, if permissible, in accordance with ITB 13

Alternative bid is not permitted. Any alternative bid will not be considered.

(e) Written confirmation authorizing the signatory of the Bid to commit the Bidder, in accordance with ITB 20.2

Notarized Power of Attorney demonstrating the authority of the signatory of the bid.

(f) Documentary evidence in accordance with ITB 17 establishing the Bidder’s qualifications to perform the contract if its Bid is accepted

Completed Current Contract Commitments / Works in Progress form;

Completed Financial Resources form with supporting documents;

Completed Bidder Information Sheet (Form ELI-1), JV Information Sheet (Form ELI-2), Pending Litigation (Form LIT-1)

Completed Financial Situation (Form FIN-1) with supporting documents, and Average Annual Construction Turnover (Form FIN-2)

(g) Technical Proposal in accordance with ITB 16

Completed Personnel Forms Completed Equipment form Site Organization Method Statement Mobilization Schedule Construction Schedule (work program or overall

implementation schedule under ITB 11.1(h))

ITB Sub-clause 11.2 Requirement

In case of JV, a copy of the Joint Venture Agreement, or a Letter of Intent to execute a JV in the event of a successful bid together with a copy of the proposed JV agreement

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Table 11: Time-bound Action Plan for Preparation and approval of Bid Evaluation Reports

Activity No. of Days Responsible

Agency/Department

Evaluation of Bids and preparation of bid evaluation report (BER)

10-15 days EA

EATC's receipt and review of BER and preparation of PC paper

4 days EATC

COSO and OGC review and comment of PC paper

5 days COSO and OGC

EA's incorporation of ADB comments in BER, if any

2 days EA

EATC's receipt of revised BER and finalization of PC paper

2 days EATC

COSO and OGC review of final PC paper and approval by Procurement Committee

5 days COSO and OGC and PC

Transmittal of ADB's no-objection of recommendation of award

1 day EATC

Notification of award to winning bidder(s) 2 days EA

Contract signing 30 days EA and Contractor

B.3 Loan and Grant Covenants Compliance Monitoring

50. Compliance for all covenants will be jointly monitored by MRTCUD and ADB through quarterly updates. In this respect, the Implementation Consultant and MRTCUD will submit to ADB a status report on the covenants summary with explanation and time-bound actions on partly or non-complied covenants.

Environmental Safeguards Monitoring

51. Monitoring is required during all three stages of the Project, i.e. planning, construction and operation to record the mitigation actions taken and the resulting effects designed to either avoid or reduce predicted impacts. The preparation and oversight of any monitoring work is the responsibility of the Executing Agency and its consultant. 52. Monitoring during the planning stage has to be taken twice: once to incorporate mitigating measures in the planning process and then at the end of that stage to monitor compliance. 53. Construction monitoring has to take place at regular intervals throughout the construction period, as indicated in EMP. Quarterly progress report will include a short description of environment, and the environment report will be submitted to ADB twice a year.

54. Operating period monitoring is dependent on the types and duration of impacts identified during the environmental assessment. The monitoring schedule is defined in the EMP and it will updated after the detailed design.

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55. Some of the monitoring during both the construction and operating periods will require sample collection and analysis during field work.

C. Evaluation

56. ADB will field an inception mission within 3 months after signing of the financing agreement. Review missions will be carried out on a semiannual basis jointly by representatives of ADB, the Beneficiary, and the MRTCUD. The review missions will assess the status of the project implementation including procurement, installation of equipment, financing, compliance to environmental and social safeguards, and the MRTCUD and MRA institutional capacity improvement. Site visits are also required. A mid-term review mission will be carried out 24 months after the loan and grant effectiveness. Mid-term review will allow for any necessary midcourse corrections to ensure successful implementation and the achievement of the Project objectives. Within 6 months of physical completion of the Project, the MRTCUD will submit the project completion report to ADB.10 D. Reporting

57. Overall progress and compliance with conditions of the financing agreement will be monitored regularly and reviewed by ADB, consistent with existing project implementation requirements. Reports will include evaluation of issues and will recommend remedial actions. 58. The MRTCUD will establish a project performance monitoring system within 6 months from loan and grant effectiveness and collect baseline data for performance monitoring. The key indicators and assumptions outlined at the impact and outcome levels in the Project’s design and monitoring framework will be the primary data required for analysis. Additional statistical data to be monitored will be agreed upon by the EA and ADB during inception of the project. 59. The MRTCUD will provide ADB with (i) quarterly progress reports within 2 weeks from the end of the related quarter in a format consistent with ADB's project performance reporting system. MRCUD will also prepare (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions, (c) updated procurement plan, and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project.

10 Project completion report format available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

Sector-Landscape.rar

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E. Disclosure of Documents

Project Documents Means of Communication

Responsible Party

Frequency Audience(s)

Project Information Document (PID) ADB’s website ADB

initial PID no later than 30 calendar days of approval of the concept paper; quarterly afterwards

General Public

Design and Monitoring Framework (DMF) ADB’s website ADB draft DMF after fact-finding mission

Project-affected people

Initial Environmental Examination (IEE) ADB’s website ADB before Board consideration

General Public, project-affected people in particular

Report and Recommendation of the President ADB’s website ADB within 2 weeks of Board approval of the loan

General Public

Financing Agreement ADB’s website ADB

no later than 14 days from Board approval of the project

General Public

Initial Poverty and Social Assessment ADB’s website ADB within 2 weeks of completion


Documents Produced under Technical Assistance ADB’s website ADB within 2 weeks of completion

General Public

Project Administration Manual ADB’s website ADB After loan negotiations

General Public

Social and Environmental Monitoring Reports ADB’s website ADB

routinely disclosed, no specific requirements


Major Change in Scope ADB’s website ADB within 2 weeks of approval of the change

General Public

Progress Report on funds released ADB’s website ADB

within 2 weeks of Board or management approval

General Public

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Project Documents Means of Communication

Responsible Party

Frequency Audience(s)

Project Completion Report ADB’s website ADB

within 2 weeks of circulation to the Board for information

General Public

Evaluation Reports ADB’s website ADB

routinely disclosed, no specific requirements

General Public

Performance of the Project with clearly defined information requirements and indicators, policy on intermodal logistics facility construction and reconstruction, 5-year investment plan, business opportunities, bidding process and guidelines, results of bidding process, and summary progress reports of the ongoing projects.

The borrower's Website

The borrower (Executive Agency)

per project progress, no longer than monthly

General Public

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X. ANTICORRUPTION POLICY

60. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project. 11 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB’s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the Project.12

61. To support these efforts, relevant provisions are included in the Financing Agreement regulations and the bidding documents for the Project.

11 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 12 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

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XI. ACCOUNTABILITY MECHANISM

62. People who are, or may in the future be, adversely affected by the project may address complaints to ADB, or request the review of ADB's compliance under the Accountability Mechanism.13

13 For further information see: http://compliance.adb.org/.

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XII. RECORD OF PAM CHANGES 63. All revisions/updates during the course of implementation should be retained in this Section to provide a chronological history of changes to implemented arrangements recorded in the PAM.14

Table 12: Sample Table for Recording PAM Changes

PAM Version Created Date Revision Date Reasons of Change

Main Contents of Change

V1.0 4 October 2010 NA Initial NA

14 The MRTCUD and ADB shall ensure that changes to the PAM during project implementation must be consistent

with the financing agreement.

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