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Project Number: 43216-01 Loan and/or Grant Number(s): {GXXXX (ADF) – tbd} 17 September 2010

Nepal: Transport Project Preparatory Facility

Project Administration Manual

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Contents ABBREVIATIONS 4

I. PROJECT DESCRIPTION 5 A. Project Rational, Location and Beneficiaries 5 B. Impact and Outcome 6 C. Outputs 6

II. IMPLEMENTATION PLANS 7 A. Project Readiness Activities 7 B. Overall Project Implementation Plan 8

III. PROJECT MANAGEMENT ARRANGEMENTS 9 A. Project Stakeholders – Roles and Responsibilities 9 B. Key Persons Involved in Implementation 10 C. Project Organization Structure 11

IV. COSTS AND FINANCING 14 A. Cost Estimates by Expenditure Category and by Financier 14 B. Allocation and Withdrawal of Grant Proceeds 16 C. Fund Flow Diagram 17

V. FINANCIAL MANAGEMENT 19 A. Financial Management Assessment 19 B. Disbursement 19 C. Accounting 21 D. Auditing 21

VI. PROCUREMENT AND CONSULTING SERVICES 22 A. Advance Contracting 22 B. Procurement of Goods, Works and Consulting Services 23 C. Procurement Plan 23 D. Consultant's Terms of Reference 23

VII. SAFEGUARDS 24

VIII. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 25 A. Project Design and Monitoring Framework 25 B. Monitoring 27 C. Evaluation 27 D. Reporting 28 E. Stakeholder Communication Strategy 28

IX. ANTICORRUPTION POLICY 28

X. ACCOUNTABILITY MECHANISM 29

XI. RECORD OF PAM CHANGES 29

XII. ATTACHMENTS 30 Attachment A: Procurement Plan 31 Attachment B: Outline TOR for Road Transport Preparatory Consultant 1 35

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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 PAM includes references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM. The executing and implementing agencies are wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB’s policies and procedures. ADB staff is responsible to support implementation including compliance by executing and implementing agencies of their obligations and responsibilities for project implementation in accordance with ADB’s policies and procedures. At Grant Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Grant Agreements. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan Agreements, the provisions of the Grant Agreements shall prevail.

After ADB Board approval of the project's report and recommendations of the President 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.

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Abbreviations ADB = Asian Development Bank ADF = Asian Development Fund AFS = audited financial statements CQS = consultant qualification selection DMF = design and monitoring framework EARF = environmental assessment and review framework EIA = environmental impact assessment EMP = environmental management plan ESMS = environmental and social management system GACAP = governance and anticorruption action plan GDP = gross domestic product ICB = international competitive bidding IEE = initial environmental examination IPP = indigenous people plan IPPF = indigenous people planning framework LAR = land acquisition and resettlement LIBOR = London interbank offered rate NCB = national competitive bidding NGOs = nongovernment organizations PAI = project administration instructions PAM = project administration manual PIU = project implementation unit QBS = quality based selection QCBS = quality- and cost based selection RRP = report and recommendation of the President to the Board SBD = standard bidding documents SGIA = second generation imprest accounts SOE = statement of expenditure SPS = Safeguard Policy Statement SPRSS = summary poverty reduction and social strategy TOR = terms of reference

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I. PROJECT DESCRIPTION

A. Project Rational, Location and Beneficiaries 1. The proposed Transport Project Preparatory Facility (the Facility) will assist the government’s effort to ensure that critically important road and air transport projects are implemented efficiently by advancing the preparatory activities in a systematic manner. The Facility will identify and prepare high priority projects for potential funding by the government and or by ADB or other development partners in the country, including feasibility studies, safeguard due diligences, detail engineering design, bidding documents, and procurement assistance for advance contracting if appropriate. This will contribute significantly toward improving the implementation performance of the ensuing projects by reducing the gap period from project concept and loan approval to commencement of improvement works, helping to achieve the intended outcomes efficiently and realizing their impact and benefits timely. The Facility will also provide capacity development support to help establish an enabling environmental, supporting the government’s goal of developing transport infrastructure under private-pubic-partnership. The Facility will prepare transport projects that will contribute to improved connectivity and accessibility throughout the country. It is relevant to the ADB’s sector strategy in support of the government’s goal of achieving regionally balance economic growth and reduced social inequalities. 2. At least two road transport and one air transport projects will be prepared under the Facility. The road transport component will prepare improvement projects for high priority SRN sections of about 1,300 km, identified in the government’s Priority Investment Plan (2007-2016) and DOR’s 20-year master plan for SRN. To enhance subregional connectivity, priorities will also include SRN links to subregional transport corridors identified under the SAARC1 Regional Multimodal Transport Study (SRMTS)2. The air transport component will prepare capacity enhancement and safety improvements at the Tribuhuvan International Airport (TIA) in Kathmandu and other regional airports, as well as the domestic airports serving remote areas that are otherwise inaccessible by roads. 3. The Facility will also provide capacity development support to help establish an enabling environment for preparing and implementing PPP projects in the road and air transport sub-sectors. These will include: PPP sector diagnostic and sector map – reviewing legal, regulatory, and policy frameworks, assessing institutional structures, conducting stakeholder consultation, and clarifying sector strategy and road map; identify and prepare at least one small scale pilot PPP project – assessing and selecting PPP options, defining procurement and bid evaluation process, and preparing bid package; and procurement assistance as appropriate. 4. A potential ensuing project will be eligible for preparatory steps under the Facility if it is: organizationally and technically feasible; prima facie economically and financially viable an sustainable; environmentally and socially responsible; consistent and prepared in accordance with the Borrower's relevant sector strategy, master plans or medium term development plan; and consistent with ADB's Country Strategy Program or Country Strategy and Program Update. For the road transport sub sector, the Facility will primarily prepare improvement for priority SRN sections identified in the PIP. However, other candidate roads could also be considered if worthy in terms of improving accessibility, especially poor rural access, contributing to reduction

1 South Asian Association for Regional Cooperation 2 SAARC Secretariat. 2007. SAARC Regional Multimodal Transport Study. Kathmandu. (prepared under ADB RETA

6187: Promoting South Asian Regional Economic Cooperation)

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of social exclusion, and enhancing connectivity to regional and economic centers, international borders, and district headquarters. For the air transport sub sector, the Facility will prepare improvement projects to enhance safety, capacity, and security in line with the Civil Aviation Sector Strategy and Infrastructure Development Plan3, updated Master Plan for TIA4, and the National Air Transport Development Plan.5 5. The implementation of the Facility will be phased in line with ADB’s pipe line projects. For instance, the preparation of about 900 km of SRN (Subgroup 1) will start immediately in order to facilitate the processing of ADB funded transport projects according to the Country Operation and Business Plan (COBP, Nepal, 2011-2013). Preparation for the remaining, about 400 km of SRN (Subgroup 2), will commence in about mid-2013 for potential transport projects to be funded during later years by ADB and or other development partners. B. Impact and Outcome 6. In support of the country partnership strategy, the impact will be enhanced transport connectivity. The immediate outcome will be improved efficiency in implementing road and air transport projects. C. Outputs 7. The outputs are:

(i) Feasibility studies and detail design of road and air transport projects. (ii) Capacity development support to DOR and CAAN for preparing and

implementing PPP projects

3 ADB. 2006. Technical Assistance to Nepal for Preparation of Civil Aviation Sector Strategy. Manila (CDTA 4772 for

$150,000, approved on 20 March) 4 ADB. 2007. Technical Assistance to Nepal for Preparing the Civil Aviation Airport Project. Manila (PPTA 7031 for

$750,000, approved on 14 December) 5 To be prepared under the recently approved Air Transport Capacity Enhancement Project (see footnote 4)

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II. IMPLEMENTATION PLANS

A. Project Readiness Activities 8. The project readiness activities, responsibilities, and estimated timeframe as follows:

Advanced Procurement Activities Mon Year

Date Project Processing Milestones Project Preparatory Consultant

(PPC1–Road Transport ) Project Preparatory Consultant

(PPC–Air Transport ) Responsible

by: ADB Department of Roads

(DOR) Civil Aviation Authority of Nepal

(CAAN) July 2010

12 - 21

Fact-Finding Mission

Aide Memoire and Preliminary PAM

Aug

30

Staff Review Meeting

►Advertise Request for Expression of Interest

Sep

01

21-22

►Send report & recommendation of the President & Loan Agreement to GoN ►Grant Negotiations

Oct

04

25

►Circulate for Board Consideration ►Board Approval

►Shortlist Report ►Issue Request for Proposal

Nov

01

Dec

01 ►Grant Signing

►Submit Proposal ►Technical Evaluation

►Advertise Request for Expression of Interest

Jan 2011

►Financial opening

►Shortlist Report

Feb

01 ►Grant Effective ►Contract signing

►Issue Request for Proposal

Mar

►Commence of services

►Submit Proposal ►Technical Evaluation

Apr

►Financial opening

May

June

►Contract signing

July

►Commence of services

ADB = Asian Development Bank, PAM = project administration manual.

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B. Overall Project Implementation Plan

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Stakeholders – Roles and Responsibilities Project Stakeholders Management Roles and Responsibilities

Executing agency (EA)

(Road Transport Component) Ministry of Physical Planning and Works (MPPW)

overall coordination of project implementation interagency coordination Implementing agency (IA)

(Road Transport Component) Department of Roads (DOR)

day-to-day project management consultant recruitment and procurement of works withdrawal applications project progress reports maintaining project accounts and complete loan

financial records Executing agency

(Air Transport Component) Civil Aviation Authority of Nepal (CAAN)

overall coordination of project implementation interagency coordination day-to-day project management consultant recruitment withdrawal applications project progress reports maintaining project accounts and complete loan

financial records ADB Monitor and review overall implementation of the

project in consultation with the EAs/IAs including: the project implementation schedule; actions required in terms of poverty reduction, environmental impacts, and resettlement plans (RPs) if applicable; timeliness of budgetary allocations and counterpart funding; project expenditures; progress with procurement and disbursement; statement of expenditure when applicable; compliance with particular loan covenants; and the likelihood of attaining the project’s immediate development objectives.

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B. Key Persons Involved in Implementation Executing Agency for Road Transport Component (MPPW)

Mr. Purna Kadariya Secretary Ministry of Physical Planning and Works Singhdurbar Kathmandu, Nepal Telephone: 977 1 4211880/931/782 Fax: 977 1 4211720

Implementing Agency for Road Transport Component (DOR)

Mr. Ram Kumar Lamsal Director General Department of Roads Babar Mahal Kathmandu, Nepal Telephone: 977 1 426 2693 Fax: 977 1 425 7409, 426 2993

Mr. Dinker Sharma Project Director Project Directorate (ADB), Department of Roads Bishalnagar Kathmandu, Nepal Telephone: 977 1 443 7492/7493 Fax: 977 1 443 7488 Email: pdadb@wlink.com.np

Executing Agency for Air Transport Component (CAAN)

Mr. Ram Prasad Neupane Director General Babar Mahal, Kathmandu, Nepal Telephone: 977 1 4262387, 4262326, 4262518 Fax: 977 1 4262516 Email: dgca@caanepal.org.np

Mr. Suman Kumar Shrestha Deputy Director General (Air Transport Planning and Development Directorate) Babar Mahal, Kathmandu, Nepal Telephone: 977 1 4257668 Fax: Email: suman_caan@hotmail.com

Mr. Dhurba Dass Bhochhibhoya Project Director, TIAIP-PD P.O.Box No. 284 Sinamangal, Kathmandu, Nepal Telephone: 977 1 446 6665/6671 Fax: 977 1 447 7410 Email: tiaip@caanepal.org.np

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ADB Transport and Communications Division of South Asia Regional Department (SATC)

Sri Widowati Director, SATC Telephone No.: (63) 2 632 6794 Email address: swidowati@adb.org

Mission Leader Dong-Kyu Lee Transport Specialist, SATC Telephone No.: (63) 2 632 5992 Email address: dklee@adb.org

Note: Update as changes occur C. Project Organization Structure 9. The flow chart below shows the reporting lines essential internal structures of key organizations involved in implementation, including the national steering committee, executing agencies, provincial coordinating committee, implementing agencies, and project implementation units.

Note: Road Transport Component: will utilize existing Project Implementation Unit for ADB G-0051

(Road Connectivity Sector 1 Project). Air Transport Component: will utilize existing Project Implementation Unit for ADB L-2581 (Air Transport Capacity Enhancement Project)

10. The following flow charts show the reporting lines essential internal structures of the project implementation units and their staffing assignments.

Civil Aviation Authority of Nepal

Executing Agency

Department of Roads

Implementing Agency

Project Implementation Unit - Project Directorate (ADB)

TIA Improvement Project Project Directorate

Project Implementation Unit

Ministry of Physical Planning and Works

Executing Agency

Roads Transport Component Air Transport Component

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Project Implementation Organization – Road Transport Component

Staffing Assignment/Recruitment Plan as of 21 July 2010:

Serial No.

Position Name Existing New Recruit [timeframe]

1 [1] Project Director Mr. Dinker Sharma appointed 2 [2] Deputy Project Director Mr. Bijendra B. Shrestha appointed 3 [2A] Project Engineer 1 Ms. Shova Giri appointed 4 [2B] Project Engineer 2 Mr. Ujjal Shrestha appointed 5 [3] Chief Accountant Mr. Ishwar Kafle appointed 6 [3A] Assistant Accountant 1 Mr. Yogesh Parajuli appointed 7 [3B] Assistant Accountant 2 Mr. Tham N. Sharma appointed 8 [5] Admin Officer Mr. Upendra Dhakal appointed 9 [5A] Admin Assistant 1 Mr. Gopal Shrestha appointed 10 [5B] Admin Assistant 2 Mr. Raj Kumari Thapa appointed

Accounting/Finance

Chief Accountant [3]

Key positions: Assist. Accountant 1 [3A] Assist. Accountant 2 [3B]

Project Implementation Unit (Project Directorate – ADB)

Project Director [1]

Administration

Admin Officer [4]

Key positions: Admin Assistant 1 [4A ] Admin Assistant 2 [4B]

Project Supervision

Deputy Project Director [2]

Key positions: Project Engineer 1 [2A] Project Engineer 2 [2B]

DOR Planning Division

Existing DOR Staff

Department of Roads (DOR)

Implementing Agency

Director General

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Project Implementation Organization – Air Transport Component

Staffing Assignment/Recruitment Plan as of 21 July 2010:

Serial No.

Position Name Existing New Recruit [timeframe]

1 [1] Project Director Mr. D. Bhochhibhoya appointed 2 [1A] Senior Civil Engineer 1 Mr./Ms. appointed 3 [1B] Civil Engineer Mr./Ms. appointed 4 [1C] Architect Engineer Mr./Ms. appointed 5 [1D] Electrical/Mechanical Engineer Mr./Ms. appointed 6 [1E] CNS/ATM Engineer Mr./Ms. appointed 7 [2] Chief Accountant Mr. B. P. Marasini appointed 8 [2A] Assistant Accountant 1 Mr./Ms. appointed 9 [2B] Assistant Accountant 2 Mr./Ms. appointed 10 [3] Admin Officer Mr. M. Kunwar appointed 11 [3A] Admin Assistant 1 Mr./Ms. appointed 12 [3B] Admin Assistant 2 Mr./Ms. appointed

Accounting/Finance

Chief Accountant [2]

Key positions: Assist Accountant 1 [2A] Assist Accountant 2 [2B]

Project Implementation Unit (Project Directorate – TIAIP)

Project Director [1]

Key positions:

Senior Civil Engineer 1 [1A] Civil Engineer [1B] Architect Engineer [1C] Elec./Mech. Engineer [1D] Communication Navigation

Surveillance / Air Traffic Management Engineer [1E]

Administration

Admin Officer [3]

Key positions: Admin Assistant 1 [3A ] Admin Assistant 2 [3B]

Air Transport Planning & Development

Directorate

Deputy Director General

Civil Aviation Authority of Nepal (CAAN)

Executing Agency

Director General

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IV. COSTS AND FINANCING

11. The project is estimated to cost $13.8 million, including taxes and duties of about $1.56 million to be financed by the government. The total cost includes physical and price contingencies, and other charges during implementation. The investment plan is summarized in Table 1.

Table 1: Project Investment Plan ($ million)

Item Amounta

A. Base Costb 1. Consulting Services 12.52 1a. Road transport component 7.45 1b. Air transport component 5.07 2. Project management 0.24 Subtotal (A) 12.76 B. Contingenciesc 1.04

Total (A+B) 13.80a Includes taxes and duties of $1.56 million to be financed from government resources. b In mid-2010 prices. c Physical contingencies computed at 10.0% for consulting services contract values. Price contingencies

computed at 2% on foreign exchange costs and 7% on local currency costs; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate.

Source: Asian Development Bank estimates 12. The government has requested a grant not exceeding $12.0 million from ADB’s Special Funds resources to help finance consulting services to carryout preparatory activities, including feasibility studies, detail engineering design, safe guard assessment, and provide PPP capacity strengthening. ADB will finance 87% of the total project investment cost; the government will finance 13% (Table 2). The government's financing will cover taxes and duties, and other recurrent project management expenses. The financing plan for the Project is in Table 2.

Table 2: Financing Plan

Source Amount ($ million)

Share of Total (%)

Asian Development Bank 12.00 87.00 Government 1.80 13.00

Total 13.80 100.00 Source: Asian Development Bank estimates

A. Cost Estimates by Expenditure Category and by Financier 13. The detailed cost estimates by expenditure category and detailed cost estimates by financier are presented below.

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Total ADB Government ADB Government % of TotalItem Cost Total Total (%) (%) Base CostA. Investment Costs [a] [b]

1. Consultants 12.52 11.08 1.44 88.50 11.50 90.8a. Road Transport Component 7.45 6.59 0.86 88.50 11.50 54.0b. Air Transport Component 5.07 4.49 0.58 88.50 11.50 36.8

Subtotal (A) 12.52 11.08 1.44 88.50 11.50 90.8B. Recurrent Costs

1. Project Management [c] 0.24 0.00 0.24 0.00 100.00 1.7a. DOR - Project Implementation Unit 0.12 0.00 0.12 0.00 100.00 0.9b. CAAN - Project Implementation Unit 0.12 0.00 0.12 0.00 100.00 0.9

Subtotal (B) 0.24 0.00 0.24 0.00 100.00 1.7C. Contingencies

1. Physical Contingency [d] 0.77 0.68 0.09 88.50 11.50 5.62. Price Contingency [e] 0.27 0.24 0.03 88.50 11.50 2.0

Subtotal (C) 1.04 0.92 0.12 88.50 11.50 7.5D. Financing Charges During Implementation

1. Interest During Implementation [f] 0.00 0.00 0.00 0.00 0.00 0.02. Commitment Charges [g] 0.00 0.00 0.00 0.00 0.00 0.03. Front-end Fees [h] 0.00 0.00 0.00 0.00 0.00 0.0

Subtotal (D) 0.00 0.00 0.00 0.00 0.00 0.0Total Project Cost (A+B+C+D) 13.80 12.00 1.80 87.00 13.00 100.0

[a] In mid 2010 prices.[b] Inclusive of local taxes and duties computed at 13.0% for consultant services.

ADB will pay 100% of consulting services excluding taxes.[c] Incremental administrative expenditures, including bank charges related to imprest accounts.[d] Computed at 10.0% for consulting services contract values.[e] Computed at 2.0% for foreign currency costs, and 7.0% for local currency costs.[f] Not applicable for ADF Grant.[g] Not applicable for ADF Grant.[h] None.

Source: Asian Development Bank

DETAILED COST ESTIMATES AND FINANCING PLAN ($ million)

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B. Allocation and Withdrawal of Grant Proceeds 14. Unless specifically stated otherwise, the following are applicable to both the Ordinary Operation and Special Operation loans.

ALLOCATION AND WITHDRAWAL OF GRANT PROCEEDS (Transport Project Preparatory Facility)

CATEGORY ADB FINANCING Total Amount Allocated

for ADB Financing ($)

Item

Category Subcategory

Percentage and Basis for Withdrawal from the Grant

Account

A Consultants 11,080,000 Road Transport

Component 6,590,000 100 percent of total expenditure

claimed* Air Transport Component 4,490,000 100 percent of total expenditure

claimed* B Unallocated 920,000 C Total 12,000,000

* Exclusive of taxes and duties imposed within the territory of Nepal

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C. Fund Flow Diagram 15. The following diagrams, one for road transport component and one for air transport component, show how the funds will flow from ADB and the Borrower to implement project activities.

[Road Transport Component]

Notes on funds flow: From ADB to the Imprest Accounts. Grant proceeds will be channeled through Imprest Account opened at the Nepal Rastra Bank (Central Bank). DOR will process all other disbursement requests to ADB, including direct payment to consultants (above $100,000). The Imprest Account will be replenished according to the ADB's Loan Disbursement Handbook. From ADB to consultants. Dollar-denominated payments for consultant fees contracted by DOR (above $100,000), will be paid directly by ADB, which requires DOR's submission of approved invoices and documentation to ADB in accordance with ADB's Loan Disbursement Handbook.

Project Imprest Account ($)

@ Nepal Rastra Bank (Central Bank)

Project Directorate (ADB)

Consultants

[A] Individual payments not exceeding $100,000 [B] Payments to Consultants (above $100)

Asian Development

Bank

A

B

Note: Cash flow Reports for reconciliation and replenishment (with copy to Ministry of Finance)

Direct payment procedure – withdrawal application/payment

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[Air Transport Component]

Notes on funds flow: From ADB to the Imprest Accounts. Grant proceeds will be channeled through Imprest Account opened at the Nepal Rastra Bank (Central Bank). CAAN will process all other disbursement requests to ADB, including direct payment to consultants (above $100,000). The Imprest Account will be replenished according to the ADB's Loan Disbursement Handbook. From ADB to consultants. Dollar-denominated payments for consultant fees contracted by CAAN (above $100,000), will be paid directly by ADB, which requires CAAN's submission of approved invoices and documentation to ADB in accordance with ADB's Loan Disbursement Handbook.

Project Imprest Account ($)

@ Nepal Rastra Bank (Central Bank)

CAAN (TIA-PD)

Consultants

[A] Individual payments not exceeding $100,000 [B] Payments to Consultants (above $100,000)

Asian Development

Bank

A

B

Note: Cash flow Reports for reconciliation and replenishment

Direct payment procedure – withdrawal application/payment

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V. FINANCIAL MANAGEMENT

A. Financial Management Assessment 16. Financial management assessment was carried out for the implementing agencies—DOR for the national road transport component and CAAN for the air transport component. 17. DOR has prior and ongoing experience with implementing ADB-funded projects and has satisfactory capacity in terms of project financial accounting and knowledge of ADB disbursement procedures. Within DOR’s Project Directorate (ADB), the project implementation unit for the road transport component, there will be a dedicated project accounting and finance team with suitably qualified accountants: a chief project accountant and two assistant accountants. 18. CAAN operates with an adequate system of financial and management accounting, reporting, auditing, and internal controls. However, efficiency is weak due to staff resources and lack of a computerized information system. The capacity strengthening component of ADB’s recently approved Air Transport Capacity Enhance Project will help address this by introducing a financial management information system consisting of accounting software, networked computers, and training. CAAN will assign suitably qualified accountants (a chief project accountant and an assistant accountant) to the PIU for project accounting and financial management. 19. Both DOR and CAAN will establish and maintain separate project records and accounts to identify the financing resources received and expenditures made for the Facility, ensuring an adequate audit trail. The government's Office of Auditor General will annually audit the project accounts and related financial statements in accordance with international auditing standards. To further minimize any risks, ADB's direct payment procedure will be utilized for substantial disbursement of payments for works, goods, and consulting services 20. Financial management risks should be considered and updated6 throughout the life of the project. Risk mitigation measures should also be updated accordingly. B. Disbursement 21. The Loan proceeds will be disbursed in accordance with ADB’s Loan Disbursement Handbook (2007, as amended from time to time),7 and detailed arrangements agreed upon between the Government and ADB. 22. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),8 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5 of the SPS) to subprojects financed by ADB. 23. Direct payment procedure by ADB will be utilized for progress payments on consultant's fees. Reimbursement, imprest fund, liquidation and replenishment procedures may be utilized 6 Available at: http://www.adb.org/Documents/Others/FM-toolkit/Methodology-Note.pdf, and Financial Management. See also Analysis of Projects Guidelines (2005): http://www.adb.org/Documents/Guidelines/Financial/default.asp. 7 Available at: http://www.adb.org/Documents/Handbooks/Loan_Disbursement/loan-disbursement-final.pdf 8 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf

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for progress payments on consultants (below $100,000). Two separate imprest accounts will be established and maintained by DOR and CAAN, respectively as follows: Funding Source (ADF Grant) Road Transport Component Air Transport Component Imprest Account (1) account ($) established at

the Nepal Rastra Bank (Central Bank) in the name of DOR Project Directorate (ADB)

(1) account ($) established at the Nepal Rastra Bank (Central Bank) in the name of CAAN – TIA Improvement Project – Project Directorate

24. The maximum ceiling of the imprest accounts "in aggregate” will not at any time exceed the estimated ADB financed expenditures to be paid from the imprest account for the next 6 months or 10% of the respective grant amount, whichever will be lower. The request for initial advance to the imprest account should be accompanied by an Estimate of Expenditure Sheet9 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 borrower will furnish to 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.10 25. ADB's statements of expenditure (SOE) may be utilized for reimbursement and liquidation and replenishment of the imprest accounts for any individual payments not exceeding the equivalent of $100,000. SOE records should be maintained and made readily available for review by ADB's disbursement and review mission or upon ADB's request for submission of supporting documents on a sampling basis, and for independent audit.11 26. Before the submission of the first withdrawal application, the borrower should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. The borrower is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. 27. DOR for the road transport component and CAAN for the air transport component, respectively, will be responsible for (i) preparing disbursement projections, (ii) requesting budgetary allocations for counterpart funds, (iii) collecting supporting documents, and (iv) preparing and sending withdrawal applications to ADB. 9 Available in Appendix 29 of the Loan Disbursement Handbook. 10 Follow the format provided in Appendix 30 of the Loan Disbursement Handbook. 11 Checklist for SOE procedures and formats are available at:

http://www.adb.org/documents/handbooks/loan_disbursement/chap-09.pdf http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-100-Below.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Contracts-Over-100.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Operating-Costs.xls http://www.adb.org/documents/handbooks/loan_disbursement/SOE-Free-Format.xls

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C. Accounting 28. DOR and CAAN will maintain separate project accounts and records by funding source for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices. D. Auditing 29. The DOR and CAAN will cause the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing and in accordance with the Government's audit regulations by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 9 months of the end of the fiscal year by the executing agency. The annual audit report will include a separate audit opinion on the use of the Imprest Accounts, and the SOE procedures (as applicable). The Government, MPPW, DOR, and CAAN have been made aware of ADB’s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB’s financing is used in accordance with ADB’s policies and procedures. For revenue generating projects only, ADB requires audited financial statements for each executing and/or implementation agency associated with the project.

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VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting 30. All advance contracting will be undertaken in conformity with ADB’s Procurement Guidelines (2010, as amended from time to time) (ADB’s Procurement Guidelines)12 and ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time) (ADB’s Guidelines on the Use of Consultants).13 The issuance of invitations to bid under advance contracting will be subject to ADB approval. The Government, MPPW, DOR, and CAAN have been advised that approval of advance contracting does not commit ADB to finance the Project. 31. Advance contracting includes recruitment of consultants. The detailed advance action schedules, which will be updated on regular basis, are presented below.

Road Transport Component: Project Preparatory Consultant 1 (PPC1)

Project Preparatory Consultant 1 Recruitment (DOR)No. Activity Days Timeframe Action By Status1 Prepare Request for Expression of Interest (REOI) 22-Aug-10 DOR done2 Advertise in the newspapers & ADBBO 5 27-Aug-10 DOR done3 EOI Submission 32 28-Sep-10 External ongoing4 Submission (1) to ADB: Shortlisting/Draft RFP 10 08-Oct-10 DOR not yet due5 ADB's Review & No-Objection 14 22-Oct-10 ADB not yet due6 Issue Request For Proposal (RFP) 3 25-Oct-10 DOR not yet due7 Proposal Submission 45 09-Dec-10 External not yet due8 Submission (2) to ADB: Technical Evaluation 14 23-Dec-10 DOR not yet due9 ADB's Review & No-Objection 14 06-Jan-11 ADB not yet due

10 Public Opening of the Financial Proposals 3 09-Jan-11 DOR not yet due11 Submission (3) to ADB: Financial Evaluation/Ranking 10 19-Jan-11 DOR not yet due12 ADB's Review & No-Objection 7 26-Jan-11 ADB not yet due13 Invite 1st Ranked Firm - Negotiate/Draft Contract 10 05-Feb-11 DOR not yet due14 Submission (4) to ADB: Draft Negotiated Contract 5 10-Feb-11 DOR not yet due15 ADB's Review & No-Objection 5 15-Feb-11 ADB not yet due16 Contract Signing & Issue Notice to Proceed 8 23-Feb-11 DOR not yet due17 Submission (5) to ADB: Signed Contract 1 24-Feb-11 DOR not yet due18 Consultant Mobilization 19 15-Mar-11 Consultant not yet due

Total 205

Air Transport Component: Project Preparatory Consultant

[To be determined and updated]

12 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf 13 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf

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B. Procurement of Goods, Works and Consulting Services 32. All procurement of goods and works will be undertaken in accordance with ADB’s Procurement Guidelines. 33. Before the start of any procurement ADB and the Government will review the public procurement laws of the central and state governments to ensure consistency with ADB’s Procurement Guidelines. 34. An 18-month procurement plan indicating threshold and review procedures, goods, works, and consulting service contract packages and national competitive bidding guidelines is in Section C (Procurement Plan). 35. All consultants will be recruited according to ADB’s Guidelines on the Use of Consultants.14 The terms of reference for all consulting services are detailed in Section D. 36. To carryout project preparatory activities under the Facility, international firms, as project preparatory consultant (PPC) will recruited. PPC1-Road Transport Component requires an estimated 353 person-months (68 international, 285 national). Requirements for PPC2-Road Transport and PPC-Air Transport Component will be assessed and identified during the course of the Facility. Consulting firms will be engaged using the quality- and cost-based selection (QCBS) method with a weighting of 90% technical and 10% financial as the nature of the assignment requires priority consideration for quality. To assist CAAN with project management, a national individual will be recruited for about 24 person-months using individual selection procedure. If necessary, an international individual consultant for project management could be recruited subject to satisfactory justification. C. Procurement Plan 37. The procurement plan is in Attachment A and describes all procurement of good and works to be undertaken for the Project. D. Consultant's Terms of Reference 38. The consultant's terms of reference are provided in the following:

Road Transport Component: Project Preparatory Consultant 1 Attachment B E. Procurement Capacity 39. Procurement capacity assessments have been carried out for the DOR and CAAN.15 Both organizations have adequate capacity and are experienced with procurement capacity under the ongoing AD funded projects. The PPMO will provide updated training for the staff of DOR and CAAN on technical guidelines and manuals, including refresher course for the latest ADB procurement guidelines and standard bidding documents.16 14 Checklists for actions required to contract consultants by method available in e-Handbook on Project

Implementation at: http://www.adb.org/documents/handbooks/project-implementation/ 15 Fresh procurement capacity was carried out for DOR. For CAAN, recent capacity assessment conducted in late

2009 (processing of ADB Loan 2581: Air Transport Capacity Enhancement). 16 PPMO is a the national procurement oversight agency under the Office of the Prime Minister and Council of

Ministers. ADB is currently providing a technical assistance to strengthen the PPMO to implement requirements of the newly enacted act and regulations.

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VII. SAFEGUARDS

40. The Facility is expected to ensure development of environmentally and socially viable investment loans. The follow-on loans and grant will be prepared in compliance with ADB's Safeguard Policy Statement (2009) and government guidelines, regulations, and policies. The Facility is not expected to have any adverse social and environmental consequences due to the nature of the proposed intervention, i.e., project preparation. Social and environmental impacts relating to follow-on loans and grants will be assessed and mitigated in accordance with ADB's Safeguard Policy Statement (2009) and government guidelines, regulations, and policies. During the feasibility studies, the consultants will prepare environmental impact assessments or initial environmental examinations, including environmental management plans, as applicable, for the selected subprojects. Similarly, resettlement planning, indigenous peoples planning and gender analyses will be prepared for the selected subprojects during this stage, and will be updated during detailed design stage.

VIII. GENDER AND SOCIAL DIMENSIONS

41. The Facility is not expected to have any physical impact on gender and social dimensions. Follow-on project will be prepared in compliance with ADB's Guidelines for Incorporation of Social Dimensions in Bank Operations (1994), and ADB's Handbook on Social Analysis (2007). Gender, consultation and participation, labor, HIV/AIDs, and other social risks relating to follow-on loans and grants will be assessed by social development consultant (refer PAM Attachment B) and mitigation plan will be prepared to address those issues, if any. For implementation of the mitigation plan for follow-on project, two gender experts will be engaged (refer PAM Attachment C). 42. The Government will ensure, for each follow-on project for ADB financing, that bidding documents under such follow on project shall include specific provisions to comply with all (a) applicable labor laws and core labor standards on (a.i.) prohibition of child labor as defined in national legislation for construction and maintenance activities, on (a.ii.) equal pay for equal work of equal value regardless of gender, ethnicity or caste, and on (a.iii.) elimination of forced labor; and (b) the requirement to disseminate information on sexually transmitted diseases including HIV/AIDS to employees and local communities surrounding the project civil works sites.

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IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION

A. Project Design and Monitoring Framework Design Summary

Performance Targets and Indicators with Baselines

Data Sources and/or Reporting Mechanisms

Assumptions and Risks

Impact Transport connectivity is enhanced.

Percentage of population within walking distance of paved roads in 4 hours or less in hill areas and 2 hours or less in Terai areas increases to 90% by 2018 (2007 baseline: 78%). Annual number of air passengers increases by 75% for international travel and 55% for domestic travel by 2018 (2009 baseline: 1.6 million international and 1.1 million domestic passengers per year).

Ministry of Public Works and Planning Civil Aviation Authority of Nepal

Assumption Government implements complementary investments to improve overall transport network Risk Air traffic volume is affected by the global economy.

Outcome Road and air transport projects are implemented efficiently.

By project completion (2015), implementation gap of ADB-funded transport projects (interval period from approval of loan and/or grant to award of first works contract) is improved to 6 months (2009 baseline: 27 months)

Project performance reports ADB country portfolio review reports

Assumption The government remains committed to implementing the Priority Investment Plan (2007–2016) for development of strategic roads.

Outputs 1. Feasibility studies

and detail design of road and air transport projects

2. Capacity

development support to DOR and CAAN for preparing and implementing PPP projects.

By project completion (2015): 1.1 Minimum of two road

transport projects are prepared

1.2 Minimum of one air

transport project is prepared

2. Minimum of one pilot PPP

project is prepared for each of road and air transport subsector.

ADB missions Consultant’s progress and completion reports

Assumption Executing and implementing agencies provide effective monitoring and quality support to ensure timely progress of the preparatory activities. Risk Consultant recruitment and mobilization are delayed.

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Activities with Milestones (months after commencement) Inputs 1. A. Feasibility studies and detail design for road transport project—

subproject group 1 1.1 Preliminary assessment of technical, economic, and financial viability,

safeguard implications, consistency with government’s sector development plans (4)

1.2 Engineering design, specifications, bill of quantities, cost estimate, and bidding documents (21)

1.3 Economic analysis (23) 1.4 Social assessment and safeguard analysis–resettlement and indigenous

people assessment, environmental, and gender (23) 1.5 Procurement assistance (during implementation)

B. Feasibility studies and detail design for road transport project—subproject group 2

1.6 Repeat activities 1.1 to 1.5 (60)

C. Feasibility studies and detail design for air transport project 1.7 Preliminary assessment of technical, economic, and financial viability,

safeguard implications, consistency with government’s sector development plans (7)

1.8 Engineering design, specifications, bill of quantities, cost estimate, and bidding documents (24)

1.9 Economic and financial assessment (26) 1.10 Social assessment and safeguard analysis—resettlement and indigenous

peoples assessment, environmental, and gender (26) 1.11 Procurement assistance (during implementation of the ensuing project)

ADB: $12.0 million

Government: $1.8 million (taxes and duties)

2. Capacity development support for preparing and implementing PPP

projects—road and air transport infrastructure 2.1 PPP sector diagnostic and sector map—review technical issues and legal,

regulatory, and policy frameworks; assess institutional structures and capacity and commercial, financial, and economic issues; conduct stakeholder consultation; and prepare clear sector strategy and road map (12)

2.2 Prepare a small-scale pilot PPP project—assess and select PPP options; technical preparation; analyze project financing, tariff design, and subsidy design; define procurement process and bid evaluation process; and prepare bid package (22)

2.3 Procurement assistance (if necessary during implementation)

ADB = Asian Development Bank, CAAN = Civil Aviation Authority of Nepal, DOR = Department of Roads, PPP = public–private partnership. Source: Asian Development Bank

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B. Monitoring 43. Project performance monitoring: The achievement of the project performance targets will be assessed following the design and monitoring framework. DOR and CAAN, respectively, will establish a project performance management system. Indicators to be monitored include (i) Percentage (%) of population with walking distance to paved roads of 4 hours or less in hill areas and 2 hours or less in terai areas; (ii) number of international and domestic air passengers per year; (iii) the number of road and air transport projects before and after the Project; (iv) the number of investment loans, (v) the number of bid documents ready for tender, and (vi) the extent of due diligence of social and environmental safeguard measures completed at ensuing loan fact-finding mission stage, during the project implementation; and (vii) number of PPP road and air transport projects prepared and ready for bidding. Achievement of the capacity development activities will also be monitored. Progress will be monitored and reported monthly by the consultants. These quarterly reports will provide information necessary to update ADB's project performance reporting system.17 44. Compliance monitoring: Compliance with covenants will be monitored through ADB's Project Administration Missions – including project inception mission to discuss and confirm the timetable for compliance with the loan covenants; project review missions to review the borrower's compliance with particular loan covenants and, where there is any noncompliance or delay, discuss proposed remedial measures with the Government; and mid-term review mission if necessary to review covenants to assess whether they are still relevant or need to be changed, or waived due to changing circumstances. 45. Safeguards monitoring: Regular safeguards monitoring of TA Consultants' outputs to ensure that ADB's Safeguard Policy Statement (2009) are met will be conducted through the ADB's Project Administration Missions. As necessary, special administration missions and a midterm review mission will be fielded to ensure safeguard policy compliance. DOR and CAAN will monitor project implementation in accordance with the schedule and time-bound milestones, and keep ADB informed of any significant deviations that may result in not achieving the milestones. 46. Gender and social dimensions monitoring: Regular gender and social dimensions monitoring of Consultants outputs to ensure ADB's Gender and other social related policies are met will be conducted through the ADB's Project Administration Missions. As necessary, special loan administration missions and a midterm review mission will be fielded to ensure compliance of Gender and other social related policies. DOR and CAAN will monitor project implementation in accordance with the schedule and time-bound milestones, and keep ADB informed of any significant deviations that may result in not achieving the milestones. C. Evaluation 47. A project inception mission will be fielded soon after the legal agreements for the Facility are declared effective; thereafter, regular reviews will follow at least annually. As necessary, special loan administration missions and a midterm review mission will be fielded, under which any changes in scope or implementation arrangement may be required to ensure achievement of project objectives. DOR and CAAN will monitor project implementation in accordance with the

17 ADB's project performance reporting system is available at:

http://www.adb.org/Documents/Slideshows/PPMS/default.asp?p=evaltool

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schedule and time-bound milestones, and keep ADB informed of any significant deviations that may result in the milestones not being met. Within 6 months of physical completion of the Project, DOR and CAAN will submit a project completion report to ADB.18 D. Reporting 48. The DOR, through MPPW, and CAAN will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency audited financial statements, together with the associated auditor's report, should be adequately reviewed. E. Stakeholder Communication Strategy 49. Once a year, DOR and CAAN, respectively, will hold one-day workshop to share information on project progress, issues, lessons learned, and performance improvement measures if appropriate. 50. Various information regarding the Project, including scope, general progress status, beneficiaries, invitation for bid, and consultant recruitment notices, will be provided to the general public. The information will be made available and updated through the official websites of DOR and CAAN. 51. While conducting poverty and social assessment, the Consultants will conduct field visits and direct consultations/interactions with stakeholders using participatory approaches at the local and line Ministry levels. If there are any gaps emerging from the communication needs assessment, the Consultants will have to formulate, in discussion with internal stakeholders and key decision-makers, a communications strategy for the Facility.

X. ANTICORRUPTION POLICY

52. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project.19 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.20 To support these efforts, relevant provisions are included in the bidding documents for the Project. 53. 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 DOR and CAAN, and consultants and other service providers, as they relate to the Facility. The government will also allow and assist ADB representatives' carrying out random spot checks on 18 Project completion report format available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-

Sector-Landscape.rar 19 Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 20 ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

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the work in progress and the utilization of funds for the Facility.

XI. ACCOUNTABILITY MECHANISM

54. 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.21 55. The executing agencies and consultants will undertake studies in line with ADB safeguard policies and requirements, which will ensure greater accountability, including consultation concerning environment, resettlement and social aspects

XII. RECORD OF PAM CHANGES

56. All revisions/updates during course of implementation should be recorded and retained under this Section to provide a chronological history of changes to implemented arrangements recorded in this PAM.

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

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XIII. ATTACHMENTS

Attachment A: Procurement Plan Attachment B: Outline TOR for Road Transport Preparatory Consultant 1

Attachment A

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PROCUREMENT PLAN

Basic Data Project Name Transport Project Preparatory Facility Country Nepal Executing Agency Ministry of Physical Planning

(for road transport component) and Civil Aviation Authority of Nepal (for air transport component)

Loan/Grant Amount $12 million grant Loan/Grant Number Date of First Procurement Plan 21 July 2010 Date of This Procurement Plan 17 September 2010 A. Process Thresholds, Review, and 18-Month Procurement Plan

1. Project Procurement Thresholds

1. Except as the Asian Development Bank (ADB) may otherwise agree, the following process thresholds shall apply to procurement of goods and works.

Procurement of Goods and Works Method Threshold International Competitive Bidding (ICB) for Goods Above $500,000 National Competitive Bidding (NCB) for Goods Beneath that stated for ICB, Goods Shopping for Works Below $100,000 Shopping for Goods Below $100,000

2. ADB Prior or Post Review

2. Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the project. Procurement Method Prior or Post Comments Procurement of Goods and Works ICB Works Prior ICB Goods Prior NCB Works and Goods Post Prior review for the bidding

documents and bid evaluation reports.

Shopping for Works Post Shopping for Goods Post Recruitment of Consulting Firms Quality- and Cost-Based Selection (QCBS) Prior Recruitment of Individual Consultants Individual Consultant Selection Prior

Attachment A

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3. Goods and Works Contracts Estimated to Cost More Than $ 1 Million

3. The following table lists goods and works contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description Contract

Value

Procurement Method

Prequalification of Bidders (Yes/No)

Advertisement Date

(quarter/year)

Comments

None expected at this time.

4. Consulting Services Contracts Estimated to Cost More Than $100,000

4. The following table lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description Contract Value Recruitment

Method Advertisement

Date (quarter/year)

International or National Assignment

Comments

Road Transport Project Preparatory Consultant 1 (PPC1-Road)

About $4.0 million

Quality and Cost Based Selection

(90:10)

Q3/2010 International firm

Air Transport Project Preparatory Consultant (PPC-Air)

About $4.3 million

Quality and Cost Based Selection

(90:10)

Q4/2010 International firm

Air Transport Preparatory Project Management Advisor

About $200,000 Individual Selection

Q4/2010 National Individual

5. Goods and Works Contracts Estimated to Cost Less than $ 1 Million and Consulting Services Contracts Less than $100,000

5. The following table groups smaller-value goods, works, and consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months. General Description Value of

Contracts (cumulative)

Number of Contracts

Procurement / Recruitment

Method

Comments

None expected at this time.

Attachment A

33

B. Indicative List of Packages Required Under the Project

6. The following table provides an indicative list of all procurement (goods, works and consulting services) over the life of the project. Contracts financed by the Borrower and others should also be indicated, with an appropriate notation in the comments section. General Description

Estimated Value (cumulative)

Estimated Number of Contracts

Procurement Method

Domestic Preference Applicable

Comments

Goods

none

General Description

Estimated Value (cumulative)

Estimated Number of Contracts

Recruitment Method

Type of Proposal

Comments

Consulting Services

About $11 million

4 QCBS (90:10) International or

Individual Consultant Selection

Full, simplified or

biodata proposal

Attachment A

34

C. National Competitive Bidding

National competitive bidding (NCB) shall be in accordance with that described as "by inviting bids and a national level" as set forth in "The Public Procurement Act, 2007" (PPA) and "The Public Procurement Regulations, 2007" (PPR) and subject to the following: (i) The first NCB document for both goods and works procurement shall be reviewed and approved by ADB prior to issue. These will be used for all NCB procurement under the project. The document shall include qualification and evaluation criteria and ADB's right to audit and inspect in accordance with para 1.14 of ADB's Procurement Guidelines. No other criteria other than that described in the bidding document may be used to determine the lowest evaluated responsive bidder and no form of domestic preference may be employed. A positive assessment of a bidder's qualifications to perform a contract will be a pre-requisite to an award. (ii) All qualified ADB member bidders and ADB member produced goods, services and works shall be eligible. Registration and licensing shall be permitted only as a condition of contract award and not participation in bidding. No award may be withdrawn for failure to obtain tax registration; license or fulfill any similar requirement without ADB's prior concurrence. No bidder will be held ineligible based on provision 63 of the PPA without ADB prior concurrence. (iii) Invitations to bid shall be advertised in at least one widely circulated national daily newspaper or freely accessible, nationally-known website allowing a minimum of twenty-eight (28) days for the preparation and submission of bids. Invitations for bids for contracts estimated at $500,000 or more for goods and $1,000,000 or more for civil works shall be advertised on ADB’s website. No restriction will be placed on the sale of bidding documents. (iv) The approved Standing List of a Procuring Entity prepared in accordance with the law shall only be accepted to supplement an advertised open pre-qualification exercise for the specific contract provided that those on the standing list meet the qualification criteria. (v) Bids shall be opened at a single location immediately after the deadline for submission. Multiple locations for submission and opening are not acceptable. (vi) Government-owned enterprises in Nepal shall be eligible to participate only if they meet the conditions of para 1.8 (c) of the Procurement Guidelines. (vii) Extension of bid validity of more than 4 weeks beyond the original validity shall not be allowed without the prior concurrence of ADB. (viii) Cancellation of bidding and re-bidding shall not be carried out without the prior concurrence of ADB. (ix) Percentage variations from rates fixed by a district rate fixation committee shall not be used for the purpose of evaluating bids. In the event of a conflict between these provisions and the law, these provisions shall prevail.

Terms of Reference for PPC1-Road Component Attachment B

35

OUTLINE TERMS OF REFERENCE FOR ROAD TRANSPORT PROJECT PREPARATORY CONSULTANT 1 (PPC1-ROAD)

A. Background and Objectives 1. The Government of Nepal (the Government) has applied for a grant from the Asian Development Bank (ADB) for the Transport Project Preparatory Facility (the Facility) and intends to apply a portion of proceeds to engage a firm of international consultants (the Consultant) to: (a) undertake preparatory activities for the processing of a new loan or grant projects for funding by ADB or other bilateral or multilateral development institutions; and (b) provide capacity development support to prepare and implement PPP projects. 2. The consulting services contract award and signing will be upon ADB Board approval of the project and grant effectiveness. 3. The main objectives of the consulting services (the Services) are as follows. Part-A: Review the government’s Priority Investment Plan (2007-2016) for the development and management of strategic road network, discuss and identify with the Department of Roads (DOR) about 900km of high priority road sections, and carryout combined feasibility study and detail engineering design, including minor structures and bridges, which consist of: (i) appropriate condition surveys, (ii) engineering design, specification, bill of quantities, cost estimates, and bidding documents for the improvement works, (iii) economic analysis, (iv) social and environmental assessment in accordance with ADB's Safeguard Policy Statement 2009 (SPS), ADB’s Environmental Assessment Guidelines (2003) as well as government regulations and policies, (v) bidding documents, (vi) procurement assistance, and (vii) other assistance as may be required by ADB Mission for loan processing. It is expected that the preparation of the roads will be carried out in two subgroups (Subgroup 1 and Subgroup 2) with each subgroup targeted as a single road transport project. Part-B: Provide capacity strengthening in PPP preparatory work and implementation with the objective of establishing an enabling environment. This includes: PPP sector diagnostic and sector map – reviewing legal, regulatory, and policy frameworks, assess institutional structures, conducting stakeholder consultation, and clarifying sector strategy and road map; identify and prepare at least one small scale pilot PPP project – assessing and selecting PPP options, defining procurement and bid evaluation process, and preparing bid package. B. Scope of Services

PART A: Preparation for Priority Roads Improvement Projects

1. Selection of Priority Roads

4. The consultant will review the government’s Priority Investment Plan (2007-1016) for development and management of strategic road network and propose a priority road list of total length of about 900km. A candidate road should identified and included if it is:

(i) technically feasible, and prima facie economically and financially viable/sustainable;

(ii) environmentally and socially responsible;

Attachment B Terms of Reference for PPC1-Road Component

36

(iii) consistent with the government’s relevant sector strategy, master plans and development plans – i.e. Priority Investment Plan (2007-1016);

(iv) consistent with ADB’s Country Partnership Strategy (Transport Sector Strategy); and

(v) significant for regional cooperation and integration (RCI) or have beneficial subregional trade facilitation

2. Engineering Design, Cost Estimate, and Contract Packages

5. The consulting service will comprise the following tasks:

(i) Inventory road sections selected for engineering, including geometric features, and type and condition of drainage structures, including an estimate of their load-carrying capacity, pavements, and other major features.

(ii) Carry out engineering surveys as required preparing detailed engineering designs as appropriate to enable construction quantities to be calculated with reasonable accuracy (10%).

(iii) Prepare designs based on the typical pavement sections, applying sound engineering practice and giving due regard to environmental and social safeguards aspects in accordance with the ADB’s Safeguard Policy Statement 2009 and Government's related regulations and policies.

(iv) Investigate the suitability of local construction materials and, where necessary, locate new quarries and borrow pits and assess the quality and quantity of materials and hauling distance.

(v) Study the hydrological regime in detail, based on an analysis of rainfall and flood records, supplemented by engineering field investigations, to establish the adequacy of road embankment levels, culverts, and side ditches, and design bed and slope protection for the drainage structures and bridges.

(vi) Assess cross-drainage requirements and proposed new structures (bridges, culverts, and causeways as appropriate) or improvements to structurally unsound structures.

(vii) Prepare practical and cost-effective geometric (horizontal, vertical, intersection, etc.) pavement and structural designs on the basis of projected traffic levels; pavement structure studies; axle-load considerations, as determined from activities (i) to (vi) and from previous studies; traffic safety; environmental assessment; and other relevant inputs.

(viii) Determine the most cost-effective improvement option for each project road section. Where new pavements are to be provided, they will be designed, using an internationally recognized procedure, for a 10-year life, with provision for overlays during or at the end of that period to extend the life to 15-20 years.

Terms of Reference for PPC1-Road Component Attachment B

37

(ix) Prepare engineering technical specifications for each work item, taking into account relevant specifications in use in the country and elsewhere for similar works.

(x) Conduct road safety audits with use of ADB’s Road Safety Audit for Road Project; An Operational Tool Kit or similar procedures acceptable to ADB. Provisions for managing road safety aspects appropriately during construction will be included in all bidding documents.

(xi) Prepare detailed engineering designs of road, pavement, and structures, and bills of quantities, and calculate engineering costs estimates for civil works broken down into foreign (direct and indirect) and local components.

(xii) Prepare contract packages, taking into account (a) the location of the project roads, size of contracts, and other project specific factors; (b) ADB’s Guidelines for Procurement; and (c) the aim of supporting development of strong, competitive domestic private sector capacity in road industry.

(xiii) Prepare engineering project implementation schedules showing anticipated progress of works and expenditures for each contract package. The schedules will reflect seasonal climatic effects at the work sites and take into account typical outputs on earlier ADB-financed road projects.

(xiv) Prepare engineering drawings as per Client's requirements.

(xv) Prepare bidding documents for each contract packages in accordance with the latest ADB standard bidding documents template available on the ADB website.

3. Economic Analysis

(i) Review existing traffic data, conduct traffic counts and origin-destination and axle-load surveys, and forecast traffic for each candidate road sections for 20 year projections.

(ii) Prepare an economic analysis of the proposed road improvements using the Highway Development and Management model (HDM, version 4). Calculate the Economic Internal Rate of Return (EIRR), individually and overall.

(iii) Undertake sensitivity analysis on the risk factor basis for various scenarios such as changes to the cost, generated and diversion traffic, modal shift, construction period, etc.

(iv) For selected priority road sections with impact on the subregional transport system, assess the economic impact and outcome/benefits – derived from or attributable to the improved subregional transport system/network (especially between India and Nepal). This includes (but not necessarily limited to) the following:

Attachment B Terms of Reference for PPC1-Road Component

38

- Measurable affect on trade competitiveness through delivery costs, transit times, and supply reliability – identify relevant baseline indicators and predict achievable target outcomes.

- Estimated increase to regional traffic volume and trade volumes generated by the enhanced road network by improving project roads.

(v) Prepare and submit Economic Assessment Report, presenting the following:

(a) Introduction (b) General Considerations (c) Input Data for Vehicle Operating Cost Components and Other

Components for Economic Analysis (d) Economic Benefits (including those due to regional implications) (e) Construction and Maintenance Alternatives and Cost Estimates (f) Economic Analysis (g) Sensitivity Analysis (h) Conclusions – summarizing the economic assessment, approach &

methodology, findings (EIRRs and sensitivity analysis), and overall economic viability.

Appendices:

A. Project road details (should be available from main report) B. Traffic studies (base year traffic, traffic generation, traffic diversion

assessments) C. Economic growth trend and traffic forecast (including the basis)

(vi) Develop a project impact monitoring framework and carry out baseline survey for all roads.

4. Social Assessment

6. The consultants will carry out the following tasks but are not limited to:

(i) Conduct 20% poverty & social assessment taking into account socioeconomic and poverty status of the project area of influence, including the nature, extent and determinants of poverty in the project area. Identify and estimate the likely socioeconomic and poverty reduction impacts of the project. Assess local demand for the proposed road investments, employment opportunities, child labor, affordability, gender specific capacity to take advantage of the likely socioeconomic opportunities that would result from the project. This will be in accordance with ADB’s Guidelines for the Incorporation of Social Dimensions in ADB Operations and its Handbook on Poverty and Social Analysis.

(ii) Identify project-related interests of key stakeholders, likely barriers to their participation in and benefiting from the project resources, and suggest possible strategies for addressing their concerns.

(iii) Conduct studies by using participatory approaches. With the participation of stakeholders, identify and analyze the reasons behind the vulnerability of at risk

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groups, including their exposure to risks. Suggest participatory development strategies for key stakeholders to apply when designing and implementing the project.

(iv) Prepare a gender analysis. Identify project design elements (policy, investment, or implementation) in which women can participate in and thus benefit from the project.

(v) Conduct assessment of risks of human trafficking and HIV/AIDS due to the project. Provide suggestions for measures to be incorporated in the project to mitigate possible adverse impacts through human trafficking and HIV/AIDS, and identify possible partners for assisting in implementing such measures.

(vi) Identify any necessary mitigation measures and a strategy for implementing them. Identify potential proactive measures, in terms of additional components and design options, which will make it easy for the poor and vulnerable to benefit from the project.

(vii) In coordination with the economic analysis, design a time-bound benefit monitoring and evaluation program, including monitoring indicators and baseline data, to assess the project benefits to local communities before and after the construction of project. The program should address not only the economic benefits but also poverty reduction impacts and other social benefits such as stability of the region and integration with other parts of the country.

(viii) Submit a draft final Poverty and Social Analysis (PSA) report to ADB and DOR for review and comments. Incorporate comments and finalize the PSA accordingly, then re-submit the revised PSA to ADB through DOR. Summarize and submit these PSA findings in the Summary Poverty Reduction and Social Strategy (SPRSS) report format.

5. Resettlement and Indigenous People Assessment

7. The consultants will carry out Resettlement and Indigenous People Planning of the project road in accordance with the ADB’s Safeguard Policy Statement 2009, Public Communications Policy 2005 as well as Government's acts, regulations and policies. The major tasks include, but are not limited to, the following:

(i) Conduct a preliminary social impact assessment for the project including assessment of possible land acquisition/resettlement impacts for the candidate road alignments in accordance with ADB’s Safeguard Policy Statement 2009. Prepare and complete screening and impact categorization form for involuntary resettlement for the candidate road alignments.

(ii) Identify whether the project will be located in, or pass through, areas of significant indigenous people’s settlements, and if this is the case propose how to specifically include indigenous peoples in project planning and implementation in accordance with ADB’s Safeguard Policy Statement 2009. If relevant, make an overview of population characteristics in the project area and anticipate project

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impacts. Prepare and complete checklist for indigenous people screening and impact categorization for the candidate road alignments.

(iii) For the whole program, review existing Resettlement Framework under Road Connectivity Sector 1 Project and adjust them to the project roads as necessary acceptable to the Government and ADB in compliance with the ADB’s Safeguard Policy Statement 2009 and Government related acts and policies.

(iv) Prepare a resettlement plan (RP) and indigenous people plan (IPP) as necessary acceptable to the Government and ADB in compliance with the ADB's Safeguard Policy Statement 2009, and Government related acts and policies. RP and IPP should be based on 100% census which covers a complete enumeration of all Displaced Persons (DPs) and their affected assets.

(i) Define categories for impact and eligibility of affected people for compensation and prepare a matrix of entitlements covering compensation and other assistance for all types of impacts to fully replace lost assets, income, and livelihood. Assess whether the compensation standards for all types of assets, crops, and trees are based on replacement value and discuss in detail the valuation methodology used.

(ii) Prepare a comprehensive income and livelihood restoration program, supported by adequate budget, to help DPs improve, or at least restore, their incomes and livelihoods. Identify specific measures for the affected poor, ethnic minorities, or other vulnerable households.

(iii) Ensure that (a) the compensation standards are based on replacement value, and (b) the overall resettlement budget is sufficient to implement the resettlement plan based on the proposed entitlements and rehabilitation plans.

(iv) Assist Government officials to initiate and expand consultation with the affected communities, local leaders, proponents, and stakeholders who may be opposed to the Project. Prepare a consultation plan for the DOR and a format for documenting consultation with affected people.

(v) Assess the capacity of the Government in implementing the proposed RP and IPP, recommend improvements and actions required before land acquisition, and proposed necessary training to enable the DOR and the Government to implement the RP and IPP and assess the social and resettlement issues of the follow-on subprojects, if required. Assist the DOR to (i) prepare a resettlement implementation schedule, (ii) recruit NGO/Agency for RP and IPP implementation (if required), and (iii) recruit consultants for external monitoring and evaluation.

(vi) Assist the DOR to develop a computerized database management system for recording DPs and lost assets. The system should reflect the present impact on DPs and accordingly the entitlements for DPs are planned. The system should be in place from the beginning of the resettlement survey. Also, develop cadastral mapping of affected plots for construction of new alignments using road inventory map developed under the engineering study.

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(vii) While preparing IPPs, conduct (a) social impact assessment, (b) meaningful consultation and (c) ascertain consent of affected IP communities. For items (b) and (c), proper recording and full documentations are required. These documents must be attached to IPPs as annex. These IPPs should also incorporate the findings of the resettlement census.

(viii) Prepare a final RP and IPP, and summary RP and IPP based on detailed design, taking into account comments from ADB and the Government, and based on 100% census survey. The RP and IPP should include a record of consultation with affected persons.

(ix) Conduct a workshop training to provide guidance to the DOR on Project-related social issues and ADB’s Safeguard Policy Statement (2009) procedural requirements during Project preparation and implementation. The scope of training should include the differences between the provisions of the ADB policy and the relevant country laws.

6. Environmental Assessment

8. The Environment Specialist will prepare the following tasks, but are not limited to:

(i) In accordance with Government's notification on Environmental Impact Assessment (EIA) and ADB’s guidelines, review and confirm the environmental classification of the project, and indicate which sections pass through National Park (NP), Wildlife Sanctuary (WS), other Sanctuary (S), and reserve forest if any. From the review, prepare a summary matrix for environmental classification, showing the length of sections passing through NP, WS, S, or RF areas, necessary environment-related information, and environmental classification;

(ii) If the project is classified as “A”, draft terms of reference for the EIA study, to be submitted to the Ministry concerned for approval. After the approval of the TOR for the EIA study, undertake the EIA study and prepare an EIA report. The Consultant will lay special emphasis to induced/cumulative impacts of the projects and keep the climate change impacts in mind while assessing the environmental sustainability of the proposed project designs;

(iii) If the project is classified as “B”, undertake initial environmental examination (IEE) study and prepare an IEE report including an environment management plan (EMP) for each project in accordance with ADB’s Safeguard Policy Statement (2009);

(iv) If the project passes through ecologically sensitive areas, necessary primary data on ecology (vegetation analysis, rapid assessment on biodiversity) needs to be collected to be used as a basis for predicting the environmental impacts;

(v) Ensure that the IEE/EIA study be carried out by taking into account Government’s and ADB’s EIA guidelines, and that the EIA report and its summary be prepared in accordance with the ADB’s Environmental Assessment Guidelines, 2003. The study has to cover project area and affected area, and provide assessment of impacts, analysis of alternatives, environmentally

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sensitive regions, loss of biodiversity, suitable mitigation measures, adequate consultation with affected people, and a proper management plan;

(vi) Analyze greenhouse gas emission levels in the project cycle, and recommend technically and financially feasible and cost-effective options to reduce or offset project-related greenhouse gas emissions during project design, construction and operation;

(vii) Recommend occupational and community health and safety measures, and proper Grievance Redressal Mechanism for the affected people in the course of the project cycle;

(viii) Assess the DOR institutional arrangement and capacity in addressing environmental concerns related to the Project; odentify requirements for additional capacity building in project preparatory works; and conduct a seminar/workshop to provide guidance to DOR on procedural requirements and required activities for each stage of project preparation and implementation;

(ix) Finalize EIA or IEE report including EMPs and their summaries, as required. Prior to finalization, draft reports should be submitted to DOR and ADB for review.

7. Procurement Assistance

9. Procurement will be carried out in accordance with ADB’s Guidelines on Procurement. The Consultant will prepare bidding documents and assist with procurement actions, including advertising, issuing bidding documents, responding to queries, receiving and evaluating bids, and preparing bid evaluation reports, and any other appropriate assistance.

PART B: Capacity Development in PPP preparatory work and implementation

8. PPP Road Sector Diagnostic and Sector Road Map 10. Carryout a sector diagnostic with realistic assessment of the current sector constraints, covering the following:

(i) Technical issues – assess current technical constraints in the sector to be reformed (to the extent they are known) including system efficiency, utility operations, and responsiveness to users, differentiating the degree to which operational issues are a result of underinvestment, poor investment planning, maintenance, ineffective management, lack of operational expertise, or other issues.

(ii) Legal, regulatory, and policy frameworks – covering; • oversight arrangements, regulatory bodies, regulations; • major sector institutions and government entities related to the sector; • tariff and subsidy policies and arrangements; • existence and applicability of legally mandated service quality standards;

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• natural resource safeguards and management requirements important to sector performance;

• environmental and health regulations; • relevant labor laws and regulations; and • limitations on foreign ownership/sector participation, foreign exchange

restrictions, and limitations on repatriation of profits, i.e., foreign investment laws.

(iii) Institutional structures and capacity – assess institutional and capacity requirements for stakeholder within and outside government to take on new roles or perform existing roles in improved ways, including the following: • Are the institutional and legislative frameworks in place to support sector

improvement and PPP, in particular? What are the impediments according to the ministry, users, and utility?

• Do the level of autonomy and accountability of stakeholders match their proposed obligations?

• Are the relevant levels of government prepared to relinquish or revise their roles?

• Are the relevant levels of government prepared to delegate some control to private partners within defined policy and regulatory parameters?

• Does each institution have the funding, staff, training, and equipment required to discharge its functions?

• Does each institution understand its role and know how to develop the procedures for accomplishing this role?

• Is there a key stakeholder—i.e., a champion—with the capacity and the political will to lead and drive the reform agenda forward?

(iv) Commercial, financial, and economic issues – assess the current arrangements and outcomes of the sector, the desired sector outcomes and how these might be achieved.

• Commercial considerations relating to the business orientation of the

infrastructure service provider in the country which may become a partner in the PPP - necessary improvements to the billing system, customer database, the status of receivables, funding arrangements, which may be necessary to improve the financial position of the potential service provider.

• Financial considerations relating to the design of detailed and realistic pricing

(including customer tariffs, off-take agreements, etc.) strategies - the objective is to provide affordable services, encouraging use, while providing the private partner with revenue sufficient for commercially viable operations, including the government’s provision of financial support through investment contributions or other forms of “viability gap” support or even ongoing subsidies can achieve this balance.

• Economic considerations relating to the overall cost/benefit analysis of the

proposed PPP and its projected impact on the sector.

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(v) Stakeholder consultation – conduct the following as necessary:

• Opinion research - gather data on stakeholders, their perceptions, and behaviors with respect to the issues concerning a specific PPP through questionnaires, polling, etc.

• Stakeholder consultation – through focus groups or stakeholder discussion

groups, discusse themes and policies of interest within or across stakeholder groups and gather information regarding current perceptions and understanding and the basis of those opinions.

(vi) Sector strategy and road map – based on the above diagnostic, develop targeted, specific, and realistic sector strategy and road map to achieve improvements, through PPPs and other interventions in the road subsector. Establish initial timetable and action plan for:

• strategic planning, • organizing and managing the process, • collecting additional information, • defining objectives, • resolving constraints, • defining scope, • selecting options, • identifying partners, • financing for investment, • cost recovery strategy, • regulatory strategy, • finalizing the terms of the partnership, • tendering and procurement, • negotiating and contracting, • managing the contract, • monitoring and evaluation, • managing disputes, and • managing transitions.

And develop PPP road map, specifically describing the high-level action plan for:

• Technical

– defining and documenting the desired technical outcomes of the partnerships,

– defining the correct metrics for measuring improvement, – defining the necessary investments for achieving improvement, – developing the procurement plan and process for achieving the

investments, and – defining and documenting the expected improvements which do not

require major investment. • Legal, regulatory, and policy frameworks

– Creating or improving existing policy framework for PPP activity and regulation;

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– establishing a process to make the legal reforms needed to reduce impediments to improved/expanded service such as assignment of responsibility for development, control, financing, regulating, and managing infrastructure assets;

– establishing a process to make any realistic legal reforms needed to overcome potential constraints to PPP including limits on assets ownership or management, repatriation of resources, and barriers to cost recovery;

– establishing a process to enact the regulatory requirements of the PPP including monitoring of service obligations, compliance with service conditions, consumer protection, tariff regulation, and asset management;

– developing a PPP process that is consistent with the legal and regulatory regime; and

– developing PPP legislation that seeks to address perceived gaps in the legal and regulatory frameworks.

• Institutional and capacity status – assigning the appropriate level of authority to each institution in the

sector; – creating new institutions such as regulators, which might be required; – educating each institution on new roles and training staff to perform new

functions; – developing the manuals, procedures, standards, and other tools required

to implement new functions; and – providing technical assistance for transition periods.

• Commercial, financial, and economic issues – agreeing with stakeholders on the economic balance of costs and

benefits to be achieved in sector reform, – designing a PPP plan to achieve these sector results, and – developing a financing plan for PPP that is realistic for the market and is

commercially viable and sustainable

9. Preparing Pilot PPP road project 11. Identify and prepare a suitable small scale pilot PPP road project as follows:

(i) Assess available PPP options against the sector reform objectives, and analyze/highlight potential strength and weakness. Main option to be explored include, but are not necessarily limited, to the following types; • service contracts; • management contracts; • affermage or lease contracts; • build–operate–transfer (BOT) and similar arrangements; • concessions; and • joint ventures

(ii) Select an appropriate PPP option based on a diagnosis of: • PPP options available, • Technical constraints and goals of the sector (as identified in the diagnostic), • Legal and regulatory constraints (as identified in the diagnostic), • Institutional issues (as identified in the diagnostic),

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• Commercial, financial, and financing requirements and constraints (as identified in the diagnostic),

• Interest of the market, and • Any other special requirements of the sector based on characteristics in the

local context.

(iii) Technical preparation – define the technical specifications of the proposed pilot PPP road project, to be documented in the terms of reference, and ultimately enshrined in the PPP contract.

(iv) Institutional structures - recommend key institutional arrangements needed to support the pilot PPP road project: PPP units and project implementation office/project implementation unit.

(v) Commercial, financial, and economic preparation – analyze and identify the structure of payments to and revenues for the potential private partner, including any subsidies that might be required. This iterative process will encompass: • technical analysis—to determine the cost of service; • market and social research—to determine what people are willing and able to

pay for certain service levels; • financial analysis and modeling—to determine the cost recovery tariff

required to support the desired coverage targets and service levels; and • consultation and trade-offs—to agree any transitional subsidies until cost

recovery is achieved or ongoing subsidies, e.g., to low-income customers. If the subsidies are not available, coverage and service targets may need to be reduced.

(vi) Local partners – assess the government’s perspective on including local private and public partners in the PPP process and ways to achieve this.

(vii) Prepare bid package, contracts, and any marketing documents as well as protocols for communicating with the public and potential bidders, including but not limited, to the following: • Notification and Prequalification Documents • Description of procurement process - most suitable option • Description of bid evaluation process – including technical and financial

evaluation criteria • Bid package – invitation for bids, instruction to bidders, bid data sheet, draft

form of contract, sample forms and procedures, and the contract.

(viii) Procurement assistance (if necessary during implementation) – negotiation and contract start.

C. Implementation Arrangements and Staffing

12. The consulting services will be implemented by a firm of international consultants. An association with a suitable domestic consultant is encouraged to compliment consultant's local knowledge and experience. It is anticipated that the following international and local staff will be required:

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INTERNATIONAL STAFF:

Position Qty Number of TotalPerson-Months Person-Months

TEAM-ATeam Leader/Highway Engineer 1 24.00 24.00Transport Economist 1 8.00 8.00Road Safety Engineer 1 3.00 3.00Technical Specialist (as-needed basis) 1 8.00 8.00

TEAM-BPPP Capacity Development Specialist 1 12.00 12.00PPP Legal/Regulatory Specialist 1 3.00 3.00PPP Financial Modelling Specialist 1 4.00 4.00PPP Contract Procurement Specialist 1 6.00 6.00

Subtotal 8 68.00

NATIONAL STAFF:

Position Qty Number of TotalPerson-Months Person-Months

TEAM-AHighway Engineer 1 1 24.00 24.00Highway Engineer 2 1 20.00 20.00Bridge/Structural Engineer 1 24.00 24.00Geotechnical Engineer 1 15.00 15.00Materials Engineer 1 15.00 15.00Pavement Engineer 1 15.00 15.00Traffic Engineer 1 15.00 15.00Hydrologist 1 15.00 15.00Drainage Engineer 1 15.00 15.00Quantity Surveyor/Cost Engineer 1 1 24.00 20.00Quantity Surveyor/Cost Engineer 2 1 20.00 15.00Procurement Specialist 1 24.00 24.00Environmental Specialist 1 1 12.00 12.00Environmental Specialist 2 1 12.00 12.00Social Development Specialist 1 20.00 20.00Resettlement Specialist 1 20.00 20.00

TEAM-BPPP Legal/Regulatory Specialist 1 8.00 8.00PPP Contract Procurement Specialist 1 6.00 6.00

Subtotal 18 295.00

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C. Reports, Deliverables and Time Schedule

13. The consulting services will be implemented over 24 calendar months from the commencement date. 14. The following reports, in the English language, will be submitted by the consultant to the Government (4 copies) and ADB (2 copies). The final report will also be submitted on CD-ROM. No. Preparatory Outputs Submission Deadline

(no. months after the commencement date)

Cumulative Payment Ceiling (% of Total Remuneration + Out–of–Pocket Expenses )

Inception Report 1.5 5% Subgroup 1 (about 500 kilometers of priority strategic road network sections) (i) Poverty Social Assessments

(PSAs) and Categorization Checklists (IP/IR)

4.0

(ii) Environmental Assessment, REAs, IEE/EMP, and Categorization

4.0

15%

(iii) Design, Specification, and Cost Estimate

6.0

(iv) Economic Analysis,

6.0

35%

(v) Resettlement Plan, and Indigenous People Plan

9.0

(vi) Bidding Documents 9.0

40%

Subgroup 2 (about 400 kilometers of priority strategic road network sections) (i) Poverty Social Assessments

(PSAs) and Categorization (IP/IR)

8.0

(ii) Environmental Assessment, REAs, IEE/EMP, and Categorization

8.0 55%

(iii) Design, Specification, and Cost Estimate

11.0

(iv) Economic Analysis

11.0 75%

(v) Resettlement Plan, and Indigenous People Plan

15.0

(vi) Bidding Documents 15.0 80% Draft Final Report 17.0 90% Final Report 18.0 100%