Document of The World Bank

FOR OFFICIAL USE ONLY

Report No: 66369-PK

EMERGENCY PROJECT PAPER

ON A

PROPOSED GRANT

IN THE AMOUNT OF US$5.0 MILLION

UNDER THE MULTI DONOR TRUST FUND FOR KHYBER PAKHTUNKHWA, FEDERALLY ADMINISTERED TRIBAL

AREAS AND BALOCHISTAN

TO THE

ISLAMIC REPUBLIC OF PAKISTAN

FOR A

BALOCHISTAN DISASTER MANAGEMENT PROJECT

JUNE ___, 2012

This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

CURRENCY EQUIVALENTS

(Exchange Rate Effective June 21, 2012)

Currency Unit = Pakistani Rupees (PKR) PKR 94.23 = US$1 US$0.011 = PKR 1

FISCAL YEAR

July 1 – June 30

ABBREVIATIONS AND ACRONYMS

AAA Analytical and Advisory Assistance

ADB Asian Development Bank

CBDRM Community Based Disaster Risk Management

CAS Country Assistance Strategy

CPS Country Partnership Strategy

CQ Consultants Qualification

CSOs Civil Society Organizations

CV Curriculum Vitae

DA Designated Account

DCO District Coordinating Officer

DDCG DRM Donor Coordination Group

DDMA District Disaster Management Authority

DFID Department for International Development

DMIS Disaster Management Information System

DNA Damage and Needs Assessment

DPO District Project Officer

DRM Disaster Risk Management

EC European Commission

ESSAF Environmental, Social Screening and Assessment Framework

ERC Emergency Recovery Credit

EU European Union

FATA Federally Administered Tribal Areas

FM Financial Management

FMM Financial Management Manual

FY Fiscal Year

KP Khyber Pakhtunkhwa

GDP Gross Domestic Product

GoB Government of Balochistan

GoP Government of Pakistan

GPS Global Positioning System

GRM Grievance Redressal Mechanism

GSP Geological Survey of Pakistan

IA Implementing Agency

IBRD International Bank for Reconstruction and Development

ICB International Competitive Bidding

ICT Information and Communications Technology

IDA International Development Association

IFC International Finance Corporation

IFR Interim Financial Report

IMF International Monetary Fund

IPSAS International Public Sector Accounting Standards

JICA Japanese International Cooperation Agency

MTBF Medium Term Budgetary Framework

MDTF Multi-Donor Trust Fund

NAM New Accounting Model

NCB National Competitive Bidding

NDM National Disaster Management

NDMA National Disaster Management Authority

NDMC National Disaster Risk Management Commission

NDMO National Disaster Management Ordinance

NDRMF National Disaster Risk Management Framework

NESPAK National Engineering Services Pakistan

NFGS New Framework for Growth Strategy

NGOs Non-Government Organizations

NWFP North West Frontier Province

ORAF Operational Risk Assessment Framework

OP/BP Operational Policy / Bank Procedures

PCNA Post-Crisis Needs Assessment

PDMA Provincial Disaster Management Authority

PDMC Provincial Disaster Management Commission

PEFA Public Expenditure and Financial Accountability

PEOC Provincial Emergency Operations Center

PPRA Public Procurement Regulatory Authority

PFM Public Financial Management

PFMAA Public Financial Management and Accountability Assessments

PIFRA Project for Improvement of Financial Reporting and Auditing

QCBS Quality and Cost Based Selection

R3T Rapid Rescue and Response Team

RFP Request for Proposal

RVP Regional Vice President

PAKISTAN Balochistan Disaster Management Project

CONTENTS

Page

A.  Introduction ......................................................................................................................... 1 

B.  Emergency Challenge: Country Context, Recovery Strategy and Rationale for Proposed Bank Emergency Project. ............................................................................................................ 1 

C.  Bank Response: MDTF....................................................................................................... 4 

D.  Appraisal of Project Activities ............................................................................................ 8 

E.  Implementation Arrangements and Financing Plan .......................................................... 12 

F.  Key Risks and Mitigating Measures ................................................................................. 14 

G.  Terms and Conditions for Project Financing .................................................................... 15 

Annex 1: Detailed Description of Project Components ........................................................... 16 

Annex 2: Results Framework and Monitoring ........................................................................ 20 

Annex 3: Summary of Estimated Project Costs ....................................................................... 26 

Annex 4: Operational Risk Assessment Framework (ORAF) ................................................ 27 

Annex 5: Financial Management and Disbursement Arrangements ..................................... 30 

Annex 6: Procurement Arrangements ...................................................................................... 37 

Annex 7: Implementation and Monitoring Arrangements ..................................................... 44 

Annex 8: Project Preparation and Appraisal Team Members ............................................... 46 

Annex 9: Environmental and Social Safeguards Framework ................................................ 47 

Annex 11: Documents in Project Files ...................................................................................... 51 

Annex 12: Statement of Loans and Credits .............................................................................. 52 

Annex 13: Country at a Glance ................................................................................................. 54 

Annex 14: Maps........................................................................................................................... 56 

PAKISTAN

BALOCHISTAN DISASTER MANAGEMENT PROJECT

Basic Information Country Director: Rachid Benmessaoud Sector Manager: Ming Zhang Team Leader: Haris Khan Project ID: P127253 Expected Effectiveness Date: July 1, 2012 Lending Instrument: Multi Donor Trust Fund

Sectors: Sub-national government administration Themes: Natural disaster management Environmental category: C Expected Closing Date: June 30, 2015

Project Financing Data [ ] Loan [ ] Credit [ ] Grant [ ] Guarantee [ X ] Other: MDTF Proposed terms: This Project is being financed from a Multi Donor Trust Fund (MDTF) for Khyber Pakhtunkhwa (KP), Federally Administered Tribal Areas (FATA) and Balochistan.

Financing Plan (US$m) Source Total Amount (US $m)

Total Project Cost: Multi Donor Trust Fund: Borrower: Total Project Financing (MDTF):

5 5 0 5

Client Information Recipient: Islamic Republic of Pakistan Responsible Agency: Provincial Disaster Management Authority (PDMA) Balochistan Contact Persons: Tahir Munir Minhas, Director General, PDMA Balochistan Telephone No.: 92-81-2880245 Fax No.: 92-81-2880189 Email: tmmenhas@yahoo.com

Estimated disbursements (Bank FY/US$m)FY 13 14 15 Annual 2.8 1.8 0.4 Cumulative 2.8 4.6 5.0

Project Development Objective and Description Project development objective: To strengthen the capacity of PDMA Balochistan to prepare for and respond to natural disasters. Project description: The project consists of the following four components: Component 1: Institutional Strengthening of PDMA Balochistan (US$2.5 million). This component will support PDMA Balochistan in strengthening institutional disaster risk management capacity and emergency response systems.

Component 2: Hazard and Risk Assessment (US$1 million). This component will support hazard and risk assessment in the provincial capital. Component 3: Development and Piloting of Community Based Disaster Risk Management (CBDRM) Program (US$1.5 million). This component will support PDMA Balochistan in establishing and piloting a CBDRM program to engage local communities on risk management activities and guide initiatives to improve DRM awareness. Component 4: Contingent Emergency Response Component (US$0). In the event of a natural disaster in Balochistan, critical emergency response and recovery costs in the Province may be supported through this component upon activation.

Safeguard and Exception to Policies Safeguard policies triggered: Environmental Assessment (OP/BP 4.01) Natural Habitats (OP/BP 4.04) Forests (OP/BP 4.36) Pest Management (OP 4.09) Physical Cultural Resources (OP/BP 4.11) Indigenous Peoples (OP/BP 4.10) Involuntary Resettlement (OP/BP 4.12) Safety of Dams (OP/BP 4.37) Projects on International Waterways (OP/BP 7.50) Projects in Disputed Areas (OP/BP 7.60)

[ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No [ ]Yes [ x ] No

Does the project require any exceptions from Bank policies? Have these been approved by Bank management?

[ ]Yes [ x ] No [ ]Yes [ x ] No

Conditions and Legal Covenants: Financing Agreement Reference Description of

Condition/Covenant Date Due

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A. Introduction

1. This Project Paper seeks the approval of the Regional Vice President (RVP) to provide a Grant under the Multi Donor Trust Fund (MDTF) for Khyber Pakhtunkhwa, Federally Administered Tribal Areas and Balochistan in an amount of US$5 million to Pakistan for the Balochistan Disaster Management Project. The proposed grant is expected to be supplemented by in-kind counterpart contributions from the Government of Balochistan comprising counterpart staff time and office spaces.

2. The proposed Grant aims at strengthening the capacity of PDMA Balochistan to prepare for and respond to natural disasters.

3. The Provincial Disaster Management Authority (PDMA) Balochistan will implement the Project.

B. Emergency Challenge: Country Context, Recovery Strategy and Rationale for Proposed Bank Emergency Project.

Country Context

4. The Province of Balochistan has experienced several significant natural disasters over the past ten years. Most recently, the 2010 and 2011 floods have had a major impact, with damages and losses of US$620 million, or 6 percent of provincial GDP, according to the Damage and Needs Assessment (DNA) led by the Bank and the Asian Development Bank (ADB). According to the National Disaster Management Authority (NDMA), on a national level, the floods covered over 100,000 square km and affected more than 20 million people, or over ten percent of Pakistan's population. The floods impacted 1.6 million homes and thousands of acres of crops and agricultural land, which experienced major soil erosion and damaged irrigation infrastructure. The country suffered its last major earthquake in October 2005 when an earthquake, measuring 7.6 on the Richter Scale, hit nine districts in Khyber Pakhtunkhwa (KP, formerly Northwest Frontier Province, NWFP) and Azad Jammu Kashmir (AJK). The event killed over 73,000 people and damaged about 450,000 houses.

5. In addition to the major floods of 2010 and 2011, other recent events have had a major impact in Balochistan. For example, in 2007, Cyclone Yemyin severely affected large areas of the Province, resulting in over 400 deaths and internally displacing more than 150,000 people. According to a DNA conducted by the Bank and the ADB, total estimated losses in Balochistan amounted to US$394 million, or approximately 4 percent of provincial GDP. Finally, the Province bore the brunt of the drought that affected the country during 2000-2002, which caused GDP growth rate to fall from a target of 4 percent to 2.5 percent.

6. Lagging economic development and low human development and social indicators increase the vulnerability of Balochistan to natural disasters. Low economic development is compounded by difficult to manage human settlement patterns, with the majority of the population spread across the long and rugged coastline, making them a challenge to reach during, and immediately after, a disaster. Limited capacity of the government, due to financial and technical constraints, compounds vulnerability to natural disasters.

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Institutional and Capacity Issues

7. Over the last decade, Pakistan has worked to gradually change how the country addresses natural disasters - from an ex-post disaster response perspective to an ex-ante risk management approach. The promulgation of the National Disaster Management Ordinance (NDMO) of 2006, which established the National Disaster Risk Management Framework (NDRMF), reflects this more pro-active approach towards disaster risk management (DRM).

8. The National Disaster Management (NDM) Act was approved in 2010 and builds on the 2006 NDMO. This Act established the National Disaster Management Authority (NDMA) as the lead agency at the federal level to coordinate disaster response. A National Disaster Management Commission (NDMC), chaired by the Prime Minister, was created by the Act to serve as the main policy-making institution for DRM. Recent developments include the creation of Federal Ministry of Climate Change1 (formerly established as Federal Ministry of Disaster Management), to coordinate preparation and response activities for natural disaster related to extreme weather phenomena and climate change, the adoption of a National Climate Change Policy2 formulated with the aim of incorporating the factor of climate change in various vulnerable aspects of the economy for ensuring climate resilient development in the country, and passage of the 18th Amendment, which devolved some powers to the provinces, including greater responsibility to prepare for and respond to disaster.

9. The NDM Act of 2010 established not only a national level disaster management authority, but also mandated the replication of the NDMA structure at more decentralized levels. The Chief Minister chairs a Provincial Disaster Management Commission (PDMC) and serves as the executive arm of the PDMC in most provinces and regions. The NDM Act of 2010 also provides for the establishment of District Disaster Management Authorities (DDMAs), which have been implemented in a small number of districts.

10. One year after its enactment, the NDM Act is not yet fully implemented, and details on how to operationalize it are still to be defined. In particular, the PDMAs have differing capacities across provinces and administrative regions. Similarly, DDMAs have only been established in selected districts and their operational capacity varies significantly.

11. Following the enactment in April 2010 of the 18th constitutional amendment and the resulting devolution of a number of federal functions to the provincial governments, the provinces have been given disaster management responsibilities within the overall national framework. This translates into increased responsibility for PDMA Balochistan to urgently address the various DRM challenges in the disaster-prone province. The Government of Balochistan (GoB) is keen to support PDMA Balochistan to enable it to function effectively and efficiently as envisaged under the NDRMF.

Government Response

12. Following the militancy crisis in KP and FATA and major flooding in Pakistan in 2010, the Government of Pakistan (GoP) has undertaken various assessments for defining strategic

1 Notified in April 2012 2 Adopted by the Federal Cabinet in March 2012.

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needs and investment for the region in the short and the medium to long-term. The twin crises of conflict and flooding are complex in nature and reinforce themselves with a resulting weakening of official institutions. Due to internal crisis in the region, governance capacity and the reach of the state have fallen. The 2010 floods had a significant impact on overall development and economic activity and the limited response capacity of the Government to assist the affected population weakened its credibility as a service provider. This in turn has lowered the reach of Government. As a result, the Government, with the assistance of the donor community, developed two needs assessments, one to address weak governance and a second to launch flood recovery efforts. The objective is to begin restoring the credibility of government by improving the capacity of the provincial agencies to prepare for and respond to natural disasters.

13. In 2009, the GoP requested the Bank and the ADB to lead a rapid damage and needs assessment (DNA) for short-to medium-term recovery in the seven most crisis affected districts and agencies in the former Northwest Frontier Province and FATA. The DNA developed initial estimates for: i) reconstructing and rehabilitating damaged infrastructure to restore livelihoods and priority services; ii) ensuring some semblance of normalcy in the basic governance structure; and, iii) providing a much needed cash injection into the affected areas. The DNA estimates of sectoral needs amount to approximately US$1 billion.

14. While the KP-FATA 2009 DNA is an important step towards addressing the more immediate crisis-recovery needs, it represents only the initial stage of the longer recovery and peace-building process. The DNA alone is insufficient for identifying necessary measures in the medium and long term to reduce the risk of relapse into crisis. As a result, a subsequent Post Crisis Needs Assessment (PCNA) was requested by the GoP and completed in October 2010 with the assistance of the ADB, European Union (EU), United Nations (UN) and the Bank. Both efforts assessed and quantified the short and medium-term social and economic needs of the region.

15. The PCNA provides the underpinning for long term peace building in KP and FATA. Drawing on extensive stakeholder consultations, the report identifies key crisis drivers and the consequent priority areas that need to be addressed to support a coherent and durable peace-building strategy. The key strategic objectives to achieve a durable peace and embark upon sustainable development include: i) enhance responsiveness and effectiveness of the State to restore citizen trust; ii) stimulate employment and livelihood opportunities; iii) ensure provision of basic services; and, iv) advance counter-radicalization and reconciliation measures. This project builds on the first strategic objective of the PCNA.

Coordination with Donors

16. The Bank has been actively engaged with the donor community to support the GoP’s efforts to address DRM issues. A DRM Donor Coordination Group (DDCG), which is co-chaired by the Bank, UN System, and NDMA, includes most development partners and donor agencies. The Group maps individual programs and initiatives in order for donor efforts to be aligned instead of redundant. The participants at the forum have been apprised of the proposed project. Along similar lines, a number of donors including the UN, USAID, JICA and EC are supporting DRM programs that include efforts to strengthen the capacity of various PDMAs.

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Each of these activities is in the initial stages, and the Bank is coordinating to avoid duplication and achieve synergies.

C. Bank Response: MDTF

17. In response to the KP-FATA 2009 DNA, and subsequent PCNA 2010 Report, a Multi-Donor Trust Fund (MDTF) was established as a funding mechanism for the crisis affected areas of KP, FATA and Balochistan. A consortium of ten donors has pledged the equivalent of US$140 million towards the MDTF, which the Bank administers. The objective of the KP/FATA/Balochistan MDTF is to support the implementation of a program for reconstruction and development aimed at facilitating the recovery of the affected regions from the impact of armed conflict and the floods of 2010.

18. Support is provided under the MDTF for a comprehensive reconstruction and development program to restore infrastructure, services and livelihoods while addressing governance, capacity building and other challenges that contribute to the instability of governance institutions. The PCNA informs the strategic priorities of the MDTF, which has four strategic pillars that guide portfolio development. These include: i) restoring damaged infrastructure and disrupted services; ii) improving governance and service delivery; iii) supporting livelihood and creating employment opportunities; and, iv) building capacity and strengthening institutions.

Rationale for the Proposed Emergency Project

19. The GoP has requested MDTF assistance to respond to the increasingly difficult situation resulting from the militancy, and exacerbated by major floods in 2010 and 2011. To improve its governance capacity, the GoB has requested Bank assistance to support the development of its DRM capacity.

20. As the administrator of the MDTF, the Bank is well placed to help Pakistan cope with the challenges, resulting from the internal crisis and major flooding. The Bank has an extensive history of working in challenging environments and in building capacity and institutions to improve governance and service provision. In addition, the Bank has a comprehensive DRM program, with extensive experience in post-disaster recovery and reconstruction as well as pro-active DRM institution building to improve disaster preparedness and response capacity.

21. The proposed US$5 million Balochistan Disaster Management Project directly supports Pillar 4 of the MDTF, which is defined as building capacity and strengthening institutions. The main activities to be financed relate to improving institutional capacity and improving the operational effectiveness of the PDMA Balochistan.

Project Development Objectives

22. The objective of the project is to strengthen the capacity of PDMA Balochistan to prepare for and respond to natural disasters. This will involve the strengthening of institutional capacity, systems and processes that will enable PDMA Balochistan to more effectively prepare for and respond to natural disasters. Increased preparedness would also be achieved through improved understanding of hazards vulnerabilities as well as a more robust disaster response infrastructure.

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Summary of Project Components

23. The project will comprise the following components: (i) Institutional Strengthening of PDMA Balochistan; (ii) Hazard and Risk Assessment; (iii) Development and Piloting of CBDRM Program; and (iv) Contingent Emergency Response.

Component 1: Institutional Strengthening of PDMA Balochistan (US$2.5 million)

24. This project component will support strengthening the institutional and operational capacity of PDMA Balochistan to respond to natural disasters, and is divided into the following subcomponents.

25. Sub-component 1a: Development of Institutional DRM Capacity for PDMA Balochistan. Under this sub-component, the existing DRM institutional structure would be assessed in relation to the arrangements envisioned under the NDM Act, 2010. Current operational capacity will be analyzed while gaps and bottlenecks will be identified and the most critical gaps identified would be addressed under this project. Technical assistance would be provided for the development of Standard Operating Procedures (SOPs) to guide response operations of the agency following a natural disaster.

26. Sub-component 1b: Strengthening of Emergency Response System. Under this sub-component, an effective response system would be developed through strengthening of the Provincial Emergency Operations Center (PEOC). Activities to be financed would include a Disaster Management Information System (DMIS) and the establishment of a Rapid Rescue and Response Team (R3T) within the PDMA. A fully equipped PEOC would enable more effective communications and data analysis to manage disaster response, and systems put in place would synchronize with national systems to promote information and data sharing.

27. Sub-component 1c: Project Implementation. This sub-component would finance the costs associated with project coordination, implementation, monitoring, and evaluation. The expenditures financed under this sub-component would include training, consultants' services (including for audits), equipment, and operating costs (including project staff allowances for civil servants working on the Project3), as well as expenditures necessary to carry out other activities associated with Project implementation, such as procurement-related complaint handling, third-party supervision, and the establishment of a Project-related grievance redress mechanism. Incremental operating costs under Component 4, should it be triggered, will also be financed under this sub-component. The establishment of a project management unit outside PDMA Balochistan is not envisaged and the project aims to utilize internal resources and systems at PDMA Balochistan for implementation with supplementary capacity support in critical areas only. This will entail in-kind contribution from counterparts in terms of counterpart staff time and office spaces.

3 Such project staff allowances will be financed in accordance with applicable government rules and regulations and, unless the Bank agrees otherwise, only for a period of 24 months after effectiveness of the Grant Agreement.

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Component 2: Hazard and Risk Assessment (US$1.0 million)

28. This project component will support the identification of the hazard and risk environment by undertaking a hazard and risk assessments in the provincial capital of Quetta. The methodology and the technical scope of the assessment will be finalized after extensive consultations with relevant actors and agencies. Upon completion of the consultative process, the formal assessment would be kicked off through an initial scoping workshop with international experts and technical agencies to design the assessment process in Balochistan.

29. The output of this component would be a multi-hazard exposure map for Quetta, which could be scaled to other parts of the project area by the GoB, as funding becomes available. Besides the publication of a hazard and risk map for the targeted area, this activity would build broad capacity to analyze exposure and vulnerability at the provincial level, with the objective of enabling the GoB to update the maps and scale up this activity for other districts in future.

Component 3: Development and Piloting of CBDRM Program (US$1.5 million)

30. In accordance with NDMA’s priority for institutionalizing the CBDRM approach across Pakistan, this component will support PDMA Balochistan in developing and piloting a CBDRM program. The project will support PDMA Balochistan in undertaking the following broad activities: (a) adaptation of the national CBDRM program to the provincial context; (b) creation of a cadre of master trainers at the provincial level to impart further training under the cascade of training approach; (c) pilot the CBDRM program within selected union councils in Quetta to train communities in first response, preparedness, early warning and the use of emergency response equipment; (d) Assess the planning and logistical requirements associated with emergency stockpiles at the district levels in order to develop a logistics plan and establishment of two pilot stockpiles in Quetta district; and (e) development of DRM instructional materials available for dissemination to local communities, including materials for CBDRM training.

Component 4: Contingent Emergency Response Component (US$0)

31. Following an adverse natural event that causes a major natural disaster, the GoB may request the Bank to re-allocate project funds to this component (which presently carries a zero allocation of grant proceeds) to support response and reconstruction4. This component would allow the GoB to request the Bank to re-categorize and reallocate financing from other project components to partially cover emergency response and recovery costs. This component could also be used to channel additional funds should they become available as a result of the emergency.

32. Disbursements under Component 4 will be contingent upon the fulfillment of the following conditions: (i) The Recipient has determined that an Eligible Natural Disaster has occurred and the World Bank has agreed and notified the Recipient; (ii) PDMA Balochistan has prepared and adopted the Contingent Emergency Response (CER) Implementation Plan that is agreed with the World Bank; (iii) PDMA Balochistan has prepared, adopted, and disclosed

4 Such a reallocation would not constitute a formal Project restructuring, as permitted under the particular arrangements available for contingent emergency response components (ref. Including Contingent Emergency Response Components in Standard Investment Projects, Guidance Note to Staff, April 2009, footnote 6).

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safeguards instruments required as per Bank guidelines for all activities from the CER Implementation Plan eligible for financing financed under Component 4.

33. Disbursements would be made either against a positive list of critical goods and/or against the procurement of works, and consultant services required to support the immediate response and recovery needs of the GoB. All expenditures under this component, should it be triggered, will be in accordance with BP/OP 8.0 and will be appraised, reviewed and found to be acceptable to the Bank before any disbursement is made.

Eligibility for Processing under OP/BP 8.0

34. The project is in line with the guiding principles under the Bank’s OP/BP 8.00. The proposed activities to be financed address the need to improve DRM capacity and enhance the operational efficiency for preparation and response in relation to natural disasters in the current emergency environment.

35. The project is being administered under the MDTF, which was established to address the emergency environment created by weak governance and major flooding. The MDTF seeks to make investments to improve governance and service delivery in an area that has experienced recent conflict, with the GoP seeking to improve the capacity of the local government to administer state services. The proposed project is adapted to the emergency's particular circumstances and takes into account the Bank’s CPS for the country, which aims to improve disaster risk management in the country.

Consistency with Country Strategy (CAS or ISN)

36. The Bank’s Country Partnership Strategy (CPS) for Pakistan (FY 2010-13) is committed to supporting and improving Pakistan’s DRM capacity. The project is fully aligned with the CPS, which specifically highlights Improving Disaster Risk Management under Pillar 2 of the CPS - Improving Human Development and Social Protection. The CPS further notes that the Bank seeks to assist the GoP in developing a DRM strategy and aims to work with the GoP and other partners to enhance DRM capacity and integrate DRM into development programs.

Expected Outcomes

37. The project aims to build the capacity of PDMA Balochistan for managing natural disasters through improved disaster response mechanism, increased awareness of the risk environment and readiness for implementing CBDRM initiatives.

38. The project will also support PDMA to collect, manage and communicate information through the improvement of communications infrastructure at the emergency operations center, and relevant capacity building assistance. The response mechanism at PDMA Balochistan will be strengthened through the development and effective implementation of operating procedures for emergency response as well as through the establishment of a rapid response team.

39. Technical capacity will be strengthened at PDMA to analyze exposure and vulnerability with the objective of enabling the GoB to update the maps and scale up this activity for other districts in the future. In addition, the development of provincial CBDRM program, cadre of

8

master trainers, and training materials will significantly improve the readiness at PDMA Balochistan to engage with local communities. Finally the pilot CBDRM initiative undertaken in Quetta, including the planning and establishment of emergency stockpiles will provide the PDMA with an effective model and operational experience.

40. The set of indicators to be monitored against these activities can be found at Annex 2.

D. Appraisal of Project Activities

Technical

41. The bulk of activities to be financed under the project are technical in nature and focus on building and improving institutional capacity. Therefore, specialized technical expertise will be required to assist in hazard and risk mapping, establishment of information systems and effective communications and in training activities. For the hazard and risk assessment, the scoping workshop would include national / international experts, who would assist in finalization of the methodology, scope and resource requirement for the exercise. Experts in CBDRM would also be required to develop and implement the training program.

Fiduciary

42. Financial Management: A Financial Management (FM) Assessment was undertaken to review the existing FM arrangements at PDMA Balochistan. The assessment identified capacity and control weaknesses at PDMA Balochistan including: i) the need to develop detailed policies; ii) non-segregation of duties; iii) lack of management reporting; iv) weak record management; and, v) the need to strengthen inventory management. During the assessment it was also noted that FM, Procurement, and Administration functions are not segregated at PDMA Balochistan; however, on the recommendation of the Bank PDMA Balochistan has recently appointed a qualified and experienced Accounts Officer to lead the FM unit. Under Component 1 of the project, a detailed capacity assessment of PDMA Balochistan will be carried out and a plan for capacity building will be prepared within 8 months of effectiveness. The overall FM Risk is assessed “High” and certain actions have been agreed with the management to strengthen the implementing entity’s internal controls.

43. For the project, a segregated Designated Accounts (DA) in US Dollars will be established. Disbursements will follow the ‘report-based’ principle whereby funds will be front-loaded to the DA, based on cash forecasts for the following two quarters provided in the Interim Financial Reports. Under Component 4, the Bank may reallocate funds on government’s request and may reimburse the amount spent on procurement of critical goods on the basis of evidence provided to satisfaction of the Bank, as explained in Annex 5. Government procedures will apply for budgeting and a budget will be prepared on the basis of planned activities. Project financial statements shall be prepared using Cash Basis IPSAS providing details of expenditures by components and activities. These will be audited by the Auditor General of Pakistan and must be submitted to the Bank no later than 6 months after the year-end. PDMA Balochistan is not currently implementing any Bank-financed projects and there are no unsettled ineligible expenditures and overdue audit reports. The project will use Financial Management Manual (FMM) that has been prepared by the Bank for projects funded by MDTF for KP, FATA and

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Balochistan which will provide a comprehensive internal control framework. The Bank Team will also support the PDMA Balochistan through relevant trainings and on the job support to manage the project financial management matters.

44. Procurement: Procurement for the proposed Project would be carried out in accordance with the World Bank’s “Guidelines: Procurement under IBRD Loans and IDA Credits” dated January 2011; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011, as well as the provisions stipulated in the Financing Agreement. The Project is designed to strengthen the capacity of the PDMA by providing Technical Assistance. Exposure to World Bank procurement practices will help the procurement focal person at PDMA to enhance the capacity over three years of implementation. The present draft of the procurement plan does not envisage any high value or complex procurements.

45. A Procurement Capacity Assessment of the PDMA procurement staff was carried out by the Bank during project preparation. It was found that the PDMA has not conducted any procurement in accordance to World Bank rules. In addition, the types of procurement that are typically carried out by the PDMA are in response to the urgent needs as a result of disaster, and therefore, the PDMA has limited experience in procurement planning. However PDMA has agreed for designating a dedicated Procurement Focal Person. There is also an absence of procurement legislation and regulatory authority in Balochistan; procurements are being carried out as per the Balochistan Purchase Manual.

46. Procurements are expected to comprise goods, consultancies and possibly some small works. Some procurement under Component 2 may have to be procured through direct contracting and single source selection basis from public sector entities in categories of goods and services. However such requirements are adjunct to the recommendations of a technical committee proposed under Component 2. These procurements will require the Bank’s prior review and approval based on the justification presented. A procurement consultant shall be hired by the PDMA who shall manage work in close consultation with the technical team as well as the PDMA’s procurement focal person. The contracts shall be procured and awarded by a Procurement Committee of the PDMA supported by the procurement focal person at PDMA. The Authority’s relevant technical staff shall be involved in supervising contract implementation. In addition, PDMA’s procurement staff will also be able to benefit from parallel MDTF interventions in Balochistan. The Bank will conduct procurement training of staff and attempt to bridge the procurement capacity gaps through an ongoing interaction through Audio/Video conferences and face to face meetings; on need basis.

47. The Procurement Plan will be updated at least annually, or as required, to reflect the actual Project implementation needs and improvements in institutional capacity.

Safeguards

48. Environmental Aspects: Natural disasters have a two-way linkage with the environment – environmental degradation can potentially cause or exacerbate disasters, and disasters can cause significant environmental degradation.

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49. The Project mainly comprises of capacity building and technical assistance activities that are environmentally benign and will not cause any environmental degradation. Therefore, the Project is classified as Environment Category C in accordance with the OP 4.01.

50. Component 4 may have certain environmental issues associated with activities that may be financed under the component, should it be triggered. As a condition for disbursement under Component 4, PDMA Balochistan will carry out a screening of the activities included in the CER Implementation Plan for any potential environmental impacts. Furthermore, any safeguards instruments required under the Environmental and Social Screening and Assessment Framework will be prepared, submitted to the World Bank for review and approval, and thereafter adopted and locally disclosed by PDMA Balochistan prior to disbursements under Component 4. Should this screening require a modification of the Environmental Assessment categorization of the Project and / or the triggering of any of the Bank's safeguards policies, a restructuring will be carried out to record these changes and make applicable the attendant requirements.

51. Furthermore, in case Component 4 is triggered, safeguard aspects of project activities would be in line with the Bank prepared Environmental, Social Screening and Assessment Framework (ESSAF). The ESSAF provides guidelines on the GoB’s responsibilities for integrating and managing environmental aspects into the investment design and implementation. This document would guide the GoB in undertaking a rapid environmental assessment for the potential activities under this component.

52. The proposed project offers environmental enhancement opportunities in all of its components. Under Component 1, environmental considerations will be incorporated into the capacity development of DRM institutions, in the preparation of SOPs/Rules of Business and coordination mechanism, strengthening of the PEOC, and establishment/strengthening of R3T at PDMA under Component 1. Environmental aspects will also be incorporated in the Hazard and risk assessment that will be financed under Component 2. Under Component 3, the importance of environmental considerations would be integrated into the CBDRM program particularly in the training of the master trainers and raising awareness of communities and other stakeholders.

53. Social Aspects: The primary focus of the project is to build the institutional capacity of the Balochistan PDMA, which does not involve physical works. Institutional strengthening activities do not involve any land acquisition, displacement or negative impacts on any public or private assets. Therefore, Bank Policies on Involuntary Resettlement (OP/BP 4.12) and Indigenous Peoples (OP/BP 4.10) will not be triggered.

54. As a condition for disbursement under Component 4, PDMA Balochistan will carry out a screening of the activities included in the CER Implementation Plan for any potential social impacts. Furthermore, any safeguards instruments required under the Environmental and Social Screening and Assessment Framework will be prepared, submitted to the World Bank for review and approval, and thereafter adopted and locally disclosed by PDMA Balochistan prior to disbursements under Component 4. Should this screening require a modification of the Environmental Assessment categorization of the Project and / or the triggering of any of the Bank's safeguards policies, a restructuring will be carried out to record these changes and make applicable the attendant requirements.

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55. Furthermore, in case that Component 4 is triggered under the project, the Bank has prepared an ESSAF, in accordance with the OP/BP 8.0 for emergency operations. The ESSAF is applicable to all projects under the KP/FATA/Balochistan MDTF and specifies the social assessment requirements of project implementation. Should this component be triggered, the PDMA will be assisted to apply this framework to address any social impacts in post disaster recovery and reconstruction programs, including temporary and preventive resettlement.

56. The PDMA will be supported in developing a policy framework to address gender issues in disaster preparedness and response.

Economic and Financial Analysis

57. The economic costs of natural disasters can be classified in into two categories, direct and indirect costs. Direct costs are defined mostly in terms of lives, property, and income losses, while indirect costs are defined mostly in terms of reduced economic prospects, increases in poverty, and social disruptions. According to the 2007 Balochistan post-cyclone DNA, the province incurred losses estimated at US$394 million, while the 2010 Floods DNA estimated losses at US$620 million in Balochistan. Five districts of Balochistan are also being analyzed under the ongoing 2011 Floods DNA, for which damages and losses are being quantified.

58. The magnitude of the damages associated with natural disasters call for preparedness and mitigation efforts, and while it is difficult to assess the overall return of this type of investment, it has been observed that the returns are substantial. In addition to building resilience and capacity, this project would also allow the Bank to make mitigation investments through preparedness activities in Balochistan in order to lessen the economic losses associated with natural disasters.

Lessons Learnt and Applied in the Project Design 59. The project is the Bank’s first dedicated DRM project in Pakistan. However the design of the components has been guided by lessons learnt from national and international experience.

60. The hazard and risk assessment component has been designed keeping in view the localized hazard/risk mapping initiatives that are currently being undertaken by various agencies across the country. Following the 2005 earthquake and under the subsequent Emergency Recovery Credit (ERC) project, the Bank supported a macro-level risk assessment. The activity was not completed due to multiple reasons including the security environment and issues in sharing of sensitive data with a foreign firm. During discussions with GoP on this issue and possible solutions for future exercises, a lesson learnt was that some local agencies and public departments, such as Geological Survey of Pakistan (GSP), National Engineering Services Pakistan (NESPAK), and Pakistan Space and Upper Atmosphere Research Commission (SUPARCO) have both experience and capacity for undertaking such exercises. In most cases these entities are the custodians of required data or can easily procure data being public sector organizations.

61. For the CBDRM component, the project proposes adapting the CBDRM program developed and implemented after the 2005 earthquake in Pakistan, which is considered a global good practice model by the United Nations International Strategy for Disaster Reduction.

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62. The project proposes a contingent emergency response component, to enable the reallocation to funds from other components and / or additional financing, to support recovery efforts in case of a natural disaster. This contingent window has been established keeping in view major flooding events in 2010 and 2011 in parts of Balochistan.

63. With regards to the implementation arrangements, the project design aims at building capacity within public agencies instead of implementing the project through an outside project management unit. This decision is based on lessons learnt in the past under other projects, which recommend that the capacity accumulated within temporary units tends to dissipate once the project is concluded. The resources, operational experience, and capacities built during the project can be retained in the long term if the existing systems and institutions are the primary recipients for all support extended under the project in this regard. This approach will likely experience more delays in the project execution while implementation capacity is built within the PDMA; however, in the longer term, this approach would provide the PDMA with permanent capacity to ensure sustainability and institutional memory after project completion.

E. Implementation Arrangements and Financing Plan

64. PDMA Balochistan is the project implementation agency, which would oversee the project by providing guidelines, preparing budgets, procurement and implementation plans, and ensuring vertical and horizontal coordination. The DG PDMA Balochistan will appoint a suitable official to lead the implementation of the project on a full time basis

65. Preliminary capacity assessments in the areas of financial management and procurement identified issues within the existing setup of PDMA Balochistan. Adequate implementation of the project depends upon enhanced financial management and procurement capacity. This requires the separation of procurement and financial management functions. To address these constraints, the PDMA Balochistan is appointing an Accounts Officer to strengthen financial management capacity. Furthermore, PDMA Balochistan would separate the procurement and financial management functions with the Assistant Director Administration responsible for the former and the Accounts Officer tasked with the latter.

66. The PDMA would monitor and supervise implementation of project activities through a system of reporting that would include the submission of quarterly and annual progress reports. A uniform simple progress-reporting format focusing on physical and financial progress and outcomes achieved would be adopted in this regard. Progress reports would be shared with the Bank within one month of the end of the reporting period. A detailed intermediate results monitoring plan is included at Annex 2.

67. For any disbursements under Component 4 PDMA Balochistan will need to: (i) Prepare and adopt a Contingent Emergency Response (CER) Implementation Plan that is agreed with the World Bank; (ii) Prepare, adopt, and disclose safeguards instruments required as per Bank guidelines for all activities from the CER Implementation Plan eligible for financing financed under Component 4.

Supervision Arrangements

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68. Joint Review Missions: The Bank Team will participate in joint review missions with the implementing agency in order to formally review program implementation semi-annually. The missions will conduct a comprehensive review of Project performance against the Results Framework and agree on planned actions (including financing plan). One month prior to the joint review missions, the IA will provide the Bank Team with a comprehensive progress report on project activities.

69. Technology Based Measures: In view of the security challenges across Balochistan, the travel for Bank staff has been restricted and supervision missions by the Bank teams to Balochistan may not always be feasible. Therefore, there is a need for alternative approaches to implementation support, particularly for field supervision and monitoring of investments. The proposed supervision mechanisms include the use of technology such as: i) geo-referenced photographs through Global Positioning System (GPS) enabled cameras for physical asset verification (such as emergency stockpiles in the pilot district); and ii) video conferencing technology for progress review meetings with counterparts in Balochistan. While these measures cannot fully replace the utility of actual field visits, they provide an alternative in crisis-affected areas where access may be an issue.

70. Third party validations: Besides regular monitoring by the IA, PDMA Balochistan will engage a firm for third party monitoring/validation to ensure that the required outcomes as per acceptable standards have been achieved. The firm will also review and comment on the continuing adequacy of the FM system, and any actions that PDMA Balochistan needs to take.

Financing Plan 71. The Project will be financed by a Grant of US$5.0 million from MDTF. A summary of the cost components can be found in the table below.

Components Project cost (US$ million)

Balochistan (US$ million)

MDTF Financing (US$ million)

Component 1: Institutional Strengthening of PDMA Balochistan

2.5 0.0 2.5

Component 2: Hazard and Risk Assessment

1.0 0.0 1.0

Component 3: Development and Piloting of CBDRM Program

1.5 0.0 1.5

Component 4: Contingent Emergency Response Component

0.0 0.0 0.0

Total 5.0 0.0 5.0

72. The Component 4 has zero allocation and would allow the GoB to request the Bank to re-categorize and reallocate financing from other project components to partially cover emergency response and recovery costs. This component could also be used to channel additional funds should they become available as a result of the emergency.

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F. Key Risks and Mitigating Measures

73. The overall risk rating at preparation and implementation as defined in the Operational Risk Assessment Framework (Annex-4) is ‘High’. The volatile security situation in the project area poses risks that may hamper timely implementation and adequate oversight.

74. Stakeholders’ risks include a potential lack of preparedness at provincial government and provincial DRM agencies to play a more active role after the devolution of DRM responsibilities under the18th Amendment. This is the result of the fact that, previous to the Amendment provincial governments depended on the federal government for assistance in disaster response. Low preparedness levels may be exacerbated by low operational capacities at provincial and district level agencies that are responsible for the new pro-active DRM approach. The purpose of the project is to support the development and strengthening of PDMA Balochistan.

75. Amongst implementation agency risks, there is a possibility that non-familiarization with the Bank’s fiduciary and safeguard requirements could risk quality of preparation and implementation, and may result in delays. In addition, financial management and procurement functions need to be separated at the PDMA and the financial management capacity needs strengthening. In response, PDMA Balochistan has appointed an Accounts Officer as a first step to take over financial management responsibilities and have the procurement functions separated. Furthermore, fiduciary and safeguards trainings will be provided to the relevant officials of PDMA Balochistan prior to, and during project implementation to mitigate these risks.

76. The proposed hazard and risk assessment may prove a challenge since this is being undertaken for the first time in the Province. In view of this, the proposed assessment will be undertaken for the provincial capital only. The technical scope and methodology for the assessment will be developed during an initial scoping workshop involving international experts and public-sector technical agencies (SUPARCO, Geological Survey of Pakistan, and Meteorological Department).

77. Given the current security situation, a key risk during implementation is the inability to supervise project progress in the project areas. This could result in the lack of progress on the ground and the potential misallocation of resources due to lack of robust oversight. To mitigate this constraint, the Bank team will have to devise innovative supervision arrangements such as third party supervision, the use of geo-referenced photographs, and video-conferencing.

78. The key risks and proposed mitigation measures are summarized in the below table:

Risks to the Achievement of PDO

Risk Rating

Risk Mitigation Measures

Unclear DRM Roles and Responsibilities

High The project is building the capacity of the PDMA to become the lead agency for DRM in the province. The roles and responsibilities of the PDMA are being incorporated in the Rules of Business of the provincial government to enable it to perform its functions.

Perception Risks Medium A robust communication, awareness and advocacy campaign would be launched as part of project activities which would clearly identify the role of the project’s support in the area of DRM for enabling the government and

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communities to be better prepared for and respond to disaster events. Weak Capacity at PDMA Balochistan

High The existing capacity at the implementing agency will be strengthened through: -installing the bare minimum capacity requirements identified during initial assessments in the areas of financial management, procurement, and safeguard implementation -training of relevant PDMA staff in Bank procedures -hiring of technical experts in line with the recommendations of the detailed capacity assessment during the implementation stage

Turnover of Operational Staff at Implementing Agency

Medium Operational consistency will be ensured through provision of technically qualified staff at the PDMA which would ensure continuity in the event of transfers and turnover.

Lack of Prior Experience and Implementation Models for Hazard and Risk Assessment

High The hazard and risk assessment will be undertaken for the provincial capital under the project. The technical scope and methodology for the assessment will be developed during an initial scoping workshop involving international experts and public-sector technical agencies (SUPARCO, Geological Survey of Pakistan, Meteorological Department, et al.). The proposed hazard and risk assessment exercise is expected to further provide an operational model as well as generate capacities and experience for PDMA Balochistan. Coordination would also be ensured with other entities and organizations providing similar support to benefit from their experiences.

Environmental and Social Impact of Interventions under Component 4, If Activated

N/A The client will undertake an environmental assessment for the proposed interventions under this component as per the guidelines on borrower responsibility ib the ESSAF, if and when the actual list of interventions is developed.

Overlap with Activities from other Donors / Programs

Medium The DRM country team at the World Bank is constantly engaged with active donors in the DRM sector and would be coordinating with the donors working with PDMA Balochistan to ensure synergies and avoid overlaps. A number of forums, such as the DRM Donors Coordination Group (DDCG) are being used to discuss and coordinate proposed interventions.

Security Concerns High Employment of alternative options for supervision including third party supervision, the use of available technology such as GPS-referenced photographic evidence and video conferencing facilities, will be employed.

Procurement and Quality Risks

High Packaging of the project activities and formulation of the Terms of Reference would be undertaken by taking into consideration the realities on the ground and to achieve a balance between field work and research activities. Procurement support to be provided through the Implementation Support Unit for all MDTF funded projects being planned for Balochistan

Overall Rating High G. Terms and Conditions for Project Financing 79. A US$5.0 million MDTF grant would finance the project at 100%, inclusive of taxes. Retroactive financing would be available for certain eligible expenditures necessary to complete project preparation, incurred since November 01, 2011 till the signing of the Grant Agreement. The retroactive financing is allowed for all components except Component 4 up to US$500,000. 80. The closing date of the project is June 30, 2015.

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Annex 1: Detailed Description of Project Components

PAKISTAN: Balochistan Disaster Management Project 1. Project development objective: To strengthen the capacity of PDMA Balochistan to prepare for and respond to natural disasters.

2. The Project comprises of the following four components.

Component 1: Institutional Strengthening of PDMA Balochistan (US$2.5 million)

3. The National Disaster Management (NDM) Act, 2010 provides the framework for the DRM institutional structure in Pakistan. While appropriate legislation has been passed, the operationalization of various DRM structures has met with varying degrees of success at various levels. Currently, the National Disaster Management Authority (NDMA) has been set up and functions under the guidance of the National Disaster Management Commission (NDMC). In parallel, the provinces have been entrusted with the responsibility for DRM, which requires the establishment of PDMA offices to fulfill its responsibilities.

4. This component shall support the strengthening of institutional capacities as well as the development of planning and response capabilities at PDMA Balochistan. The structure and systems at PDMA Balochistan would be strengthened to undertake, and better coordinate, operations across the Province. The component includes the following subcomponents:

a) Strengthening of Institutional DRM Capacity: Under this sub-component the capacity of PDMA would be assessed, including the level of operationalization as per the NDM Act, 2010. Based on the assessment, critical gaps and additional requirements would be identified, prioritized, and financed under this project. This would lead to the development and implementation of an organizational capacity and enhancement plan. The project will also provide technical assistance to update the Disaster Risk Management Plan, developed by PDMA Balochistan in 2008. This sub-component will also provide support to design and implement a set of Standard Operating Procedures to guide response operations of the agency following a natural disaster. Finally, capacity building of officials involved in DRM functions, including PDMA staff and response agencies, through exposure visits to national and international best practice models. The findings of the exposure visits and study tours undertaken will be documented in the form of knowledge products.

b) Strengthening of Emergency Response Systems: Under this sub-component, assistance to develop an effective response system would be provided. These activities would empower the government to better respond to disasters in the Province. Systems developed would be in line with national level systems architecture to ensure smooth transfer of information and data. The PEOC would be augmented with communication systems needed to enable it to receive and share information through an enhanced alert and response system, including training on its use. An integrated Disaster Management Information System (DMIS) including a database to collect, aggregate, and display information for use by the PEOC for timely response in case of disasters would also be established. In addition to this, a fully equipped and trained R3T will be established at the PDMA for rapid deployment in the event of a disaster. The team will be provided training and critical equipment and would supplement existing capacity at the

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Federal, Provincial and local levels. Emergency simulations and drills would be carried out to improve operational coordination, preparedness and emergency protocols.

c) Project Implementation: This sub-component would finance the costs associated with project coordination, implementation, monitoring, and evaluation. The expenditures financed under this sub-component would include training, consultants' services (including for audits), equipment, and operating costs (including project staff allowances for civil servants working on the Project5), as well as expenditures necessary to carry out other activities associated with Project implementation, such as procurement-related complaint handling, third-party supervision, and the establishment of a Project-related grievance redress mechanism. Incremental operating costs under Component 4, should it be triggered, will also be financed under this sub-component. The establishment of a project management unit outside PDMA Balochistan is not envisaged and the project aims to utilize internal resources and systems at PDMA Balochistan for implementation with supplementary capacity support in critical areas only. This will entail in-kind contribution from counterparts in terms of counterpart staff time and office spaces.

Component 2: Hazard and Risk Assessment (US$1.0 million)

5. Under this component, an initial hazard and risk assessment would be undertaken in Quetta. The technical scope and the methodology of the assessment would be finalized after consultations with relevant actors and agencies. An initial scoping workshop with international experts and technical agencies (SUPARCO, GSP, Meteorological Department, and other relevant departments and agencies) would be conducted to design, develop and inform the hazard and risk assessment process in Balochistan. The hazard and risk assessment process would be implemented under the guidance of a technical committee, comprising core technical and international experts. A specific procurement approach will be formalized by the IA on the basis of the outcomes of the deliberations of the technical committee.

6. The approach is based on the lessons learnt in similar activities undertaken in the past. Following the 2005 earthquake, and under the subsequent Emergency Recovery Credit (ERC) project, the Bank supported a macro-level risk assessment. The activity could not take off due to multiple reasons including security situation and issues in provision of sensitive data to a foreign firm. To mitigate the risks of similar complications, local agencies and public departments having experience and capacity for undertaking such exercises would be involved to better guide the hazard and risk assessment process.

7. The output of this component would be a multi-hazard exposure map for Quetta, which could be scaled to other parts of the project area by the GoB, as funding becomes available. Besides the publication of a hazard and risk map for the targeted area, this activity would also build broad capacity to analyze exposure and vulnerability at the provincial level, with the objective of enabling the GoB to update the maps and scale up this activity for other districts in the future.

5 Such project staff allowances will be financed in accordance with applicable government rules and regulations and, unless the Bank agrees otherwise, only for a period of 24 months after effectiveness of the Grant Agreement.

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Component 3: Development and Piloting of Community Based Disaster Risk Management (CBDRM) Program (US$1.5 million)

8. The CBDRM program, developed by the government in response to the 2005 earthquake in Pakistan, is considered a global good practice model by the United Nations International Strategy for Disaster Reduction (UNISDR). The model seeks to mitigate the impact of natural disasters through community based disaster risk management activities. The NDMA is launching a national level CBDRM program, which would scale up this initiative.

9. The project will support PDMA Balochistan in undertaking the following broad activities: (a) adaptation of the national CBDRM program to the provincial context; (b) creation of a cadre of master trainers at the provincial level to impart further training under the cascade of training approach; (c) pilot the CBDRM program within selected union councils in Quetta to train communities in first response, preparedness, early warning and the use of emergency response equipment; (d) Assess the planning and logistical requirements associated with emergency stockpiles at the district levels in order to develop a logistics plan and establishment of two pilot stockpiles in Quetta district; and (e) development of DRM instructional materials available for dissemination to local communities, including materials for CBDRM training.

Component 4: Contingent Emergency Response Component (US$0)

10. Following an adverse natural event that causes a major natural disaster, the GoB may request the Bank to re-allocate project funds to this component (which presently carries a zero allocation of grant proceeds) to support response and reconstruction6. This component would allow the GoB to request the Bank to re-categorize and reallocate financing from other project components to partially cover emergency response and recovery costs. This component could also be used to channel additional funds should they become available through as a result of the emergency.

11. Disbursements under Component 4 will be contingent upon the fulfillment of the following conditions: (i) The Recipient has determined that an Eligible Natural Disaster has occurred and the World Bank has agreed and notified the Recipient; (ii) PDMA Balochistan has prepared and adopted the Contingent Emergency Response (CER) Implementation Plan that is agreed with the World Bank; (iii) PDMA Balochistan has prepared, adopted, and disclosed safeguards instruments required as per Bank guidelines for all activities from the CER Implementation Plan eligible for financing financed under Component 4.

12. Disbursements would be made against a positive list of critical goods or the procurement of works, and consultant services required to support the immediate response and recovery needs of the GoB. All expenditures under this component, should it be triggered, will be in accordance with BP/OP 8.0 and will be appraised, reviewed and found to be acceptable to the Bank before any disbursement is made. In accordance with BP/OP 8.00, this component would provide immediate, quick-disbursing support to finance goods (positive list agreed with the GoB), works, and services needed for response, mitigation, recovery and reconstruction activities. Operating costs eligible for financing would include the incremental expenses incurred by the GoB for

6 Such a reallocation would not constitute a formal Project restructuring, as permitted under the particular arrangements available for contingent emergency response components (ref. Including Contingent Emergency Response Components in Standard Investment Projects, Guidance Note to Staff, April 2009, footnote 6).

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early recovery efforts arising as a result of the impact of major natural disasters. Such operating costs would be incurred under the Project implementation sub-component - 1 (c) above - as with all operating costs7 under this Project.

13. Goods, Works and Services under this component would be financed based on review of satisfactory supporting documentation presented by the government including adherence to appropriate procurement practices in emergency context. All supporting documents for reimbursement of such expenditures will be verified by the Internal Auditors of the GoB and by the Project Coordinator, certifying that the expenditures were incurred for the intended purpose and to enable a fast recovery following the damage caused by adverse natural events, before the Application is submitted to the Bank. This verification should be sent to the Bank together with the Application.

14. Specific eligible expenditures under the category of Goods include: (i) construction materials; water, land and air transport equipment, including supplies and spare parts; (ii) school supplies and equipment; (iii) medical supplies and equipment; (iv) petroleum and fuel products; (v) construction equipment and industrial machinery; and (vi) communications equipment.

15. Specific eligible expenditures under the category of Works may include urgent infrastructure works (repairs, rehabilitation, construction, etc.) to mitigate the risks associated with the disaster for affected populations. Specific eligible expenditures under the category of Services may include urgent studies (either technical, social, environmental, etc.) necessary as a result of the effects of the disaster (identification of priority works, feasibility assessments, delivery of related analyses, etc).

7 Refer relevant section under Annex 5 for details of the composition of operating costs.

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Annex 2: Results Framework and Monitoring

PAKISTAN: Balochistan Disaster Management Project

Program Development Objective (PDO): To strengthen the capacity of PDMA Balochistan to prepare for and respond to natural disasters.

PDO Level Results

Indicators

Evaluation Criteria

Unit of Measure

Base-line

Cumulative Target Values Frequency

Data Source/ Methodology

Responsibility for Collection

Description (indicator definition etc.) YR 1 YR 2 YR3

Indicator One: Improved disaster response mechanism at PDMA Balochistan

SOPs for disaster response prepared and operationalized Number of drills / simulation exercises completed to assess operational coordination, preparedness and emergency protocols

- Number

- 0

Assessment of current procedures completed and draft plans prepared 0

Proposed Systems tested and plans revised 1

Final SOPs approved and implemented 2

Annual Annual

Assessment by Bank team and PDMA Balochistan Assessment of response efficiency as per targets in SOPs.

PDMA Balochistan PDMA Balochistan

Identification of current procedures and gaps, recommendations and institutionalization will be supported under the project Drills / simulation exercises to be undertake in order to assess the effective implementation of SOPs for disaster response

Indicator Two:

Increased awareness of the hazard and risk environment in Quetta

DMIS database established and populated by data collected during hazard and risk assessment

- - DMIS database set up and available data collected

Collection in DMIS of data generated through hazard and risk assessment of Quetta started.

Collection in DMIS of data generated through hazard and risk assessment of Quetta completed

Annual Annual Assessment by Bank team and PDMA Balochistan

PDMA Balochistan

This pilot initiative will serve as a case study to scale such assessments to other major cities. Multi-hazard exposure map to be published and made available to departments and agencies responsible for development planning in the provincial capital in YR3

Indicator Three:

Enhanced capacity at PDMA Balochistan

Number of Master trainers trained

Number

0

5

10

15

Annual

Project Annual Report

PDMA Balochistan

Master trainers trained under the project to deliver training to responders in first response, preparedness, early warning and the use

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for implementing CBDRM initiatives

Number of training sessions for responders in selected union councils in Quetta

Instruction materials on CBDRM available for dissemination to communities

Number

Number

0

0

0

1,000

2

4,000

4

10,000

Annual

Annual

Project Annual Report

Project Annual Report

PDMA Balochistan

PDMA Balochistan

of emergency response equipment

INTERMEDIATE RESULTS

Component 1 - Institutional Strengthening of PDMA Balochistan

Intermediate Results

Indicators Output Indicators

Unit of Measure

Base-line

Cumulative Target Values Frequency

Data Source/ Methodology

Responsibility for Collection

Notes

YR 1 YR 2 YR3

Indicator One: a) Enhanced capacity at PDMA Balochistan to collect, manage and communicate information

• DMIS database established • Enhanced communications systems in place at the Provincial Emergency Operations Center (PEOC)

- -

- -

DMIS database set up Design and specifications of emergency communications system finalized

- Emergency communications equipment procured and installed

- Emergency communications equipment operationalized and integrated within response regime.

Annual Annual

Project Annual Report Project Annual Report

PDMA Balochistan PDMA Balochistan

Weak communication capacity at PEOC. Goods to be procured to improve emergency communication and alerts.

Indicator Two: b) Development and effective implementation of disaster response

• Balochistan DRM Plan 2008 reviewed and updated

-

-

Balochistan DRM Plan 2008 reviewed and draft updates prepared

Draft strategic updates agreed after discussion with stakeholders

-

Annual

Project Annual Report

PDMA Balochistan

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procedures at PDMA

• PDMA capacity assessment undertaken and enhancement plan prepared • SOPs for PDMA on disaster response prepared • Number of drills / simulation exercises completed to assess operational coordination, preparedness and emergency protocols • Number of exposure visits by PDMA Balochistan staff undertaken and knowledge products produced

- - Number Number

- - 0 0

Assessment of current capacity completed and draft recommendations prepared Assessment of current procedures completed and draft plans prepared 0 1

Capacity enhancement plan discussed with stakeholders and finalized Proposed Systems tested and plans revised 1 3

- Final SOPs approved and implemented 2 4

Annual Annual Annual Annual

Project Annual Report Project Annual Report Project Annual Report Knowledge Products developed by PDMA Balochistan

PDMA Balochistan PDMA Balochistan PDMA Balochistan PDMA Balochistan

Inputs of final SOP includes: i) stock taking of current system; ii) gap analysis; iii) new SOP; and iv) sensitization/ institutionalization of SOP Simulations will be executed based on revised SOPs with expectation that the third year will outperform the second Study visits to expose PDMA Balochistan professionals to other agencies will robust and functioning operational procedures

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Component 2 – Hazard and Risk Assessment Intermediate

Results Indicators

Output Indicators Unit of

Measure Base-line

Cumulative Target Values Frequency

Data Source/ Methodology

Responsibility Collection

Notes

YR 1 YR 2 YR3

Indicator One: a) Increased technical capacity at PDMA to manage the implementation and dissemination of hazard and risk assessments

• Scoping exercise completed and methodology for hazard and risk assessment finalized • Data collected and collated in the DMIS repository • Information collected during the hazard and risk assessment on sources of risk available to all departments and agencies responsible for development planning in the provincial capital

- - -

- - -

Methodology for Hazard and Risk Assessment finalized Data available with government departments and agencies collected in the DMIS -

- Collection in the DMIS of data generated through hazard and risk assessment of Quettastarted. -

- Collection in the DMIS of data generated through hazard and risk assessment of Quetta completed Results from Hazard and Risk Assessment Published and disseminated to departments and agencies responsible for development planning

Annual Annual End of Project

Project Annual Report Project Annual Report Published multi-hazard exposure map

PDMA Balochistan PDMA Balochistan PDMA Balochistan

Initial scoping workshop with international experts and technical agencies (SUPARCO, GSP, Meteorological Department, and other relevant departments and agencies) Data currently available with government departments/agencies and further data generated through the hazard and risk assessment to be collected in the DMIS. Multi-hazard exposure map is baseline map that identifies that exposure to floods, earthquakes and other adverse natural events by mapping the likelihood of occurrence and severity around Quetta

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Indicator One: a) Increased capacity of PDMA Balochistan to engage with local communities for improved preparedness

• Provincial CBDRM program developed • Number of training sessions conducted by master trainers in selected union councils in Quetta • Logistics Plan developed for emergency stockpiles in selected districts • Number of pilot stockpiles established in Quetta based on Logistics Plan • Instruction materials on CBDRM available for dissemination to communities

- Number - Number Number

- 0 - 0 0

Draft provincial CBDRM program developed 0 Draft logistics plan for emergency stockpiles developed 0 1,000

Draft provincial CBDRM program discussed and pretested in Quetta 2 Logistics plan for emergency stockpiles in selected areas agreed with stakeholders and finalized 1 4,000

Provincial CBDRM Program agreed with stakeholders and finalized 5 Final checklists for emergency stockpile equipments developed 2 10,000

Annual Annual Annual Annual Annual

Project Annual Report Project Annual Report Project Annual Report Project Annual Report Project Annual Report

PDMA Balochistan PDMA Balochistan and third party PDMA Balochistan PDMA Balochistan and third party PDMA Balochistan

National CBDRM Program customized to provincial context Master Trainers will deliver trainings to responders District level Stockpile Checklist will be developed, in tandem with PDMA Balochistan SOPs Only a small number of pilot stockpiles to be financed as demonstration to other districts in order to streamline logistics for scaling stockpiles across Balochistan

Component 3 – Development and Piloting of CBDRM Program

Intermediate Results

Indicators Output Indicators

Unit of Measure

Base-line

Cumulative Target Values

Frequency Data Source/ Methodology

Responsibility for Data

Collection

Notes

YR 1 YR 2 YR3

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Component 4 – Contingent Emergency Response Component

Intermediate Results

Indicators

Output Indicators

Unit of Measure

Base-line

Cumulative Target Values Frequency Data Source/ Methodology

Responsibility for Data Collection

Notes

YR 1 YR 2 YR 3

Indicator One: NA NA

Triggered, if requested [Y/N]

NA NA NA NA NA NA NA

Only to be triggered in case of major emergency

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Annex 3: Summary of Estimated Project Costs

PAKISTAN: Balochistan Disaster Management Project

Project Cost by Component

Estimated Costs from MDTF Grant (US$ millions)

A. Component 1: Institutional Strengthening of PDMA Balochistan

a) Development of Institutional DRM Capacity 0.6

b) Strengthening of Emergency Response Systems 1.5

c) Project Implementation 0.4

Total Component 1 2.5

B. Component 2: Hazard and Risk Assessment

a) Development of Methodology and Scope 0.2

b) Hazard and risk assessment for the provincial capital 0.8

Total Component 2 1.0

C. Component 3: Development and Piloting of CBDRM Program

a) Adaptation of the national CBDRM program to the provincial context 0.1

b) Creating a cadre of master trainers at the provincial level 0.2

c) Pilot the CBDRM program in Quetta 0.5

d) Planning & logistical assessment for district level emergency stockpiles and establishment of a pilot stockpile at Quetta

0.6

e) Development and dissemination of DRM instructional materials, including CBDRM training materials.

0.1

Total Component 3 1.5

D. Component 4: Contingent Emergency Response Component

Total Component 4 -

PROJECT TOTAL 5.0

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Annex 4: Operational Risk Assessment Framework (ORAF)

PAKISTAN : Balochistan Disaster Management Project Stage: Negotiations

1. Project Stakeholder Risks Rating High Description : Unclear DRM Roles and Responsibilities: The Provinces have typically had a reactive approach towards DRM and at many times look towards the Federal Government for response assistance. While the PDMAs are required to play a more active role after the devolution of DRM responsibilities after the18th Amendment, there may be a lack of clarity on roles and responsibilities as well as the authority of the PDMA within provincial governance system. Perception Risks: DRM is a new field in Pakistan with major focus on disaster response rather than preparedness. In this context, project’s support may be incorrectly perceived and linked with disaster response rather than creating capacity for disaster preparedness and management.

Risk Management (Unclear DRM Roles and Responsibilities): The project is building the capacity of the PDMA to become the lead agency for DRM in the province. The roles and responsibilities of the PDMA are being incorporated in the Rules of Business of the provincial government with the necessary authority to PDMA to enable it to perform its functions. ‐ Resp: Client | Stage: Imp | Due Date : | Status: Not yet Due

Risk Management (Perception Risks) : A robust communication, awareness and advocacy campaign would be launched as part of project activities which would clearly identify the role of the project’s support in the area of DRM for enabling the government and communities to be better prepared for and respond to disaster and emergency situations in the province. ‐ Resp: Partners | Stage: Prep | Due Date : | Status: Not yet Due

2. Implementing Agency Risks (including fiduciary) 2.1 Capacity Rating: High

Description: PDMA Balochistan has been recently established with the approved strength of five officers which may not be sufficient to meet the reporting requirements satisfactorily. Specific risks include lack of technical experts in finance and procurement and aggregation of these functions with the same individuals.

Risk Management : A review of the capacity of PDMA Balochistan undertaken during project preparation in the areas of financial management, procurement, and safeguard implementation, have made a number of recommendations for addressing capacity gaps. Foremost amongst these is a requirement for the establishment of the requisite financial management and procurement capacity at PDMA Balochistan. Initially, PDMA will meet the bare minimum requirements whereas technical experts would be hired in line with the recommendations of the detailed capacity assessment during the implementation stage. In addition, the project team at the Bank will conduct appropriate training of relevant PDMA staff in Bank procedures. ‐ Resp: Client | Stage: Prep | Due Date : | Status: Not yet Due

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2.2 Governance Rating: Medium Description: The Project’s effectiveness depends on continued ownership and commitment from key counterparts in Balochistan. Transfers of the top management of PDMA can affect project implementation.

Risk Management : Operational consistency will be ensured through provision of technically qualified staff at the PDMA which would ensure continuity in the event of transfers and turnover. ‐ Resp: client | Stage: Prep | Due Date : | Status: Not yet Due

3 Project Risks 3.1 Design Rating: High Description: Since hazard and risk assessment is being done in the Province for the first time, there is no successful model to follow leading to the risk of the assessment not being completed to the required levels / standards.

Risk Management : The hazard and risk assessment will be undertaken for the provincial capital under the project. The technical scope and methodology for the assessment will be developed during an initial scoping workshop involving international experts and public-sector technical agencies (SUPARCO, Geological Survey of Pakistan, Meteorological Department, et al.). The proposed hazard and risk assessment exercise is expected to further provide an operational model as well as generate capacities and experience for PDMA Balochistan. Coordination would also be ensured with other entities and organizations providing similar support to benefit from their experiences. ‐ Resp: Client | Stage: Prep | Due Date : | Status: Not yet Due

3.2 Social & Environmental Rating: N/A Description: No risk is involved with respect to environment and its degradation. In case Component 4 is activated in vase of an emergency and subsequent agreement between the bank and borrower, the interventions conceived hence may have negative impacts on the environment.

Risk Management : The client will undertake an environmental assessment for the proposed interventions under this component as per the guidelines on borrower responsibility ib the ESSAF, if and when the actual list of interventions is developed.

3.3 Program & Donor Rating: Medium Description: MDTF: The Project is one of the activities being funded by the MDTF and hence depends upon the procedures governed by the MDTF and its requirements.

Donor Activity Overlap: Due to the presence of other

Risk Management (MDTF) : The MDTF is being administered through a dedicated secretariat operating under the directions of a Steering Committee which comprises representatives from participating donors. The MDTF Secretariat has been very prompt and efficient to date in their response to clearance requests. While the time taken for Government approvals has varied significantly, the MDTF Secretariat has been active in taking this up with the Government at all levels, including at Steering Committee meetings.

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development partners and CSOs/NGOs in the province, there may be an overlap between the Bank’s project and their programs resulting in an inefficient use of the MDTF.

‐ Resp: Bank | Stage: Prep | Due Date : | Status: Not yet Due

Risk Management (Donor Activity Overlap) : The DRM country team at the World Bank is constantly engaged with active donors in the DRM sector and would be coordinating with the donors working with PDMA Balochistan to ensure synergies and avoid overlaps. A number of forums, such as the DRM Donors Coordination Group (DDCG) are being used to discuss and coordinate proposed interventions. ‐ Resp: Bank | Stage: Prep | Due Date : | Status: Not yet Due

3.4 Implementation & Sustainability Rating: High Description: Security Concerns: Uncertain security situation could lead to inadequate implementation supervision and monitoring. Procurement and Quality Risks: Potential lack of capacities within national contractors and/or an unwillingness to work in uncertain security situation may result in quality risks for certain technical activities such as Hazard and risk Assessment. Risk of collusion due to small number of vendors.

Risk Management (Security Concerns): Employment of alternative options for supervision including third party supervision, the use of available technology such as GPS-referenced photographic evidence and video conferencing facilities, will be employed. ‐ Resp: Client | Stage: Impl | Due Date : | Status: Not yet Due

Risk Management (Procurement and Quality Risks) : Packaging of the project activities and formulation of the Terms of Reference would be undertaken by taking into consideration the realities on the ground and to achieve a balance between field work and research activities. Procurement support to be provided through the Implementation Support Unit for all MDTF funded projects being planned for Balochistan ‐ Resp: Client | Stage: Impl | Due Date : | Status: Not yet Due

4. Project Team Proposed Rating Before Review 4.1. Preparation Risk Rating: High 5.2 Implementation Risk Rating: High Comments: The volatile security situation in the post-crises context poses risks that may hamper timely implementation and adequate oversight.

5. Risk Team 5.1. Preparation Risk Rating 6.2 Implementation Risk Rating Comments: (this section will not print if there is no « Risk Team » Review) 6. Overall Risk Following Review 6.1. Preparation Risk Rating: 7.2 Implementation Risk Rating: Comments:

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Annex 5: Financial Management and Disbursement Arrangements

PAKISTAN: Balochistan Disaster Management Project Country Issues 1. The Bank has carried out extensive analytical work on public financial management (PFM) systems in the country, both at national and sub-national levels. In May 2007, Public Financial Management and Accountability Assessments (PFMAA), using the PEFA PFM Performance Measurement Framework, were completed for Balochistan, Punjab, and KP and a Federal level PFMAA was delivered in 2009. The Assessment noted that reforms underway have contributed towards improvements in PFM systems. Most notable are the activities initiated under the Bank-funded Project for Improvement of Financial Reporting and Auditing (PIFRA) and the implementation of a Medium Term Budgetary Framework (MTBF) that is supported by DFID. However, the government is yet to develop an effective internal audit function and continuing efforts are needed to improve effectiveness of tax collection as well as the management of cash balances. FM Risk 2. The overall financial management risk is assessed “High”. PDMA Balochistan is a relatively new entity and the FM Assessment identified that financial management system and internal controls are weak. The project design, however, is simple with one spending unit and a limited number of contracts. Thus, the proposed FM arrangements are straightforward and take into account the limited capacity. The project aims to develop the capacity of PDMA Balochistan and FM is a key area where capacity will develop as the project advances. The risk assessment will be updated once the project implementation starts and agreed actions are implemented. Existing FM Arrangements at PDMA Balochistan 3. PDMA Balochistan was established in September 2007 under National Disaster Management Ordinance 2006, but has yet to fully develop its detailed financial management policies and procedures. Recently notified PDMA Balochistan rules briefly mention the requirements for budget, audit and annual accounts and, at present, financial rules of the GoB are used as reference. 4. The PDMA Balochistan does not prepare a detailed annual budget and has minimal annual budget allocation that is executed through a commercial bank account. To respond to disasters, the GoB keeps a block provision in its annual budget and in the event of a disaster, these funds are released to Deputy Commissioners of the affected districts, in coordination with PDMA Balochistan. The accounts are maintained manually on single entry basis where only a cash book is maintained and updated monthly or quarterly. Payment vouchers are not prepared and expenditure sanction is obtained on files. Presently, no financial management reports are prepared and only reconciliation with the Treasury Office is carried out, which is not periodic. It was noted that an Assistant Director is heading the FM unit who is also responsible for administration and procurement. Recently, PDMA Balochistan has employed an Accounts Officer as the head of FM unit who has previous experience of government accounting.

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5. Inventory is maintained in a storehouse and is issued under the orders of Director General. Effective inventory management is critical to deal with any disaster and at PDMA Balochistan inventory management needs to be improved by: i) improving record management to track inventory; ii) maintaining appropriate levels of key items by establishing reorder, maximum and minimum inventory levels; iii) ensuring regular stock taking and reporting results to management; and iv) periodically reviewing and reporting lost, damaged or obsolete inventory. 6. The FM assessment identified critical capacity gaps and control weaknesses. Under Component 1 of the project a detailed capacity assessment of PDMA Balochistan, including financial management, will be carried out and a detailed plan for institutional capacity building will be prepared. PDMA Balochistan will share the capacity assessment and capacity building plan with the World Bank within 8 months of effectiveness. The capacity building plan will be implemented over the life of the project but following ex-ante controls were agreed with the management of PDMA Balochistan8:

(i) PDMA Balochistan will appoint a firm of chartered accountants for its annual audit as required under section 32 of the rules of the authority, by May 31, 2012.

(ii) PDMA Balochistan will carry out bi-annual inventory and assets reconciliation and physical verification from June 2012 onwards as required by rules of the authority.

(iii)Payment vouchers will be introduced from the next financial year starting Jul 01, 2012. Project’s FM Arrangements 7. FM Staffing: The existing FM staff of PDMA Balochistan will also manage the FM functions of the project. To provide technical support to the FM team, PDMA Balochistan will hire a financial management consultant under terms of reference agreed with the Bank within three months of project effectiveness9. The consultant will provide necessary training to the FM Staff and the Bank team during supervision will review progress in this regard. 8. Budgeting: Project’s budget will be prepared annually according to GoB rules and procedures on the basis of planned activities. The budget will be prepared based on an Annual Work Plan that provides details of activities to be carried out by the project during the year. The project will be 100 percent financed through grant and counterpart funds shall mainly be covering salaries of civil servants deputed to the project and the costs of the office space utilized. The project budget will be reflected in the development budget of Balochistan. 9. Accounting: Separate books of accounts, on a cash basis, will be maintained for the project activities using the Chart of Accounts under the New Accounting Model (NAM). Sufficient subsidiary records will be kept to facilitate preparation of quarterly reports and annual financial statements providing details of receipts and expenditures. Manual books of accounts will be maintained, including:

(a) Cash/ Bank Book – to record all cash/ bank receipts and payments (b) General Ledger – to record all receipts and payments by object code

8 This action is not a dated covenants in terms of the legal agreements for this Project 9 This action is not a dated covenants in terms of the legal agreements for this Project

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(c) Appropriation Register – to monitor expenditure against budget allocation (d) Asset Register – to maintain up to date record of assets procured (e) Stock Register – to maintain up to date record of inventories procured (f) Invoice Register – to track payments

10. Payment vouchers will be prepared for all payments and will be the basis of accounting. The complete accounts classification will be entered on each voucher and will be accompanied by supporting documents for payment processing. 11. Internal Controls: The project will use the Financial Management Manual (FMM) that has been prepared for projects funded by MDTF for KP, FATA and Balochistan and defines a strong and comprehensive internal control framework for activities under the project. For each process, the FMM defines key tasks, responsibilities, specific steps and timelines so that it also serves as a benchmark for management to measure its performance. Internal control activities for the project will, at minimum, include:

(a) Authorization and Approvals: The DG PDMA Balochistan will appoint a suitable official to lead the implementation of the project on a full time basis (referred to as Project Director hereafter). Financial authority to approve payments shall vest with the Project Director or to an official as delegated by Project Director in accordance with delegation of powers under financial rules 2008 issued by GoB. (b) Verifications: For each payment, the FM section shall perform a reasonableness check that each payment claim is appropriately supported by documents, is in compliance with approved policies, and has been approved by competent authority. (c) Segregation of Duties: FM function will be independent of procurement and administration. The project will have dual bank signatories, one of whom will be from a unit and other from the FM team. (d) Physical Controls: The project will maintain a fixed assets register for assets procured from grant proceeds, and all assets will be tagged and periodically verified. Under Component 3, stockpiles will be created for which stock registers will be maintained and periodic verifications will be carried out. (e) Periodic Reporting: The project will prepare Budget Execution Reports on a monthly basis, Interim Financial Reports on a quarterly basis and Financial Statements, as per Cash Basis IPSAS, on an annual basis. The head of FM unit will have the primary responsibility to prepare these reports. (f) Reconciliations: The expenditure reconciliation with the Accountant General and bank reconciliation will be carried out on monthly basis. Any difference in the reconciliation will be reviewed and reasons for difference will be documented. (g) Supervisory Controls: The head of FM unit will perform a quarterly review to ensure that financial management activities are in compliance with the Financial Management Manual and relevant government rules and regulations. The results of

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the review will be shared with the Project Director. Monthly reconciliations with Accountant General and the Bank, physical verifications reports and periodic financial reports will be reviewed by the Project Director. (h) Third Party Monitoring: As explained in Annex 7, PMDA Balochistan will engage a firm for monitoring/ validation including review of the FM systems.

12. Fund Flow Arrangements: A segregated Designated Account (DA) will be established in United States Dollars. The DA will be operated by joint signatories ensuring segregation of duties. Funds will be front-loaded using a report-based system. Quarterly Interim Financial Reports (IFRs), providing six monthly cash forecasts, will be prepared and submitted to the Bank. Advances into the DA will be provided for six months by the Bank on the basis of projections/ forecast for the first two quarters of the IFR. Subsequent IFRs will document expenditures against the advance received and will provide forecast for the following two quarters, on the basis of which the amount of funds to be disbursed will be determined. The funds deposited into the DA would be used to meet the project’s eligible expenditures.

13. GoB may request the Bank to re-allocate project funds to Component 4 in the event of a major natural disaster. Disbursements under Component 4 will be contingent upon the fulfillment of the following conditions: (i) The Recipient has determined that an Eligible Natural Disaster has occurred and the World Bank has agreed and notified the Recipient; (ii) PDMA Balochistan has prepared and adopted the Contingent Emergency Response (CER) Implementation Plan that is agreed with the World Bank; (iii) PDMA Balochistan has prepared, adopted, and disclosed safeguards instruments required as per Bank guidelines for all activities from the CER Implementation Plan eligible for financing financed under Component 4.

14. For critical goods under Component 4, the Bank will reimburse expenditure made on the basis of (a) evidence of the purchase of Critical Goods(e.g., bills of lading) certified by the Recipient’s customs department for imported goods and the Accountant General Balochistan as well as Project Implementing Entity for locally procured goods; (b) evidence of payment for said Critical Goods (e.g., receipts or retirement documents with respect to letters of credit, payment vouchers); and, (c) letters of comfort or affidavits from the Project Implementing Entity and the Auditor General of Pakistan certifying the retroactive, current, or expected use of said Critical Goods for the carrying out of said Part of the Project, including details of the use of any of said Critical Goods consumed as of the date of such letters or affidavits. The Recipient will not use the critical goods financed under the component for military or paramilitary purposes. If the World Bank determines at any time that the proceeds of the Grant were used to make a payment for either: (i) ineligible expenditures; or (ii) goods eventually used for military or paramilitary purposes, the Recipient shall the amount of such payments or the costs of these goods. All amounts so refunded to the World Bank shall be subsequently cancelled by the World Bank.

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Allocation of Grant Proceeds Disbursement Category Amount of

Credit (in USD) %age of

Expenditure to be Financed

Goods and Incremental Operating Costs under Component 1 of the project 1.5 100%

Consultants’ Services and Non Consultant Services, and Training under Component 1 of the project

1 100%

Goods, Consultants’ Services and Non Consultant Services, and Training under Component 2 and 3 of the project.

2.5 100%

Critical goods under Component 410 of the project 0 -

Works, non-consulting services, consultants’ services, and Training under Component 4 of the Project

0 -

Total 5,000,000 100%

The MDTF financing is inclusive of import duties and taxes. 15. Incremental Operating Costs will cover incremental staff salaries, per diem and allowances, office supplies, utilities, conveyance, travel and boarding/lodging allowances, operating and maintenance expenditures of office equipment and vehicles, bank charges, insurance, advertising, media projections, newspaper subscriptions, periodicals, printing and stationary costs incurred for the purposes of project activities, which expenditures would not have been incurred in the absence of the project. Incremental Operating Costs exclude salaries, fees, honoraria, bonuses, and any other salary supplements of members of the Recipient’s or the Project Implementing Entity’s civil service except Project Allowances for civil servants deputed to the project in accordance with the applicable government rules and regulations. Project Allowance will be eligible expenditure from Grant funds for a period of twenty-four (24) months after effectiveness of Grant Agreement, except as the Bank may otherwise agree. Office space is not included in operating costs, as PDMA Balochistan will be providing this. 16. Retroactive Financing: The retroactive financing is allowed for all components except Component 4 up to US$500,000 to meet eligible expenditures incurred starting November 01, 2011 up to the date of signing of grant agreement. 17. Financial Reporting: Interim Financial Reports (IFRs) will be submitted within 45 days of the end of each calendar quarter. The format and content of these reports will be shared and

10 Component 4 has zero allocation and would allow the GoB to request the Bank to re-categorize and reallocate financing from other project components to partially cover emergency response and recovery costs. Such a reallocation would not constitute a formal Project restructuring, as permitted under the particular arrangements available for contingent emergency response components (ref. Including Contingent Emergency Response Components in Standard Investment Projects, Guidance Note to Staff, April 2009, footnote 6)". This component could also be used to channel additional funds should they become available for response to the emergency.

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discussed with the PDMA Balochistan prior to negotiations. Annual financial statements will be prepared in accordance with Cash Basis International Public Sector Accounting Standards. 18. Auditing: External audit of the project will be conducted by the Supreme Audit Institution, i.e., the Office of the Auditor General of Pakistan, which is acceptable to the Bank. For each financial year closing on June 30, acceptable audited financial statements will be submitted to the Bank by December 31, i.e. within 6 months of the close of each financial year.

Audit Report Type Due Date Project Audited Financial Statements for Financial Year ended June 30 each year

December 31 each year.

19. PDMA Balochistan is not implementing any Bank funded project and therefore no audit reports are outstanding. Conditions/ Agreed Actions PDMA Balochistan will appoint a firm of chartered accountants for its external audit by

May 31, 2012 and share audited financial statements and management letter with the Bank within six months of the end of each fiscal year during Project implementation, that is, by December 31, 2012 for the first fiscal year.

PDMA Balochistan will share the results of capacity assessment and capacity building plan prepared under Component 1 (a) of the Project with the Bank. (Within 8 months of effectiveness)11

PDMA Balochistan will carry out an inventory and asset reconciliation, with physical verification, semi-annually from June 2012 onwards as required by rules of the authority.12

PDMA Balochistan will introduce payment vouchers from the next financial year starting Jul 01, 2012.13

PDMA Balochistan to hire an FM Consultant within 3 months of project effectiveness.14

FM Supervision Plan 20. Intensive FM supervision will be required in the initial year of implementation given the high project risk and limited capacity of the implementing agency. However, security risk can limit the field supervision and desk review may remain the most feasible supervision option. Another option would to be hire supervision consultant for field supervision if the security situation does not improve over the medium term. 21. During Project implementation, the Bank will review: (a) the Project IFRs and audited financial statements, including the budget execution report, together with the management letters; and, (b) the Project’s financial management and disbursement arrangements to ensure

11 This action is not a dated covenants in terms of the legal agreements for this Project 12 This action is not a dated covenants in terms of the legal agreements for this Project 13 This action is not a dated covenants in terms of the legal agreements for this Project 14 This action is not a dated covenants in terms of the legal agreements for this Project

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compliance with the agreed requirements. Moreover, the Bank will supervise interventions for FM capacity building. With the implementation of the sound financial management by the professional staff, the Bank’s normal implementation review procedures will suffice.

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Annex 6: Procurement Arrangements

PAKISTAN: Balochistan Disaster Management Project

1. Procurement for the proposed project would be carried out in accordance with the World Bank’s “Guidelines: Procurement of Goods, Works, and Non-Consulting Services under IBRD Loans and IDA Credits” dated January 2011; and “Guidelines: Selection and Employment of Consultants by World Bank Borrowers” dated January 2011, as well as the provisions stipulated in the Grant Agreement. The general descriptions of various items under different expenditure categories are described below.

2. For each contract to be financed under this Grant, different procurement methods or consultant selection methods, along with estimated costs, prior review requirements, and time frame have been agreed between the Borrower and the Bank in the Procurement Plan. An initial draft of the plan has been developed. The Procurement Plan will be updated at least annually, or as required, to reflect the actual Project implementation needs and improvements in institutional capacity. A General Procurement Notice will be published.

Procurement of Works 3. No major works are envisaged in this project under the first three components. However, some unforeseen works could be undertaken under Component 4. If such procurement is agreed, the Bank’s relevant Procurement methods and the Bank’s standard bidding documents, if prescribed, for such procurements shall be used. For the other three components works under the project will consist of shopping for contracts costing up to US$50,000 equivalent and NCB for contracts up to US$300,000 for which Bank’s standard bidding documents shall be used.

4. Minor works, which may be required for procurements of up to $50,000, may be done through shopping.

Procurement of Goods

5. Contracts for goods under ICB are not expected at this stage. Procurement of required Goods for the PDMA may be done by the Procurement Committee under the direct supervision of PDMA’s Procurement Focal Person. Procurement methods for Goods under the Project will consist of shopping for contracts costing up to US$50,000 equivalent, NCB for contracts up to US$300,000 equivalent, and ICB for contract costing more than US$300,000 equivalent. Direct contracting may be used with prior approval of the Bank. Applicable procurement processes for Component 4 will also be employed with prior approval of Bank.

Additional Provisions and Procedures for National Competitive Bidding (NCB)

6. Balochistan presently does not subscribe to any procurement legislation. However when procuring goods, non-consultant services and works through NCB, it shall be ensured that the following additional provisions are applied:

(i) Invitations to bid shall be advertised in at least one (1) national newspaper with a wide circulation, at least thirty (30) days prior to the deadline for the submission

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of bids.

(ii) Bid documents shall be made available, by mail or in person, to all who are willing to pay the required fee.

(iii) Foreign bidders shall not be precluded from bidding and no preference of any kind shall be given to national bidders in the bidding process.

(iv) Bidding shall not be restricted to pre-registered firms.

(v) Qualification criteria shall be stated in the bidding documents.

(vi) Bids shall be opened in public, immediately after the deadline for submission of bids.

(vii) Single bids shall also be considered for evaluation.

(viii) Bids shall not be rejected merely on the basis of a comparison with an official estimate without the prior concurrence of the World Bank.

(ix) Before rejecting all bids and soliciting new bids, the World Bank’s prior concurrence shall be obtained.

(x) Contracts shall not be awarded on the basis of nationally negotiated rates.

(xi) Contracts shall be awarded to the lowest evaluated and qualified bidder.

(xii) Post-bidding price negotiations shall not be allowed with the lowest evaluated or any other bidders.

(xiii) Bids shall be solicited and works contracts shall be awarded on the basis of unit prices and not on the basis of a composite schedule of rates.

(xiv) Draft NCB contract would be reviewed by the World Bank in accordance with the prior review procedures.

(xv) A firm declared ineligible by the World Bank, based on a determination by the World Bank that the firm has engaged in corrupt, fraudulent, collusive, coercive or obstructive practices in competing for or in executing a World Bank-financed contract, shall be ineligible to be awarded a World Bank-financed contract during the period of time determined by the World Bank.

(xvi) Each contract financed from the proceeds of the Grant shall provide that the suppliers, contractors and subcontractors shall permit the World Bank, at its request to inspect their account and records audited by auditors appointed by the World Bank. The deliberate and material violation by the supplier, contractor or subcontractor of such provision may amount to obstructive practice.

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(xvii) State-owned enterprises shall be eligible to bid only if they can establish that they are legally and financially autonomous, operate under commercial law, and are not a dependent agency of the Recipient.

(xviii) The World Bank shall declare a firm ineligible, either indefinitely or for a stated period, to be awarded a contract financed by the World Bank, if it at any time determines that the firm has, directly or through an agent, engaged in corrupt, fraudulent, collusive, coercive, or obstructive practices in competing for or executing a contract financed by the World Bank.

Procurement of non-consulting services

7. Presently no procurements have been identified in this category.

Selection of Consultants

8. The Bank’s procurement guidelines shall be followed for acquiring consultant services. Contracts with consulting firms will be procured in accordance with Quality and Cost Based Selection procedures, or other methods given in Section III of the Consultants’ Guidelines. Consulting services selection would be carried out through Quality and Cost Based Selection (QCBS) for contracts with consulting firms costing more than US$300,000 equivalent, and through Consultants Qualification (CQ) for contracts costing up to US$300,000 equivalent. Other methods as mentioned in Section III of Consultants’ Guidelines shall be used as required.

Individual Consultants

9. Individual consultants will be contracted as full-time or part-time technical assistance required for the project. Services for assignments that meet the requirements set forth in paragraph 5.1 of the Consultant Guidelines may be procured under contracts awarded to individual consultants, in accordance with the provisions of paragraphs 5.2 through 5.3 of the Consultant Guidelines. These provisions stipulate that the selection should be made through comparison of at least 3 CVs that meet the requirements of the Terms of Reference, including those for qualifications and experience. Under the circumstances described in paragraph 5.4 of the Consultant Guidelines, such contracts may be awarded to individual consultants on a sole-source basis.

Operational Costs 10. Costs related to the implementation of the project will be financed by the Grant. Please see paragraph 13 of Annex 5 for details. Assessment of the Agency’s Capacity to Implement Procurement 11. The Balochistan PDMA is responsible for overall project implementation. Procurement capacity of the PDMA shall be enhanced and the Bank will conduct training workshops for PDMA procurement staff / consultants.

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12. The identified risks for procurement, contract implementation, and mitigation measures are provided below. Given the readiness status of the project, the overall Project risk for procurement is High. Capacity of PDMA 13. The PDMA has no experience in undertaking Bank financed procurements. The Bank will conduct training workshops for the procurement staff / consultants of PDMA. Procedural Clarity

14. Given the emergency nature of the project, quick turnaround in procurement decisions is essential. There shall be agreement with GoB that the implementing entity shall be empowered to take procurement decisions. Such agreements shall be documented in the form of Procurement SOP. Market Constraints

15. Consulting firms may be reluctant to participate in the project given the law and order situation in Balochistan. The assignments shall be developed in a manner that local as well as external participation is encouraged and the contract sizes are large enough to solicit good response. There shall be adequate dissemination of the opportunities. Transparency 16. An official website of the Project shall be maintained for adequate dissemination. All procurement notices, bid documents / RFPs, evaluation reports, and award data shall be posted on the website. The Bank’s guidelines on publication of award, paragraph 2.31 of consultancy guidelines and 2.60 of the procurement guidelines, shall be followed for disclosure. The website shall also be used for posting of grant evaluations, awards, and performances. Complaints

17. The PDMA would develop and manage a complaint handling system for procurement related issues. This system would include the documentation and addressing of complaints within a period of seven days. If the redressal by the PDMA is not deemed sufficient then a nominated official of the GoB (of appropriate rank) shall be the forum for appeals for the complainant in Balochistan. The PDMA shall keep the Bank informed by forwarding any complaints within three days of the receipt.

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Table 1: Procurement Actions15 Issues Action Timeline Responsibilityi. Capacity of the PDMA Identification/appointment

of Procurement Focal points Facilitation of dialogue with procurement staff of parallel MDTF projects in Balochistan Training session

Prior to negotiations As per timelines of respective projects After identification/ appointment of staff

PDMA PDMA and Bank Bank

ii. Procedural clarity

Agreement on: PDMA’s internal approval procedures through procurement SOPs

Within 3 months of effectiveness

PDMA

iii. Market Constraints Adequate packaging Wide circulation

Prior to negotiations Ongoing

PDMA PDMA

v. Transparency Functional web site Disclosure on website

Within 3 months of effectiveness As required

PDMA PDMA

vi. Complaints Independent complaint redressal mechanism

Within 3 months of effectiveness

PDMA

Procurement Plan 18. The Recipient has developed a Procurement Plan for Project implementation that will provide the basis for the procurement methods. This plan will be made available in the project’s database, project website, and the Bank’s external website. The Procurement Plan will be updated in agreement with the Bank annually, or as required to reflect the actual implementation needs and improvements in institutional capacity.

15 The actions in Table-1 are not dated covenants in terms of the legal agreements for this Project

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Frequency of Procurement Supervision

19. Review Missions would be carried out at least once every six months. However, this will occur more frequently in the early stages of the project, with a procurement specialist participating. Review of Procurement by the Bank 20. Thresholds for prior review of contracts under eligible expenditures are given in table 2 below. All other contracts will be subject to Post-Review by the Bank. The PDMA will send to the Bank a list of all contracts for post-review on a quarterly basis. Post-reviews, as well as the implementation reviews, would be completed annually. For post-reviewed contracts awarded during the reporting period, a sample of about 15-20 percent of the awarded contracts shall be reviewed.

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Table 2: Thresholds for Procurement Methods and Prior Review Aligned with The Rapid Response to Crisis and Emergencies: Streamlined

Procurement Procedures. Expenditure

Category Contract Value

(Threshold) US $

Procurement Method

Contracts Subject to Prior Review

US$ thousands

1. Goods >300,000 ICB All

<300,000 NCB First Contract

<50,000 Shopping First Contract

Regardless of value Direct Contracting All

2. Consulting Services

All TORs and Training Programs to be reviewed by Bank’s TTL

>300,000 QCBS/QBS All

Firms <300,000 FBS, LCS, CQS, SSS

First contract by any process and thereafter as provided in the approved Procurement Plan

Individual Consultants

Regardless of value Single Source All

Comparison of 3 CVs

First contract and contracts for procurement of Project Coordinator, Procurement/FM Specialists, Procurement Agent and Legal Expert (as applicable)

3. Civil Works >50,000 NCB First Contract

<50,000 Shopping First contract Note: ICB = International Competitive Bidding; NCB = National Competitive Bidding; QCBS = Quality- and Cost-Based Selection; QBS = Quality-Based Selection; FBS = Fixed Budget Selection; LCS = Least-Cost Selection; CQS = Selection Based on Consultants’ Qualifications; TOR = Terms of Reference.

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Annex 7: Implementation and Monitoring Arrangements

PAKISTAN: Balochistan Disaster Management Project 1. PDMA Balochistan is the project implementation agency, which would oversee the project by providing guidelines, preparing budgets, procurement and implementation plans and ensuring vertical and horizontal coordination. The DG PDMA Balochistan will appoint a suitable official to lead the implementation of the project on a full time basis.

2. Preliminary capacity assessments in the areas of financial management, procurement, and safeguards implementation have identified some critical capacity gaps within PDMA Balochistan. In particular, the responsibility of both procurement and financial management functions currently lie with the same official and it has been recommended that the two functions be separated. In addition, the strengthening of financial management staff has been recommended.

3. Adequate implementation of the project depends upon the establishment of critical capacity, particularly in the areas of financial management and procurement. As a first step, PDMA Balochistan has posted an Accounts Officer to handle financial management functions under the project. In addition, the procurement and financial management functions have been separated with the Assistant Director (Administration) relieved of the financial management function and now tasked with procurement responsibilities only.

4. The Bank Team will participate in joint review missions with the implementing agency in order to formally review program implementation semi-annually. The missions will conduct a comprehensive review of Project performance against the Results Framework and agree on planned actions (including financing plan). One month prior to the joint review missions, the IA will provide the Bank Team with a comprehensive progress report on project activities.

5. The PDMA will also monitor and supervise implementation of project activities through a system of reporting that would include the submission of quarterly and annual progress reports. A uniform simple progress-reporting format focusing on physical and financial progress and outcomes achieved would be adopted in this regard. Progress reports would be shared with the Bank within one month of the end of the reporting period. The list of monitoring indicators and a detailed intermediate results monitoring plan is included at Annex 2.

6. Besides regular monitoring by government agencies, PDMA Balochistan will engage a firm for third party monitoring/validation to ensure that the required outcomes as per acceptable

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standards have been achieved. The firm will also review and comment on the continuing adequacy of the FM system, and any actions that PDMA Balochistan needs to take. In addition, innovative supervision strategies such as geo-referenced photographs and video-conferencing are expected to be utilized since supervision missions by the Bank teams to Balochistan may not always be feasible owing to travel restrictions on the Bank staff.

7. The Implementing Agency/s shall also ensure the establishment of an accessible and effective Grievance Redressal Mechanism (GRM) which would address any concerns / complaints communicated by beneficiaries and serve as a feedback mechanism for project interventions. The proposed GRM is expected to be particularly important during the pilot CBDRM program, the operations of the Rapid Response and Rescue Team, as well as any interventions that are developed under the emergency response component. A two tier GRM is envisaged with a Grievance Redressal and Response Cell established at the provincial level within PDMA Balochistan as well as simultaneous implementation of the GRM function at the district level in the areas of project implementation.

8. For any disbursements under Component 4 PDMA Balochistan will need to: (i) Prepare and adopt a Contingent Emergency Response (CER) Implementation Plan that is agreed with the World Bank; (ii) Prepare, adopt, and disclose safeguards instruments required as per Bank guidelines for all activities from the CER Implementation Plan eligible for financing financed under Component 4.

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Annex 8: Project Preparation and Appraisal Team Members

PAKISTAN: Balochistan Disaster Management Project

Name Title Unit Haris Khan Task Team Leader, DRM Specialist SASDU Raja Rehan Arshad Lead Operations Officer SASDU Shahnaz Arshad Senior Urban Specialist SASDU Suhaib Rasheed DRM Consultant SASDU

Shiraz Ali Shah DRM Consultant SASDU

Ahsan Tehsin DRM Consultant SASDU

Zahir Ali DRM Consultant SASDU Rehan Hyder Senior Procurement Specialist SARPS Javaid Afzal Senior Environment Specialist SARDI Samina M. Islam Social Development Consultant SASDS Waseem Kazmi Financial Management Specialist SARFM Anwar A. Bhatti Financial Analyst SACPK Chau-Ching Shen Senior Finance Officer CTRFC Shabir Ahmad Program Assistant SASDO Shahnaz Meraj Program Assistant SASDO Sameena Dost Senior Counsel LEGES Jack Campbell Peer Reviewer GFDRR Armando Guzman Peer Reviewer LCSUW

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Annex 9: Environmental and Social Safeguards Framework

PAKISTAN: Balochistan Disaster Management Project Environmental Safeguards

1. Natural disasters have a two-way linkage with the environment – environmental degradation can potentially cause or exacerbate disasters, and disasters can cause significant environmental degradation.

2. The Project mainly comprises of capacity building and technical assistance activities that are environmentally benign and will not cause any environmental degradation. Therefore, the Project is classified as Environment Category C in accordance with the OP 4.01.

3. Component 4 may have certain environmental issues associated with activities that may be financed under the component, should it be triggered. As a condition for disbursement under Component 4, PDMA Balochistan will carry out a screening of the activities included in the CER Implementation Plan for any potential environmental impacts. Furthermore, any safeguards instruments required under the Environmental and Social Screening and Assessment Framework will be prepared, submitted to the World Bank for review and approval, and thereafter adopted and locally disclosed by PDMA Balochistan prior to disbursements under Component 4. Should this screening require a modification of the Environmental Assessment categorization of the Project and / or the triggering of any of the Bank's safeguards policies, a restructuring will be carried out to record these changes and make applicable the attendant requirements.

4. Furthermore, in case Component 4 is triggered, safeguard aspects of project activities would be in line with the Bank prepared Environmental, Social Screening and Assessment Framework (ESSAF). The ESSAF provides guidelines on the GoB’s responsibilities for integrating and managing environmental aspects into the investment design and implementation. This document would guide the GoB in undertaking a rapid environmental assessment for the potential activities under this component.

5. The proposed project offers environmental enhancement opportunities in all of its components. Under Component 1, environmental considerations will be incorporated into the capacity development of DRM institutions, in the preparation of SOPs/Rules of Business and coordination mechanism, strengthening of the PEOC, and establishment/strengthening of R3T at PDMA under Component 1. Environmental aspects will also be incorporated in the Hazard and risk assessment that will be financed under Component 2. Under Component 3, the importance of environmental considerations would be integrated into the CBDRM program particularly in the training of the master trainers and raising awareness of communities and other stakeholders.

Social Safeguards

6. The primary focus of the project is to build the institutional capacity of the Balochistan PDMA, which does not involve physical works. Institutional strengthening activities do not involve any land acquisition, displacement or negative impacts on any public or private assets. Therefore, Bank Policies on Involuntary Resettlement (OP/BP 4.12) and Indigenous Peoples (OP/BP 4.10) will not be triggered.

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7. As a condition for disbursement under Component 4, PDMA Balochistan will carry out a screening of the activities included in the CER Implementation Plan for any potential social impacts. Furthermore, any safeguards instruments required under the Environmental and Social Screening and Assessment Framework will be prepared, submitted to the World Bank for review and approval, and thereafter adopted and locally disclosed by PDMA Balochistan prior to disbursements under Component 4. Should this screening require a modification of the Environmental Assessment categorization of the Project and / or the triggering of any of the Bank's safeguards policies, a restructuring will be carried out to record these changes and make applicable the attendant requirements.

8. Furthermore, in case that Component 4 is triggered under the project, the Bank has prepared an ESSAF, in accordance with the OP/BP 8.0 for emergency operations. The ESSAF is applicable to all projects under the KP/FATA/Balochistan MDTF and specifies the social assessment requirements of project implementation. Should this component be triggered, the PDMA will be assisted to apply this framework to address any social impacts in post disaster recovery and reconstruction programs, including temporary and preventive resettlement.

9. The strategic policy review envisaged under Component 1 will also address gender aspect in disaster management, and the PDMA will be supported in developing a policy framework to address gender issues in disaster preparedness and response.

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Annex 10: Economic and Financial Analysis

PAKISTAN: Balochistan Disaster Management Project

1. The economic costs of natural disasters and their impacts can be classified into two categories, direct costs and indirect losses. Direct costs include loss of lives, property and income, while indirect losses are defined mostly in terms of reductions of economic prospects, increases in poverty, and social disruptions.

2. In Pakistan, recent disasters have had significant adverse impact on economic development, GDP, balance of payments, level of indebtedness, fiscal balance and indexes of investment. For example, the 2010 floods adversely affected the economy by destroying not only the standing crops but also irrigation infrastructure. In this case, the direct loss is the lost crop, while the indirect loss is the decreased economic potential due to the inability to sufficiently irrigate future crop cycles leading to diminished growth.

3. The chart below shows the frequency of major disasters in Pakistan.

Source: Disaster Risk Management, TWG Working Group Meeting, United Nations, May 17, 2007.

4. As per the 2007 Balochistan post cyclone DNA, the province incurred losses estimated at US$394 million while the 2010 Floods DNA Floods estimated losses at US$620 million in Balochistan. Fourteen districts of Balochistan were also affected by the floods of 2011.

5. In economic terms, the benefits from investment in disaster management are the avoided losses in lives and property, which are multiplied as they translate into macroeconomic losses to the country. Therefore, the damages associated with natural disasters call for preparedness and mitigation efforts, and, while it is difficult to assess the overall return of this type of investment, it has been observed that the returns are substantial. Although little empirical data is available which quantifies the relationship between technical assistance investments in preparedness and mitigation and reduced disaster losses, comparisons of the experiences of developed versus undeveloped countries tends to confirm that prior investments in response capability and in

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vulnerability reduction disasters yield extensive returns in terms of lives saved and property damage avoided. 6. The project will focus on preparedness activities such as defining the risk environment, building response capacity, enhancing the quality and availability of information on disasters and emergency planning as well as building community awareness through improved access to disaster information.

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Annex 11: Documents in Project Files

PAKISTAN: Balochistan Disaster Management Project 1. Project Concept Note 2. Project Concept note Data Sheet 3. Project Information Document (Concept Stage) 4. Project Information Document (Appraisal Stage) 5. Project Financial management Assessment 6. Disaster Risk Management Plan, Balochistan, November 2008.

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Annex 12: Statement of Loans and Credits

PAKISTAN: BALOCHISTAN DISASTER MANAGEMENT PROJECT

Original Amount in US$ Millions

Difference between expected and actual

disbursements

Project ID FY Purpose IBRD IDA SF GEF Cancel. Undisb. Orig. Frm. Rev’d

P125999 2012 PK:Punjab Irrigated Agriculture Producti 0.00 250.00 0.00 0.00 0.00 247.89 0.00 0.00

P112902 2011 PK: Karachi Port Improvement Project 115.80 0.00 0.00 0.00 0.00 115.51 0.00 0.00

P096745 2011 PK: Punjab Barrages Improvement II Proj 145.60 0.00 0.00 0.00 0.00 139.93 -5.27 0.00

P118177 2011 PK: Skills Development Project 0.00 21.00 0.00 0.00 0.00 20.70 2.01 0.00

P118779 2011 PK: Tertiary Education Support Project 0.00 300.00 0.00 0.00 0.00 297.54 42.39 0.00

P125105 2011 PK: Flood Emegency Cash Transfer Project

0.00 125.00 0.00 0.00 0.00 78.20 24.33 0.00

P114508 2009 PK: 3rd Partnership for Polio Erad. 0.00 115.68 0.00 0.00 0.00 0.11 -44.68 0.00

P107300 2009 PK: Sindh Education Sctr Project (SEP) 0.00 350.00 0.00 0.00 0.00 35.12 -25.88 23.30

P105075 2009 PK: PPAF III 0.00 250.00 0.00 0.00 0.00 183.74 -30.25 0.00

P103160 2009 PK: Social Safety Net TA 0.00 210.00 0.00 0.00 0.00 160.34 -2.50 0.00

P102608 2009 PK: Punjab Education Sector Project 0.00 400.00 0.00 0.00 0.00 44.20 -16.44 23.08

P101684 2009 PK:Second Trade & Transport Facilitation 0.00 25.00 0.00 0.00 0.00 22.37 9.61 0.00

P084302 2008 PK: Sindh Water Sector Improvement Proj

0.00 150.20 0.00 0.00 0.00 93.40 24.16 0.00

P089378 2008 PK: Balochistan SSIP 0.00 25.00 0.00 0.00 0.00 14.91 12.26 0.00

P110099 2008 PK: Water Sector Capacity Buidling Proj 0.00 38.00 0.00 0.00 0.00 20.03 7.50 9.12

P095982 2008 PK:Electricity Distribution & Transmissi 173.60 83.10 0.00 0.00 0.00 163.58 151.39 -88.25

P090501 2007 PK:Land Records Mgmt & Information Syst.

0.00 45.65 0.00 0.00 0.00 33.37 28.40 0.00

P076872 2006 PK: PIFRA II 0.00 108.50 0.00 0.00 0.00 35.52 8.57 4.96

P083929 2006 PK:Punjab Municipal Services Improvement

50.00 0.00 0.00 0.00 0.00 15.05 15.05 9.05

P094086 2006 PK: Balochistan Educ Support Project 0.00 22.00 0.00 0.00 0.00 8.58 7.18 4.58

P078997 2004 PK: Sindh On-Farm Water Management Proj

0.00 111.14 0.00 0.00 4.12 34.13 -12.03 0.00

P010556 2004 PK: HIGHWAYS REHAB 215.00 280.00 0.00 0.00 0.00 82.73 -230.80 -65.80

Total: 700.00 2,910.27 0.00 0.00 4.12 1,846.95 - 35.00 - 79.96

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PAKISTAN STATEMENT OF IFC’s

Held and Disbursed Portfolio As of 7/31/2011

(In USD Millions)

Committed Disbursed Outstanding

FY Approval Company Loan Equity

**Quasi Equity *GT/RM

Partici pant Loan Equity

**Quasi Equity *GT/RM

Partici pant

1993/97 Crescent bahuman 0 0.51 0 0 0 0 0.51 0 0 0

2004 Csibl 0 0 4.56 0 0 0 0 4.56 0 0

2006 Dewan petroleum 12 4.28 0 0 17.86 12 3.06 0 0 17.86

2003 Dewan salman 17.5 0 4 0 0 17.5 0 4 0 0

2007/10 Engro asahi 24 11.41 0 0 24 24 11.41 0 0 24

2007 Engro energy 49.56 2.79 0 0 0 49.56 2.79 0 0 0

2010/11 Engro fertilizer 0 0 80 0 0 0 0 80 0 0

2006 Habib bank ltd 0 0 50 0 0 0 0 50 0 0

2008 Intsl 12 6.41 0.02 0 0 0 6.41 0.02 0 0

2005 Js large cf 0 0.6 0 0 0 0 0.6 0 0 0

1995 Jsil (mgt co.) 0 0.27 0 0 0 0 0.27 0 0 0

2006 Jspe fund 0 19.99 0 0 0 0 6.89 0 0 0

2008 Kashf mfb 0 0.75 0 0 0 0 0.66 0 0 0

2007 Kesc 80 0 38.79 0 0 65 0 38.79 0 0

1995 Kohinoor 0 4.86 0 0 0 0 4.86 0 0 0

2010 Laraib 35 0 0 0 0 15 0 0 0 0

0 Mashal 0 0 3 0 0 0 0 0 0 0

2002/11 Micro bank 0 2.97 0 0 0 0 2.97 0 0 0

2011 Nrsp mfb 0 1.88 0 0 0 0 0 0 0 0

2006 Orix leasing pak 6.68 0 0 0 0 6.68 0 0 0 0

1965/87/91/ 94/95/05/09 Packages 0 45.41 0 0 0 0 45.41 0 0 0

2010/11 Qict 40 0 0 0 0 14.1 0 0 0 0

2008/10 Silkbank limited 0 17.33 0 0 0 0 17.19 0 0 0

2006/08 Tameer bank 0.93 0.44 0 0 0 0.93 0.44 0 0 0

2007 Tps (p) 0 16 0 0 0 0 16 0 0 0

2004/07 Trg pakistan 0 0.66 0 0 0 0 0.66 0 0 0

1996 Uch power 0 0 0 0 0 0 0 0 0 0

2011 Uch-ii 102.83 0 0 0 0 21.97 0 0 0 0

Total Portfolio: 380.5 136.56 180.37 0 41.86 226.74 120.13 177.37 0 41.86

* Denotes Guarantee and Risk Management Products.

** Quasi Equity includes both loan and equity types.

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Annex 13: Country at a Glance

PAKISTAN: Balochistan Disaster Management Project

55

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Annex 14: Maps

PAKISTAN: Balochistan Disaster Management Project