Water Supply and Sanitation Sector Project – Additional Financing (RRP ARM 45299)

Project Number: 45299 Loan Number: LXXXX-ARM February 2012

Loan for Additional Financing Republic of Armenia: Water Supply and Sanitation Sector Project

Project Administration Manual

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Contents

ABBREVIATIONS

I. PROJECT DESCRIPTION 1

A. Impact and Outcome 1 B. Outputs 1

II. IMPLEMENTATION PLANS 2

A. Project Readiness Activities 2 B. Overall Project Implementation Plan 3

III. PROJECT MANAGEMENT ARRANGEMENTS 4

A. Project Implementation Organizations – Roles and Responsibilities 4 B. Key Persons Involved in Implementation 4 C. Project Organization Structure 5

IV. COSTS AND FINANCING 6

A. Project Investment Plan 6 B. Financing Plan 6 C. Detailed Cost Estimates by Expenditure Category 7 D. Allocation and Withdrawal of Loan Proceeds 8 E. Detailed Cost Estimates by Financier 8 F. Detailed Cost Estimates by Year 9 G. Contract and Disbursement S-Curve 9 H. Fund Flow Diagram 10

V. FINANCIAL MANAGEMENT 11

A. Financial Management Assessment 11 B. Disbursement 11 C. Accounting 12 D. Auditing 12

VI. PROCUREMENT AND CONSULTING SERVICES 13

A. Advance Contracting and Retroactive Financing 13 B. Procurement of Goods, Works and Consulting Services 13 C. Procurement Plan 14 D. Consultant's Terms of Reference 20

VII. SAFEGUARDS 26

VIII. POVERTY, GENDER AND SOCIAL DIMENSIONS 30

IX. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION 31

A. Project Design and Monitoring Framework 31 B. Monitoring 36 C. Evaluation 36 D. Reporting 36

X. ANTICORRUPTION POLICY 37

XI. ACCOUNTABILITY MECHANISM 38

XII. RECORD OF PAM CHANGES 39

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Project Administration Manual Purpose and Process

1. The project administration manual (PAM) describes the essential administrative and management requirements to implement the project on time, within budget, and in accordance with Government and Asian Development Bank (ADB) policies and procedures. The PAM should include references to all available templates and instructions either through linkages to relevant URLs or directly incorporated in the PAM.

2. The State Committee for Water Economy (SCWE) and Armenia Water Sewerage Company (AWSC) are wholly responsible for the implementation of ADB financed projects, as agreed jointly between the borrower and ADB, and in accordance with Government and ADB‟s policies and procedures. ADB staff is responsible to support implementation including compliance by SCWE and AWSC of their obligations and responsibilities for project implementation in accordance with ADB‟s policies and procedures.

3. At Loan Negotiations the borrower and ADB shall agree to the PAM and ensure consistency with the Loan agreement. Such agreement shall be reflected in the minutes of the Loan Negotiations. In the event of any discrepancy or contradiction between the PAM and the Loan and/or Project Agreement, the provisions of the Loan and/or Project Agreement shall prevail.

4. After ADB Board approval of the project's report and recommendations of the President (RRP) changes

in implementation arrangements are subject to agreement and approval pursuant to relevant Government and ADB administrative procedures (including the Project Administration Instructions) and upon such approval they will be subsequently incorporated in the PAM.

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Abbreviations

ADB = Asian Development Bank AFS = audited financial statements AMU = Asset Management Unit ARE = assistant resident engineer ASRA = Auditing Standards of the Republic of

Armenia AWSC = Armenia Water Sewerage Company CRE = Chief Resident Engineer CQS = Consultant Qualification Selection EA = executing agency EARF = environmental assessment and

review framework EIA = environmental impact assessment EMP = environmental management plan ICB = international competitive bidding IA = implementing agency IAS = International Auditing Standards IEE = initial environmental examination LAR = land acquisition and resettlement MIS = Management information system NCB = national competitive bidding O&M = operations and maintenance PAM = project administration manual PCU = project coordination unit PMU = project management unit PPMS = project performance management

system QBS = quality based selection QCBS = quality- and cost based selection RE = resident engineer RF = resettlement framework RP = resettlement plan SCWE = State Committee for Water Economy SGIA = second generation imprest accounts SOE = statement of expenditure SPS = Safeguard Policy Statement SPRSS = summary poverty reduction and

social strategy TOR = terms of reference

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I. PROJECT DESCRIPTION

1. On the back of the likely successful implementation of the original project, the Government through the State Committee for Water Economy (SCWE) has requested ADB to support the funding of the new project and further support the Government‟s continued efforts in the rehabilitation and extension of the WSS systems across 10 subprojects and improvements in operational efficiency and financial management of Armenia Water and Sewerage Company (AWSC), a government-owned commercial company that is managed and operated through a management contract by an international water utility company, SAUR. 2. The new project (the Project) is included in the country operational business plan1 and it strongly supports the Government‟s objective of human development by providing better access to safe, reliable and sustainable water supply which will improve the lives of households in 18 towns and up to 92 villages in Armenia. A. Impact and Outcome

3. The Project‟s impacts and outcomes will be similar to the original project. It will improve public health and environment for households and other consumers in 18 towns and up to 92 villages2 through safe, reliable and sustainable water supply. It is expected that the government will continue to implement relevant institutional and legislative reforms to assist AWSC on its on-going efforts in enhancing management capacity and operational efficiency. 4. The Project will also support poverty reduction by (i) reducing the incidence of waterborne diseases and costs of medical care; (ii) improving the time poverty of women due to labor intensive housework such as water collection, which may allow them to participate more in social and economic activities; (iii) providing safer and more reliable water supply; and (iv) improving the quality of life of households in all the project towns and villages by improving their access to safe and sustainable drinking water. B. Outputs

5. Similar to the original project, the Project will fund two project components which include: (i) municipal infrastructure rehabilitation and improvement; and (ii) management improvement and development which include gender features. 6. Component A: Municipal Infrastructure and Rehabilitation and Improvement. This will address the rehabilitation and replacement of the existing water supply infrastructure. Works will include construction of about 600 km of new mains and pipe network to connect about 110,000 new and existing households, rehabilitation of about 5 pumping and about 3 chlorination stations, 1 water treatment plants, about 15 daily regulation reservoirs as well as installation of about 20,000 water meters to commercial and domestic consumers. Further, this component will include the re-designing of the water supply systems. 7. Component B: Management Improvement and Capacity Development. This will address further improvements in the operational and management efficiency of AWSC which will include: (i) increasing public awareness on municipal infrastructure rehabilitation and improvement actions. The public awareness campaign will be implemented by a combination of

1 ADB. 2011. Country Operations Business Plan: Armenia, 2012-2013. Manila.

2 The number of towns and villages may change subject to further detailed assessments.

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technical, public outreach, social, gender and safeguards measures, as well as media campaigns; (ii) strengthening the service contracts between the company and municipal governments on the use of locally owned distribution networks, and contracts between the company and communities taking a bulk water supply; (iii) developing disconnection policy for non-payers; and (iv) preparing strategy for AWSC‟s human resource development in improving staff training and development.

II. IMPLEMENTATION PLANS

A. Project Readiness Activities

Indicative Activities 2011 2012

Party Dec Jan Feb Mar Apr May

Advance contracting actions SCWE, CBD

Establish project implementation arrangements ADB, SCWE, CBD

ADB Board approval ADB

Loan signing ADB, MoF, MoE

Government legal opinion provided MoFE, MoE. MoJ

Government budget inclusion MoF

Loan effectiveness ADB, MoF, MoE

ADB = Asian Development Bank, CBD = Company Board of Directors, MOE=Ministry of Economy, MoF = Ministry of Finance, SCWE = State Committee for Water Economy.

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B. Overall Project Implementation Plan

Year No.

Year

Period Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

A Recruitment of Domestic Firm

Shortlisting 1

EOI 1

RFP 1

Evaluation 1

ADB Approval & Selection 1

Other

Loan Effectiveness 1

Update PIP 1

Prequalification of Contractors 1

B PART A: Infrastructure Rehabilitation and Upgrade

Detailed Engineering Design

First Group - 5 subprojects 1 1

Second Group - 5 subprojects 1 1

Prepartion of Bid Documents

First Group - 5 subprojects 1 1 1

Second Group - 5 subprojects 1 1 1

Bid Evaluation and Award of Contracts

First Group - 5 subprojects 1 1 1

Second Group - 5 subprojects 1 1 1

Implementation of Subprojects

First Group - 5 subprojects 1 1 1 1 1 1 1 1 1 1 1 1

Second Group - 5 subprojects 1 1 1 1 1 1 1 1 1 1 1 1

C PART B: Management Improvement and Development

Financial Management System Improvement 1 1 1 1 1 1 1 1 1 1 1 1 1

Operational Efficiency Improvement 1 1 1 1 1 1 1 1 1 1 1 1 1

Public Outreach Program 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Other Regulatory & Legal Improvements 1 1 1 1 1 1 1 1 1 1 1 1 1

Water Quality Monitoring & Rectification 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Data Collection and PPMS Updates 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

4

2015

5

20162012

1 2

2013

3

2014

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III. PROJECT MANAGEMENT ARRANGEMENTS

A. Project Implementation Organizations – Roles and Responsibilities

Project implementation

organizations Management Roles and Responsibilities

Executing Agency (State Committee for Water Economy (SCWE)

Responsible for oversight and administration Hold monthly meetings with AWSC to review progress Convene regular meetings in consultation with the

Company Board of Directors and AWSC Facilitate the approval procedures within the

Government Implementing Agency

(Armenia Water Sewerage Company)

Oversee accounting and auditing Oversee implementation and management Secure technical and environmental approvals for all

civil works prior to bidding Ensure compliance with covenants Invite bids, evaluate and prepare bid evaluation reports

for ADB‟s approval Award contracts Oversee contractors‟ works Prepare and submit quarterly progress reports

Asian Development Bank

(ADB)

Ensure technical and financial support and oversight according to the financing and loan agreement

B. Key Persons Involved in Implementation

Executing Agency

Mr. Andranik Adreasyan Chairman, SCWE Address : 13 a Vardanants Str. 375010, Yerevan, Armenia Facsimile : (374 10) 540603 Telephone : (374 10) 540733 E-Mail Address: SCWE@netsys.am

ADB Urban Development and Water Division (CWUW)

Anand Chiplunkar Director, CWUW Tel. No. (632) 6325802 Email – achiplunkar@adb.org Adrian Torres Senior Finance Specialist, CWUW Tel. No. (632) 6321831 Email – atorres@adb.org

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C. Project Organization Structure

PROJECT IMPLEMENTATION FRAMEWORK

COMPANY BOARD OF DIRECTORS

State Committee for Water Economy (Chair) State Committee for Water Economy (Deputy Chair) Ministry of Finance Ministry of Nature Protection Ministry of Economy AWSC NGO

Note: Company‟s Board of Directors” or “CBD” means a body consisting of stakeholders from the

various ministries, chaired by the chairman of State Committee of Water Systems, established pursuant to

a Government Decree No.1693-N (November 3, 2003), and responsible for Project management and

supervision

State Committee for Water

Economy

Project Coordination Unit

Armenian Water and Sewerage Company

Project Management Unit

Municipalities and Local Administrations

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IV. COSTS AND FINANCING

A. Project Investment Plan

($ million) Item Original

Project New Project (the Project)

Total Amount

A. Base Cost 1. Civil Works 38.2 31.6

69.8

2. Equipment and Materials Included* 2.0 2.0 3. Incremental Cost (including

Project Management & Opex) Included* 1.2

b 1.2

4. Detailed Design and Supervision Included* 2.2 2.2 5. Project Technical & Financial

Audits Included* 0.2 0.2

Subtotal (A) 38.2 37.2 75.4

B. Others 1. Physical & Price Contingency 5.6 3.5 9.1 2. Taxes & Duties included 8.2 8.2 Subtotal (B) 5.6 8.2 17.3

C. Financing Charges During Implementation 1.2

1.1

a

2.3

Total (A+B+C) 45.0 50.0 95.0 * Items are included in the Civil Works.

a Interest during construction computed based on ADF rates at 1% per annum for 8 years.

b Includes salaries of existing PCU (2 staff) and PMU (12 staff) personnel which is approximately $160,000 per

annum. Source: Asian Development Bank estimates 8. The Project is estimated to cost $50 million and is expected to be completed within 5 years from implementation commencement. The Government has requested a loan in various currencies equivalent to SDR 25,886,000 from ADB‟s Special Funds resources to help finance the Project. The loan will have a 32-year term, including a grace period of 8 years, an interest rate of 1.0% per annum during the grace period and 1.5% per annum thereafter, and such other terms and conditions set forth in the draft loan and project agreements. The financing plan is in Table 2. B. Financing Plan

($ million) Source Original

Project New Project Total Share of Total (%)

Asian Development Bank 36.0 40.0 76.0 80.0 Government 9.0 10.0 19.0 20.0

Total 45.0 50.0 95.0 100.0 Source: Asian Development Bank estimates

9. The Government will relend the loan to AWSC under a subsidiary loan agreement on the same terms and conditions as the ADB loan. AWSC will bear the foreign exchange risk and the Government will finance all the taxes and duties.

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C. Detailed Cost Estimates by Expenditure Category

($ million)

Component Total Cost

a

Percent

A. Infrastructure Investments

1. Civil Works 31.6 63%

1.1 WSS Infrastructure Improvements 31.6

2. Goods 2.0 4%

2.1 Backhoe Loaders 0.8 2%

2.2 Pumps, Pipelines, Vales, Appurtenances, Water Meters 1.2 3%

3. Incremental Cost (including project management & opex) 1.2 2%

4. Detailed Design and Supervision 2.2 4%

5. Project Technical & Financial Audits 0.2 0%

Subtotal (A) 37.2 74%

B. Others

1. Taxes & Duties 8.2 16%

2. Contingency 3.5 * 7%

Subtotal (B) 11.72 23%

C. Financing Charges During Implementation

1. Interest During Construction 1.1 2%

Subtotal (C) 1.1 2%

Total Cost (A+B+C) 50.0 100.0% a Values have been rounded off.

* This amount includes Government contribution of about $0.2 million. Source: Asian Development Bank estimates

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D. Allocation and Withdrawal of Loan Proceeds

* excluding taxes and duties Source: Asian Development Bank estimates E. Detailed Cost Estimates by Financier

Component Total Cost

a

% ADB Government

Amount % Amount %

A. Infrastructure Investments

1. Civil Works 31.6

1.1 WSS Infrastructure Improvements 31.6 63%

30.0 95% 1.6 5%

2. Goods 2.0 4%

2.1 Backhoe Loaders 0.8 2% 0.8 100% 0.0 0%

2.2 Pumps, Pipelines, Valves, Water Meters, Appurtenances 1.2 3%

1.2 100% 0.0 0%

3. Incremental Cost (including project management & opex) 1.2 2%

1.2 100% 0.0 0%

4. Detailed Design and Supervision 2.2 4% 2.2 100% 0.0 0%

5. Project Technical & Financial Audits 0.2 0%

0.2 100% 0.0 0%

B. Others

1. Taxes & Duties 8.2 16% 0.0 0% 8.2 100%

2. Contingency 3.5 7% 3.3 95% 0.2 5%

Subtotal (A+ B) 48.9 98%

38.9

78%

10.0

20%

C. Financing Charges During Implementation

1. Interest During Construction 1.1 2% 1.1 100% 0.0 0%

Subtotal (C) 1.1 2 %

1.1

100%

0.0

0%

Total Cost

(A+B+C) 50.0 100.0%

40.0

80%

10.0

20%

a Values have been rounded off.

Source: Asian Development Bank estimates

Number Category Total Amount Allocated for ADB

Financing ($)

ADB Financing Percentage and Basis for Withdrawal

from the Loan Account

1 Civil Works (including Materials & Equipment)

30,000,000 95% of total expenditure claimed*

2 Goods 2,000,000 100% of total expenditure claimed*

3 Incremental Cost (including project management & consulting services)

3,600,00 100% of total expenditure claimed*

4 Interest During Construction 1,100,000 -

5 Unallocated 3,330,000 -

Total 40,000,000

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F. Detailed Cost Estimates by Year

Year 2012 2013 2014 2015 2016

A. Infrastructure Investments

1. Civil Works 0.5 8.0 9.1 8.0 6.0

2. Goods 0.1 1.9 0.0 0.0 0.0

3. Incremental Cost (including project management & opex)

0.1 0.3 0.3 0.3 0.2

4. Detailed Design & Supervision & Audits

0.4 0.6 0.6 0.5 0.3

Subtotal A 1.1 10.8 10.0 8.8 6.5

B. Contingency

1. Contingency 0.2 0.8 0.9 0.8 0.8

2. Taxes & Duties 0.1 2.0 2.1 2.0 2.0

Subtotal B 0.3 2.8 3.0 2.8 2.6

B. Financing Charges During Implementation

1. Financing Charges 0.1 0.1 0.2 0.3 0.4

Subtotal C 0.1 0.1 0.2 0.3 0.4

Total (A+B+C) 1.5 13.7 13.2 11.9 9.7

Source: Asian Development Bank estimates

G. Contract and Disbursement Profile

-

10.00

20.00

30.00

40.00

50.00

60.00

2,012 2,013 2,014 2,015 2,016

Tota

l Co

st,

$ m

illio

n

Indicative Project Expenditure Profile(cumulative, $ million)

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H. Funds Flow

a Armenian Water and Sewerage Company (AWSC) will establish a new imprest account (in relation to the new

project) to receive loan proceeds direct from the Asian Development Bank. "AWSC will use the imprest fund for the project implementation including staff salary of PMU and PCU.

Ministry of Finance

Armenian Water and Sewerage

Company (PMU)

State Committee of Water

Systems (PCU)

Asian Development Bank

Contractors, consultants/

suppliers/

Imprest

Account

Funds flow

Documents flow

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V. FINANCIAL MANAGEMENT

A. Financial Management Assessment

10. The purpose of the financial management assessment (FMA) is to analyze the financial management capacity of (i) the State Committee for Water Economy (SCWE), the executing agency, and (ii) the Armenian Water and Sewerage Company (AWSC), the implementing agency for the proposed Water Supply and Sanitation Sector Project – the new project. AWSC satisfies ADB‟s financial management requirements for implementing agencies and has the financial management capability to (i) record required financial transactions and balances; (ii) provide regular and reliable financial statements and monitoring reports; (iii) safeguard the financial assets; and (iv) submit required financial documents for auditing arrangements that is acceptable to ADB. 11. Overall, the FMA rated SCWE (executing agency) and its financial management, reporting, and monitoring systems „Satisfactory‟. AWSC is adequately staffed with efficient and experienced personnel. Both the project management unit (PMU) and project coordination unit (PCU) will be staffed with qualified personnel with knowledge of and experience in International Auditing Standards (IAS) and Accounting Standards of Republic of Armenia (ASRA). PCU and PMU staff will undergo additional training in ADB standards and requirements for project financial management and reporting. 12. AWSC financial management system is in place and is applied in the agency‟s project operations. The financial system provides a reasonable and sufficient basis for determining the state of finances at the implementing agency and PMU levels. Financial statements and other reports satisfy ADB, SCWE and Ministry of Finance standards. The fund flows from ADB and local sources are satisfactory. The project special accounts and fund flow procedures are established, and will be adequately monitored and controlled by the PCU, SCWE and MOF. 13. The project external audit arrangements are satisfactory and follow international auditing standards. The AWSC auditor applies ASRA standards that have been designed in accordance with IAS. B. Disbursement

14. The loan proceeds will be disbursed in accordance with ADB‟s Loan Disbursement Handbook (2007, as amended from time to time). The PMU of AWSC, as implementing agency, will establish, maintain and manage a separate imprest account after loan effectiveness. The advance to the imprest account will not exceed the estimated eligible expenditure for the next 6 months, or 10% of the loan amount, whichever is lower. The statement of expenditures procedure may be used for reimbursement of eligible expenditures and liquidation of advance provided into the imprest account; any individual payment to be reimbursed or liquidated under the procedure will not exceed the equivalent of $100,000. 15. Pursuant to ADB's Safeguard Policy Statement (2009) (SPS),3 ADB funds may not be applied to the activities described on the ADB Prohibited Investment Activities List set forth at Appendix 5 of the SPS. All financial institutions will ensure that their investments are in

3 Available at: http://www.adb.org/Documents/Policies/Safeguards/Safeguard-Policy-Statement-June2009.pdf

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compliance with applicable national laws and regulations and will apply the prohibited investment activities list (Appendix 5) to subprojects financed by ADB. 16. Before the submission of the first withdrawal application, SCWE should submit to ADB sufficient evidence of the authority of the person(s) who will sign the withdrawal applications on behalf of the borrower, together with the authenticated specimen signatures of each authorized person. The minimum value per withdrawal application is US$100,000, unless otherwise approved by ADB. SCWE is to consolidate claims to meet this limit for reimbursement and imprest account claims. Withdrawal applications and supporting documents will demonstrate, among other things that the goods, and/or services were produced in or from ADB members, and are eligible for ADB financing. C. Accounting

17. The AWSC will maintain separate project accounts and records by funding source for all expenditures incurred on the Project. Project accounts will follow international accounting principles and practices or those prescribed by the Government's accounting laws and regulations.4 D. Auditing

18. The AWSC will provide the detailed consolidated project accounts to be audited in accordance with International Standards on Auditing and/or in accordance with the Government's audit regulations by an auditor acceptable to ADB. The audited accounts will be submitted in the English language to ADB within 6 months of the end of the fiscal year by the executing agency. The annual audit report will include a separate audit opinion on the use of the imprest accounts, and the statement of expenditures (SOE) procedures. The Government and AWSC/SCWE have been made aware of ADB‟s policy on delayed submission, and the requirements for satisfactory and acceptable quality of the audited accounts. ADB reserves the right to verify the project's financial accounts to confirm that the share of ADB‟s financing is used in accordance with ADB‟s policies and procedures. For revenue generating projects only, ADB requires audited financial statements (AFS) for each executing and/or implementation agency associated with the project.

4 Armenia. Accounting Standards of Republic of Armenia. 2003. Yerevan.

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VI. PROCUREMENT AND CONSULTING SERVICES

A. Advance Contracting and Retroactive Financing

19. All advance contracting and retroactive financing will be undertaken in conformity with ADB‟s Procurement Guidelines (February 2010, as amended from time to time) (ADB‟s Procurement Guidelines)5 and ADB‟s Guidelines on the Use of Consultants (2010, as amended from time to time) (ADB‟s Guidelines on the Use of Consultants).6 The issuance of invitations to bid under advance contracting and retroactive financing will be subject to ADB approval. The borrower, SCWE and AWSC have been advised that approval of advance contracting and retroactive financing does not commit ADB to finance the Project. 20. Advance contracting and retroactive financing. In order to facilitate the preparation of the Project, AWSC has requested to undertake advance contracting in accordance with ADB‟s Procurement Guidelines7 and Guidelines on the Use of Consultants8 to seek interest and pre-select consultants that will undertake the detailed design, take advance actions for civil works contracts bidding. Once the loan becomes effective, up to 20% of the loan may be used to finance eligible expenditures incurred, pursuant to advance contracting and retroactive financing, during the period not exceeding 12 months prior to signing the Loan Agreement. Any concurrence by ADB with the procedures, documentation, or proposal for award of contract does not commit ADB for finance any such expenditures or the Project. B. Procurement of Goods, Works and Consulting Services

21. Withdrawals from the Loan Account in respect of goods, works and consulting services shall be made only on account of expenditures relating to goods which are produced in and supplied from and consulting services which are supplied from such member countries of ADB as shall have been specified by ADB from time to time as eligible sources for procurement, and goods, works and consulting services which meet such other eligibility requirements as shall have been specified by ADB from time to time. 22. To support project implementation and build the long-term capacity of SCWE and AWSC, which are responsible for the planning and delivery of WSS services, a firm will be recruited to provide 72 international9 person-months and 474 national person-months of inputs for detailed engineering design and construction supervision. 23. Selection and engagement of consulting services will be in accordance with the quality and cost-based selection (QCBS) and Consultant Qualification Selection (CQS) method and full technical proposal under ADB‟s Guidelines on the Use of Consultants (2010, as amended from time to time).

5 Available at: http://www.adb.org/Documents/Guidelines/Procurement/Guidelines-Procurement.pdf

6 Available at: http://www.adb.org/Documents/Guidelines/Consulting/Guidelines-Consultants.pdf

7 ADB. 2010. Procurement Guidelines. Manila.

8 ADB. 2010. Guidelines on the Use of Consultants by Asian Development Bank and Its Borrowers. Manila.

9 Local experts will also be encouraged to bid on these specialist roles.

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C. Procurement Plan

Basic Data

Project Name: Water Supply & Sanitation Sector Project Country: Armenia Executing Agency: State Committee for Water

Economy Loan Amount: $40.0 million Loan (Grant) Number: P45299 Date of First Procurement Plan: IQ approval date}: Date of this Procurement Plan:

1. Process Thresholds, Review and 18-Month Procurement Plan

a. Project Procurement Thresholds

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

Procurement of Goods and Works

Method Threshold

International Competitive Bidding (ICB) for Works Above $1,000,000 International Competitive Bidding for Goods Above $500,000 National Competitive Bidding (NCB) for Works Below or equal to $1,000,000 National Competitive Bidding for Goods Below or equal to $500,000 Shopping for Works Below $100,000 Shopping for Goods Below $100,000

b. ADB Prior or Post Review

25. Except as ADB may otherwise agree, the following prior or post review requirements apply to the various procurement and consultant recruitment methods used for the project.

Procurement Method Prior or Post Comments

Procurement of Goods and Works

ICB Works Prior ICB Goods Prior NCB Works Prior/Post Prior review applies to the

procurement of the first NCB contract by the project management unit. If the first contract is procured satisfactorily, thereafter, post review

NCB Goods Prior/Post

Shopping for Works Post Shopping for Goods Post

Recruitment of Consulting Firms

Quality- and Cost-Based Selection (QCBS) Prior Quality-and cost-based selection based on 80:20 quality-cost weighting. Applied in accordance with Guidelines on the Use of Consultants (2010, as

amended from time to time) Consultant Qualification Selection (CQS) Prior

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

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

General Description

Contract Value in $

million

Procurement Method

a Prequalification

of Bidders (y/n)

Advertisement Date

(quarter/year) Comments ICB NCB

Improvement of Ararat Region Settl. WSS

5.8 3 2 N

N

N

N

N

N

N

N

N

N

To be advertised starting from July 2012 until Jan 2015 To be advertised starting from July 2012 until Jan 2015 To be advertised starting from July 2012 until Jan 2015 To be advertised starting from July 2012 until Jan 2015 To be advertised starting from July 2012 until Jan 2015 To be advertised starting from July 2012 until Jan 2015

Improvement of Amavir Region Settl. WSS

5.4

3

2

Improvement of Shirak Region Settl. WSS

3.0 1 2

Improvement of Lori Region Settl. WSS

5.2 3 2

Improvement of Geharqunik Region Settl. WSS

6.0 3 3

Improvement of Tavush Region Settl. WSS

2.6 1 2

Improvement of Syunik Region Settl. WSS

3.1 2 1

Improvement of Vayots-Dzor Region Settl. WSS

1.4 0 2

Improvement of Aragatsotn Region Settl. WSS

2.6 0 3

Improvement of Kotayq Region Settl. WSS

3.2 2 1

Goods/Procurement of pipes, valves, fittings and water meters and pumps

1.4

2 1 N To be advertised starting from December 2012 until March 2013

For emergency rehabilitation of 50 bulk water meters, 1000 ultrasonic network water meters, 20 pumps of different parameters, 20 floating valves and 94km of PE pipes to be procured in Q3-Q4 2013

Total 39.4 20 ICB/ 21 NCB packages

a All civil works packages are indicative. Value and number of individual packages will be finalized upon completion of detailed

design.

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

27. The following table lists consulting services contracts for which procurement activity is either ongoing or expected to commence within the next 18 months.

General Description

Contract Value in $

million Recruitment

Method1

Advertisement Date

(quarter/year)

International or National

Assignment Comments

Consulting Firm for: Technical Design, Construction supervision, Capacity Building and Public Awareness Campaign

2.6 QCBS 80:20

Q1 2012 National/International To be awarded in May 2012

Technical and Financial Audit for 2012-2016

0.2 CQS Q2 2013 To be awarded in May 2013

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

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

General Description

Value of Contracts in $ million

(cumulative) Number of Contracts

Procurement / Recruitment

Method Comments

Goods/Procurement of Backhoe Loaders

1.0

1 ICB In Q1-Q2 2013 additional backhoe loader to be procured to improve AWSC‟s operational capacity

Goods 0.1

1 Shopping Computer hardware and accounting software to be awarded in Q2 2013

Minor Goods 0.02

7 Shopping*

Office furniture and equipment for PMU/PCU to be awarded from Q1 2013 to Q4 2014

* Items below $10,000, may be purchased directly from the supplier (as per PAI 3.04)

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2. Indicative List of Packages Required Under the Project

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

General Description

Estimated Value in $million

(cumulative)

Estimated Number of Contracts

Procurement Method

Domestic Preference Applicable Comments

Civil Works

37.9 38 ICB/NCB No 18 ICB/ 20 NCB contracts

Goods/Procurement of Backhoe Loaders

1.0 1 ICB No

Goods/Procurement of Pipes, Valves, Fittings and Water Meters and Pumps

1.4 3 ICB/NCB No 2 ICB/ 1 NCB contracts

Goods

0.1 1 Shopping No Computer hardware and accounting software to be awarded in Q2 2013

Minor Goods

0.02 7 Shopping No Office furniture for PMU/PCU to be awarded from Q1 2013 to Q4 2014

General Description

Estimated Value

(cumulative)

Estimated Number of Contracts

Recruitment Method

Type of Proposal Comments

Technical design and construction supervision

2.6 1 QCBS FTP Technical and financial weights: 80:20. To be awarded in May 2012

Technical and Financial Auditor

0.2 1 CQS STP To undertake audits during implementation (2012-2016) to be hired in May 2013

3. National Competitive Bidding

a. General

30. The procedures to be followed for national competitive bidding shall be the open tender method (including the two-stage where appropriate) either as (i) set forth in the Law on

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Procurements of 22 December 2010 with the clarifications and modifications described in the following paragraphs required for compliance with the provisions of the ADB, Procurement Guidelines (“Guidelines”) or (ii) in accordance with ADB‟s Standard Bidding Documents.

b. Eligibility

31. The eligibility of bidders shall be as defined under section I of the Guidelines; accordingly, no bidder or potential bidder should be declared ineligible for reasons other than those provided in section I of the Guidelines. Bidders must be nationals of member countries of ADB, and offered goods, services, and works must be produced in and supplied from member countries of ADB.

c. Prequalification

32. Normally, post-qualification shall be used, unless prequalification is explicitly provided for in the Loan Agreement/Procurement Plan. Domestic and Foreign Contractors shall be allowed to participate in bid exercises using post-qualification procedure. In case prequalification of contractors is stipulated in the Loan Agreement/Procurement Plan, domestic and foreign contractors shall be allowed to participate in the prequalification exercise.

d. Registration and Licensing

(i) Bidding shall not be restricted to pre-registered/licensed firms.

(ii) Where registration or licensing is required, bidders (i) shall be allowed a reasonable time to complete the registration or licensing process; and (ii) shall not be denied registration/licensing for reasons unrelated to their capability and resources to successfully perform the contract, which shall be verified through post-qualification.

(iii) Foreign bidders shall not be precluded from bidding. If a registration or licensing

process is required, a foreign bidder declared the lowest evaluated bidder shall be given a reasonable opportunity to register or to obtain a license.

e. Bidding Period

33. The minimum bidding period is twenty-eight (28) days prior to the deadline for the submission of bids.

f. Bidding Documents

34. Procuring entities should use standard bidding documents for the procurement of goods, works and services acceptable to (ADB).

g. Preferences

35. No domestic preference shall be given for domestic bidders and for domestically manufactured goods.

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h. Advertising

36. Invitations to bid shall be advertised in at least one widely circulated national daily newspaper or freely accessible, nationally-known website allowing a minimum of twenty-eight (28) days for the preparation and submission of bids. Bidding of NCB contracts estimated at US$500,000 equivalent or more for goods and related services or US$1,000,000 equivalent or more for civil works shall be advertised on ADB‟s website via the posting of the Procurement Plan.

i. Securities

(i) Bid Security (tender security)

Where required, bid security shall be in the form of a bank guarantee from a reputable bank.

(ii) Performance Security (contract execution security)

Performance security shall be provided within twenty-eight (28) days of the notification of contract award.

j. Bid Opening and Bid Evaluation

(i) Bids shall be opened in public.

(ii) No bid shall be declared invalid/rejected at the time of bid opening. (iii) Minutes/Record of Bid Opening shall be provided to all bidders. (iv) Evaluation of bids shall be made in strict adherence to the criteria declared in the

bidding documents and contracts shall be awarded to the lowest evaluated bidder. (v) Bidders shall not be eliminated from detailed evaluation on the basis of minor,

non-substantial deviations. (vi) No bidder shall be rejected on the basis of a comparison with the employer's

estimate and budget ceiling without ADB‟s prior concurrence. (vii) A contract shall be awarded to the technically responsive bidder that offers the

lowest evaluated price, and meets the qualifying requirements. Negotiations shall not be permitted.

(viii) Price verification shall not be applied.

k. Rejection of All Bids and Rebidding

37. Bids shall not be rejected and new bids solicited without ADB‟s prior concurrence. Bids shall not be declared invalid because of procedural delays on the part of executing agencies without prior ADB‟s approval.

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l. Participation by Government-owned enterprises

38. Government-owned enterprises in the Republic of Armenia shall be eligible to participate as bidders only if they can establish that they are legally and financially autonomous, operate under commercial law and are not a dependent agency of the contracting authority/executing agency/implementing agency. Furthermore, they will be subject to the same bid and performance security requirements as other bidders.

m. Right to Inspect/Audit

39. A provision shall be included in all NCB works and goods contracts financed by ADB requiring suppliers and contractors to permit ADB to inspect their accounts and records and other documents relating to the bid submission and the performance of the contract, and to have them audited by auditors appointed by ADB.

n. Fraud and corruption

(i) The Borrower shall reject a proposal for award if it determines that the bidder recommended for award has, directly or through an agent, engaged in corrupt, fraudulent, collusive, or coercive practices in competing for the contract in question.

(ii) The Bank (ADB) will declare a firm or individual ineligible, either indefinitely or for

a stated period, to be awarded a contract financed by ADB, if it at any time determines that the firm or individual has, directly or through an agent, engaged in corrupt, fraudulent, collusive, or coercive practices in competing for, or in executing, ADB-financed contract.

o. Joint Venture and Estimated Contract Prices

(i) Joint venture partners shall be jointly and severally liable for their obligations. (ii) Estimated contract prices shall not be advertised.

p. Disclosure of Decision on Contract Awards

40. At the same time that notification on award of contract is given to the successful bidder, the results of bid evaluation shall be published in a local newspaper, or a well-known freely accessible website identifying the bid and lot numbers and providing information on (i) name of each Bidder who submitted a Bid, (ii) bid prices as read out at bid opening; (iii) name of bidders whose bids were rejected and the reasons for their rejection, and (iv) name of the winning Bidder, and the price it offered, as well as duration and summary scope of the contract awarded. The executing agency/implementing agency/contracting authority shall respond in writing to unsuccessful bidders who seek explanations on the grounds on which their bids are not selected.

4. Terms of Reference for Consulting Firm for conducting Engineering

Design, Construction Supervision, Capacity Building and Public Awareness Campaign

41. Scope of Work. The Consulting Firm will (a) carry out preliminary designs, detailed designs and construction supervision of Part A “Municipal Infrastructure Rehabilitation and Improvement” of the Contract, and will support the PMU preparation of bidding documents and

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evaluation of bids for civil works contracts, as well as (b) undertake tasks included under Part B of the Contract “Capacity Building and Public Awareness Campaign”. These are explained in the succeeding sections.

a. Part A: Municipal Infrastructure Rehabilitation and Improvement

42. This task comprises of: (i) rehabilitation and extension of distribution systems; (ii)rehabilitation and extension of mains; (iii)rehabilitation and reconstruction of the water Daily Regulation Reservoirs (DDR), intakes, treatment plants, pumping and chlorination station . This will address to rehabilitation and replacement of the deteriorated existing water supply infrastructure by reducing leakage; improving supply pressure; constructing new mains connect new consumers particularly poorly served low-income communities; installing water meters to all bulk and domestic consumers, and repairing/remodeling water intakes, DDR‟s, pumps, flow meters, valves, and treatment units. 43. By redesigning the overall WSS systems, this component also addresses the existing problems of the systems being over and/or under designed. Further, this component includes updating of consumer databases, conversion of illegal connections to registered accounts, and monitoring of water quality.

b. Part B: Capacity Building and Public Awareness Campaign

44. This task addresses the core issues, their monitoring and challenges being faced by the AWSC in efficiently managing the WSS systems and Public Awareness on the Municipal Infrastructure Rehabilitation and Improvement actions. The Capacity Building and Public Awareness Campaign will be implemented by a combination of Technical, Public Outreach, Social, Gender, Environmental and Safeguards measures, as well as Media Campaigns. All actions including the Video records should be conducted in 4 stages: before the Engineering Design, during Engineering Design/before Construction Works, during the Construction Works and after the Completion of the Construction Works. This task will target the AWSC Sectors, Contractors, Municipalities and Communities and should be conducted under the Supervision of the AWSC‟s Public Relations Department.

45. Under this task, AWSC will also receive assistance to strengthen the service contracts between the company and municipal governments on the use of locally owned distribution networks, and between the company and communities taking a bulk water supply, to better define the relationship between the parties. A disconnection policy for non-payers will be framed to formulate proposals for empowering AWSC to implement this policy. Together with this an incentive plan would also be prepared for the regular payers. Strategy for AWSC‟s human resource development would be furnished which will include rightsizing and training of staff, and improvements in the business rules.

Estimated Number of Professional and Support Staff Group 1: Feasibility, Preliminary/Detailed

Design, and Construction Supervision International

Staff* National

Staff Support Staff

(person-months)

Team Leader/WSS Specialist 24

Deputy Team Leader/ WSS Specialist 48

WSS Engineer-I 24

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Group 1: Feasibility, Preliminary/Detailed Design, and Construction Supervision

International Staff*

National Staff

Support Staff (person-months)

WSS Engineer-II 24

WSS Engineer-III 24

WSS Engineer-IV 24

WSS Engineer-V 24

Engineer Geologist 24

Lawyer/Civil Works Contracts Management 24

Environment Specialist 36

Financial Analyst/Economist 24

Procurement Specialist 24

Structural Engineer 18

Quantity Surveyor 24

Construction Supervision Specialist for Civil Works/ Chief CSS Engineer

24

Construction Supervision Specialist-I for Civil Works

48

Construction Supervision Specialist-II for Civil Works

48

Subtotal (1)

72

414

Group 2. Capacity Building and Public Awareness Campaign

Public Outreach/Community Management/PR Specialist

30

Sociologist/Gender Development Specialist 30

Subtotal (2)

60

Support Staff

Technical Support Staff for Key Experts 600

Administrative Support Staff 320

Grand Total 72

474

920

* Expert national staff shall be encouraged to bid for these specialist roles.

46. Consulting Firm Consultants Tasks (Group 1). The succeeding section outlines the tasks of Group 1 Consultants - Feasibility, Preliminary/Detailed Design, and Construction Supervision

c. Team Leader / WSS Specialist (24 international person-months)

47. The Team Leader will take the overall responsibility for the completion of all activities envisaged under the Project and submission of all reports in accordance with the Terms of Reference (TOR). The person will prepare a work plan for each individual and supervise all field investigations and studies, carry out the quality assurance of all the reports submitted to the Client and co-ordinate the work of all the team members and ensure the active involvement of various stakeholders during the currency of Project. The Team Leader would ensure that the requirements of the TOR for each specialty are fulfilled in a timely manner. The Team Leader in this regard will fix various performance targets for the team ensuring both the progress of work and the quality of submission. The Team Leader will also represent the Team in all matters including meetings with Clients, stakeholders and Government representatives. The person will

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coordinate the preparation of the monthly progress reports & submit it to the Client. The person will also ensure that all the Investigations and surveys needed for the detailed design of WSS are initiated and completed in time, so that the results of the same can be properly incorporated for the preparation of the feasibility reports, preliminary/detailed design and tender documents of various services. The person will provide engineering input in identification, planning and design of subprojects by ensuring that the subprojects are evaluated precisely in accordance with the agreed selection criteria.

d. Deputy Team Leader/ WSS Specialist (48 national person-months)

48. The Deputy Team Leader will support the Team Leader in all activities envisaged under the Project and preparation of all reports in accordance with the Terms of Reference (TOR). The person will assist in preparation of a work plan for each individual, carry out the quality assurance of all the reports submitted to the Client and assist the Team Leader in coordination of the work of all the team members during the implementation of Project. The person will prepare the monthly progress reports & all kind of the references and documentation related to the Project, required by PMU and PCU.

e. Water Supply and Sewerage Engineers (24 international person-months; 96 national person-months)

49. Water Supply and Sewerage Engineers, under the supervision and assistance of the team leader, field inspectors and sociologist will complete field surveys for subproject identification as per subproject selection criteria. For the selected subprojects, the consultants will first review existing designs, undertake integrated planning and designs, following their technical viability, undertake detailed designs and prepare construction drawings and tender documents for the selected subprojects of WSS components. The Water Supply and Sewerage Engineers will also review the overall quality of water supplied to each subproject based on the water quality monitoring surveys carried out under the Project/previous work done by the concerned agencies, and build suitable remedial measures into the project component design wherever applicable. For low income and poor/slum areas, the need for any special/economical designs based on community participation approach would also be considered whenever found necessary and appropriate.

f. Engineer Geologist (24 national person-months)

50. The consultant during the Detailed Design preparation will prepare the conclusions on the geological conditions of the distribution network tranches soil bases. According to those conclusions the engineering estimates and the Bill of Quantities will be elaborated. He will be responsible for the conducting of all kind of changes and documents preparation on the actual soil categories during the construction implementation.

g. Lawyer/Civil Works Contracts management (24 national person-months)

51. The consultant will be responsible for the preparation of all relevant legal documentation, including changes, addendums and modifications to contract.

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h. Environmental/Safeguard Specialist, (36 national person-months)

52. The Environmental Specialist will carry out the initial environmental examination (IEE) of all subprojects in accordance with ADB‟s Safeguard Policy Statement (2009), and Armenia Environmental Guidelines, and accordingly prepare the Environmental Management Plans (EMPs) to monitor the subprojects both at the design and implementation stages. The environmental mitigation and monitoring measures should ensure that (a) any adverse environmental impacts are minimized by the mitigating measures and monitoring program detailed in the environmental management plan (EMP) in the IEE; (b) implementation of the EMP and any violation of environmental standards are reported to ADB (c) EMP is incorporated in the bidding documents. The Specialist will also be responsible for the Safeguards issues during construction and EMP‟s proper implementation.

i. Financial Analyst/Economist (24 national person-months)

53. Undertake the economic and financial analyses of the subproject in accordance with the related ADB Guidelines and agreed subproject selection criteria. The Consultants carry out the water demand projections and estimate the benefits of the subprojects conducting risk analysis, based on variability in raw water supply, identify design uncertainties and key parameters or assumptions, their plausible range of variability, calculate switching values and calculate FIRR and EIRR rates for each Subproject during the Final Design preparation.

j. Procurement Specialist (24 national person-months)

54. The procurement specialist will assist the team in preparation various contract packages, assist the ASWC in preparing bid invitation notices, bid documents, bid evaluation reports in line with the ADB procurement guidelines, and also assist AWSC in resolving all matters during the execution of contracts.

k. Structural Engineer (18 national person-months)

55. The Structural Engineer will prepare the detailed design, BOQ's, technical specifications and engineering drawings for any structural component of the Project including the water tanks, pump houses, any support requirements for the proposed pipelines and sewer, or any protection works etc. The consultants will work in close association with the water supply and sewerage engineers for a safe and appropriate design of any major water supply/sewerage pipeline foundations in the congested urban areas.

l. Quantity Surveyor (24 national person-months)

56. The consultant will help the design engineers in computing and preparing the bill of quantities under each contract.

m. Construction Supervision Specialist for Civil Works/ Chief CSS Engineer (24 international person-months)

57. The Chief CSS Engineer will be responsible for detailed construction supervision of all the project works, from the initiation to completion stage in the Water Supply, including but not limited to the installation of proposed water supply distribution lines/repair of pipelines, activation of overhead reservoirs, repair of existing RCC tanks, repair and refurbishment/replacement of tubewells. The person will make sure that with the help of his Resident Engineer (RE), Assistant

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Resident Engineers (AREs) and Supervisor/Inspectors at site, the technical specifications provided in the tender documents / tender requirements as laid out at the detailed design / tender awarding stage are fully complied at site including strict progress reporting/monitoring and conflict resolutions for all the on-going works. 58. The person will provide necessary guidance/supervision to the Contractor(s), so that all works carried out at site, are of proper quality and workmanship & all necessary precautions for public safety/environmental protection are being observed by the contracting firm (The construction activity will be planned in such a way so as to cause minimum inconvenience to the public, including forward planning/co-ordination with other public sector agencies/utility departments for protection/safeguarding the existing utilities at site). 59. With the help of his supervisory staff, he will ensure a smooth running of the various construction works, bringing any unwarranted delays to the notice of concerned authorities for necessary corrective action. He will also prepare cases for variation orders, if absolutely necessary, providing necessary justifications, wherever required & process/recommend contractor‟s bill for payment to the Client after getting due measurements done through his staff/workers in the field. 60. At the end of the Project, he will be responsible for final closure of the Project/submissions including submission of as built drawings etc as laid out in the Contract.

n. Construction Supervision Specialists for Civil Works (96 national person-months)

61. The above supervision staff will assist the Chief CS Engineer (CSE) in the performance of his duties at different sites/works & ensuring the quality / progress of work for which a detailed job description for each category of staff / staff member will be developed & issued by the CCSE according to the type & nature of work involved. 62. Consulting Firm Consultants Tasks (Group 2). The succeeding section outlines the tasks of Group 2 Consultants - Capacity Building and Public Awareness Campaign.

o. Public Outreach/Community Management/PR Specialist (30 national person-months)

63. The specialist will design and implement a public outreach program for AWSC including preparation of all materials and media campaign. The consultant will mobilize the communities for participation in the project planning and design, and will build awareness of the subproject benefits, and disseminate all the information during all stages of the project. The public awareness will target women‟s engagement as promoters in the public awareness program on public health, hygiene improvement and project benefits. All actions including the Video records should be conducted in 3 stages: during Engineering Design/before Construction Works, during the Construction Works and after the Completion of the Construction Works.

p. Sociologist /Gender Development Specialist (30 national person-months)

64. The specialists will design and undertake the baseline socioeconomic survey at the start of project implementation and design the annual socioeconomic survey. The specialists will also assist with the design and implementation of the customer needs survey. Based on the survey

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results, recommend the necessary social safeguard measures, develop an implementation plan and monitoring mechanism. Review the subproject for any involuntary resettlement impacts; if there are no such impacts prepare a resettlement due diligence report outlining the findings. If resettlement impacts are found, prepare the resettlement plan in accordance with the guidelines in the Resettlement Framework and ADB‟s policy on Involuntary Resettlement. Further, the consultants will ensure that women will participate in the project design and implementation, through active involvement in monitoring and evaluation of the project impact on health, sanitation and improvement in living conditions. The public awareness will target women‟s engagement as promoters in the public awareness program on public health, hygiene improvement and project benefits. 65. Consultants’ Qualification. All key expert specialists must have qualifying university degrees in the respective disciplines with at least 5 years of relevant experience. The Team Leader must have at least Masters Degree in Civil Engineering/Urban Development/Public Health, with at least 15 years of relevant professional experience. A good command of the English language will have an added value for all specialists.

5. Review of Contract Modification

66. ADB will review contract modifications in accordance with the procedures set forth in the loan agreement between the Borrower and ADB.

VII. SAFEGUARDS

67. The Project is categorized B (limited impacts) on involuntary resettlement. Possible impacts on involuntary land acquisition and resettlement (LAR) in each subproject sites were assessed and screened and no impacts were identified. Based on the final detailed design, the rehabilitation and construction activities will be conducted in the property owned by AWSC, municipal land, or within rights-of-way assigned to municipal infrastructure. 68. In order to ensure compliance with ADB Safeguard Policy Statement, 2009 (SPS), AWSC and SCWE, as implementing agency and executing agencies respectively, will ensure social safeguards compliance under the project. SCWE endorsed the Resettlement Framework (RF) that was prepared for original project and was updated based on the SPS. The involuntary resettlement process as required under the RF will be followed during implementation of the project and necessary resettlement plans will be prepared. 69. A Resettlement Plan (RP) has been prepared for the new project and approved by ADB. The resettlement plan will be implemented by SCWE and a final compliance report will be prepared by the Resettlement Specialist in AWSC. In case of unanticipated impacts, civil works for that section will be temporarily suspended until payment of compensation (if required) is made and provisions made for other required measures based on an assessment of impacts, final RP, ADB approval of the RP, and disclosure and implementation of the RP. 70. The environmental categorization of the Project is B as its subprojects will not have significant irreversible or permanent negative environmental impacts during or after construction. According to ADB‟s Safeguards Policy Statement 2009 (SPS), the subprojects require initial environmental examinations (IEE). However, since the scale of each operation is small and the impacts will all be similar, one blanket IEE has been performed for the entire operation and it shows that the impacts are largely limited to the construction phase and can be

27

adequately addressed through the well designed mitigation measures recommended in the report.

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VIII. GENDER AND SOCIAL DIMENSIONS

Gender Action Plan Objectives Actions and Descriptions Target/Indicator and Timeframe Institutional

Responsibility

Output 1: Rehabilitated, replaced and expanded water supply and sewerage systems in project towns and villages

Gender balanced employment during construction and in utility agency

Consult women and men during project implementation of WSS systems

Contracting women in civil works, maintenance and recruitment in utilities at customer services, women as meter readers and female engineers

Liaise with the local labor bureau and construction companies to help inform women of the availability of jobs (direct and indirect) during construction.

Consultation meetings with 50% women participation

All job advertisements for civil works and for utility agency include sentence on “applications by women encouraged', and 40% of jobs (utility agency) and 10% (civil works contractors) are awarded to women

AWSC

Output 2: Improved water services in project towns and villages

Female headed household have access to reliable water supply

Ensure that, female headed households have access to safe and reliable water

100% female-headed households in project towns have access to 15-hour potable water supply (2017)

AWSC

PR campaign of AWSC is informed by gender analysis of survey on household water management, household needs and knowledge gaps

Conduct survey on household water management, household needs (water related) and sanitation and hygiene concerns at least 50% of respondents are women)

Analyze knowledge gaps of households (especially women as household managers) on water hygiene, sanitation environmental impact of sewage, consumer rights and efficient water use

Survey on sex-disaggregated data of household water management, household need and knowledge gaps conducted (with 50% female respondents) (2012)

Gender analysis of survey conducted and public relations campaign informed with gender analysis

Output 3. Strengthened AWSC

Human resource management of AWSC gender mainstreamed and women‟s employment opportunities and

Establish sex-disaggregated HR database

Develop gender sensitive HR strategy for ASWC

Conduct capacity development on gender equality at the workplace in human resource management

Inform annual report on human resources of AWSC with gender analysis

Conduct gender training for all staff at AWSC and

Sex-disaggregated HR data-base in place (2012)

Annual reporting on AWSC HR includes gender analysis on employees

10% increase of women in management positions (2016) from baseline of 15%

All trainings conducted for AWSC and PMU staff include at least 25% women (2012-continuous)

AWSC

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Objectives Actions and Descriptions Target/Indicator and Timeframe Institutional Responsibility

career advancement in WSS sector increased

PMU

Include female AWSC staff in all training and facilitate their career development

Train staff working in customer care call centers on sex-disaggregated data collection of customer complaints/feedback

Create sex-disaggregated customer database

Sex-disaggregated customer data base in place

(2012)

Database on complaints and customer feedback

sex-disaggregated, and content of complaints

analyzed by gender (2012- continuous)

Customer outreach and information-awareness campaign reaches women

Develop information-awareness material on water hygiene, sanitation, customer rights and water usage efficiency based on customer needs and knowledge gaps

Conduct information-awareness campaign in the project targeted towns and villages, including trainings and dissemination of information

Especially target female headed households and ensure that they have equal participation in the project

Ensure that all the information material is gender sensitive and it is provided to women through channels and times suitable to their work and domestic responsibilities

At least 75% of women in project towns and villages receive awareness material (2012- continuous)

10 training conducted in the target towns and villages as a part of the awareness campaign with 50% of women‟s participation (2012-continuous)

One local NGOs and/or female community leaders are involved in the outreach and awareness campaign in each project town (2012-continious)

Annual report on quantity and redress of complaints (2012-continuous) includes sex-disaggregated data

AWSC

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IX. POVERTY, GENDER AND SOCIAL DIMENSIONS

71. The population of 18 towns and up to 92 villages, majority of which are in rural areas, will benefit from the improved water supply services, among them, poor and socially excluded. Customers in the rural areas strongly support the project which will change their living standards significantly, as well as create new employment opportunities. The project will improve the hygiene, water and sanitation practices in the targeted areas, and will include men and women in monitoring of services quality as informed consumers. At an institutional level, women will benefit from improved employment and career opportunities 72. The proposed project will help finance further rehabilitation of water supply infrastructure in AWSC covered regions which are mostly in rural towns and villages. It will address the limited and at times poor access to potable water supply of the targeted households in the rural areas, among them poor and extremely poor. Further, the project also supports the acceleration of achieving Millennium Development Goals with regards to the eradication of extreme poverty (by creating job opportunities not just in the urban areas but also in the rural areas and decreasing the incidence of water borne diseases through the supply of safe drinking water), promoting gender equality (by proactively creating job opportunities for women), and promoting environmental sustainability (by improving the source and supply of drinking water in a sustainable manner).

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X. PERFORMANCE MONITORING, EVALUATION, REPORTING AND COMMUNICATION

A. Project Design and Monitoring Framework

REVISED DESIGN AND MONITORING FRAMEWORK

Design Summary (Current Project)

Design Summary (Overall Project)

Performance Targets and Indicators with

Baselines (Current Project)

Performance Targets and Indicators with Baselines

(Overall Project)

Data Sources and Reporting

Mechanisms (Overall Project)

Assumptions and Risks (Overall Project)

Impact Improved public health and environment in project towns and villages

Improved public health and environment in about 29 project towns and 160 villages

Public satisfaction with the availability, quality, and quantity of water is improved. The percentage of households with 24-hour water supply increases from 38% in 2008 to 60% in 2012 in all project towns and villages.

All households in project towns and villages have access by 2012 to reliable supplies of potable water for at least 12 hours per day on average that meets Armenian quality standards.

Public satisfaction with the availability, quality, and quantity of water is improved. The percentage of households with 24-hour water supply increases to 65% in 2016 in all project towns and villages.

All households in project towns and villages have access by 2016 to reliable supplies of potable water for at least 15 hours per day on average that meets Armenian quality standards.

Annual socioeconomic surveys undertaken as part of a performance management system Armenia Water and Sewerage Company (AWSC) quarterly progress reports and project performance management system (PPMS) reports State Committee for Water Systems statistics Socioeconomic surveys Asian Development Bank (ADB) project performance audit reports

Assumptions The improved water supply systems are effective and will be sustained. Project communities remain committed to paying for improved services. Risks Implementation delays are due to weather conditions in the project regions in high-altitude areas. Implementation delays are due to the nonperformance of contractors. Regulatory reforms are slow, in particular on upwardly adjusting tariffs and handing over water meter ownership to the water company.

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Design Summary (Current Project)

Design Summary (Overall Project)

Performance Targets and Indicators with

Baselines (Current Project)

Performance Targets and Indicators with Baselines

(Overall Project)

Data Sources and Reporting

Mechanisms (Overall Project)

Assumptions and Risks (Overall Project)

Outcome Improved access to safe, reliable, and sustainable water supply and sanitation (WSS) services in about 21 project towns and up to 97 project villages, managed on commercial principles and with environmentally sound practices

Improved access to safe, reliable, and sustainable WSS in about 29 towns and up to 160 project villages, managed on commercial principles and with environmentally sound practices

Commercially oriented operations, financial autonomy, and full recovery of operation and maintenance costs exists in all project towns and villages covered by the AWSC by 2012. About 600,000 residents in project towns and villages directly or indirectly benefit by 2012 from reliable supplies of potable water for at least 12 hours per day that meets Armenian water quality standards. The technical, financial, and managerial capacity of the AWSC is improved by 2012.

About 700,000 residents in the project towns and villages directly or indirectly benefit by 2012 from reliable supplies of potable water for at least 15 hours per day that meets Armenian water quality standards. The technical, financial, and managerial capacity of the AWSC is further improved by 2016.

Operating and financial reports of the water supply company Reports by independent external auditors and regulators Water supply company information system Public health department records on water quality AWSC quarterly progress reports and PPMS reports

Assumptions Satisfactory arrangements are made for the management and operation of the water utility company after the current management contract expires. Local communities are willing to enter into water service agreements with the water utility company. Risk Delays in the implementation of agreed improvements will undermine financial and legal reforms.

Outputs 1. Rehabilitated, replaced, and expanded water supply and sewerage systems in project towns and villages

Extended program of rehabilitation and replacement of water supply and sewerage systems in more project towns and villages

Water supply and sewerage systems in 21 towns and 97 villages are rehabilitated, replaced in part or in full, and/or extended by 2012. About 20,000 water

Water supply systems in 29 towns and up to 160 villages are rehabilitated, replaced in part or in full, and/or extended by 2016. About 40,000 water meters

AWSC quarterly progress reports and PPMS reports AWSC technical and financial reports

Assumptions Water resources remain protected and reliable. Water quality standards do not change. All communities are willing to pay for improved WSS services.

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Design Summary (Current Project)

Design Summary (Overall Project)

Performance Targets and Indicators with

Baselines (Current Project)

Performance Targets and Indicators with Baselines

(Overall Project)

Data Sources and Reporting

Mechanisms (Overall Project)

Assumptions and Risks (Overall Project)

meters are installed in all project areas.

are installed in all project areas.

The AWSC is 100% state-owned company whose management is handed to SAUR. Risk Regulatory reforms are slow, in particular on upwardly adjusting tariffs and handing over water meter ownership to the water company.

2. Improved water services in project towns and villages

Further improvements in water services as per updated performance targets and indicators in more project towns and villages

All households in project towns and villages have access by 2012 to reliable supplies of potable for at least 12 hours per day on average that meets Armenian water quality standards, with urgent rehabilitation of sewerage systems.

All households in project towns and villages have access by 2016 to reliable supplies of potable water for at least 15 hours per day on average that meets Armenian water quality standards. A sex-disaggregated customer and complaints database is in place. One local nongovernment organization and/or female community leaders are involved in the outreach and awareness campaign in each project town. All households headed by women in project towns and

AWSC quarterly progress reports and PPMS reports.

Assumptions Water resources remain protected and reliable. Water quality standards do not change. All communities are willing to pay for improved WSS services. AWSC is a 100% state-owned company operated under a management contract with SAUR. Risk Regulatory reforms are slow, in particular on upwardly adjusting tariffs and handing over water meter ownership to the water company.

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Design Summary (Current Project)

Design Summary (Overall Project)

Performance Targets and Indicators with

Baselines (Current Project)

Performance Targets and Indicators with Baselines

(Overall Project)

Data Sources and Reporting

Mechanisms (Overall Project)

Assumptions and Risks (Overall Project)

villages have access by 2017 to potable water supply 15 hours per day.

3. Strengthened and expanded AWSC

Extended program to further expand the AWSC‟s operational and institutional capacity

Nonrevenue water is reduced to 40% from 90% in 2007 in various towns and villages to 75% in project area by 2012.

Tariff collection efficiency is improved from 40% in 2007 to 90% in project areas by 2012.

Technical and financial management training is provided to AWSC staff in project towns and villages. All communities outside of the AWSC perimeter are included the AWSC service area after rehabilitation.

Nonrevenue water is reduced to 70% in project towns and villages by 2016.

Tariff collection efficiency in project towns and villages is improved to 95% by 2016.

The AWSC human resource management strategy is further developed to include further management training provided to AWSC staff, with 25% of training participants being women.

AWSC quarterly progress reports and PPMS reports.

Assumptions Water resources remain protected and reliable. Water quality standards do not change. All communities are willing to pay for improved WSS services. AWSC remains a corporatized entity. Risk Regulatory reforms are slow, in particular on upwardly adjusting tariffs and handing over water meter ownership to the water company.

4. Improved community management skills

Not applicable Discussions during the loan review mission from 20 to 25 November 2009 brought the decision not to cover

Not applicable

Not applicable Not applicable

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Design Summary (Current Project)

Design Summary (Overall Project)

Performance Targets and Indicators with

Baselines (Current Project)

Performance Targets and Indicators with Baselines

(Overall Project)

Data Sources and Reporting

Mechanisms (Overall Project)

Assumptions and Risks (Overall Project)

this task under the project. Systems in villages that are included in the AWSC perimeter during project implementation will automatically be maintained and operated by the AWSC.

Activities with Milestones (Additional Financing) Inputs (Additional Financing)

1. Extended program of rehabilitation and replacement of water supply and sewerage systems in more project towns and villages 1.1 Upgrading and rehabilitation completed by December 2017 2. Further improvements in water services as per updated performance targets and indicators in more project towns and villages

2.1 Further improvement in water supply potability and reliability by December 2014 3. Extended program to further expand the AWSC‟s operational and institutional capacity

3.1 Further management and operational efficiency improvement (including improvements in financial management and information technology capacity) completed by December 2014

ADB: $40 million from Asian Development Fund Government: $10 million Total: $50 million

Source: Asian Development Bank.

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B. Monitoring

73. Project performance monitoring As with the original project, a list of performance indicators will be tracked and evaluated under a project performance management system (PPMS). This PPMS will monitor and track the technical performance of the Project and at the same time the social, gender and economic benefits of the Project, in particular for the poor and for women. Baseline data and performance targets will have to be established at the commencement of the Project and these performance indicators will have to be monitored and reported to ADB through the quarterly progress report. 74. Compliance monitoring: Compliance on covenants will be monitored through regular ADB review missions and on a quarterly basis in discussion with AWSC. 75. Safeguards monitoring: Monitoring and reporting of the implementation of safeguards requirements and procedures will be prepared by AWSC. They will undertake the monitoring of safeguard covenants compliance to be included in the quarterly project progress report and submitted to ADB. 76. Gender and social dimensions monitoring: See the design and monitoring framework for monitoring indicators. This will be monitored for compliance in the quarterly progress report.

C. Evaluation

77. Within 6 months of physical completion of the Project, SCWE will submit a project completion report to ADB.10 Review missions will be undertaken twice a year in the first 2 years and once a year post that period. The review will include an evaluation of the scope, implementation arrangements and performance of the components of the Project.

D. Reporting

78. The SCWE will provide ADB with (i) quarterly progress reports in a format consistent with ADB's project performance reporting system; (ii) consolidated annual reports including (a) progress achieved by output as measured through the indicator's performance targets, (b) key implementation issues and solutions; (c) updated procurement plan and (d) updated implementation plan for next 12 months; and (iii) a project completion report within 6 months of physical completion of the Project. To ensure projects continue to be both viable and sustainable, project accounts and the executing agency AFSs, together with the associated auditor's report, should be adequately reviewed.

10

Project completion report format is available at: http://www.adb.org/Consulting/consultants-toolkits/PCR-Public-Sector-Landscape.rar

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XI. ANTICORRUPTION POLICY

79. ADB reserves the right to investigate, directly or through its agents, any violations of the Anticorruption Policy relating to the Project.11 All contracts financed by ADB shall include provisions specifying the right of ADB to audit and examine the records and accounts of the executing agency and all Project contractors, suppliers, consultants and other service providers. Individuals/entities on ADB‟s anticorruption debarment list are ineligible to participate in ADB-financed activity and may not be awarded any contracts under the Project.12 80. To support these efforts, relevant provisions are included in the loan agreement and the bidding documents for the Project.

11

Available at: http://www.adb.org/Documents/Policies/Anticorruption-Integrity/Policies-Strategies.pdf 12

ADB's Integrity Office web site is available at: http://www.adb.org/integrity/unit.asp

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XII. ACCOUNTABILITY MECHANISM

81. People who are, or may in the future be, adversely affected by the project may submit complaints to ADB‟s Accountability Mechanism. The Accountability Mechanism provides an independent forum and process whereby people adversely affected by ADB-assisted projects can voice, and seek a resolution of their problems, as well as report alleged violations of ADB‟s operational policies and procedures. Before submitting a complaint to the Accountability Mechanism, affected people should make a good faith effort to solve their problems by working with the concerned ADB operations department. Only after doing that, and if they are still dissatisfied, should they approach the Accountability Mechanism.13

13

For further information see: http://www.adb.org/Accountability-Mechanism/default.asp.

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XIII. RECORD OF PAM CHANGES

82. Major or minor changes in project scope, design, costs, and implementation arrangements as described in Project Administration Instruction (PAI) 5.04 which can be downloaded from the following website http://www.adb.org/Documents/Manuals/PAI/default.asp. Design changes should be indicated as a part of the Progress Report.